An­drea Perez-Sobers
Se­nior Re­porter
an­drea.perez-sobers@guardian.co.tt

Trinidad and To­ba­go’s en­er­gy sec­tor de­liv­ered on­ly a mar­gin­al im­prove­ment in 2025, as gains in petro­chem­i­cal prices helped off­set a sharp fall in oil prices, but deep­er struc­tur­al chal­lenges con­tin­ue to weigh on the in­dus­try, ac­cord­ing to the Cen­tral Bank’s An­nu­al Eco­nom­ic Sur­vey and in­de­pen­dent en­er­gy ex­perts.

The En­er­gy Com­mod­i­ty Price In­dex (ECPI), which tracks the prices of the coun­try’s ma­jor en­er­gy ex­ports, rose by 1.6 per cent over the year.
While this sug­gests rel­a­tive sta­bil­i­ty at the head­line lev­el, both pol­i­cy­mak­ers and an­a­lysts point to a more com­plex re­al­i­ty be­neath the sur­face, one de­fined by falling oil prices, con­strained gas out­put, and in­creas­ing ex­ter­nal risks.
For­mer en­er­gy min­is­ter and en­er­gy ex­pert Car­olyn Seep­er­sad-Bachan char­ac­terised the sit­u­a­tion as a struc­tur­al is­sue rather than a tem­po­rary cy­cle.
“The find­ings of the 2025 sur­vey con­firm a struc­tur­al re­al­i­ty: This coun­try’s en­er­gy sec­tor re­mains high­ly ex­posed to the dual pres­sures of price volatil­i­ty and de­clin­ing pro­duc­tion,” she not­ed.
The Cen­tral Bank’s da­ta show that crude oil prices de­clined sig­nif­i­cant­ly in 2025, av­er­ag­ing US$67 per bar­rel, a 14.3 per cent drop from the pre­vi­ous year. Prices re­mained be­low US$80 through­out the year and weak­ened fur­ther in the fi­nal quar­ter, re­flect­ing an over­sup­plied glob­al mar­ket.
Seep­er­sad-Bachan point­ed to the un­der­ly­ing caus­es of this de­cline.
“The 14.3 per cent de­cline in crude oil prices, av­er­ag­ing US$67 per bar­rel, would have di­rect­ly re­duced ex­port rev­enues and for­eign ex­change earn­ings. This down­turn re­flects per­sis­tent glob­al over­sup­ply, dri­ven by in­creased pro­duc­tion from non-OPEC pro­duc­ers such as the Unit­ed States, Brazil, and Guyana, com­bined with soft­er de­mand growth,” she ex­plained.
For this coun­try, where en­er­gy ex­ports are the pri­ma­ry source of for­eign ex­change and gov­ern­ment rev­enue, this de­cline has di­rect eco­nom­ic im­pli­ca­tions. Low­er oil prices al­so trans­lat­ed in­to re­duced prices for re­fined prod­ucts such as gaso­line, jet fu­el, and gas oil, fur­ther re­flect­ing the glob­al down­turn.

Gas and petro­chem­i­cals car­ry the sec­tor

The da­ta in­di­cat­ed that de­spite the fall in oil prices, the per­for­mance of nat­ur­al gas and petro­chem­i­cals pro­vid­ed some sup­port to the over­all en­er­gy sec­tor.
The Cen­tral Bank re­port­ed that the LNG price bas­ket de­clined by 1.9 per cent in 2025, even as key in­ter­na­tion­al mar­kets record­ed stronger pric­ing. Eu­rope and North­east Asia, two ma­jor des­ti­na­tions for Trinidad and To­ba­go’s LNG, saw in­creas­es dri­ven by con­tin­ued de­mand for en­er­gy se­cu­ri­ty and sta­ble sup­ply arrange­ments.

Seep­er­sad-Bachan point­ed to the com­plex­i­ty of LNG pric­ing in ex­plain­ing why stronger mar­ket con­di­tions did not ful­ly trans­late in­to high­er re­alised prices.
“While there has been a grad­ual shift to­ward hub-based pric­ing in more re­cent LNG con­tracts ref­er­enc­ing in­dices such as the UK Na­tion­al Bal­anc­ing Point (NBP) and the Japan Ko­rea Mark­er (JKM), re­alised prices re­main in­flu­enced by lega­cy oil-linked struc­tures and com­pos­ite pric­ing mech­a­nisms. This has lim­it­ed the ex­tent to which T&T can ful­ly cap­ture up­side in stronger gas mar­kets,” she out­lined.

