VZCZCXYZ0005
PP RUEHWEB

DE RUEHSP #0208/01 1281914
ZNR UUUUU ZZH
P 071914Z MAY 08
FM AMEMBASSY PORT OF SPAIN
TO RHMCSUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEAHLC/HOMELAND SECURITY CENTER WASHDC PRIORITY
INFO RUEHC/SECSTATE WASHDC 9146

UNCLAS PORT OF SPAIN 000208 
 
SENSITIVE 
 
SIPDIS 
 
ENERGY FOR SECRETARY BODMAN 
HOMELAND SECURITY FOR A/S STEPHAN 
STATE FOR WHA/CAR, WHA/EPSC, USOAS 
 
E.O. 12958: N/A 
TAGS: PREL EPET PGOV PTER ASEC OVIP TD
SUBJECT: SCENESETTER FOR VISIT OF SECRETARY OF ENERGY 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY 
 
¶1. (U) Embassy Port of Spain warmly welcomes your May 12-13 visit to 
Trinidad and Tobago (T&T).  Your trip presents an opportunity to 
reinforce engagement with T&T, building on the goodwill generated by 
last June's Conference on the Caribbean and in advance of next 
year's Summit of the Americas meeting.  T&T is important to 
America's energy security, having supplied more than two-thirds of 
U.S. imports of liquefied natural gas (LNG) over the last five 
years.  It also has been expanding its political and economic 
influence in the region, leveraging its dynamic and prosperous 
economy.  Trinidad, however, also is coping with an upsurge of crime 
driven, at least in part, by narcotics and firearms trafficked from 
the South American mainland.  While T&T sometimes differs with the 
USG on foreign policy matters, it is a friend, ally and strong 
supporter of hemispheric free trade. 
 
¶2. (U) This cable provides a brief overview of the country and a 
look at potential topics that will be covered during your stay. 
Meetings with the Ambassador and members of the Country Team shortly 
after your arrival will provide further information and the 
opportunity to discuss issues at length. 
 
------------------ 
POLITICAL SNAPSHOT 
------------------ 
 
¶3. (U) Prime Minister Manning's People's National Movement (PNM) 
party retained its parliamentary majority when the citizens of 
Trinidad and Tobago voted on November 5, 2007.  The PNM won 26 seats 
to the opposition United National Congress' (UNC) 15.  The year-old 
Congress of the People (COP) party contested the election as well 
but won no seats.  The PNM and UNC parties are heavily, but not 
exclusively, based on ethnicity, with the PNM supported largely by 
Afro-Trinidadians and the UNC by Indo-Trinidadians.  The COP also 
draws mostly from Indo-Trinidadians, though it consciously sought 
(as did the other parties) in the last election to cross ethnic 
lines. 
 
¶4. (SBU) Manning first served as Prime Minister from 1991 to 1995, 
when the PNM lost its parliamentary majority to the UNC and Basdeo 
Panday became Prime Minister.  An electoral deadlock in 2001 
eventually led to the return of Manning and the PNM. With a secure 
majority in Parliament, Manning need not call another election until 
¶2012. 
 
----------------- 
ECONOMIC SNAPSHOT 
----------------- 
 
¶5. (U) T&T has a vibrant industrialized economy, buoyed by 18 
trillion cubic feet of proven natural gas reserves.  It is our 
largest trading partner in the Caribbean and the leading beneficiary 
of Caribbean Basin Initiative trade preferences.  T&T is 
experiencing strong GDP growth, averaging 9.8% over the last five 
years, sustained by exports of oil, natural gas, and petrochemicals. 
 While fiscal policy has generally been restrained, rising spending 
coupled with a tight labor market have contributed to rising 
inflation, which reached 10 percent year-on-year in October 2006, 
moderated to 7.9 percent in August 2007, and climbed back to 10 
percent in January 2008 as a result of wage agreements concluded on 
the eve of November's national elections.  T&T is considered a 
low-risk investment destination.  The T&T dollar remains stable in 
value against the U.S. dollar (at about 6.25/dollar), contributing 
to the country's attractiveness to foreign investment.  Standard & 
Poor's raised its credit rating for T&T to A- in 2005 and confirmed 
that rating in 2006 and 2007.  GOTT regularly courts foreign 
investors, with U.S. companies often taking the lead. 
 
