VZCZCXRO9413
RR RUEHDE RUEHDH RUEHGR
DE RUEHSP #0117/01 0722330
ZNR UUUUU ZZH
R 132330Z MAR 09
FM AMEMBASSY PORT OF SPAIN
TO RUEHC/SECSTATE WASHDC 9761
INFO RUEHHH/OPEC COLLECTIVE
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCNCOM/EC CARICOM COLLECTIVE
RUEHSJ/AMEMBASSY SAN JOSE 0506
RUEHNE/AMEMBASSY NEW DELHI 0037

UNCLAS SECTION 01 OF 02 PORT OF SPAIN 000117 
 
SIPDIS 
 
STATE FOR EEB/IEC, WHA/EPSC, WHA/CAR 
ENERGY FOR POLICY/INTERNATIONAL - GWARD, SBROWNE 
SAN JOSE FOR REGIONAL ENVIRONMENTAL HUB 
 
E.O. 12958: N/A 
TAGS: ENGR EPET EIND TD
SUBJECT: TRINIDAD ENERGY SECTOR NEWS (#1-09) 
 
In this edition, we report on developments in the Trinidad and 
Tobago (T&T) energy sector December 2008 - February 2009: 
 
¶1. India-T&T joint venture signs PSC for NCMA2 
¶2. More PSCs and bid rounds coming in 2009? 
¶3. Upstream companies look to cut costs 
¶4. Petrotrin 2008 loss, credit rating downgraded 
¶5. BG/Chevron have 4 TCF of uncommitted natural gas 
¶6. Plastics project still on stream? 
¶7. Aluminum:  Venezuelan partner out, China stays in 
 
 
¶1. India-T&T joint venture signs PSC for NCMA2 
--------------------------------------------- - 
Energy Minister Conrad Enill signed a production sharing contract 
(PSC) with ONGC Mittal Energy Ltd. (OMEL) of India and GOTT-owned 
Petrotrin for the North Coast Marine Area 2 (NCMA2) offshore 
exploration block.  According the media reports, OMEL bid US$204 
million and paid a US$30 million signing bonus to the GOTT.  At the 
signing ceremony OMEL's CEO said five exploratory wells would be 
drilled in the block over a four-year period. 
 
NCMA2, originally offered for bid in 2005, covers an area of roughly 
97,000 hectares in 50-100 feet of water adjoining T&T's western 
maritime border with Venezuela, immediately north of several gas 
fields operated and developed by BG Group. 
 
OMEL, with a 65% interest in NCMA2, is a joint venture between the 
India-based Oil and Natural Gas Corporation (ONGC) and the 
investment arm of Mittal Steel, which operates one of T&T's two 
steel mills.  Petrotrin holds the remaining 35% interest in NCMA2. 
 
¶2.  More PSCs and bid rounds coming in 2009...? 
--------------------------------------------- -- 
Speaking at the PSC signing ceremony for NCMA2, Minister Enill said 
2009 would see the GOTT introduce a new PSC fiscal regime and sign 
three pending PSCs.  In addition, it would negotiate PSCs for three 
more exploration blocks, hold one bid round for offshore blocks in 
shallow water and another bid round for deep water blocks.  Several 
weeks after this staetment, Energy Ministry Director of Resource 
Management Helen McInnes announced that the bid round launch was 
being delayed pending the announcement of a new fiscal regime, but 
she reiterated that deep water blocks would be offered by the end of 
¶2009. 
 
¶3. Upstream companies look to cut costs 
--------------------------------------- 
Speaking at an energy conference in Port of Spain, representatives 
of the major upstream companies operating in Trinidad and Tobago 
signaled they are seeking to cut costs in 2009 in response to the 
global economic slowdown.  Petrotrin, for example, plans to conduct 
3-D seismic surveys of onshore blocks but will not drill any 
exploratory wells in 2009. 
 
¶4.  Petrotrin 2008 loss, credit rating downgraded 
--------------------------------------------- ---- 
Petrotrin Chairman Malcolm Jones announced that he expects a 2008 
loss in the range of US$30-50 million due to the decline in global 
crude prices.  While offering no comment on the possibility of job 
cuts, Jones indicated he would approach the Oilfields Workers Trade 
Union (OWTU) to look for ways to reduce operating costs by more than 
10 percent. 
 
In reaction to the announcement, international rating agencies 
downgraded Petrotrin's credit rating to negative from stable.  With 
oil and gas prices and refining margins down, the agencies expressed 
concern that planned spending on Petrotrin's refinery upgrade could 
result in a significant increase in the company's financial 
leverage. 
 
¶5.  BG/Chevron have 4 TCF of uncommitted natural gas 
--------------------------------------------- ------- 
BG Group (formerly British Gas), the second largest upstream 
producer in the local energy sector, reported uncommitted gas 
reserves and resources in T&T amounting to four trillion cubic feet 
(TCF).  In announcing its fourth quarter and full year financial 
results for 2008, the company cited three discoveries in Block 5(c) 
off Trinidad's east coast, where BG is the operator in a 50/50 joint 
venture with Chevron, as well as first gas from the Poinsettia field 
in Trinidad's North Coast Marine Area (NCMA) near the maritime 
border with Venezuela. 
 
¶6.  Plastics project still on stream? 
------------------------------------- 
Tight availability of project financing has slowed but not killed 
 
PORT OF SP 00000117  002 OF 002 
 
 
plans for a $2.3 billion polypropylene plant in Trinidad, slated for 
completion in 2012.  Andrew Jupiter, head of the GOTT-owned National 
Energy Corporation, told the press he has received assurances from 
the European firms involved that they remain committed and are 
seeking additional financial backing. 
 
¶7.  Aluminum: Venezuelan partner out, China stays in 
--------------------------------------------- ------ 
Energy Minister Conrad Enill revealed that private Venezuelan firm 
Sural has withdrawn as the minority partner in a 60/40 joint venture 
with the GOTT to operate the Alutrint aluminum smelter.  Alutrint 
officials responded by affirming that construction (by a Chinese 
firm) would begin on schedule.  The construction is being financed 
by a US$400 million low-interest loan from China's EXIM Bank. 
 
SHAPIRO