Impact On Trinidad And Tobagos Economy Economics Essay

The proposed understanding to use the hydrocarbon militias in the Loran- Manatee field will increase the modesty to production ( R/P ) ratio. It is estimated that the Republic of Trinidad and Tobago ‘s portion of the gas in this field is 2700 BCF. The Ryder Scott study of 2009, list our R/P ratio at 10. This R/P ratio indicates that based on current use of proved militias, Trinidad and Tobago has ten old ages of gas staying. A dislocation of the proven, likely, possible and geographic expedition potency for a nine twelvemonth period is shown below in table 1.



















































Table 1

Proven, Probable and possible militias of Trinidad and Tobago.

Beginning: Ryder Scott study, 2009.

When the 2700 BCF of gas from the cross boundary line field is considered in this context it has the consequence of increasing the R/P ratio for the terminal of the twelvemonth 2009. The R/P ratio would be 11.89. Thus the proved militias of this field allows for a farther two old ages of gas supply to the state for a sum of 12 old ages proven supply.

Impact on Trinidad and Tobago ‘s Economy

Trinidad and Tobago ‘s economic system is driven by the crude oil sector. The crude oil sector on mean contributes 40 % of our gross domestic merchandise ( GDP ) and besides histories for 80 % of the state ‘s exports ( beginning ) . It is besides the taking beginning of authorities gross. To find the impact of the understanding on the economic system of Trinidad and Tobago, the use of these militias will be discussed under the undermentioned headers ;

Impact on the petrochemical sector.

Development of downstream industries.

Compress Natural Gas ( CNG ) as a transit fuel.

Gross coevals

Human resource development

Figure 1

Beginning: Central Bank of Trinidad and Tobago drumhead indexs study, June 2009.

Impact on Petrochemical sector

The monetisation of the lorane mantee cross boundary line field will supply, ensures and extends the possible supply of gas to the Point Lisas Industrial Estate. The Point Lisas Industrial Estate is the hub for local downstream activities in the energy sector. The estate is home to eleven Ammonia workss, one Urea works and seven Methanol workss which have helped to do Trinidad and Tobago a prima exporter of Methanol and Ammonia. These fabricating workss among others on the estate require important sums of natural gas to keep their operations.

Analyzing the methyl alcohol and ammonium hydroxide fabrication indicated that on mean 1083 MMscf/d of natural gas1 for the period 2006 to 2008 was consumed in the production of these merchandises. When compared with other consumers of natural gas it is seen that these two fabrication procedures are the 2nd largest consumers of natural gas, with Liquefied Natural Gas ( LNG ) being the first. Table 2 below, obtained from the Ministry of Energy of The Republic of Trinidad and Tobago indicates the mean day-to-day ingestion of natural gas over a three twelvemonth period.

Table 2


Gas ingestion





Power Coevals




Ammonia Industry




Methanol Industry








Iron and Steel Manufacture




Cement Industry




Urea Industry




Gas Processing




Small Consumers




Liquefied Natural Gas ( LNG )








Beginning: Ministry of Energy and Energy Industries

The continued endurance of the petrochemical sector is based on a changeless and dependable supply of natural gas. The nature of the fabrication processes in this sector utilizes natural gas as the feedstock which is reformed or cracked to bring forth the coveted merchandise. Thus the use of the Loran Manatee cross bored Fieldss would supply a continued supply of locally extracted gas for a period greater than the 10 old ages as stated in the Ryder Scott study of 2009.

The industry and sale of petrochemicals contributes to the gross domestic merchandise ( GDP ) of Trinidad and Tobago as they are critical foreign money changer earners. The petrochemical sector which forms portion of the crude oil sector on mean contributes 4.9 % of our GDP see figure 2 below. For the intent of exemplifying this part it was split from the crude oil sector part. From the figures given it can be seen that petrochemical sector has a important function in the economic well being of the Trinidad and Tobago. Thus the use of the natural gas contained in the cross boundary line Fieldss will guarantee the growing and stableness of this natural gas dependent sector and thereby leting part to GDP.

Figure 2

Beginning: Central Bank of Trinidad and Tobago drumhead indexs study, June 2009.

