The poor re­sponse to the 2022 T&T deep­wa­ter bid round with on­ly four of the 17 blocks re­ceiv­ing bids re­flects that the ex­cite­ment over this coun­try’s deep­wa­ter po­ten­tial has waned, says for­mer En­er­gy Min­is­ter Kevin Ram­nar­ine.

Last week was a dis­ap­point­ing end to the six-month process and the first deep­wa­ter bid round in al­most a decade when the clos­ing took place at the Hy­att Re­gency.

The Min­istry of En­er­gy had of­fered 17 blocks in the deep­wa­ter bid round and three quar­ter of the blocks went with­out a sin­gle bid.

The deep­wa­ter blocks where there were bids were on Blocks 25(a) 25(b) 23 and 27.

In­ter­est­ing­ly BHP, now Wood­side Pe­tro­le­um showed no in­ter­est in the deep­wa­ter blocks hav­ing ac­quired ex­ten­sive seis­mic in T&T’s deep­wa­ter and made nat­ur­al gas dis­cov­er­ies.

On June 1, the merg­er of Wood­side with BHP’s oil and gas port­fo­lio was com­plet­ed to cre­ate a glob­al en­er­gy com­pa­ny.

In an email re­sponse as to why it did not par­tic­i­pate in the bid­ding the com­pa­ny said: “Wood­side En­er­gy has a sig­nif­i­cant po­si­tion in the re­gion through pri­or bid rounds. We are cur­rent­ly fo­cused on pro­gress­ing our suc­cess­ful dis­cov­er­ies at Mag­el­lan (South­ern li­cens­es) and Ca­lyp­so (North­ern li­cens­es) and our po­si­tion in Bar­ba­dos.

“In 2021, we com­plet­ed a two well ap­praisal pro­gramme at Ca­lyp­so and com­plet­ed a seis­mic pro­gramme over our Bar­ba­dos li­cens­es.”

Ac­cord­ing to Ram­nar­ine, the fact that BHP/Wood­side kept find­ing nat­ur­al gas and not oil could be one fac­tor and then there was the dis­ap­point­ment with the much tout­ed Broad­side well in 2021 as he fur­ther ex­plained why the deep­wa­ter’s po­ten­tial has less­ened.

“The deep­wa­ter was sup­posed to be our great hope. It’s not as at­trac­tive as it was be­tween 2012 to 2014 when we award­ed nine blocks to BHP, BP and Rep­sol. I think the Gov­ern­ment needs to pur­sue BHP/Wood­side to en­sure we get the Ca­lyp­so go­ing and even­tu­al­ly in pro­duc­tion by 2027,” Ram­nar­ine ad­vised.

Ad­di­tion­al­ly, he not­ed that bp has es­sen­tial­ly now “fold­ed its arms” on ex­plo­ration in the shal­low and av­er­age depth wa­ters in the Colum­bus Basin.

“In 2018/2019 we must re­call there was an av­er­age wa­ter depth bid round which re­sult­ed in three bids from the same BP-Shell con­sor­tium and that went nowhere and we have nev­er heard of the out­come.

“In re­cent times Touch­stone has had suc­cess on land in Or­toire (a block award­ed in 2014) but it seems that the pro­duc­tion there when re­alised will be small (but wel­comed),” Ram­nar­ine said.

BPTT, Queen’s Park West, Port-of-Spain.

ROBERTO CODALLO

Over­all, he added, the up­stream re­al­ly has not been mo­ti­vat­ed since 2015 and the ma­jor­i­ty of ex­plo­ration in the last cou­ple years was as a re­sult of con­tracts and li­cens­es award­ed be­tween 2011 to 2015.

“Note too that these are called ‘com­pet­i­tive bid rounds’ but there is noth­ing com­pet­i­tive when you get one bid in a block.” the for­mer en­er­gy min­is­ter fur­ther said.

How­ev­er, while agree­ing that the re­sults of the 2021/2022 deep­wa­ter bid round were not ex­cit­ing, he said En­er­gy Min­is­ter Stu­art Young “did well” to get the min­istry to put out a deep­wa­ter bid round.

The rea­son be­ing Ram­nar­ine said pri­or to the re­cent­ly con­clud­ed 2021/2022 deep­wa­ter bid round, the last time the Min­istry of En­er­gy held a deep­wa­ter bid round was in 2013/2014 when he (Ram­nar­ine) served as min­is­ter.

Ac­knowl­edg­ing that the eight-year gap can­not not be good for the coun­try Ram­nar­ine said: “As for the re­sults, a de­ci­sion to bid on a block rests in­ter alia on the prospec­tiv­i­ty of the block, its eco­nom­ics, its dry hole cost, the capex and ac­cess to mar­kets etc. Com­pa­nies as­sess blocks look­ing at these risk fac­tors.”

Fur­ther, he said the bet­ter the qual­i­ty in­for­ma­tion they have the more they can de-risk the block and even­tu­al­ly bid.

“Hav­ing said that, I am not sure whether the Min­istry has done any ge­o­log­i­cal stud­ies since the pre­vi­ous deep­wa­ter bid rounds which were in 2012 and 2013/2014 re­spec­tive­ly.

“The fis­cal terms of the 2021/2022 bid round were al­so those used in 2013/2014. The is­sue with that is in my era as min­is­ter the com­pa­nies were look­ing for oil in the deep­wa­ter.

