Senior Reporter
geisha.kowlessar@guardian.co.tt
A potential billion-dollar surge in energy revenue could be on the horizon for Trinidad and Tobago, driven by escalating geopolitical tensions and a restructured Atlantic LNG pricing formula, Energy Minister Dr Roodal Moonilal has said.
Moonilal noted that the country is uniquely positioned to benefit from a spike in Asian LNG price markers. However, his optimistic fiscal outlook was quickly challenged by his predecessor, Stuart Young, who argued that no amount of global price increases could offset what he described as “destructive practices” destabilising the local petrochemical sector.
Speaking on the effects of the shifting geopolitical landscape in the Middle East, Moonilal told Guardian Media yesterday that escalating international conflicts could provide an “unintended” windfall for T&T’s energy coffers.
“Regrettably, these global conflicts do bring unintended consequences to our energy revenues. The ongoing conflict can result in an increase in commodity prices, especially given the importance of the Strait of Hormuz as a major energy corridor. Should there be a sustained interruption, coupled with impacts to production from Gulf countries, an increase in both oil and natural gas prices—especially the Asian markers—can be expected,” Moonilal said.
“In terms of the local energy sector, increases in oil prices will result in higher government revenue from exploration and production licences through taxes, and from production-sharing contracts via an increased profit share,” he explained.
Moonilal also pointed to the strategic restructuring of Atlantic LNG (ALNG) as a key factor in allowing T&T to capitalise on global price volatility.
Under the new terms for Trains 2 and 3, the LNG pricing formula now includes an oil-linked component and exposure to Asian LNG price markers.
“As a result of the restructuring of ALNG, the pricing for Trains 2 and 3 now includes an oil component in addition to exposure to an Asian LNG price marker. Both factors can result in higher LNG prices and, subsequently, increased revenue to the Government of Trinidad and Tobago,” the Energy Minister added.
However, Young challenged that optimistic narrative.
While acknowledging that the roughly 20 million barrels of crude oil and refined products passing daily through the Strait of Hormuz could trigger a temporary price surge that would benefit T&T, he argued that the domestic energy sector remains in a state of self-inflicted crisis.
“We are all waiting to see what global oil prices will open at. There is currently a lot of uncertainty, as about 20 million barrels of crude oil and refined products pass through the Strait of Hormuz daily. It is expected that prices will rise temporarily until there is greater certainty. Any rise in price will assist Trinidad and Tobago,” Young said.
He added that LNG supplies could also be affected, noting that Qatar is the world’s second-largest LNG exporter.
“So LNG prices are also likely to be temporarily affected, which could benefit us in terms of revenue. However, none of it assists our domestic consumers of natural gas, including NGC’s customers, who are still struggling with what I consider incompetent leadership and destructive practices that are making it difficult for petrochemical offtakers to remain viable,” Young said.
Young further argued that the closure of Nutrien cost the country hundreds of millions of dollars in lost revenue and said there has been no meaningful update on the sector’s recovery.
“So while there may be some temporary global price increases, the medium- and short-term sustainability of our energy sector remains uncertain,” he added.
