To the Energy Chamber, by Dr Keith Rowley, Leader of the Opposition, at Cara Suites, Wednesday April 15th 2015
Mr President Executive Members, Parliamentary Colleagues
Members of the Media
Some eight (8) months ago I had the opportunity to address the Energy Chamber of Trinidad and Tobago and I used that opportunity to highlight the success of the energy sector of the country from the late 1970’s to the early period of the 20th century.
A lot to be proud of; a successful switch from dependence on oil for export to a buoyant gas-intensive sector prompted by the rapid decline of oil production and reserves and a well thought-out plan to monetize available gas reserves.
The so-called Trinidad model of natural gas monetization and creation of a successful natural gas sector received international recognition and provided an example to many gas-rich developing countries. Of significance was the fact that the natural gas reserves of the country at that time were less that 1% of that of the world.
During this period, the country moved from a production utilization of 150 million cubic feet of gas per day in 1978 to a current level of over 4 billion cubic feet of gas per day.
Also, during this period, with the establishment of an iron and steel complex, nine (9) fertilizer plants and seven (7) methanol plants, the country has exported 18.6 million tons of ammonia, 2.4 million tons of urea and 23 million tons of methanol in the last four (4) years alone. Some 147 million tons of LNG have been exported since 1999 and over 100 thousand tons of melamine – from the AUM1 plant commissioned in 2010.
A remarkable story by all standards of comparison and evaluation, from a country dominated by oil production and refining of oil, Trinidad and Tobago’s economy is now driven by natural gas – accounting for 44% of GDP.
However, I also used that opportunity to indicate that the country was facing the major challenge of sustaining and expanding this key sector of our economic activities.
Any signs that can adversely affect any sector that contributes over 20% of the country’s GDP must be taken seriously and treated with urgency, both in the short and long-term.
The signs were there for all to notice:
- Gas production had dropped
- The production of methanol, fertilizers and steel had fallen
- Since the commissioning of AUM1 in 2011, for which construction began in 2008/2009. The country has not been able to attract any new major projects that utilize gas
- The AUM2 project (which had been approved and gas contracts finalized and announced in 3 successive budget speeches), had not been realized. Instead we have had the sad situation of the Government of Trinidad and Tobago engaging in extensive arbitration with the potential investors in the project. After millions of dollars paid in legal fees and a loss of three (3) years, this project has been effectively abandoned, the arbitration having gone against us.
- Investors committed to the creation of an aluminum industry, including the downstream production of high valued products have been prevented from making these investments as the government took a decision prior to any Court of Appeal decision on the matter to just abandon the project. The aftermath of this has led to:
- Two (2) ongoing arbitrations between these investors and the government
- A rejection by the government of the US$400 million on concessionary loan terms towards financing the development of the aluminum industry
- The loss of attracting the largest private industrial conglomerate in Brazil
- A power plant which major load has disappeared causing a significant payment by T&TEC without having the full benefit of the power plant
- The effective abandonment of the Union Estate at La Brea
- The cancellation of ESSAR sponsored project which involved an investment in the iron and steel industry of over US$1.5 billion.
The full significance of these separate and unrelated events was probably not fully appreciated at the time and certainly was brought to the attention of the national community that indeed the country was facing a crisis in the energy sector. However we have been in a state of denial for sometime.
Those items became the focus of my attention during the Budget debate over the past two (2) years.
Recently, prior to any public attention being given to the falling oil and gas prices, appearing in the public domain were some immediate effects of these events. I list these as follows:
- Over the past four (4) years, gas supply to the gas-intensive industries has dropped by over 10%, reaching a peak shortage of some 25%. This led to a significant production reduction in the petrochemical sector affecting ammonia, methanol and AUM
- Loss of revenue to these companies have been in the hundreds of millions of dollars.
- The drop in aggregate tax revenues from this sector has approached US$1 billion( approx.$6.25 b TT), ;Equivalent to the total budget deficit for one whole year.
- The entire shareholding - 100% of MHTL – the crown jewel of the Pt. Lisas companies, by a decision of the International Arbitration Tribunal after several years and many millions of dollars in legal fees, has had to be sold to the foreign partners at a price of some US$800 million below the expectation of the government.
