Energy revenues must increase competitiveness

Trinidad and Tobago has further consolidated its position as a major liquefied natural gas (LNG) producer with the start up of operations of Train IV, which has pushed its total LNG  capacity to 700 million cubic feet annually. While it may be difficult for the average layman to grasp the significance of this,  the opening of Train IV means the volume of LNG Trinidad and Tobago exported to the United States of America in 2004 has increased by 60 percent — more than 75 percent of that country’s LNG imports. It means that TT is now not only to take care of all of the immediate LNG needs of the United States but with US crude oil production falling, any increased demand for LNG will most likely be met.

This underlines our  importance to America’s energy security. Government can expect to collect combined revenues of US$5.311 billion over a 20- year period, based on a Henry Hub natural gas price of US$3.50 per 1,000 cubic feet of gas. Energy Minister Eric Williams, in Parliament last Friday, noted that with Henry Hub natural gas prices projected to reach US$6 per 1000 cubic feet, Government revenues are expected to rise from the project to US$9.72 billion. Meanwhile, propelled by energy alone, GDP growth is projected to increase to about 8 percent  in 2006 from this year’s 6.5 percent. With other liquefied natural gas trains and large industrial projects set to come on stream, TT will be better  positioned to add substantially to the Stabilisation Fund. 

Despite the expected large increase in revenues, great care should be exercised to keep Trinidad and Tobago’s non energy and energy based products competitive in the international market place. The inescapable truth is that cheap foreign manufactured products pose increasingly uncomfortable challenges to TT manufactured goods To achieve this, manufacturers will have to market to trade unions the need for the country’s small and medium manufacturers to remain competitive for  the survival of jobs in their industries. Trade union leaders must be able to market the strategy to the rank and file, who may have become restless with all the talk of increased Government revenues and company profits from the energy and energy based industries.