All Guyana should listen to Stuart Young

Feb 22, 2024 Features / Columnists, Peeping Tom

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Kaieteur News – Trinidad and Tobago has been knocking on Guyana’s door for many years now. It has been offering to help us to make the best uses of our hydrocarbon resources. But Guyana has been reluctant towards having the depth of collaboration that is envisaged by the twin-island Republic.

In 2018, Trinidad and Tobago closed its oil refinery at PETROTRIN. It now focuses more on gas rather than oil. Trinidad and Tobago is now predominantly a gas- economy. A last check, Trinidad and Tobago was producing less than 60,000 barrels of oil per day. This is ten times lower than what Guyana is producing at present. But unlike Guyana, Trinidad and Tobago has control over its gas reserves. It has a number of facilities that help to monetise this production. At the Guyana Energy Conference in 2023, it was reported that Trinidad and Tobago had 10 ammonia plants, seven methanol plants and four LNG plants. It also had heavy industrial concerns that utilised power from natural gas. In 2004, Trinidad and Tobago was producing 155,000 barrels of crude per day. Guyana commenced production at less than 120,000 barrels per day on average. When in 2018 it was clear that Guyana was going to soon be an oil-producing state, it could have entered into a prospective arrangement with Trinidad and Tobago to supply them with Guyana’s share of profit oil. This decision may have prevented the closure of PETROTRIN – the refinery in Trinidad and Tobago. It could have saved more than 5,000 jobs in the twin-island Republic. But the APNU+AFC never either considered or attempted to enter into such an arrangement. This could have been because the APNU+AFC was not sure-footed because it lacked the experience in the sector.

Trinidad and Tobago came knocking again in 2023. At the Guyana Energy Conference, the Prime Minister of Trinidad and Tobago, Dr Keith Rowley was quoted as saying, “Trinidad and Tobago therefore provides a viable option for those countries that wish to optimise the monetization of their hydrocarbon resources without incurring substantial capital expenditure.”

He was hinting that a country like Guyana did not need to invest in the billions of dollars that are needed to monetise its natural gas, a process that would take years and not grant an immediate return on the capital invested. But Guyana’s Natural Resources Minister, Vickram Bharrat was quoted as responding that the Guyana government was keen on building its own refinery. The Minister’s answer missed entirely the issue of the economics of monetising oil and natural gas. Regardless of whether Guyana wanted to be self-sufficient in refined petroleum products, Guyana knew then that from 2027 and beyond, Guyana’s oil production would surpass 1 million barrels per day. Guyana then would have had sufficient hydrocarbon resources – both oil and gas – to allow Trinidad and Tobago to utilise its spare capacity and still have more than sufficient to operate a local modular refinery and meet its export commitments to the United Kingdom and India.

The Trinidadians are here knocking again. And what they are saying makes sound economic sense. Trinidad and Tobago is calling for collaboration between Guyana and Trinidad and Suriname in terms of hydrocarbons. Stuart Young, the Minister of Energy of Trinidad and Tobago made a strong case as to why there should be collaboration between Guyana, Suriname and Trinidad and Tobago when it comes to natural gas. He argued that there are countries that need liquefied natural gas (LNG). He said that Trinidad has the capacity to produce more LNG but needs access to reserves of oil and gas. That country already has the infrastructure and the know-how. Its gas infrastructure is already amortized which means that the cost for building that does not have to be included in the cost of producing LNG. Stuart Young explained that it would take billions of dollars for countries with hydrocarbon resources to build the infrastructure to monetize, for example, its natural gas. He indicated via rhetorical questions that the people who own gas reserves would take years to monetise that gas. They would also have to offer fiscal incentives and put in shipping infrastructure. On the other hand, he said that in Trinidad there is the existing plugins. He urged the owners of the gas resources to send their gas resources and the returns would be immediate without the need for incentives, and the returns can then be used to build out infrastructure and other development.

This proposal makes economic sense for Guyana. Except that Guyana’s may own its natural gas resources but does not have control over these resources. The control is in the hands of the oil companies. Even Jagdeo has admitted that the oil companies are keen to re-inject the natural gas into the wells so as to raise the pressure in the wells. But it is not the absence of economic reasoning or the oil companies’ control that allows us to disregard the proposals of Trinidad and Tobago. The problem is that the government is disapproving to proposals that come from outside its inner circle.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• Guyana, Peeping Tom, Petrotrin, Stuart Young, Trinidad and Tobago

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