Adapt or die

Therefore, Christie, explained, continuous innovation in the sector is of utmost importance for it to remain economically viable.

He identified six mega trends that oil majors must pay attention to if they are to remain competitive:

• energy transitions – the rapid growth of natural gas and renewable energy;

• oil supply – the overproduction of oil leading to a decline in demand;

• natural gas – dramatic increase in natural gas trade, with liquefied natural gas (LNG) “poised to surpass pipeline imports as the dominant form of traded gas in the next 20 years”;

• renewable energy – rapid growth of wind and solar power;

• electrification and transportation – advent of electric and driverless vehicles; and

• demand

Using BPTT as an example, he explained how Big Oil could adapt in the face of these changes. While the oil and gas economy is unstable, for instance, BPTT – a subsidiary of the British oil company, BP – continues to invest in new gas ventures.

“For example, despite the economic downturn we spent over US$3 billion in capital expenditures in 2015 and 2016 combined. Further, we will spend another US$1.3 billion in 2017 if the environment remains conducive to investments. The US$2 billion Juniper project which will deliver first gas in the third quarter of this year demonstrates our commitment to investing through cycles.”

The Juniper project, which will develop gas from the Corallita and Lantana fields off the South-east coast of Trinidad, will produce approximately 590 million standard cubic feet a day (mmscfd), which will flow through the Mahogany B offshore hub.

Additionally, the oil and gas giant is currently working on another gas project, Angelin, which is scheduled to begin by 2019.

On Angelin, Christie said, “We are also being courageous in pausing unsanctioned investments while we await policy and commercial clarity. Angelin is one such project that we will sanction once there is clarity on policy and commercial matters such as price. Time is of the essence though, because the country needs this gas in early 2019. The good news is that we are now in active negotiations with the government and NGC to agree the terms necessary for sanction of Angelin. And, the government is treating this with urgency.”

Investments like Juniper and Angelin, in increasing the percentage of gas in the company’s portfolio, will ensure BP’s survival in a low-price environment. Vice president of BPTT, Andre Celestin said, “At a global level, BP is developing into an organisation that can succeed in the current low price environment. This is important to note because BP’s Trinidad and Tobago operations will play a key role in attaining some of the objectives that BP has set.”

Another way to build competitiveness, according to Christie, is through putting people first. While the drop in oil and gas prices has resulted in “significant dislocations” across the globe – drop in revenue, job loss, currency devaluations and political instability in some cases – with Trinidad and Tobago having suffered almost 70 percent reduction in its revenue and massive job losses, it is nonetheless important to safeguard employees.

He elaborated, “We work extremely hard to put people first. Safety has remained our number one priority and respect is one of our values. There is no quantum of hydrocarbon or money worth more than our workers.”

Competitiveness then, according to Christie, is achieved through having a vision, being courageous and valuing people above power.

Keynote speaker, Bernard Looney, chief executive, Upstream, BP, supported the assertions in Christie’s speech, saying, “…the energy world is changing and we must adapt or else we die.”

Looney identified other upcoming investments like the Onshore Compression Project, TTOC, which will be completed this year. There is also the Sercan II project with EOG Resources, Inc.

He continued, “We are investing in new seismic surveys, as well as exploration drilling in the deepwater with our partner BHP, and in our own acreage in the Columbus Basin – spudding the Savannah well last month. There’s more to come, with plans to spud (make initial drilling) four further exploration wells in the near term.

“That adds up to $6 billion of investment since 2013… all of which is helping bring on stream much-needed additional production which will start to alleviate the ongoing gas supply short falls.

“We are bucking a trend – maintaining investment at a time when it’s been falling across our industry.”

BPTT could achieve all of that because, said Looney, it has focused on building relationships.

In essence, both men agree that the energy sector must not become fooled because of the recent uptick in oil prices – currently, the oil price is at US$52.79 – and treat the instability as the “new normal,” in the words of Looney.

Notably, BP and BHP Billiton are two companies which have signed on to the Local Content Charter on day one of the conference.

The other companies are: Air Liquide Trinidad & Tobago Limited; Atlantic; Caribbean Nitrogen Company; EOG Resources; LGO Energy plc; Massy Energy & Industrial Gases Business Unit; Phoenix Park Gas Processors; Methanex Trinidad; PLIPDECO; Methanol Holdings Trinidad Ltd.; National Energy; National Gas Company of Trinidad and Tobago; Nu- Iron; PCS Nitrogen; Repsol; Shell; Touchstone Trinidad; Yara Trinidad and Petrotrin.

The Local Content and Local Participation Policy and Framework, as explained by Acting Minister of Energy, Colm Imbert at the conference, “supplemented the general obligations under the Petroleum Act and Regulations, which require licensees to optimise the participation and development of nationals in their employ.”