That apparently simple decision of the Government to engage in avoidable futile arbitration has seen this major local flagship in the energy sector pass into the hands of foreign shareholders. This represents a major reversal of our entrepreneurial spirit which we hope is not extinguished as we forge ahead.
- Current investors in the gas industry began looking elsewhere, where gas supply can be competitively priced and most importantly, supplied with 100% reliability, a reputation which Trinidad and Tobago had, but now is sadly eroded.
- New investments are being delayed until the natural gas situation improves. The decline in gas reserves, now below 13 trillion cubic feet per the recent Ryder Scott Report, presents problems in the negotiation of new long-term contracts. At that time, while I made reference to the growing production of oil and gas in the United States from Shale formation, the seriousness of that challenge was not fully realized.
We trust that the gas supply outlook for 2018 be such that we could conclude the transactions and begin work now, with all our fullest support, for the long awaited MASSY/Mitsubishi project which could refocus Trinidad and Tobago to gas-based industrial growth.
Recent figures are startling:
- US reserves of oil and gas have reached their highest in forty (40) years – 36 billion barrels of oil and rising, 365 trillion cubic feet of gas and rising
- Not for comparison but purely for noting, Trinidad and Tobago’s figures now stand at less than 1 billion barrels of oil and 13.1 trillion cubic feet of proven gas
This introduction of oil and gas production from shale may yet be the biggest challenge to be faced by a small developing country with limited hydrocarbon assets such as Trinidad and Tobago.
Trinidad and Tobago in facing these challenges, both recent and current, must adopt not only long-term measures but develop medium and long-term strategies to treat with them. The challenges, compounded by internal problems of poor decision-making and/or lack of action, have also been aggravated by the impact of both external and international developments such as they now face.
In treating with these serious implications, these challenges have and will continue to impact on the economy, quality of life and our overall national development. We must cease being superficial in treating with these problems, hoping that some activity outside of our control will bring both short and long-term solutions. We have to focus the full national talent pool and national experience on this urgent assignment.
We commit to that.
Simply adopting the attitude that oil and gas prices will reach promised and future heights and in the meanwhile we wait in hope will lead to disastrous results.
The cyclic behaviors of the pricing of oil, gas and products derived from these hydrocarbon assets are well-established facts.
For example, in the mid-1980’s to 2003, the adjusted price of a barrel of crude was generally under US$25.
During 2004 the price doubled to US$50 and exceeded US$75 by mid 2006.
In March 2008, a price of US$110 was reached.
Here we are, five (5) years later debating whether the price will be closer to US$40 rather than US$50.
Any analysis of the situation in Trinidad and Tobago must go beyond simply looking at the price of oil and gas.
Our energy sector comprises several sub-sectors:
- Iron and Steel Production
- Natural Gas Production and Processing
- Oil Production
- Refined Products
All having a common factor that they are export oriented and have to compete in the international market.
These several products have cycles of their own and in treating with the current challenges, market trends, prices and market destinations must be examined and appropriate measures adopted.
I’m certain that this has become a routine exercise for all the natural gas investors in that sector of the economy, but the government must also do its analysis and on that basis assist in the solution rather than focus simply on the prices of oil and gas. Such analysis can lead to significant dialogue with the corporate citizens of the energy sector and provide the options to be followed by these corporations with the proactive support of the Government.
Both in the short, medium and long-term, continuous and continued dialogue must become the norm between the government and these several corporations active in the sector.
Indeed as I have proposed without success, issues affecting the energy sector should be treated in a bipartisan manner and an appropriate mechanism should be found whereby solutions to these challenges can be determined without reference to party politics. This is a model that several countries have adopted and the current energy crisis does require a national effort over the next few years.
New Parliamentary Standing Orders have seen the establishment of the Standing Joint Select Committee on Energy but he operations of this Committee has not got off to a very auspicious start but it is a start nonetheless.
As an example that this situation will not improve overnight, some simple facts can be stated:
- I’ve already given the tremendous improvement of the hydrocarbon reserves of the US and when one examines the production figures of natural gas, a better appreciation of the problems facing Trinidad and Tobago comes to light. For example, production of natural gas from shale in 2005 was 5% of the total production of natural gas in the US, by 2015 that figure will climb to over 40%.
