Updated: 16-08-2024 - 12:00PM 3 12 CLOSED
Mar 05, 2015
The Energy Chamber believes there is “huge potential” for co-operation between T&T and Venezuela in various areas relating to the energy sector.
This comes after two energy agreements were signed between T&T and Venezuelan last week Tuesday during a visit by Venezuelan President Nicolás Maduro.
“With the right agreements in place, T&T has the potential to be a major hub for the provision of energy services to spur the development of the oil and gas industry in eastern Venezuela and to provide a market for Venezuelan gas. The big prize for T&T is the agreement from Venezuela to export gas to T&T for processing into petrochemicals or for re-export to international markets. There is also potential for Venezuelan gas—processed through T&T—to be used to meet the energy demands of the wider Caribbean and to help in the transition away from reliance upon expensive imported fuel oil and diesel for electricity generation in the region,” the Energy Chamber said in reply to a list of questions from the Business Guardian last Friday.
The Energy Chamber gave more details on the two agreements.
The first agreement was a field-specific unitisation agreement for the Manakin-Coquina natural gas field that straddles the maritime boundary off the south east coast of Trinidad.
“This field-specific agreement has been reached using the framework set out in the overarching unitisation agreement signed in 2007. It is similar to the field-specific agreement that was signed for the Loran Manatee field in 2010. The field-specific agreement allows the international oil and gas companies who hold the licences over the fields and the two governments to begin to discuss the details of how the field will be managed, how the gas resources are divided and how decisions will be made.
The second agreement, the Energy Chamber said, is a more general technical co-operation agreement which creates the framework for discussions, exchanges and sharing of information between the two countries.
“We expect that the agreement will simply establish a basic framework for technical cooperation and that joint committees and working groups will now be needed to identify potential projects of mutual benefit and to oversee these activities.”
After the signing, Maduro promised that Venezuela would resume selling oil and bitumen to Trinidad’s refinery.
The chamber reacted positively to this but said the correct, technical details must be worked out.
“The Pointe-a-Pierre refinery currently imports crude oil from a variety of countries to supplement the domestic crude that goes into the refinery. Every refinery is onfigured to receive a specific mixture of crude oil for optimal efficiency, so crude oil imports from Venezuela will need to have the right specifications and be offered at the right prices for them to utilised in the refinery. With respect to bitumen, there is significant demand in T&T because of the current road expansion programmes.”
Government’s position
Prime Minister Kamla Persad-Bissessar, in the press conference last Tuesday, just after the signing called the agreements “historic” and said it comes at a time when global energy prices are low.
“This is the first time in the western hemisphere there is the commercialisation of crossborder reserves and this has only happened three times in the world before.”
She spoke about “commodity sharing” which would mean the Government will purchase goods identified by the Government of Venezuela from T&T’s manufacturers—like gasoline and parts for machinery—which are needed there and these would then be traded for commodities that are needed for T&T’s industries—in particular bitumen and crude oil—which can be supplied by Venezuela.
“With the expected increase in production, it is envisaged that manufacturers, in turn, will look to expand their businesses, creating much needed jobs for our young people, and stimulating economic growth. It is expected that Venezuela’s economy will also be boosted as a result of this proposed initiative, through the trade of their commodities in exchange for finished products that the people of Venezuela need,” she said.
The Prime Minister outlined the energy agreements as:
1. The Unitisation Agreement for the Exploitation and Development of Hydrocarbon Reservoirs of the Manakin-Coquina field that extends across the delimitation line between the T&T and the Bolivarian Republic of Venezuela
2. As well as the Framework Agreement on Energy Sector Cooperation between the Government of the Republic of T&T and the Government of the Bolivarian Republic of Venezuela.
Venezuelan position
President Maduro, at the press conference, called the signing of the agreements a “win-win” situation for both countries.
“This is a diplomacy of peace and we are good neighbours. It is inclusive Caribbean diplomacy that we are building in this historic time.”
He said Venezuela would restart the selling of oil and bitumen to T&T and, in return, Venezuela would buy equipment to enhance the gas transmission network as part of the gas development project in that country.
He added that the energy agreements represent a “new rhythm of work” for both countries.
“We have advanced in the commission of ongoing consultations at the highest level to discuss all the issues of cooperation with a new rhythm of work. It is fair trade and a new form of commerce,” he said.
He compared T&T and Venezuelan co-operation to wars and conflicts in other parts of the world over oil and gas.
“Modestly, we would have to say that T&T and Venezuela are giving an example where we can a world of peace and where we can a world where energy is not a cause of tension and conflict but rather is lever for developing countries.”
Increased gas production
Dr Roger Hosein, senior economist at the University of the West Indies (UWI), summarised the two agreements for the Business Guardian.
“Two energy agreements were signed on Tuesday between Venezuela and Trinidad. Offshore to the west of Trinidad, in the Manakin-Coquina field, in the Gulf of Paria, it is estimated to have reserves of oil and gas. However, such reserves in the Manakin-Coquina field also reside within Venezuela territorial waters.”
He said the agreement would govern the exploitation and development of hydrocarbon reservoirs in the field.
“Such an agreement would most likely state how much reserves in the field should belong to Venezuela, and how much should belong to T&T. Such an agreement would most likely state oil and gas productions terms and conditions for both T&T and Venezuela in this field. In the case of oil production, this can be very desirable since it can reverse the production decline T&T has been experiencing for the past eight years.”
In the case of natural gas, he said it can increase T&T’s natural gas production.
“T&T natural gas reserves are relatively small (13 TCF) as compared to the US which has approximately 800 TCF of technically recoverable shale gas. I think T&T should use its natural gas to produce more downstream products and to help produce electricity at a lower cost to facilitate more manufacturing activity,” he said.
Economist Dr Ronald Ramkissoon told the Business Guardian last Friday that the energy agreements represent a “positive” step in energy relations between both countries.
“I think the signing is very positive in respect of T&T being able to access additional supplies of gas and it is long overdue. However, I do not know it is going to be immediate. It will take a while before we actually get gas coming out of the ground and receiving revenue for it. The fact that it has happened at all, the various memoranda of agreement, is positive for the immediate and long term of the country,” he said.
Source:
RAPHAEL JOHN_LALL
raphael.lall@guardian.co.tt
Trinidad Guardian, BG4 and BG5
Thursday March 5, 2015