BHP oil strike revitalizes offshore sector
As part of a deepwater drilling campaign offshore, Australia’s BHP drilled two additional exploration wells with one discovery and one well classified as dry.
In its operational update for the third quarter BHP said that the two wells were located in the Northern licenses and were a part of the company’s Phase 4 deepwater drilling campaign.
The Boom-1 well was spud on August 28 and encountered hydrocarbons. Evaluation and analysis of the well are currently ongoing.
The second well, the Carnival-1, was spud on September 30 and reached total depth after the end of the September 2019 quarter. The well was a dry hole.
Drilling of the two wells completed the exploration program on the Trinidad and Tobago Northern licenses. Evaluation and development planning studies of the discoveries in the North are ongoing.
Following Carnival-1, the Deepwater Invictus rig will return to the U.S. Gulf of Mexico to complete regulatory abandonment work on Shenzi appraisal and exploration boreholes.
BHP approved $283 million in funding to develop the Ruby offshore project in August. In April, BHP found hydrocarbons in its Bélé-1 exploration well.
More oil in Mexico
In its operational update BHP shared the results of the Trion 3-DEL appraisal well offshore Mexico, which the company spud in July 2019. It was encouraged by the preliminary results, with the well encountering oil in the reservoirs up-dip from all previous well intersections.
Evaluation and analysis were ongoing, with no further appraisal wells anticipated. BHP set aside $256 million for the Trion 3-DEL back in February 2019 following an oil discovery at the Trion field. BHP’s well, which made the discovery, was the first well drilled by an international operator in the Mexican deepwater. BHP – then BHP Billiton – successfully bid on the Trion field in 2016 as Mexico’s Pemex sought an experienced deepwater player to share costs at the Trion discovery due to its depth and complexity. Once fully appraised, Trion is expected to be in the top 10 fields discovered in the Gulf of Mexico in the last decade. BHP holds a 60% interest in the Trion field and the remaining 40% is held by the Mexican company.
October 17, 2019
Trinity Exploration & Production plc
Q3 2019 Operational Update
Return to drilling, positive results from SCADA trial and increasing base production
Trinity, the independent E&P company focused on Trinidad and Tobago, today provides an update on its operations for the three-month period ended 30 September 2019 (“Q3 2019” or “the period”). During the period, Trinity continued to focus on maintaining base production, drilling new infill wells, generating free cash flow and protecting the business from downside risk.
Trinity has now completed four new onshore infill wells as part of its H2 drilling programme, including the Company’s first High Angle Well (“HAW”), FR 1807, which has to date performed in line with expectations. Two of the four new infill wells drilled to date were brought on production during Q3 2019, with a third brought on production subsequent to the period end. As a result, base production has risen steadily (October average to date: 3,017 bopd) with an expected year end exit production rate of c.3,400 bopd.
Focus on optimising and protecting base production is a strategic company priority, including piloting the use of Weatherford International plc’s proprietary Supervisory Control and Data Acquisition (“SCADA”) platform. The two wells being trialed with the new SCADA technology have, to date, seen material production increases and the Company is very encouraged by the early results of the trial.
During the period, Trinity also took advantage of a spike in oil prices following the Saudi Arabia drone attacks to implement a further tranche of its hedging programme which is designed to partially mitigate the impact of Supplementary Petroleum Tax (“SPT”) whilst retaining upside exposure to rising oil prices over the majority of production,. As a result, Trinity now has a total of 35,000 bbls per month hedged (c. 41% of Q3 2019 production).
Q3 Operational Highlights
- Group average production volumes were 2,816 bopd for the period, which is a 3% increase on the same period last year (Q3 2018: 2,734 bopd) but represents a 6% quarter on quarter decline (Q2 2019: 2,996 bopd). The lower than expected Q3 2019 production volumes was due to a combination of weather-related electrical supply disruptions, low availability of swabbing and workover rigs due to a bottleneck in rig certifications and higher than normal closing stocks (sold post period end). The rig issue is being resolved with the backlog of pending approvals beginning to clear
- A total of 10 recompletions (“RCPs”) (Q2 2019: 3) and 25 workovers (Q2 2019: 36) were completed during the period
- The RCP at Trintes was completed and brought on production on 30 September 2019
- FR1807, our first HAW, has to date met our expectations. Reservoir pressure data, as we continue to optimise the well and draw down the downhole pressure, points to the well being able to produce its pre-drill prognosed rate of 134 bopd once fully optimised. We continue to monitor the well for oil, water and sand production but to date those parameters remain stable
- The Company commenced continuous production monitoring and optimisation through the use of SCADA onshore via the partnership with Weatherford International plc
- The two onshore trial wells using the SCADA system are deployed on a progressive cavity pump well and a sucker rod pump well, the two most common pumps used onshore. Results from both wells to date are giving material production increases and important new production data, in real time. The results and learnings to date are enabling the selection of wells for a more extensive roll out programme that is being planned for the coming months
- Technical and commercial discussions on Galeota with the Ministry for Energy and Energy-Related Industries, our partner Heritage Petroleum Company Limited and technical providers have continued.
