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Trinidad prepared to withhold oil blocks if Shell, BP don’t meet basic requirements
Kaieteur News – Neighbouring oil and gas producer, Trinidad and Tobago, is prepared to reject bids from two of the country’s major oil and gas producers as they have failed to meet the country’s minimum requirement for accessing its offshore oil blocks.
An exclusive Reuters report said Wednesday that the TT government is set to have discussions with BP Plc BP.L and Shell Plc SHEL.L, the only two companies that took part in its oil block auction, but will be holding back its deep-water assets if the oil majors cannot come to terms with the basic requirements of the twin island’s most recent bid round.
Trinidad and Tobago’s Energy Minister Stuart Young
Reuters said that Trinidad could reject four of the offshore exploration bids presented by BP Plc BP.L and Shell Plc SHEL.L. It said that Trinidad and Tobago’s deep-water bid round closed in early June with offers received only from a BP-Shell consortium on four of the 17 available blocks. It was noted that the country’s Energy Ministry objected to the offers’ conditional commitment to drill new wells and what it described as a meager signing bonus. The consortium’s bid proposed to evaluate seismic data before committing to a drilling plan, the report said.
It was related that the Trinidad government will nonetheless pursue talks with the two oil and gas companies on any willingness to improve the jointly submitted bids. “If not, the blocks will not be awarded,” officials at the Ministry of Energy and the Cabinet told Reuters. The report continued that in 2020, a similar situation occurred in the auction of shallow-water blocks with proposals from the same BP-Shell consortium being rejected after they failed to meet minimum thresholds. The groups entered into talks that failed to reach an agreement and that process was subsequently scrapped.
Reuters said too that while Shell has declined to comment on the matter, saying that it had not been notified of a formal rejection, a BP spokesperson related earlier in the month, that company’s willingness to initiate talks regarding the blocks. It said that the company was “looking forward to progressing talks on the deepwater blocks,” but declined to comment on the timing of the discussions as it felt that the details should come to the public from the TT government.
It was noted that in November, Energy Minister Stuart Young confirmed that his ministry had submitted its recommendation regarding the bid to the TT Cabinet. Trinidad is said to be Latin America’s largest its liquefied natural gas (LNG) exporter, with the capacity to process 4.2 billion cubic feet per day of gas into LNG, petrochemicals and power. Its gas production is just under 3 billion cubic feet per day.
Reuters said that BP’s president for Trinidad and Tobago operations, David Campbell, had urged movement on the bids saying BP needs to access deepwater fields for future output. It was stated that Trinidad too urgently needs new gas supplies to boost its liquefied natural gas (LNG) production. In November Trinidad’s Energy minister had said that the government originally had hoped to announce winners for the deepwater blocks in September but was delayed. BP Plc and Shell Plc, already the country’s major gas producers and co-owners with state-owned National Gas Company in its Atlantic LNG export facility.
Some notable provisions in Trinidad’s Deep-Water Model Production Sharing Contract includes fiscal stability via ring-fenced Production Sharing Contract, Cost Recovery up to 80 percent, and payment of taxes and royalty for the operator on behalf of the contractor out of the government’s share of profit petroleum. The minister’s share of profit petroleum and the minimum work obligations are biddable items.
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