Prime Min­is­ter Dr Kei­th Row­ley raised the alarm bells on Mon­day, in­di­cat­ing that with­out gas pro­duc­tion from new fields, the coun­try was like­ly fac­ing a cri­sis that could se­vere­ly im­pact cit­i­zens stan­dard of liv­ing.

Row­ley said the gov­ern­ment has been work­ing hard and con­tin­ues to do so in an ef­fort to in­crease nat­ur­al gas pro­duc­tion which he said had fall­en to an av­er­age of 2.9 bil­lion stan­dard cu­bic feet per day (bcf/d), down from a high of 4.2 bcf/d.

It must be not­ed that fig­ures from the Min­istry of En­er­gy place the nat­ur­al gas pro­duc­tion fig­ures at 2.5 bcf/d and not the 2.9 claimed by the Prime Min­is­ter.

Dr Row­ley said it was be­cause of this dilem­ma he felt it nec­es­sary to head to Eu­rope and meet with the lead­er­ship teams of Shell, BP and Pro­man to try and push the in­ter­est of T&T.

The Busi­ness Guardian reached out to two en­er­gy ex­perts on what ac­tions can gov­ern­ment take to achieve its goal of im­proved nat­ur­al gas pro­duc­tion.

For­mer En­er­gy Min­is­ter Kevin Ram­nar­ine, un­der whose lead­er­ship saw the last suc­cess­ful bid round, now eight years ago, told the Busi­ness Guardian (BG) that the most fun­da­men­tal eco­nom­ic is­sue in the coun­try is nat­ur­al gas pro­duc­tion.

Ram­nar­ine said nat­ur­al gas pro­duc­tion is lit­er­al­ly the foun­da­tion of our econ­o­my and not­ed that in pe­ri­od 2014 to 2021, nat­ur­al gas pro­duc­tion de­clined by 1.49 bil­lion cu­bic feet per day.

“Most of that de­cline ( two thirds) hap­pened in the years 2020 and 2021. The ef­fects of this de­cline are a 20% re­duc­tion in re­al GDP from 2014 to 2021 and a 29% re­duc­tion in en­er­gy sec­tor re­al GDP for the same pe­ri­od. In 2022 and 2023 we will see some mar­gin­al im­prove­ments in nat­ur­al gas pro­duc­tion but T&T will still strug­gle to get above 3.0 bil­lion cu­bic feet per day. This lev­el of nat­ur­al gas pro­duc­tion is still in­suf­fi­cient to meet the de­mands of the plants in the coun­try. Post 2023, the de­cline will set in again,” Ram­nar­ine not­ed.

He posit­ed that the Prime Min­is­ter seems to be alert­ed to the precipice that is fac­ing this coun­try come 2026 to 2028.

Ram­nar­ine said, “If deep­wa­ter gas pro­duc­tion is not re­alised in 2028 or there­abouts we are in trou­ble. A bad sit­u­a­tion will be­come a lot worse. I al­so don’t think we should hang our eco­nom­ic coat on Venezue­lan gas. The sanc­tions are still there de­spite the op­ti­mism of some. If all the sanc­tions were lift­ed to­mor­row, it will take years be­fore nat­ur­al gas from Venezuela flows to T&T.”

Ram­nar­ine said to in­crease nat­ur­al gas pro­duc­tion T&T needs to fo­cus on four things. First­ly, we need to over­haul the fis­cal regime. He not­ed this was promised in the last bud­get but noth­ing has hap­pened.

“I ex­pect some fluffy state­ment about it on bud­get day. The fis­cal regime and in par­tic­u­lar Mr Im­bert’s roy­al­ty regime of 2017 have failed the coun­try and have been a ma­jor fac­tor in the fall in nat­ur­al gas pro­duc­tion. We went af­ter a larg­er slice of a shrink­ing pie. The re­sult of the 2018/2019 shal­low wa­ter bid round should have been a wake up call to the Gov­ern­ment that their ap­proach to the fis­cal regime does not work,” Ram­nar­ine told the BG.

His view that there is a need to re­form the fis­cal regime is in keep­ing with a call from the En­er­gy Cham­ber. In a state­ment the En­er­gy Cham­ber in­sist­ed gov­ern­ment should act now to re­form the fis­cal regime.

In its state­ment the En­er­gy Cham­ber said it “strong­ly en­cour­ages the Gov­ern­ment to avoid any fur­ther de­lay in re­form­ing the up­stream fis­cal terms in Trinidad & To­ba­go. The time to act is now.”

It added that with the con­tin­ued push for net-ze­ro by 2050, the win­dow for in­vest­ment in gas and es­pe­cial­ly in crude oil pro­duc­tion is nar­row­ing every day. Across the world, the En­er­gy Cham­ber ar­gued, oil and gas com­pa­nies have re­mained very dis­ci­plined in how they are al­lo­cat­ing cap­i­tal to up­stream in­vest­ments even with the cur­rent high glob­al oil prices.