Strong Balance Sheet
- Cash balance of US$15.6 million (unaudited) as at 30 September 2019 (30 June 2019: US$17.8 million)
- The reduction in cash balances is largely a function of new drilling related investment capex in the period ahead of the commensurate benefit in production revenues
- Trinity has continued to implement its hedging strategy which is designed to protect the Group’s free cash flows by partially mitigating the impact of SPT whilst retaining upside exposure to rising oil prices over the majority of production
- A further hedge was put in place, on attractive terms, during the short period when oil prices spiked as a result of drone attacks in Saudi Arabia
- 3-Way Option (12 month tenor) for 10,000 barrels per month
Put spread of US$50.0 – US$56.0/bbl with a call strike of US$65.5/bbl
Total of 35,000 barrels per month now hedged (41% of Q3 production)
- 3-Way Option (12 month tenor) for 10,000 barrels per month
Post Period End Highlights
- The third infill well in the H2 drilling campaign commenced production on 9 October
- The fourth infill well which spudded on 30 September was completed on 8 October and will be perforated and brought on production in the next few days
- The rig will move on to the fifth well location shortly, following routine maintenance work, and the Company now expects to complete this, and a sixth, well during Q4 2019
- Initial Cumulative Production (“ICP”) from the three new wells that have currently commenced production has been over 50% ahead of the pre-drill prognosis (despite still not yet including the full impact of the ongoing HAW optimisation)
- Strong contributions from these three new infill wells have seen current production rising steadily (October average to date: 3,017 bopd) with an expected year end production exit rate of c.3,400 bopd
Outlook
The focus for the remainder of the year will be on completing and evaluating lessons learned from the H2 2019 onshore drilling campaign, preparation for further drilling in H1 2020, the continued monitoring of the two trial SCADA wells and the preservation of base production. Results from the first HAW will help determine future well locations with the Company fully focused on growing production whilst maximising free cash flow generation. With a low operating break-even and with new infill wells increasing production, the Company intends to further strengthen cash generation levels and the balance sheet.
In addition, the Company will continue to progress the Galeota development and consider opportunities that may arise in the changing local market with the aim of affecting a step change in longer-term production capabilities.
Bruce Dingwall CBE, Executive Chairman of Trinity, commented:
“We continue to focus on increasing our low-cost high margin production while developing our asset base and utilising new technologies in order to maximise the resultant returns. The Company is pleased with the production achieved by the three new completed infill wells, including from our first HAW which we see as integral to achieving our growth ambitions going forward.
“When we couple these new higher production levels, our low cost base and the increased production rates seen on our trial digital SCADA wells, we believe we are in a great place to move forward as a free cash flow generating business with significant upside potential.”
Enquiries:
For further information please visit www.trinityexploration.com
EU imposes 5-year tariff on fertilisers
The European Union imposed a five-year tariff on fertiliser shipped by Methanol Holdings Ltd to Europe,following a European Commission (EC) final ruling on October 8, based on a complaint by Fertilizers Europe in June 2018, claiming TT, Russia and the US were dumping product, resulting in material injury to European producers.
According to the ruling, the dumping margin (the per cent difference in price sold in the importing country versus the price sold in the exporting country) for TT’s product was 55.8 per cent and the underselling margin (considered a type of predatory pricing) was 16.2 per cent. The ruling came into effecton 10 October and will last for five years.
The EC said in its ruling: “In view of the conclusions reached with regard to dumping, injury, causation and union interest, definitive anti-dumping measures should be imposed in order to prevent further injury being caused to the union industry by the dumped imports of the product concerned.”
It ordered a definitive anti-dumping duty on imports of mixtures of urea and ammonium nitrate in aqueous or ammoniacal solution, currently falling under CN code 3102 80 00, and originating in Russia, TT, and the US. TT received the lowest tariff imposition of the three.
Trinidad producers of UREA ammonium nitrate (UAN) must now pay a €22.24 (TT$174.14) per tonne tariff on fertiliser shipped to the EU.
Representing the case for TT was Methanol Holdings (Trinidad) Ltd (MHTL), a subsidiary of Swiss conglomerate Proman, the parent company of some of TT’s major petrochemical producers, including Caribbean Nitrogen Co Ltd and Nitrogen 2000.
MHTL was aware of the EC’s preliminary decision in July to impose the five-year tariff on the three countries. As the sole UAN producer in the Caribbean, MHTL engaged the commission on the issue since it was first raised. It has kept the Ministry of Trade and Industry and other stakeholders informed. The company had taken the possibility of these tariffs into account as part of its regular forecasts and contingency planning and will continue to utilise its global integrated supply chain to ensure customers’ needs are met.
“We were surprised by the European Commission’s decision to pursue these measures to protect European producers, which we have made clear throughout our discussions with the commission. Like other globally competitive UAN producers, we are disappointed by the commission’s recent findings, and are assiduously exploring all of our available options.”
The downstream petrochemical sector is a major revenue earner for TT.
According to the 2019 review of the economy, the production and export of UAN increased sharply. During the first ten months of fiscal 2019, UAN output rose by 37.1 per cent to 1,237,400 metric tonnes, from 902,500 metric tonnes in fiscal 2018. UAN exports likewise increased by 30.3 per cent, from 953,100 metric tonnes, to 1,242,000 metric tonnes.
The petrochemical manufacturing sector overall contributed $11.38 billion to GDP in 2018, or 7.3 per cent.
Columbus Energy spuds Saffron well in South West Peninsula
11 Oct 2019
Columbus Energy, the oil and gas producer and explorer with operations in Trinidad and Suriname, provided an update on the Saffron well in the South West Peninsula, Trinidad.
The drilling rig to be used for drilling the Saffron well (Talon #38) is now on location and commenced drilling operations following official Ministry inspection and approval.
Leo Koot, Executive Chairman of Columbus, commented:
‘The Company is pleased that the rig is on site and we are ready to commence drilling operations in the next few days. The Company notes that its preferential access to the Talon #38 rig means there is no material cost whilst waiting for the drilling operations to commence.’
South West Peninsula Exploration – Appraisal – Development (24 September 2019) the Saffron well will test three different horizons, the Upper Cruse, the Middle Cruse and the Lower Cruse (the primary target) and will be drilled to a total depth of 4000 – 4500 ft.
The company will advance to drilling with the 8½ inch pilot hole.
It expects the well will take approximately 30-45 days to complete and evaluate and will update the market when appropriate.
