T&T Upstream Sector and 2020 Budget Comments

Yesterday, I had the opportunity to participate in a post-budget panel discussion hosted by the Couva Point Lisas Chamber of Commerce, held jointly with several Chambers across the country. Also on the panel were former ministers, as well as experts in tax, finance and economics from the private sector.

I updated the room on the upstream sector in T&T, mentioned some of the related items in the 2020 budget and compared activity here to what's happening in Guyana and Suriname.

Some key points made:

1. Oil production in T&T is averaging 60,000 bopd and 3.6 bcf/d. Guyana will start production in Jan 2020 at 120,000 bopd and get to 750,000 bopd by 2025 or thereabouts.

Major projects from BP, Shell, BHP will bring on new gas by 2021, and new oil from BHP by 2021. No plans thus far from Heritage.

2. Upstream activity in T&T is essentially a big secret. The operators both large and small, do not educate the public nor do they publish much information about their current or planned drilling and development activity. BP, BHP, Shell, EOG, Perenco, Heritage and most of the smaller LO/FO operators are all guilty of this. The MEEI is also complicit in hiding this information from the public.

Touchstone is one example of an operator that has been very open with its activities. Exxon and its partners in Guyana have been extremely open with this type of info. A simple visit to their FB page will show this.

3. The service sector in T&T needs this kind of info to be able to plan ahead and develop capacity to be able to be eligible for these types of projects. Many service companies are not even aware of what projects are occurring so how can they participate?

4. The 2020 budget had very little relevance to the energy sector. Few fiscal measures were altered and one may serve more as a disincentive than anything else.

5. T&T's oil and gas acreage needs a targeted approach to design a framework for different areas based on technical and economic factors. That is, different fiscal regimes and contracts need to be designed to target small operators onshore, mature fields offshore, dry gas fields in the north coast, large shallow water gas and oil on the east coast and exploration and development in the deepwater. One standard regime cannot work anymore.

6. The Guyana-Suriname Basin has proven large oil fields with low breakeven prices and favourable contract and fiscal terms. It is quickly becoming the size of the next North Sea. Why would NEW large operators be interested in T&T with our mature fields, lack of recent exploration success, difficult fiscal terms, difficulty of doing business and poor management from regulators?

Hence our failed and non-existent recent bid rounds.

7. T&T has a massive human resource trained in the energy sector both upstream and downstream. We also have new graduates coming out every year and very little to do with them. Building strong local companies and entrepreneurs who can export services, personnel, bring in Forex and ultimately improve the T&T economy has to be part of the plan going forward.