Leveraging the energy sector to ensure future prosperity
OIL AND GAS BRING IN BILLIONS OF DOLLARS IN REVENUE, WHICH GOES A LONG WAY IN THESE SMALL ISLANDS. THE OBJECTIVE OF THE GOVERNMENT IS TO SEE THAT THIS MONEY IS INVESTED WISELY FOR DEVELOPMENT

OIL CURRENTLY accounts for more than one-quarter of GDP and 77% of foreign exchange

Oil and gas spell opportunity in Trinidad and Tobago: not just the opportunity for business and investment, but also for establishing the country securely as an economic leader in the region.

The sector is bringing in billions of dollars. International companies have invested more than $4 billion in the sector over the past five years. And revenues could reach an annual $10 billion over the next five years.
For a small country, these revenues will go a long way. They will finance Prime Minister Patrick Manning’s ambitious targets set out in the Vision 2020 project.
“One of the key government objectives is to ensure that maximum benefits are derived from this industry for our people and for the overall development of our country as a whole,” says Eric Williams, Minister for Energy and Energy Industries.

ERIC WILLIAMS Minister of Energy and Energy Industries

KEITH AWONG Chairman of the National Gas Company of Trinidad and Tobago

GERARD ACOSTA CEO of Trinidad and Tobago National Petroleum Marketing Company

FRANK LOOK KIN President of the National Gas Company of Trinidad and Tobago

MALCOLM JONES Chairman of the Petroleum Company of Trinidad and Tobago

For Minister Williams this means spending the revenues on building a sustainable economy with a broad base of activity in addition to providing social services such as healthcare and education.
“The government has taken a policy decision that further developments in oil and natural gas should be increasingly utilized in the production of goods with a greater local value-added content,” explains Mr. Williams.
The National Gas Company of Trinidad and Tobago (NGC) is the company on which the twin islands’ future most depends. New fields are coming into production every year. Known reserves are projected to last until 2036 while potential gas reserves could extend until 2050.

“We will stimulate growth in a way that maximizes added value in Trinidad and Tobago,” says Keith Awong, NGC’s Chairman. “Most gas goes into fertilizers, methanol, and liquid natural gas (LNG), so there is a need to diversify away from these three areas. For example we would like to expand downstream activities in methanol and ammonia,” he adds.

“We also have to recognize that we are dealing with the depletion of a non-renewable resource, so we have to encourage some sustainable activities that will eventually compensate for the reduction of this finite resource.”
NGC already supplies 70% of the U.S.’s demand for LNG from Trinidad and Tobago. But with several fields still unexploited, it is looking at an array of other opportunities. These include collaborating in the construction of an aluminum smelter, the creation of a world-scale ethylene production complex, and possibly collaborating with the local oil company, Petrotrin, on the manufacture of high quality transportation fuels from natural gas.

Atlantic LNG Company of Trinidad and Tobago was formed in 1995 to develop an LNG plant in the Caribbean. A joint venture between NGC and four international firms, BP, BG, Repsol and Tractebel, the plant was built at Point Fortin and is designed to produce three million metric tonnes of LNG per annum and 6,000 barrels per day of stabilized natural gas liquids. Sections of the plant,Train1 and 2, are working at full capacity and Train 3 will be operational in the third quarter of 2003.

The most high-profile future project is the possibility of building a trans-Caribbean undersea pipeline. The first phase, which would cost $500 million and could be completed by 2010, would extend through the entire chain of eastern Caribbean islands to Puerto Rico, explains Frank Look Kin, President of NGC.

“The key to making this project economic is the inclusion of Martinique and Guadeloupe. They would represent something like 60% of the capacity of the pipeline. The project will not really be able to proceed on a commercial basis unless they are involved,” he says.
Although most of the growth potential is seen as coming from natural gas, it is Petrotrin, the Petroleum Company of Trinidad and Tobago, that currently makes the single largest contribution to the country’s GDP. Oil alone accounts for more than one-quarter of GDP and 77% of foreign exchange.

Petrotrin is a fully integrated oil company, from exploration and production to refining and marketing. Although a state-owned company, it is looking to collaborate with investors who can bring both capital and expertise to help the company improve its infrastructure, says its Chairman, Malcolm Jones. “We see the need for finance; we see the need for new technology. If someone can bring that to us surely we will find the best way.”
Some projects are necessary to cut costs and maximize returns on wells that are reaching the end of their production life. “We are looking at possible joint ventures with partners who could come in and apply technology to get the last bit of oil out of the ground,” says Mr. Jones.

Another large project, still on the drawing board, is to reconfigure the refinery away from the uneconomic production of fuel oil, currently one-third of output, towards higher-value fuels. “We are talking about capital expenditure of $300 million to $400 million,” says the Petrotrin Chairman.

Mr. Jones is also looking at other downstream projects. He is President and CEO of Titan Methanol, a joint venture between JP Morgan, Saturn Methanol and BP, the largest methanol plant in the northern hemisphere, and one of Petrotrin's largest customers. “All the methanol is exported; roughly half to Europe and half to the U.S.,” Mr. Jones adds.
A new plant named Atlas Methanol – a joint venture between Methanex and BP – is currently under construction in Trinidad next to the Titan Methanol site. On completion it will be the largest methanol plant in the world.

BP is also engaged in a $600 million gas expansion project in its Kapok field which will provide Trinidad and Tobago with one of the largest offshore gas handling facilities in the world. The Kapok platform will be the largest offshore gas processing facility operated by BP globally.

NEW GAS FIELDS are coming into production every year, and the National Gas Company is also looking to diversify into downstream activities involving methanol and ammonia

Meanwhile, the Trinidad and Tobago National Petroleum Marketing Company (NP) is preparing for liberalization. Since 1972 it has been the sole marketer of petroleum fuels in the islands, with a network of 215 service stations. It also manufactures a wide range of automotive and industrial lubricants, greases, and specialist fuels.
“NP is a state corporation that touches the life of every Trinidadian and Tobagonian,” says CEO Gerard Acosta. “They have to use gas to cook, to drive their motor cars. They have to come into our outlets. So the quality of service we provide has a very direct impact on their quality of life. Locally we have been upgrading our service station network to include convenience stores.”

The prospect of liberalization does not worry Mr. Acosta. “It is how you do business that makes money. We are having to ensure that our gross margins are right, to get the maximum profit by being more efficient.”
According to Deputy Chairman Magna William-Smith, NP is also looking at expanding into the Dominican Republic and Northern Brazil. At home it has a niche in one of the country’s greatest cultural traditions – a subsidiary makes drums for the steel band industry. NP funds a community outreach program to transfer the skills of the aging generation of ‘pan tuners’ to the younger generation.