Last Thurs­day, BP an­nounced that it had agreed to ac­quire Wood­side En­er­gy’s 70 per cent in­ter­est in Block TTDAA 14. Once com­plet­ed, the trans­ac­tion will take BP’s own­er­ship of the Ca­lyp­so gas project to 100 per cent and give it op­er­a­tor­ship of one of Trinidad and To­ba­go’s largest un­de­vel­oped nat­ur­al gas re­sources. This is an ex­treme­ly pos­i­tive de­vel­op­ment.

Ca­lyp­so is es­ti­mat­ed to con­tain ap­prox­i­mate­ly 3.5 tril­lion cu­bic feet of gas. It was dis­cov­ered in 2018, but the project re­mains at an ear­ly stage of de­vel­op­ment and will take us in­to the 2030s be­fore there is any ac­tu­al de­liv­ered gas.

Late last week we were teased about an im­por­tant an­nounce­ment re­lat­ed to the en­er­gy sec­tor. That rev­e­la­tion may al­ready be known by the time this col­umn is pub­lished but re­gard­less I now take the op­por­tu­ni­ty to re­vis­it the Nat­ur­al Gas Mas­ter Plan giv­en that we are now at an end of the plan’s hori­zon.

The plan was com­mis­sioned from Poten & Part­ners (P&P) in No­vem­ber 2014 and de­liv­ered in 2015. It is la­beled as the Nat­ur­al Gas Mas­ter Plan 2014-2024. In 2026, it has passed its plan­ning hori­zon.

I sug­gest that P&P’s most im­por­tant in­sight was the dis­tinc­tion be­tween re­serves and de­liv­er­abil­i­ty. I have writ­ten about the dis­tinc­tion around stock and flow many times in this space over the years be­cause we are in many set­tings fooled by stock and blind­sided by flow.

Over the past decade we of­ten heard about the stock of for­eign ex­change re­serves and the stock (bal­ance) of the Her­itage and Sta­bil­i­sa­tion Fund and paid lit­tle at­ten­tion to the flow of those two funds to the ex­tent that we are now scratch­ing our heads and won­der­ing why our re­serves are so low and why the with­drawals from the fund has in­creased.

In a nat­ur­al gas con­text, re­serves are a stock and de­liv­er­abil­i­ty is a flow. A busi­ness can own valu­able as­sets and still be un­able to meet pay­roll; a gas econ­o­my can hold sub­stan­tial re­sources be­neath the seabed and still be un­able to pro­vide nat­ur­al gas feed­stock to a plant at Point Lisas.

At the time of the P&P re­port, Trinidad and To­ba­go was al­ready ex­pe­ri­enc­ing cur­tail­ments. Ma­ture fields were de­clin­ing, re­place­ment fields were be­com­ing small­er and more ex­pen­sive, main­te­nance re­duced sup­ply and con­trac­tu­al de­mand ex­ceed­ed what the gas pro­duc­ers could re­li­ably de­liv­er. The plan warned against treat­ing head­line re­serve num­bers as proof that the sys­tem could meet all of its oblig­a­tions.

It mod­elled pro­duc­tion of ap­prox­i­mate­ly 3.85 bil­lion cu­bic feet per day, or about 1.4 tril­lion cu­bic feet per year. Yet po­ten­tial down­stream re­quire­ments were clos­er to 4.3 bil­lion cu­bic feet per day. The point is that the plan ac­knowl­edged a deficit from the start and deficits meant al­lo­ca­tion and cur­tail­ment. LNG, am­mo­nia, methanol and elec­tric­i­ty could not each be promised what was orig­i­nal­ly avail­able or what they need­ed.

Re­al­i­ty

The mas­ter plan fol­lowed that di­ag­no­sis to its con­se­quences. It rec­om­mend­ed fis­cal and li­cens­ing changes to at­tract in­vest­ment in­to small­er and more dif­fi­cult fields; greater deep­wa­ter ac­tiv­i­ty; im­proved ac­cess to in­fra­struc­ture; stronger pro­duc­er de­liv­ery oblig­a­tions; and the pur­suit of re­gion­al gas, par­tic­u­lar­ly the then in­te­grat­ed Lo­ran Man­a­tee re­source.

