VZCZCXRO5839
RR RUEHDE RUEHGR
DE RUEHSP #0253/01 1621817
ZNR UUUUU ZZH
R 101817Z JUN 08
FM AMEMBASSY PORT OF SPAIN
TO RUEHC/SECSTATE WASHDC 9212
INFO RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEAHLC/HOMELAND SECURITY CENTER WASHDC
RUCNCOM/EC CARICOM COLLECTIVE
RUEHHH/OPEC COLLECTIVE
RUEHBR/AMEMBASSY BRASILIA 0101

UNCLAS SECTION 01 OF 03 PORT OF SPAIN 000253 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CAR, WHA/EPSC, EEB/IEC 
DOE FOR OFFICE OF THE SECRETARY, OFFICE OF POLICY AND INTERNATIONAL 
AFFAIRS, OFFICE OF ELECTRICITY DELIVERY AND ENERGY RELIABILITY 
DHS FOR A/S BOB STEPHAN 
 
E.O. 12958: N/A 
TAGS: EPET PREL ENRG EIND EINV CARICOM TD
SUBJECT:  Secretary of Energy's visit to Trinidad reinforces 
bilateral energy relationship 
 
 
SENSITIVE BUT UNCLASSIFIED - PROTECT ACCORDINGLY 
 
¶1. (SBU) SUMMARY: During his May 12-13 visit to Trinidad and Tobago, 
the Secretary of Energy reinforced the US-T&T relationship by 
drawing attention to bilateral LNG trade and commending T&T for its 
open market and regional leadership.  At the same time, he flagged 
U.S. energy company concerns that the GOTT needs to get incentives 
right for upstream exploration and development.  His messages on 
alternative energy and biofuels received extensive press coverage. 
Septels report on his discussion of energy infrastructure protection 
with GOTT ministers.  END SUMMARY. 
 
¶2. (U) Secretary of Energy Samuel Bodman visited Trinidad May 12-13, 
accompanied by Assistant Secretary of Energy Kevin Kolevar, 
Assistant Secretary of Homeland Security Robert Stephan. 
Accompanying from DOE were Foreign Policy Advisor Molly Williamson, 
Deputy Chief of Staff Ben Getto, DAS William Bryan, Public Affairs 
Director Andy Beck, Americas Director Gary Ward, and International 
Relations Specialist Sam Browne.  This cable reports on the 
Secretary's interaction with industry and media, as well as 
representational functions hosted by the PM and the Ambassador. 
Septels report on the Secretary's formal meetings with PM Manning 
and GOTT Ministers, which focused on bilateral cooperation to 
improve energy infrastructure protection. 
 
--------------------------------------------- --- 
US Energy Companies Share Perspectives, Concerns 
--------------------------------------------- --- 
 
¶3. (SBU) In the Secretary's roundtable meeting with US energy sector 
companies, several representatives voiced concern over the GOTT's 
long-term strategy for natural gas resources.  Noting the lack of 
focus on developing new gas reserves or expanding LNG exports, one 
industry professional commented that the market for petrochemicals 
and metals was a distraction that contributed little to the 
country's overall development.  Another noted that after 
commissioning the largest LNG train in the world at the end of 2005, 
Atlantic LNG (ALNG) had difficulty sourcing enough gas to run at 
capacity in 2006, and yet the GOTT was signing agreements to build 
new energy-intensive projects like aluminum smelters.  Companies 
also cited inconsistent policies on local content.  While some 
foreign companies invested heavily in building up local engineering 
capacity, for example in the LNG project and in local manufacture of 
off-shore platforms, the GOTT recently awarded a US$1 billion 
refinery upgrade project with no local content requirement 
whatsoever. 
 
------------------------- 
Low Hanging Fruit is Gone 
------------------------- 
 
¶4. (SBU) A major concern of nearly all attendees was the perceived 
lack of financial incentives for upstream exploration and 
development.  Upstream companies agreed that the financial risk to 
reward ratio was not advantageous and was in fact stifling the 
development of gas reserves.  Noting that "the low hanging fruit is 
gone" - referring to the large, shallow-water gas fields already 
exploited - the group asked Secretary Bodman to press for GOTT 
recognition that greater financial incentives are needed for 
international oil companies to develop smaller and deep water 
offshore gas fields.  While T&T was a very attractive market five 
years ago when drilling costs were low, the picture has changed due 
to higher drilling costs and a larger GOTT take, in the form of both 
production sharing and price splits.  On the bright side, the GOTT 
engaged an expert who has consulted with upstream companies in 
recent months and is expected to recommend changes to the incentive 
mix. 
 
¶5. (SBU) The companies welcomed the infrastructure protection focus 
of Secretary Bodman's visit.  The inability of the GOTT to protect 
the offshore platforms from incursion was a source of concern, with 
one company calling for enforcement of a 500 meter buffer zone.  In 
a lighter moment, the Secretary observed there is usually great 
fishing around offshore gas and oil platforms.  Nearly all firms 
represented voiced concern over threat interdiction capabilities and 
poor coordination between company security and GOTT law enforcement 
and military. 
 
--------------------------------------------- -------- 
PM Credits Secretary's Role in Bilateral Relationship 
--------------------------------------------- -------- 
 
 
PORT OF SP 00000253  002 OF 003 
 
 
¶6. (SBU) During remarks at the opening of a large dinner at the 
Prime Minister's Residence and Diplomatic Center in honor of the 
visit, PM Manning warmly welcomed the Secretary.  Speaking to over 
100 guests, comprising GOTT and state-owned energy company officials 
and spouses, the PM recounted how then-CEO of Cabot Industries 
Bodman had intervened personally to overcome disagreements among the 
original members of the Atlantic LNG (ALNG) consortium.  Manning 
went on to describe the Secretary as "T&T's best friend in 
Washington," thanking the Secretary for keeping his door open and 
engaging with the GOTT's priorities, most recently on protecting 
energy infrastructure. 
 
