Speaking at the GECF gas symposium in Port of Spain yesterday, Dr Rowley said “Traders have begun using the system to their advantage. Through clever portfolio management, traders are able to benefit unfairly from our LNG production. As such, very little of the returns from high global LNG prices makes its way back to T&T. This cannot be allowed to continue and as such, the current system must be reviewed. I am sure that this problem of unfair benefit-sharing is not unique to Trinidad and Tobago. There may be other countries among us who face this problem in one form or another.”
He said as the country moves to “strengthen its drive to increase gas production from its depleting reserves, and continue exploration efforts,” upstream companies have committed to spend over US$10 billion in exploration and development activities over the next five years.
Prtime Minister Rowley noted the development of gas markets in Europe was driving an “evolution in gas pricing” with a shift away from oil-linked pricing to hub-based pricing. He said LNG pricing was not within TT’s control saying the “value extracted for the benefit of the country ought to depend on the efficiency of the value chain and the cost of exploiting the gas.”
“This has an impact beyond Europe as this market has become the market of last resort for LNG and thus has become an important marker in the LNG spot-market pricing. I would like to encourage the GECF to work expeditiously to develop and implement the gas-pricing index, which I know many members have been working on assiduously. Now more than ever, the need for such a global reference price is evident, in order to protect both producers and consumers alike.”
He said the GECF has a mandate to “support the sovereign rights of member countries” concerning their natural gas resources and their ability to “independently plan and manage the use of natural gas resources for the benefit of their people.”
Rowley noted that cost competitiveness, security of supply and sustainability were the three pillars to ensure growth of the gas industry and pointed to the Asian market where the price of coal was lower than landed LNG.
The Trinidad and Tobago Prime Minister said a collective effort was needed to protect each other’s interests as the majority of the CARICOM region’s countries were net importers of energy.
“The energy exporters must do their part to assist in bringing energy security to the region. Natural gas, in the form of small-scale LNG arrangements, can play a key role in bringing stability to the region.”
Rowley said the Caribbean region is becoming a “hotbed for hydrocarbon exploration” and cited the recent success in oil exploration in Guyana. He said this has prompted an interest in other countries such as Suriname, Cuba, Barbados and Grenada.