Raphael John-Lall
Outgoing Prime Minister, Dr Keith Rowley made some bold decisions in the energy sector, the driver of T&T’s economy, over the past nine years such as the mothballing of the Pointe-a-Pierre refinery, the restructuring of Atlantic LNG company and signing controversial gas deals with Venezuela.
In looking at his legacy in the energy sector, analysts have questioned if these decisions would benefit T&T in the future as the country is yet to see positive results of some of these decisions.
Justifying the decision by arguing that the company was mismanaged and a drain on the economy, the current administration closed the Petrotrin refinery in 2018 and opened wholly state-owned successor companies, Trinidad Petroleum Holdings Ltd and its subsidiaries Heritage Petroleum Company and Paria Fuel Trading Company, Guaracara Refinery Ltd and legacy Petrotrin.
In 2014, Petrotrin registered a loss of $361.3 million and when Rowley took office in 2015 its loss was $1.2 billion.
The Pointe-a-Pierre Refinery was closed in 2018 due to losses of more than $1 billion in the previous five years. The closure affected 2,600 permanent jobs, including 1,700 direct jobs.
Speaking in the Senate during the post-budget debate last October, Minister of Energy Stuart Young said the refinery became financially unfeasible and faced significant losses that threatened T&T’s economic existence.
“It was experiencing significant losses because it was an older refinery and because we had to purchase the vast majority of crude. We had to be buying over 100,000 barrels of oil a day. If you use a price of US$75 of oil, work the math, that had to be paid in US dollars, US$7.5 million a day, to put crude oil into an outdated refinery,” Young said.
Former energy minister and energy consultant Kevin Ramnarine told the Sunday Business Guardian that in the energy sector, Rowley made some important decisions that will continue to impact the country well into the future. However the sector is worse off today than ten years ago.
Ramnarine was the last minister of energy before the Rowley administration took over in 2015.
“Some of the major issues in the energy sector over the past decade include the significant decline in natural gas production, the closure of the refinery at Pointe-a-Pierre, Atlantic Train 1 and other plants at the Point Lisas Estate, the deals with Venezuela especially Dragon Gas agreement, the declines in energy sector real GDP and declines in persons with jobs in the energy sector, both of which were significant, losing our position as production leader of the Caricom to Guyana.”
Ramnarine gave the opinion that the Government did little to provide incentives to companies to drill for energy resources.
“The Government in my opinion failed to adequately incentivise drilling and we went through a period between my departure from office in 2015 and the arrival of Minister Young in 2021 of little or no new acreage awards and disappointing bid-round results. This has really set us back badly. My biggest disappointment is the Government did not grab the deepwater baton I left in 2015 and run with it as they ought to have done. We should be producing deepwater gas today but instead we are looking at 2031 or 2032.”
He argued that the energy sector under the Rowley administration “declined badly” over the past decade.
“My opinion and this is industry consensus, is the energy sector has declined badly under Dr Rowley. That opinion is supported by the statistical facts and reality. The decline will not stop unless we get Venezuelan gas and deepwater gas. One won’t be enough. We need both.”
Ramnarine also shared statistics from the Ministry of Energy which show that in 2015 oil production was 78,630 barrels a day while in 2024 oil production had fallen to approximately 51,000 barrels per day.
Natural gas production was 3.8 bcf a day in 2015 while in 2024 it had fallen to 2.525 bcf/d.
He explained why there was a fall in production since 2015.
“The issue is a reduction in drilling by approximately 60 per cent. The fiscal regime is one factor, and the other factor is the ease of doing business. For oil, the supplemental petroleum tax (SPT) is a major obstacle. If we abolish SPT on land we could revive land-based oil production.”
While he spoke positively of Rowley’s decision to work with neighbouring Venezuela to explore gas fields, he said there continue to be risks associated with this co-operation.
“I want to add that I think the policy to pursue partnership with Venezuela to access their vast natural gas deposits is the right one. However the politics in Venezuela and the geopolitics were obstacles but things can always change.”
Guyana vs T&T
Guyana trails behind only the US and Brazil as the fastest growing oil producers not part of the Organization of Petroleum Exporting Countries (OPEC).
A 2024 report from the US Energy Information Administration (EIA) said the ranking was made because Guyana bumped up its oil production by an annual average of 98,000 barrels per day (b/d) in the period 2020-2023.
Because of Guyana’s ascendancy as a global oil producer with the fastest growing economy in Latin America and the Caribbean, analysts compare T&T to Guyana.
Economist Dr Vanus James weighed in on the discussion, saying Guyana’s emergence as the regional oil power and T&T’s relative decline should not be solely blamed on the Rowley’s legacy.
“Well, that is not because of the failures of the Government of T&T, significant as those are. That is the result of the distribution of the gifts of nature and the historical machinations of the British colonial empire. The preoccupation with reliance on natural resources or colonial inheritance is not one that is encouraged by sound economic analysis of the development process, as Guyana will also discover sooner or later.”
James also said that Rowley’s handling of the energy sector has caused the entire economy to suffer.
“Look carefully at the fundamentals. Rowley took over an economy from Kamla Persad-Bissessar that was in deep crisis because of its excessive dependence on oil and gas. He leaves behind an economy that is still excessively dependent on oil and gas, and is still in significant crisis or heading there.
“Rowley took over a government that was incapable of leading fundamental change in any area of economic or social life, including crime management, and incapable of empowering its citizens and communities because of its authoritarian and over-centralised design. In other words, he took over a government in desperate need of constitutional reform. He leaves behind a government that has the same deficiencies and is still in desperate need of constitutional reform. It should be obvious to an ordinary citizen that this is a legacy of fundamental failures.”