Leo Koot, executive chairman commented: “The Company is pleased to receive Ministry consent for the Saffron well and, as mentioned at the AGM, I will be actively involved at the rig-site during the critical phases of the well campaign.
“This has been the culmination of many years of commercial structuring, technical work, planning, and, more recently, site preparation activities. We will update the market as drilling activities on Saffron progress.”
Source: Columbus Energy
State amassed $2.4 billion from Tax Amnesty
The Finance Minister announced that oil companies contributed the most revenue during the 2019 tax amnesty between June 15 and September 30.
Highlighting the segments that made up the tax revenue, he said
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- $750 million , in taxes in the three months this year came from the oil companies.
- Corporation taxes amounted to approximately $600 million and
- Taxes from foreign companies were $431 million.
- The rest came from individuals.
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The 2019 Tax Amnesty gained the country $2.4 billion, $1.6 billion more than expected .
In 2016 a tax amnesty targeted $500 million and raised $750 million. A Tax Amnesty this year as government prepared for the revenue authority targeted $700 million to $800 million.
It is usually a norm for the country to enter into the budget period with an overdraft of 95 per cent.
“It’s a feature of T&T that permanent secretaries wait until July and August and then they get masses of files coming to the Ministry of Finance because they’re all trying to spend what remains in their allocation.”
Because cheques are written in September, they have to be dealt with, in October or November— which make them “two of the most difficult months for a government.”
However, because of the revenues generated from the tax amnesty, the overdraft percentage fell to 82 per cent.
He took time to mention the investments to come to Tobago.
He “heard a commentator complaining that we are only allocating $200 million for capital development in Tobago.” The cost to build the new airport terminal in Tobago is $870 milion.
State agencies like WASA will be spending $1bilion in Tobago in the fiscal year 2020 for in capital expenditure. “So when you add that up, $1 billion from other agencies, $200 million to the House of Assembly directly, $300 million loan approval, that’s $1.5 billion and then you put in the airport that’s $2 billion dollars.”
The actual investment is ten times the numbers from the critics.
The airport terminal will be a state-of-the-art facility and the upcoming construction in Tobago will bring the island “into the modern age.”
BP
Looney must adapt in the top job at BP
An Upstream opinion
Adapt or die, oil majors told – so it cannot be business as usual for Looney or BP
Dudley ‘preparing to stand down from BP’
BP Confirms Looney As Dudley’s Successor
10 October 2019 9:30
by Editorial
OPINION: It looks like business as usual at oil supermajor BP with the decision to appoint Bernard Looney as the new chief executive.
The 49-year-old is Irish by extraction and is often seen without a tie, but that’s one of the few things that distinguishes him from the man he will replace next spring, Bob Dudley.
Looney is straight out of BP’s central casting department — a company lifer who ended up as head of exploration and production.
This is a well-known trajectory that was seen with past bosses such as (Lord) John Browne and Tony Hayward.
In fact, Dudley himself was slightly different as he was an American who arrived through the merger of BP with Amoco in 1998.
Looney’s terms set as he prepares to lead BP
But the Mississippi-raised Dudley — never seen without a tie — was a perfect choice in the aftermath of the Deepwater Horizon tragedy in the US Gulf of Mexico.
Looney’s challenges contain a wider existential threat to BP, and its rivals — how to deal with the decarbonisation needed to tackle climate change.
BP has not chosen an outsider as a new boss who might have undertaken a root-and-branch review of how to turn it from crude to energy producer.
Looney is an oilman through and through — although his track record suggests he is a highly successful one.
Certainly the sub-committee of the board set up by BP’s relatively new chairman Helge Lund to find a successor did look at outside candidates. In the end BP played safe and went for Looney who joined the company straight after graduating from University College, Dublin.
Looney pushed his way up the ranks with spells in the North Sea, Vietnam and the Gulf of Mexico. He was spotted early by Browne as a potential star of the future.
Looney is feted internally as a great communicator with a no-nonsense manner. He has championed diversity and mental health issues inside the workplace, but this is no softy. He has very high standards for himself and everyone around him.
He won the top job after bringing more than 20 new projects on stream on time and on budget as head of production. So, BP from February 5 will be in the hands of a very motivated and skilled company man, but one steeped in the carbon tradition.
His supporters insist he is as well aware as anyone that BP cannot just keep on doing the same things it has in the past. But you have to wonder whether the UK supermajor played safe at a time when it was an opportunity to be bold.
After all, Lund himself is an oilman — unlike his predecessor Carl-Henrik Svanberg who has been boss of Swedish electrical giant Ericsson.
Meanwhile, there must be high praise for Dudley. With smart moves, endless patience and steely nerves, the quiet American steered BP off the rocks despite over $65 billion worth of fines and liabilities related to the Macondo disaster.
He had been given a thorough testing for the most senior job when he was literally chased out of Russia by the Kremlin’s henchmen in the dark days of TNK-BP.
It may be that Looney has not been tested to that level of destruction, but he will be in the years ahead as the green anti-carbon juggernaut gathers speed.
Adapt or die, warned one Chatham House analyst about the future facing oil majors. So it cannot be business as usual for Looney or BP.
Bernard Looney – Chief Executive, Upstream
Executive team tenure:
Appointed 1 November 2010
On 4 October 2019 the Board announced that Bernard Looney will succeed Bob Dudley as group chief executive and join the BP Board on 5 February 2020
Professional interests:
Fellow of the Royal Academy of Engineering
Fellow of the Energy Institute
Age:
49
Nationality:
Irish
Career
Bernard Looney has run BP’s Upstream business since April 2016 and has been a member of the company’s executive management team since November 2010.
As chief executive, Upstream, Bernard is responsible for all BP’s oil and gas exploration, development and production activities worldwide. The Upstream segment includes some 17,000 people operating across almost 30 countries and produces around 2.6 million barrels equivalent of oil and gas a day.
