As the glob­al en­er­gy sec­tor be­comes more com­pet­i­tive T&T needs to move faster in en­sur­ing it can re­al­ly of­fer what in­vestors need.

Ac­cord­ing to Do­minic Ram­per­sad, pres­i­dent, Phoenix Park Gas Proces­sors Ltd, in­vestors are seek­ing cer­tain things in­clud­ing a sta­ble in­vest­ment cli­mate.

Speak­ing on a pan­el ti­tled, “Im­prov­ing the In­vest­ment Cli­mate,” at the T&T En­er­gy Con­fer­ence, Ram­per­sad ex­plained, “As an in­vest­ment ter­ri­to­ry we tend to be in­ward fo­cused. We look at what we have to of­fer to the world,” as he ref­er­enced that in the 1990s and in the ear­ly 2000s T&T, at that time, pre­sent­ed a mod­el which was con­sis­tent with what in­vestors were look­ing for.

“You had cheap gas, long-term con­tracts, you had cheap elec­tric­i­ty…the bot­tom line was we were the low-cost pro­duc­er in the re­gion and there­fore, in­vestors came in here in­flux.

“To­day I’m not so sure that still ex­ists.One of the things that comes out very clear­ly is when you lis­ten to even some of our ex­ist­ing multi­na­tion­als as they rein­vest back in­to the coun­try is they are look­ing for cer­tain things and one of the things they are look­ing for is sta­bil­i­ty,” Ram­per­sad out­lined.

He fur­ther ad­vised that T&T needs to look for the gaps and plug them.

“We re­al­ly have to stand back and un­der­stand as a gas-pro­duc­ing coun­try where our lev­el of com­pet­i­tive­ness is, where it is rel­a­tive to what in­vestors are look­ing for and where our gaps are. The prob­lem is in do­ing that we don’t have a lot of time to do it be­cause new provinces are show­ing up.

“We’ve seen the im­pact of the ‘Shale Rev­o­lu­tion’ over the last cou­ple of years and now we are see­ing the im­pact of Guyana and Suri­name on our mar­ket. Be­ing able to move quick­ly is go­ing to be a re­al im­por­tant fac­tor for us as a coun­try,” Ram­per­sad re­it­er­at­ed.

In the mean­time he added, in­vestors are not wait­ing as they have a host of oth­er op­tions.

Hence, un­less T&T presents a pack­age to in­vestors as to why it’s bet­ter than the al­ter­na­tive, “we will just be sim­ply wast­ing time,” Ram­per­sad em­pha­sised.

The com­pe­ti­tion, there­fore, not on­ly re­mains very re­al among oth­er coun­tries but there’s al­so com­pe­ti­tion be­tween cap­i­tal that would have gone to tra­di­tion­al hy­dro­car­bons ver­sus the cap­i­tal that’s go­ing to­wards re­new­ables.

As an in­ter­na­tion­al play­er Paul Baay, pres­i­dent and CEO of Touch­stone Ex­plo­ration, an oil and nat­ur­al gas ex­plo­ration and pro­duc­tion com­pa­ny in T&T, out­lined some of the walls he faces.

“When I go in to give a pitch in Lon­don or Toron­to I re­al­ly don’t have to pitch about Trinidad, sta­bil­i­ty of Gov­ern­ment, the rocks... but the ques­tion that al­ways comes up is the fis­cal take, the net­back and how much cash we are ac­tu­al­ly gen­er­at­ing and that’s where this com­pet­i­tive­ness sort of dis­ap­pears and you don’t have that same com­pe­ti­tion for cap­i­tal,” Baay ex­plained.

He said it’s more than just the fis­cal regime in T&T.

“It’s like on­ly hav­ing one buy­er of your gas. In our par­tic­u­lar case we have to get a gas con­tract to get the fi­nanc­ing to de­vel­op a gas plant so the first thing you have to do is ne­go­ti­ate with NGC but we don’t have a lot of lever­age when it’s the on­ly buy­er and I need the mon­ey to op­er­ate the plant,” Baay added.

