PORT OF SPAIN, Apr. 13 -- Trinidad and Tobago has offered seven blocks for competitive bidding in its 2010 bid round.
The blocks have been offered in the shallow waters off the twin-island nation’s east and north coasts in areas that significant oil and gas finds have been made in the past.
Energy Minister Conrad Enill said offering the blocks was designed to increase the country’s reserves as well as it’s crude oil production.
Over the last 20 years, Trinidad and Tobago’s oil production has declined by more than 50% from a high of over 260,000 bo/d to just over 120,000 bo/d.
It has caused a challenge for the nation’s economy, which has now become increasingly dependent on natural gas sales, particularly the export of LNG from Atlantic LNG’s Point Fortin operations.
Enill admitted that Trinidad and Tobago’s tax regime had become uncompetitive and said after consultation with the stakeholders in the energy sector it was discovered that the fiscal regime was not working.
“In those circumstances, the mechanism that you would use to deal with that is the production-sharing contract.” He said.
He said PSCs allow for the government and the producer to sit down and decide what risks they will each take and how much profit they will share.
“When you look at the regime, and you look at the production levels, the regime is intended to allow them to get involved in activity for which we would pick up a lot of the cost, so you would get activity but you would get production,” he said. He said the government is merely creating the environment for stakeholders in the energy sector to get into activity. Investor confidence, he added, has gained momentum.
“The global environment has changed, Enill said. “Some time ago, capital was extremely difficult to come by. We are seeing today capital is not as difficult. We are seeing—because the world is in a low-priced environment—the projections over the next 6-8 years is that it goes through a cycle. Investment now will allow you to pick up on the uptake in 6-8 years.”
Enill said even without new exploration activities he expects that there will be sustained activity in the local energy sector with a total projected capital expenditure program of $1.7 billion for marine areas in order to maintain its operations, as well as to undertake the drilling of 13 exploration wells and 87 development and work protect wells. Capital spending for land-based projects, meanwhile, is estimated at $500 million in order to sustain existing operations and to undertake the drilling of 8 exploration wells.
Bidding for 39 deepwater blocks also was launched. Enill said Trinidad and Tobago wants state-owned Petrotrin to partner with Brazil’s Petroleo Brasileiro SA (Petrobras) as a part of a consortium to find oil in the deep water.
Trinidad and Tobago offers seven blocks in latest bid round