Trinidad and Tobago's energy sector has lost three investors who were to pump an estimated US$185 million combined in energy projects that include drilling programmes spread over a four-year period.

Energy Minister Conrad Enill said the withdrawals were in line with international trends, marked by cutbacks.

The International Energy Agency (IEA) reports that the global upstream oil and gas investment budgets, through cutbacks in spending, project delays or cancellations have been cut by 21 per cent or US$100 billion during 2008.

Energy companies operating in Trinidad are also reporting declines in their profitability during the second quarter while the outlook for rig activity for the rest of the year remains uncertain, according to a recent industry survey.

Trinidad's biggest loss is OMEL Energy, a subsidiary of ONGC Mittal Energy which along with state-owned oil company, Petrotrin signed a production sharing contract last December to carry out exploration on the North Coast Marine Area (NCMA), Block 2 which comprises 98,669 hectares.

The NCMA Block 2 is within a prolific dry gas province in which a productive hydrocarbon system has been established and is on trend with the Northern Venezuelan Dragon gas field and gas discoveries made in 2008. The block will now be included in the country's next bid round.

Energy blocks awarded

The Trinidad Exploration and Development Company (TED) which was awarded two energy blocks from an earlier 2005/2006 bid round also withdrew earlier this year, followed by London-based Tullow.

Tullow pulled out from a consortium involving another UK company, Centrica Energy, and Petrotrin, which was granted approval for the award of a production sharing contract to explore and develop Block 2(ab) located off Trinidad's east coast.

In July, Centrica Energy signed an agreement with the government for the exploration of the offshore energy block which Upstream Business Director Richard Mew described as highly prospective.

The company also plans to establish a partnership with Canada-based NIKO Resources Limited which would hold a 26 per cent stake in the block and another Canadian company, Voyager, with 9.75 per cent.

Centrica said it will spend US$48 million on the 1,600 square kilometre block which will include the drilling of three wells.

Also last month, Canadian company Voyager Energy and its joint venture partner Petrotrin signed a production sharing contract with the government to carry out onshore and offshore exploration in the Guayaguayare Blocks in the south-eastern region over the next four years, costing US$40 million.

Joint-venture agreement

In September 2008, Voyager also secured the exploration rights for two central range blocks onshore and has since entered into a joint venture agreement with Petro Andina Resources to explore the acreage.

But while the government continues to sign energy contracts, a number of service companies in the sector complain that business is slow.

The South Trinidad Chamber of Industry and Commerce which monitors the energy sector said 85 per cent of respondents reported a drop in their overall profitability, compared to over 80 per cent of respondents during the first quarter survey.

"The global economic downturn has changed the financial climate, leading to declining energy commodity prices and uncertainty over access to credit," the chamber said.

"As a result, investments into the local energy sector are being cancelled or postponed even as prices rebound slightly."

Rig activity, one indicator of economic buoyancy, has declined relative to 2008, it added.

Little or no growth is expected in the energy sector in 2009 following on a marginal 0.4 per cent growth last year.

Trinidad whose economy is pegged to the performance of energy, experienced a 3.3 per cent decline in GDP in the first quarter of this year as activity in the oil and gas sub-sectors contracted by 2.0 per cent, according to the central bank's latest report.

GDP growth

Real GDP grew by an annual 3.5 per cent in 2008, but is expected to show zero to one per cent growth at the end of this year.

Despite the downturns, new bid rounds are scheduled for 2010 for acreages located in shallow and average water depths and comprising at least five offshore blocks - two in the East Coast Marine Area (ECMA), and three in the North Coast Marine Area (NCMA).

And Trinidad has reportedly resumed talks with Venezuela over the shared Loran-Manatee gas fields whose 10 trillion cubic feet of reserves are shared 74:26 in favour of Venezuela.

Another bid round comprising acreages in the deep water depths will follow.

Enill defined deep water exploration as "the new frontier".

"The proposals being considered seek to minimise the upfront risks to investors while ensuring equitable returns to both the investor and the government," the energy minister said.

business@gleanerjm.com