Home' Trinidad and Tobago Guardian : April 30th 2015 Contents APRIL 2015 • WEEK FIVE www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG7
Opposition Leader Dr Keith Rowley has assured that should
the government change there will be no immediate increase
in taxes on energy sector companies.
In a wide-ranging, recent address on the PNM s energy
policy, Rowley said the country had to be pragmatic because
it was in competition with many other oil and gas provinces
with less difficult acreage to explore and therefore had to
ensure that there was the right reward in place for the risks
of exploration drilling.
Pointing out that the cost of drilling a well in the deepwater
was US $200 million, Rowley said the country did not have
the resources to drill such wells and had to rely on capital
from the multinational companies.
He explained: "So we are offering more difficult areas in
the deepwater and other countries are offering up other virgin
areas that are easier. So that puts additional pressure on us
to determine what we offer to make ourselves competitive in
the international environment. We must not do anything to
not keep ourselves competitive. We must be pragmatic and
do what has to be done to keep ourselves competitive in the
industry because this industry feeds our people."
The opposition leader said the shale gas revolution and
increased production from tight oil had changed the external
environment and this country had to adjust.
"Trinidad and Tobago in facing these challenges, both recent
and current, must adopt not only long-term measures but
develop medium and long term strategies to treat with them.
The challenges, compounded by internal problems of poor
decision making and or lack of action have also been aggravated
by the impact of both external and international developments
such as they now face," Rowley told the Energy Chamber.
He added: "In treating with these serious implications, these
challenges have and will continue to impact on the economy,
quality of life and our overall national development. We must
cease being superficial in treating with these problems, hoping
that some activity outside of our control will bring both short
and long-term solutions. We have to focus the full national
talent pool and national experience on this urgent assign-
Dr Rowley said the PNM had several measures it would
adopt if it were to be elected. Among them:
• A formal mechanism that will allow continuing discussions
with all the stakeholders in the Energy Sector.
• Reduction of wasteful spending;
• Obtaining from the energy state enterprises (NGC, NEC,
PPGPL, Petrotrin, NP) their plans for treating with this cri-
sis;• Initiate, with urgency, dialogue with private sector interests;
upstream and downstream and the trade unions;
• Direct energy state enterprises to concentrate on their
core business, utilizing their resources in a cost-effective
manner and eliminating non-essential expenditure;
• Obtaining from the ministries of energy and finance an
accurate estimate of the impact that falling prices in LNG,
methanol, ammonia/urea, steel and iron products, crude oil
and refined products will have on government revenue.
• Undertaking immediate steps to resolve the chronic cur-
The Opposition leader was asked about his views on bartering
with Venezuela by exchanging manufactured goods for oil, Dr
Rowley said it was a possibility but counseled the need for
He pointed to a situation where T&T had set up a facility
to assist Caricom and Guyana drew down a lot of the money
and it got to a point where they owed significant sums to this
country. Guyana never paid and despite attempts by the gov-
ernment to get land and timber from Guyana the fellow
Caricom country refused, even though they have now allowed
other countries to own land on the South American mainland.
He said such an arrangement needs to be well structured.
Dr Rowley told the Energy Chamber: "While we are seven
miles away from Venezuela, Venezuela sees us as a competitor
in the energy sector for the Caribbean market and that may
be the biggest hurdle for us to overcome. Any such arrangement
has to be formally structured. It cannot be an informal kind
of arrangement. "
Opposition Leader Dr Keith Rowley
Knowing the worst can help with a recovery,
but it is no guarantee.
Petrobras issued its much-delayed results
on April 22, after accountants had scoured its
books to find details of many years of scams
and kickbacks which are part of Brazil s biggest
corruption scandal. The state-controlled oil
company said that graft had cost it US$2.1 bil-
lion. Other charges included a bigger-than-
expected write-down of US$14.7 billion, mainly
on a flagship petrochemical complex and a big
refinery. The net loss was US$7.12 billion in
2014, against a US$7.78 billion profit the year
Cleaning up Petrobras, and Brazil s political
system, is a long-term job. In the short term
the company is focused on survival, with pro-
duction sinking, oil prices low, cash scarce and
a hefty bill looming to develop its prized assets:
the "pre-salt" oil fields that lie deep below the
country s offshore waters.