--------------- 
Public Messages 
--------------- 
 
¶7. (U) Speaking at a breakfast meeting of the American Chamber of 
Commerce (AmCham) in T&T on May 13, the Secretary highlighted T&T's 
role in U.S. energy security, describing bilateral cooperation on 
energy infrastructure security and conveying his desire to continue 
and deepen that cooperation.  He also made a strong pitch for 
alternative energy, energy efficiency, and openness to private 
investment that is needed to meet global demand for safe, clean, 
reliable and diverse energy supply.  He praised T&T for its record 
of openness and transparency, as well as its leadership in resisting 
non-market based energy supply arrangements.  (See Post internet 
site for text of remarks as prepared for delivery.) 
 
¶8. (U) AmCham members posed questions on ethanol and food prices, 
prospects for U.S. domestic oil exploration and expansion of LNG 
imports, and proposals for a natural gas exporters' cartel.  The 
Secretary reviewed factors behind the rise in global food prices, 
observing that corn-based ethanol production accounts for only 3 or 
4 percent of a global increase of 40 percent.  He also discouraged 
international efforts to control energy supply, pointing out that 
free markets are more conducive to the mobilization of capital 
required for LNG projects.  Asked whether he saw any cause for 
optimism about energy, he noted Brazil's success on biofuels, adding 
that he would like to see the U.S. tariff on ethanol imports removed 
over time.  He also observed that the free market is working in 
T&T's upstream energy sector, where the GOTT has an opportunity to 
reassess the terms it is offering in response to market signals 
emerging from its 2006 bid round.  (NOTE: Many international oil 
companies refrained from bidding on deep water blocks offered in 
2006 after the GOTT tweaked production sharing terms in its own 
favor.) 
 
¶9. (U) In a press availability immediately following the AmCham 
event, the Secretary said that as the U.S. seeks to increase LNG 
imports, he hopes to see T&T's LNG exports to the U.S. increase.  He 
offered assurance that market-based energy trade between the two 
countries would not change under a new U.S. administration.  He also 
voiced confidence that T&T will expand its role as a reliable 
supplier, notwithstanding regional competition from Venezuela's 
PetroCaribe initiative.  While declining to predict oil price 
trends, he urged consuming nations to respond to high prices by 
improving efficiency and investing in alternative fuels.  (NOTE: 
Local press covered the Secretary's visit extensively, highlighting 
in particular his messages on alternative energy and the 
ethanol-food prices issue.) 
 
--------------------- 
Raising T&T's Profile 
--------------------- 
 
¶10. (U) At a small luncheon with energy and government leaders at 
the Ambassador's residence, Foreign Minister Gopee-Scoon described 
an initiative to revamp T&T's diplomatic image and re-tool its 
foreign missions in order to focus on energy and trade.  She cited 
T&T's technical assistance to African countries on developing 
natural gas based industries as an example of this new thrust. 
(NOTE: Former DOE Assistant Secretary Karen Harbert suggested to 
former Energy Minister Eric Williams that GOTT seek ways to share 
the Trinidad experience in developing and bringing LNG to market. 
T&T could serve as an example to South American and African 
countries as these regions seek to develop energy resources based on 
market based principles.)  The GOTT Cabinet had approved a note 
allocating funds to train T&T diplomats in these areas.  As a way of 
raising T&T's profile in the U.S., DOE Foreign Policy Advisor 
Williamson suggested that the GOTT approach the Smithsonian 
Institution on the possibility of featuring T&T in the Smithsonian's 
annual Folklife Festival on the National Mall in Washington DC. 
 
PORT OF SP 00000253  003 OF 003 
 
 
 
¶11. (U) Secretary Bodman encouraged Professor Ken Julien, president 
of the University of Trinidad and Tobago (UTT) and chairman of the 
GOTT's Natural Gas Export Task Force, to consider fielding a team 
for DOE's annual Solar Decathlon, also held on the National Mall, as 
a way of promoting research on alternative energy.  Julien lamented 
the lack of incentive to develop solar energy in T&T, where 
electricity rates are among the lowest in the hemisphere.  He 
ascribed Barbados' success in promoting solar water heaters to the 
fact that consumers there pay four times as much for electricity as 
in Trinidad.  He also suggested that political sensitivity around 
electricity rates is high for T&T, comparable to gasoline and diesel 
price sensitivities in Jamaica. 
 
------------------------------ 
Visit to Atlantic LNG Facility 
------------------------------ 
 
¶12. (SBU) Together with the Permanent Secretary (PS) in the Ministry 
of Energy, Leroy Mayers, and the Chairman of the National Gas 
Company, Frank Look Kin, Secretary Bodman visited Atlantic LNG 
(ALNG) on Tuesday May 13.  Having played a critical role in the 
development of ALNG's Train 1 as CEO of Cabot Corporation in the 
mid-1990s, the Secretary was interested to see the dramatic 
expansion of ALNG's plant.  Robert Fryar, COO of ALNG, updated the 
Secretary on ALNG's operations, which now include four trains and a 
production capacity of 15 million tons of LNG per year.  Fryar also 
led the delegation on a tour of the facility.  Discussing the future 
of the gas industry in T&T and the gas fields T&T shares with 
Venezuela, PS Mayers commented that T&T has an umbrella agreement 
with Venezuela, but that the specifics on operational development of 
the cross border gas fields have yet to be negotiated.  He indicated 
that the GOTT was waiting on Venezuela so they could move forward 
and joked about the importance of being "nice to one's neighbors." 
 
AUSTIN