VZCZCXRO9161
PP RUEHGR
DE RUEHSP #0152/01 0461434
ZNR UUUUU ZZH
P 151434Z FEB 07
FM AMEMBASSY PORT OF SPAIN
TO RUEHC/SECSTATE WASHDC PRIORITY 7885
INFO RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL
RUCNCOM/EC CARICOM COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 3639

UNCLAS SECTION 01 OF 03 PORT OF SPAIN 000152 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR WHA PDAS DUDDY, WHA/CAR, WHA/EPSC, EEB/ESC/IEC/EPC 
SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: N/A 
TAGS: EPET ENRG EINV EFIN TD
SUBJECT: PETROLEUM CONFERENCE HIGHLIGHTS ISSUES CONFRONTING T&T OIL 
AND GAS SECTOR 
 
REF: Port of Spain 21 
 
SENSITIVE BUT UNCLASSIFIED - PROTECT ACCORDINGLY 
 
¶1. (U) SUMMARY:  Oil and gas companies operating in Trinidad & 
Tobago outlined aggressive programs to develop proven reserves in 
their presentations at the T&T Petroleum Conference, but several 
speakers raised concern that exploration may not be keeping pace 
with gas utilization.  Energy Minister Saith announced that results 
of the first audit of T&T's reserves in two years will be released 
within the next few months and that a feasibility study is being 
launched for a new LNG train.  Saith also foreshadowed a GOTT move 
into shipping and regasification of its LNG exports, and he 
announced plans for a  conference in late March/early April to 
discuss the future of T&T's energy sector.  Several speakers raised 
PetroCaribe as a diplomatic success for Venezuela and a challenge 
for T&T.  Presentations on Nova Scotia and Chile, as well as the 
Extractive Industries Transparency Initiative, provided a 
counterpoint to resource nationalism elsewhere in the region.  END 
SUMMARY. 
 
¶2. (U) The annual Trinidad and Tobago Petroleum Conference (TTPC), 
February 5-6, brought together several hundred local and visiting 
oil and gas industry executives with GOTT officials, a trade 
delegation from Nova Scotia, and Suriname Energy Minister Rusland. 
While the conference theme, "Energy and People," set the stage for 
companies to showcase their workforce development/local content and 
corporate social responsibility efforts, the program also covered 
the macro issues confronting energy policy makers in T&T and, to a 
lesser extent, the Caribbean region. 
 
--------------------------------------------- 
T&T Energy Sector - Questions on Gas Reserves 
--------------------------------------------- 
 
¶3. (U) Rampersad Motilal of the South Trinidad Chamber of Industry 
and Commerce (STCIC) questioned whether T&T gas reserves are keeping 
pace with gas utilization, which increased from 3 billion to 4 
billion cubic feet per day over the previous year.  Voicing concern 
over the future of T&T's gas-based economy, Motilal noted that the 
GOTT had not released an update of audited reserves since January 
2005 and that the 2006 bid round for exploration and development 
rights drew minimal interest. 
 
¶4. (U) Responding to these concerns, T&T Energy Minister Lenny Saith 
announced that the results of a new audit of T&T's gas reserves 
would be announced by the third quarter of FY-2007 (i.e. 
April-June).  U.S. accounting firm Ryder Scott is performing the 
audit, which will assess reserves as of end-2006.  On the 2006 bid 
round for new exploration blocks, Saith said the GOTT would seek 
industry views on whether newly revised model production sharing 
contract (PSC) had discouraged companies from bidding, and he 
affirmed that the GOTT would adjust PSC terms as needed. 
 
¶5. (SBU) NOTE: Industry contacts previously told Econ Chief that the 
GOTT mishandled the 2006 bid round by dividing the commercially 
risky deep water region into too many blocks and tilting PSC terms 
too much in its own favor. END NOTE. 
 
¶6. (U) Saith reported that oil and gas companies' current 
exploration and development plans call for investing US$400 million 
in T&T's upstream sector over the next two years, comprising eleven 
new wells in 2007 and six in 2008.  Moreover, the GOTT's National 
Gas Company (NGC) had concluded negotiations with most of the 
companies producing in T&T for a total supply of 560 million cubic 
feet per day of natural gas over a 12-15 year period, tied to 
production sharing contracts. 
 
--------------------------------------------- -------- 
LNG Markets - GOTT Studying Train X, Going Downstream 
--------------------------------------------- -------- 
 
¶7. (U) Energy Minister Saith announced that the GOTT would soon 
launch a feasibility study for a fifth LNG train, known as "Train 
X," to be concluded by end-2007.  He also said the GOTT intends to 
diversify and invest in the liquefied natural gas (LNG) sector by 
attracting new entrants to gas liquefaction and increasing GOTT 
participation in the shipping, gasification, and marketing of T&T's 
LNG exports.  Professor Ken Julien, chair of the National Energy 
Corporation and president of the University of Trinidad & Tobago 
(UTT), elaborated that by investing in U.S. regasification 
terminals, the GOTT could address concerns that existing commercial 
 
PORT OF SP 00000152  002 OF 003 
 
 
arrangements do not provide T&T with "direct access" to the U.S. 
market. 
 
¶8. (SBU) One industry contact commented during a sidebar 
conversation with Econ Chief that the downstream end of the LNG 
value chain is notoriously complex, and a move into regasification 
would stretch the GOTT's capacity. 
 
