Energy lifeline: Good signals

Energy Minister Eric Williams, busy last week making the round, signing up multi-million dollar deals with international and local consortia to carry out seismic and exploration work said the involvement of local firms will be a regular feature in any bid rounds that the ministry puts out.

"The Government has discussed, at length, its position on enhanced local participation, local content and local capability development in the energy sector. Indeed, it is so significant to us that we intend to make it a criterion in the award of all new contracts," Williams said.

The 2003/2004 Bid Round for which production sharing contracts are now being initialed has seen international companies partnering with local firms for the various blocks offered.One of the companies that partnered with two international energy companies and was successful during the 2003/2004 Bid Round is the CL Financial-owned Primera Oil and Gas.

Primera partnered up with US Independent, EOG Resources for Block 4 (a), located in the gas-rich East Coast Marine Area and comprising 457 sq km. It also joined up with another US-based company Kerr McGee for block 3 (b) which encompasses close to 160,000 acres in water depths ranging from 130 to 3,000 feet.

Fully understanding the implications of joining forces with international companies, Rampersad Motilal, Director with Primera Oil and Gas said linking up with established and bigger companies gives valuable exposure to local workers .

"Primera is committed to the challenge of becoming one of the first local indigenous companies to participate meaningfully in a significant and successful exploration and development venture offshore," Motitlal said during the signing with Kerr McGee.

"Our existing working relationships with other partners have been extremely beneficial to Primera and to our young professions who are exposed to, and have the opportunity to learn new technologies."

Primera Oil & Gas has been operating in the Trinidad and Tobago market since 1934. Originally incorporated in Scotland as the Caribbean Oil Company Ltd., the company went through several incarnations before it was acquired, in 1999, by CL Financial and re-named.

The company has extensive leased land acreages in a number of areas in Trinidad and has ventured into the offshore arena in a joint venture arrangement with Petrotrin in the East Brighton Fields.

Last week too, partners Petro-Canada and Petrotrin signed production-sharing contracts with government for Blocks 1(a), 1(b) and 22. With government’s latest emphasis on getting more local companies involved in seismic and exploration work, the Ministry of Energy may see a number of companies in the country getting together with international energy corporations when Consortia are invited to enter bids for the exploration of the Southern Basin onshore, expected anytime soon.

The Southern Basin comprises a total acreage of some 687,000 acres.

There have been complaints that very little was being done to address the needs of the local independent companies.

While the independent sector has made a significant contribution to the development of the energy sector, the sector is flat and in decline which was attributed this to regressive fiscal terms and lack of opportunities.

Gervase Warner, Executive Chairman, Neal and Massy Energy Business Unit solicited views from the private sector on local content in the energy sector and found there is a major disconnect between the Ministry’s Local Content and Participation Policy Statement, the stated commitment of the international oil and gas companies (IOCs) operating in Trinidad to increase local content and the reality of local content and participation

in the energy sector.

Among some of the findings of the study are for government to set specific targets with industry leaders, support with regulatory measures and systems to monitor and measure, facilitate work permits to expedite knowledge transfer, standardize and broaden certification.

For international companies, Warner’s findings called for increased transparency in contracting rules, modifying systems and incentives to align with local content vision an aspiration and they must be willing to invest in short-term to build local content suppliers, increase international rotation for national staff among others.

Independent companies were responsible for over 20 mmbbls of oil produced in the last 15 years (daily production around 6000 bopd) and provide employment for several hundred people. They contribute millions of dollars in Over Riding Royalties and reduce the oil import bill for Petrotrin and maintain old infrastructure.