By
South Trinidad Chamber of Industry and Commerce (STCIC)
The Trinidad Guardian
Port
Spain
Petroleumworld.com
03 05 06
Energy
sector relations between T&T and Venezuela have been much
in the news over the past couple of weeks. The address of former
Finance Minister, Wendell Mottley, to the TTPC 2006, the Caricom
heads of Government meeting in Port-of-Spain and the visit by
David O’Reilly, chief executive of Chevron, have all brought
the relationship between T&T and Venezuela into sharp focus.
There are two separate but seemingly overlapping aspects to
this relationship: firstly, the PetroCaribe agreement and, secondly,
the issue of cross-border unitisation of gas reserves.
PetroCaribe
has been the source of much debate and comment since it was
signed by Caricom members in June 2005, with the notable exceptions
of T&T and Barbados. The agreement was seen as a lifeline
for Caribbean countries whose economies had been negatively
impacted by high oil prices in the last two years. The fact
that most energy analysts believe that these high prices will
be around for at least the rest of the decade has meant that
oil importing Caribbean economies have serious concerns about
the impact of high prices on their foreign currency reserves
and balance of payments.
In
2004, T&T had proposed its own oil facility which provided
a rebate on purchases of oil. Monies from this rebate would
be put into a fund to be used for developing regional economies
and building capacity. However, the PetroCaribe agreement offering
cheap financing seemed to most Caribbean countries to be the
immediate answer to their energy-related financial problems.
PetroCaribe
is in essence a loan facility and not oil at a discounted price
or cheap oil. The repayment of this loan is at very soft terms
and offers a degree of flexibility. However, a debt is still
a debt and future fiscal management is one of the reasons cited
by the Barbados for not signing the agreement.
T&T’s
reservations about the PetroCaribe agreement are fairly obvious,
namely that it has the potential to undermine traditional markets
for Petrotrin and Phoenix Park Gas Processors Ltd. In his address
at the TTPC, Mottley noted that in December 2005, Pdvsa (the
Venezuelan state oil company) delivered 7,200 10kg LPG bottles
to St Vincent as part of the PetroCaribe agreement. He further
noted that there are obvious consequences here for Phoenix Park
Gas Processors Ltd which traditionally supplies natural gas
liquids to the Caricom region.
Petrotrin’s
refinery supplies petroleum products, fuel oil, diesel and gasoline
to the Caribbean islands. Approximately 56 per cent of product
sales from Petrotrin’s Pointe-a-Pierre refinery are in
the Caribbean market.
T&T’s
reservations about PetroCaribe have evidently led to tensions
between this country and our Caricom partners and with Venezuela.
The tensions within Caricom on this issue appear to be easing.
The communiqué coming out of the recent Heads of Government
meeting stated that the meeting had “full discussions
with regard to the PetroCaribe Agreement” and went on
to state that Head of Government “welcomed the willingness
of T&T to facilitate the PetroCaribe Agreement.”
The
details of how T&T would facilitate the agreement were,
however, not provided except that it would support the application
for a suspension of the common external tariff in that regard.
Presumably the details of this facilitation of the PetroCaribe
agreement will be provided by the Task Force on Regional Energy
Policy, which the Heads of Government agreed should meet as
a matter of urgency.
The
task force is also to look at other energy initiatives: these
would presumably include the proposed Eastern Caribbean Gas
Pipeline; the proposed Tobago/Grenada electricity cable and
the Jamaican LNG project. All three projects are yet to be realised
and are some way off.
On
February 13, it was reported in Upstream magazine that the Jamaican
LNG project has been delayed by a further two years. Construction
of the facility was initially scheduled to start this year and
be completed in 2008. However, there is a clear need for more
than a few projects to address the overall issue of energy in
the Caribbean. Caricom must significantly advance the discussions
concerning overall regional energy policy, frequently mentioned
but with few detailed proposals ever being put forward. Central
to this policy must be renewable energy, energy efficiency and
energy conservation.
At
the TTPC, chief secretary of the THA Orville London outlined
the THA plans to use natural gas for the development of Tobago.
This plan envisions widespread use of CNG powered vehicles to
as much as 60 per cent of all the vehicles on the island. This
is a laudable objective and one which should certainly be considered
by other countries in the eastern Caribbean if they were able
to access T&T natural gas.
The
other issue concerning T&T and Venezuela is the unitisation
of cross-border reserves that straddle the T&T/ Venezuela
maritime border. The importance of this issue assumes even greater
significance when one considers that T&T has approximately
15 years of proven natural gas reserves remaining (based on
reserves and production figures for 2005).
Last
year, Chevron reported a natural gas find in T&T’s
block 6d which straddles the Venezuela maritime border. The
Chevron find consist of six to eight tcf of gas of which one
tcf lies on the T&T side of the border. Assuming that all
this gas were to be monetised in T&T it would provide a
tremendous boost to our natural gas sector as well as providing
financial the Venezuelans.
The
Venezuelans also seems committed to their own LNG ambitions
which should see the first LNG train in that country by 2010.
In a September, 2005 article in Upstream magazine it was reported
the gas for the Venezuelan LNG project would come from the Plataforma
Deltana area. This being the case, there is a need for T&T
to pursue talks on the unitisation of reserves with haste.
However,
as Mottley noted, talks on the unitisation of cross-border reserves
seemed to have stalled for now. The unitisation steering committee
has not met since April 2005, with speculation that this delay
has been linked to T&T’s reservations about PetroCaribe.
Possibly the easing of tensions with Caricom could now allow
the cross border unitisation talks to resume. This will obviously
be welcomed by all sides and the STCIC hopes that further progress
can now be made in both these spheres of T&T/Venezuela relations.