¶9. (U) Sheldon Daniel of bpTT reported that Atlantic LNG's Train 4 
is on its way to producing at full capacity, as the company has 
largely worked through "teething problems" that have affected Train 
4's first year of operation.  Daniel also said a framework agreement 
between T&T and Venezuela for development of cross-border gas 
deposits was "nearly ready" for signature, and he hoped that a 
bilateral working group examining gas volumes and allocations of the 
Kapok/Dorado cross-border field, in which bpTT has an interest, 
would finalize its recommendations in 2007. 
 
----------------------------------------- 
PetroCaribe seen as success for Venezuela 
----------------------------------------- 
 
¶10. (U) Professor Anthony Bryan of the Center for Strategic and 
International Studies described Venezuela's PetroCaribe initiative 
as posing serious diplomatic challenges for the GOTT and the CARICOM 
region.  Two years after the initiative's launch, Bryan said, 
import-dependent CARICOM countries see Venezuela as a "trusted 
regional partner" and PetroCaribe as a real attempt to find a 
regional solution to the energy supply problems that they face. 
 
¶11. (U) Ruth Potopsingh, Managing Director of the Petroleum 
Corporation of Jamaica (PetroJam), described Jamaica's dependence on 
imported oil and praised Venezuela and PetroCaribe for having 
allowed Jamaica to set aside funding for social programs.  She also 
stated that Venezuela was considering support for a proposed upgrade 
for PetroJam facilities, including configuring a PetroJam refinery 
to handle Venezuelan crude, by end-2009. 
 
¶12. (U) While GOTT Ministers' remarks did not address PetroCaribe, 
Wayne Bertrand of the T&T state oil company Petrotrin cited 
PetroCaribe as contributing to a slight decline in output from the 
Petrotrin refinery, which produces for the domestic and Caribbean 
market, as a result of market share lost to Venezuela. 
 
---------------------- 
Energy and Development 
---------------------- 
 
¶13. (U) Energy Minister Saith outlined the GOTT strategy to leverage 
energy resources to achieve developed country status by the year 
¶2020.  Near-term plans include seven downstream projects based on 
natural gas, entailing over US$8 billion in foreign direct 
investment in petrochemicals, steel, and aluminum production. 
Collectively these projects would create 25,000 jobs during the 
construction phase and 4,400 "permanent" jobs, while laying the 
groundwork for an expanded manufacturing industry.  Saith also 
announced that the Energy Ministry and the Natural Gas Export Task 
Force will hold a conference in late March or early April to look at 
the future development of T&T's energy sector. 
 
¶14. (U) STCIC president Rampersad Motilal commended GOTT priorities 
for use of oil and gas revenues, including increased spending on 
education and allocations to a Heritage and Stabilization Fund. 
Motilal also voiced support for the general GOTT policy thrust of 
developing downstream industry, while noting that GOTT plans for 
aluminum smelters have generated controversy (see reftel). 
 
¶15. (U) Professor Ken Julien welcomed the local debate on aluminum 
smelters as a "blessing in disguise" that was forcing a critical 
analysis of how T&T should use its gas reserves.  He called for 
dialogue that was "free of emotion and hidden agendas" and 
encouraged the GOTT Environmental Management Agency to play a more 
assertive role in framing discussion of environmental concerns 
related to the proposed smelters. 
 
¶16. (U) Nova Scotia Energy Minister Bill Dooks described his 
province's approach to developing renewable energy sources, 
encouraging use of local content, and developing post-secondary 
educational resources that respond to energy industry needs.  Dooks 
described these policies as an effort to keep jobs and investment 
dollars from leaving Nova Scotia. 
 
 
PORT OF SP 00000152  003 OF 003 
 
 
¶17. (U) Former Chilean Central Bank President Roberto Zahler 
highlighted the importance of opening markets and enabling private 
sector-led development of energy resources in his presentation on 
Chile's energy sector development model.  Dr. Carlos Monge of the 
International Advisory Group for the Extractive Industries 
Transparency Initiative (EITI) delivered a presentation on the 
status of the EITI in Latin America. 
 
¶18. (SBU) COMMENT: Resource nationalism and developments in 
Venezuela's energy sector, while not explicit themes of this year's 
TTPC, were clearly on the minds of the conference organizers and 
most private sector participants with whom Econ Chief spoke during 
the event.  Presentations on Chile, Nova Scotia, and EITI added up 
to a ringing endorsement of private sector led energy development 
and energy revenue transparency.  The fact that Energy Minister 
Saith did not mention Venezuela reflects both Saith's cautious style 
and the GOTT's delicate position.  Many CARICOM neighbors welcome 
PetroCaribe and blame T&T for not doing more to help in a time of 
high oil prices, while Venezuela has veto power over development of 
cross-border gas deposits that are essential for T&T to increase LNG 
production.  A new LNG train would in turn enhance T&T's ability to 
supply LNG to Jamaica and other CARICOM partners, a possibility that 
may explain the GOTT's interest in gaining experience and know-how 
in downstream LNG. 
 
¶19. (SBU) COMMENT CONTINUED: Oil and gas companies made clear in 
their presentations that they will remain busy developing T&T's 
proven reserves - and reaping returns from past exploration - over 
the next several years.  Nevertheless, with few new discoveries and 
limited interest in the exploration blocks not yet assigned, concern 
over the sustainability of the GOTT's aggressive gas-based 
industrialization plans is on the rise, surfacing most conspicuously 
in the debate over Alcoa's proposed aluminum smelter.  In this 
election year for T&T, Post anticipates intense scrutiny of the 
forthcoming audit of T&T reserves.  END COMMENT. 
 
AUSTIN