BMI View: Times are tough for Trinidad & Tobago's oil and gas industry, with 2011 oil output having slumped, and US demand for the country's gas exports on the slide. The government expects an upturn in 2012 drilling activity and, with several new smaller IOCs now involved, there is scope to at least slow the rate of decline in oil production.
The main trends and developments we highlight in the Trinidad & Tobago (T&T) Oil and Gas sector are:
- Upstream companies operating in T&T will invest US$3bn in oil and gas exploration activities over 2012, Energy Minister Kevin Ramnarine said in February 2012. Some 15 exploration wells will be drilled, mainly by Canada-based companies Parex Resources and Niko Resources and by BP, he said. Five drilling rigs are currently operating in the country, with six seismic programmes continuing or starting in 2012.
- BP Trinidad and Tobago (BPTT) plans to spend US$1.1bn in 2012, which will include seismic surveys of its existing acreage, its president told a February 2012 energy conference.
- Updating on the status of negotiations for deepwater blocks in the Atlantic, Minister Kevin Ramnarine said discussions have concluded with BPTT and he expects a deal to be signed-off soon, while talks over deepwater acreage were continuing with BG Group and BHP Billiton. A new deepwater licensing round is due in the spring of 2012.
- Crude oil and gas liquids production in 2011 is thought to have fallen by almost 24% thanks largely to maintenance activity and unexpected field disruptions. There should be some recovery in 2012, but the overall trend is one of falling output unless higher investment can unlock new volumes. We are assuming supply of 138,000barrels per day (b/d) in 2012, easing to 127,000b/d by 2016. Output could be no more than 110,000b/d by 2021. Given demand is set to rise from an estimated 42,200b/d to 67,800b/d over the period, net exports by 2021 are set to be jut 42,200b/d.
- The short- to medium-term outlook for the country's gas sector is somewhat more positive as T&T will remain an important regional liquefied natural gas (LNG) exporter. Gas production is forecast to rise from an estimated 42.1bn cubic metres (bcm) in 2011 to 47.0bcm in 2015/2016 as new projects come onstream. However, with US purchases in decline and plenty of gas market competition, the volume of gas sold remains unpredictable. Exports should be around 20-21bcm throughout the forecast period.
- By 2016, T&T's oil and gas exports are set to yield US$13.2bn, falling towards US$11.1bn by 2021 as oil export volumes are reduced and gas sales volumes remain fairly constant.
At the time of writing we assume an OPEC basket oil price for 2012 of US$99.38/bbl, falling to US$97.23/bbl in 2013. Global GDP in 2012 is forecast at 3.2%, up from an assumed 3.1% in 2011, reflecting a faltering recovery in the US and uncertainty with regard to the eurozone debt situation. For 2013, growth is estimated at 3.7%.