Episode Transcript
[00:00:01] Speaker A: The best insight, instant feedback, accountability the all new talk Radio Freedom 106.5 at this time. We welcome to our program. We haven't spoken to her in quite some time, but it's nice to have her with us here this morning.
Let's welcome to our show former Energy Minister Carolyn Sipasai Beach. And good morning to you and welcome to our program.
[00:00:27] Speaker B: It has been a long time.
[00:00:28] Speaker A: It has, it's been quite some time actually. But it's nice to have you with us here this morning. The discussions surrounding the topic that we're going to discuss have been heated, they've been controversial and quite frankly, there is the need for as much discussion on this as we can possibly have because it speaks directly to the country's economic future and what's going to happen with this drag and gas deal given some of the geopolitical developments that we've had where you have things that are totally out of our control but which can directly impact on this deal moving forward or everything else. Let me allow you to give us your summary, your opinion of all that has transpired. We're hearing pronouncements from our minister of Energy.
Apparently he doesn't seem to be concerned and some others as well, but there are some developments that other stakeholders are saying we need to pay attention to, if not necessarily be concerned. Let's, let's hear what you have to say about some of these recent developments regarding politics in the US and other ways and what's going on or what could possibly go on with the Dragon Gas deal.
[00:01:47] Speaker B: A special good morning again to your listeners and thank you for having me this morning. It's a pleasure being here. It has been quite some time since I was last here. I think I may have been on this program two weeks ago, probably with a different host and we did discuss some of these issues on that day. This was just subsequent, you know, based on, you know, the election results of the in the US you made a very important point. You started by talking about the geopolitics and we must remember, you know, Trinidad and Tobago, geopolitics is always out of our control. We always just have to be, we are just responding and we always have to have strategies. This is why I've always maintained that, you know, we have to have difference in on the last occasion I was here, I mentioned that I think one of the problems we do have is that we seem not to be diversifying our basket of eggs in terms of the sources of natural gas and we seem to be depending a whole lot on Venezuelan Gas. So you start in with Dragon Gas. We're talking about Coquina Mannequin, we're talking about Lora and Manatee. All of these are, you know, two across border fields. Dragonglass being over the border and across the border. And I want to make that very clear. That is A yes, a 30 year license granted by Trinidad and Tobago to develop. Unfortunately, all of them except Laura and Manatee. Dragon and Coquina Mannequin are both under what we call the OFAC license, meaning, you know, in simple terms, meaning that we have, you know, some permission from the US to move forward with developments in those on those two projects without being, you know, at the risk of what we call companies participating will not be at the risk of what we call secondary sanctions as a consequence of that. My problem with, well, I would say, let me start by saying my problem with all of this. If you look at the durations of those OFAC license, they've always been just two years.
I think the Dragon Gas may be expiring sometime in 2025. Coquina Mannequin was just renewed. So we keep getting these grants. You know, these licensing, like this licensing regime has just seemed to be for the, you know, very short term, you know, for two year durations. We are dependent on those licenses being renewed. And we have to understand the investment in these projects are way longer than that. They're 20, 30 years. Exploration and development in natural gas and oil always they are very long term projects. And this is why it is carefully negotiated. This is why when we talk about contracts, we're talking long term contracts, investors, when they invest this huge capital investments we're talking about. But it has to be, it is going to be for the long term.
