Energy Minister: Oil and gas sector can be saved

All is not lost for the oil and gas industry in TT, even as the world battles the covid19 pandemic, which has drastically affected global prices.

So said panellists at the virtual launch of the TT Energy Conference 2021 on Tuesday morning.

Feature speaker Minister of Energy and Energy Industries Franklin Khan said efforts were under way to revive and boost recovery in the sector, but the government’s hands remained tied when it came to global prices.

He said while strides were being made to address the challenges in the downstream industry, which contributed significantly to development, it operates in a highly elastic environment.

“The prices are allocated primarily by demand. Prior to 2014, prices for ammonia and methanol were at an all-time high. Since then, prices have fallen. In December 2020 the US methanol FOB price stood at US$385 per metric tonne. The government has no control over the global demand for commodities such as methanol and ammonia. We are at the mercy.”

In 2019 Yara, producers of ammonia, announced the closure of one of its three ammonia plants run by Yara Trinidad Ltd.

The remaining two plants, Tringen I and Tringen II, are jointly owned by Yara International ASA and National Enterprises Ltd (NEL).

Khan added that the issue with the petrochemical sector was not solely based on the implications of the pandemic but was worsened by the reduction in demand because of the global lockdown.

“It is only reasonable to expect companies to do what is in their best interest and reorganise their portfolios, cut costs and operate mpre efficiently and support global prices for the commodities that they produce.

“In this new environment, some of these old, inefficient plants cannot survive. This is the reality of operating mature plants in a low-priced enviornment.”

He said the future of the industry needed proper succession planning, and an evaluation and a gas strategy scheme will be done to develop a 2030 natural gas plan.

Khan said with this in mind, the several projects that were delayed because of the disruption of global supply chains and strict covid19 protocols were about to recommence.

“The delayed projects are due to come on stream in the latter part of 2021. The key projects include production from Touchstone’s Ortoire block, namely Coho and Cascadura wells in quarter three of 2021; BHP’s Ruby and Delaware projects in quarter four of 2021; Shell’s Baracuda and Colibri in quarter four of 2021 and into 2022 – adding a combined total of approximately 450 million standard cubic feet per day; EOG’s Osprey East in 2022; and bpTT’s Cassia C and Matapal projects in 2022 will add incremental production increases.

“Further afield, we are working with Shell to mobilise production from the Manatee field, which was successfully delinked from Loran on the Venezuelan side, as early as 2025.”

Khan added that renewable energy is a critical area being looked at for future projects and the strategies will be unique based on available resources.

Is there a future for Point Lisas?

The survival of the Point Lisas Industrial Estate has also been a key topic of discussion since before the conference.

The panellists agreed that there is life in the estate, but it needed to be revamped to ensure it is maximised properly, as covid19 has shown that dimension changes and diversification are needed in the energy sector, something which was long in the making.

This was the view expressed by the panel, which included BpTT regional president Claire Fitzpatrick; National Gas Company (NGC) president Mark Loquan; BHP president Vincent Pereira; Methanol Holdings (Trinidad) Ltd, Caribbean Nitrogen Company Ltd and N2000 managing director Jerome Dookie; Energy Chamber chairman Dwight Mahabir; and chairman and president/CEO of the Energy Chamber Dr Thackwray Driver.

The estate and the energy value chain, they said, were built on collaboration among the State and multi-national investors both upstream and downstream, and this needed to be refined.

Mahabir noted that it has been a cornerstone of the country’s economy for many years and an employer of many people.

“The estate is an extremely important market for Trinidad and Tobago's upstream gas producers and is integral to the economic success of TT. Plants on the estate have faced a challenging time in recent years.

“The current work to develop a new medium-term strategy with the gas industry, being undertaken by the Energy Ministry, with consulting support by Gas Strategies in the UK, is extremely important for the entire country. The scope of this strategic review needs to ensure that the industry can survive the short term, and that all of the necessary changes are addressed to create long-term sustainability.”

Loquan said before the pandemic, shifts to shale gas in the US and climate change among other things, had moved markets further away from TT. Focus is now on sustainability.

The group noted that regional opportunities, collaboration and reform to the Caribbean Single Market (CSME) were crucial for the energy sector’s survival in the region.

The TT Energy Conference (TTEC 2021) will take place virtually from June 7-9.