The Monetization of Natural Gas Reserves in Trinidad and Tobago Session 3 II LAC Oil and Gas Seminar July 25, 2012 Montevideo, Uruguay

Transcription

1 The Monetization of Natural Gas Reserves in Trinidad and Tobago Session 3 II LAC Oil and Gas Seminar July 25, 2012 Montevideo, Uruguay

2 Trinidad and Tobago Strategic Location

3 Country Facts THE GOVERNMENT OF THE Official Name Location Area Population Language Currency Economic Activity Republic of Trinidad and Tobago 11 0 N, 61 0 W 5,128 sq. km (1,980 sq. miles) 1.3 million English TT Dollar (US$1 = TT$6.44) Energy, Manufacturing, Tourism Political System Democratic Republic

4 Key Economic Indicators THE GOVERNMENT OF THE GDP GDP per capita US$27.1 billion US$22,100 Real GDP growth 2.1% Inflation 11.3% Unemployment 6.4% Net Foreign Reserves Export Imports US$9.66 billion US$12.06 billion US$8.23 billion Source: Central Bank of Trinidad and Tobago

5 THE Energy GOVERNMENT OF THE Sector Contribution Share of GDP, Energy Sector (2011) 43.5 % (est.) Share of Government Revenues, Energy Revenue (2011) Share of Government Revenues, Oil & Gas Exploration and Production (2009/2010) 52.3 % 43.9 % Share of Merchandise Export Receipts, Energy Sector (2010) 83.5 % Total Revenue (2011) US$ 6.9 bn (provisional) Energy Revenue (2011) US$ 2.8 bn (revised) Source: Central Bank of Trinidad and Tobago (2010 Annual Economic Survey)

6 Energy Sector Key Resources THE GOVERNMENT OF THE Crude Oil Production 100,000 bpd Oil Refining Throughput 127,000 bpd Natural Gas Production LNG Production NGL Production (capacity) 3P Gas Reserves(as of Jan 1 st, 2011) 3P Oil Reserves(as of Dec 2007) 4.3 Bcf/d 15.3 Mn tonnes per annum 70,000 bpd tcf 570 million bbls

7 THE GOVERNMENT OF THE (MBOED) 1,200 Projected 1,000 ALNG IV ALNG III Natural Gas used to produce Power and Ammonia Pt. Lisas Construction Begins ALNG II ALNG I 200 First Oil Refinery Established 0 OIL GAS

8 LEGISLATIVE FRAMEWORK

9 Legislative Framework Laws of Trinidad and Tobago Petroleum Act Petroleum Regulations Exploration and Production (E&P) Licences Production Sharing Contracts (PSC)

10 Objectives of Countries adopting E&P Licences Extract wealth from exploration and production activities- Royalty/Tax System Influenced by type of legislative framework Indicates ownership of natural resources

11 Objectives unique to PSC Assert greater control over natural resources Retain the name of the State entity the right to exercise the mining right and ownership of all petroleum Retain production in kind for use in the domestic market or for trading abroad Assure a more predictable and steady source of income Gain greater role in decision making and a more active participation in operations

12 FISCAL FRAMEWORK

13 Petroleum Taxes Oil producing companies pay the following taxes : Supplemental Petroleum Tax (SPT) Petroleum Profits Tax (PPT) Withholding Tax Unemployment Levy Green Fund Levy

14 Tax Revenue The Taxes under the Petroleum Taxes Act are applicable to persons engaged in: - production business - refining business

15 Other Revenues GORTT receives other revenues from the petroleum sector which are paid to the Ministry of Energy and Energy Based Industries (MEEI). These are: Royalty Signature Bonus Production Levy Petroleum Impost Production Bonuses Government s share in PSCs

16 Major Fiscal Elements of Licence/Contract Financial Obligations Production Revenue Cost Control Cost Recovery Ring Fencing

