Cur­tis Williams

cur­tis.williams@guardian.co.tt

With the an­nu­al T&T En­er­gy Con­fer­ence start­ing to­day, Econ­o­mist Gre­go­ry McGuire be­lieves the is­sue of nat­ur­al gas short­ages, its com­pet­i­tive­ness and a new for­mu­la for nat­ur­al gas pric­ing for petro­chem­i­cals must be front and cen­tre.

In an in­ter­view yes­ter­day with Guardian Me­dia McGuire said while he does not ex­pect the con­fer­ence to deal with the price of nat­ur­al gas it is a ma­jor is­sue fac­ing the sec­tor that he hopes the val­ue chain study be­ing done by Gas Strate­gies finds a so­lu­tion to.

He ex­plained, “It is one of the is­sues that the val­ue chain study is seek­ing to ad­dress be­cause ul­ti­mate­ly, what’s go­ing to hap­pen is some­body is go­ing to have to con­coct a regime of mar­ket re­lat­ed prices, which is what op­er­ates in LNG. LNG is a net back for­mu­la, and so how do we fig­ure out how to net back a for­mu­la for the petchems be­cause ne­go­ti­a­tions and point­ing fin­gers at the NGC or point­ing fin­gers at the up­stream those things are not go­ing to car­ry us very far. So ul­ti­mate­ly a net back for­mu­la will have to be found for the petro­chem­i­cals.”

He said is­sues like the fu­ture of Train 1 which has been shut down since last year are im­por­tant but to him it is a larg­er ques­tion of the dis­tri­b­u­tion of nat­ur­al gas that the coun­try has to con­sid­er and he hoped some of it could be dis­cussed at the con­fer­ence.

“The big­ger ques­tion is gas dis­tri­b­u­tion. How do you dis­trib­ute be­tween down­stream and LNG? I don’t ex­pect the is­sue of gas pric­ing to come up at the con­fer­ence bear­ing in mind the agen­da. But it is an is­sue. The pric­ing thing is re­al, we do have a prob­lem,” the En­er­gy Econ­o­mist not­ed.

He ar­gued that gov­ern­ment had no pow­er to re­duce gas prices and said once a net back for­mu­la could be found then the mar­ket will dic­tate the fu­ture.

What he said gov­ern­ment had some pow­er in was the is­sue of putting out acreage for bid rounds to en­sure the sec­tor can grow.

He said as with any­where in the hy­dro­car­bon busi­ness, long term sur­vival and long term sus­tain­abil­i­ty de­pend on avail­abil­i­ty of re­serves.

“So for me, your E&P ac­tiv­i­ty is al­ways a pri­or­i­ty. What­ev­er needs to hap­pen to fa­cil­i­tate the search for new re­serves can­not ever be post­poned, pushed back, de­layed what­ev­er. You have to do it,” McGuire in­sist­ed.

He not­ed that with oil one can ex­plore and ex­port but with gas a mar­ket has to ex­ist or you have to be con­fi­dent that there is go­ing to be a mar­ket for the gas be­fore you ex­plore. McGuire said such a con­di­tion ex­ists in T&T.

“That con­di­tion ex­ists in so far as a na­tion we con­tin­ue to see the long term chal­lenge in terms of avail­abil­i­ty of sup­plies which is go­ing to be the biggest con­straint on any growth of the busi­ness go­ing for­ward,” McGuire posit­ed.

He said notwith­stand­ing what is hap­pen­ing in the US re Shale Gas the search has to con­tin­ue for new re­sources in T&T and it must be pri­or­i­ty.

“Form the gov­ern­ment side it must be what is be­ing done to stim­u­late up­stream ac­tiv­i­ty, from the com­pa­nies side which projects have been ap­proved, which projects they have sanc­tions for, or what they are go­ing for new sanc­tion and al­so from the gov­ern­ment side would be where is the new hot spot with re­spect to leas­es and bid rounds.”

He said the suc­cess of Touch­stone will gen­er­ate some more in­ter­est in the land fields and hopes the new bid round will in­clude land acreage.

On the is­sue of en­er­gy tran­si­tion from fos­sil fu­els to re­new­ables McGuire in­sist­ed en­er­gy tran­si­tion means dif­fer­ent things to dif­fer­ent coun­tries and from an oil and gas pro­duc­er stand­point it is dif­fer­ent to an oil and gas im­porter.

He point­ed to the ex­am­ple of Bar­ba­dos and its fo­cus on re­new­able en­er­gy par­tic­u­lar­ly so­lar wa­ter heaters.

“En­er­gy tran­si­tion re­quires some se­ri­ous thought. Yes the dri­ver might be the gen­er­al trend in the world to re­duce car­bon emis­sions but even while we do that we need to un­der­stand that this re­source re­mains our biggest for­eign ex­change earn­er.”

The En­er­gy Econ­o­mist used the ex­am­ple of Guyana and asked what is the coun­try to do with its re­cent mas­sive oil dis­cov­er­ies oth­er than pro­duce it and per­haps even faster than it would nor­mal­ly been done to beat the en­er­gy tran­si­tion win­dow.

“We need to pur­sue re­new­ables to al­low us to free up hy­dro­car­bons for ex­port but al­so we need en­sure that en­er­gy tran­si­tion hap­pens in ar­eas like pow­er gen­er­a­tion,” McGuire said.

The con­fer­ence starts to­day with Prime Min­is­ter Dr Kei­th Row­ley as the keynote speak­er. But we will al­so hear from the Prime Min­is­ter of Ja­maica and the Pres­i­dents of Guyana and Suri­name.