In just over a month, the coun­try’s fi­nan­cial year comes to an end and the Min­is­ter of Fi­nance will find that the en­er­gy sec­tor has grown in 2018. This growth has tak­en place on the back of con­tin­ued in­crease in nat­ur­al gas pro­duc­tion which has had the ef­fect of in­creased pro­duc­tion down­stream com­modi­ties and in­creased ex­port from At­lantic LNG.

In fact, the Min­is­ter of Fi­nance re­cent­ly re­vealed that for the first half of the year the coun­try had al­ready col­lect­ed 800 mil­lion more from the petro­chem­i­cal sec­tor than it had for the first six months of fis­cal 2017.

He said, “Drilling deep­er in­to the fig­ures, in the petro­chem­i­cal sec­tor, col­lec­tion of cor­po­ra­tion tax has moved from $371 mil­lion in the pe­ri­od Oc­to­ber 2016 to April 2017 to $1.2 bil­lion in the pe­ri­od Oc­to­ber 2017 to April 2018, an in­crease year-on-year of $835 mil­lion.”

Oil prices are al­so ex­pect­ed to as­sist the Min­is­ter of Fi­nance be­cause even though crude out­put is down by close to sev­en per cent by prices have av­er­aged more than 25 per­cent high­er than was bud­get­ed.

In his mid-term re­view of the econ­o­my the Min­is­ter of Fi­nance told the Par­lia­ment, “Ac­cord­ing­ly, the en­er­gy sec­tor is well poised to meet the de­mands of the down­stream sec­tor over the near-term hori­zon there­by sup­port­ing our medi­um-term growth re­cov­ery. Fur­ther ahead, ac­cess to ad­di­tion­al gas from Venezuela will gen­er­ate sub­stan­tial op­por­tu­ni­ties for strength­en­ing and sup­port­ing our econ­o­my. The pick-up in the en­er­gy sec­tor is hav­ing a knock-on ef­fect on growth in the non-en­er­gy sec­tor where that sec­tor is pro­ject­ed to break even in 2018, af­ter years of de­cline, with growth es­ti­mates (for the non-oil sec­tor) in 2019 of 1.2 per cent ris­ing to 2.9 per cent in 2020. These im­prov­ing growth fore­casts are wel­come in the con­text of the lack­lus­tre per­for­mance of the econ­o­my over the 2013 to 2017 pe­ri­od.”

Since then Shell has an­nounced the start up of pro­duc­tion from both its Starfish field and its Dol­phin ex­ten­sion fields that to­geth­er will add 300 mil­lion stan­dard cu­bic feet of gas per day to their dai­ly out­put, lead­ing to ad­di­tion­al gas for both At­lantic and the down­stream pro­duc­ers.

In a re­cent press re­lease the com­pa­ny said it had achieved first gas from one of its de­vel­op­ments in the East Coast Ma­rine Area (EC­MA). Shell de­liv­ered first gas from its first well in its Dol­phin Ex­ten­sion Cam­paign ahead of sched­ule. The Dol­phin de­vel­op­ment will con­sist of three pro­duc­tion wells when com­plet­ed.

“Our Starfish de­vel­op­ment, which achieved first gas ear­li­er this year, and Dol­phin de­vel­op­ment projects were both ac­cel­er­at­ed fol­low­ing the ac­qui­si­tion of Chevron’s as­sets in the EC­MA which gave us full op­er­a­tion of the up­stream val­ue chain.”

Econ­o­mist Dr Roger Ho­sein said told Busi­ness and Mon­ey that while the gov­ern­ment should be hap­py about the ex­tra gas that is go­ing to be avail­able for both down­stream and LNG, he warns on the LNG side that the prices are like­ly to re­main de­press as the US ramps up pro­duc­tion of the com­mod­i­ty.

He said the T&T gov­ern­ment had to be aware of the sup­ply side im­bal­ance in LNG.

While there are those who it is the up­stream pro­duc­ers and LNG that dri­ve the en­er­gy sec­tor, in many ways it is re­al­ly the down­stream sec­tor that is the main­stay of the econ­o­my.

Con­sid­er this: it is the down­stream petro­chem­i­cal com­pa­nies that are re­spon­si­ble for the pur­chase of close to 40 per­cent of the coun­try’s nat­ur­al gas. This means that the gas pro­duced by the up­stream com­pa­nies like bpTT and Shell re­quire a mar­ket. With­out the down­stream com­pa­nies like MHTL or Methanex or even CNC a large part of that mar­ket is gone.

The Gov­ern­ment has de­pend­ed heav­i­ly on bil­lions of dol­lars in div­i­dend pay­ments from the Na­tion­al Gas Com­pa­ny. The NGC makes most of its mon­ey from the sale of nat­ur­al gas to the down­stream com­pa­nies. There­fore it is the down­stream sec­tor that is a ma­jor part of gov­ern­ment’s abil­i­ty to earn tax­es and div­i­dends from the NGC.