TT natural gas prospects look good

As long as natural gas remains the preferred fuel of choice for the US, Trinidad and Tobago could rule the roost for quite a while. That’s the view of Mark Finley, senior economist at BP’s International Affairs Office, who was in the country recently.

Accodring to Finley, US consumption of natural gas has risen by nearly 4% in the last year. Another reason for these favourable expectations is TT’s physical proximity to North America which gives the advantage of low shipping costs. As for global energy trends, stable and gradually changing is how world conditions were described by Finley. “Global energy trends are intact,” says Finley, highlighting the evidence of continuity and change in the market. Oil holds at a steady 40% of the market share, continuing in its monopoly over transportation, natural gas continues to capture what was traditionally coal’s domain and nuclear power remains at a plateau. Development of alternative power sources like wind and solar power continues to be extremely minimal, but growing rapidly at an average annual rate of over 30%. Overall, world energy consumption has experienced a 2.5% increase if one includes China’s demand for coal which accounts for 66% of that figure. This growth which Finley describes as “robust” amounts to the considerably slower 1% when China is removed from the calculations.

Last year China alone accounted for all of the growth in worldwide oil consumption as well. OPEC has been willing to cut production to support high prices but this quota-cutting has resulted in a loss of market share as non-OPEC oil interests have been stepping up production to about 1.5 million barrels per day since last year. Russia, for example forged ahead with a production count of 642,000 barrels per day. Saudi Arabia and other OPEC producers maintain surplus production capacity as policy and these reserves were tapped into during the US war with Iraq. On the whole, however, total production by OPEC is at its lowest since 1995 and its share of the market is at its lowest since 1991. The market has altered, too, in that world oil consumption has slowed in the last five years in comparison to the period between 1992-1997, bottoming out at a growth rate of less than 1% per annum. Last year’s sluggish increases, says Finley, can be attributed to the weak global economy and the aftermath of the September 11th crisis which impacted on jet fuel consumption. By contrast, BP’s oil production rose 20% last year mostly because of new technology. These factors suggest “an oil market with weakening fundamentals but high prices,” says Finley. Also, natural gas trade has grown more rapidly than natural gas consumption, the latter itself showing more growth than oil at 2.5%. In spite of this discrepancy between production and consumption, “natural gas worldwide remains the preferred fuel,” Finley assures us.  The future is inviting for TT, Finley promises, since “the total of US imports and TT’s role will increase significantly in the years ahead.”