Copyright trinidadexpress
ECONOMIST Dr Vaalmikki Arjoon says that while access to Venezuelan gas once appeared ready to boost Trinidad and Tobago’s output, the deal never materialised and, with gas agreement talks now frozen, the economy is “no worse off today” for it. In an e-mail exchange with Express Business, Arjoon said, “The real lesson is strategic: it highlights the risk of anchoring any energy plan to geopolitically exposed, sanction-sensitive supply. While we may not be giving up on cross-border gas, it should be treated as upside, not the baseline—the priority is to accelerate domestic projects and reignite exploration in our own province to strengthen our energy security and competitiveness.” Arjoon said that securing reliable offtake supply for the Atlantic LNG facility and downstream companies in the medium to long term was critical. However, he flagged that cross-border gas deals carry not only political risk but revenue-sharing obligations, whereas the benefits of domestic gas production remain wholly within the province. “It is quite striking that we didn’t offer any new exploration blocks between 2015 and 2022—a long gap for a mature gas producer whose output was already declining. That pause discouraged investment and slowed the discovery of new fields that could have replaced older, depleting ones. While new volumes have already come onstream this year from Cypre and Mento, going forward, our focus must be reducing risks and speeding up projects that are already close to first gas.” He gave a few examples such as the bpTT’s Cypre Phase 2, EOG’s Mento infill wells, Touchstone’s Cascadura expansion, and Perenco’s Onyx development, and said these could be fast-tracked, “as most of the infrastructure already exists and only small additional investments are needed to tie in new wells or expand output”. “This can provide supply increases in the next two years,” Arjoon said. “Fast-tracking of these and other projects also require improving the efficiency of the approval process. Indeed, reducing bureaucratic delays in permitting, while enhancing the environmental approval process and fiscal negotiations can improve timelines and investor confidence,” he said. Arjoon added that T&T can also consider time-limited fiscal incentives, such as enhanced capital allowances or temporary royalty relief, for projects that deliver gas ahead of schedule. “These measures would reward early production, lower upfront costs, and encourage companies to make faster investment decisions,” he explained. He added that production could also increase by targeting small gas fields within large acreage blocks that may not be financially viable for major producers like Shell or bpTT to develop. “These fields can be ideal for smaller, more nimble international companies with lower operating costs and faster project turnaround. The Government can attract such investors by designing a special fiscal package—including lower royalties, faster cost recovery, and simplified approvals—tailored to the size and risk of these projects,” he suggested. Arjoon said this approach would help monetise stranded gas, diversify the upstream sector, and make the industry more competitive overall. “It’s also important to secure a final investment decision (FID) for Calypso. Although signed in 2012, and can produce up to 700 mscf/d, it is a deepwater project with significant technical and operating risks, so we need a competitive, well-designed fiscal package to make the development bankable and move it to FID,” he added. He noted, though, that the “demand side” must be managed with the same discipline. “Gas allocation should prioritise the sectors that bring the highest foreign exchange and fiscal returns, namely LNG exports, and reliable, export-oriented petrochemical producers,” he said. Arjoon added that restarting the refinery could also provide a significant boost to the Government’s fiscal position by reducing fuel import costs, improving energy self-sufficiency, and generating export revenues from refined products. “Securing a viable and financially sound private operator can ensure that the refinery is restarted on a commercially sustainable basis, with the necessary capital investment, technical expertise, and governance discipline to avoid placing additional burdens on the public purse,” he highlighted.
