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What an energy policy document should contain

By David Renwick

The Ministry of Energy and Energy Affairs (MEEA) is in the midst of a series of “national energy policy consultations,” as the four-part exercise is described, designed to achieve “the re-fuelling of Trinidad and Tobago’s economic engine” during the period 2011-2015 (which coincides with the current government’s constitutional term in office).

This is a very noble ambition, though the “re-fuelling of Trinidad and Tobago’s economic engine” might be more speedily achieved, in the short to medium term at least, were the government to infuse some capital into the construction industry, as the previous People’s National Movement (PNM) administration did, especially in helping to bring about the erection of the two tall buildings always intended for those ugly spaces that now disfigure downtown Port of Spain.

MEEA says it hopes to establish “a new energy policy” based on the outcome of the consultations and such a policy, of course, is useful in its own right, never mind any role it may have in the “re-fuelling of the economic engine”.

MEEA claims that “a clear policy document” will “enhance our international relations and investor readiness profile,” though both of those attributes, I would have thought, are already engrained in most investors’ minds – certainly, in most oil and gas investors’ minds.

RWE Dea AG, Germany’s second largest utility, is an example of this and has needed the existence of no one-stop energy policy to convince it to want to invest in the country’s petroleum sector, which it has done through its joint bid with Canada’s Niko Resources for the NCMA 2 block off Trinidad’s north coast, the production sharing contract – PSC – for which should be signed off anytime now.

Thomas Rappuhn, CEO of RWE Dea AG’s oil and gas unit, describes Trinidad and Tobago as “attractive, having lots of gas on the basis of the data we have seen”.

The fact is, a “clear policy document” could have been prepared quite easily by MEEA without the need for these drawn-out talking shops (though I hasten to add I will be attending the one being held in Port of Spain on January 26, primarily to sample the free food and drink which I trust will be served, though I hope it will be better organised than, from all accounts, was the one in San Fernando).

If Ms Carolyn Seepersad-Bachan, our quick-witted new Energy Minister, learns anything new from these sessions, I would be prepared to eat my hat (actually, I don’t wear one).

Those of us who take an interest in the energy sector already know what any all-embracing “energy policy” document should contain.

So, does the minister herself, of course, indeed, she has been spelling out policies one after another in her various public speeches during the eight frenetic months she has been in office.

In any event, such policies are only supposed to change at the margins when a new government comes into office: Mr Patrick Manning was quite adamant about that and so was Mr Basdeo Panday, with whose administration Ms Seepersad-Bachan was once associated.

The basic drivers must remain in place because the imperatives of the energy sector are the same, whether its Trinidad and Tobago or Timbuctoo (does Timbuctoo have an energy industry? I’m not too sure).

The “margins”, in Ms. Seepersad-Bachan’s case, refer to her pursuit of “energy efficiency”, which was not particularly stridently articulated during the former PNM administration and the points-linked gas allocation criteria she has enunciated.

All the other imperatives she has already outlined are standard concerns for any energy minister and qualify on the basis of common sense alone for inclusion in any energy policy document.

Here are some of the obvious examples, with which my readers are well familiar:

• Maximisation of oil and gas production, the bedrock of tax revenue sustainability. Finance Minister Winston Dookeran calculates that he will collect around $11.7 billion in direct taxation under exploration and production (E and P) and PSC contracts in 2011, some $1.5 billion less than the revised figure for 2010, a reflection not of the level of pricing but of the level of production. The energy minister recognises this very well and has already indicated that she will use all the tools at her disposal as far as oil in particular is concerned – new block rounds, revival of old and small oilfields, enhanced production methods – to increase crude output.

• Keeping the downstream gas monetisation programme going, which implies helping identify commercialisation opportunities for companies which have gas resources, they are anxious to utilise – the UK’s Centrica Energy comes to mind, among others – and those that may discover gas resources in the future, such as the operators of the NCMA 2,3 and 4 blocks off Trinidad’s north coast, who all have a fairly good chance of finding new gas accumulations. These monetisation avenues should be not only confined to the domestic but also include the external, in particular the possibility of LNG exports to Cuba, which wants to import the stuff and the smaller Caribbean non-pipeline gas trades which are being discussed in electric utility circles at the moment (and I hope MEEA is keeping on top of that).

• Pursuing renewable energy to as feasible an extent as possible (and it is not a panacea, as some of its proponents might claim, to the challenges of expensive fossil fuels but rather a modest contribution by this country to the amelioration of global warming). The experts say renewable energy is also not suitable for base load energy in power plants but there is clearly still some merit in adding it to the Trinidad and Tobago energy matrix.

• Continued “localisation” of the entire energy sector, in the sense that local energy service companies must have a bigger presence in the business of oil and gas exploration and development and, often overlooked, that local companies must be offered business opportunities in the upstream, where state firm, Petrotrin, dominates in oil and international companies (bpTT, BG T and T, EOG Resources Trinidad and BHPBilliton TT) dominate in gas. It is unfortunate that the bid by Gulf Central Ltd for the North Marine block in the Gulf of Paria offered in the recent shallow and average water block auction did not meet MEEA’s hurdle because it would have given a local company, Krishna Persad and Associates, an added bite at a bit of the upstream (KPA is already offshore as a 13 per cent shareholder in Mora Ven Holdings Mora block off the east coast, while Dr Persad, in his own right, holds nine per cent).

Several other initiatives already announced by the minister, including ensuring that Petrotrin’s refinery reclaims its place as a premier Caribbean crude processing centre, already have a secure place in any likely energy policy, all helping to render the stated goal of the consultations somewhat redundant.

David Renwick was awarded the Hummingbird Medal (Gold) in 2008 for the development of energy journalism in Trinidad and Tobago.

Sourc: Trinidad Express

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