“BHP went out and drilled over 2016 to 2021 and found nat­ur­al gas in the deep­wa­ter. The eco­nom­ics of nat­ur­al gas in deep­wa­ter is not as at­trac­tive as the eco­nom­ics for oil in deep­wa­ter. So I sup­pose some con­sid­er­a­tion should have been giv­en to that in struc­tur­ing the fis­cal terms,” Ram­nar­ine said.

But more im­por­tant­ly, he added, the is­sue of ease of do­ing busi­ness in the en­er­gy sec­tor weighs heav­i­ly on these bid rounds and the time­lines, cit­ing the Ca­lyp­so project as an ex­am­ple. “The Gov­ern­ment says it will de­liv­er first gas in 2027. That is fif­teen years af­ter the re­lat­ed pro­duc­tion shar­ing con­tracts were signed ( co­in­ci­den­tal­ly by me).

“We need to ad­dress the length of time it takes to go from bid round to first gas or first oil,” Ram­nar­ine said.

On whether the poor re­sponse means that com­pa­nies may be less in­ter­est­ed in do­ing busi­ness with T&T as op­posed to Guyana and Suri­name which may seem to be more lu­cra­tive Ram­nar­ine said en­ti­ties in­ter­est­ed in T&T and those in­ter­est­ed in Guyana and Suri­name are dif­fer­ent with the ex­cep­tion of Shell.

But he not­ed that Guyana and Suri­name plan to have bid rounds soon, adding that is “bound to at­tract” a lot of at­ten­tion from in­vestors.

Shell T&T Ltd general manager commercial Stephane Picarle, left, and bpTT president Claire Fitzpatrick sign documents during the closing of the T&T deepwater competitive bid round 2021-2022, at the Hyatt Regency Trinidad, Wrightson Road, Port-of-Spain last Friday. Looking on is Louise Pay-Wing, senior state counsel, Ministry of Energy and Energy Industries.

NICOLE DRAYTON

Ad­di­tion­al­ly, Ram­nar­ine ad­vised that Gov­ern­ment take note that no new com­pa­nies are knock­ing on its door.

“It’s the same BP, Shell, EOG, BHP. Equal­ly wor­ry­ing is the fact that the hold­er of all the acreage in the T&T deep­wa­ter, BHP did not place a sin­gle bid.

“Maybe this is be­cause of the Wood­side ac­qui­si­tion or maybe it’s some­thing else,” Ram­nar­ine said.

And re­gard­ing the con­sor­tium of bp and Shell which were the on­ly bid­ders, Ram­nar­ine said these are two great ex­plo­ration com­pa­nies as he wished them suc­cess.

Why on­ly four bids?

En­er­gy ex­pert and ge­ol­o­gist Dr Kr­ish­na Per­sad told the Busi­ness Guardian that com­pa­nies have var­i­ous cri­te­ria in­clud­ing look­ing at the blocks them­selves and what they think the po­ten­tial is for both gas and oil.

But there are oth­er con­sid­er­a­tions.

Ac­cord­ing to Per­sad, these in­clude prof­itabil­i­ty in terms of the tax regimes and the acreage po­si­tion in T&T.

“Do they need to con­cen­trate on ac­quir­ing ad­di­tion­al acreage at this time or should they be look­ing to ex­plore and de­vel­op the acreage that they al­ready have? These would be the con­sid­er­a­tions not just the oil and gas po­ten­tial of the block,” Per­sad fur­ther ex­plained.

Ref­er­enc­ing BHP/Wood­side, he not­ed that com­pa­ny has a fair amount of acreage which it is ex­plor­ing and has al­so found a large amount of gas.

“If you were in their shoes what would you do? Would you look for more acreage and you’re not talk­ing Trinidad alone. You’re talk­ing world-wide,” Per­sad said, al­so not­ing the re­cent merg­er with Wood­side could have been an­oth­er fac­tor.

Then there’s the fi­nan­cial as­pect.

“Re­mem­ber you’re talk­ing ul­tra deep wa­ter so who are the com­pa­nies in the world with these pock­ets which are big enough and deep enough?

“You think Exxon leav­ing Guyana to come here? Exxon was here and failed so they gone Guyana.

“Their hands are full in Guyana. To­tal is in Guyana too and Suri­name in a new basin,” Per­sad not­ed.

In Feb­ru­ary this year To­tal En­er­gies and APA Cor­po­ra­tion made a sig­nif­i­cant new oil and as­so­ci­at­ed gas dis­cov­ery at the Krabdagu-1 well, in the cen­tral area of Block 58, off­shore Suri­name.

Kevin Ramnarine

Natasha Saidwan

This fol­lows pre­vi­ous dis­cov­er­ies at Ma­ka, Sapakara, Kwaskwasi and Keske­si, and the suc­cess­ful­ly test­ed Sapakara South-1 ap­praisal well.

But ac­cord­ing to Per­sad the fact that bp and Shell did bid in T&T means that they felt things were right in­clud­ing the tax regime, the po­ten­tial with the blocks and in­clud­ing their acreage po­si­tion.

“But it would not just be one ac­tor. All the fac­tors would have to be cor­rect so it would have to be five out of five,” Per­sad added.

And not­ing that T&T re­mains a proven oil and gas province, Per­sad said the com­pa­nies which are here and are suc­cess­ful would be the one which are more like­ly to con­tin­ue in­vest­ing in this coun­try.

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