DESPITE only four out of the 17 deepwater exploration blocks up for grabs being bid on at the end of the relevant bid round on Thursday, Minister of Energy Stuart Young said the results were a great positive for Trinidad and Tobago.
Responding to questions at the end of the three-day TT Energy Conference 2022 at the Hyatt Regency hotel, Young said the fact that there were no further bids was also expected. He reiterated what he said in December last year at the beginning of the bid round, that shareholders of oil companies have stopped them from going into new areas.
“As I said on the outset when we were going with these bid rounds, I never expected there to be a lot of external interest because of the way the global energy sector is set up. A lot of these energy companies have been forced by their shareholders to take decisions that you cannot invest in new provinces. It has to be seen in that context. So the four blocks were actually taken up by a consortium of BP and Shell is a great positive for TT,” Young said.
During the presentation of the Ryder Scott Report delivered in December, Young announced the deepwater bid round, which was expected to be open for six months, ending on Thursday, which was also the last day of the energy conference.
Young said proposals would be evaluated based on the provisions outlined in the order and a point system detailed in schedule six of the Deepwater Competitvie Bid Round order of 2021. Earning points on the bid depended on its proposed minimum exploration work programme, geophysical and geological work programme and proposed drilling plans. Each block has its own point system.
The successful bidders will be announced three months after the close of the bids on Thursday. The successful bidder will enter a production-sharing contract with the government which will be held for a term of no more than nine yearse.
The contract will include a requirement to present to the minister a work programme for each year for approval; and a requirement to make payments on annual charges, production bonuses, technical assistance and equipment bonuses.
Young described the deepwater provinces as “virgin territory” and said it would be costly and risky to explore and put down infrastructure on the blocks.
“It is a highly unrisked area,” he said. “The next bid round will be the onshore bid rounds and there is going to be a lot more interest there because it is a lot cheaper to explore and produce.”
A consortium of BPEOG and BG, a subsidiary of Shell, bid on the four blocks – 23(b) 25(a) 25(b) 27.
Block 23(b) is about 20 km off the eastern coast of Tobago. The area is 2,584 sq km. Blocks (b) 25(a) 25(b) and 27 are about 100 km away from the east coast of Trinidad. Block 25(a) is 1,388 sq km, block 25(b) is 1,389 sq km and block 27 is 1,181 sq km.
Young said the consortium was a positive, with the two companies being major shareholders of Atlantic LNG. He said because of the expense, it would be better for the country if both companies went in together so they could share the cost.
BPTT president Claire Fitzpatrick said the consortium made perfect sense and meant both companies would be able to bring skills to the table that would progress deepwater activities.
“When you look at some of these deepwater projects, they come with risk and are quite expensive. Therefore it is perfectly normal that you actually end up doing things in a consortium.”
While she did not have any preconceived notions about possible competitors, she said she focused on the potential in the deepwater blocks.
“Like any exploration, it is where do you think there would be the most prospectivity,” Fitzpatrick said while answering questions on BPTT’s selection of blocks.
“Those blocks were what were the most attractive to us and we also saw some synergies with some other activities we already had in the region.
"What I was interested in was what we thought of the blocks. Strategically, it made sense for us to partner with Shell. The fact that we did bid means that we do see potential in TT’s deepwater, and for me that is what I am focusing on.
"I am eagerly anticipating the ministry’s evaluation and I am hoping that we could move to activity.
“We are delighted to bid together,” added Stephane Picarle, Shell TT general manager. “We believe that we bring joint forces into this challenging activity, so that is what a consortium enables.”