How TT can benefit from MOU with Venezuela

THE EDITOR: The Government of TT has signed a memorandum of understanding with Venezuela so as to exploit the cross boundary gas/oil reservoirs. This is very important and necessary since reservoirs do not respect national boundaries and, secondly, with directed drilling it is feasible to stay on one side of a boundary and exploit pockets of gas or oil on the other side.

In the short term, it may also be more convenient to so exploit the oil and gas reserves that are exclusively on the Venezuelan side, with respect to the production, processing and marketing simply because of the TT side facilities or even our political and economic stability. The existence of the LNG plant at Pt Fortin makes it feasible and possibly more economic to process Venezuelan gas at other Pt Fortin trains instead of in the short term considering building another LNG plant in Venezuela. With respect to the concern expressed by other commentators on the availability of TT reserves, surely the improved availability of supply that will result from any further agreement reduces the risk as regards estimation and production errors and even opens up the opportunity for, say the NGC to become a transportation agent of Venezuelan gas for FDI based downstream industry in TT. Though the details of the MOU are not yet available there is talk about a regional gas and oil conglomeration that could supply the regional and USA energy needs and which utilises a Caribbean pipeline all the way up to the Florida peninsula.

There are many aspects of this to be considered, three of which are, the owners of the energy resources and investment capital, and the suppliers of the intellectual and strategic resources. The proven reserves of TT are minuscule (20 tcf of gas) as compared with those of Venezuela (66 billion barrels of proven oil reserves and 148 tcf of gas), Columbia (2.6 billion barrels of oil with only 20 percent of its potential explored) etc.  Hence our contribution to the natural resource base of any such conglomeration is almost irrelevant. The people of this country own Petrotrin and NGC with some small investments in the rest of the energy sector. Hence we will not be any major capital investor as compared with FDI or even Venezuela that owns the third largest petroleum company in the world. Though we may at this time be a convenient node for the export and processing of the resources our major impact in this conglomeration should be strategic, as for example, the role Singapore adopted in channelling process plant etc. into Malaysia while retaining design, implementation, financing and marketing of the ventures.

Though the economy of Venezuela at the moment is poor (GDP/capita in 2002 US$4310, inflation rate of 27 percent) compared with that of TT, it has made major contributions to the development of the energy sector eg in the processing of heavy crude oils (of which it has the largest deposits in the world) via its orimulsion plants and the indigenous design of aluminium smelters. Hence Venezuela itself with its 14 universities for a population of some 24 million people and its huge natural resource base is also a challenger to our intellectual and strategic leadership in this conglomeration (recall Chavez’s thrust to capture the Caribbean market for oil products from TT). Another commentator, Dr Morgan Job, was indeed wary of the impact of the ‘real politic’ on the proposed joint venture among the countries and in particular Chavez’s Venezuela inclusion. It is no secret that the USA is seeing itself as the only super power in the world today and intends to remain as such. Also it is well known that the Chavez-Castro axis in the Caribbean supported by Caricom and particularly by TT is not to the liking of the USA. Further, the blatant threat by the US with respect to those in the region that supported the ICC is surely an indication of what is possible if we were to run afoul of the US’ wishes. The game that is unfolding with respect to the use of Iraq’s energy resources should be of concern to those who see economic development of TT in terms of becoming a major exporter of natural gas and petrochemicals to the US, albeit by FDI. As usual, our economic future even in the energy sector depends not on our reserves in the ground but on the expertise of our people. My concern and surely that of our Parliament’s Joint Select Committees must lie with the details of the MOU.

SENATOR MARY K KING
Santa Margarita