During his tenure, process and personal safety performance has improved by 35% and 20% respectively and production has grown by 20%, driven largely by 23 major project start-ups – delivered ahead of schedule and under budget.
He has led access into new countries, including Mauritania and Senegal, high-graded the portfolio with the acquisition of onshore US assets from BHP Billiton and the proposed sale of the Alaska business, and created innovative new business models such as Aker BP in Norway.
Bernard has encouraged BP to lead the industry on methane detection methods as well as driving sustainable emissions reductions of almost 3 million tonnes CO2 equivalent in the past two years.
Under his leadership, Bernard has made significant improvements in both gender and global diversity, with his top regional leadership team now being one-third women and one-third from outside the US/UK. He has also initiated a company-wide dialogue on mental health in hope of ‘ending the stigma’ associated with the issue.
In earlier Upstream executive roles, he was responsible for all BP-operated oil and gas production worldwide and for all BP’s drilling and major project activity. He led the creation of central drilling and projects functions following the Deepwater Horizon accident.
Bernard joined BP in 1991 as a drilling engineer and worked in operational roles in the North Sea, Vietnam and the Gulf of Mexico, including as drilling engineer on the discovery of the giant Thunder Horse field. After a period in BP Alaska, he became head of the group chief executive’s office, working directly for BP chief executives Lord Browne and then Tony Hayward.
An Irish citizen, Bernard grew up in County Kerry and in 1991 gained a degree in Electrical Engineering from University College Dublin. He later, in 2005, gained a MS in Management from Stanford Graduate School of Business.
Bernard is a fellow of the Royal Academy of Engineering, a fellow of the Energy Institute and is also a mentor in the FTSE 100 Cross-Company Mentoring Executive Programme.
Career history:
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- 2016-present: chief executive, Upstream
- 2013-2016: chief operating officer, production
- 2010-2013: executive vice president, developments & member of BP executive team
- 2009-2010: managing director, BP North Sea
- 2008-2009: vice president, Norway and North Sea infrastructure
- 2006-2008: head of group chief executive office
- 2005-2006: senior vice president, BP Alaska
- 2004-2005: Stanford Graduate Business School
- 2002-2004: executive assistant to Group vice president exploration & renewal
- 1991-2002: production and drilling engineering roles in North Sea, Vietnam and deepwater Gulf of Mexico.
Bernard Looney’s recent speeches
17 September 2019
Open for the future
In a speech at the SIS Schlumberger Global Forum, Monaco, Bernard Looney, chief executive, Upstream, outlines how successful energy companies of the future will be the ones that address societies concerns, find new ways to collaborate, and harness the benefits of digital and new technologies.
2 September 2019
Oil and gas: changing for the future
Bernard Looney, Upstream chief executive, at the Offshore Europe Gala Dinner in Aberdeen, 2 September 2019: Discusses the vital role of the North Sea oil and gas sector in helping to meet society’s need for cleaner, better energy. Looney talks about how the industry’s track record of innovation is the platform for a future that will see: continued modernization and more efficiency, further emissions reductions and a changing role of oil and gas in tomorrow’s energy system.
25 September 2018
New energy opportunities in Africa
Bernard Looney, chief executive, Upstream, Atlantic Council, New York, 25 September 2018: With demand for energy in Africa well ahead of the world average, and BP’s long history on the continent, Bernard Looney speaks about the in Africa’s prospects for growth and investment.
BP chief executive Bob Dudley to retire, to be succeeded by Bernard Looney
Release date: 4 October 2019
Bernard Looney
The Board of BP
announced today that, after a 40-year career with BP and over nine years as group chief executive, Bob Dudley, 64, has decided to step down as group chief executive and from the BP Board following delivery of the company’s 2019 full year results on 4 February 2020 and will retire on 31 March 2020.
The Board is also pleased to announce that Bernard Looney, 49, currently chief executive, Upstream, will succeed Dudley as group chief executive and join the BP Board on 5 February 2020. Looney will continue in his current role until this date.
Commenting on the announcement, BP Chairman Helge Lund said: “Bob has dedicated his whole career to the service of this industry. He was appointed chief executive at probably the most challenging time in BP’s history. During his tenure he has led the recovery from the Deepwater Horizon accident, rebuilt BP as a stronger, safer company and helped it re-earn its position as one of the leaders of the energy sector. This company – and indeed the whole industry – owes him a debt of gratitude.”
On Looney’s appointment, Lund added: “As the company charts its course through the energy transition this is a logical time for a change. Bernard has all the right qualities to lead us through this transformational era. He has deep experience in the energy sector, has risen through the ranks of BP, and has consistently delivered strong safety, operational and financial performance. He is an authentic, progressive leader, with a passion for purpose and people and a clear sense of what BP must do to thrive through the energy transition.”
Bob Dudley commented: “It has been the privilege of a lifetime to serve this company and work in this industry for the past four decades. I have worked with so many committed people from all over the world – both inside and outside BP – and I am enormously proud of all the things we have achieved together to provide energy for the world. Bernard is a terrific choice to lead the company next. He knows BP and our industry as well as anyone but is creative and not bound by traditional ways of working. I have no doubt that he will thoughtfully lead BP through the transition to a low carbon future.“
Bernard Looney said: “It has been a great pleasure to work with Bob and it is an honour to succeed him as chief executive. I am humbled by the responsibility that is being entrusted to me by the Board and am truly excited about both the role and BP’s future. Our company has amazing people, tremendous assets, and a set of core values that guide our actions, but most of all we have a desire to be better. I look forward to tapping into that desire and building on the strong foundation that Bob has built as we meet society’s demand for cleaner, better energy.”
