Raphael John-Lall

De­spite the threat of war in the Caribbean basin where large multi­na­tion­al en­er­gy gi­ants cur­rent­ly op­er­ate, US en­er­gy econ­o­mist Fran­cis­co Monal­di is op­ti­mistic that these in­vestors will con­tin­ue to in­vest in T&T and the rest of the re­gion.

Monal­di is a lec­tur­er in en­er­gy eco­nom­ics at Rice Uni­ver­si­ty’s De­part­ment of Eco­nom­ics in Texas, and a lec­tur­er in en­er­gy man­age­ment at the Jones Grad­u­ate of School of Busi­ness in Texas.

Large en­er­gy com­pa­nies such as Exxon­Mo­bil, Chevron and BP all op­er­ate in Venezuela, T&T and Guyana where geopo­lit­i­cal ten­sions cur­rent­ly ex­ist and it is the re­gion where the US Gov­ern­ment re­cent­ly de­ployed mil­i­tary as­sets in­clud­ing a nu­clear sub­ma­rine.

On Fri­day, T&T’s Prime Min­is­ter Kam­la Per­sad-Bisses­sar signed an en­er­gy deal with Grena­da’s Prime Min­is­ter Dick­on Mitchell and said her fo­cus is on that at the mo­ment when the me­dia asked her for an up­date on the en­er­gy re­la­tion­ship with Venezuela.

Last month, the T&T Gov­ern­ment al­so signed a pro­duc­tion shar­ing agree­ment with US en­er­gy ma­jor Exxon­Mo­bil to ex­plore T&T’s deep wa­ters.

Prime Min­is­ter Per­sad-Bisses­sar said that it is es­ti­mat­ed that Exxon­Mo­bil will in­cur ex­pen­di­ture of an es­ti­mat­ed US$42.5 mil­lion in the manda­to­ry first phase of the project and with suc­cess, the pro­ject­ed de­vel­op­ment costs could be be­tween US$16.4 bil­lion and US$21.7 bil­lion.

Last week, En­er­gy Min­is­ter Dr Roodal Mooni­lal told the Busi­ness Guardian that while T&T has a strong re­la­tion­ship with the Unit­ed States and T&T con­tin­ues to col­lab­o­rate on se­cu­ri­ty is­sues, it must al­so pre­serve space for di­a­logue with Venezuela.

Dur­ing a tele­vised pro­gramme last Wednes­day in Venezuela, Venezuela’s Jus­tice Min­is­ter Dios­da­do Ca­bel­lo ac­cused the Unit­ed States of sab­o­tag­ing the Drag­on gas field project which he said cost T&T bil­lions of dol­lars.

Ca­bel­lo claimed that US Sec­re­tary of State Mar­co Ru­bio sees T&T as one of the “pawns” of the Caribbean and he re­ferred to the failed Drag­on gas deal be­tween T&T and Venezuela.

He al­so said T&T’s re­la­tion­ship with the Unit­ed States is like “sell­ing its soul to the dev­il.”

“The US State De­part­ment sab­o­taged the Drag­on gas project for two rea­sons. If it had ma­te­ri­alised, T&T’s in­come could have ex­ceed­ed US$2 bil­lion an­nu­al­ly in the first phase. This would have strength­ened the po­si­tion of T&T as the en­er­gy hub of the Caribbean and helped T&T to de­pend less on the Unit­ed States,” Ca­bel­lo said.

Busi­ness-friend­ly en­vi­ron­ment

De­spite an in­creas­ing com­plex geopo­lit­i­cal and busi­ness en­vi­ron­ments, Monal­di told the Busi­ness Guardian that the big multi­na­tion­al en­er­gy com­pa­nies con­tin­ue to see coun­tries like T&T and Guyana as des­ti­na­tions for in­vest­ment for the sim­ple rea­son that these coun­tries are busi­ness friend­ly and oil and gas projects are eco­nom­i­cal­ly vi­able.

“I do not think that for­eign in­vestors will be de­terred from in­vest­ing in T&T be­cause of con­di­tions in Venezuela. I am talk­ing about the risks in Venezuela and do­ing any­thing in T&T’s wa­ters, I do not think that is a risk. In the case of Guyana, Chevron or Exxon­Mo­bil will not be de­terred from in­vest­ing there. The Unit­ed States will not let Venezuela in­ter­vene in Guyana. Guyana is much more prof­itable for Chevron.”

