Gas equivalent of OPEC Needed

By George Allyene
August 15, 2007

Natural GasWith the spectre of a relatively early end to Trinidad and Tobago’s natural gas reserves haunting the country following on the publication of a report which declared that gas reserves in TT would last for a mere 12 years, Government should lobby for the forming of a natural gas equivalent of the Organisation of Petroleum Exporting Countries (OPEC) with the immediate accent on an optimum price or system of taxation for the fast depleting asset.

Admittedly, a gas producing and exporting body has already been formed, but its continuing passive stance demands the formation of another and more vibrant body. Trinidad and Tobago cannot wait until gas supplies run out to wring its collective hands in anguish and declare that it should have acted in a positive manner and early with respect to meaningful pricing of one of the country’s energy assets, the other being crude. While OPEC had been formed for some 13 years before its member States decided on optimising crude exports, via a policy of taxing their crude exported to user countries as though the price on which the tax was based was in effect, Trinidad and Tobago does not have the luxury of time in its favour.

The setting up of a natural gas exporting body, employing the 1973 taxing policy of OPEC, should be effected not several years from today, but instead done now. When our natural gas reserves and those of several of the other gas producing and exporting principals are history, importing and user nations will simply look to other sources of supply, without even a “Thank you”, but rather a curt “Goodbye”.

While the Ryder Report’s declared position on this country’s gas reserves running out in 12 years may not become a reality and yet unproven reserves may see the country still in the business of natural gas exploration, production and exports in the second half of this century, nevertheless any Government in power should seek to obtain the best possible price for the nation’s patrimony. Because any attempt by Trinidad and Tobago to go it alone in negotiating what it may consider to be the best possible price for its natural gas would be treated in much the same way that oil producing nations were prior to OPEC’s giant step. It follows that the only way this country can achieve desired results would be via part of a unified approach by several of the world’s gas majors.

Membership in an organisation determined to achieve economic cooperation of the principal gas exporting countries is what Trinidad and Tobago clearly needs. And it should begin the process of negotiating the establishment of such a grouping almost side by side with plans to become the financial services centre of the Southern Caribbean. And these plans must be well in place before not only our natural gas but our crude oil should become history.

The United States of America which today imports some 78 per cent of its liquefied gas from Trinidad and Tobago would not have hesitated to have insisted on the highest possible price for its natural gas had the roles been reversed. But even more to the point (forgive the cliche) the negotiated price structure for the sale of our natural gas to Atlantic LNG should have been appreciably higher than the price agreed upon, or is it the word offered, by the United National Congress when it came into Office in late 1995.

Allow me to retrace the steps taken that year to offer a special price rate for natural gas to Atlantic LNG. The then People’s National Movement Administration, in an effort to attract Atlantic LNG to this country, had offered a special price for gas to the company. The Opposition United National Congress then announced it would offer an even lower below the then market price for natural gas to Atlantic LNG on its hoped for accessing of Office which, incidentally, it achieved. Other high energy (natural gas) users who were about to establish plants here, and even some with plants, demanded what they described as equitable treatment. The UNC Administration yielded and the grant- ing of lower than market price for potential high end users became a policy position of the United National Congress Government.

Trinidad and Tobago’s liquefied natural gas is satisfying a formidable percentage of American market demand as pointed out earlier. This means that a not insubstantial portion of Trinidad and Tobago’s annual production of natural gas is sold to Atlantic LNG for liquefied natural gas production in its several trains. The argument can perhaps be advanced by the company that Government, through an agency, has equity in Atlantic LNG via the quantity of natural gas supplied. What is interesting, however, is that the economic law of demand appears not to have been applied vis a vis the pricing of gas, not merely to Atlantic LNG, but to several of the other high end users.

I wish to make it clear that I welcome foreign investment in Trinidad and Tobago. Indeed I always have and always will. The greater their profit, the greater will be the number of foreign investors attracted to this country. This will mean increased employment, increased Government revenue and foreign exchange earnings and more money turned around within the economy. But with Trinidad and Tobago’s natural gas reserves being poised to run out shortly my concern is what are we getting for our rapidly declining patrimony?,62416.html

3 thoughts on “Gas equivalent of OPEC Needed”

  1. I had a conversation today with a friend who has spent more than thirty-five years in the oil and gas procesing business, including the design and patenting of gas processing equipment; and having just returned to my other home from TnT, where the scare tactics of oil and gas running out have been the headlines, I asked him what he thought of “our reserves will be all gone by 2019”. He does not know of a single country in the world whose reserves have run out.

    We looked at a map of the world together, and traced what we consider an oil bearing stream from Equador, through Columbia, to Venezuela, Brazil, Trinidad and Tobago, across the water to Angola, Nigeria, through North Africa, including Libya and Egypt, to the Middle East and right on through Turkmenistan to Russia and China. There is another “stream” running down through Canada and The USA to Mexico. This one may be considered part of the same stream, if the China /Russia(Siberia)connection is used.

    Oil and gas may be found deeper under the ocean floor, and so, more expensive to mine. Diagonal drilling can also allow technoligically advanced countries and companies, to tap into the reserves of other countries, since a border is not a swath of country, but a line, and in the ocean, you can only talk of terrotorial waters, but as Canada is discovering, all those borders can be disputed and challenged.

    Skepticism about the oil and gas drying up should not lead to excessive and wanton use of the evenue so generated, but the political scare tactics of the “Silly Season” should not frighten people into worrying about a future when there will be no oil. Citizens of Trinidad and Tobago should use the free education system to get the best education they could. That way, they would have a future, no matter where they end up. Before we exported most of the natural gas eastern North America (USA) uses, we exported educated people who made our country’s name well respected in many places.

    The fact that our oil and gas can purchase free education for all, at all levels, and free medical care, should be causes of rejoicing, instead of generating the fear of “lawd, what we go do then”.

    Countries with a lot more than us, abandon their people to fend for themselves at both the secondary and tertiary levels of education. Some are countries where only the wealthy go to secondary school, and the very wealthy go to college or university.

  2. A “NGPEC” is still a very good idea.
    At the same time T&T governments and its people have to be looking to elsewhere for markets and technology.
    Ms Edwards points are totally accurate. We ought not to be worrying about running out 12 twelve years, we need to be worrying about what we will be DOING DURING those years.
    Whoever “comissioned” the cited report is clearly setting the stage for political purposes to favor someone other than Trinidad.
    C’mon peeple yuh tink BP came BACK to Trinidad to run out in TWELVE years??? You think British Gas and Canada whatever comming here for kickks and Carnival??
    Doh fret, yuh go be hearing de same talk as long as the prices high and dem want to devalue the money or something.

  3. Gas Reserves,

    All the more reason to discontinue the ESSAR STEEL project.
    This plant will use a very large amount of gas on a yearly basis…..

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