The Board is also pleased to announce that Lamar McKay, currently deputy group chief executive, has agreed to serve as chief transition officer. In this new role, McKay will support the Chairman and incoming group chief executive to ensure a full and orderly transfer of leadership. He will assume this new role immediately and step down as deputy group chief executive.
These decisions are the result of a comprehensive and deliberate search process, including consideration of a range of internal and external candidates. The process was led by Helge Lund, senior independent director Sir Ian Davis and remuneration committee chair Paula Rosput Reynolds, a working group of the Board’s nomination and governance committee.
A biography of Bernard Looney is attached to this release.
The company confirms there is no further information to be disclosed under the requirements of listing rule 9.6.13R in relation to Looney’s appointment.
Details of arrangements for Dudley’s retirement and of Looney’s remuneration are:
Bob Dudley’s retirement arrangements
Bob Dudley’s service contract provides for a 12 months’ notice period and notice commenced on 4 October 2019. He will step down from the board on 4 February 2020 and remain an employee of the company on his existing terms until 31 March 2020. Dudley has waived his entitlement to notice pay for the unserved part of his notice period.
Dudley will be eligible for an annual bonus for the 2019 financial year in the normal way. The amount of this bonus will be stated in the 2019 Directors’ Remuneration Report with 50% being deferred into shares in line with policy. He has waived any entitlement to an annual bonus in respect of any part of 2020 that he works.
Dudley’s share awards under BP’s Executive Directors’ Incentive Plan (EDIP), will be preserved in accordance with the good leaver provisions of the EDIP. Information relating to the vesting of shares will be updated in the 2019, 2020 and 2021 Directors’ Remuneration Reports.
Bernard Looney’s remuneration arrangements
Annual salary of £1.3 million.
Provisions relating to bonus opportunity, bonus deferral and performance shares are all in accordance with BP’s 2017 remuneration policy as approved by shareholders.
Looney will be entitled to a cash allowance in lieu of pension equal to 15 per cent of base salary. For the purposes of his deferred pension calculation, base salary will be capped at his current salary while accrued service has already been capped in 2011.
Further information
BP press office, London: +44 (0)20 7496 4076, bppress@bp.com
Renewable Energy
Selection of a BPTT/ Shell consortium of three companies as the preferred bidder for a utility scale renewable energy project has been reported.
but it was not announced in the 2019-2020 budget.
There were 11 bids for the project.
An official from one of the companies which bid for the project questioned the report.
The official recalled the project started off as an expression of interest last June and became a request for proposals (RFP) in December 2018. The RFP indicated that all bidders would be told by the Energy Ministry which of them had been successful.
BPTT and Shell submitted two proposals, but only one was accepted.
A highlight of the RFP was that there could be more than one highest-ranked applicant. The highest-ranked applicants are defined as those whose proposals are “substantially responsive, who have successfully met the requirements of Stage 1, Stage 2 and Stage 3, and whose economic evaluation best meets the overall power sector objective of reliability and security of supply at least cost to the grid.”
Applicants selected for this status will therefore be those whose individual or particular combination of proposals offer the best improvement in tariff to the electricity consumers.
The official said his company’s proposal satisfied the International Renewable Energy Agency’s guidelines for the project.
The Energy Ministry and BPTT could not be reached for comment.
Predator Oil & Gas
09 Oct 2019
Photo – see caption
Predator Oil & Gas provided an update on the Pilot EOR Project in the Inniss-Trinity field using injected CO2.
Columbus Energy Resources and Predator recently finalised and formally submitted the updated CO2 Injection Pilot proposal to Heritage for approval, civil works are planned for completion in December 2019. Predator ordered a number of long lead items to begin the CO2 Injection Pilot by January 2020. Initial results from the pilot are expected in Q1 2020.
Separately Predator has entered into a Confidentiality Agreement with another operator of a mature producing oil field onshore Trinidad which the Company believes may be another suitable geological candidate for a Pilot CO2 EOR Project.
Paul Griffiths, Chief Executive of Predator, commented:
‘We are pleased to be working jointly and most effectively with Columbus to advance this exciting project. The Company’s near-term focus is to prioritise CO2 EOR production growth by adding new CO2 EOR opportunities using the experience we have gathered to date on the ground in Trinidad. Adding new projects is not capital intensive and is consistent with the current risk-adverse market sentiments. The signing of a Confidentiality Agreement specific to a new CO2 EOR opportunity is an important step forward.‘
Source: Predator Oil & Gas
Unipet service stations shutdown
Some Unipet service stations including Santa Cruz, Charlieville, Freeport, Cocorite, Chaguanas and Couva are without fuel while the National Petroleum Marketing Company (NP) dispelled ‘rumours of a fuel shutdown,
Unipet claims that petroleum dealers across the market have been facing significant challenges over the past few years, which is affecting their ability to purchase gas to supply their customers.
“In an effort to reduce our operating costs, Unipet and some members of the Petroleum Dealers Association (PDA) cut back their operations today with gas stations scheduled to re-open on Wednesday 29th October at 6:00 am. This is in an attempt to trim operating costs which have been severely impinged by the Regulator not providing sustainable margins to the industry.”
“Non-Unipet stations are able to approach the regulator to make up any shortfall in operating cost they may experience but as independent operators, there is no coverage for our shortfall and we are left with no option but to reduce our operations. We sincerely apologize to our customers but are left with no other options. The future viability of the liquid petroleum industry is in the hands of the regulator who has all the information with regard to the changes that are necessary to make the model sustainable.“
Queues formed at the NP service stations after NP assured that there would be no shutdown of its service stations. “NP wishes to advise the public that our operations are running as normal and that we remain steadfast in our commitment to ensure that a continuous and reliable supply of fuel is delivered across the country” .