Sig­nif­i­cant­ly, she high­light­ed that pro­duc­tion con­straints con­tin­ue to af­fect the sec­tor’s over­all per­for­mance.
“More fun­da­men­tal, how­ev­er, is the is­sue of de­clin­ing nat­ur­al gas pro­duc­tion, which con­tin­ues to con­strain out­put across LNG and petro­chem­i­cal in­dus­tries. This sup­ply short­fall has al­ready had re­al eco­nom­ic con­se­quences, in­clud­ing the clo­sure of op­er­a­tions by Nu­trien Ltd.,” Seep­er­sad-Bachan stat­ed.

While there have been re­ports of mar­gin­al in­creas­es in crude oil pro­duc­tion, she in­di­cat­ed that these gains have not been suf­fi­cient to off­set re­duced ac­tiv­i­ty in gas-dri­ven in­dus­tries.

“The com­bined ef­fect is clear: low­er prices and low­er pro­duc­tion are si­mul­ta­ne­ous­ly sup­press­ing rev­enues, weak­en­ing fis­cal per­for­mance, and con­strain­ing for­eign ex­change in­flows,” she not­ed.

Econ­o­mist and en­er­gy con­sul­tant Gre­go­ry McGuire pro­vid­ed ad­di­tion­al con­text on how the ECPI func­tions and why move­ments in the in­dex mat­ter for the wider econ­o­my.

“The En­er­gy Com­mod­i­ty Price In­dex (ECPI) is a sta­tis­ti­cal mea­sure used to track the av­er­age changes in prices of our ma­jor ex­port com­modi­ties over time. This mea­sure was de­vel­oped in a joint ini­tia­tive by the Cen­tral Bank and the En­er­gy Cham­ber around 2008,” he ex­plained.

McGuire not­ed that the in­dex tracks a range of com­modi­ties, in­clud­ing crude oil, nat­ur­al gas, LNG, am­mo­nia, methanol, and urea, all of which are sub­ject to fluc­tu­a­tions in glob­al sup­ply and de­mand.

“In gen­er­al, an up­ward move­ment in the ECPI is good news. It means that, on av­er­age, prices of our ex­port prod­ucts were high­er over the year, and this may mean high­er for­eign ex­change earn­ings and tax rev­enue for the gov­ern­ment. In con­trast, an over­all de­cline in the ECPI means that com­mod­i­ty ex­port prices were gen­er­al­ly low­er, re­sult­ing in re­duced forex, low­er tax and div­i­dend rev­enue,” he said.

McGuire point­ed out that the mod­est in­crease record­ed in 2025 was large­ly dri­ven by gains in petro­chem­i­cal prices, which helped off­set the fall in oil.
“Ac­cord­ing to the Cen­tral Bank’s 2025 An­nu­al Eco­nom­ic Sur­vey, the ECPI rose by 1.6 per cent, main­ly dri­ven by high­er petro­chem­i­cal prices, which out­weighed falling oil prices. This rise in petro­chem­i­cal prices is sig­nif­i­cant, as it pos­i­tive­ly af­fects the fi­nan­cial per­for­mance of the Na­tion­al Gas Com­pa­ny and its sub­sidiaries, re­sult­ing in bet­ter re­turns and div­i­dends for share­hold­ers,” he ex­plained.

The Cen­tral Bank’s da­ta sup­ports this, show­ing strong price in­creas­es in fer­tilis­ers and in­dus­tri­al chem­i­cals, in­clud­ing urea, methanol, am­mo­nia, and UAN, re­flect­ing sus­tained glob­al de­mand in agri­cul­ture and man­u­fac­tur­ing.

Risks and out­look

Be­yond prices and pro­duc­tion, Seep­er­sad-Bachan warned of grow­ing ex­ter­nal risks that could fur­ther com­pli­cate the sec­tor’s out­look.
Re­cent de­vel­op­ments in Unit­ed States sanc­tions pol­i­cy, par­tic­u­lar­ly the use of com­pa­ny-spe­cif­ic li­cences, in­tro­duce un­cer­tain­ty for cross-bor­der gas projects in­volv­ing T&T.

