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Energy Chamber’s take on the National energy policy consultations and a Green Economy

The Ministry of Energy and Energy Affairs recently concluded a national energy policy consultation series to foster dialogue on the future of the sector and lay the foundations for a clear policy document. During these deliberations a cross section of the Government, business, labour and civil society representatives weighed in and offered their view points on issues vital to the sector’s continued growth.
The Energy Chamber played a central role in the consultations, offering tangible policy recommendations which would help stimulate upstream activity, rationalise gas utilisation and gas pricing, bolster local content development, advance energy services exports and promote T&T as an ideal energy investment destination. Below are some key recommendations forwarded by the Energy Chamber as well as some of the major talking points to emerge from the consultations:

Data Access

There was a call for the ministry to make seismic and well data from exploration companies available to their peers in the industry. The general view was that companies would bear less risks and activity would be stimulated with more access to data. The ministry, of course, will need to categorise, compile the data and, more importantly, make the necessary adjustments to existing legislation.

Development of Untapped Reserves
One of the major talking points at the consultations was developing untapped reserves, especially as it relates to Petrotrin’s Trinmar acreage. The Energy Chamber and the OWTU were in agreement that there should be improved safety, increased production and increased investment in Trinmar assets. The only point of divergence between the union and the chamber was over the role of private capital in developing Trinmar, with the Energy Chamber proposing equity investments to secure capital and the union noting the need for investment but not identifying the sources of capital. Given the declining production levels at Trinmar, the chamber offered possible mechanisms for securing the needed investment  including the sale of Trinmar’s assets, public-listing (all or part), a joint-venture or a series of  lease-outs. At the consultations, there were also calls for Petrotrin to set up an enhanced oil recovery unit to maximize the potential of mature fields through steam injection, CO2 or other technologies.

Gas Utilisation and Pricing
At the consultation, the Energy Chamber raised several questions on the issue of gas utilisation surrounding how much gas should the country extract, the appropriate utilisation mix for gas, whether government should seek investment in gas outside of T&T, whether government’s role as a facilitator should be reviewed and whether government be should be involved in gas value added projects plus shipping and marketing of LNG. The consultation also brought the issue of gas contract renewal for both upstream and downstream companies in 2014 and 2018 to the table. Other talking points included exploring power generation opportunities in combined cycle and exhaust  heat plus renewing gas contracts for petrochemical plants based on how efficiently these plants use energy.

Local Content

The Energy Chamber has always been the champion of promoting local content and participation in the energy industry. At the consultations, several suggestions were made on encouraging local capital to be invested in the sector, including investment in oil production as well as listing companies and projects on the local stock exchange. The role of legislation in boosting local content was explored and the chamber noted that percentage target spend on  legislation does not have good success rate and it was more beneficial to target procurement process and promote use of local companies, as was done with Atlantic Train IV construction. The chamber highlighted the need for the establishment of a local content monitoring and evaluation unit. Also the importance of standards and certification was also encouraged by the chamber as adherence to high standards can help local companies export their services and fend off unfair low-cost international competition.

Green Economy
During the consultations, the Energy Chamber highlighted quick wins which can help promote a green economy in the country including the promotion of the widespread use of cleaner transportation fuels like CNG in public transportation as well as the removal of current transportation fuel subsidies. The Chamber also called for promotion of solar technology in homes and businesses, though noting that large-scale grid applications were unlikely in the current environment. For any changes to take root their must be policy targets for reduction of carbon emissions by milestone dates, review of tariff structure for electricity and transportation fuels, targets for TTEC that a percentage of energy purchased from power producers must come from renewable sources, investment to develop and upgrade the electricity distribution network to the extremities of the islands and continuation of capital incentives ( from 2010 Budget) and fiscal incentives to encourage capital investment in renewable projects.

Institutional strengthening and reform
If the Government is to successfully implement a new energy policy the Energy Chamber believes that there is an urgent need to strengthen both the regulatory and investment promotion functions of the Government and cut the bureaucratic red tape involved with attaining permits. There was extensive discussion of the need to strengthen and speed-up the regulatory functions of the Ministry of Energy and Energy Affairs and other regulatory agencies (including the Environmental Management Authority’s environmental clearance process) during the consultations. The Energy Chamber believes that there should be one single agency with the responsibility for promoting investment into the T&T energy sector, in both the upstream and downstream sectors (and including renewable energy).

Conclusion

There were several other pertinent points raised during the consultations and, while we cannot list them all, the Ministry of Energy and Energy Affairs has to sift through many recommendations in order to add different dimensions to the proposed policy document. The importance of a policy to guide the energy sector cannot be understated. In 2010, the energy sector accounted for 36 per cent of GDP, 52 per cent of government revenue and 81 per cent of foreign direct investment. While T&T’s energy sector is more than 100 years old, planning for the next 100 years must begin now. Any future policy document must then focus on promoting the country as a preferred investment destination and as an exporter of energy services expertise paying attention to our reserves replacement, gas utilisation, commitment to local content and embrace of green energy technologies. Mindful of the fact that there have been consultations before to which bore little fruit and despite the commitment by the Ministry that this would not be another talk shop, no schedule for the roll out or formulation of the policy document was provided.

For more information on the Energy Chamber’s policy recommendations contact execoffice@energy.tt or call 6-ENERGY.



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