----------------------- 
A CLOSER LOOK AT ENERGY 
----------------------- 
 
¶6. (U) Oil was discovered in Trinidad in the mid-19th century, and 
the local energy industry is celebrating the 100th anniversary of 
commercial oil production in 2008.  After riding the oil boom and 
bust cycle of the 1970s and 1980s, Trinidad and Tobago has made a 
major transition over the last ten years to an economy driven 
largely by natural gas, both for export and for consumption in 
domestic industries, attracting major foreign investment projects in 
liquefied natural gas (LNG), petrochemicals and steel.  T&T also 
continues to play a role in regional energy security, supplying 
refined petroleum products to the rest of the Caribbean, although 
competition from Venezuela (backed by concessionary financing) is 
eroding its regional market share. 
¶7. (SBU) USG interest in energy security centers on imports of LNG 
from Trinidad, which has supplied two-thirds of U.S. imports of this 
commodity over the past five years.  While LNG accounts for only 10 
percent of U.S. overall natural gas imports, T&T's resources plays a 
critical role supplying East Coast markets from New England to 
Louisiana.  For this reason, USG agencies recently conducted a 
vulnerability assessment aimed at improving protection of critical 
infrastructure in T&T's energy sector, an initiative that enjoyed 
full cooperation from the GOTT and energy sector companies.  The 
GOTT is also working with the U.S. Department of Energy and U.S. 
Southern Command to host a regional energy infrastructure protection 
conference in Port of Spain May 14-15. 
 
¶8. (U) Atlantic LNG, the country's sole LNG producer, is a 
consortium of companies including BP (which absorbed Amoco several 
years ago), British Gas, Repsol, Suez (successor to Cabot's interest 
in ALNG Train 1), and the local National Gas Company (NGC).  In 
2005, Atlantic LNG completed Train 4, the largest ever built, 
expanding ALNG's production capacity from 10 million to 15 million 
tons per year.  U.S. construction company Bechtel International was 
the primary contractor on the Train 4 project, and GE Oil & Gas has 
an ongoing service contract. 
 
¶9. (SBU) While the GOTT is studying the feasibility of constructing 
a fifth LNG train, possibly to supply Caribbean and other regional 
markets, prospects depend on two factors:  availability of natural 
gas and whether the GOTT allocates new gas for export or domestic 
consumption. 
 
¶10. (SBU) The years 2006 and 2007 saw few significant gas 
discoveries and limited interest from international energy companies 
in bidding for rights to explore unassigned deep water blocks, 
fueling concerns that new discoveries are not keeping pace with 
utilization.  These concerns increased with the August 2007 release 
of an independent audit showing a proven reserves/production ratio 
of 12 years, down from previous estimates of 15-20 years.  In 
January 2008, two Canadian companies announced discoveries in T&T 
waters, with additional reserves estimated at roughly one more year 
at current consumption levels.  The GOTT is voicing optimism that 
other planned exploratory wells will find more gas; at the same time 
it has hinted that it might offer more favorable financial terms in 
the offshore bid rounds it has scheduled for 2008 (shallow water) 
and 2009 (deep water). 
 
¶11. (SBU) The best near-term prospect for raising production is from 
several large gas fields that cross T&T's maritime border with 
Venezuela.  The two governments made significant progress in 2006-07 
in talks on joint development, culminating in the signing of a 
framework unitization agreement on March 20, 2007, during a visit to 
Caracas by Prime Minister Manning.  The agreement sets out the legal 
terms for ownership and development of the cross-border fields, but 
it does not specify on which side of the border the gas will be 
monetized, nor for what purpose.  Loran/Manatee, the largest of 
these fields, is estimated at 10 trillion cubic feet (TCF), of which 
2.7 TCF are assigned to T&T.  Chevron, as designated operator on 
both sides of Loran/Manatee, has facilitated progress at the 
technical level.  However, the effort to conclude a field-specific 
accord with Venezuela has been stalled since June 2007.  Energy 
Minister Conrad Enill stated publicly in February 2008 that efforts 
are under way to revive negotiations.  While Chevron officials 
welcomed Enill's remarks, other private sector contacts doubt that 
Venezuela will move this project forward. 
 
