Trinidad to 'explore' energy stimulus measures

Mechanisms to facilitate the resurgence of Trinidad and Tobago’s economic activity across different sectors, including energy, after the coronavirus pandemic, will need to be explored, according to Prime Minister Keith Rowley (pictured).

Rowley made the comment following a first meeting of a team tasked with preparing a recovery road map, a draft document for which is expected to be ready by the end of May.

“The emphasis must be on removing constraints to private investment,” he said.

In its annual economic survey released this month, Trinidad and Tobago’s central bank highlights that “the government has estimated that the virus- and price war-induced shocks to energy prices will push the projected budget deficit for fiscal 2019/20 to US$8.53bn compared to the budgeted US$5.0bn.”

The larger shortfall was based on oil and gas prices which were revised to US$40/b and US$1.80/MMBTU, respectively, from US$60/b and US$3/MMBTU, effective March 10.

A separate report from the monetary authority adds that the energy commodity price index the bank uses to gauge the overall price movements of the country’s main energy products fell 19.2% year-on-year during the period from July 2019 to January 2020.

International credit insurance and risk management group Coface said recently that “new extraction sites (notably the Angelin project) will not be able to offset the decrease in production from existing sites, especially since low prices are not encouraging companies to invest to maintain existing capacity.”

The latest figures released by the UN Economic Commission for Latin America and the Caribbean (ECLAC) on Tuesday show that the Caribbean country’s GDP this year is forecast to contract 5% due to COVID-19.

In December, ECLAC had projected that the country’s GDP would increase 1.5% in 2020.

On March 26, S&P lowered Trinidad and Tobago’s long-term foreign and local currency sovereign credit ratings to ‘BBB-’ from ‘BBB’, based on expected lower oil and gas prices over the next several years.

Source: Trinidad and Tobago central bank

IMPACT ON SERVICE COMPANIES

“The energy services sector has been badly impacted by the current overlapping coronavirus and oil price crises,” according to The Energy Chamber of Trinidad and Tobago.

The association said that a survey of members revealed that their revenue was down on average by 56% with some reporting a 100% drop.

The chamber adds that major downstream maintenance projects have been postponed and that service companies which had work in other countries have not been able to travel due to restrictions.

OPERATOR DEVELOPMENTS

“The Deepwater Invictus rig is anticipated to mobilise to Trinidad and Tobago in the middle of the 2020 calendar year to drill one exploration well, Broadside, in our southern licences as part of phase 5 of our deepwater drilling campaign, subject to any potential COVID-19 constraints on mobilization,” BHP said in an update.

The natural resource giant added that the Ruby gas project is on schedule and budget with overall completion at 23%. Initial production is due to begin in 2021.

BHP’s first quarter crude/condensate and natural gas output in Trinidad and Tobago slid 53% and 19.8%, respectively, to 438,000boe (barrels of oil equivalent) and 46.1Bf3 (billion cubic feet) respectively. The company attributed the dip in gas production to a decrease in tax barrels in accordance with the production sharing contract.

For its part, Heritage Petroleum, which took over upstream operations from state oil company Petrotrin as part of the latter’s restructure, reported that it is “pursing a strategy of storage of oil production which will be sold as the oil market improves.”

Heritage said that its storage capacity is approximately 3.5Mb (million barrels), which will allow the company to store around 2.5 months of production, which stands at 1.2Mb/month.

And Trinity Exploration & Production announced that its field operations have not been impacted by COVID-19 and only essential infrastructure, asset integrity and production related spend is budgeted for this quarter.

Photo credit: Office of the Prime Minister