Publishing audited results was vital. Creditors
could have demanded early repayment of US$54
billion of debt if the company had missed a
deadline of April 30. The previous manage-
ment s borrowing binge left Petrobras as the
most indebted company in the world and, when
the scandal broke, as an outcast from the capital
Openness about the past will not forestall
American shareholders, who are fuming about
mismanagement. Some have already sued. For
now, though, investors seem willing to give the
new management under Aldemir Bendine, for-
mer head of the state-controlled Banco do
Brasil, a chance. Petrobras shares have steadied
in recent months, though they still are well
below their peak.
Bendine said that he will husband cash by
canceling this year s dividend, slash capital
expenditure and sell US$14 billion in assets by
the end of next year, though finding buyers for
them will be another story.
The company s future does not lie with its
management alone. Politicians must not only
stop stealing, but also cease interfering. President
Dilma Rousseff s left-wing Workers Party
forced Petrobras to sell imported gasoline at a
loss to keep pump prices low. That made the
company bleed cash. Since then the government
has let it raise prices, but Petrobras still suffers
political pressure, such as demands for big div-
idends, which help bolster Brazil s threadbare
public finances. The government insists that
Petrobras should take the lead in developing
offshore fields, a task for which it may have
the technical expertise, but not the balance
Some of these problems will land on Shell s
desk. The Anglo-Dutch giant recently bought
BG, a British energy company which is a big
partner for Petrobras. Bendine said that he may
seek more ties. Shell has cash and know-how,
but may tread carefully in a country where
nemesis follows hubris and there is always
plenty of blame to go around.
Petrobras comes clean,
and it isn't pretty
Russian President Vladimir Putin with
Argentina s counterpart Cristina Fernandez
de Kirchner during a signing ceremony at
the Kremlin in Moscow on April 23, 2015
Russia and Argentina on Thursday signed
a slew of deals furthering energy ties as
Moscow reaches out to allies amid its standoff
with the West.
Though no firm deals were settled, Russia s
President Vladimir Putin and Argentina s
Cristina Kirchner hailed their strategic part-
nership and oversaw the signing of some 20
memorandums, including on defence.
Among the agreements is Moscow s pledge
to finance a hydropower plant on Argentina s
Neuquen River, to be constructed by Russian
energy giant Inter RAO together with a group
of Argentine companies.
Russia s Vneshekonombank s chief exec-
utive Vladimir Dmitriyev told journalists the
bank would provide US$1.2 billion after sign-
ing the protocol of intention. The Kremlin
says Russia will invest US$1.9 billion in the
Russia s Gazprom "is looking into the pos-
sibilities of joint development of hydrocarbon
deposits in Argentina," Putin said after the
signing of a cooperation deal between
Gazprom and Argentina s YPF state oil com-
The countries also pledged that Russia will
build a new nuclear reactor in Argentina.
Rosatom nuclear corporation chief Sergei
Kiriyenko said he hopes to sign the final deal
by the end of the year.
"Rosatom joined the project to construct
the sixth power unit of Atucha nuclear plant,"
Putin said, promising the project will bring
"the latest Russian technology" to Argenti-
na.Moscow aims to boost trade with Latin
America, particularly after imposing an
embargo on agricultural products from
Europe, a tit-for-tat measure responding to
sanctions against Moscow over its actions
in Ukraine by the European Union and the
Kirchner was wrapping up a warm visit
to Moscow where she also opened an exhi-
bition devoted to Argentina s charismatic
first lady Eva Peron, who died in 1952.
She has found in Putin an ally in Argenti-
na s battle against US hedge funds thwarting
its effort to restructure its defaulted debt.
In a joint statement, the two presidents
stressed that "actions by other countries, let
alone private minority shareholders or spec-
ulative funds, should not thwart any country s
sovereign right to settle state debt with the
majority of its creditors."
Putin has also voiced support for Argenti-
na s drive for sovereignty over the Falklands,
for which Buenos Aires is locked in a dispute
with Britain since the 1980s.
"Russia supports Argentina s efforts to
hold direct talks with Britain that would aim
to regulate the dispute over the Malvinas
islands," Putin said, using the Argentine name
for the islands.
Russia boosts energy
ties with Argentina
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