An­drea Perez-Sobers

Se­nior Re­porter

an­drea.perez-sobers@guardian.co.tt

Wood­side En­er­gy has out­lined how T&T’s pro­duc­tion shar­ing con­tract frame­work is struc­tured to de­liv­er in­creas­ing re­turns to the State as prices and out­put rise, with wind­fall gains large­ly ac­cru­ing to the coun­try dur­ing pe­ri­ods of ex­tra­or­di­nary mar­ket con­di­tions.

Coun­try man­ag­er for T&T, Bryan Ram­sumair, ad­dressed the is­sue while ap­pear­ing be­fore the Joint Se­lect Com­mit­tee on En­er­gy Af­fairs yes­ter­day, as mem­bers ex­am­ined the fis­cal and reg­u­la­to­ry ar­chi­tec­ture sur­round­ing the Ca­lyp­so deep­wa­ter gas project.

With­out dis­clos­ing spe­cif­ic thresh­olds, Ram­sumair ex­plained that the pro­duc­tion shar­ing con­tract (PSC) op­er­ates on a tiered ba­sis, where the gov­ern­ment’s take ris­es as pro­duc­tion vol­umes and com­mod­i­ty prices in­crease. As a re­sult, high­er out­put and stronger prices trans­late in­to a larg­er share of prof­its flow­ing to the State.

He point­ed to the volatil­i­ty of glob­al oil and gas mar­kets, not­ing that ex­tra­or­di­nary price spikes oc­ca­sion­al­ly oc­cur. Un­der those ex­treme con­di­tions, the PSC is struc­tured so that wind­fall el­e­ments are cap­tured pri­mar­i­ly by the State rather than the op­er­a­tor. Ram­sumair con­firmed that as prof­its rise sharply, the ben­e­fit shifts in­creas­ing­ly in favour of the coun­try.

The Wood­side ex­ec­u­tive al­so ad­dressed how T&T’s fis­cal regime com­pares with oth­er deep­wa­ter ju­ris­dic­tions where the com­pa­ny op­er­ates. He ex­plained that while the cap­i­tal in­ten­si­ty of deep­wa­ter projects is broad­ly sim­i­lar across re­gions, eco­nom­ics be­come more chal­leng­ing as op­er­a­tors move in­to small­er reser­voirs.

“You still have to spend an equiv­a­lent amount in terms of drilling de­vel­op­ment costs, as well as all the safe­ty and en­vi­ron­men­tal pro­tec­tions that you have to put in place,” he said. “So the cost per bar­rel, whether it be gas or oil, is in­creas­ing.”

Against that back­drop, Ram­sumair ex­plained that op­er­a­tors glob­al­ly look for in­cen­tives to pur­sue small­er pools and mar­gin­al reser­voirs. These in­cen­tives may take the form of im­proved PSC terms or ad­just­ments un­der the Pe­tro­le­um Tax­es Act, aimed at off­set­ting high­er unit costs and main­tain­ing com­mer­cial vi­a­bil­i­ty.

Com­mit­tee mem­ber for Port of Spain North/St Ann’s West, Stu­art Young, em­pha­sised that Ca­lyp­so rep­re­sents this coun­try’s first deep­wa­ter project, de­scrib­ing it as un­chart­ed ter­ri­to­ry for the coun­try. He not­ed that the project is be­ing pur­sued un­der a PSC rather than the tra­di­tion­al ex­plo­ration and pro­duc­tion regime and that ne­go­ti­a­tions on fis­cal terms had spanned rough­ly two years.

Young high­light­ed the in­her­ent ten­sion in those ne­go­ti­a­tions, with com­pa­nies weigh­ing risk and ex­pen­di­ture while the State seeks to max­imise re­turns from na­tion­al re­sources on be­half of cit­i­zens. He added that dis­cus­sions had been con­duct­ed re­spect­ful­ly and con­struc­tive­ly, with both sides at­tempt­ing to find what he de­scribed as a “sweet spot”.

Wood­side En­er­gy’s vice pres­i­dent for de­vel­op­ment, Grant McKen­zie, de­scribed trans­paren­cy as cen­tral to the process. He ex­plained that progress is achieved when both sides are will­ing to clear­ly ex­plain their chal­lenges, out­line pos­si­ble so­lu­tions and iden­ti­fy ar­eas of over­lap that al­low projects to move for­ward.

Young al­so ref­er­enced the re­struc­tur­ing of At­lantic LNG by the for­mer ad­min­is­tra­tion, which in­tro­duced third-par­ty ac­cess to LNG fa­cil­i­ties. He de­scribed that change as a crit­i­cal fac­tor that en­hanced T&T’s at­trac­tive­ness to Wood­side, as it cre­at­ed the pos­si­bil­i­ty for pro­duc­ers to bring gas for liq­ue­fac­tion, sub­ject to com­mer­cial ne­go­ti­a­tions.

McKen­zie lat­er re­turned to the is­sue of col­lab­o­ra­tion across the life cy­cle of a project, in­clud­ing at the ma­ture stage of reser­voirs. He point­ed to past ex­am­ples where dis­cus­sions on drilling op­tions and cost re­cov­ery had re­sult­ed in amend­ments to PSCs, ex­tend­ing the pro­duc­tive life of as­sets.

He stressed that on­go­ing, two-way en­gage­ment re­mains es­sen­tial, whether at the front end of de­vel­op­ment or dur­ing the fi­nal phase of pro­duc­tion.
Min­is­ter in the Min­istry of Fi­nance, Kennedy Swarats­ingh, ob­served that glob­al en­er­gy com­pa­nies con­tin­u­al­ly re­assess where to en­ter or ex­it mar­kets as part of evolv­ing busi­ness mod­els, par­tic­u­lar­ly when push­ing in­to fron­tier ar­eas such as deep­wa­ter. McKen­zie re­spond­ed that while Wood­side’s deep­wa­ter projects share tech­ni­cal sim­i­lar­i­ties, each ju­ris­dic­tion presents unique chal­lenges.
He out­lined how ris­ing costs across glob­al sup­ply chains have placed pres­sure on project eco­nom­ics.  
McKen­zie ex­plained that Wood­side’s re­fresh of the Ca­lyp­so con­cept at the end of 2024 in­to 2025 fo­cused on de­liv­er­ing a lean­er de­vel­op­ment ap­proach with­out com­pro­mis­ing safe­ty, health or en­vi­ron­men­tal stan­dards. Key mile­stones for 2026 in­clude com­plet­ing pre-front-end en­gi­neer­ing de­sign stud­ies to re­fine cap­i­tal ex­pen­di­ture es­ti­mates and con­firm tech­ni­cal and eco­nom­ic vi­a­bil­i­ty.
Par­lia­men­tary Sec­re­tary in the Min­istry of For­eign and Cari­com Af­fairs, Nicholas Mor­ris, re­ferred to the Cab­i­net’s re­cent an­nounce­ment of an en­er­gy ac­cel­er­a­tor hub to stream­line li­cens­ing and reg­u­la­to­ry ap­provals. Ram­sumair wel­comed the ini­tia­tive, de­scrib­ing it as ben­e­fi­cial as Ca­lyp­so moves in­to de­vel­op­ment, par­tic­u­lar­ly in keep­ing ap­provals aligned with project sched­ules.