Dear Editor,
Trinidad & Tobago has long been the example that everyone in the Caribbean envied when it came to oil and gas. But the protracted decline that seems to have happened there should be a lesson for us here in Guyana. As Kevin Ramnarine, T&T’s former Energy Minister, has pointed out publicly, his country desperately needs to change its approach to contracts and exploration if it wants to remain a fossil fuel powerhouse.
For decades, Trinidad allowed oil exploration only on terms that greatly favoured the government. From profit sharing to strict local content rules, Trinidad was the gold standard. Our own government’s new local content consultant Anthony Paul was instrumental in developing these rules. And for a while, companies were willing to pay that price and Trinidad benefitted.
And then they weren’t. Fracking and other new technologies unlocked vast new deposits of natural gas around the world and suddenly Trinidad didn’t look so appealing. Companies took their investment dollars elsewhere. The country coasted, depleting existing wells and remaining in denial of the problem for years until it finally has to face facts: offshore exploration off the coast has declined so much and for so long that now the country is running out of gas.
Look at the closing of Petrotrin in 2018 and the thousands of workers laid off in shutdowns of steel and ammonia plants and you will see what happens when a country that builds an industrial base around hydrocarbons runs out. Analysts estimate that Trinidad has maybe one decade of gas left and small discoveries have not been enough to stop the plummeting revenues and dwindling sovereign wealth fund. Guyana should be wary of making the same mistake. Governments are right to want the most out of their resources, but there must be a balance. Offshore exploration is expensive and risky. If the math of breakeven costs, government take, local content rules and global markets doesn’t work, they will move elsewhere. It’s just business.
Regards
Donald Singh