17 Financial Obligations PSC Signature Bonus Annual Charges Research and Development Contribution Scholarships/Training Contribution Administrative Charges Acreage Rental Technical Assistance/Equipment Bonus Production Bonus E&P Signature Bonus Annual Charges Research and Development Contribution Scholarships/Training Contribution Administrative Charges Acreage Rental Technical Assistance/Equipment Bonus Production Bonus

18 OIL & GAS The T&T Energy Value Chain THE GOVERNMENT OF THE Capital Build Projects Upstream (Exploration and Production) Downstream Trading Platforms Refineries Primary Petrochemicals (Ammonia & Methanol) Downstream Petrochemicals (Exploration) Seismic, Geological, & Drilling Operators (Develop Field) and (Produce) Wells & Facilities (Decommission) Wells & Facilities Storage Facilities Ammonia & Methanol Plants Refineries Melamine, UAN, Polyolefin Plastics & Speciality Chemicals Retail Sites / Stations End Users Service Providers CARIDOC Indirect Support Regulatory Agencies:

19 T&T Natural Gas Value Chain THE GOVERNMENT OF THE

20 Pt Lisas Atlantic LNG

21 Point Lisas Industrial Estate

22 THE Evolution GOVERNMENT OF THE of Natural Gas Industry 1980 POWER GENERATION 20% 1992 IRON & STEEL MANUFACTURE 3% Other 10% POWER GENERATION 15% FUEL FOR NON- OIL CONSUMERS 37% OIL OPERATIONS 30% AMMONIA MANUFACTURE 13% OIL OPERATIONS 42% AMMONIA MANUFACTURE 25% 0.3 bcf/d 2001 Other 4% POWER GENERATION 13% 0.9 bcf/d METHANOL MANUFACTURE 5% LIQUEFIED NATURAL GAS (LNG) 30% AMMONIA MANUFACTURE 26% 1.5 bcf/d IRON & STEEL MANUFACTURE 6% REFINERY 2% METHANOL MANUFACTURE 19%

23 REPUBLIC Natural OF TRINIDAD AND Gas TOBAGO Utilization by Sector Natural Gas-Liquids Processing Facility 4 Liquefied Natural Gas Trains 1 Crude Oil Refinery 10 Ammonia Plants 1 Urea Plant 7 Methanol Plants 4 Iron and Steel Mills Liquefied Natural Gas (LNG) 58% Other 3% Methanol Manufacture 14% Power Generation 7% Ammonia Manufacture 15% 6 Power Generation Sites 1 A-U-M Complex Iron & Steel Manufacture 3% 4.3 bcf/d

24 MT Global Position - Ammonia THE GOVERNMENT OF THE #1 in Export from a single site #1 Exporter to the US 10 Plants (5.8m MTPA) Yara Trinidad Ammonia Production and Export PCS Nitrogen Production Export PLNL

25 Ammonia Export Destinations THE GOVERNMENT OF THE USA 68% Belgium 2% Mexico 10% Cuba 2% Brazil 11% Morroco 2% other 2% France 1% Turkey 1% Korea 1%

26 MT Global Position - Methanol THE GOVERNMENT OF THE #1 in Export from a single site Atlas & Titan Methanol #1 Exporter to the US 7 Plants (6.5m MTPA) Methanol Production and Export Production Export MHTL Largest Methanol Complex in the World at a single site

27 Methanol Export Destinations THE GOVERNMENT OF THE China 5% Spain 3% USA 57% Canada 10% France 3% United Kingdom 5% Italy 2% Mexico 4% The Netherlands 8% Other 1% Korea 1% Portugal 1%

28 Million Cubic Feet Global Position - LNG THE GOVERNMENT OF THE #1 Exporter to North America #1 Exporter to the US #7 Exporter in the World 4 LNG Trains (15.3 MTPA) U.S. Liquefied Natural Gas Imports Imports From Trinidad Total Imports

29 LNG Export Destinations THE GOVERNMENT OF THE USA 27% Argentina 7% Brazil 5% Canada 7% Chile 4% Dominican Republic 5% China 1% UK 8% Turkey 1% Taiwan 2% Spain 17% Puerto Rico 3% Portugal 1% Korea 4% Kuwait 1% India 3% Italy 2% FOB 1% France 1% Greece 0%