Development of Downstream Industries

The honorable Minister of Energy and Energy Industry, Ms. Carolyn Seepersad-Bachan stated in a imperativeness conference on Tuesday 13th July 2010 that “ The prioritization and allotment of natural gas for undertakings will be based on the following cardinal standards ”

Energy Efficiency

Downstream Value

High local content including equity engagement

Movable Technology

These standards would hence be used to measure any possible energy undertakings that may originate out of the use of the hydrocarbon militias contained in the cross boundary line Fieldss. Potential energy undertakings that may be undertaken based on Loran-Manatee gas Fieldss are ;

Melamine and Urea Ammonium Nitrate ( UAN ) workss.

Polyethylene production, which would take to the development of plastics- based industry.

Liquefaction Train Ten

The authorities of Trinidad and Tobago has indicated that a national symposium on natural gas is to be conducted to find the best manner to use our hydrocarbon militias before any determinations are made. When the energy undertakings listed are evaluated utilizing the standards stated by the Minister, the polythene production appears to be an country for possible development. The polythene undertaking would add downstream value by the creative activity of a plastic-based industry. It would let for higher local content as local industries can acquire affect in the industry of plastics-based merchandises and the production of polythene. The puting up of this industry would let subjects to be exposed and trained in new engineering thereby fulfilling the movable engineering standards.

The viability of this undertaking hinges on the energy policy which is to be determined through the national symposium and the designation of extra natural gas militias through the deep H2O geographic expedition blocks. A undertaking of this nature would hold a positive impact on the economic system of Trinidad and Tobago as it would make employment for subjects, develop the state ‘s human resources, addition GDP and most significantly it would bring forth gross for the authorities through royalties and revenue enhancement.

The building of another natural gas liquefaction train, train X along the same lines of Atlantic LNG ‘s theoretical account in my sentiment does non look to be a feasible option for the natural gas from the Loran-Manatee Fieldss. The liquified natural gas ( LNG ) sector in Trinidad has experienced some disruptive times due to cut down demands in United States and weak monetary values for the trade good. Trinidad has lost market portion in the LNG market in the United States as that state has been able to tap into its antecedently indefensible geological formations ( Shale ) .

However train tens may be economically feasible to this state in concurrence with other elements of the LNG value concatenation. These elements include transportation, re-gasification terminuss and distribution to consumers. Transportation of LNG is an country of significance as the state tries to set up a ship edifice installation in topographic point of the now defunct aluminum smelter in La brea. Further The University of Trinidad and Tobago has launched a maritime preparation and enfranchisement programmes which would let subjects to work on these ships.

Traveling further into the LNG value train would make employment for subjects, generate gross, increase GPD and aide in the variegation of the local economic system. All these are positive developments that can originate out of the use of Loran-Manatee natural gas militias.

The Use of CNG as a Transportation Fuel

The population of Trinidad and Tobago benefits from authorities subsidy on gasolene. This subsidy cost the authorities two ( 2 ) billion TT dollars each twelvemonth and in these ambitious economic times has placed a strain on the fundss of the state. CNG has been touted as a inexpensive alternate transit fuel that would let the authorities to take the subsidy on gasolene thereby salvaging some 2 billion TT dollars each twelvemonth. Thus if some of the gas militias from the cross boundary line Fieldss can be processed into CNG it can positively impact the economic system by cut downing authorities outgo in the signifier of the gasolene subsidy.

The money saved from the remotion of the gasolene subsidy can be used to set about other enterprises that can be of benefit to the people such as improved wellness attention and substructure development. Therefore it may be in the best involvement of national development that the natural gas in the Loran-Manatee Fieldss be dedicated to this intent. However CNG requires some investing in equipment for both users and providers and as a consequence authorities has to supply inducements to speed up the transition from gasolene to CNG.

Gross Generation

The authorities of Trinidad and Tobago will bring forth gross from the use of the cross boundary line hydrocarbon militias through revenue enhancement and royalties. The value and the possible net incomes from this gas field is dependent on the way of this new disposal with respects to its policies of natural gas use. However the potency for important additions in GDP and gross exist.

Human Resource Development

Through the use of this cross boundary line field will enable subjects working straight and indirectly on this undertaking to heighten their skill sets. This can hold the consequence of re-energising the economic system, as extremely skilled work force auspexs good for the economic development of the state. The handiness of a extremely trained and skilled work force would besides function to do Trinidad and Tobago more attractive to transnational energy companies to put in energy undertakings locally. This would function to supply direct foreign investing to the state and excite the services sector as good. It besides increases the gaining potency of these workers.

