Too little, too late?

By Raffique Shah
March 23, 2018

Raffique ShahIt may well be a case of too little, too late. It might even be a classic case of trying to set right an historical economic wrong when the oil barrel is about to run dry. But for sure, Government’s Rip Van Winkle’s rude awakening to the reality that Trinidad and Tobago has for far too long been gang-raped by the large energy corporations, with the complicity of its mothers and stepmothers (successive governments and some of the elites), reduces informed patriots to a mixture of tears and guffaws.

I could hardly believe what I was watching and hearing—the front rank of the ruling People’s National Movement in full attack mode, crying foul over the contractual tax arrangements between the Government(s) of T&T and the oil and gas majors, agreements that see the latter’s contributions to the Treasury literally dry up at a time when no other commodities can fill the breach, leaving the country starved for foreign exchange and revenues in general.

In stupor, I literally peered into my television set, foolishly expecting to see and hear apparitions of realists and revolutionaries of yesteryear—George Weekes, Joe Young, Trevor Farrell, George Sammy, Lennox Pierre, Allan Alexander—speaking from behind the curtains, with Keith Rowley, Franklyn Khan, Colm Imbert and others miming from the front.

You see, the PNM, in previous incarnations, especially under the leadership of the venerable Dr Eric Williams, ridiculed those who cautioned government about the wiles of the global energy conglomerates and warned them against parting with the national patrimony for the proverbial song. In fact, when we (I was a “youth-man” among those giants) protested against the relative pittances firms such as BP (also in a previous incarnation), Shell, Texaco and Amoco were paying for our oil, and demanded they re-negotiate royalties and taxes upwards, the governments of the day pointedly ignored us.

So it was quite a shock to see the Rowley regime expose some of the injustices that linger to this day, and signal Government’s intention to call on the exploiters of our hydrocarbon-resources to come better in these tough times, to not bite the hands that contribute to their super-profits. BP, for example, enjoyed a US $6.2 billion profit in 2017, up from $2.6 billion in 2016. Shell, which recently returned to T&T having acquired British Gas, posted a profit of US $16 billion, while the largest of them all, Exxon Mobil, which rules the new-oil roost in Guyana, declared $19.7 billion.

BP, operating locally as bpTT, is, or was, the second largest contributor to the national coffers after the National Gas Company. It also rescued the natural gas sector by starting production at the Juniper platform last July, and overall restoring daily production closer to the 4 billion cubic feet per day (bcd) required to meet the needs of the downstream petrochemical plants (ammonia, methanol and urea), power generation, and Atlantic LNG.

Several factors negatively impacted the slump in government revenues from the energy sector, which plummeted from TT $27 billion in 2014 to TT $9 billion in 2017. These included steep declines in production and prices of both oil and gas. Additionally, the conglomerates were allowed to write off their capital investments over a much shorter period (hence significantly reducing their tax liabilities), and engage in the lawful but disingenuous practice of “transfer pricing” in marketing their lion’s share of LNG.

Indeed, while it is true that hindsight is 20-20 vision, one wonders whether getting into LNG at the turn of the Century was a prudent, not to add profitable, venture. It was one thing to boast of being a leader in the new wave of selling and transporting natural gas for which demand was growing almost exponentially. But with relatively small gas reserves (never more than 15 trillion cubic feet proved), and generous concessions made to Atlantic LNG shareholders (BP, BG, Repsol, with NGC having small stakes), one wonders why we proceeded with Trains 2, 3 and 4 without demanding a bigger share of the pie.

Atlantic LNG consumes more than 50 percent of our gas production (2 bcf/d), but the returns to NGC, hence government, are nowhere close to what we earn from the ammonia and methanol plants at Point Lisas, which utilise far less gas. True, the latter also enjoy generous gas prices which need to be revised upward (note the CNC-NGC imbroglio). But during the gas-shortage crisis, they suffered more than Atlantic LNG.

Readers should note, too, that the world’s leading LNG exporters have infinitely bigger reserves than ours: Qatar (75 million tonnes per year—880 tcf reserves); Australia (45MMT/132 tcf); TT (12MMT/12 tcf).

So, yes, we need not merely to re-negotiate our share of the profits from our hydrocarbon resources, but we should re-prioritise usage, allocate gas based on returns to the country—and let the energy majors know that it cannot be exploitation as usual.

Sure they are in business to make and enjoy profits, super-profits, as I have noted above. But so are we. With a mere 700 million barrels of proved oil reserves remaining (Guyana, seven wells drilled, has 3.2 billion and counting!), and around 10 tcf gas, even with new finds, we have at best a few decades to make money off our hydrocarbons.

