Home' Trinidad and Tobago Guardian : June 1st 2017 Contents BG8 | ENERGY
BUSINESS GUARDIAN guardian.co.tt JUNE 1 • 2017
Energy recovery could
unbalance other sectors
T&T is in danger
of relying solely
on the energy
sector to get the
country out of
this could lead to a further slippage
in the performance of other sectors.
That is the view of UWI econo-
mist Dr Roger Hosein who said the
Finance Minister's mid-year review
showed an over-reliance on the
energy sector to turn the economy
"Danger seems to be lurking as the
economy appears to be drifting to-
wards a greater dependence on the
energy sector. Manufacturing value
added decreased from TT$7,886.1
million in 2010 to TT$7,162.3 mil-
lion in 2016.
"In the same period, there has
been a decline in output from the
agricultural sector from TT$456.9
million to TT$369.8 million."
Hosein said the budget review
created a perception that diversi-
fication was being partially thrust
aside and the focus was on reviving
the energy sector, especially gas pro-
duction closer to its previous output
peak in 2010.
According to Hosein: "In May
2017, production of natural gas
stood at 3,326 mmcf/d as compared
to 4,330 mmcf/d in 2010. Because
oil and gas are two of the compar-
ative advantage sectors of the T&T
economy, the government---from a
practical standpoint---was wise in
specialising in these goods.
"In fact, good practice economics
therefore recommends that a nation
produces among exports those goods
in which it has a relative abundance
of factors of production.
"However, heavy focus on the
energy sector and the appreciation
of the economy's real effective ex-
change rate led to a decrease in the
number of sectors in which the T&T
economy has comparative advan-
tage from 34 in 1999 to 18 in 2014.
Practical economic thinking also
requires avoiding this type of slide
and maintaining a sufficiently wide
export base to ensure a reasonable
inflow of foreign exchange," Hosein
He noted that it is easy to get car-
ried away and focus on the energy
sector because of the huge returns
involved with the government hav-
ing collected TT$310 billion in ener-
gy revenues between 2010 and 2016.
Hosein said while EOG's Sercan
and BHP's Angostura Phase III,
TROC and bpTT's Juniper projects
will all help with the gas supply
shortages, fields will continue to
decline and additional gas will be
required to fill a larger and larger
gap going forward.
As such the timely development
of new projects is required to main-
tain the confidence in the economy
necessary for growth and the inflow
of foreign capital.
Only on Tuesday Shell announced
its intention to buy Chevron's sub-
sidiary in T&T, including its hold-
ings in the East Coast Marine Area
Blocks 6, 5a and E.
"T&T represents a rich opportu-
nity for us to continue building our
integrated gas position in country
and securing new competitive pro-
duction," said Derek Hudson, vice
president, Shell T&T.
"Shell continues to actively evalu-
ate other options to increase supply
from our existing assets, as well as
pursue additional opportunities
such as the previously announced
purchase of Centrica's interests in
the North Coast Marine Area," Hud-
This transaction, for approxi-
mately US$ 250 million, will allow
Shell to optimise its developments
across the East Coast Marine Area,
a core component of Shell's inter-
ests in T&T supplying gas to both
the domestic market and Atlantic
LNG. The deal is expected to close
Meanwhile, CEO of the T&T Man-
ufacturers Association, Mahindra
Ramesh Ramdeen, agreed manu-
facturers have been facing increased
challenges, particularly with respect
to accessing foreign exchange.
"This is a problem we have been
facing for some time now and it
has gotten progressively worse. It
has reached the stage where some
manufacturers are being forced to
close down some of their lines and
only operate those with the highest
"If we cannot get the foreign ex-
change to purchase the raw materials
then we cannot make the finished
products," he said.
Ramdeen said the manufacturers
want to partner with the government
to diversify the economy but they
also require some assistance from
the government with regard to trade
promotion and marketing.
Ramdeen said the larger manufac-
turers like SM Jaleel and Angostura
have been successful in penetrating
extra-regional markets because of
their size and ability to fund market-
ing and trade promotion activities.
He said what is needed is more
assistance from the country's dip-
lomatic missions for smaller man-
Ramdeen also told the Business
Guardian that the manufacturing
sector has not seen any large decline
in its Caricom market but, to grow,
manufacturers have to go to extra-
NGC to make US$15M from nat gas trading
The National Gas Company
of T&T could earn almost
$100 million (US$15 mil-
lion) in additional revenue
in 2017 by selling LNG to
This was revealed by
the president of the NGC, Mark Loquan, in
an interview on the sidelines of the recently
concluded Geological Society of T&T Con-
ference at the Hyatt Regency.
"So you have an example like Angola LNG
coming on stream after many years and they
are now looking to get a market but there is a
glut at the same time. We use suppliers like
that, for example, from Nigeria and we get it
to Egypt under a government-to-government
arrangement. That is the model we have so far
and that could generate up to $100 million in
revenue in 2017 and at least it can help diver-
sify some of the revenue streams you need,"
The NGC president explained that the
company's risk is limited because it has a gov-
ernment-to-government arrangement with
Egypt, which was brokered by former Energy
Minister Nicole Olivierre at a gas exporters
meeting she had attended.
Further, Loquan said the NGC was using
the large traders to hire ships and to get the
cargoes from sellers to buyers.
"So the background is that you have a
growth of countries importing gas now and
you have an oversupply of LNG in the mar-
ket. When you put those two together, it is a
good combination to get into some trading
activities. We don't want to get into the trad-
ing where we take all the risk in supply or not
getting paid and so on.
"That risk is actually borne by the large trad-
ing company and we are partnering with them
under a government-to-government type of
arrangement where the government of Egypt
and the government of T&T get involved and
you have that kind of working relationship
Loquan pointed out that the NGC has been
trading both its equity cargoes and third-party
cargoes. He said with the equity cargoes the
company can see the entire value chain and
has done a lot better in trading its own cargoes.
"When it comes to the third-party cargoes
you have to ask: where are the LNG cargoes
going to and where are they coming from?
The model here is if we can somehow partner
with some of the large trading companies, in
a sense, they take a lot of the risk.
"Whereas the number of the countries im-
porting gas is on the rise, you can see people
using the latest technology such as FSRUs
(floating storage regasification units) to try
and get the gas they need for power and other
uses," Loquan added.
He also argued that the present gas cur-
tailment showed the need for the country
to use more renewable energy in electricity
He pointed to the use by T&TEC of 500
mmscf/d of natural gas for power generation
and the waste of the country's finite natural
"If you take the context in which we are
operating now we supply power equivalent
to five or six plants to T&TEC in which you
have loading areas and you have a margin in
which you are losing money.
"So, if you look at it from the NGC perspec-
tive it is much better, at a time like this, to
get the gas demand down and replace it with
alternative energy. That requires a mix of solar
and wind power to do that and, at the same
time, you focus on energy efficiency so you
convert some of your simple cycle to combined
cycle and look at your plant efficiencies.
"If you are to do all that and use that gas that
is going into electricity by creating methanol,
ammonia, I think it creates greater value for
Loquan insisted that NGC was not seeking
to reduce the gas used for power to trade the
gas as LNG but rather he was thinking in terms
of adding value to the country.
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