When oil and gas com­pa­nies are as­sess­ing in­vest­ments, the Cham­ber said, they do not base their de­ci­sions on to­day’s oil and gas prices, but rather on the fu­ture long-term pro­ject­ed prices. Com­pa­nies want to make sure the in­vest­ment makes sense at prices un­der US$50 per bar­rel as well as at prices over US$100 per bar­rel.

The Cham­ber’s state­ment read, “Un­for­tu­nate­ly, in Trinidad & To­ba­go the struc­ture of the up­stream fis­cal regime, es­pe­cial­ly for oil, means that it is ex­treme­ly dif­fi­cult to be prof­itable af­ter-tax once prices are in the US$ 50 range. This is pri­mar­i­ly be­cause of the way in which roy­al­ties (on oil and gas) and sup­ple­men­tal pe­tro­le­um tax (on oil) are cal­cu­lat­ed. While this does not im­pact in­vest­ment in the acreage un­der pro­duc­tion shar­ing con­tracts, it does im­pact po­ten­tial in­vest­ments in acreage un­der the Ex­plo­ration & Pro­duc­tion (E&P) li­cens­ing regime.”

Ram­nar­ine said the sec­ond thing gov­ern­ment needs to do is to com­mer­cialise deep­wa­ter gas.

He said, “The Gov­ern­ment needs to sit with Wood­side (for­mer­ly BHP) and work with them to make the Ca­lyp­so project a com­mer­cial and en­gi­neer­ing re­al­i­ty. They al­so need to get Wood­side to bring that gas to mar­ket ear­li­er by two years.”

The for­mer en­er­gy min­is­ter said the coun­try needs more nat­ur­al gas pro­duc­ers like the De­N­ovos and more Touch­stones of this world, small com­pa­nies that have the ap­petite for the small pools of nat­ur­al gas.

The idea of de­vel­op­ing small pools of gas is some­thing that En­er­gy ex­pert An­tho­ny Paul has long been preach­ing. Paul told the BG that we need to re­mem­ber the “Cream­ing Curve” con­cept that says there is as much oil and gas in a basin in small fields as there is in large fields. He ex­plained that large fields get de­vel­oped first, be­cause they can pay for the re­quired de­vel­op­ment in­fra­struc­ture and sup­port sys­tem. Small­er fields get de­vel­oped late be­cause they can pig­gy-back on the in­stalled base. In ad­di­tion, new plants re­quire a long-term, se­cure gas sup­ply to get fi­nanc­ing. Once they’ve passed their in­vest­ment pay-back phase, they can sur­vive on short­er term or low­er vol­ume gas sup­ply con­tracts, which is all small fields can of­fer.

Paul al­so called for the seis­mic and well da­ta be re­moved from un­der the in­def­i­nite con­fi­den­tial­i­ty cov­er that Her­itage and BP have with­out us­ing it ef­fec­tive­ly.

He al­so called for the gov­ern­ment to en­force re­lin­quish­ment claus­es for un­der-ex­plored or un-de­vel­oped acreage from BPTT.

“Add to that. a trans­par­ent process for fix­ing gas prices from pro­duc­ers and open ac­cess to in­fra­struc­ture (pipelines and plants, in­clud­ing LNG), all the small fields that BPTT isn’t in­ter­est­ed in (be­cause they don’t qual­i­fy for fund­ing with­in their rich glob­al port­fo­lio) will have a huge mar­ket to small­er, low­er cost op­er­a­tors, like EOG. Keep in mind that BP and Shell have re­cent­ly stat­ed that T&T is not in their long term growth strat­e­gy. PM may be­lieve that he has con­vinced them oth­er­wise, but all he would have walked away with are promis­es, not com­mit­ments. We seem not to know the dif­fer­ence.You must know that un­der the cur­rent arrange­ments, on­ly the share­hold­ers in AL­NG have the right to off-take liq­uids. So no oth­er gas pro­duc­er can ben­e­fit from the down­stream LNG val­ue-chain,” Paul told the BG.

For Ram­nar­ine an­oth­er fac­tor is the ease of do­ing busi­ness. He said the ease of do­ing busi­ness is suf­fo­cat­ing in­vest­ment in the en­er­gy sec­tor and de­lay­ing projects that should be pro­duc­ing nat­ur­al gas.

The Gov­ern­ment, Ram­nar­ine ar­gued needs to make it eas­i­er for com­pa­nies to get ap­provals and not be held hostage by min­istries, some pub­lic ser­vants and statu­to­ry agen­cies.