30 ALNG Trains I-IV

31 Fabrication Yard Cost US$12.7M Completed in Dec. 2004

32 Future Developments: Midstream & THE GOVERNMENT OF THE Downstream Gas Based Projects LNG Expansion Floating LNG, Midscale LNG, ALNG Debottlenecking, Train X Downstream Ammonia Complex AUM II - Urea, Melamine, Ammonium Sulphate, MUF CNG Expansion Expanded use in domestic transportation sector Export to regional destinations Pipeline Interconnects Caribbean Gas Pipeline (Barbados, Guadeloupe, Martinique) Venezuela Gas to Olefins Complex Polypropylene, Polyethylene, Plastics Gas to Petrochemical Complex Acetic Acid, Pharmaceuticals, Specialty Chemicals, Textiles Glass Manufacture High Tech Components, Solar Panels

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34 Key Criteria for Evaluating Gas Based Projects THE GOVERNMENT OF THE Potential for Value Creation and Value Chain Participation Project implementation schedule and natural gas requirements Energy Efficiency, Carbon Profile and Opportunities for Integration Local Content Projection during construction and operation of the plant Environmental and Social Impacts Capex, Opex and other Financing Requirements Extent of variation required on key contract terms for Gas, Utilities and Estate and Port use. Additional benefits from Corporate Social Responsibility (CSR) programs

35 Future THE GOVERNMENT OF Developments: THE Upstream Activities

36 T&T s Success Factors THE GOVERNMENT OF THE 1. Strategic Location 2. Stable Democracy 3. Settled Legal System 4. Competitive Gas Price 5. Attractive Fiscal Regime 6. Transparent Decisions 7. Liberalized Currency 8. Skilled Workforce 9. Trade Liberalization 10. Strategic Alliances

37 THANK YOU Timmy Baksh Tel:

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39 STATE-OWNED COMPANIES

40 The National Gas Company of Trinidad and Tobago Limited (NGC) BACKGROUND: The National Gas Company was established in 1975 and plays a key role in the development of the natural gas based energy sector. CORE BUSINESS Gas Transmissions and Distribution Gas Purchase SALE AND UTILISATION OF NATURAL GAS CORPORATE FINANCIAL PERFORMANCE NGC has always made a profit since its establishment. (32 years). Investment Quality Ratings BBB+ Standard and Poors A 3 Moody s AAA CariCRICS

41 The National Energy Corporation BACKGROUND: Initially NEC was a task force set up in Incorporated by the Government in CORE BUSINESS To develop and promote the orderly management and utilization of hydrocarbon resources. Own and operate marine and other infrastructure to facilitate the import and export requirements of Petrochemical and metal plants. Development and Management of Marine Assets at Point Lisas and the La Brea Industrial Estate. In February 2004 Government expanded NEC s mandate to include: The promotion of new energy based industries and the provision of infrastructure to support these developments.

42 PETROTRIN BACKGROUND: Petrotrin is the only fully integrated oil company in Trinidad and Tobago involved in exploration and production on-shore and off-shore, refining, marketing and storage. PERFORMANCE: Recurrent expenditure is increasing due to increase in wages owing to a large workforce. Materials and contract costs are increasing due to inflation. Contribution to Government s revenue is proportional to the Company s net income and averages approximately 60% for the period The value of assets are also increasing due to improvement in working capital and sound debt management. Oil and gas production profile increased between Overall, land and Galeota production declined, but Joint Venture production increased.