When one examines what is taking place in the production of gas-intensive products, we are witnessing restarting, debottlenecking and new construction of over thirteen (13) new ammonia plants in the US, where a new ammonia plant has not been established for thirty (30) years. Additionally, fifteen (15) new methanol plants have been announced for construction in the US.
Our LNG exports to the US peaked at over 266 million cubic feet in 2008, accounting for over 75% of US imports of LNG. Today it is below 20% and dropping.
A small developing country such as Trinidad and Tobago with limited oil and gas reserves will only maintain its place in the global energy industry if there is full and active cooperation between the Government and all the corporate citizens of the energy sector.
As an example of the type of cooperation that is needed, the question arises of how Trinidad and Tobago can maintain its leading position in the production and export of ammonia and methanol, notwithstanding the development of the substantial production of natural gas from shale anticipated in the United States and other countries. Trinidad and Tobago now stands at fourth or fifth in the production of LNG, but its own production is less than 20% of that produced in Qatar. More importantly, its traditional major market, namely the United States, is fast disappearing. While the prime responsibility for treating with the situation clearly lies with Atlantic LNG, the proactive support and cooperation of the Government I’m certain would be most welcomed by them as they look for new markets.
Atlantic LNG must be complimented on successfully seeking and obtaining new markets and hopefully the gas-intensive companies with appropriate encouragement and incentives from the government will also do the same.
What should be the role if any that any government in a country in facing these formidable challenges should adopt? Firstly, the national community must be sensitized to the nature and seriousness of the problem.
No hiding of our head in the sand will minimize these challenges. Short-term strategies and measures must be formally adopted with a high level of efficiency and urgency. These should include:
- As suggested, a formal mechanism that will allow continuing discussions with all the stakeholders of the energy sector
- Reduction of wasteful spending
- Dissemination of priorities of several government-sponsored and funded projects
- Obtaining from the Energy State Enterprises (NEC, NGC, PPGL, Petrotrin, NP) their plans for treating with this crisis
- Initiate with urgency dialogue with private sector interests; upstream and downstream and the Trade Unions
- Direct Energy State Enterprises to concentrate on their core business, utilizing their resources in a cost-effective manner and eliminating non-essential expenditure
- Obtaining from the Ministries of Energy and Finance an accurate estimate of the impact that falling prices in LNG, methanol, ammonia/urea, steel and iron products, crude oil and refined products will have on government revenue
- Undertaking immediate steps to resolve the chronic gas curtailment crisis
In the medium term, more in-depth and independent analysis will have to be done, obtaining authoritative projections of the global gas industry. Following such analysis, Trinidad and Tobago’s potential role in the global energy industry can then be identified. Such a role can only be undertaken if specific measures are undertaken and adopted. These will include:
- Re-establishing the credibility and the image of our country internationally with special effort focused on such relationships in the US, UK, Venezuela, Brazil, Ghana, Germany, China Saudi Arabia, India and most importantly, the Caribbean countries.
- Engagement with both current and potential producers of our hydrocarbon resources especially those who want to commit to maintaining an investment interest in in what we do now and those who may be encouraged to make investments in new areas of expansion such as adhesives and plywood, clay products or downstream aluminium products from imported ingots.
- Treating with the problems that now face the companies involved in the petrochemical sector …...the gas-pricing dilema must be resolved!
- Identifying the key roles to be assigned to the Energy State Enterprises, including Petrotrin and NGC, in meeting these challenges and grasping these opportunities
- Ensuring that the Ministry of Energy and Energy Affairs is once again staffed with experienced and qualified professionals
- Revisiting the use of the Union Estate and the marine facilities at La Brea
With the advent of shale gas and the impact it will have on the global energy sector, the discovery of substantial natural gas reserves in Africa – Tanzania, over 60 tcf, Mozambique over 150 tcf etc – the development of new technologies that will allow natural gas to become the feedstock for products traditionally associated with oil such as transportation fuels including diesel and gasoline, the plastic industry etc, Trinidad and Tobago may be presented an opportunity to increase its role in the global energy industry.
Trinidad and Tobago has had an excellent record in the development of the natural gas sector and the expertise and experience of several of its citizens and of the companies operating in that sector is well-known and well-established.
This places the country in a favorable position to consider investment partnerships and transfer of technology opportunities outside of Trinidad and Tobago.
