KEVON FELMINE

kevon.felmine@guardian.co.tt 

Even as Fi­nance Min­is­ter Colm Im­bert boasts that Gov­ern­ment ne­go­ti­a­tions with key en­er­gy part­ners has put T&T’s en­er­gy sec­tor on a “more sol­id and sus­tain­able foot­ing,” stake­hold­ers are not sure how it will ex­e­cute plans for the in­dus­try amidst low petro­chem­i­cal prices.

Dur­ing yes­ter­day’s pre­sen­ta­tion of the 2021 Bud­get, Im­bert said T&T would con­tin­ue to be in an at­trac­tive lo­ca­tion for in­vest­ment in the oil sec­tor for years to come.

But giv­en the glob­al over­sup­ply of oil and gas, for­mer En­er­gy Min­is­ter Car­olyn Seep­er­sad-Bachan be­lieves the Gov­ern­ment is hold­ing on­to hope by bas­ing the bud­get on an oil price of US$45 per bar­rel and a gas price of US$3 per mcf.

Seep­er­sad-Bachan, an en­gi­neer by pro­fes­sion, said giv­en the low oil prices over the re­cent quar­ters, the Gov­ern­ment should have used an oil price of US$40 per bar­rel of and a gas price of US$2, not­ing that the West Texas In­ter­me­di­ate oil price was US$39.95 per bar­rel while nat­ur­al gas was US$2.71.

“Even if prices for oil and gas re­bounds, you will get high­er pro­duc­tion of shale gas from the US as well, so it will not re­al­ly af­fect the cur­rent prices. It is even why when OPEC had a re­duc­tion in pro­duc­tion, the prices went back to where it was. I think the Gov­ern­ment is hop­ing that prices will re­cov­er and they would ad­just the bud­get up­ward at a lat­er date,” Seep­er­sad-Bachan said.

As a tech­no­crat in the en­er­gy sec­tor for decades, Seep­er­sad-Bachan said apart from the in­crease of Sup­ple­men­tal Pe­tro­le­um Tax (SPT) from $50 to $75, there was hard­ly any­thing new re­gard­ing the en­er­gy sec­tor. 

Im­bert said yes­ter­day that based on dis­cus­sions, the thresh­old for the im­por­ta­tion of the SPT for small on­shore oil pro­duc­ers would in­crease to $75 per bar­rel for fis­cal years, 2021 and 2022 in the first in­stance, up from the cur­rent $50 per bar­rel. He said the Gov­ern­ment would re­view it at the end of the two years.

But with com­mod­i­ty prices so low, Seep­er­sad-Bachan ques­tioned the vi­a­bil­i­ty of op­er­a­tors to con­tin­ue with this in­crease.

How­ev­er, an­oth­er for­mer en­er­gy min­is­ter, Kevin Ram­nar­ine, be­lieves the in­dus­try will wel­come changes in the SPT. He said the Gov­ern­ment should have brought these changes four years ago when pe­tro­le­um prices were high­er.

“We al­so have to fo­cus on in­creas­ing oil and gas pro­duc­tion and the re­vi­sion of the SPT can go a long way to help­ing with at­tract­ing in­vest­ment with in­creased oil pro­duc­tion,” Ram­nar­ine said.

He added that the Gov­ern­ment should di­vest Her­itage Pe­tro­le­um’s idle in­crease by leas­ing it to the pri­vate sec­tor to help in­crease pro­duc­tion.

Im­bert al­so an­nounced that the Gov­ern­ment will re­move fixed re­tail mar­gins for all liq­uid pe­tro­le­um prod­ucts, al­low­ing re­tail­ers and deal­ers to set their prices. The gov­ern­ment tar­gets Jan­u­ary 2021 to im­ple­ment this lib­er­al­i­sa­tion change.

Seep­er­sad-Bachan said at the cur­rent pe­tro­le­um prices, there was al­most no sub­sidy for the Gov­ern­ment to pay. How­ev­er, if oil and gas prices rise, it will cre­ate un­cer­tain­ty. 

By lib­er­al­is­ing deal­ers, she said diesel prices can in­crease and if it does cit­i­zens can ex­pect an in­crease in the cost of liv­ing as com­mer­cial prices and trans­porta­tion will raise. How­ev­er, she said it could be an in­cen­tive for busi­ness­es to con­vert their ve­hi­cles to CNG.

But Seep­er­sad-Bachan said Im­bert’s pre­sen­ta­tion leaves ques­tions as to whether the Na­tion­al Pe­tro­le­um Mar­ket­ing Com­pa­ny will sell its gas sta­tions and who in­her­its the li­a­bil­i­ty of those sta­tions re­gard­ing the en­vi­ron­ment. She al­so asked what the Min­istry of En­er­gy and En­er­gy In­dus­tries will im­ple­ment to en­sure deal­ers do not mo­nop­o­lise the mar­ket and im­pose preda­to­ry prices on mo­torists. 

Ram­nar­ine be­lieves Im­bert should go a step fur­ther and al­low for mul­ti­ple pri­vate sec­tor com­pa­nies to im­port fu­el.

Cur­rent­ly, on­ly State-owned Paria Fu­el Trad­ing Com­pa­ny im­ports fu­el for the do­mes­tic mar­ket.

“If you have more im­porters, you will have more com­pe­ti­tion. When there are more choic­es, the ben­e­fi­cia­ry is the con­sumer. We need more de­tails as to how it will work,” Ram­nar­ine said.

De­fend­ing the Gov­ern­ment’s po­si­tion to re­struc­ture Petrotrin in 2018, Im­bert yes­ter­day said the new en­ti­ty, Her­itage Pe­tro­le­um Com­pa­ny Ltd (Her­itage), post­ed a $1.4 bil­lion prof­it, con­tribut­ing $820 mil­lion in tax­es, levies, rent, roy­al­ties and li­cens­es. Im­bert said this prof­itabil­i­ty con­tin­ued in­to the first six months of the 2020 fi­nan­cial year.

As the gov­ern­ment en­gages Pa­tri­ot­ic En­er­gies and Tech­nolo­gies Co Ltd (Pa­tri­ot­ic) on the sale of the Guaracara Re­fin­ing Com­pa­ny, for­mer­ly Petrotrin’s Pointe-a-Pierre Re­fin­ery, Im­bert re­mind­ed that the dead­line was Oc­to­ber 31.

“If an agree­ment can­not be reached on a vi­able or prac­ti­cal con­trac­tu­al agree­ment by that time, af­ter giv­ing Pa­tri­ot­ic all op­por­tu­ni­ties to fi­nalise the terms of the agree­ment, the process will be brought to an end, and the Gov­ern­ment will con­sid­er oth­er op­tions for the sale of the re­fin­ery,” Im­bert said.

In a brief state­ment on this yes­ter­day, Oil­fields Work­ers’ Trade Union chief ed­u­ca­tion of­fi­cer Ozzi War­wick re­it­er­at­ed the union’s po­si­tion that it was ready. 

“We are ready and we are of the firm view that there is no oth­er op­tion that is in the in­ter­est of Trinidad & To­ba­go oth­er than the ac­qui­si­tion of the re­fin­ery to Pa­tri­ot­ic,” War­wick said.