43 Crude Oil Refining One 160,000 bpd capacity refinery Located at Pointe-a-Pierre, Trinidad Operated by state owned Petroleum Company of Trinidad and Tobago Limited (Petrotrin) 2010 Statistics Millions of barrels Throughput Local crude Imported crude 26.1 Production 44.1 Local Sales 10.3 Exports 35.0

44 Thousands of Barrels THE GOVERNMENT OF THE Production of LPG, Diesel, Gasoline and Bitumen Petrotrin Refinery to 2011 Sep 14,000 12,000 10,000 8,000 6,000 LPG Diesel Gasoline Bitumen 4,000 2, to Sep

45 Thousands of Barrels THE GOVERNMENT OF THE Exports of LPG, Diesel, Gasoline and Bitumen Petrotrin Refinery to 2011 Sep 10,000 9,000 8,000 7,000 6,000 5,000 4,000 LPG Diesel Gasoline Bitumen 3,000 2,000 1, to Sep

46 Petrotrin Refinery Sales Volumes by Channel (Oct Sep 2010) Bunkers 2% Local 23% International 28% Extra-Regional 20% Regional 27%

47 Trinidad & Tobago National Petroleum Marketing Company Ltd BACKGROUND: Established in 1972 when service stations were required from BP, ESSO, SHELL and TEXACO. The Trinidad & Tobago National Petroleum Marketing Company Limited is the most diversified petroleum marketing company in the English-speaking Caribbean. CORE BUSINESS NP markets: Petroleum fuels Lubricating Oils and Greases Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG) Bituminous Products and Automotive Specialty Products NP possesses the largest service station network in Trinidad and Tobago; from its Blending Plants come Lubricating Oils, Greases, Brake Fluid and Radiator Coolants. They also deliver Marine bunkering and Aviation fuel at facilities in both Trinidad and Tobago and in Dominica

48 Lake Asphalt of Trinidad and Tobago (1978) Limited BACKGROUND Lake Asphalt is engaged in the mining, processing and marketing of Trinidad Lake Asphalt or Dried Asphalt, which is extracted from the Pitch Lake in La Brea, Trinidad. CORE BUSINESS Mining, processing and distribution of asphalt and asphalt products in the local, regional and international markets. In addition, the Company manufactures and markets Cationic Bitumen Emulsions and a range of industrial coatings and paints marketed under the Brand name LASCO

49 Trinidad Lake Asphalt Natural Pitch Lake Located at La Brea, Trinidad Operated by state owned Lake Asphalt of Trinidad and Tobago (1978) Limited (LATT) Mining, Processing and Exporting of Asphalt Products Manufactures and Markets Cationic Bitumen Emulsions

50 Metric Tonnes THE GOVERNMENT OF THE Natural Asphalt Extracted by Lake Asphalt of Trinidad and Tobago (LATT) 30,000 25,000 20,000 15,000 10,000 5,

51 Trinidad & Tobago Electricity Commission BACKGROUND T&T.E.C. is the sole electric utility in the twin-island Republic and is responsible for the design, construction, operation and maintenance of the country's electrical transmission and distribution network. OVERVIEW OF GENERATING CAPACITY Approximately 1600 MW of capacity 260 MW Steam 1131 MW Gas Turbine 196 MW Combined Cycle 21 MW Diesel (Tobago) Transmission and Distribution 310 km of 132 kv Lines km of 66 kv Lines km of 33 kv Lines 6,280.0 km of 12 kv Lines

52 Global Impacts THE GOVERNMENT OF THE Global Economic Recovery from 2008 Recession Higher Prices Increased Demand Threat of a Double Dip Recession in 2011 Lower Prices Reduced Demand Seasonal sales cycle (summer/winter) Geopolitical Influences

53 Pricing 300 Propane Butane Natural Gasoline

54 Global Developments beyond 2011 Higher Growth Rate in Emerging and Developing Economies Seasonal Sales cycle Increased supply of LPG (Project Developments) Non Conventional Gas Boom (Shale Gas) Greater Influence of Environmental Regulations on NGL Specifications Influence of China and its Investments on World Fiscal Economies (Europe/Africa/Latin America)

55 Product Shipped (Millions of Barrels) Number of Shipments THE GOVERNMENT OF THE Shipments Volumes Diverted to local supply Volume of Product Shipped Number of Shipments Year 275 Average Loading Time is 26.5hrs

56 Barrels THE GOVERNMENT OF THE Local LPG Distribution Volume of Product Delivered April May June July August Volume of Product Delivered