Pressing on the gas

This means that we can look forward to the future portfolio drill-out. The new offshore gas discoveries, as well as plans to increase upstream investment, should be taken as a boost of confidence in Trinidad and Tobago’s aging energy sector. This is even more significant as the energy sector has been impacted in recent years by falling prices and concerns over dwindling reserves.

While all this represents positive developments, we must understand that the Macadamia field should at least have an operational platform around 2020, while the Savannah field will be linked into the nearby Juniper platform when it comes on-line later this year. We must also note bpTT’s announcement of the construction and subsequent deployment of a 15th platform, to bring on-line its Angelin offshore gas project, which is located 60 km off Trinidad’s south-east.

There is the anticipation that production in the Angelin field will begin in the first quarter of 2019. When in production there will be four wells forecasted to produce up to 600 million standard cubic feet per day.

In recent years, we have suffered a decline in energy earnings due to lower prices and falling output. This has had the knock-on effect of being responsible for lower government revenues. The Minister of Finance has reported that government income fell by 35% to TT$37bn between 2014 and 2016. We have also seen our net international reserves drop from $10.4bn as of May 2014 to $8.95bn at the end of May 2017, resulting in export coverage moving from 12 months to 10.

We have also seen reduced spending by oil and gas companies to a fall in first-half projections of value-added tax (VAT) revenue. It is estimated that income from VAT fell short of forecast by as much as TT$669m; the projected full-year figure for FY 2016/17 was estimated at TT$7.8bn.

New offshore gas discoveries and plans to increase upstream investment should boost confidence in Trinidad and Tobago’s energy sector, which has been impacted in recent years by falling prices and concerns over dwindling reserves. These new deposits are expected to take time to begin operations. However, they signify a degree of security for the energy sector and the government, giving us a sizable amount of reserves for exploitation and extended long-term revenue flow.

These new projects in the pipeline mean that there could be a reversal of lower spending and its negative impact on VAT in the energy sector. Henry Hub Natural Gas Spot Price has increased from more than a 10- year low of $1.75 per million British thermal units in March last year to $2.98 last month. If gas prices continue to rise, this could assist in a turnaround. The advent of higher gas prices and increased production could serve as growth drivers this year. We can surely hope that these factors could assist in getting the economy out of the recession it entered into since 2015.