: “…, as of .. 2019 October 28, the placing of orders for the purchase of all liquid fuel products continued unabated, with deliveries to service stations taking place today as scheduled, and others being scheduled for tomorrow, based on orders received from our dealers.” There was no need for consumers to panic buy as this will only serve to cause fuel shortages at the pump.
Trinidad & Tobago Petroleum Dealers’ Association (PDA) said that it fully supports the call for margins to be regularized in the Liquid Fuel Petroleum Sector.
“Most of our members operate gas stations with Supply Agreements with the Trinidad & Tobago National Petroleum Marketing Company Limited (NPMC). Under these agreements, NPMC Dealers are not permitted to close the sites. While we fully understand and support UNIPET’s attempts to have regularized margins, we expect that all gas stations will be under considerable strain for the duration of this action and ask the motoring public to understand the constraints under which we try to make fuel available to the public.“
“Daily, the Petroleum Dealers are faced with the financial limitations of operating with unsustainable margins. Our expenses are greater than our income and while we are continuously taking measures to reduce expenditure, the model itself is unsustainable. The situation is that we can no longer pay for fuel on delivery, so we are forced to take fuel only when we have the funds to pay for it. It means that sometimes we will not be able to supply product to our customers. It also means that some sites will be forced to reduce their operating hours and staff compliments. Most NPMC Dealers earn around $2.50 for every $100.00 fuel sale by cash, and around $1.10 for every $100.00 sale by electronic cards. From this, they are expected to pay all their operating expenses.”
The issue of unsustainable retail and wholesale fuel margins is a legacy issue spanning decades. “Four years ago, UNIPET, together with the downstream industry and independent researchers commissioned a scientific study and provided the Ministry of Energy and Energy Industries, the Ministry of Finance and the Ministry of Trade with the report which recommended how a different model could be implemented to ensure sustainability of the industry. The Trinidad & Tobago Petroleum Dealers’ Association had made similar research available to the same parties over the past four (4) years. In 2017, the Minister of Finance granted a five cents increase in the margins while simultaneously increasing the price of fuel which led to an increase in the Business Levy and the Green Fund paid. The impact for UNIPET has been a severe impairment of their working capital and their ability to make timely payments for fuel from Paria Trading.”
“In addition, liftings done on weekends, after business hours and public holidays are associated with extremely high overtime cost charged by the terminal facility. Indeed, NPMC is faced with similar constraints. NPMC supplies fuel to 115 gas stations and operate a gantry / barge facility of their own. They must provide fuel to Tobago, the Airports and to the Ferries, together with their bunkering operations. In fact, to cope with their unsustainable margins, NPMC collects up to Five Cents out of the Dealers margins as rent, and even this is not enough for them to sustain their operations. It is a testament to the unsustainability of the current margins.” The Chairman of NPMC recently admitted that NPMC supplies fuel to unprofitable and nonviable sites. It is instructive to note that NPMC does not actually operate any of their Sites, but contracts such operations to Petroleum Dealers, who provide the capital and manpower to do so.
PDA claims that unlike other industries the petroleum industry is still rigidly controlled by the government. “This means that we cannot increase margins, nor can we go to a cheaper source of supply. Despite continued representation to the relevant parties for a margin increase, there has been no response. We take seriously, our responsibility to the traveling public to provide safe and reliable gas and diesel but we simply cannot continue under the current pricing and tax structure. The simple solution to this problem is for the Regulator to implement adequate margins as recommended so that the industry can survive.”
Unipet’s 21 service stations across the country remained closed as dealers sent a message to the Government that their profits were too low for them to consider staying in business.
Thousands of drivers overwhelmed workers at over 100 NP service stations that remained open with more vehicles than they usually catered for daily. Fuel ran out at some NP stations and those who felt the brunt of the burden were commuters, some of whom were forced to wait for well over an hour to get fuel.
At the Unipet pumps motorist were greeted with signs that stated “No Fuel Sales” or “We do apologise to our valued customers for the inconvenience. This is as a result of the dire financial realities of the sector. Over the past 4 years, we have made the best effort to avoid this consequence, but it is now beyond our control.”
One elderly driver left Princes Town to get gas in Cocoyea as the stations were closed. In Santa Flora, motorists at the Unipet station only needed to cross the street to the NP station.
In San Fernando supply tankers were topping up the gas stations, ensuring continuity in supplies but motorists were worried that a further shutdown will cause panic and create queues at the pumps.
In Central Trinidad, motorists driving everywhere to fill tanks, created congestion in several areas as Unipet stations that were closed while NP retailers continued operations.
Unipet said that the company will have a challenge with its supply and that consumers could expect hiccups in purchasing gas. Under the current regime since 2015, petroleum dealers across the market faced significant challenges which affected their ability to purchase gas to supply their customers.
“Since the levies were adjusted four years ago, things have been very burdensome for the dealers. Increased taxes and unsustainable margins also have been a concern for dealers. The industry has really been affected financially. Dealers have a problem with their ability to purchase gas.”
President of the Petroleum Dealers Association (PDA) Robindranath Naraynsingh is insisting that it is not holding the country ransom until their margins are increased.
“Why would you consider a financial crisis to be holding people ransom?”
PDA’s intentions were to give a better service to the community. He insisted the action did not constitute a strike.
“If it was a strike the whole place would have been shut down. Some stations were closed, some were not giving full service.
“The problem is that the gas station dealers mortgaged their homes to raise capital to provide a service to their communities and the public at large. They’ve cut expenses, invested money, they buy the gas and they support this industry. The petroleum dealers do this and as a result, it becomes unsustainable because of the small margins. The expenses are more than income. They’re running at a loss. Besides that, it ties up your cash flow. You can run a business without a profit, but when cash-flow dries up, then you start to see trouble.”