¶12. (U) While Prime Minister Manning acknowledges the role of LNG 
exports in T&T's economic prosperity, his development vision focuses 
on expanding gas-based industries to generate sustainable jobs in 
metals, plastics, and downstream manufacturing.  Trinidad and Tobago 
is already a world-class producer of ammonia and methanol, with 
significant U.S. investment in several plants.  New projects would 
expand steel and add aluminum, ethylene and polypropylene 
production.  However, ALCOA's proposal to construct a 341,000 
ton/year aluminum smelter met with unprecedented resistance from 
local environmental activists, culminating in the Prime Minister's 
late 2006 decision to put the ALCOA project on hold pending 
agreement on a new site.  Anti-smelter activists have since turned 
their energies toward blocking Alutrint, a smaller proposed aluminum 
smelter with 60% GOTT and 40% Venezuelan private ownership, as well 
as a new steel mill to be constructed by India's Essar Steel.  It 
remains to be seen whether U.S. company Westlake Chemical will meet 
similar resistance to its proposed $1.5 billion ethylene plant, 
slated for completion by 2011. 
 
---------------------- 
LABOR AND TRADE UNIONS 
---------------------- 
 
¶13. (SBU) Trade unions have at times been at odds with GOTT efforts 
to increase competitiveness.  In one example, after years of 
thwarted negotiations with the airline workers' union, the GOTT took 
the drastic step in 2006 of closing down BWIA, the unprofitable 
national carrier, and creating a new, downsized entity.  It is still 
unclear if the new national carrier, Caribbean Airlines, will be 
unionized.  The Prime Minister suggested last year that the GOTT may 
try a similar tactic with the far more powerful Oil Workers Trade 
Union (OWTU) in an effort to create a new, unified national 
petroleum company to replace the state-owned Petrotrin. 
 
--------------------- 
NARCOTICS TRAFFICKING 
--------------------- 
 
¶14. (SBU) The country's location just seven miles off the coast of 
Venezuela makes drug trafficking a major challenge.  Narcotics from 
South America transit T&T's waters or move through its airports. 
Illegal drug use and trafficking are on the rise.  The narcotics 
trade is likely linked to the persistently high number of murders 
and other violent crimes that plague the country.  The government 
faces an uphill battle in trying to control these problems, 
exacerbated by inadequate border controls, corruption in the police 
service and a slow judiciary.  T&T's vibrant petrochemical industry 
has the potential to provide diverted precursor chemicals for use in 
illegal drug production.  The country's growing economy and 
well-developed banking, communications and transportation systems, 
facilitate a significant number of sizeable financial transactions 
that can obscure money laundering. 
 
----- 
CRIME 
----- 
 
¶15. (SBU) Violent crime has been one area of particular concern over 
the last several years.  T&T saw significant increases in murders 
and kidnappings from 2000 until present.  In 2007 there were almost 
400 murders, the highest number recorded in any one year. For the 
first four months of 2008, T&T has realized a staggering 160 
murders, more than one a day. The GOTT has widely been viewed as 
unable to effectively address the serious crime problem, partially 
due to corrupt and inefficient police, inadequate disciplinary 
systems, a slow-motion court system and political intransigence. 
This, coupled with perceptions that some criminal organizations 
operate relatively freely, has led to a loss of confidence in the 
GOTT's ability to solve the crime problem.  To date, the crime 
situation has not affected foreign direct investment or tourism, 
though several local business families have fled the country and 
each day, local merchants raise more concern. 
 
--------- 
TERRORISM 
--------- 
 
¶16. (SBU) T&T has no significant indigenous terror groups, but some 
criminal Muslim organizations remain a concern.  T&T has a 
considerable Muslim minority, comprising roughly six to ten percent 
of the total population, though estimates vary widely.  The majority 
of Muslims are represented by moderate Islamic organizations, but a 
few radical Islamic fundamentalist leaders have reportedly advocated 
for actions to be taken against the United States.  The most famous 
of Trinidad's radical organizations is the Jamaat al-Muslimeen, a 
local Afro-Trinidadian group that launched a violent failed coup 
attempt in 1990.  Over the last few years, however, several radical 
splinter groups have emerged.  Anti-American sentiments are 
sometimes heard even from moderate Muslims, and several of the major 
mainstream groups helped to organize protests against U.S. actions 
in Iraq in early 2003.  T&T is party to eleven of the twelve UN 
anti-terror conventions, and in September 2005 passed anti-terrorism 
legislation.  Elsewhere, T&T has come into compliance with the 
International Ship and Port Facility Security Code (ISPS), and the 
T&T Central Bank cooperates with Post in alerting financial 
institutions to potential sources of terrorist finance. 
 
