The Min­is­ter of En­er­gy tells us that the NGC will un­der­go a ma­jor shift in its strat­e­gy go­ing for­ward. The in­ten­tion is to di­ver­si­fy the econ­o­my, di­ver­si­fy the en­er­gy sec­tor. NGC will seek to ver­ti­cal­ly in­te­grate back­ward in­to the sup­ply side (it does not own any reser­voirs). It is al­so look­ing to in­te­grate for­ward, seek­ing in­vest­ment op­por­tu­ni­ties around the world. For ex­am­ple, there is an emerg­ing mar­ket for LNG and CNG in the Caribbean.

The min­is­ter sees en­er­gy di­ver­si­fi­ca­tion as a key el­e­ment of growth in this coun­try since di­ver­si­fi­ca­tion does not mean di­ver­si­fi­ca­tion away from en­er­gy. He con­sid­ers this one of the fun­da­men­tal flaws in the di­ver­si­fi­ca­tion ar­gu­ment.

What he has missed is that di­ver­si­fi­ca­tion in T&T is al­so about the change in char­ac­ter of the eco­nom­ic mod­el in place and means of cre­at­ing a sus­tain­able econ­o­my on­shore (em­ploy­ing some 95 per cent of our peo­ple) that does not suf­fer al­most to­tal­ly from the non-en­er­gy deficit.

The min­is­ter then talks about Petro­bras of Brazil, Ecopetrol of Colom­bia and Petronas of Malaysia as mod­els for our en­er­gy-sec­tor di­ver­si­fi­ca­tion, though tai­lored in scope. It is worth­while to ex­am­ine rather briefly the per­for­mance of these mod­el com­pa­nies.

Ecopetrol of Colom­bia in 1983 dis­cov­ered 1.1 bil­lion bbls of oil and be­gan to ex­port oil in 1986. In the 1990s it ex­tend­ed this ex­por­ta­tion from new dis­cov­er­ies with BP. It ran joint ven­tures (en­cour­aged by a slid­ing tax regime) to gain ac­cess lo­cal­ly to the tech­nolo­gies and was ac­tive in ex­plo­ration and pro­duc­tion of the re­source as op­posed to sim­ply hold­ing shares. It had a net in­come of US$8.3 bil­lion in 2011. Its oil pro­duc­tion is 0.8 mil­lion bbls/day.

Petronas of Malaysia had 2.84 bil­lion bbls of oil in 1982 and this was ex­pect­ed to be de­plet­ed by the late 1980s. It found oil again in 1988 and in­vest­ed in oil and gas out­side of Malaysia, eg in Viet­nam. Its net in­come was US$21 bil­lion in 2010. Its pro­duc­tion is 1.63 mil­lion boe/day.

Petro­bras of Brazil de­vel­oped the tech­nol­o­gy, Pet­rosix, for ex­tract­ing shale oil in 1953 and by 2006 was pro­duc­ing 260 tonnes/hr. Oil ex­plo­ration and pro­duc­tion were done by this com­pa­ny as a mo­nop­oly from 1954 to 1997. In 2009, it raised some US$70 bil­lion by mar­ket cap­i­tal­i­sa­tion to ex­ploit its ul­tra-deep wa­ter oil fields.

Petro­bras is known for its deep wa­ter tech­nolo­gies and has start­ed to ex­port giv­en its mas­sive deep wa­ter re­serves, though it al­so ex­ports its tech­nolo­gies and is us­ing these in the deep wa­ter fields of West Africa and the Gulf of Mex­i­co. Its oil pro­duc­tion is 2 mil­lion bbls/day.

These three com­pa­nies have been able to be­come ma­jor eco­nom­ic en­ti­ties if on­ly be­cause they have large re­serves and pro­duc­tion of pe­tro­le­um, which they use to ac­crue the cap­i­tal to rein­vest. They stayed in con­trol of the ex­plo­ration and pro­duc­tion process­es and in­vest­ed re­turns in ex­pan­sion of their reach both lo­cal­ly and abroad.

The ma­jor key then is large ex­ploitable re­serves; the next is lo­cal own­er­ship of the re­source and the abil­i­ty to ex­ploit it, even in part, lo­cal­ly; the next is to re-in­vest in­come in­to im­prov­ing lo­cal­ly owned as­sets and of im­por­tance, es­pe­cial­ly as Brazil, in the de­vel­op­ment of its own tech­nolo­gies, the oth­er two via joint ven­tures, en­sured ac­cess to tech­nolo­gies.

In­stead, the ex­ploita­tion of our re­sources was left to main­ly for­eign in­vest­ment via li­cens­ing or pro­duc­tion-shar­ing con­tracts for the up­stream and sim­i­lar­ly in the down­stream. There was no sig­nif­i­cant lo­cal tech­nol­o­gy de­vel­oped and our skills were re­strict­ed to op­er­a­tion and main­te­nance.

NGC and T&T can adopt the mod­el of these com­pa­nies if we were to dis­cov­er vast new re­sources, giv­en that we are now on the downs­lope of both oil and gas de­ple­tion; we rein­vest some of our in­come in­to the in­dus­try to gain more as­sets and we ac­quire and de­vel­op com­pet­i­tive tech­nolo­gies.

At present we have our fin­gers crossed (though the min­is­ter is sure) that we will find new oil and/or gas in the deep, but again, we sim­ply have pro­duc­tion-shar­ing con­tracts which shut us out of the ex­plo­ration and pro­duc­tion ac­tiv­i­ties. For­eign in­vest­ment alone will not build us a Petro­bras.

Mary K King

mark­ing@tstt.net.tt