The en­er­gy sec­tor was dealt a mas­sive blow when, just over a month ago, the Unit­ed States’ Of­fice of For­eign As­sets Con­trol re­voked the li­cences which would fa­cil­i­tate the ex­plo­ration of nat­ur­al gas fields in Venezue­lan wa­ters.

But in the past two weeks, there has been news which serves as a re­minder that the sec­tor still has some kick in it.

Last week, Peren­co T&T Lim­it­ed an­nounced it had found nat­ur­al gas af­ter the suc­cess­ful drilling of the Onyx well off Trinidad’s south-east coast.

Ear­li­er this week, Touch­stone Ex­plo­ration an­nounced it suc­cess­ful­ly closed the ac­qui­si­tion of 100 per cent of the share cap­i­tal of Shell Trinidad Cen­tral Block Ltd (STCBL).

Ac­cord­ing to the an­nounce­ment from Touch­stone, the ac­qui­si­tion was com­plet­ed for cash con­sid­er­a­tion of ap­prox­i­mate­ly US$28.4 mil­lion, sub­ject to fi­nal clos­ing ad­just­ments.

The no­tice ex­plained fur­ther that the STCBL holds a 65 per cent par­tic­i­pat­ing in­ter­est in the on­shore Cen­tral block ex­plo­ration and pro­duc­tion li­cence in Trinidad, which in­cludes four pro­duc­ing nat­ur­al gas wells and a gas pro­cess­ing fa­cil­i­ty. The re­main­ing 35 per cent par­tic­i­pat­ing in­ter­est is held by state-owned Her­itage Pe­tro­le­um Com­pa­ny Lim­it­ed. The Cen­tral block li­cence en­com­pass­es ap­prox­i­mate­ly 6,699 gross acres (4,354 net work­ing in­ter­est acres).

Touch­stone has in­di­cat­ed it will pro­vide an up­dat­ed cor­po­rate pre­sen­ta­tion and re­vised 2025 guid­ance as the in­te­gra­tion of the ac­quired as­sets pro­gress­es.

Touch­stone’s pres­i­dent and CEO, Paul Baay, hailed the ac­qui­si­tion as “a sig­nif­i­cant mile­stone for Touch­stone as we con­tin­ue to ex­pand our port­fo­lio of high-qual­i­ty as­sets in Trinidad.”

He ex­plained that the move would strength­en the com­pa­ny’s pro­duc­tion base as it would al­low the com­pa­ny wider ac­cess to the liq­ue­fied nat­ur­al gas (LNG) mar­ket while al­so broad­en­ing Touch­stone’s on­shore pres­ence, and en­hanc­ing its op­er­a­tional ca­pac­i­ty in a re­gion where it sees long-term strate­gic val­ue.

“The pur­chase of that cen­tral block from Shell, re­al­ly fits in­to what I’ll call the puz­zle that we have out in Rio Claro. All those are blocks where we have our ex­ist­ing gas pro­duc­tion. It di­rect­ly off­sets our ma­jor pro­duc­ing fields in Co­ho and Cas­cadu­ra. And re­al­ly, what it al­lows us to do is have an­oth­er source that we can take our gas to,” Baay told the Busi­ness Guardian in a phone in­ter­view.

“But the re­al ad­van­tage for that is it’s tied in­to both the south­ern and the north­ern gas lines on the is­land, so it al­lows us to ac­cess both the do­mes­tic mar­ket and the LNG mar­ket. So it gives us a bunch more gas pro­duc­tion for one, but it al­so al­lows us to di­ver­si­fy our mar­ket a lit­tle bit, and, quite frankly, get a high­er price for the gas go­ing to the LNG mar­ket.”

Baay ac­knowl­edged the sec­tor had been im­pact­ed by the geopo­lit­i­cal fall­out of the Unit­ed States’ stance to­ward Venezuela, but he be­lieved there were still op­por­tu­ni­ties to be ex­plored in Trinidad and To­ba­go.

He said, “I think the geopo­lit­i­cal is­sues, es­pe­cial­ly with Venezuela look­ing like it’s pushed out a lit­tle bit fur­ther on the hori­zon. It’s go­ing to make gas in Trinidad hope­ful­ly more valu­able for us as pro­duc­ers. But they al­so need more gas to run the fa­cil­i­ties. We look at the ac­qui­si­tion as be­ing one where we can play a big­ger part in the nat­ur­al gas pro­duc­tion of Trinidad, and we can spend a lit­tle bit more mon­ey and hope­ful­ly ramp up the pro­duc­tion that we pur­chased.”

