Chamber president Roger Packer advises: Lift local standards

 

Oil production will increase 18 per cent to an average of 1.1 million barrels a day in December from a year earlier, Cardenas said in a January 12 interview. Colombia is the third-largest crude producer in South America after Venezuela and Brazil. Packer was speaking on Monday at the opening ceremony of the Energy Chamber’s annual conference at the Hyatt Regency Trinidad hotel, Dock Road, Port-of-Spain.

He said it is important that T&T attracts foreign investment to sustain its energy sector. “Clearly, we need to be competitive if we are to attract the investment dollars needed to develop our industry. This is not just about fiscal terms, it is also about getting the right institutional structure and one that is responsive to change and able to adapt and change the strategy as the external market evolves. “We need to significantly strengthen the state institutions that promote investment across the entire value chain. And we must deepen the collaboration and integration between investment in the upstream and downstream sectors,” he said.

 

Raising the bar

He called for high standards among local companies in the energy sector. “Ensuring that local companies are operating at the highest standards is a crucial element of local content. This is why initiatives of the Energy Chamber, such as the Energy Industry Competency Development Initiative and Safe To Work Initiative, are so important for local content.” South-South co-operation is important, Packer said. “We also believe that these programmes are important for us to partner with and work in close collaboration with industry associations and chambers in some of the newly emerging energy provinces in Africa and in the Caribbean region. We believe that this can foster genuine South-South technical co-operation at the same time as building the business-to-business relations that are so important to the service industry.” Energy Minister Kevin Ramnarine, who spoke at the conference, signalled his intention to attract smaller upstream companies, and referred to local company Trinity. “It is in the national interest to attract smaller companies who have more manageable cost structures and are more nimble. A number of these companies are doing exciting things, like Bayfield, Range, Leni, Parex, Niko and Fram, and our very own Trinity. In this regard, it should be noted that the lease operatorships and farmouts produce approximately 30 per cent of land oil production at present.”

 

Seeking BRIC investors

Packer said it is urgent that T&T attract new investors to its energy sector. “We need to have institutions that are able to secure investment not just from our traditional partners in North America and Europe, but new investors from the rapidly growing BRIC countries: Brazil, Russia, North America and Europe as well as SaudiArabia and the Gulf States. Often this will mean working with majority state-owned companies. 

“And highlights the importance of having foreign policy framework to attract investment as well as promote our services globally,” he said. T&T requires significant continued investment in T&T’s upstream sector, Packer said. “If we are to ensure a rebound in oil production and consistent delivery of gas to our diverse downstream plants, it is just not about exploration and new developments. As the offshore infrastructure ages, it is important that operators invest heavily in preventative maintenance, if we are to safely and consistently deliver oil and gas.” Aleem Hosein, deputy chairman, Petrotrin, said workers need to be continuously educated about the value of foreign investment in the industry. “We must educate unions as to why multinationals are needed to invest in the sector. Many of them are still thinking in the 1970s when foreign companies were nationalised,” he said.

 

Packer gave “good news” about the fiscal regime. “Clearly, getting the right incentives in place is crucial if we are to turn around the declining oil production. On this score, there is good news to report. The fiscal incentives for onshore oil introduced in 2012 resulted in a significant return to drilling activity in 2011.