September 15, 2016
Deputy Permanent Secretary in the Ministry of Energy and Energy Affairs, Ms. Heidi Wong
Members of the diplomatic corps
Members of the media
Ladies and gentlemen
It is my pleasure to welcome you to the 2016 presentation of the BP Statistical Review of World Energy by our Group Chief Economist Mr. Spencer Dale.
For over 60 years, this review has been one of the most authoritative and highly regarded publications on the petroleum industry. Today, Spencer Dale will share objective data about world energy markets and trends. I am very pleased that Spencer was able to visit Trinidad this year as part of his many trips around the World to key energy markets and to speak with governments and stakeholders.
BP has a history of sharing our Statistical Review in T&T. We are pleased to do this again, after a two year hiatus, by welcoming Spencer who will be presenting to this audience for the first time.
This presentation is a timely one. First, because we are about to engage in another annual budget exercise; and second because, as a country, we are at a serious cross road with regards to the largest industry. As we gather today, the nation is moving closer to the presentation of the 2016/2017 National Budget. We will soon focus on the performance of the Trinidad and Tobago economy and, more specifically, the local energy sector. This is the time of year in which plans are presented and the nation gains an understanding of the direction being set at least for the next 12 months. Energy remains the driving force of the Trinidad and Tobago economy and so it is natural that it will play a major role in the national budget debate. Being the largest energy producer in the country we believe we have an important role to play in ensuring that everyone – Government, private sector and the man on the street is better informed on the energy sector, as well as the opportunities and challenges that face us today. As we approach the budget I’m sure we all wish we had a crystal ball that shows where energy markets are heading and what’s the outlook for the sector that still drives our economy. While the Statistical Review is by no means a crystal ball it provides objective data on historical trends and shifting global dynamics that can provide some insights to these questions. I will say this though, that Spencer’s predecessor, Christof Ruehl was one of the few economists who publicly questioned the sustainability of $100+ oil long before the price collapsed. So it is worth listening to our chief economists because at a minimum it will help us to develop appropriate stress tests for our businesses. With regards to the industry cross road that we are at – particularly for natural gas, Spencer’s comments will help promote help to promote a data driven contextual framework that positively impacts decision making. As leaders, we all know how vitally important context is. For example, the data Spencer will share supports bpTT’s position to continue to encourage the government, energy sector and the country to deeply focus on competitiveness and to ensure all segments of the natural gas value chain are properly incentivized – and I’m not just referring here to fiscal incentives but rather to the principle that all players in the value chain should realize returns that are commensurate with their level of investment and risk.
Speaking for the upstream I can categorically say that the results of the current Gas Master Plan deliberations must result in clear policy decisions regarding matters such as gas allocation and price and must incentivize upstream investments in an increasingly competitive environment. Failure to bring clarity to these matters quickly will result in investments drying up. We will then see a repeat of the circumstances that have materially contributed to the natural gas supply and demand imbalance that we are currently experiencing; only it will be worse. Of course, these are outcomes we do not want and that is why bpTT has worked hard and against significant odds to develop the Juniper and onshore compression projects, which will start production in 2017. Beyond these projects though, the next phase of planned major developments, starting with Angelin, are still not sanctioned and will not be sanctioned unless policy decisions properly recognize the context within which we are operating. Said another way, no sensible business person is going to invest billions of US dollars into natural gas projects without knowing their return on investment and more so given the current level of uncertainty in the energy markets. We at bpTT have always said that it is not a matter of whether or not the hydrocarbon resources are there but rather it is matter of how industry and government continue to work together to create an enabling environment to efficiently monetize those resources with fair returns for all stakeholders.
So, what Spencer has to share is useful for the upcoming budget and more importantly for the longer term future of the local natural gas industry because he will provide fact based, well researched, relevant context.
Let me close now by again thanking you all for being here today. I am confident that it will be time well spent.