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Enter bilateral agreements with extreme caution
– Guyana should avoid pitfalls and pain suffered by T&T- Energy Strategist, Anthony Paul
By Kiana Wilburg
On the heels of a visit last week by US Secretary of State, Mike Pompeo, Guyana signed onto a critical bilateral agreement that would pave the way for deeper involvement by the USA in the nation’s fledgling oil sector.
Trinidadian Energy Strategist, Anthony Paul
But industry experts are of the firm view that Guyana needs to approach this and all other bilateral agreements to come, with extreme caution.
Specifically noting this salient piece of advice during an exclusive interview was Trinidadian energy strategist, Anthony Paul.
The Petroleum Geophysicist told Kaieteur News that Trinidad paid dearly for failing to be cautious, while noting that it would be in Guyana’s interest to pay keen attention to the mistakes made by a sister CARICOM member.
Paul, who is currently advising the Government of Mozambique, noted that he recently participated in a Nigerian Summit which aims to improve local content and the same sage advice was provided.
The Energy Strategist said: “Interestingly, I gave a feature presentation at the Nigerian Content Summit 2020 this (last) week. (https://nigeriancontentsummit.com/) on ‘Trinidad and Tobago’s Experience’…My presentation demonstrated how T&T approached oil and gas historically, while highlighting some of the successes, challenges and lessons learnt. We had been very successful until Liquefied Natural Gas (LNG) came along.”
Paul noted that, because the US Company in T&T (Amoco) was hesitant to invest in LNG, the T&T government gave multiple incentives and assurances for them to build the first LNG train. This included a bilateral agreement between governments to ensure this was possible and that its interest was protected. This agreement was called ‘Treaty between the Government of the Republic of Trinidad and Tobago and the Government of the United States of America concerning the encouragement and reciprocal protection of investment.’
As a result of the fact that TT authorities did not pay attention to how US trade actually works, the CARICOM nation paid dearly for this.
Paul noted that local companies had been doing all the operations and maintenance support for the industry for years effectively, cheaply and safely. Instead of using them, British Petroleum which had bought Amoco, an American company registered in Delaware, brought in UK companies to take over the work and the workers, as the UK North Sea was in decline.
BP, Paul said, was able to convince the TT Prime Minister at the time to allow it to displace locals since the Treaty that was signed, contained provisions which protected US investments.
Since Amoco was still registered in Delaware, it was covered by the treaty. In fact, the oil company was able to convince the PM to allow this to happen before he really understood the far-reaching economic implications for his people.
BP also convinced the Prime Minister to rapidly expand LNG production, the result of which is that the local suppliers were overwhelmed and so deemed to not be able to meet the demand.
As a consequence, the upstream (exploration and production) companies started bringing in their people. Further, the gas reserves were quickly depleted, leading to plants being shut down or reducing production for lack of gas since 2018.
“We had put a local content policy in place to bring them in line… but then they complained to the Embassy that we were in breach of the bilateral agreement which provided for the protection of their investment.”
In the end, Trinidadian businesses were displaced rather than enhanced and the industry was essentially managed in the interest and benefit of the USA and the UK and their companies.
Paul said that Guyana stands to lose much more than Trinidad if it is not cautious in avoiding this pitfall, since T&T at least had some good governance in the years from Independence to the early 2000s.
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