The presence of several international companies in this country is a significant advantage and the opportunity for joining and cooperating with them, exploring opportunities outside of Trinidad and Tobago can be a major step in maintaining a significant role in the global energy industry.
The use of substantial funds by NGC and Petrotrin outside of the core businesses of these companies could have been better utilized for investment in the energy sector locally, regionally and internationally. The country must be innovative and creative if we are to maintain on a sustainable basis the role we have created over the years in the energy sector.
A government cannot do this alone, nor can the local private sector on its own. Joint-venturing and cooperation may be the only solution.
These are but a few steps that are needed. There are several others:
- Diversification of the economy, including diversification within the energy sector itself
- Expansion and deepening of the other important sectors of the economy including manufacturing, financial services, the entertainment industry, tourism and other sectors which can be developed to help reduce our dependence on the energy sector.
- Placing agriculture and local food production and consumption higher on the national agenda
- Continued meaningful investment in education and training, preparing the country to rely more on brain power for its future growth
- Creating an environment that provides for ease and transparency in all business transactions,including pension portability and some form of Health Insurance.
- Treating head-on with the several issues with which the country is now faced. These issues impact on the social development of the country, the productive sector, the enhancement of the quality of life of our citizens, governance, international relations, management of financial resources for opportunities for young people.
This is a long list that a Government and its citizens must engage with a fair level of urgency.
For example social issues include:
- Elimination of Corruption….zero tolerance
- Poverty Reduction
- Reduction of dependency on the State
- Crime and security
- Removal of inequity in all social services
- Education with development objectives
- Improved delivery of health care
- Provision of affordable housing
- Family savings and healthy living
All of these require urgent and immediate attention.
However, these challenges will also provide opportunities and it is left for the country to accept these challenges and work towards benefiting from the opportunities presented. All elements of our society must work in tandem towards that achievement.
I have used this opportunity to highlight on the one hand the worsening crisis which this country now has to face.
There is no waving of a magic wand, no simple words of assurances, no superficial analyses, no articulation of expectations that these challenges are temporary and will disappear overnight because “God is a Trini”
God must be saying to us “ Trinidad and Tobago, get your act together!”
Well thought-out strategies based on in-depth analysis must be designed and most important of all, all elements of the national community must be made aware of the problem and thus become an important part of the solution.
It is time for all hands on deck! If trinidad and Tobago ever needed you it is now. I invite you, the Energy Chamber to be first in answering this call.
Thank you and May GOD BLESS all our endeavours.
The People’s National Movement (PNM) wishes to advise the National Community that Senator Dianne Baldeo-Chadeesingh has withdrawn her candidacy for the Chaguanas East Constituency.
Senator Baldeo-Chadeesingh has withdrawn due to personal reasons.
The Screening Committee of the PNM will meet the Executive Committee of Chaguanas East next week to select a candidate from among the Nominees that were already screened.
Senator Baldeo-Chadeesingh continues to hold her post as Opposition Senator and remains fully committed to the aims and ideals of the People’s National Movement.
The People's National Movement (PNM) strongly condemns the United National Congress (UNC) temporary Senator Barbara Gray Burke for her reckless and outrageous statement "that the PNM never gave the Baptist faith anything."
The PNM wishes to remind the National Community that the rapid advance of the provisions of schools and education facilities which began under the People’s National Movement, has always been central to the party's policy while in Government.
This policy is to a large extent responsible for the significant educational strides made by persons of every religious denomination and religious grouping in this country. It has never emphasized the construction of schools as repayment for political favours, whether it be for ongoing newspaper endorsements from pastors, or the annual ones from a minute segment of the Spiritual Shouter Baptist community.
The PNM has always considered the education of our children too important to be trifled with for political purposes and condemn yet another attempt to play politics with the future of our nation’s children.
The People’s National Movement is appalled by the continuing use of Prime Minister Kamla Persad-Bissessar of our cherished state resources to play politics and campaign for the upcoming general elections.
The decision by the Prime Minister to announce the handing over of a Secondary School to the temporary UNC Senator is not only a slap in the face for the parents and teachers who have been protesting the corruption and mismanagement of the Saint Barbara’s Spiritual Shouter Baptist Primary School but also the United Voice of the Spiritual Shouter Baptist Faith who have also condemned the operations of that school.
