Q&A: Trinidad’s Energy Minister Young Talks Gas Production, Venezuela and Atlantic LNG

Trinidad and Tobago’s Minister of Energy and Energy Industries Stuart Young spoke on March 7 with Pietro D. Pitts, Hart Energy’s international managing editor at CERAWeek by S&P Global. The two discussed the government of the twin-island country's lease sale bid rounds, incentivization efforts to stop declining gas production, exchanges with Venezuela regarding tapping gas from the Dragon Field and the restructuring of Atlantic LNG.

Pietro D. Pitts: Where is Trinidad’s gas production today and how are developments aimed at boosting production advancing?

Stuart Young: Trinidad is currently at about 2.8 Bcf/d in terms of production. We have a number of projects online and a number coming on stream. For example, BP's Cassia compression and the Matapal projects [and] Shell’s Barracuda and Colibri [projects have come online], and we have EOG Resources doing other [project-related work to boost production]. We have some onshore production that's going to come on hopefully in the middle of this year from Touchstone [Exploration]. I expect us to hold the 2.8 Bcf/d and maybe we'll go up to about 3 Bcf/d and just stay there, level, hopefully for a while as other projects start to come on. One of the big ones we're working with is Shell [with] the Manatee project. You have a number of things that are on stream, and I’m also looking at marginal fields. ‘How could we get some of the marginal fields produced where there's some smaller production?’ The good news is you have EOG… prepared to do sidetrack drilling to get to some smaller pools of gas. Government is ready and on standby to speak to industry about what commercial and fiscal terms they need to progress, because our attitude is every molecule of gas is a molecule we could use.

PDP: Has Trinidad implemented the necessary fiscal terms to attract investments from energy companies?

SY: Absolutely, but right now you're not finding major IOCs [international oil companies] going into new territories. We're very fortunate that we have BP, Shell and Woodside out of Australia who are doing deepwater appraisals right now. We're actually in the middle of negotiations with them on commercial terms because when we get the deepwater province in Trinidad produced, that's going to be significant. That's our next big significant set of gas production. So the truth is I don't think you're going to have any main major players making moves to new jurisdictions and provinces.

That's one of the things that I think we are always cognizant of. And what we've done over the last six years [is to say] to the players come and speak to the government, we're willing to look at PSCs [production-sharing contracts]. We renegotiated with Shell, for example, the Manatee PSC. We've been speaking to BP and gave them extensions on some E&P licenses, and that's what got Cassia across the line and Matapal. Recently when I and the prime minister met with BP in London, [CEO Bernard] Looney said, ‘look, go ahead,’ and he sanctioned the Cypre project.

What we're prepared to do is sit down, discuss and negotiate fiscal terms and the contractual terms on the fiscal side, which is the taxation side. We are there, but we continue to review it. The minister of finance and myself are currently reviewing the fiscal terms to see if there are any more incentives or things that can be done that would spur on more production. And of course we're very protective with the revenue for the people of Trinidad.

PDP: You've had onshore, near-shore and offshore bid rounds recently. Could you give us an update on how that’s gone?

SY: So on the onshore and the near-shore bid rounds, it was 11 blocks. We had 16 bids come in. So you have about eight blocks where there's competition. Right now, they’re being evaluated by the ministry and I’ve told them they must stick to the three-month deadline that I’ve given. They recently assured me they’re on track and going to bring it to me shortly and I am going to go to Cabinet within that three-month period with recommendations as to who we should award these blocks to. And I’m very excited that’s going to increase our oil production. But I’m also hopeful some of those onshore blocks may have some significant gas finds as well.

PDP: Trinidad at one point produced over 4 Bcf/d. Do you think what you’ve signed thus far and going forward can get you back to that mark, or is Venezuela then really the only viable way to get there again or even beyond?

SY: So to get back up to 4 Bcf/d, we are a declining province and I think people need to understand that. I just came out of our plenary session where the chairman and president of ConocoPhillips was talking about the Permian Basin and how even that is going to go into decline and plateauing by the end of this decade. So I'm conscious of that in Trinidad.

The two big projects we have now that are going to maintain us and hopefully take us upwards of 3 Bcf/d are Manatee with Shell and deepwater production with Woodside. Outside of that, yes, the cross-border gas and the Dragon Field, for example, are what are going to push the production up significantly. So we're working assiduously on that. Those are the types of big projects that are going to not only arrest decline, but send you back up significantly.

RELATED: Chart Talk: Trinidad Eyes Venezuelan Gas Supply from Mariscal Sucre Project

PDP: How have negotiations with Washington and Caracas gone recently about working with Venezuela’s state-owned PDVSA on getting that Dragon Field gas to Trinidad?

SY: We spent a lot of time during 2022 having discussions with the U.S., Europe and Venezuela. I want people to understand we in Trinidad have always maintained open channels of communication and a close relationship with the government of Venezuela. They are seven miles off our coast and therefore our closest neighbor. In January of this year, we succeeded with our OFAC [U.S. Office of Foreign Assets Control] application. We’ve gotten a license to pursue the development of the Dragon gas field that will allow us to produce the gas, export it to Trinidad to produce commodities in our plants in Trinidad. We are currently in discussions with Venezuela and I’ve already had two sessions with the highest level of the government and [will return] shortly and continue those discussions. I have to say the discussions are going very well. We have a good relationship with the government and I expect us to find the right terms and conditions… to produce that Dragon gas.

