TT lost US$17B in 7 years by rushing into gas sector

Jul 19, 2021 News

– Expert urges Guyana to take note

Kaieteur News – Lack of knowledge and, perhaps, a heavy dose of gullibility are two of the main reasons why Trinidad and Tobago ended up losing billions of dollars in oil and gas revenue over the last few decades.
Expounding on this front during an exclusive interview, Trinidadian energy strategist, Anthony Paul shared that his home country took for granted, the importance of learning everything it should about the trading of gas, and instead, trusted oil companies to sell their gas resources in a transparent and honest manner.

Trinidadian Energy Expert, Anthony Paul

Paul shared that, as a result of this, the oil companies were able to funnel US$17B into the pockets of its shareholders. He said this is money that the oil companies should have paid in taxes between 2010 and 2017. Had Trinidad been a prudent manager, the expert was keen to note, this money could have been collected and used to clear a significant part of Trinidad’s national debt which stood at US$22B during that time.
Further to this Paul said, “TT is not a player in the downstream part of the Liquefied Natural Gas Market (LNG), which is where most of our gas goes. In other words, we don’t get involved in LNG trading. As a result, we don’t get the best price, and the companies which sell our resources on our behalf, skillfully choose which markets to do so…” Kaieteur News understands that in many instances, these companies would sell the gas resources to their affiliates at low prices to avoid paying their rightful taxes. When the affiliates sell the gas resources to the world market, they make a killing in profits and wire those moneys to the headquarters.
The industry expert added, “…Now this is not illegal. Remember, companies have one goal, which is to maximize profits. So they would do what they can to pay as little tax as possible…”
Paul said that Trinidad tried to mitigate this abuse by trying to use more of its gas for manufacturing purposes but even this failed to solve its problems as the government he said, did not pay attention to market prices for the products, which it sought to produce, nor was it guided by a policy on what were the best gas products that should be manufactured.
Paul said that the country did manage to make some money in the initial stages but another big misstep was that TT failed to properly push productive capacity in other sectors. He said that this failure to diversify and not be overly dependent on oil money resulted in more costly consequences.
The Chatham House Advisor said, “…You see, it does not take a lot of brain power from the government to get that money flowing from the oil and gas sector…But without the control systems to manage expenditure and other challenges that come along the way, quite frankly, it leads to corruption. And soon enough, significant value is lost.”
While Guyana may not be trading in gas at this time, Paul stressed that Guyana can certainly take a cue from the consequences Trinidad and Tobago was made to suffer. At the end of the day, he stressed that the authorities of the day must at all cost operate with the frame of mind that they have to return the most value to its shareholders, that being Guyanese, while adding that one of the key ways it can do this is to equip itself with the knowledge that it needs on each aspect of the sector so that the right decisions can be made.

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