Some dealers reported that closing their stations saved money, as in the state closure of the indebted, loss-making Petrotrin refinery.
“It might be cheaper to shut down a gas station for one day than run it for seven,” he said adding that margins for the various fuels range between 4-4.5 per cent; the lowest in the Caribbean.
Unipet said the industry has undergone challenges since the levies were adjusted four years ago.
The industry was having serious financial problems. The company issued a statement saying that “the future viability of the liquid petroleum industry is in the hands of the regulator who has all the information with regard to the changes that are necessary to the current margin model and tax structure to make the industry sustainable at no extra cost to the consumer”.
Paria Fuel Trading Company assure that there was no shortage of fuel.
“The Company loaded Road Tank Wagons (RTWs) from both the National Petroleum Marketing Company Limited (NP) and Unipet at the Pointe-a-Pierre gantry this weekend (between Saturday, October 26 and Monday, October 28, 2019). NP loaded 44 thousand barrels of fuel (13,500 barrels at the gantry and 31,000 barrels at the Pointe- a-Pierre port) and Unipet loaded just over 10 thousand barrels at the gantry. Paria continues to have healthy inventories of all categories of liquid fuel.”
Ministers of government have not responded to the media. Azizah Baksh-Backredee, Permanent Secretary in the Ministry of Energy, said, “We will send out a release shortly.”
This is not the first time dealers took action to persuade government to adjust margins. In 2016, dealers rejected credit and debit card payments from customers, saying that it was a cost-cutting measure.
Naraynsingh said, “It all depends on how the Government deals with this situation. If they come to us to negotiate, we can reach a solution.”
Closure of Unipet’s 25 gas stations signalled a readiness by private owners to flex some muscle against disadvantageous government policy. The impact on consumers was immediate as drivers rushed to fill up at NP stations in panic-buying. The impact of the one-day shutdown on the authorities remains to be seen.
The ball is now in the court of the Minister of Finance who must decide whether to dig in his heels or concede to Unipet’s demand for a bigger financial margin in the sale of gas, the most politically sensitive products on the market. Rumours of a shortage sends the motoring public rushing from homes and workplaces to join queues in hopes of filling up. Personal transport is too important to risk an empty gas tank.
It has been a while since access to gas was threatened , although Unipet states closure is not a protest but a result of a “lack of funds to purchase fuel”. Unipet and the Petroleum Dealers’ Association are firm in their position that after four years of making minimal headway in negotiations with the Government, the situation has reached a point where they believe something has got to give. The response by the Ministry of Energy and Energy Industries to the shutdown placed the onus on the Ministry of Finance as it “continues to collaborate with the Ministry of Finance in reviewing the suitability of the operating margins in the liquid petroleum fuels sector.” This review follows a five-cent increase in margins in 2017 , the impact of which was “neutralised” by Government’s subsequent increase in the price of fuel at the pump which affected sales. The review is an ongoing discussion which gas station operators believe needs to be brought to a head.
If Unipet is accurate in its claim about the unsustainability of the current financial margin then the Government needs to act since the issue will not be resolved on its own. If, however, the Government believes Unipet’s claim is not valid, then the Minister of Finance must address the issue publicly and explain why he is not willing to budge from his position. The worse possible outcome would be for the matter to escalate to another stage of crisis where the PDA joins Unipet in taking common action. The faltering economy shows no signs of growth. Although the Finance Minister is relieved that the philosophical majority prevents riots over austerity measures, political grievances are festering since before closure of the refinery, as a perfect combination of aggressive activism and fumbling by governmental authorities, incapacitated the iconic oil industry and offers no respite from escalating crime, migrants and shortages of water and medicine.
Secrecy hinders investors
Thu Oct 10 2019
Geophysicist Javed Razack, director of contracts and proposals at Ramps Logistics, told a post-budget seminar, hosted by the Confederation of Regional Chambers at the Couva Chamber of Industry and Commerce that new multinational corporations will prefer to invest in Guyana because of lack of transparency. and poor regulatory controls by the Trinidad Ministry of Energy.
Expressing disappointment that the 2019/2020 Budget did not offer any incentives for oil and gas operators or opportunities linked to the Guyanese oil find, Razack said T&T will lose potential investors because of this massive development.
“When Guyana begins to produce oil from January 2020, the Guyanese government share of profit in Guayana will be US$300 million. The current revenue for the year is about US$1 billion which is a 30 per cent increase in revenue. Excon Mobil made 14 discoveries since 2015. They have found 6 billion barrels of recoverable oil so far and they have explored about 20 per cent of the hydrocarbons,” Razack said., “Guyana is developing in a huge way and when you look at Trinidad with poor incentives, lack of transparency, lack of regulations, it is easy to see why a large multinational will go to Guyana or Suriname to invest, rather than to invest in Trinidad.”
Investors were burdened by difficulties in doing business in T&T because of the bureaucracy at State institutions.
“We need to redesign the contractual framework, the fiscal regime as well as improve the ease of doing business with the regulatory institutions of the country like the Environmental Management Authority, (EMA), Ministry of Finance and Ministry of Energy.”
He hoped that the government will segment T&T’s mature field development and offer incentives for small and medium operators
“You must look at the technical and economic aspects together and design an economic framework that actually targets each of the operators. The budget barely has anything to incentivise the new drilling or explorations. You have to break up the fields rather than looking at it as one energy sector” .
One aspect of regulation that must be upgraded is the publication of all activities by multinational oil and gas players, as well as small and medium energy operators.
“It is extremely difficult in T&T to find out what the big operators are doing. It is a big secret to find out who is doing what, who is doing what where and what are the developmental plans of these companies. In Guyana, every day two or three stories come out and operators are publishing exactly what happens. They keep the public in the loop. Companies, therefore, could see the opportunities coming up and they can position themselves to be a part of the sector.”