PDP: Venezuela flares around 2 Bcf/d in its eastern region. The idea has been floating for a while about capturing that gas and transporting it to Trinidad. Is that something that Trinidad is still contemplating?

SY: That is absolutely something that we are discussing. So it's not only [to] think about, but that is part of my conversation with Venezuela. But we need to take it one step at a time.

I think if we manage to do such a project: one, obviously it helps because some of the gas will be left in Venezuela for domestic use. But the export of gas to Trinidad where you have existing infrastructure that can monetize the gas in global commodities is of significant and tremendous value both to Venezuela and Trinidad. But then also the environmental side… if we manage to capture that and utilize it, then it's a win-win for everyone.

PDP: Atlantic LNG has been without Train 1 for almost a year now. How have talks gone with BP, Shell and other shareholders about a restructuring of the plant?

SY: The good news is we had the agreement on all of the commercial terms for the restructuring. So as far as we are concerned, the restructuring exercises were right. Now what we’re doing is all the entities… that’s NGC [National Gas Co. of Trinidad and Tobago], BP, Shell and the government, and our lawyers are working together to come up with the definitive agreements. We've set ourselves a timeline of the first quarter of this year. Right now, we're in the middle of those discussions with the lawyers trying to finalize these definitive agreements. And I'm hoping that we will be able to stick to the timelines. We have a few weeks overlap into April, but it's looking good. So we would have completed the restructuring of Atlantic LNG, which is again, a tremendous achievement because it's never been done anywhere else in the world.

RELATED: Chart Talk: Atlantic LNG Restructuring, Falling Output

PDP: When we talk about your other neighbors Guyana and Suriname, Guyana maybe has 17 Tcf of gas offshore. Are there any discussions ongoing about potentially capturing that gas in some way or another?

SY: What you can see is an open source that the prime minister and myself have been developing very good relationships with the governments of both Guyana and Suriname. I myself have been having [a] discussion for a while now about CARICOM integration and us working together as a region: Trinidad, Guyana and Suriname. That is part of any conversation you would expect in an evolution towards that. But right now, ‘it is how can we help our CARICOM sister countries as they are having hydrocarbon finds? How can we help them with what we have learned being in this business for over 100 years on the exploitation of oil and decades in the utilization of gas?’ So we are having very good conversations. We have a close relationship and we stand by ready to assist them and help. But yes, there must be conversation about the development of gas.

PDP: When you talk about renewables, I know Lightsource BP has a project offshore Trinidad. Can you talk about that and how that's moving forward?

SY: Towards the end of last year, [we] signed on to a 112.2 megawatt solar project, and that is actually a consortium of BP and Shell, with Lightsource BP being the ones who are going to get it done for us. We are going to take a stake in it as well, meaning the government of Trinidad through our NGC Group. So that is on the stream and I'm hoping that you're going to see at the beginning of April the breaking of ground to start construction. That’s the first huge step. It’s going to be the largest renewable solar project, and in particular in the English-speaking CARICOM region. And that's going to be a start. I'm hoping very shortly after to work with some RFPs [requests for proposals] to see if we can have more solar farms in Trinidad. But as I said, we're also going to be pursuing the wind-generated electricity through the wind turbines as well.

PDP: How has the Russia-Ukraine conflict that started last year impacted your exports of LNG, methanol and ammonia? Have you gotten better prices for the exports due to conflict?

SY: Well, I think global commodity prices in 2022 went to some very, very high highs. We've seen it sort of level back out now in the first quarter of 2023. So obviously, whatever the global commodity prices are, we would either benefit from it when they're high prices or we will take some cuts when they are low prices. So we benefited from the price side, as you know, and as you started the conversation here this afternoon, production in Trinidad has declined. We've managed to stabilize at about 2.8 Bcf/d. So, obviously as much of that gas that we can convert into these commodities, the better for us. We’re also looking at energy efficiency and reduction of use of gas for production of electricity, not only through the renewables side, but also making all our grid and the production of electricity using gas more efficient by moving all of our plants, etc. to what is combined cycle. That is also something I'm pursuing, and hopefully we'll be able to do because there can be significant savings of molecules and scuffs of gas there that can then go into conversion to commodities.

PDP: What would be your final comment to a potential investor looking at the volatile Latin American region about investing in Trinidad and why now?

SY: Trinidad has shown over decades there is a great deal of stability. So not only are contracts respected, we will have respectful conversations, but there's also existing infrastructure. So as we move through this energy transition, we have the infrastructure for shipping. All of the petchem plants, save one, are in one industrial estate so we can combine together with the carbon capture and reduce costs through economies of scale. In other words, Trinidad and Tobago has all of the right boxes to tick to keep us competitively advantaged in a good space, and that's exactly what we're going to work towards.