Yes, Chevron has a stake in the Stabroek Block, af­ter the US en­er­gy com­pa­ny, ear­li­er this year, com­plet­ed its ac­qui­si­tion of Hess Cor­po­ra­tion, which in­cludes a 30 per cent stake in the block which is lo­cat­ed off the coast of Guyana. This block is known for its sig­nif­i­cant oil re­serves and is one of the fastest-grow­ing oil provinces in the world.

“Exxon­Mo­bil will con­tin­ue to be in­ter­est­ed in T&T be­cause one of the things that makes de­vel­op­ing gas in Trinidad at­trac­tive is there is spare in­fra­struc­ture. This is a bit spec­u­la­tive, but I think it will be a more at­trac­tive en­vi­ron­ment for Exxon­Mo­bil if the deals with Venezuela do not con­tin­ue. That is a dif­fer­ent an­gle.”

Speak­ing specif­i­cal­ly about Venezuela where Chevron was re­cent­ly giv­en a green light to con­tin­ue lim­it­ed op­er­a­tions, Monal­di said with­out regime change and Venezuela’s rein­ser­tion in­to the West­ern bloc of coun­tries, it will con­tin­ue to be dif­fi­cult to get sig­nif­i­cant in­vest­ments.

“But mar­gin­all,y if there are li­cences giv­en the ea­ger­ness of the Venezue­lan Gov­ern­ment to at­tract in­vest­ment, there might be some in­vest­ment but it may not be sig­nif­i­cant. Al­so, the cur­rent Chevron li­cences seem to be a lit­tle bit less at­trac­tive than the one be­fore. So, I think there will be slight­ly less growth in pro­duc­tion that Venezuela had ex­pect­ed be­fore. Over­all, this is an im­pact­ful set of de­vel­op­ments for some of these projects, but we have to keep in mind that things can change de­spite the eco­nom­ics be­ing at­trac­tive right now.”

Venezuela en­er­gy re­la­tions

In April, for­mer prime min­is­ter Stu­art Young an­nounced that the Unit­ed States had re­voked this coun­try’s Of­fice of For­eign As­sets Con­trol (OFAC) li­cences, which fa­cil­i­tat­ed the de­vel­op­ment of both the Drag­on and Cocuina-Man­akin gas fields.

Speak­ing last month, T&T’s Prime Min­is­ter said if Venezuela in­vades Guyana, T&T will al­low the Unit­ed States to use T&T as a mil­i­tary base to at­tack Venezuela. How­ev­er, she did say that she wants to main­tain good re­la­tions with Venezuela.

De­spite En­er­gy Min­is­ter Mooni­lal say­ing there will al­ways be space for di­a­logue with Venezuela in en­er­gy and oth­er mat­ters, Monal­di opined that chal­lenges will re­main in the T&T en­er­gy sec­tor.

“No doubt it is al­so hard­er to get the li­cences from the US es­pe­cial­ly with the es­ca­la­tion re­cent­ly. In ad­di­tion, the un­cer­tain­ty for in­vestors in a cross-bor­der deal makes it hard­er to de­vel­op in these cir­cum­stances. The case of BP is dif­fer­ent as they do not have to do much in­vest­ments on the Venezue­lan side. BP was grant­ed the li­cences for the Cocuina fields in 2024.”

Monal­di said if there is a change of gov­ern­ment in Venezuela and the gas field projects re­main eco­nom­i­cal­ly vi­able, then there will be a pos­si­bil­i­ty for new con­tracts.

“I think that the eco­nom­ics are at­trac­tive enough that if there is a po­lit­i­cal change at some point, these deals might go through. How­ev­er in the fu­ture, the eco­nom­ic con­di­tions might change, the world de­mand for Liq­ue­fied Nat­ur­al Gas (LNG), the price for LNG and at some oth­er point the win­dow for op­por­tu­ni­ty might dis­ap­pear. In the case of the Drag­on gas field, if T&T dis­cov­ers more gas and they fill all the LNG in­fra­struc­ture, it may be that the eco­nom­ics of that field may be less at­trac­tive. A lot can change. But right now, the eco­nom­ics makes it that if there is po­lit­i­cal change, it might go through.”