March 7, 2007

TT, Guyana faceexciting future

Trinidad & Tobago's Newsday - George Allyene

TRINIDAD & TOBAGO - News that Trinidad and Tobago will be in a position shortly to physically access approximately 4.7 trillion cubic feet of natural gas reserves, along with that of Guyana’s plans for the exploration of oil on its western edge, has made the second half of the first decade of the 21st century an exciting period for the two southernmost Carib-bean economies.

Trinidad and Tobago’s impending formalisation of an agreement with its South American neighbour, Venezuela, for the unitisation of the maritime cross border natural gas reserves between the two countries will see it accessing some 2.7 trillion cubic feet of proven natural gas reserves in the Loran/Manatee fields. In turn, there is the added bonus of two trillion cubic feet of natural gas reserves in the Mango and Cashima fields, off Trinidad’s South-East coast, to be developed by the multi-national energy company, bpTT.

Should Guyana’s planned oil exploration thrust produce yields as heartening as hoped for, it will allow the country at long last to emerge from the shadows of economic ups and downs. Indeed, Guyana, in 2000, had ended the 20th century with a real Gross Domestic Product (GDP) growth of -0.8 percent.

Meanwhile, in 2001, the first year of the 21st century Guyana had recorded a current account balance of minus 13.8 percent of its GDP! In turn, Guyana, as well as Trinidad and Tobago, have been adversely afffected in economic and social planning by the decision of the European Union (EU) to effect an around the corner end of its preferential entry quota of raw cane sugar from African, Pacific and Caribbean countries, under the Convention of Lome. This has been further aggravated by a 39 percent cut in the price of raw cane sugar from ACP countries, spread over a limited period. Should crude oil be discovered in Guyana in appreciable commercial quantities, apart from taking full care of the country’s needs, it would more than offset, revenue and foreign exchange earnings wise, the European Union’s preferential entry sugar quota loss of some 173,000 metric tonnes of raw cane sugar, white sugar equivalent. What it would not do, however, is offset any loss of jobs in the short and medium term, as the sugar industry in Guyana is labour intensive, while the oil industry is capital intensive.

Continuing the plus side, though, the discovery of sizeable quantities of crude and the full exploiting of this discovery will result in anticipated economic growth on a sustained basis. Indeed, should oil exploration estimates be achieved, realistically, then Guyana’s coming into crude oil production when oil prices would still be high, would be able to achieve, along with revenue, an impressive annual savings on the current fuel import bill.

These, along with a far more comfortable exchange rate. Additionally, it should be emphasised that the problem of the middle 1990s, when the Paris Club of creditors had called on Guyana to repay outstanding debts, the execution of which would have sent the Caricom country into default, would have little or no chance of recurring. It is a matter of record that the United States of America, which regarded the Guyana’s Administration as a friend requested the Paris Club to forgive two-thirds of Guyana’s debt. I have dealt with this at length in an earlier column.

Trinidad and Tobago’s industrialisation thrust will be fuelled further by the impressive additional supplies of natural gas, both from the standpoint of an increased availability for domestic energy and energy based industries and increased Government revenues and foreign exchange earnings from exports of natural gas and liquefied natural gas, among others.

Both the development of the natural gas reserves, of two trillion cubic feet, in the Mango and Cashima fields and the reaching of an agreement by Venezuela and Trinidad and Tobago on the unitisation of the cross-border natural gas reserves which will see this country accessing 2.7 trillion cubic feet of natural gas for a significant total of 4.7 trillion cubic feet should serve to silence critics. Or will it?