---------------------------------- 
REGIONAL INFLUENCE AND INTEGRATION 
---------------------------------- 
 
¶17. (SBU) PM Manning, bolstered by greater energy revenues and a 
strong economy, is seeking to expand T&T's role regionally and 
internationally, for example by offering technical assistance to 
African oil and gas countries.  Closer to home, he is a strong 
backer of CARICOM integration and seeks U.S. support for an expanded 
T&T security presence in the Eastern Caribbean.  A move toward 
regional integration took place in October 2006 in advance of the 
Cricket World Cup Tournament.  In his capacity as chairman of 
CARICOM's Security Committee, PM Manning signed a Memorandum of 
Agreement in Port of Spain with visiting Secretary of Homeland 
Security Michael Chertoff, paving the way for an Advance Passenger 
Information System (APIS).  APIS screened all travelers entering the 
region for the tournament. 
 
¶18.  (SBU) In the wake of the brutal 2005 hurricane season, T&T 
donated nearly TT$40 million (US$6.67 million) in disaster relief to 
islands in the region.  It also contributed troops, relief supplies 
and volunteer workers almost overnight to the stricken island of 
Grenada following Hurricane Ivan.  Regional integration in the form 
of the CARICOM Single Market and Economy (CSME) is progressing but 
far from reality, however, as demonstrated by periodic political 
backlash in Jamaica and Barbados over the success of T&T businesses 
in penetrating those markets.  Furthermore, Venezuela is overtaking 
T&T as the Caribbean's largest energy supplier, through its 
PetroCaribe program.  For its part, T&T has been contributing US$67 
million annually to the CARICOM Petroleum Fund it set up in 2004 to 
finance social development projects in oil-importing member 
countries. At a recent CARICOM Heads meeting in the Bahamas, Manning 
announced an increase in T&T's Petroleum Fund contribution as well 
as US$38 million in new money for the CARICOM Regional Development 
Fund. 
 
¶19. (SBU) Manning also is raising T&T's and the region's profile 
internationally by hosting the Fifth Summit of the Americas (SOA) in 
April 2009 and the next Commonwealth Summit about six months later. 
While the GOTT is only slowly coming to grips with the logistical 
challenges of the SOA, bilateral dialogue on themes and concepts for 
the Summit has been constructive.  T&T's focus on "human prosperity" 
offers scope for both U.S. priorities like competitiveness and 
Caribbean priorities such as crime and food security.  T&T also 
should be receptive to U.S. priorities in the two other thematic 
pillars it has put forward, energy security and environmental 
sustainability. 
 
------------------ 
POLICY DIFFERENCES 
------------------ 
 
¶20. (SBU) Though T&T is friendly to the U.S., there are areas of 
policy difference.  Due in part to former President Robinson's role 
as a "father" of the International Criminal Court (ICC), T&T was one 
of the first ICC signatories.  It has not signed an Article 98 
agreement with the U.S. and likely never will.  While not taken with 
the systems in either Venezuela or Cuba, T&T seeks to maintain 
positive ties with each of those nations and is an advocate of 
dialogue between Washington and Caracas and Havana.  T&T, along with 
its neighbors, did not recognize Haiti's interim government in the 
absence of a CARICOM consensus.  T&T also did not support the U.S. 
intervention in Iraq, and its media have been openly critical on 
this issue.  Its voting record at the U.N. also leaves much to be 
desired from a U.S. policy perspective, though it is roughly in line 
with its CARICOM partners. 
 
---------- 
CONCLUSION 
---------- 
 
¶21. (U) T&T remains an important ally, trading partner and regional 
leader.  It has a well-established and functioning democracy and 
regularly cooperates with the U.S. on energy and security matters. 
We look forward to facilitating a successful visit to T&T for you. 
 
 
AUSTIN