Even with oil, your economy will suffer shocks

Nov 16, 2018 News

‘If you fail to prepare, prepare to fail’- Former T&T PM tells Guyana
Former Prime Minister of Trinidad and Tobago, Kamla Persad-Bissessar, is convinced that had it not been for some timely interventions made by her government, the economic situation in her country would have been much worse than it is now.
As such, she advocated that Guyana keep in mind that oil is not an infinite resource and, even at the beginning of its journey as an oil-producing country, prepare for the day when the proverbial well runs dry.
She gave this advice as she spoke last week at the Guyana Manufacturing and Services Association (GMSA) dinner and award ceremony held at Pegasus Hotel.
Among many other things, Persad-Bissessar said that it is important to keep in mind that hydrocarbons are naturally declining resources.
She said, “The wells that may produce massive flows of crude oil and gas today, may one day decline substantially. This may very well be at a time when a lot of capital has already been invested in the infrastructure in place, notwithstanding that alternative sources of energy should be a priority even now.”
Persad-Bissessar also emphasized that there is a need for Guyana to put systems in place to continue the exploration of hydrocarbons with good supplies.
She said that Trinidad’s failure to do this left that country facing an enormous challenge in 2010 – a rapidly declining resource sector.
The former TT PM said, “Faced with a looming crisis, my Government began an unprecedented scale of activities to reverse this trend of declining production. We amended the Finance Act in 2014 to enable incentives to potential investors to create a fiscal package which was attractive to them to invest quickly, but did not adversely affect the income from these investors.
“Capital allowances and deferral of tax credits saw the Multinational Investors coming back to Trinidad and Tobago.”
She continued, “We set about a series of Bid Round packages based on the seismic data in blocks being offered. Our Ministers and Technocrats travelled around the world, selling these packages to potential investors to place bids on these potentially lucrative blocks. Incidentally, the activities of the Ministry of Energy are funded by the Petroleum companies under the Petroleum Impost Act, so this was at no cost to the Treasury. In fact, the sales of the data packages brought profits into this process.”
Persad-Bissessar added, “Most important, we engaged in open, transparent and frank discussions with investors, suppliers and stakeholders in the Petroleum Sector; we listened and treated with their concerns and in that way, enabled the sector by way of enhanced corporate social responsibility and joint ventures. This approach was extremely successful.”
As a result of these strategies, the TT Opposition Leader said that Trinidad and Tobago is only now starting to return to higher levels of Natural Gas production. In this regard, she said that the BP Juniper Project which started in the second half of 2017, brought 590 million cubic feet of natural gas per day into production.
The official said that BP’s decision to invest over US $2.1 Billion in this project happened during her time in government (August 2014) which was due in part to fiscal incentives that were offered. She said that construction began almost immediately.
“Today, Trinidad and Tobago is reaping those benefits. Further investment projects including Angelin, TROC and BHP Greater Angostura came to fruition during my administration because of the incentives that were put into place.
When these additional projects come online, at least an additional 900 million cubic feet of natural gas will be produced per day, helping to reach the target of four billion cubic feet of natural gas per day,” the former TT PM stated. She said that these investments happened because her government put in place an aggressive exploration strategy by incentivizing seismic companies, the up streamers (BP, Shell, and BHP), to find new reserves of Hydrocarbons.
Had these investments not been made at that time, the official said, the situation in the country today would have been even more dire.
With this in mind, she urged the Guyanese authorities to learn from Trinidad’s experience and implement an aggressive exploration strategy which would be to the benefit of future generations.

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