He stat­ed that the move was done with the in­ten­tion to ramp up pro­duc­tion where pos­si­ble.

“I mean, we’re not just buy­ing it to blow it down. We think there’s a way that we can ac­tu­al­ly sig­nif­i­cant­ly in­crease the pro­duc­tion from those Shell as­sets go­ing for­ward,” said Baay.

The Touch­stone CEO al­so ex­plained that he ex­pect­ed a good re­la­tion­ship with the new­ly in­stalled gov­ern­ment, es­pe­cial­ly as the com­pa­ny had en­joyed a fruit­ful re­la­tion­ship with Prime Min­is­ter Kam­la Per­sad-Bisses­sar pre­vi­ous­ly.

How­ev­er, he said the com­pa­ny has not yet had a meet­ing with the new ad­min­is­tra­tion.

“We haven’t reached out yet, be­cause we ob­vi­ous­ly want them to (speak with us), but they’re pret­ty busy on what they’re do­ing. If you look back at our li­cences for Cas­cadu­ra and Co­ho, it was (un­der their ad­min­is­tra­tion.) It was is­sued in 2013, so it was ac­tu­al­ly is­sued un­der the prime min­is­ter that’s there now. So we’re not un­fa­mil­iar with her, and with­out her hav­ing is­sued those li­cences back in 2013, we wouldn’t be where we are to­day. So it’s kind of come a lit­tle bit of full cir­cle for us,” said Baay.

The en­er­gy ex­ec­u­tive said Touch­stone is ex­cit­ed about the plans it has for T&T, and looks for­ward to work­ing with the new gov­ern­ment.

“But we, as of yet, haven’t for­mal­ly reached out to them.”

He said, de­spite the chal­lenges in the en­er­gy sec­tor in re­cent years Trinidad and To­ba­go re­mained well placed.

“When you look at the com­bi­na­tion of where it’s lo­cat­ed, I mean, it’s in the Venezue­lan basin, one of the rich­est basins in the world, that’s num­ber one. And then num­ber two, you look at the LNG and do­mes­tic mar­kets that are short of gas, and even the is­land be­ing short of oil pro­duc­tion. I mean, you’ve got these built-in mar­kets.”

Baay ex­plained that while there were some is­sues that could be im­proved from the pro­duc­er’s point of view in terms of gas price re­turns, over­all there were more pos­i­tives than neg­a­tives with re­gard to the T&T en­er­gy sec­tor in his view,

“ I think the gov­ern­ment’s go­ing to have to work through those as we go for­ward, and in or­der to en­cour­age new things. And if you look at even the Peren­co dis­cov­ery that was an­nounced re­cent­ly, and some of the oth­er dis­cov­er­ies that we’ve seen from EOG and our­selves. I mean there’s lots more to do yet, right for on the is­land,” Baay said.

He said cur­rent­ly the fo­cus should be on find­ing means to ramp up its pro­duc­tion ca­pac­i­ty, as he is con­fi­dent much more could be achieved in the sec­tor.

“With this par­tic­u­lar ac­qui­si­tion, you know, we now con­trol all the gas plants on­shore in Trinidad. So what we need to do now is fill them up. We could pro­duce al­most 100 or 80 mil­lion cu­bic feet a day of gas, if we had them run­ning full. To­day, we’re nowhere near that. We’re prob­a­bly in about 40 mil­lion cu­bic feet a day, 40 to 50 mil­lion cu­bic feet a day. So, you know our mot­to now is that we’ve got all the in­fra­struc­ture. It’s, what we call drill to fill. So we’re just hop­ing our drilling pro­gramme will kick off in the next cou­ple of weeks, and hope­ful­ly it’s just con­tin­u­al­ly drilling for the next two years on­shore and fill­ing up those gas plants,” said Baay, who stat­ed cur­rent­ly Trinidad is the com­pa­ny’s on­ly pro­duc­ing as­set.

Baay said, ‘Every dol­lar that we pro­duce in Trinidad goes back in­to the ground in Trinidad. Some of the oth­er in­ter­na­tion­als will move that mon­ey around to var­i­ous places around the world. So, you know, it’s the more cash we can get, the more drilling we can do, the more gas we can pro­duce. It’s sort of a cy­cle. And we’ve been that way for 15 years, since we’ve been en­ter­ing that now it’s, it’s ba­si­cal­ly al­most a Trinidad com­pa­ny that trades in Lon­don and Toron­to.”

He said this gave the com­pa­ny an in­creased in­cen­tive to hire lo­cal­ly and give back to the is­land.