Home' Trinidad and Tobago Guardian : August 21st 2014 Contents BG8 | ENERGY
BUSINESS GUARDIAN www.guardian.co.tt AUGUST 2014 • WEEK THREE
When the Minister of
Finance Larry Howai
presents his 2015 budget,
he is likely to reveal that
crude has averaged more
than US$15 above what was predicted in last
year's budget. Once his production estimates
were correct, there should have been significant
transfers to the Revenue and Stabilisation
When the minister presented his budget
last year, he told Parliament that Government's
projected revenue was based on crude prices
of US$80 barrel for Trinidad's mix of crude
and US$2.75 per million cubic feet for natural
He said, "Government expenditure is
planned on the basis of revenue projections,
which are predicated on oil and gas assump-
tions of US$80 per barrel for the T&T basket
of crude and US$2.75 per mcf, respectively. It
should be noted that an average oil price of
US$80 per barrel for T&T basket of crudes
equates to a West Texas Intermediate (WTI)
oil price of US$75 per barrel."
According to the United States Energy Info-
mation Agency, the market's perception of
reduced risk to Iraqi oil exports and news
regarding increasing Libyan oil exports con-
tributed to a drop in the Brent crude oil spot
price to an average of US$107 per barrel (bbl)
in July, US$5/bbl lower than the June aver-
EIA projects Brent crude oil prices to average
$107/bbl over the second half of 2014 and
$105/bbl in 2015. West Texas Intermediate
(WTI) crude oil prices fell from an average of
$106/bbl in June to $104/bbl in July,
In determining the average price of crude
one has to consider the mix of crude produced
including Galeota Blend and condensate which
fetches a price close to Brent.
Together this represents about 35,000 bo/d
while Trinmar's 23,000bo/d fetches a prices
close to West Texas Intermediate and the
onland production, which is about
23,000bop/d is lower than WTI, but all that
crude goes directly to the refinery in Pointe-
In its latest report, the EIA added that the
WTI discount to Brent, which averaged
US$11/bbl in 2013, is expected to average
US$8/bbl and US$9/bbl in 2014 and 2015,
respectively, both US$1/bbl lower than pro-
jected in last month's STEO.
This should be good news for Petrotrin
which has suffered because US oil refineries
have benefited from discounted crude owing
to increase crude production in non traditional
US producing areas and the challenge of getting
that crude from the fields to the refineries
due to a lack of infrastructure. This has led
to refineries getting discounted crude and
flooding the market with products in which
their margins are great but which has resulted
in significant losses to the State owned com-
pany. The shrinking of the difference between
the US WTI and Brent should lead to higher
net crude prices to the refineries and help
reduce their margins.
The Minister of Finance is likely to have
met his revenue expectations with respect to
natural gas prices. While it is not clear how
much gas prices would have averaged because
the price is based on a net back position worked
oput after the trades and determined to a larget
extent by cargo diversions Atlantic has revealed
that it has been abole to source some of the
best markets and was pleased with its per-
formance over the last year. However natural
gas production remains down and the Min-
ister's revenues would have been affected by
The EIA said natural gas spot prices fell
from US$4.47/million British thermal units
(MMBtu) at the beginning of July to
US$3.78/MMBtu at the end of the month as
natural gas stock builds continued to outpace
historical norms. Henry Hub natural gas spot
price, which averaged $3.73 per MMBtu in
2013, will average US$4.46/MMBtu in 2014
and US$4.00/MMBtu in 2015,
US$0.31/MMBtu and US$0.51/MMBtu lower
than in last month's STEO, respectively.
Energy prices higher in FY 2015
BPTT's announced decision to proceed with its Juniper
field development will not lead to an increase in the com-
pany's overall natural gas production.
In an e-mail response to questions from the Business
Guardian, the company confirmed that the gas will be used
to meet its natural gas commitment and is not designed
to specifically address natural decline in the company's
BPTT said, "Gas from Juniper will assist the company
in meeting its natural gas commitments to the market. Pro-
duction is not related specifically to addressing decline of
production from older fields."
Energy Minister Kevin Ramnarine had boasted that the
decision will yield immediate and long-term benefits for
the people of the country by way of revenue generation
and job creation.
He told the Business Guardian,"This is a very important
project for the future of T&T's economy. The investment
is just over US$2 billion."
Ramnarine said: "This demonstrates strong investor con-
fidence in the economy. Production will commence in 2017.
This is a good signal for the LNG business, the existing
downstream business and planned new investments. "
BPTT told the Business Guardian it was not prepared to
say how much the project was going to cost, even though
Ramnarine has touted the figure at $2 billion.
The Business Guardian reported that the Minister of
Finance was likely to face the challenge of trying to maximise
revenues from the natural gas sector, but would find that
difficult with continued gas curtailment.
Gas production has averaged a mere four billion standard
cubic feet per day over the last 12 months and between
April and June has not averaged above 4bscf/d.
This has a cascading effect on Government revenues with
less taxes from the upstream producers, less revenue from
the downstream sector.
Juniper is estimated to contain 1.5 tcf of gas and is located
off the east coast, on the continental shelf where bpTT
produces all of its 2bcf/d gas .
The company said the Juniper project will feature the
construction of a normally unmanned platform together
with corresponding subsea infrastructure, a first for bpTT.
Fabrication is proposed to begin in fourth quarter 2014.
The Juniper facility will take gas from the Corallita and
Lantana fields located 50 miles off the south east coast of
Trinidad in water-depth of approximately 360 feet. The
development will include five subsea wells and will have
a production capacity of approximately 590 million standard
cubic feet a day (mmscfd). Gas from Juniper will flow to
the Mahogany B hub via a new ten- kilometre flowline.
Juniper will become bpTT's 14th offshore production
facility. Drilling is due to commence in 2015 and first gas
from the facility is expected in 2017.
BPTT regional president Norman Christie said: "Juniper
demonstrates bpTT's commitment to T&T over the long
-term. This development is an important part of the future
for bpTT because it will assist the company in meeting its
natural gas commitments to the market. It is also an impor-
tant step change for bpTT as it introduces subsea infra-
structure to continue the development of its resources in
the Columbus Basin."
It took BP PLC two years to sign off on the project because
of concerns about the cost of development and the tax
regime in T&T. It took a revision of the Caribbean island's
fiscal incentives for the project to be approved.
BPTT produces 18 per cent of BP's global production .
Juniper field will not increase overall
natural gas production
Minister of Finance
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