T&T puts 17 offshore blocks up for auction

Dec 07, 2021 News

-forewarns of ‘ring fencing provisions’ to protect against financial exploitation

Kaieteur News – The Government of Trinidad and Tobago (T&T) recently launched its 2021 competitive bid round, for the auctioning off, of 17 deep-water oil blocks.
The auction is expected to be open for six months, with the deadline for submissions being June 2, 2022 at noon.

Map showing the deep-water blocks that are up for auction offshore Trinidad and Tobago.

The T&T administration—led by Prime Minister, Dr. Keith Rowley—said the offshore concessions that are now on the market, were subjected to an internal technical evaluation taking into account as well, proximity to ongoing developments.
The 17 offshore deep-water blocks up for the taking, are located off the northern and eastern coasts of T&T.
The T&T government was keen to put potential bidders on notice however, that they should expect certain key provisions in their ‘Deep-Water Production Sharing Contract.’
One such crucial provision that will be in place, it said, is the inclusion of ring fencing for all agreements.
According to the T&T administration, the State’s share of Profit Petroleum and the minimum work obligations are biddable items.
Over in Guyana, the absence of ring fencing provisions in the Stabroek Block Production Sharing Agreement (PSA) has faced heavy criticisms from local and international actors for several years.
Earlier this year, the Institute of Energy Economics and Financial Analysis (IEEFA), which studied the impact of ‘zero ring fencing protection’ in the contract, noted that more announcements of discoveries in the Stabroek Block by ExxonMobil means little for the citizenry.
This since, in the absence of a ring-fencing provision, ExxonMobil and its partners are essentially deducting costs associated with the Liza Phase Two, Payara Projects and other exploratory works from the Liza Phase One Project that is in production.
In doing so, the institute said the already small profit to be split with Guyana gets even smaller.
In a report titled: “Lack of Ring-Fencing Provision Means Guyana Won’t Realize Oil Gains Before 2030s, if at All,” by IEEFA’s Director of Financial Analysis, Tom Sanzillo, the devastating effects of failing to have this provision are further highlighted.
By IEEFA’s estimates, Guyana should receive upward of US$6B annually by 2028 or sooner but since Exxon has the leeway to deduct additional expenses from the Liza Phase One revenue stream, IEEFA’S Director of Financial Analysis posits, “Guyana will be shortchanged until the 2030s, if not longer.”
When the foregoing issues are placed alongside the fact that the true cost of ExxonMobil’s projects, new discoveries, and dry holes remain unknown, Sanzillo alluded that the Stabroek Block deal, essentially leaves the people of Guyana “in a dark abyss of worrisome financial risks.”
With ring fencing provisions being placed into its future deep-water contracts, Trinidad and Tobago appears determined to not follow in Guyana’s footsteps.

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