In many ways, Government may have moved too late to retrieve some lost dollars, and to restore some dignity to one of the oldest oil producers in the world. Realistically, we need both. They have my support in this pursuit.

6 Responses to “Too little, too late?”


  • Lt. you are a little too late on this matter. This Rowley regime is like an untamable runaway mule.This arrogant beast will have to run wild for a couple more years unfortunately.Until then God help the people of T&T.

  • It’s been over 130+ yrs since oil was discovered in Trinidad, one of the World’ oldest oil producing countries, to this day, still have no control on production. After all these yrs, from it’s inception, Multi-National corporations have been in the frontline of exploiting the resources of this Colony.I Say Colony, because in reality, Trinidad is still viewed by these International business concerns as that. Over these yrs the cumulative production totaled 3 billion barrels, in 1987, Amoco alone accounted for 500 millions barrels of the highest grade crude in the world, as a matter of fact, Amoco became who they are, because of Trinidad. As we can see, Trinidad have been a Haven for both American and Anglo-American interest.When we take into consideration that Oil and Gas account for 40% GDP, 80% of exports and only 5% employment, any Gov’t will be facing a musical beat that they cannot dance to, these Foreign Companies controls the heart rate. Both Exon and Shell presently have have production sharing contracts with T&T, these can be easily manipulated, profits by any means are the Mantra of these Vampire companies. Can the Rowley gov’t negotiate? i doubt it very much, the World is presently awash with Oil and Gas, and these companies usually seek their interest, greater turn overs on their investments, the same way gov’t negotiate with the local unions, it is along the very lines with the Multi- Nationals, all about profits. There is a mis-conception about the oil discovered in Guyana, lets make one thing clear, Guyana have no control over Exon’s oil production, presently, the Guyana Gov’t are at a cross road, you see, Oil wasn’t discovered on Land, its offshore , Guyana, unlike Trinidad, doesn’t have an Oil industry, all Guyana have received so far, is $8million from Exon, Guyana gov’t have no idea of what is happening, all you know, Exon might be pilfering the oil from Venezuela, DYNA Drilling can take oil many miles from where the platform is situated. I support and Wish Mr Rowley and his team all the best negotiating with these EVIL profit first multi-National companies, whose budgets are many times bigger than T&T’ economy, going cap in hand is normally the way developing Countries negotiate,We Want Dem,More than Dey want We.Venezuela is a clear example, if they can’t get whey they want, the will take it by any means necessary.

  • It is always challenging to deal with global conglomerates who has behind them a long list of investors. Trinidad has been a global player before the days of Eric.

    When Eric entered the scene a lot change. He knew what it took to bring these energy czars to this shore. He was the true fadder of the Caribbean giving Guyana over $500 million US in oil credits that kept Burnham in power. He also gave Jamaica over $300 million US to which Manley once said Trinidad money pass through like a dose of salt.

    The deals made when things are bright should be revisited delicately when things are dark. A fair deal is always the best deal. In today’s world there are opportunities to find new markets and escape the will of the conglomerates. That requires the business class to seize the opportunities available whilst the door is open.

  • Whether we jump high or low conglomerates are here to stay and expand. The second paragraph of Mamoo’s submission is so true. In fact, when Texaco(prior to that TPD, Regent) and Shell came in to T&T to explore and exploit oil and locals that was the bargaining chip Williams used to give over the Chaguramas base and negotiate for independence. I wish I could have said the same for the defunct Caroni (1975) Ltd. (post Williams). Analogy to the current tariffs being imposed by the US for imports of aluminium and steel with the exception of Canada and Mexico whilst the revisit to NAFTA negotiations currently being ensued. The same argument can be made for Brexit with the EU, likewise the technological hub that is proposed for Toronto.
    After Williams negotiating skills, the crop of T&T negotiators tend to appear at the table: ‘what’s in there for me as opposed to us?’. That’s the selfish culture we have developed over the years and that’s one of the reason we tend to have so called skilled people robbing their own treasury.

  • Lt Shah. You may be correct in your submission but one must reflect on the attitude of the local companies and the rich individuals in Trinidad and Tobago. Our culture and business mantra is not to invest in the resources of the country but to buy cheap items from China for 5 cents and sell for $1.00. No one in Trinidad is interested in investing in the extraction of oil and gas. This is why we are beholding to the international companies to invest the up front capital to extract the oil and gas. They invest billions of their shareholders money in Trinidad in the hope of making a profit. Our businessmen in Trinidad want quick rich businesses. They have amassed millions if not billions from the investment of the international corporations. Trinidadians should have taken the lead in exploiting the oil and gas industries. But it is easier to buy cheap and sell high. This is not to say that we should not get the biggest share of the pie. But he who pays the piper calls the tune.

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