Mar­i­ano Browne

Any in­vest­ment re­quires analy­sis be­fore com­mit­ting. En­er­gy projects are cap­i­tal-in­ten­sive, mean­ing they are large-scale un­der­tak­ings that re­quire sub­stan­tial up­front in­vest­ment to ac­quire phys­i­cal as­sets and heavy ma­chin­ery, or to build in­fra­struc­ture, be­fore they can start op­er­at­ing or gen­er­at­ing rev­enue—the more com­plex the project, the deep­er the analy­sis, the longer the time­line to com­ple­tion.

While no one can pre­dict the fu­ture, it is bet­ter to iden­ti­fy and mit­i­gate the risks be­fore in­vest­ing. These in­clude tech­ni­cal analy­ses, such as seis­mic stud­ies to de­ter­mine the reser­voir’s size, and ex­plo­ration to cor­rob­o­rate the stud­ies. Then, con­duct a com­mer­cial and eco­nom­ic analy­sis to de­ter­mine fi­nan­cial vi­a­bil­i­ty. All de­ci­sions must al­so ex­plic­it­ly con­sid­er the mar­ket. Is the world econ­o­my on a growth path or head­ing for a re­ces­sion? Will in­ter­na­tion­al en­er­gy mar­ket prices be sta­ble? What is the cost of ex­trac­tion rel­a­tive to mar­ket prices?

Then there is the es­ti­ma­tion of oth­er non-fi­nan­cial risks that can af­fect the project’s out­come. Con­tracts must be ne­go­ti­at­ed with gov­ern­ments first to se­cure the ac­cess rights on suit­able terms and con­di­tions be­fore any fi­nal in­vest­ment de­ci­sion is made. The bot­tom line is that there will be no fi­nal in­vest­ment de­ci­sion un­less there is the strong pos­si­bil­i­ty of a healthy fi­nan­cial re­sult. The re­sult is that the time­line be­tween dis­cov­ery and com­mer­cial­i­sa­tion of an en­er­gy project can take an ex­tend­ed pe­ri­od.

For ex­am­ple, Kevin Ram­nar­ine, for­mer Min­is­ter of En­er­gy, gave a his­tor­i­cal time­line of the cross-bor­der Cocuina-Man­akin reser­voir on his LinkedIn page. A cross-bor­der reser­voir is a hy­dro­car­bon de­posit which strad­dles the bound­ary be­tween two coun­tries, in this case Venezuela and T&T. The Cocuina was first dis­cov­ered by Venezuela’s na­tion­al oil com­pa­ny, PDVSA, in 1983, and the Man­akin por­tion in T&T wa­ters was dis­cov­ered by BP sev­en years lat­er, in 1990.

The field com­pris­es sev­er­al blocks. Venezuela award­ed Sta­toil a block on its side of the bor­der in 2003, a full 20 years af­ter its dis­cov­ery. The first ap­praisal well was drilled in 2006. Since the field/reser­voir cross­es na­tion­al bound­aries, it re­quires agree­ment be­tween the par­ties to en­sure that nei­ther par­ty drains the reser­voir faster than the oth­er, there­by en­sur­ing ef­fi­cient pro­duc­tion and fair rev­enue shar­ing. A Frame­work Agree­ment be­tween Venezuela and T&T on the Uni­ti­za­tion of the field was de­vel­oped in 2007 but was not signed un­til 2015.

Be­tween 2015 and 2024, blocs on both sides of the bor­der changed hands. In 2024, the Venezue­lan Gov­ern­ment award­ed a 20-year li­cence to BP and NGC for Cocuina. This year, NGC ac­quired a 20 per cent stake in Man­akin. If all goes well, first gas is ex­pect­ed in 2029, pre­sum­ing that a fi­nal in­vest­ment de­ci­sion is made soon—29 years would have elapsed be­tween dis­cov­ery and pro­duc­tion.