Diversification of the Economy

Using the gas from this field provides many chances for development of downstream industries which would diversify from the typical production of petrochemicals and LNG. However there has been treatment of diversifying the economic system off from oil and gas into other sectors such as touristry, fabrication, agribusiness and information and communications engineering ( ICT ) .

Analyzing the impact of using gas from this possible understanding may impede the variegation of the economic system. By come ining into this understanding and using gas from these Fieldss may put more accent on the development of the crude oil sector one time more. The possible negative consequence of this on the economic system is that it can switch concentrate from sectors identified as cardinal to the variegation of the economic system and

a continuance of the roar and broke rhythm. Thus prudent direction is required to guarantee that the procedure of variegation continues irrespective of hydrocarbon finds and utilization understandings.

If the expected gross generated from come ining into such an understanding is managed decently it can supply the authorities with the necessary fundss to set about development in these countries. To diversify the economic system the authorities has to do capital investings, provide inducements and develop its human resource. It is the duty of the authorities to supplying these conditions necessary to excite the variegation of the economic system. Further to that, the authorities has to place and apportion resources towards this end in the face of falling gross. Thus the gross generated from such an understanding with Venezuela can be used to fuel the variegation of the economic system.

Partnering with Venezuela given its political clime

The political clime in Venezuela is polarized between protagonists of President Hugo Chavez and protagonists of the resistance cabals. President Chavez has nevertheless maintained a loyal backup from the bulk of the population. The political clime has stabilized significantly after the military putsch of 2002 and the work stoppages. Since the 2nd one-fourth of 2003 the political state of affairs improved due to increasing economic prosperity ref pdf. In the first one-fourth of 2010 with the effects of the planetary economic crises and proposed constitutional reforms the political clime once more became charged.

There were presentations on the street that turn violent as dissenters and constabularies clashed. President Chavez was able to defy the force per unit area and a canvass conducted by

“ Venezuelan Institute of Data Analysis ( IVAD ) found more than 58 % of Venezuelans continue to O.K. of Chavez ‘s presidential term ref ” . Thus President Chavez was able to keep control of the authorities and steer it towards socialism.

While the political clime in Venezuela is a cause for concern, the benefits of come ining into such an understanding have to be analyzed from a GORTT position before any determination can be made. The 1990 pact signed between Venezuela and GORTT on the boundary line of Marine and pigboat countries ensures that even if there is a political turbulence in Venezuela the natural resources contained within the limit can non be wholly utilised by any one state. In other words even if the Venezuelan authorities changes the GORTT will non lose its claim to the resources contained in the cross-border Fieldss.

There is a grade of hazard associated with come ining into this understanding sing Venezuela ‘s political clime. Under President Chavez regulation, the Venezuelan authorities has taken stairss to increase authorities engagement in all sectors in order to guarantee the wealth is distributed among the poorer category of Venezuelans citizens. As a consequence the 2001 Hydrocarbons Law was enacted which “ militias to the province the geographic expedition, production, assemblage, and initial transit and storage of crude oil and associated natural gas. ”

The Venezuelan ‘s 1999 Gaseous Hydrocarbon jurisprudence which governs the natural gas sector is of more involvement to the GORTT. This jurisprudence allows for the natural gas sector to be to the full opened to both international and local private investings. It is because of this jurisprudence that Chevron has been awarded the licence to pull out the natural gas from the Plataforma Deltana, which includes the Loran field. However, Venezuela under President Chavez ‘s disposal continues to to the full encompass socialism there is a possibility that Torahs similar to 2001 Hydrocarbons Law can be enacted. Thereby leting the Venezuelan authorities to nationalise the natural gas sector and obtain entire control ref province section.

The possible autumn out from such a development can negatively impact the GORTT engagement in this understanding. As Chevron may be forced out and replaced by a Venezuelan province tally company. This could decelerate the development of the cross boundary line Fieldss and potentially do holds to Trinidad and Tobago ‘s attempts to pull out the natural gas on its side of the boundary line due to judicial proceeding and compensation proceedings.

Entering into an understanding with Venezuela to use the cross boundary line hydrocarbon militias of the Loran-Manatee Fieldss can be good to the GORTT. Benefits expected to be derived from come ining into such an understanding are ;

Positive impact on R/P ratio.

Generate Gross

Increase GDP

Stimulate upstream development.

Stimulate downstream development

Instrument for variegation of the economic system