Along with a comprehensive review of its tax system, bid rounds for 17 deep water blocks, and the pursuit of gas exploration in cross border acreage to attract deep-pocket investors; the Government of Trinidad and Tobago says it is also open to implementing relinquishment provisions on companies that are sitting idle on their respective blocks.
Making this announcement on Wednesday was Minister of Energy and Energy Industries, Stuart Young. Young stressed how important it is for upstream operators to commit to exploration and development of prospects within their acreage, since the government is on a mission to extend the life of its petrochemicals and liquefied natural gas (LNG) sectors.
In this regard, Young said, “The Ministry will be working closely with operators to determine their work plans and in the event, there is no planned activity, relinquishment of acreage is an option we may wish to pursue.” He was keen to note that the government intends to work with Heritage Petroleum, one of T&T’s newest state-owned oil companies to ascertain what blocks it is desirous of giving up.
The energy minister said, “It makes no sense for Heritage to sit on acreage when there are companies who are willing to spend money on exploration and production. If block holders, including Heritage, are not working the acreage we will explore and pursue relinquishing the acreage so those who want to produce oil are allowed to do so.”
The announcement by T&T follows statements made by Guyana since last year that it would be pursuing the aggressive relinquishment of oil blocks ahead of its historic bid round set for the third quarter of 2022. According to Guyana’s Production Sharing Agreements, blocks are relinquished at varying degrees after three renewals are executed during a 10-year period. During that time frame, the company has an agreed-upon work programme it must complete.
Government can also instruct companies to return a portion or all of the asset to the State if it is found that work programmes are not being executed. A word of caution in this regard, was issued this year to CGX Energy and its Canadian partner, Frontera Corporation as both signaled that they would not be honouring their work obligations for the Demerara Block this year. Minister of Natural Resources, Vickram Bharrat informed the joint venture however that two commitment exploration wells must be drilled on the Demerara block per the terms of the Demerara Petroleum Prospecting License and associated Petroleum Agreement prior to February 12, 2023.
The agreement categorically states that the partners would have to relinquish more than 20 percent of the block if they renege on their obligations.