The Man­a­tee project had a sim­i­lar ges­ta­tion pe­ri­od, from dis­cov­ery in 1983 to the fi­nal in­vest­ment de­ci­sion in 1924 (41 years), with first gas ex­pect­ed in the sec­ond or third quar­ter of 2027 (44 years). Man­a­tee’s pro­duc­tion will not solve T&T’s gas sup­ply cri­sis. Av­er­age dai­ly gas pro­duc­tion for 2026 is es­ti­mat­ed at 2.5 bil­lion cu­bic feet per day (bcfd). It will take time for Man­a­tee to reach full pro­duc­tion of 600 mil­lion cu­bic feet per day. In the mean­time, oth­er fields will de­cline. To stay in the same place or im­prove nat­ur­al gas pro­duc­tion re­quires con­tin­u­ous ex­plo­ration to find new fields.

This is why de­vel­op­ments on Venezuela’s Lo­ran side of the field have at­tract­ed con­sid­er­able at­ten­tion and spec­u­la­tion about their im­pact on T&T. Venezuela has an­nounced a mul­ti­phase li­cens­ing deal with en­er­gy ma­jors. Phase 1 is as­signed to Shell plc, while Phase Two li­cences have been grant­ed to a con­sor­tium com­pris­ing bp plc, the UAE’s XRG, and Qatar’s UCC Hold­ing.

XRD is an in­ter­na­tion­al low­er-car­bon en­er­gy, nat­ur­al gas, and chem­i­cals in­vest­ment com­pa­ny launched by the Abu Dhabi Na­tion­al Oil Com­pa­ny (AD­NOC). UCC Hold­ing is a sub­sidiary of Qatar’s Pow­er In­ter­na­tion­al Hold­ing (PIH), an in­vest­ment com­pa­ny that op­er­ates across the en­er­gy, min­ing, con­ces­sions, and con­struc­tion sec­tors.

Shell has in­di­cat­ed that it in­tends to con­nect Lo­ran gas re­sources, in par­al­lel with its de­vel­op­ment of the ad­ja­cent Man­a­tee field, to ex­ist­ing in­fra­struc­ture in T&T. This would de­liv­er ma­jor new vol­umes of nat­ur­al gas di­rect­ly to Trinidad’s pro­cess­ing in­fra­struc­ture, sup­ple­ment­ing do­mes­tic fields that have ex­pe­ri­enced short­falls. This is ex­ceed­ing­ly use­ful to Shell and BP, the ma­jor­i­ty own­ers of At­lantic LNG (AL­NG). T&T will re­ceive the full ben­e­fit of the Man­a­tee field, in­clud­ing roy­al­ties, pro­duc­tion-shar­ing rights, and a share of AL­NG’s prof­its.

It is not clear that the same holds for the gas flow­ing from Lo­ran. The terms and con­di­tions are not yet known.

Ac­cord­ing to Act­ing Pres­i­dent Ro­driguez, Venezuela’s in­tent for Phas­es One and Two of the off­shore Lo­ran nat­ur­al gas field is to ag­gres­sive­ly de­vel­op and mon­e­tise its mas­sive re­serves to el­e­vate Venezuela’s sta­tus as a ma­jor glob­al gas ex­porter. This in­cludes sup­ply­ing Trinidad and To­ba­go’s es­tab­lished in­fra­struc­ture while feed­ing do­mes­tic Venezue­lan petro­chem­i­cal and in­dus­tri­al needs.

Venezuela’s Lo­ran an­nounce­ments are pos­i­tive de­vel­op­ments. How­ev­er, the dev­il is in the de­tails. How will Venezuela be re­ward­ed for its gas? Is AL­NG buy­ing Venezuela’s Lo­ran gas as an in­put, or is the gas to be processed and ex­port­ed through AL­NG on a tolling ba­sis? Will AL­NG be paid a pro­cess­ing fee with the ex­port pro­ceeds go­ing to Venezuela? BP’s part­ner­ship with XRD and UCC on Phase Two sug­gests a more com­pli­cat­ed arrange­ment. What are the mon­e­tary ben­e­fits that will ac­crue to T&T from the Lo­ran Phase One and Two?

Mar­i­ano Browne is the CEO of the UWI Arthur Lok Jack Glob­al School of Busi­ness