Home' Trinidad and Tobago Guardian : March 12th 2015 Contents BG8 | ENERGY
BUSINESS GUARDIAN www.guardian.co.tt MARCH 2015 • WEEK TWO
Ateam from the Ministry
of Energy is due to
travel to Caracas
tomorrow to try and
hammer out unitisation
and unit operating
agreements for the
border fields with their Venezuelan counter-
The local team is led by the ministry s Per-
manent Secretary Selwyn Lashey and will be
joined by officials from the Ministry of Foreign
Affairs. They are due to meet with their
Venezuelan counterparts---who form the steer-
ing committee---seeking to monetise the 10
trillion cubic feet of natural gas it is estimated
that the field, which straddles the maritime
boundaries of both countries, contains.
The meeting follows last month s visit to
T&T by the Bolivarian Republic s President
Nicolás Maduro in which he signed a uniti-
sation agreement for the Manakin/Coquina
field that also extends across the delimitation
line between this country and Venezuela. He
also signed a Framework Agreement on Energy
In signing those agreements, Venezuela and
T&T put out a joint statement expressing their
full support for the work being undertaken by
the steering committee, particularly highlight-
ing the progress being made in the unitisation
of the Loran-Manatee field unit area.
"The work of the steering committee was
recognised as providing the necessary political,
socio-economic and institutional platform
for the use of such reserves in accordance
with the principles of reciprocity, solidarity
and respect to the sovereignty of both States."
"Both governments also expressed their
interests in the prompt operational start-up
for the development of this field by the explo-
ration and production companies involved in
T&T and Venezuela share a number of gas
fields that cross their territorial lines. The
first field to be unitised---that is for which an
agreement was signed by the two countries
that the fields should be jointly developed---
was the Loran/Manatee field.
This field is estimated to contain 10 tcf of
natural gas with approximately 7.3 tcf on
Venezuela s side of the marine boundary and
2.7 tcf on the T&T side. Chevron has been
named as the operator on both the T&T and
Venezuela sides with British Gas having an
interest on this country s side and Venezuela s
state owned company PDVSA having an inter-
est on Venezuela s side.
Before the gas can be brought to the market
both countries have to agree to unitise the
field, which has been done. They have to
identify the operator, which has also been
done. The two countries are now at the stage
of negotiating an unitisation and unit operating
agreement. That agreement will regulate how
all four companies in the unit area will be
conduct the operations including how much
money each will contribute, the time lines,
the cash call and other logistical arrange-
Once that is agreed, a joint operating agree-
ment has to be completed that will determine
where the gas will go to be processed, what
pipelines will be used, will it come here or
go to Venezuela. It is only after the joint
operating agreement has been signed that a
project can be developed, the gas processed
and monetised, and both countries and com-
panies can make money.
Helena Innis was the director of resources
management at the Ministry of Energy when
the unitisation agreement for the Loran/Man-
atee field was negotiated. She was part of the
T&T team. She told the Business Guardian
that it should take another three to five years
if a market can be developed for the gas.
"There were several excellent options
advanced by Chevron that may still be feasible
so as long as the political will exists in
Venezuela, it may happen."
Innis said the unitisation and unit operating
agreements are very important as it will set
out the rights and obligations of all the parties
to the agreement on a daily basis as to how
the development of the cross-border fields
will proceed. Adding "this will pave way for
something real to happen."
On Block 1, Venezuela s state-owned oil
company Petroleos de Venezuela SA (PDVSA)
drilled its Dorado 1 well, which is said to have
discovered a structure containing 1.5 tcf of
gas. This is matched on the Trinidad side of
the border by BP T&T s Kapok field, which
is an amalgamation of three finds---Sparrow,
Renegade, and Parang---believed to contain
in excess of 4 tcf of gas.
Block 2, where the Loran well was drilled
in 1982, is shared on the Trinidad side with
Block 6d, or Manatee in which there is a joint
operator Chevron. That field has 10 tcf of
gas with 2.7 tcf on the T&T side of the boarder
and 7.3 tcf on Venezuela s side of the border.
T&T team heads to Venezuela
to fine-tune agreements
OPEC is likely to maintain its production policy at a meeting
in June, Kuwait s OPEC governor said on Tuesday in the first
public comment on what would be a crucial decision to deter-
mine the direction of global oil prices in the second half of
Many OPEC oil ministers including Saudi Arabia s Ali al-
Naimi have defended the organisation s November decision
not to cut production but instead defend market share and
curtail the output of more expensive producers such as the
The accord sent oil prices below US$50 per barrel, extending
a sharp decline that began in June amid a global glut of crude.
The Organisation of the Petroleum Exporting Countries has
said it believes the oversupply, as much as 1.5 million barrels
per day, will evaporate as oil demand picks up and US oil pro-
duction growth slows, with companies drilling fewer wells.
However, should US oil producers prove more resilient than
OPEC expects, the glut could persist and even be further
aggravated if Western powers and Iran reach a nuclear deal
allowing Tehran to increase its oil exports.
A deadline for a framework agreement on Iran s nuclear
programme between Tehran and six major powers is set for
March, with a deadline for a full deal hoped for in June - the
same month as the next scheduled OPEC meeting.
On Tuesday, Kuwait s OPEC governor Nawal Al-Fuzaia said
at an energy conference in Qatar that she thought OPEC would
maintain its policy at the next meeting in Vienna on June 5.
"I think so because there is less than two months, removing
weekend and summer time, before the next OPEC meeting.
"I don t think there would be a big change in the oil market
supply/demand in this time."
Fuzaia said she did not expect oil prices to go below US$40
a barrel. Brent crude is currently at about US$58.
"It is difficult to predict (the) oil price point because it is
not just moving on sentiment; prices are affected by geopolitics,
disruption in Iraq, Iran," Fuzaia said.
She said Iraqi oil production growth was uncertain after
severe fluctuations in past months, while the return of large
oil volumes from Iran could take longer than expected.
"Yes, there is an increase of production in Iraq, but the sit-
uation is still not clear," she said.
"In Iran it is all linked with how the nuclear file will progress
with the West. Even otherwise, I think the production in Iran
will increase, but still not increase quickly, because the situation
has been affected. The maintenance, recovery in field, bringing
new equipment, will all take time."
Analysts from the Energy Aspects think tank said that even
before fresh Iranian barrels return to the market, OPEC and
other oil producers will have to face lower oil prices as demand
is set to weaken in April-June.
"Most of the supportive factors for Brent are starting to
fade. Supplies impacted by weather and technical issues are
returning, just when global refinery maintenance is about to
peak," it said in a note on Tuesday.
Bank of America Merrill Lynch said it saw downward pressure
on oil persisting throughout the third quarter of 2015 as devel-
oped nations continued to build up commercial oil stocks.
"From a macro perspective a stronger dollar and weaker
emerging markets will keep a lid on oil prices, while a possible
Iran deal is a key risk," it said in a note. Reuters
Kuwait expects OPEC to continue policy beyond June
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