Home' Trinidad and Tobago Guardian : July 4th 2013 Contents JULY 2013 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
The National Gas Company (NGC) is awaiting written confirmation
from the Cabinet before it goes ahead with the purchase of French energy
giant, Total assets in T&T.
Several sources at the NGC and the Ministry of Energy confirm that
Cabinet has approved and the NGC will soon get the note and the official
approval so that it can proceed with the billion-dollar purchase.
Last month Energy Minister Kevin Ramnarine said the Cabinet had
authorised the NGC to enter into negotiations with Total.
"Cabinet has agreed that the NGC can enter into negotiations with
Total, but, of course, that still has to be negotiated between the NGC and
Total. You will also note there are other shareholders in Block 2(c) and 3(a)
who will have pre-emptive rights. One of those players is, of course,
Petortrin. Petrotrin has said to us that they will not exercise those pre-
Ramnarine said he had looked at the economics of such a purchase by
the NGC and was satisfied it was a move in the right direction.
"What I can say about the Total acquisition is that the economics look
very good when the economics were presented to me and we think it's
a step in the right direction to diversify the NGC, to have its own upstream
presence. Of course, they have a small upstream presence in Teak Samaan
and Poui (TSP), but this is a step in the right direction," Ramnarine
On March 14, the Business Guardian exclusively reported the NGC was
in the final stages of purchasing the Trinidad assets of the French energy
giant Total SA. Multiple sources at the Ministry of Energy, the NGC and
Total had confirmed the sale, which was expected to be completed by the
end of May.
Ramnarine confirmed that the NGC was working with a tight deadline
to complete the transaction.
"The timeline is pretty tight right now. Total wants to know because
they have other people who are knocking on the door right now but the
NGC is the preferred bidder."
Energy consultant Dr Krish-
na Persad told Business
Guardian he agreed with NGC's decision to purchase the assets, saying
it was long overdue.
Persad said he felt the NGC, and not Petrotrin, should have purchased
the assets because he feels the company should take the lead role in
attempts to move operations from out of T&T as so many other state oil
and gas companies have done globally.
He said the NGC was not burdened by the challenges that Petrotrin
faces in managing an organisation with a strong trade union presence. He
said the goal of the NGC should be to have operations along the value
chain, including upstream, mid-stream and downstream.
Persad said the real risks in the upstream are from exploration and cost
overruns associated with the development programe, but that there were
few risks associated with reservoir or reservoir management. He said all
over the world, oil companies were making billions and as a country, we
should not be afraid to invest into the upstream business.
Both an energy consultant and a former government minister say while
the asset is potentially valuable, the Government should explain its choice
of the NGC over Petrotrin.
Energy consultant Tony Paul told the Business Guardian, "We need to
know what the Government's overall strategy for the energy sector is. There
is no doubt that it may be a valuable asset, but what is the reason for the
NGC purchasing the exploration and production assets and not Petrotrin.
Is it that we are now going to have two companies from the State sector
involved in E&P?"
Paul said it was not good enough that since the NGC was not the operator
of the block that it could be an investor.
"Investors are usually the financial sector type of companies and they
have external advisers telling them about what to do with their E&P assets.
If not they are usually E&P companies with built in E&P knowledge and
capacity. In that case, the NGC will have to build such capacity," Paul said
Former energy minister Conrad Enill shared Paul's view, saying the NGC's
core business does not include E&P, which reside in Petrotrin. In that context,
Enill said it may have been wiser for Petrotrin to purchase the assets.
Enill said it could not be argued that the NGC has a better cash flow
because all was required was for a dividend to be paid to the Minister of
Finance and it then be passed onto Petrotrin. On the issue of the union,
Enill said the union had to be dealt with and properly managed.
The NGC is expected to make the purchase within the next 60 days.
Both the president of the Geological Society of T&T
(GSTT) and one of the country's leading geologists say
there is shale oil and shale gas in T&T and the country
should look at the possibility of producing it.
Dr Krishna Persad, a petroleum consultant and lecturer
at the University of the West Indies, told the Business
Guardian that not only was there shale oil and gas in
T&T, but it was potentially lucrative. He said, "Yes,
there is a certainly shale oil and gas both on-land and
in the Gulf of Paria that is not just commercial, but
potentially lucrative. If you examine the source rock
that so much of our oil and gas has been produced
from, in the cretaceous, you will see that there is real
potential for shale oil and gas. In fact, not just potential,
I am sure it exists in commercial quantities."
GSTT president Helena Inniss-King agreed with Per-
sad, saying while the society has not formally discussed
the matter, she believes there is both shale oil and gas
Inniss-King pointed to one of BHP Billiton's gas find
in Block 2c in which she said there was a gas discovery
in the Naparima formation. She said, "If you look at
one of BHP's offshore gas discoveries, it was made in
the Naparima hill formation, which is a solid mud rock
with no real pore spaces as you will get normally get
in sand, and what you have is the flowing of gas and
oil through the fractures. So in a real sense, that is a
Inniss-King said fracking is not new to T&T since
it was used in the 1960s by Texaco, particularly in the
Navet field where the oil was flowing very slowly, and
with the use of fracking, it dramatically increased oil
production then from Navet field.
Persad shares this view, saying the evidence from
Texaco supports his theory there was significant potential
for oil and gas from fracking both onland and offshore.
A recent article in the energy magazine Upstream
claimed that US independent EOG resources was looking
into the possibility of drilling for unconventional gas
and oil in T&T.
According to the article, EOG has obtained sub-
surface data from state-owned Petrotrin as part of its
evaluation effort of the potential for shale in this coun-
try.Shale gas refers to natural gas that is trapped within
shale formations. Shales are fine-grained sedimentary
rocks that can be rich resources of petroleum and natural
gas. Sedimentary rocks are rocks formed by the accu-
mulation of sediments at the earth's surface and within
bodies of water. Common sedimentary rocks include
sandstone, limestone and shale.
Over the past decade, the combination of horizontal
drilling and hydraulic fracturing has allowed access to
large volumes of shale gas that were previously uneco-
nomical to produce. The production of natural gas from
shale formations has rejuvenated the natural gas industry
in the United States to the point where it is moving
from becoming an importer of LNG to an exporter of
Inniss-King said while she and Persad agreed on the
presence of shale oil and gas in T&T, she's skeptical
about the ability to produce it in commercial quanti-
She said shale oil and gas in the United States are
being produced from large structures and in T&T, the
geology was far more complex.
She said, "In the US you have large structures with
far less faulting. In T&T, ago because of the faulting,
it is more difficult to access the oil and gas that is there,
and so we don't have those nice large structures as you
would find in the US or in the Middle East. Our geology
is different. So my suggestion is that there needs to be
studies o determine the extent to which it exists and
whether it is a viable opportunity."
Geological Society, consultant say:
T&T has shale gas
NGC awaits Cabinet
nod on Total asset buy
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