Press Release - The Ryder Scott Audit

The Energy Chamber of Trinidad and Tobago would like to commend the Ministry of Energy and Energy Affairs for keeping its commitment to sharing information on Trinidad and Tobago's natural gas reserves.

The release of the Ryder Scott natural gas audit report for 2009 comes at a time when there is already ongoing national dialogue on the country's future natural gas utilization and exploration activity.

Natural gas converted into LNG accounts for 30 percent of our exports and its contribution to national development is immense and cannot be understated.

This year's Ryder Scott findings show the country's 2009 proven reserves declining to 14.4 trillion cubic feet (tcf) from 15.3 tcf in 2008.

Following a downward trend, Trinidad and Tobago's proven reserves have declined every year in the past decade.

There is also a concern over the rate at which the country replaces its gas reserves as the country's reserve to production ratio (RP) has consistently trended downwards since 1998 (see graph 1).

Graph 1 - Natural Gas Reserves and Reserves To Production Ratio

These statistical trends should prompt swift, joint action by Government, the private sector and other stakeholders - especially action on stimulating exploration of our hydrocarbons.

The upcoming bid round is therefore critical.

In fact, the Energy Chamber of Trinidad and Tobago views the upcoming shallow/average water depth bid round - and the deepwater bid round that is due to follow close on its heals - as crucial for the future of Trinidad and Tobago's energy sector and national development. The shallow/average bid round is due to close on the 11th August 2010.

Getting all of the details right in the current bid round will translate to the major oil and gas companies having the confidence to make aggressive bids to access the acreage on offer.

While these plans will stimulate medium term growth, there are concrete measures which can be taken to stimulate short term activity in the sector.

One immediate step can be a policy to increase oil production by tweaking the Supplemental Petroleum Tax (SPT) fiscal regime, especially as it relates to mature oil reservoirs.

With limited changes to the SPT fiscal regime the country can increase oil production by at least 16,000 bbd from existing oil reservoirs, leading to additional Government revenue and increased direct and indirect employment which translates to increased PAYE and Corporation Tax receipts. The bottom line is that activity needs to be generated and both the Energy Chamber and Government acknowledged there needs to be nine exploration wells drilled per year to maintain the country's reserves base.

The RP can be a useful planning tool to help policy makers, governments and energy companies make decisions on future exploration plans and bid rounds.

We must approach any action plan to increase exploration activity with a sense of urgency not panic.

As always, the Energy Chamber is committed to dialogue on these issues which impact the energy sector and by extension the national community. We are committed to playing our role in ensuring Trinidad and Tobago's energy future is sustainable.