Trinidad and Tobago energy companies look for expansion opportunities in the region and beyond

 

The twin-island nation of Trinidad and Tobago has been, in its own right, a focal point for oil and gas exploration and production for decades. However, recent discoveries and developments are drawing attention to the surrounding area of the Caribbean and the northern coast of South America. In this wider perspective, T&T should be viewed not as a stand-alone energy industry, but as part of a widely connected regional energy hub.

Guyana Gains

Most interest in the region has been generated by major finds off the coast of Guyana in northern South America. In 2015 ExxonMobil struck oil with its Liza well in the deepwater Stabroek block (ExxonMobil has a 45% stake in the block, with Hess, of the US, holding 30% and CNOOC of China the remaining 25%). This deposit is estimated to contain as much as 1bn barrels of crude oil.

That discovery was followed in January 2017 by another find at the Payara-1 well 10 miles northwest of Liza. ExxonMobil officials say the Liza and Payara fields are close to each other, but the reservoirs are separate and unconnected.

Initial appraisal drilling suggested that there could be an additional 100m-150m barrels of oil in the Payara well. “We are encouraged to find a second field that tells us Liza was not a one-hit wonder,” a company manager told The New York Times. While still speculative, estimates by analysts at Tudor, Pickering, Holt & Co. Securities in January 2017 suggested the combined fields could represent a total of 2bn barrels of oil, worth some $100bn if an average price of $50 per barrel is assumed.

New Opportunities Arise

Oil from the Liza field is expected to come on-line in 2020, perhaps initially at a rate of 100,000 barrels per day (bpd) – this is in excess of the 74,000 bpd that is currently being produced in Trinidad. The technical challenge of delivering the oil will be significant, given that Guyana has little onshore infrastructure and no deepwater port. This is due to strong marine currents and heavy coastal siltation rates. The crude is therefore likely to be delivered to a floating production, storage and offloading facility, before being delivered by tankers to an overseas refinery.

There are opportunities for Trinidad-based oil service providers to capitalise on support roles that may arise from the planned operation, perhaps even using the state-owned Petrotrin refinery to process crude oil from Guyana. “There are substantial opportunities for energy services companies in Guyana, but to take full advantage it is essential to establish a local partner,” Frank Teelucksingh, managing director of T&T-based environmental consultancy firm Coastal Dynamics, told OBG.

The Guyana find is generating interest in the immediate area, according to Thackwray Driver, president of the Energy Chamber of Trinidad and Tobago. He said that deepwater exploration and production across the entire southern Caribbean – Trinidad, Barbados, Guyana and Suriname – has been on the radar for many oil majors. This creates important opportunities for T&T. In Driver’s view, the early development work in Guyana will have to be staged out of Trinidad, using the latter’s port and transport infrastructure, as well as the support that could be offered by a range of experienced Trinidad-based oil and gas service companies.

This and other regional developments should therefore deliver important diversification opportunities to the domestic energy industry. Richard Jeremie, chief technical officer for the Ministry of Energy and Energy Industries, told OBG, “Some of our local service companies are engaging the Guyanese in talks, so as to use landing facilities in Trinidad to take out pipelines. I think they will use Trinidad as a base. They can use our facilities here as opposed to setting up new facilities in Guyana. It will still depend on the details of each project, of course.”   VENEZUELA: Discussions on joint development of gas fields with Venezuela also point to benefits for T&T. Both the Loran-Manatee offshore cross-border gas field and Venezuela’s Dragon field are closer to Trinidad’s off- and onshore transport infrastructure than they are to Venezuelan infrastructure, as eastern Venezuela has less pipeline connectivity than the west of the country. This is the reason Venezuelan authorities are preparing to have the gas pumped out and commercialised via T&T, subject to acceptable revenue-sharing arrangements.

Gerry Brooks, chairman of T&T’s state-owned National Gas Company (NGC), has underlined the potential for Trinidad’s deepwater ports to serve as staging areas for nearby ports in the region with shallow natural drafts, such as those on the coasts of Suriname, Guyana and Venezuela. “We have been actively working with Guyanese counterparts to identify all areas for collaboration and further development,” Brooks told OBG. “These opportunities may include the transportation, processing and fractionation facilities for any substantial natural gas, as well as utilisation of our existing port facilities during exploration works.”

Port Expansion

One domestic beneficiary of the country’s growing role as an energy hub could be the Galeota Port in south-eastern Trinidad. Oil companies working off Trinidad’s eastern shores, including BPTT, BHP T&T, Trinity Exploration and Production, and Repsol, have used the port for some time. Expansion work at the port began in 2014 and has involved over $100m worth of investment. The port acts as a base for maintenance and supply services to offshore platforms.

Officials say the port is now ready to provide logistics support for new exploration. Recent construction has dredged the port to a depth of 12.8 metres and extended the quay to 995 metres, allowing it to cater to ships of up to 60,000 deadweight tonnes. It will be able to support exploration work in Suriname, French Guiana and Guyana, as well as deepwater exploration and development in Trinidad’s own eastern waters. Brooks said that capacity expansion work at the port should be completed by the end of 2019, totalling $130m.

Shifting the Focus

Shazan Ali, CEO of Trinidad-based TOSL engineering, expressed a view to OBG of long-term opportunities for oil service and engineering companies. While describing the situation facing the energy sector in Trinidad as difficult because of gas supply shortages and lower prices, Ali told OBG that the future is bright, as all recessions generate opportunities.

TOSL is able to perform work across the entire energy value chain, from wellhead through to downstream processing plants. TOSL has recently registered a subsidiary in Guyana and is bidding for two power plant projects in the country, designed to begin laying the foundations for a national electricity grid. Ali is sensitive to Guyana’s own development needs and priorities. “When I speak to people operating in offshore oil and gas in Guyana, they say that they may use Trinidad as a base for their operations,” Ali said. “That is fine, but if I was a member of Guyana’s government, the best thing I could do for my people would be to bring the oil onshore in Guyana and create jobs locally.”

Despite that qualification, Ali believes that Guyana and Suriname are likely to grow to represent the future of Caribbean energy, and that the best role for Trinidad-based oil and gas service companies such as his own was to pursue international business. That would require developing human capital, and training managers in negotiating and cultural skills. As he put it, oil executives from Texas did not integrate well in the T&T of the 1960s. “We cannot have that attitude. We need to prepare our people culturally. The future for us is not in Trinidad, it is outside Trinidad,” Ali told OBG.

Aiming for Africa

Other companies and stakeholders in the energy sector are also looking further afield. There have been a number of attempts to secure business in west Africa, where there is demand for offshore drilling expertise. In May 2016 Prime Minister Keith Rowley paid a visit to Ghana and signed a general agreement on oil and gas cooperation with the administration of former President John Mahama. Offering his country’s expertise for a gas pipeline project, he said that although T&T is small, it has over 100 years of experience in oil and gas that could be brought to fruition in Ghana.

“I continue to believe that there are excellent opportunities for Trinidad and Tobago energy service companies in Africa, despite the lack of major success to date,” Driver told OBG in September 2016. “The potential to expand in this market is something that should now be actively pursued. The government and our state-owned companies – especially the NGC – need to take the leading role in helping our service industry to access these markets.”

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The Report: Trinidad & Tobago 2017

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