Home' Trinidad and Tobago Guardian : June 6th 2013 Contents jJUNE 2013 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
BpTT has announced it will not be con-
ducting seismic surveys in its two deepwater
blocks on its own, but has instead decided
to conduct joint seismic with BHP Billiton,
saying this was the cheaper and more effi-
Speaking with journalists at bpTT's head
office, company president Norman Christie
said in an increasingly high-cost environ-
ment, his company was looking at oppor-
tunities to control costs, hence the partner-
ship with BHP Billiton.
"We are always on the lookout to see ways
in which we can do things more efficient
for the country and we actually came up
with an opportunity because BHP is in the
process of concluding their production shar-
ing contracts (PSC) for the blocks that they
pick up. Their blocks are very close to ours.
In fact, they are adjacent blocks. So the
opportunity that we have is to combine our
efforts around seismic, so it will actually
lead to a delay in our activities to allow for
a combine shoot with BHP."
Christie said there were timelines in the
PSCs with the Energy Ministry, which would
now be missed, but said the ministry and
the companies were of like mind.
"There are milestones in the contract
which we will have to discuss with the min-
istry in terms of the knock-on effects, but
the hurdle we have crossed is that this is
compelling case to all for the joint seismic,"
On July 25, 2011, bpTT was awarded a
100 per cent interest in blocks 23(a) and
TTDAA 14, both in deepwater frontier
acreage offshore Trinidad's east coast, under
production sharing contracts.
The success follows detailed sub-surface
research and evaluation by bpTT, whose
Trinidad operations account for more than
half of T&T's natural gas output and 12 per
cent of BP's global oil and gas production.
The awards doubled the acreage held by
bpTT in T&T.
BHP Billiton is yet to sign off final PSCs
with the Government for their four deep-
water blocks. The Business Guardian has
reported that the agreement is with the
Attorney General for final vetting.
Christie said bpTT had completed its
US$250 million ocean cable bottom seismic
survey and the preliminary results were very
encouraging. Christie said most of the excite-
ment surrounded possible additional gas in
its existing acreage, but noted there were
also some oil possibilities.
He said, "So we have completed our survey
and I will tell you that while the results are
preliminary, our sub-surface people are very
optimistic. The technology allows us to see
things for more clearly and we are optimistic
about the possibility of new production in
the medium term. Its mainly gas, but there
is some oil play."
BpTT's regional president added that his
company had to look at extracting maximum
value from its investment dollar. In that
context, it wanted Government to make the
environment more competitive.
"What we are saying is if you are going
to make this sustainably competitive, you
will have to look at all the factors, including
fiscal, to ensure that T&T is, in fact, com-
Christie said while bpTT was going to
increase production in 2014 when compared
with this year, it was not returning to the
high levels of previous production since it
will no longer provide cushion gas.
He said the issue was not about whether
the resources were available, but it had to
do with the fact that bpTT could no longer
be in a position where it was almost storing
gas so that it can provide to the National
Gas Company whenever there was a shortfall
in the system.
T&T's largest natural gas producer bpTT
has said it will be seeking higher prices for its
gas when it negotiates a new agreement for
the commodity in 2018 with state-owned
National Gas Company (NGC).
In a luncheon with journalists on Monday,
bpTT's chief executive Norman Christie said
the government needs to provide incentives
to upstream producers to encourage them to
undertake the expense of exploring for energy
reserves in T&T.
Mr Christie said: "Not just the fiscal con-
versation, there is a margin conversation which
I was alluding to which will relate to contracts
where it makes sense.
"What we are looking at, to be fair, is if this
conversation was reported the wrong way
people may think that we are saying to the
government go and lower your taxes so we
can invest. We are not saying that. What we
are saying is that there is this pie with different
parts, fiscal being a piece, the margins we get
"So the same way we will have conversa-
tions with the government about the fiscal
regime, we will have conversations with those
players about competitiveness and margins.
We will say if you want to remain a com-
petitive industry the upstream needs to be
incentivised to continue to deliver the gas
you need. How do you go about this?"
Upstream refers to the companies that
explore for and produce oil and natural gas,
while downstream refers to the companies
that use the natural gas.
Asked if this meant that NGC should get
a smaller take of the profits from natural gas,
Christie said the establishment of the down-
stream companies using natural gas initially
led to the NGC taking a great deal of the risks
but that had changed.
He said: "This is the way we think about
it: The returns should be commensurate with
the risk that people are engaging in. In our
estimation, right now there is an imbalance
and it is not by anybody's fault. When they
(NGC) were initially established it actually
made sense then. If you think about the risk
then, when peole thought gas was a by-
product the risk profile for the upsteam player
is radically different from what it is now. We
had this gas which we did not know what
to do with and the person arguably taking
the greatest risk at this time was those in
Offtakers are companies that agree to buy
a certain amount of product from a com-
He said this was one of the reasons that
bpTT invested in electricity and methanol
in an effort to spur production. But Christie
said all that had changed and now it is the
upstreamers who are taking the risk.
He explained that along with an attempt
to manage costs by seking a new fiscal
arrangement with the government bptt was
also seeking to increase value.
CEO of Methanex Trinidad, Charles Percy,
has been on the record in saying that his
company is not against paying an increased
natural gas price if it could be assured of a
reliable supply. Methanex is a Canadian com-
pany that is one of the largest producers of
methanol in the world.
The downstream industry has complained
bitterly about the shortage in production
caused, in part, by bpTT's maintenance pro-
gramme following the Macondo disaster in
the Gulf of Mexico in April 2010 in which
11 people were killed and millions of barrels
of oil spilled.
Christie said his company has been suc-
cessful by ensuring it added value along the
entire natural gas chain, which means that
bpTT remains a low margin but high volume
He said this explains why BP has retained
its T&T business, although BP's group CEO,
Bob Dudley, has emphasized that the energy
company is in the process of divesting its
low margin businesses.
A case in point, Christie said, was LNG
which continues to provide opportunities
for diversion away from the US market.
Christie said Jamaica had had a discussion
with BP's trading arm about the possibility
of purchasing LNG from Trinidad, adding
that he would be surprised if LNG is not the
fuel of choice for other Caribbean islands in
bpTT's chief executive Norman Christie:
We will be seeking a
higher price from NGC
•••• partners with
for seismic work
Norman Christie, bpTT
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