It al­so ar­gued for dis­ci­plined eco­nom­ic al­lo­ca­tion of scarce gas among LNG, petro­chem­i­cals and pow­er. It ques­tioned whether NGC could act si­mul­ta­ne­ous­ly as na­tion­al ag­gre­ga­tor, in­fra­struc­ture op­er­a­tor, pol­i­cy in­stru­ment and com­mer­cial in­vestor with­out con­flict­ing in­cen­tives. It raised the need for more ef­fi­cient gas use in elec­tric­i­ty and, most point­ed­ly, chal­lenged whether Trinidad and To­ba­go was cap­tur­ing enough val­ue from LNG.

Twelve years lat­er, the plan’s prin­ci­pal quan­ti­ta­tive am­bi­tion was not achieved. Av­er­age nat­ur­al gas pro­duc­tion fell from 3.839 bil­lion cu­bic feet per day in 2015 to 2.541 bil­lion in 2025. The av­er­age for the first quar­ter of 2026 was ap­prox­i­mate­ly 2.426 bil­lion. Pro­duc­tion is rough­ly 37 per cent be­low the 2015 lev­el and on­ly 63 per cent of the bench­mark around which the plan was con­struct­ed.

This is one of the ironies of the cur­rent dis­course. A for­mer Prime Min­is­ter and Min­is­ter of En­er­gy is quick to po­si­tion the op­er­a­tional shut downs of plants in Point Lisas as a dis­as­ter for the econ­o­my but he would be bet­ter served ex­plain­ing his stew­ard­ship of the sec­tor to ex­plain why the plus 30 per cent de­cline in pro­duc­tion hap­pened un­der his Ad­min­is­tra­tion’s watch. Ap­pre­ci­ate that re­serves and de­liv­er­abil­i­ty are not the same thing. The sev­en year gap from 2015 to 2022 when ze­ro ex­plo­ration blocks were award­ed is ma­te­r­i­al es­pe­cial­ly when you con­sid­er the Ca­lyp­so time­line.

The con­se­quences are vis­i­ble across the val­ue chain. At­lantic’s Train 1 was moth­balled in 2020 be­cause there was in­suf­fi­cient feedgas. LNG de­liv­er­ies re­main well be­low 2015 lev­els. Am­mo­nia and methanol out­put have fall­en, plants have been idled or op­er­at­ed be­low ca­pac­i­ty and the con­test among LNG, Point Lisas and elec­tric­i­ty now takes place over a much small­er pool of gas.

This would be easy to de­scribe as the coun­try run­ning out of gas. The ev­i­dence is more com­pli­cat­ed. On the new­er P1+C1 mea­sure, in­de­pen­dent­ly au­dit­ed tech­ni­cal­ly re­cov­er­able quan­ti­ties stood at ap­prox­i­mate­ly 10.6 tril­lion cu­bic feet in 2015 and rose to 11.5 tril­lion in 2022. The Min­istry of Fi­nance sub­se­quent­ly re­port­ed ap­prox­i­mate­ly 11.1 tril­lion cu­bic feet at the end of 2023.

The point is that the re­source base did not col­lapse in the same way as pro­duc­tion. We added gas on pa­per while los­ing the flow of gas through the pipeline. The bind­ing prob­lem be­came the speed and eco­nom­ics with which re­sources could be con­vert­ed in­to re­li­able pro­duc­tion. Poten’s dis­tinc­tion be­tween ge­ol­o­gy and de­liv­er­abil­i­ty aged ex­cep­tion­al­ly well.

Ca­lyp­so is ev­i­dence of that fore­sight. The plan said deep­wa­ter re­sources would be­come nec­es­sary. Ex­plo­ration ex­pand­ed, dis­cov­er­ies were made and bp is now con­sol­i­dat­ing con­trol of a 3.5 tril­lion cu­bic foot op­por­tu­ni­ty. But Ca­lyp­so did not pro­vide the pro­duc­tion res­cue con­tem­plat­ed with­in the plan’s pe­ri­od. It re­mains prospec­tive sup­ply af­ter the plan­ning hori­zon has ex­pired.

