Energy Chamber urges government: Take advantage of increased energy prices

THE Trinidad and Tobago Energy Chamber is urging the government to make every effort to take advantage of the market, in light of the recent increase in energy prices.

Its CEO Dr Thackwray Driver told Newsday the government needed to get more investments into the gas sector, in which there were a lot of potential projects.

“There is the bp Matapal project, which just came on stream, Shell has some projects and there are some big potential projects in the deep water for gas as well.

“It's now about getting the right investments for this to happen and then investing in decarbonising the production of that natural gas as far as possible, to reduce the carbon footprint,” Driver said.

On Tuesday, Brent crude oil and West Texas Intermediate (WTI) crude oil were US$79.53 and US$75.45 per barrel respectively. Natural gas was selling at US$5.71 per mmbtu.

Driver said, “It is a good opportunity for us to bring in as much investment in the oil and gas sectors in TT. In the case of the oil sector, it would be great to produce as much oil as we can as fast as we can in order to take advantage of the market, because it will not last forever.

“It would be a risk if we don’t produce fast enough because then it can become stranded and left in the ground, as has happened in other countries...The focus for the country is increasing the investments in producing oil and bringing that to market as quickly as we possibly can.”

Driver added that with oil in particular, the timeframe and potential for financial gain were shorter than for natural gas.

He said a main factor behind this was its link to the transport sector.

“We are seeing the electrification of transport, so it is reducing the demand for fossil fuels for transportation – not that it is going to go away, but it is going to be reduced a lot more. In the long term, the market for oil is likely to be on a downward trend.

"Right now, there is good pricing in the oil sector and that is because the bounce-back from the covid19 pandemic is creating a sort of better environment.”

Driver said changes to the Supplemental Petroleum Act were paramount for a successful oil and gas sector, and some changes have already been fruitful. His hope is that these changes to the tax regimes will be extended and implemented in offshore drilling.

“We have advocated for changes in the Supplemental Petroleum Act tax regime, which was introduced last year, which has been very useful and helped spur some of the explorations and the development work which we are seeing onshore in TT.

“We think those changes should be extended to the offshore sector and to larger producers as well. We need to get investments coming into our gas sector, and there are a lot of potential projects.”

Driver hoped issues to be addressed in Monday’s budget would include taxes, changes to royalty rates to encourage development, and other taxes to encourage investment, reduction of TT’s carbon footprint, use of and more investments in solar energy.

He said overall, TT’s oil and gas sector has to take into consideration everything that is happening in the sector globally, and transition towards it.

“Hydrocarbons are going to continue to play an important role within the energy systems for the world. Some of the issues which we are seeing right now in Europe and Asia with very high gas prices are related to issues bringing in renewable energy into the system. In the case of Europe and China, to replace coal with natural gas has led to high prices.

“Natural gas is an important transition fuel for the world, particularly to provide electricity instead of coal. This is why it is so important from a climate-change point of view.”

Driver said Touchstone Exploration Inc's completion of drilling on the Royston-1 exploration well and discovery of hydrocarbon accumulations could boost the economy.

“More local jobs can be created for small contractors and communities. TT has the skills and knowledge of drilling onshore and it is one of our advantages.”