Leading energy expert Anthony “Tony” Paul is calling on T&T to fix its governance framework for the sector, by updating the laws and regulations and making the Ministry of Energy and Energy Industries more transparent and accountable.
Unfortunately, those who are responsible for making the changes are the same ones comfortable with the status quo in which they can do whatever they want without consequence, Paul told the Sunday Business Guardian.
Paul is the principal consultant at the Association of Caribbean Energy Specialists (ACES) Ltd, a leading Caribbean oil, natural gas and power advisory firm, based in T&T.
Tomorrow, the T&T Energy Chamber will host its signature event, the T&T Energy Conference titled, “Navigating a complex energy future.”
Among the attendees will be the President of Guyana Dr Mohamed Irfaan Ali.
According to Paul, who has worked in East, West and Southern Africa, the Middle East, Central and Southeast Asia, Latin America and the Caribbean, T&T’s energy sector is very poorly governed, with the mechanisms used for decision-making and acting fundamentally flawed in many ways, and have been so for more than a decade now.
Saying there seems to be no desire, far less intention to fix them, Paul identified the root cause of the industry’s decline in that period as the collapse of its governance system.
Both elements of the system (legislative and administrative) are outdated and lacking in basic requirements, he said.
For instance, Paul said the Petroleum Act of 1969 and the Regulations of 1971 have never been updated, only having minimal amendments, and failing to close gaps, such as the glaring absence of Regulations for the Natural Gas segment.
Even so, he added, some key parts of the law and regulations are not being implemented or adhered to by the industry, leaving T&T in a perilous state, unbeknownst to most of the population.
“For instance, even though the law requires all operators in the sector and their contractors or agents to be licensed, not a single operator in Pt Lisas nor any of the contractors or agents are licensed, resulting in the ministry being unable to regulate them (due to the nature of the legislation) or properly determine their tax liability,” Paul said.
He also noted that one other consequence of these failings is that senior executives in the State sector and Government spend many days and weeks negotiating terms that are routinely part of the regulatory framework in natural gas production, distribution and sales around the world.
“Regulations provide for a transparent, consistent and predictable operating environment, which investors always ask for, while negotiations are always won by those with more and better resources,” Paul further explained.
Another challenge he said was the Ministry, as regulator, is operating with systems that were designed in the 1960’s and early 70’s and inadequate for the modern world, managed with “many square pegs in round holes, with no accountability to the population.”
“It used to be said that Trinidad was a graveyard for geologists. The Ministry of Energy is now a graveyard for young, bright talent,” Paul noted adding, “There is no succession planning and little or no evidence of transfer of knowledge or responsibility to a younger generation.”
Further, he said at both the technical and political levels transparency and accountability are almost “non-existent” and ministers have tended to depend on advice more from their friends in the multinational companies than their own technocrats, sometimes by-passing the checks and balances built into the legislative framework.
According to Paul the impediments around declining reserves, production, value-addition, revenue and confidence are not a function of what’s under the ground and/or economically recoverable or even the fiscal regime that is in place to incentivise increasing each of these.
“No matter how good these might be, we won’t get the benefits due to us if we continue to manage the resources like novices or lack self-confidence or the will to determine our own destiny,” Paul explained.
He said across the spectra of the value and decision chains—from attracting investors, through negotiating and contracting them, overseeing their operations and maximising and securing the benefits available to T&T, “we are making rookie mistakes and hiding them behind a false curtain of confidentiality.”
Paul reiterated that while this country has a rich history of fantastic performance, “those in charge seem disconnected from the lessons those experiences should be teaching us.”
Capitalising deepwater and shallow water
According to Paul success in exploration has always been driven by collecting, processing, analysing and interpreting as much data as possible, using the best technology, process and people available.
He said most of that data is currently in the hands of three companies who have held on to it for over 50 years, in some cases.
This, Paul explained, means that new investors (and the country) are going about their business with one hand tied behind their backs.
However, the former hydrocarbons senior adviser, at the National Directorate of Hydrocarbons and Fuels (DNHC)/Ministry of Mineral Resources and Energy (MIREME), Mozambique said this does not have to be the case as the Ministry has legal and contractual mechanisms, applied as the norm in other jurisdictions, to make data accessible to those who want to analyse T&T for new investment in exploration and production (potential licence bidder, for example) and licensees in areas adjacent to those where valuable information is available, but not accessible.
This situation, impacts both shallow and deep-water areas, Paul who was also a member, of the Advisory Panel on Local Content to the Government of Guyana said.
In addition, he added this country’s Energy Ministry has on several occasions from the 1990s to recently when licences were renewed, allowed companies to hold on to valuable exploration and production acreage that they are either unable or unwilling to explore or develop, while they are attractive for other investors.
“New investors are unable to economically monetise any natural gas they may find by using existing infrastructure, such as LNG plants and pipelines,” Paul explained.
Such access he said, will make the many small fields that lie fallow off the east and south coasts to be developed and monetised, adding that open access to excess capacity is a basic feature of Natural Gas Regulations around the world.
“There are provisions in the T&T Petroleum Act that can be triggered to institute this, but the political will seems to be absent,” Paul added.
Energy expert Dr Krishna Persad also added that Government needs to move more swiftly to implement Enhanced Oil Recovery (EOR) particularly Carbon Capture and Carbon Dioxide (Co2) EOR and sequestration.
“They are putting legislation in place but that will take months. The pace is too slow. They need to bring it (legislation) forward and push it through in two weeks,” Persad advised.
On February 18, 2021, the Cabinet agreed to establish a Co2 Enhanced Oil Recovery Steering Committee.
The mandate is to manage the implementation of a large-scale CO2 EOR project to increase T&T’s oil revenue and to address the reduction of carbon dioxide emissions, carbon capture and carbon sequestration.
This country ratified the Paris Change Climate Agreement in February 2018, which signalled the country’s commitment to reduce its greenhouse gas emissions.
Carbon capture, utilisation and sequestration are seen as integral to a net zero future by international agencies such as the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC), while being cost-effective and commercial.
Additionally, Persad said Government needs to ensure old field installations and wells are not abandoned or neglected but kept in good condition for future EOR.
Further, he said Heritage needs to get expert advice to access its resource potential.
“They need to bring in people who are equipped and who have deep pockets to do so because Heritage will not have the money,” Persad added.
Using funds going forward to diversify into green investments and switching to 100 per cent renewables as soon as possible are other factors which ought to be put in place.
Further, Persad suggested that the Heritage Fund needs to be built up as much as possible with a minimum of 10 per cent of gross revenues put into it every year.
“We need to make sure we are putting money into it and we need to treat it like a pension. We cannot say if we get oil then we will forecast,” Persad emphasised.
The Sunday Business Guardian also reached out to bpTT on its thoughts about this country’s energy industry.
Collaboration, it said is essential to develop the industry as the company noted that within the past few months it has seen the value of Government and industry working together.
“And we need to continue along that path,” bpTT added.
With 15 offshore production platforms, it is the country’s largest hydrocarbon producer, accounting for about 55 per cent of the nation’s gas production, according to its website.
“We’ve had quite a busy 2022,” bpTT said adding, “We continued to deliver many critical gas projects and activities and reached agreements on very important commercial matters that now pave the way for continued investments.
“We see our purpose as partnering with Government and other stakeholders to unlock T&T’s energy future,” bpTT said.