Asked why operators were not publishing their activities and keeping their business a secret, Razack said, “Operators have become accustomed to that and they don’t see it as a necessity. It stems from a lack of interest from the government and the companies. It is simple for a Minister to say please publish the information, so the country will know what is going on. The secrecy impacts the downstream sector who depend on the gas coming from upstream.”
Downstream companies will be able to plan if they know details about oil and gas finds.
Toco Port
Sat Oct 05 2019
22 islands of the archipelagic republic include the major islands ofTrinidad and Tobago; the Bocas islands – Chacachacare, Monos, Huevos, Gaspar Grande (Gasparee), Gasparillo (Little Gasparee or Centipede Island); the Five (six)Islands,-Caledonia , Craig , Lenagan , Nelson, Pelican; Rock ; San Diego Islands- Carrera , Cronstadt; Faralon Rock, Soldado Rock, Saut d’Eau, Little Tobago (Bird of Paradise ),St. Giles , Goat Island, Sisters’ Rock.
14 SEA PORTS are BRIGHTON, CEDROS, CHAGUARAMAS, CHARLOTTEVILLE, COCORITE, POINT GALEOTA, PORT-OF-SPAIN, POINT GOURDE, POINT FORTIN, POINT LISAS, POINTE-A-PIERRE, SAN FERNANDO, SCARBOROUGH, TEMBLADORA
11 sheltered west coast ports in the Gulf of Paria harbour require investment to serve the offshore indusrty in Guyana where commercial oil production will begin in December. Yet Toco Ferry Port is the government’s pet project, with priority for funds. Work on the billion-dollar mega project is scheduled to start in the third quarter of 2020 weeks before the general election. Request for approvals was submitted to the Environmental Management Authority (EMA) by the National Infrastructure Development Company (NIDCO) .The project which will stimulate industrial, commercial, ecotourism and residential activity in the underdeveloped northeastern region with a population of over 75,000. Construction of the port will be in phases over 30 months. The engineering estimate was $900 million. A new government in 2020, may delay construction . Ministers turned the sod in for the construction of a $196 million road upgrade from Valencia to Toco Road ,the port’s direct route. Work on the 12.4 kilometre road will be completed in 13 months.
The “Sea Bridge Team“conducted a feasibility study for a sea bridge between Trinidad and Tobago. and chose Toco as an ideal location for a port, on a rocky shore with rough seas on the exposed Atlantic coast in proximity to the hurricane path,
The multi-purpose facility comprises a two-storey ferry terminal , fishing complex, two-storey port administration office , capitainerie and Coast Guard base. Based on the project’s footprint, NIDCO had applied to the EMA for an Environmental Impact Assessment (EIA) with a conceptual design.
NIDCO procured international EIA consultant Environmental Resources Management (ERM) to ensure that everything is above board. The EIA report due .at the end of this year must be submitted to the EMA which will respond in four months. Then NIDCO will apply for a Certificate of Environmental Clearance (CEC). Tender will follow clearance and a contract will be awarded.
Toco Fishing Facility is the only business to be relocated to make way for the port but there is no relocation cost because of the location.
The port will accommodate two fast ferries, 40 marinas, 50 fishing vessels and the Coast Guard boats. The Galleons Passage, which accommodates 600 passengers and 200 vehicles will service the seabridge from Toco to Tobago. The 45 minute-trip from Toco to Scarborough is faster than the three-hour sailing time from Port-of-Spain to Tobago. Adding the road trip to Toco of 2 hours from Port-of-Spain and 3 hours from San Fernando will extend the travel time.
The northeastern region has the highest poverty rate in the country with hundreds unemployed, guiding the decision to create infrastructural development to generate employment and economic growth. The port will be a growth centre, to boost tourism, fishing and agriculture . Cconstruction will employ labourers, masons, electricians, plumbers, security officers, welders, supervisors and engineers . Following completion jobs will exist for security officers, janitors, administrative staff, fishing net menders, vendors, maintenance workers, waiters, cooks, landscapers, electricians, plumbers and shipwrights. The Coast Guard base will protect borders.
Toco Port will offer
•The terminal building with a public concourse, baggage storage, offices, retail kiosks, public lifts, bar gallery, VIP lounge and parking.
• The fisheries complex with a police post, retail and commercial spaces, car park for 60 vehicles, fishing net and boat repair yards, ice maker and fish and water storages, gas station, fish market hall and a village incorporating a bandstand, toilets, fish stalls, garden and amphitheatre.
•The capitainerie will be equipped with a dingy dock, porte-cochere, offices, reception areas, customs and security officers, car park, retail outlets, boatyard, dining terrace/balcony, fishing outlets and marinas members club lounge.
•The Coast Guard base will house are offices, briefing room, galley, commander’s office, reception security and waiting rooms, mess hall, armoury, male and female quarters.
•The port administration will consist of offices, customs and administration, maintenance and plant rooms, security, waiting and reception areas, staff rooms, storage and pilots’ facilities.
2020 budget failed
Fri Oct 11 2019
Carolyn Seepersad-Bachan, political leader of the Congress of the People says the budget failed to address urgent measures needed to transform the country’s economy.
Fiscal measures only appear to achieve short term political gains, as opposed to sustainable development.
Government’s macroeconomic position was out of sync with reality.
The Finance Minister should have predicated the budget on U-S 55 dollars per barrel and natural gas at $2.50 cents per mmbtu as the current prices could lead to a higher fiscal deficit than the estimated $5 billion for 2020.
She accused the government of not having any real interest of addressing the agriculture sector.
Despite the announcement of an increase in the minimum wage and salary increases for CEPEP, URP and OJT workers, there were no real attempts to re-engineer social programmes to lift the impoverished out of their conditions..