The Prime Minister’s announcement, without any indications that she has paid any attention to the complaints lodged at the Ministry of Education over the operations of that Saint Barbara Spiritual Shouter Baptist Primary School, suggests that she is even willing to play politics with the education of the country’s children in her vain attempt to resuscitate a moribund election campaign.
While the PNM is not surprised that a woman, who conferred Senior Counsel Status on herself, would be party to consecrating sainthood on a Baptist leader by declaring her Saint Barbara, we remain appalled that Mrs. Persad-Bissessar should be so tone deaf to ignore the cries of the children whose schoolbags carry the country’s future.
It was in the year 1951, just a short five years prior to the founding of the Peoples National Movement in 1956 that the law prohibiting worship by the Spiritual Shouter Baptists was repealed. The prohibition was imposed upon the Shouter Baptist community in the year 1917 by our Colonial masters. It was repealed a long 34 years thereafter. The repeal of the prohibition law created the environment in which Shouter Baptists, as they were then called, were able to take their rightful place among the community of traditional religious organisations in Trinidad and Tobago.
The Spiritual Shouter Baptist faith originated outside of Trinidad and Tobago. It has evolved over these many years to become a unique, indigenous religion here in our Country. A unique characteristic of its embodiment In Trinidad and Tobago, rests in the fact that it has managed to blend the beauty and pageantry of the African mosaic with the glory and majesty of Christianity, creating among us a vibrant, effervescent and awe-inspiring religious persuasion as only we in Trinidad and Tobago can lay claim.
The days when members of this spiritual community had to hide and evade the arms of the law to engage in honest and sincere worship had come to an end and the long journey toward recognition and respect had in fact been given greater momentum under the PNM. The religion was always dear to the heart of the PNM’s founding father and Father of the Nation, Dr. Eric Eustace Williams. This endearment has continued long after his passing.
It is ironical that it took 34 years to have had the prohibition law repealed and 34 years following the passing of Dr. Williams for an unpleasant accusation to be so unjustifiably leveled ostensibly designed to place a stain on the stature the PNM mainly for electioneering purposes. The number 34 truly does conjure up unpleasant memories for those who seek to defile the name of the Party.
The People’s National Movement has always recognised the unrelenting role played by the Spiritual Baptists in the development of the Nation and in providing the leadership that has brought the faith to its pride of place among the family of religious organisations in Trinidad and Tobago.
It was to a significant extent that the experience of the inequality of treatment meted out to such a large cross section of our indigenous people and the wide range of injustices brought upon them by the prohibition, which influenced the PNM to enshrine indelibly in the Nation’s Constitution the unconditional right to freedom of worship: a right which all religious institutions now enjoy and take full advantage of.
It is well worth tracing the humble beginnings from which this illustrious faith based institution was created, the struggles and strife which its members were forced to face, the prejudices which were inflicted upon them, the source from which those prejudices emanated and the battle for survival which they had to endure to demand and achieve standing side by side with the international community of religious institutions.
In and out of Government, the PNM has never failed to organise its own celebration of Spiritual Baptist Day the most recent having been held in Moruga on Saturday 21st March 2015 where the Political Leader, Dr. Keith Rowley was anointed and indeed delivered the feature address. The Party will continue to support the Church’s enriching and enlightening initiatives as we encourage them, like all other religious institutions, to participate and become increasingly involved in the shaping and building of our society and to continue to stand tall under all circumstances.
Citizens of Trinidad and Tobago have been reaping the rewards of the efforts of the Spiritual Baptists in many walks of life, by way of the shaping and influencing our moral and spiritual values, in education, in community development, in caring for the young and adolescent, in promoting good family life, and in the development of economic and social institutions which go a long way in furthering the growth and development of our nation.
The Message issued to the Nation by the Party’s Political Leader to mark this year’s celebrations clearly reinforces the Party’s endearing respect and regard for the purity and sanctity of the Religion.
The PNM commends the Spiritual Baptists and encourages them to continue in their valiant efforts to return Trinidad and Tobago to the land of peace, prosperity and happiness which we once enjoyed.
"I believe we can seize the future together - because we aren’t as divided as some would suggest; we, acting as a people, are greater than our individual ambitions or our personal or ethnic agendas. We can come together ... “We’re one family. We must lift each other or fall together, as one nation.”
Dr. Keith Christopher Rowley
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