This, Baay said, is re­flect­ed in pric­ing, not­ing that in­vestors like to in­vest in com­pa­nies where they will get the uptick.

An­oth­er ob­sta­cle fac­ing the sec­tor is time to pro­duc­tion which can al­so af­fect com­pet­i­tive­ness.

Schrein­er Park­er, se­nior vice-pres­i­dent, of the con­sult­ing firm Rys­tad En­er­gy ref­er­enced the case of Man­a­tee, a con­ven­tion­al gas de­vel­op­ment lo­cat­ed in the shal­low wa­ter in T&T and is op­er­at­ed by Shell T&T.

“We’re talk­ing about dis­cov­er­ies com­ing in­to pro­duc­tion that were made in 2005 which is the case with Man­a­tee. We’re in 2023 now and we’re talk­ing about pro­duc­tion maybe start­ing in 2028 so that’s a su­per long lead time and what it does is it puts a lot of pres­sure on the coun­try in gen­er­al be­cause you’re not re­al­is­ing the ul­ti­mate val­ue of the re­source that has been dis­cov­ered when it’s sit­ting there in a non-sanc­tioned sce­nario,” Park­er ex­plained.

He added that look­ing at the av­er­age time of 15 years in T&T means there’s a lot of mon­ey that’s be­ing left in the ground, both for com­pa­nies and the Gov­ern­ment.

How­ev­er, he not­ed that at the same time, an en­ti­ty may de­cide to go this route, par­tic­u­lar­ly when deal­ing with gas as­sets be­cause of mar­ket volatil­i­ty and the dif­fer­ent rea­sons it may not want to move for­ward.

Ac­cord­ing to Park­er if the fis­cal terms are at­trac­tive enough then op­er­a­tors will want to put those dis­cov­er­ies in­to pro­duc­tion, adding that there must be li­cens­ing terms in place that re­quire the as­sets to take the next steps af­ter dis­cov­ery.

Ad­di­tion­al­ly, achiev­ing a bal­ance be­tween a re­turn for in­vestors and do­ing good by the peo­ple was al­so dis­cussed.

This, Ram­per­sad said, is “ba­sic in­vest­ment 101.”

He said the sec­tor has to be mar­ket-dri­ven, not­ing that too much of the con­ver­sa­tion around in­vest­ing in T&T starts and cen­tres around fis­cal in­cen­tives.

“We seem to al­ways ex­pect the Gov­ern­ment and the peo­ple of T&T to pro­vide the in­cen­tive for peo­ple to in­vest here. That has to be bal­anced,” Ram­per­sad ad­vised.

He said while he agreed that a coun­try’s mi­cro­eco­nom­ic sys­tem has to be at­trac­tive, this has to be bal­anced with the “mar­ket that the prod­ucts are even­tu­al­ly chas­ing.”

“All of these prod­ucts that we’re pro­duc­ing; whether it is from the en­er­gy sec­tor or the man­u­fac­tur­ing sec­tor or even the ser­vices sec­tor..is chas­ing a mar­ket and we tend to not want to fo­cus enough on these in­vest­ments be­ing mar­ket-based verse them be­ing too much fis­cal in­cen­tive-based.

“We have to find that bal­ance be­tween what the mar­ket can tol­er­ate and where we as a coun­try now need to step in to en­sure there’s a fair re­turn for the in­vestor as well as the peo­ple of T&T,” Ram­per­sad ex­plained.

Us­ing the coun­try’s Cen­tral Bank as an ex­am­ple, he said the in­sti­tu­tion has done a good job of cre­at­ing a sta­ble en­vi­ron­ment for in­ter­est rates to al­low and en­cour­age peo­ple and in­vestors to bor­row.

Stat­ing that this bal­ance must be across the board, Ram­per­sad al­so not­ed that in the past fis­cal in­cen­tives have been pro­vid­ed and as soon as the as­sets are mon­e­tised there’s more call for more fis­cal in­cen­tives.