“The is­suance of com­pa­ny-spe­cif­ic li­cences, in­clud­ing OFAC Gen­er­al Li­cense 49 and OFAC Gen­er­al Li­cense 50, cre­ates un­cer­tain­ty for cross-bor­der gas de­vel­op­ments. In par­tic­u­lar, the ex­po­sure of the Na­tion­al Gas Com­pa­ny of Trinidad and To­ba­go to po­ten­tial changes in li­cens­ing con­di­tions rais­es con­cerns that na­tion­al in­vest­ments could be­come strand­ed or di­min­ished,” she stat­ed.

The for­mer en­er­gy min­is­ter al­so point­ed to in­creas­ing con­cen­tra­tion in gas sup­ply as a strate­gic con­cern.
“This risk is com­pound­ed by in­creas­ing con­cen­tra­tion in gas sup­ply, with grow­ing re­liance on a sin­gle op­er­a­tor such as Shell plc. While com­mer­cial­ly ef­fi­cient, such de­pen­dence presents strate­gic vul­ner­a­bil­i­ties in terms of sup­ply se­cu­ri­ty and ne­go­ti­at­ing lever­age,” she not­ed.

Look­ing ahead, geopo­lit­i­cal de­vel­op­ments could in­flu­ence en­er­gy prices, par­tic­u­lar­ly if ten­sions in key re­gions es­ca­late.

“Es­ca­lat­ing ten­sions in­volv­ing Iran and the po­ten­tial dis­rup­tion of the Strait of Hor­muz could dri­ve en­er­gy prices high­er. For T&T, high­er crude oil prices would im­prove for­eign ex­change earn­ings and fis­cal rev­enues,” Seep­er­sad-Bachan said.
How­ev­er, she cau­tioned that any up­side from high­er prices would come with trade-offs.
“This up­side is tem­pered by cor­re­spond­ing risks: in­creased fu­el sub­sidy costs and high­er for­eign ex­change out­flows for im­port­ed re­fined prod­ucts, par­tic­u­lar­ly giv­en the con­tin­ued clo­sure of the Petrotrin re­fin­ery,” she high­light­ed.

McGuire un­der­scored that price move­ments alone do not de­ter­mine eco­nom­ic out­comes, point­ing in­stead to the im­por­tance of pro­duc­tion lev­els.

“It is im­por­tant to em­pha­sise that in­creased prices alone do not nec­es­sar­i­ly trans­late in­to high­er rev­enues or for­eign ex­change earn­ings; these out­comes are ad­di­tion­al­ly in­flu­enced by pro­duc­tion and ex­port vol­umes. The ECPI ex­clu­sive­ly tracks pric­ing da­ta,” he ex­plained.

He al­so high­light­ed the broad­er role of the en­er­gy sec­tor in shap­ing na­tion­al eco­nom­ic in­di­ca­tors.
“En­er­gy com­mod­i­ty prices and out­put are the main fac­tors af­fect­ing key eco­nom­ic in­di­ca­tors like for­eign ex­change earn­ings, Gov­ern­ment rev­enue, fu­el and oth­er sub­si­dies, ex­pen­di­tures on ed­u­ca­tion, health, se­cu­ri­ty, hous­ing, util­i­ties and trans­porta­tion,” he said.
Over time, the struc­ture of the sec­tor has shift­ed, with nat­ur­al gas play­ing a more dom­i­nant role.
“His­tor­i­cal­ly, all eyes were fo­cused on the price of oil. How­ev­er, over the last twen­ty years, the econ­o­my has be­come a gas-based econ­o­my. Cur­rent­ly, al­though oil prices re­tain their sig­nif­i­cance, gas and gas-de­rived prod­ucts al­so play cru­cial roles in as­sess­ing broad­er eco­nom­ic trends,” McGuire con­clud­ed.
Seep­er­sad-Bachan summed up the chal­lenge fac­ing the coun­try’s en­er­gy in­dus­try.
“Ul­ti­mate­ly, even in a high­er price en­vi­ron­ment, T&T’s de­clin­ing pro­duc­tion ca­pac­i­ty lim­its its abil­i­ty to ben­e­fit ful­ly from glob­al mar­ket shifts. With­out ur­gent ac­tion to sta­bilise and ex­pand up­stream gas sup­ply, di­ver­si­fy pro­duc­tion sources, and safe­guard na­tion­al in­ter­ests, the coun­try risks re­main­ing a price-tak­er with­out the pro­duc­tion base to cap­i­talise on favourable con­di­tions,” she added.