Latin America

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Transparency and Accountability

Policy, Legal and Contractual Framework

Sector Organization and Institutions

Fiscal Design and Administration

Revenue Management and Distribution

Sustainable Development

Trinidad and Tobago: Vertical Integration along the Natural Gas Value Chain

The sustainable economic development of Trinidad and Tobago's economy is driven to a very large extent by its extractive industries: oil and gas account for circa 40% of GDP and 80% of exports, but only 5% of employment (source). The PowerPoint presentation linked to in the heading above shows, on page 3, a map of oil and gas field in the Caribbean nation's territories, which are mainly offshore.  Prominent on this map is the Atlantic Liquefied Natural Gas (LNG) field and its expansion since circa 2004 has created the largest single-sustained phase of economic growth in Trinidad and Tobago.

Partly as a result, the country has became the leading exporter of LNG to the United States, at one stage suppling some 70% of U.S. LNG imports; however (as of 2012) T&T has reduced significantly its LNG exports to the USA over the past three years (see addendum note below).  For 2011 T&T LNG exports accounted for 36% of US imports.  However,  it is important to note that in 2011 exports to the USA accounted for just  20% of T&T total LNG exports with all volumes going to the higher-priced North-East USA terminals.

The presentation Trinidad & Tobago (T & T): Vertical Integration along the Natural Gas Value Chain highlights the following Key Success Factors for this nation's oil and gas industries:

  • Strategic Partnering: LNG: BP, BG, Repsol, GdF Suez; Ammonia: Potash, Koch, Norsk Hydro; Methanol: Methanex, MAN Ferrostaal, Helm; and Processing: ConocoPhilips
  • Supportive Fiscal System: progressive taxes and royalties; flexible gas pricing;
  • Progressive Local Content Policies: selective based on strategic value; focus on services, capacity development; and don’t over-regulate.  See the Local Content section of the Source Book for policy context.Good Governance and Management: strong institutional, fiscal & regulatory system; and table industrial relations and political climate.

The Source Book partnership is grateful to David Small for the following addendum (May 2012) to the above:

  • LNG: GDF Suez have sold their share to the China Investment Corporation.   
  • Methanol: the largest methanol complex in the country is run by Methanol Holdings Limited, a company with majority State control.
  • Processing: Phoenix Park Gas processors is majority controlled by the National Gas Company of Trinidad and Tobago
  • Flexible Gas Pricing: natural gas pricing currently depends on the application.  For instance a commodity linked pricing model is used for gas sold to ammonia and methanol producers.  Gas sold to LNG is a direct transaction between the upstream producers and the train shareholders.  Gas for electricity generation is priced based on Government policy to maintain low electricity costs to domestic consumers.

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