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Trinidad and Tobago placing new bets on petrochemicals
By Adam Raney
AP
PORT-OF-SPAIN
Petroleumworld.com 10 31 06
More than a century after digging its first oil well, Trinidad and Tobago has built one of the Caribbean's fastest-growing economies around petroleum-based exports.Riding the latest boom in world energy prices, the twin-island nation off Venezuela's coast — second only to its neighbor among energy producers in the Caribbean — is launching several petrochemical plants. The government says the initiative will help it weather downturns like the oil bust of the 1980s, when an economic crisis drove thousands to emigrate to North America and Britain.
But as more offshore gas and oil drilling platforms crowd Trinidad's coastline, some are calling for more attention to neglected sectors like agriculture.
The main opposition party says the new factories, which convert natural gas into chemicals like ammonia, will deepen the country's dependence on a finite supply of fossil fuels and its vulnerability to price swings.
Prime Minister Patrick Manning, a former geologist for Texaco, is not concerned.
"People have been saying we'll run out of oil and gas for nearly a century," he said in a recent speech. "But we always find more."
A multibillion-dollar development plan will add seven new petrochemical plants to the 25 already churning out chemicals for paint, plastics, fertilizer, and food additives. It also calls for an expanded natural gas plant to boost production in Trinidad, which has become the leading supplier of liquid natural gas to the United States.
Analysts say the plan does little to broaden the economic base. Energy accounts for 40 percent of the country's gross domestic product.
Struck oil in 1866
Trinidad struck oil in 1866 and began producing petrochemicals for export in 1959, three years before independence from Britain.Trinidad pumps out 150,000 barrels of oil and 3.7 billion cubic feet of natural gas a day, making it the top energy producer in the Caribbean, apart from Venezuela.
Investments in the energy sector have led 12 straight years of economic growth, including a 7 percent expansion last year, but manufacturing has remained stagnant at 10 percent of the work force. The state-owned sugar company closed three years ago, and early 20th-century cocoa estates have long been abandoned.
Trinidad now imports nearly all its food. Trinidadians angered by high food prices have mounted several protests in recent weeks.
"Enough already of smelters and petrochemicals," said Kamla Persad-Bissessar, leader of the United National Congress party. "We must develop our agricultural sector and manufacturing base, or we will suffer an economic crash and environmental damage."
Manning announced plans earlier this month to build 10 large farms, but analysts say they will do little to boost agriculture's 3 percent share of GDP in the country of 1.3 million.
The Energy Ministry says the country has proven reserves of 600 million barrels of oil and 18 trillion cubic feet of gas — a supply expected to last 20 years.
But many remember the oil bust of the 1980s, which followed decades of prosperity and left thousands without jobs as the Trinidadian economy contracted 35 percent.
The government has collected some of its oil and gas profits in a $1.3 billion emergency fund.
But more diversification will be necessary when fuel prices inevitably fall, said Esteban Perez, an economist with the United Nations.
AP 29 10 06
Copyright ©2006 AP. All Rights Reserved.
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