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Trinidad's Finance Minister : Number one priority is to increase national oil production

PORT SPAIN, Oct 03, 2011

With the Minister of Finance Winston Dookeran close to presenting his 2011/2012 budget statement comes word of plummeting oil production from the country's largest energy sector company, bpTT, which last month alone resulted in a $70 million shortfall in revenue to the Government. BPTT's oil production—which is really condensate production generated from its “wet gas”—has fallen off sharply on account of declining production. The Business Guardian has been told that the company has not been able to assure it can increase any time soon.

It has meant that the projected 20,000 barrels of oil the Government expected bpTT would average for the entire year have significantly fallen short. In fact, figures show that the company's crude production for the year has fallen short by 2800 bo/d. Put another way, it has produced a million barrels of oil less than was budgeted at a loss to the country estimated at well over quarter-billion dollars. The decline in condensate production is directly due to a reduction in bpTT's overall natural gas production which has again hurt government's revenues with the Minister of Finance having to settle for lower revenues upstream from gas production and lower earnings from the petrochemical sector because they do not have the gas to make as much methanol and ammonia as they would like. This at a time when prices for both commodities are high.

BPTT's crude production last month averaged a mere 12,023 bo/d down from a high of 21,114 last year October. The fall off as well as the loss of three months production has meant that the Government's goal of being able to stop the decline of crude production has not worked and for the last fiscal year averaged a paltry 92,649 bo/d. It has also meant that the Minister of Finance has lost out on significant revenues when commodity prices are high. Well-placed sources say the company are worried that bpTT has not been able to say when they may be able to increase production. At his first speech on the energy sector, Energy Minister Kevin Ramnarine made it clear that there was a need to increase crude production.

Speaking at the Energy Chamber luncheon, he said; “I want to make it unequivocally clear that my number one priority is to increase national oil production. In case you didn't hear it, I repeat: my number one priority is to increase national oil production. National oil production currently stands at about 95,000 barrels of oil per day. The last time we dipped below 100,000 bopd was 54 years ago. That was during colonial times. This rate of production is unacceptable. Everyone in this room knows that we can do better than that. Oil production is below 100,000 bo/d, not for a lack of oil but for a lack of investment, a lack of planning and strategic missteps over the years.”

He went on to explain that assuming an oil price of US$90 a barrel, an increase of 10,000 barrels of oil a day in national oil production would translate to US$1.4 billion in revenue collected by the State. Minister Ramnarine argued that oil is intrinsically more valuable than natural gas.“Oil is fungible and is therefore easier to commercialise. This is not the case with natural gas in T&T where, in the absence of pipelines to other countries, the raw material must be converted to LNG, ammonia or methanol before it is commercialised.” The minister noted that over the course of last decade in T&T moved sharply towards natural gas which resulted in our transition to what is described as a “gas economy.”

“The effect is that we produce seven times more natural gas than oil on an equivalency basis. The time has come to adjust this balance and tilt the energy sector back towards oil. This does not mean that we will ignore natural gas and that less attention will be paid to the development of natural gas projects and the expansion of the downstream sector, but that we would also keenly focus on optimising and increasing oil production.”

Story by Energy Reporter from Business Guardian

Trinidad Guardian / Thu Sep 29, 2011


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