Kevin Ramnarine has been minister of energy and energy affairs for Trinidad and Tobago since 2010. Before joining the government of the Caribbean islands that are northeast of Venezuela, he worked as an economist for the Trindid and Tobago office of energy company BG Group. He recently visited Houston as part of a delegation that traveled around the world, seeking to attract interest to an upcoming oil and natural gas auction in Trinidad. On his local trip, he talked with FuelFix. Here are edited excerpts from the interview:
FuelFix: Many Houstonians don’t immediately associate Trinidad and Tobago with oil and gas. What are the country’s energy resources?
Ramnarine: We produce about 4.3 billion cubic feet of natural gas per day and 82,000 barrels of oil per day.
Trinidad and Tobago has been commercially producing oil since 1908, so it’s one of the oldest oil-producing countries in the world. It predates oil production in the Middle East.
The biggest players in Trinidad are BP, BG (formerly known as British Gas), BHP Billiton, EOG Resources, and Chevron on the upstream side. On the downstream side, we have Methanex (an international methanol supplier), PotashCorp (an international fertilizer company) and Koch Industries.
FuelFix: What does Trinidad and Tobago do with the natural gas it produces?
Ramnarine: We are the second country in the world to generate all its electricity from natural gas. We like to think of ourselves as the world’s first natural gas economy. The Qataris may want to disagree, but while Qatar produces a lot of natural gas, it also produces a lot of oil. For us, natural gas is the predominant force in our economy.
Trinidad and Tobago is also the sixth largest exporter of liquefied natural gas, exporting it to 19 countries. About 55 percent of all natural gas produced goes to Point Fortin (in southwestern Trinidad), where there are four liquefied natural gas trains that have been in operation since 1999.
About half of that LNG goes to Argentina, Brazil and Chile, and the remainder goes to Europe, Asia and the United States.
FuelFix: How has the shale revolution impacted Trinidad and Tobago’s natural gas industry?
Ramnarine: Our exports to the United States have significantly declined, but this is not bad news for us, because we have been able to diversify our markets and we have found new markets in South America and in Asia, where the prices are very good for natural gas.
Our LNG trains were also built much more cheaply than it would cost to construct an LNG train today in Louisiana. The biggest threat to the global LNG industry is the cost of construction, as new facilities can cost billions of dollars, so we think that competitive advantage in Trinidad will remain. As the U.S. starts to export LNG, it will be good for Trinidad, because in doing so, the U.S. gas industry will become integrated into the global economy. It will harmonize the U.S. gas market with the world gas market.
FuelFix: How does the transportation cost factor into selling natural gas overseas?
Ramnarine: There are significant transportation costs to Asia, but this is less of an issue for South America. But the price in Japan is so good that it offsets the transportation costs. Right now, there is very little LNG traffic going through the Panama Canal because the tankers are too big to go through. The widening of the Panama Canal will allow tankers to go back and forth from the Atlantic to the Pacific, which will give Trinidad and Tobago faster access to Japan, as well as South Korea, Taiwan and China. Previously, the cargo has had to go down to the tip of South America, then up to the Pacific.
Our cargos are getting upwards of $15 per million British thermal units (mBtu) in Japan. We are also getting upwards of $10 per mBtu in South America and Europe.
FuelFix: What is the significance of the upcoming auction?
Ramnarine: We have been promoting bid rounds for the last three years very aggressively. We had a bid round in 2011, where we signed two deep-water production-sharing contracts with BP. There was another bid round in 2012 that was very successful, and we signed four production-sharing contracts with BHP
Billiton for deep water. We think we have a world-class deep-water basin in Trinidad that is oil prone. Before I became minister, the pendulum had swung far toward natural gas investment in Trinidad, but now there is a renewed focus on oil. But there is still a focus on natural gas, because of its importance to our economy.
This new bid round was opened in August and the bid will occur in January 2014. It will be a production-sharing contract. (The round will offer six offshore blocks for lease in the country’s east coast area and in the offshore area northeast of Venezuela.)
FuelFix: What has your government done to make it more attractive to invest in energy in Trinidad?
Ramnarine: We have given a whole range of incentives for the three deep-water bid rounds we have done in the last three years. We have also reduced the tax rate on deep water from 50 percent to 35 percent.