Man­a­tee tells a sim­i­lar sto­ry. The for­mer cross-bor­der Lo­ran Man­a­tee ac­cu­mu­la­tion even­tu­al­ly moved for­ward by sep­a­rat­ing the T&T share from Venezuela. Shell took a fi­nal in­vest­ment de­ci­sion in 2024, with first gas ex­pect­ed around the mid­dle of 2027 and peak pro­duc­tion tar­get­ed at ap­prox­i­mate­ly 604 mil­lion cu­bic feet per day. Strate­gi­cal­ly im­por­tant, yes but again thir­teen years out­side the start of the plan­ning hori­zon.

The wider cros- bor­der strat­e­gy has fared worse. Venezue­lan gas re­mains at­trac­tive be­cause it could use ex­ist­ing in­fra­struc­ture in T&T, but sanc­tions, pol­i­tics and com­mer­cial com­plex­i­ty re­peat­ed­ly ad­vanced and de­layed the Drag­on project. This fi­nal­ly is back on track. Those op­posed to a clos­er work­ing re­la­tion­ship with the US should al­so in­di­cate if they are will­ing to forego this gas sup­ply be­cause that is the pri­ma­ry rea­son the gas might be avail­able now com­pared to what ob­tained pre­vi­ous­ly.

Up­dat­ing

Cred­it is due to the for­mer ad­min­is­tra­tion and min­is­ter of en­er­gy for the fol­low­ing. The 2015 plan ar­gued that T&T was not re­ceiv­ing suf­fi­cient val­ue from parts of the LNG chain. Sub­se­quent ne­go­ti­a­tions led to the re­struc­tur­ing of At­lantic LNG as a uni­tised fa­cil­i­ty in 2023, broad­er State par­tic­i­pa­tion across the four trains and more mar­ket re­lat­ed pric­ing. This could well be the rea­son for NGC’s re­port­ed­ly record per­for­mance.

The in­tro­duc­tion of a 12.5 per cent nat­ur­al gas roy­al­ty al­so im­proved State cap­tur,e but it might al­so have de­layed gas de­liv­er­abil­i­ty be­cause it changed the eco­nom­ics of pro­duc­tion. There are al­ways trade­offs.

A coun­try can earn more from a bet­ter con­tract while pro­cess­ing few­er mol­e­cules. But im­proved val­ue per unit does not erase the phys­i­cal short­age. The decade pro­duced a para­dox of low­er pro­duc­tion, low­er plant util­i­sa­tion, and even­tu­al­ly cer­tain bet­ter eco­nom­ics in se­lect­ed arrange­ments. Even then it can be ar­gued that we didn’t go far enough giv­en the well es­tab­lished leak­age through trans­fer pric­ing. This is­sue is still not get­ting the at­ten­tion it de­serves. Fur­ther de­spite the crit­ics, in­creased prices to the down­stream was the nat­ur­al next step.

Oth­er rec­om­men­da­tions re­main in­com­plete. Elec­tric­i­ty pric­ing and ef­fi­cien­cy re­forms were not ful­ly im­ple­ment­ed and the much her­ald­ed so­lar park now seems to no longer be con­tribut­ing to the grid. Gas al­lo­ca­tion be­came tighter by ne­ces­si­ty, and we need to reeval­u­ate the rank­ing of com­pet­ing us­es by their to­tal val­ue to the coun­try.

The 2014 Gas Mas­ter Plan cor­rect­ly an­tic­i­pat­ed the pri­ma­cy of de­liv­er­abil­i­ty, the need for deep­wa­ter and re­gion­al re­sources, the weak­ness of some LNG arrange­ments, the dif­fi­cul­ty of al­lo­cat­ing scarce gas and the in­sti­tu­tion­al ten­sions around NGC.

To­day the pro­duc­tion base­line on which this once rest­ed has dis­ap­peared. Its for­mal 2014-2024 hori­zon has end­ed. The com­mer­cial and geopo­lit­i­cal en­vi­ron­ment around nat­ur­al gas has changed. Gov­ern­ment an­nounced work in 2021 on a 2030 plan. It was not de­liv­ered be­fore 2025.

Ca­lyp­so cap­tures the po­si­tion neat­ly. It may yet be­come one of the coun­try’s most im­por­tant gas de­vel­op­ments, but it was an­tic­i­pat­ed by a plan that has since ex­pired.

Ian Nar­ine is a fi­nan­cial con­sul­tant who tries to mas­ter his plans. Please send your com­ments to ian@ian­nar­ine.com