In four days, the Energy Chamber of T&T will host one of its most important energy conferences.
You see, the conference is coming at a time of great international change, with energy companies being pressured to move towards net-zero carbon emissions as soon as possible but no later than by 2050.
Last week saw the world’s largest oil and gas company, Exxon Mobil, in a monumental fight that resulted in two of its directors losing their seats on the 12-member board and being replaced by supporters of those who felt the company needed to cut spending, boost returns and prepare for a lower-carbon future.
Exxon has been the least enthusiastic of the majors on the move to renewables. The company has in the past argued that the technology would emerge that would allow for the continued use of fossil fuels while, at the same time, protecting the planet from global warming.
Trying to stave off the criticism emanating from those who saw the company as not being sufficiently proactive in the fight against climate change, Exxon Mobil in March proposed an ambitious and expensive plan to reduce its carbon footprint.
The plan it outlined was to focus initially on carbon capture and storage, as well as hydrogen production and other lower-carbon opportunities.
Other areas of the plan included:
1. Leveraging ExxonMobil’s experience and capabilities
2. Promoting supportive policies and regulatory frameworks
3. Establishing partnerships and coalitions
4. Investing approximately $3 billion on lower-emission energy solutions through 2025, adding to the more than $10 billion ExxonMobil invested since 2000.
The plans were not enough for what appears to be not just growing public opinion but emerging consensus that fossil fuel had to be sharply reduced, and the power of institutions and governments will be brought to bear on this issue.
If we are to believe the Vice President of Nigeria, already, the European Union and the British have instructed their developmental agencies not to lend any money for new fossil fuel projects.
BP PLC’s president Bernard Looney recently told the Columbia University’s Global Summit that the world has a carbon budget and it is running out. He explained that society and many of BP’s employees want the company to change and he believes there is an enormous business opportunity from renewables.
“And I’ve always believed that you can’t be a long-term successful company if you’re going against the grain of society. I was talking to someone recently and he says, you can’t defy gravity. And in some ways, that’s how it feels at the moment.
“And in the third reason that we must change is that I think it’s an enormous business opportunity and trillions of dollars are going to get rewiring and re-plumbing, the Earth’s energy system. It’s a hard problem to solve, it’s complex and quite frankly, we love that, we love that complexity because, in many ways, it is what we’re built for. So, on the one hand, we have to change, because if you don’t, you get left behind by society,” Looney told the conference.
Meanwhile, BP, the parent company of this country’s largest natural gas producer, has already slashed its exploration budget, indicated an intent to sell many of its fossil fuel assets and gotten into renewable projects and partnerships, including with companies like Cemex, the parent company of TCL, as it moves to transition into an integrated energy company with a large and compelling renewable energy portfolio.
This is the new world that T&T finds itself in and there is no turning back.
Since 1973, following the first oil price shock and which was further enhanced in 1979, along with the discovery of billion-barrel fields TSP off the cost of Guayaguayare, T&T’s economic fortune has been directly linked by oil prices and later on by oil and gas prices and production.
The longest period of prosperity this country has seen, 1996 to 2014, was driven by oil and gas (LNG) prices and production and petrochemicals.
It is the forex from the sector that has allowed us to support our taste for foreign goods. It is the forex that has allowed us to pay for the importation of goods and services and made us build up some official reserves that today still provide some buffers for our economy.
It is the revenue from the energy sector that supports the onshore sector and government spending and in some ways, it is the revenue from the energy sector that has allowed us to maintain the level of waste and mismanagement while not as yet paying the ultimate price.
Next week’s Energy Conference will allow us to hear first-hand from the majors of the way their companies see the future in the T&T context.
While I am clear in my mind that the days of massive use of fossil fuel is coming to an end, it does not mean as a country we should abandon the energy sector. Far from it. This is a time to move quickly to fix the problems in the sector.
We have to focus on issues of the competitiveness and sustainability of the sector. We have to figure out a new model for the Point Lisas Industrial Estate that ensures we can compete with the low-priced natural gas environment by having natural gas at a competitive price and at the same time exploring new opportunities for green ammonia and methanol.
The Government, through the NGC, must see itself as a partner with the downstream sector, looking for solutions and recognising that times have changed and everyone loses when plants are shut down because they simply cannot compete on the global scale.
The Government has to tell us what is the future of Atlantic LNG Train 1 and we have to reform the fiscal measures to ensure more sub-surface investments. Oil and gas in the ground benefits no one.
Newly-minted Minister of Energy Stuart Young has promised that the new bid round will take place on time. He has to keep his promise!
In fixing the energy sector, we must fix our country. We have to learn to do more with less. I don’t mean that we have to get accustomed to less revenue because I am confident that if we do a number of things, starting with a revenue authority and with the projects already on stream, we will see a boost in revenue in the 2023/24 period.
What we have to do urgently is to ensure we are getting value for money and that we are collecting all that is due to the state.
We have to remove the real stumbling blocks to doing business in this country and we have to have a government that creates a more enabling environment.
Let us be clear, the Government’s stranglehold on the economy is not good for the country and it will lead us down the road to perdition.
The time has changed. T&T as a small open economy will fail if it does not innovate and is not competitive in everything it does, starting with the energy sector.
It is David Rudder in his song Rally Round the West Indies— which has now become the basis for the West Indies cricket team’s anthem—who warned the region that we as a people were no longer needed to be the pawns in the international cold war games and were likely to be even less important than we were before.
“Soon we must take a side or be lost in the rubble. In a divided world that don’t need islands no more. Are we doomed to be at somebody’s mercy? Little keys can open mighty doors,” Rudder noted.
For Rudder, Caribbean unity would be key going forward because as the Jamaicans say, you might be small but you tallawah.
We are increasingly in a world that will not need hydrocarbons anymore. At least not in its large quantity.
T&T has to be bold and smart and finally see that it cannot continue the way it is going.
The winds of change are blowing. We don’t stand a chance against it.