Though Trinidad’s latest shallow water bid round was welcomed by its Energy Chamber, much concern was expressed about the need to stimulate short-term investment in existing acreage to prop up its liquefied natural gas (LNG) sector.
Launched on Oct. 4, the round put on offer 13 blocks as efforts mount to maximise TT’s hydrocarbon resources to revive its energy industry, which has seen better days. Licenses have been awarded for onshore blocks and production-sharing contracts (PSCs) for deepwater blocks in recent months.
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However, the Energy Chamber led by Dr. Dax Driver pointed out that those are likely to deliver additional gas or oil to the market after the 2030s.
“There is an urgent need to stimulate more investment in existing acreage in the short-term, to be able to deliver gas to downstream plants and the LNG facility,” the Chamber said in its Oct. 5 statement.
The Energy Chamber urged for stronger fiscal reform to bring this to fruition.
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It said it has argued for amendments to the supplemental petroleum tax (SPT) to encourage investment for oil production in mature acreages and changes to the petroleum profit taxes and royalties to encourage investment in gas, especially from small fields. The Chamber noted that slight changes have been made to the SPT, including more announced this year and more coming next year.
But in the same vein, it said, no changes were introduced to stimulate investment in natural gas production, except some potential changes in the structure of capital allowances which may help the economics of projects to an extent.
“The Energy Chamber will continue to seek dialogue with the government on amendments that could help stimulate investment in gas production from existing acreage. The long-term sustainability of government revenue from the energy sector rests on encouraging investment now,” the Chamber concluded.
TT’S bid round comes on the heels of disappointing results from its last round. This is the first shallow water auction since 2018. TT’s Energy Minister, Stuart Young said that lessons from the previous round’s poor results led to a comprehensive internal review of the bid process and fiscal terms.
As a result, there are now no pre-bid fees and bid fees have been significantly reduced. Noteworthy provisions in the Shallow-Water Model Production Sharing Contract include fiscal stability through a ring-fenced Production Sharing Contract and cost recovery up to 60%.