Now having said that, my problem with it is that we have had a change in administration. We now have a U.S. government, you know, a Trump administration. I mean, it's a transition government right now, transition, but they operate in almost like a government right now. And the last time I was here, we were talking about Mr. Trump's policies. And that is Mr. Trump's policies when he started in his last term of office was put energy first. So America energy first. So they want to be. And they, I mean with the whole, the whole technological advance in hydro, horizontal drilling and fracking, you know, the US is now a major exporter of energy, including, you know, natural gas. So we know natural gas derive products such as lng. So we are. And they're looking to position themselves cells again. So we have to understand the geopolitics there. They want to be energy efficient, self reliant, they want to be, you know, a number one exporter. So there are several implications there for Trinidad and Tobago, more so that we're talking about an administration that is going to be extremely right wing. We now have Secretary Marco Rubio who has made no qualms and he has made his opinions very public as far back as 2019 when he said that I am not, we are, you know, Fernando has to be careful. He feels that there should be more sanctions against the U.S. so I'm sorry, against Venezuela. So you know, bearing that in mind and right now we really have no representation in Washington. I mean I hear the minister speaking to the issue that you know, to make sure that they secure these projects, meaning securing the extension or the renewal of these license, these OFAC license and they're trying to secure that both on the, on both sides of the aisle. They're saying they, you know, they're lobbying with Democrats and Republicans but I'm not sure. Do we have representation in Washington right now? I, I don't think so. So just bearing that in mind, you know, there is even, you know, a higher risk that you know, these OFAC license will not be renewed. No, I'm not trying to spread, you know, doom and gloom. I'm just trying to face the facts. We have to be prepared as a country. We cannot just be, you know, trying to play it by air. We don't run a country's business that way. And especially we're talking about energy which is, you know, the mainstay of, you know, it still contributes significantly to the GDP of this country and more importantly to the foreign exchange earnings. Our lack of foreign, you know, the shortage of foreign exchange right now has to do with, you know, the reduced revenues coming in, reduced foreign exchange revenues coming in from the energy sector. So we have to be mindful of this. And if you are unable, you are now talking about drag and gas and across the border field. There's even a greater geopolitical risk there compared to your cross border fields and that is at any point in time. We've seen it, we've seen it in Europe. I mean, you know, one country there is, if geopolitical tensions accelerate for some reason between Fernando Tobago and Venezuela, I'm not saying they will, but we always have to be mindful of the possibilities. They can always turn off on their side. So you know, I mean, you know, turn off the tap or turn off the valve and you know, these are issues I'm not sure that we are taking into consideration and therefore, if you look at where we are going, we are in a serious, yes, natural gas shortage. And we are not thinking, we are putting so much emphasis, you know, on Venezuelan gas. I have always maintained, you know, this is why sometimes it may just be better for the country to look at development in our own waters. And in so doing it's better that you give more tax incentives to encourage investments, you know, in our deep water blocks. So, you know, that's my take on the issue. Of course we also have to take into consideration Mr. Trump is going to be putting on tariffs on all products that have been exported. And we all of a lot of our petrochemicals go into the US which are all natural gas based and natural gas as a feedstock, methanol, ammonia, etc. We have to be mindful that if you add tariffs onto those products, plus bear in mind that if you are going to be energy reliant and you're going to be producing your own natural gas is a very, you know, and this is something that we have been talking about for years, since we were in government, since, you know, I was there in government, the whole fracking technology will allow a lot of those muck ball petrochemical complexes to be reactivated. Because you are now looking at the supply of natural gas and you're looking at it at a very competitive price. So in that regard, it's very likely that our products will face a lot of, you know, competitive, you know, they will be competitive and we would be looking at downward pressures on pricing of our products in those in the US market. And as a result of that, your net back pricing of your natural gas, bearing in mind, you know, and you know, I make this point all the time that our petrochemical, the petrochemical industry in Trinidad and Tobago, whereas the PNGC for natural gas, remember, it's not a fixed price. It varies based on the market price of that commodity. And therefore if it is that those prices, you know, there's a downward pressure on prices you will have downward, dissimilarly it will be reflected in the natural gas price that is paid to ngc. That is the contractual arrangement. So, you know, these are, these are issues I think that we have to bear in mind and therefore we need strategies and one of them is really diversifying the sources of our natural gas.
[00:11:07] Speaker A: What I find disheartening and I don't know if other people would see this or people might describe this as being unfair.
There is an attempt by the Minister of Energy and Others within the administration and their supporters to delegitimize and devalue any opinion that is opposed to their position.
And they seek to do it by painting people as unpatriotic. And throughout, well, you see them, they may want this to happen because they will make the government look good and they don't want the government look good and all. And all kinds of things that are insignificant to the discussion because of how far reaching the consequences are. And unfortunately we have a population that can't think for itself, the majority of them. And when they hear these things, they buy into it and the discussion gets convoluted. When as a nation, this is a big deal, this is a big problem that we're confronted with.
The insecurities that surround this entire drag and gas thing from the get go. The US giving you a license for two years when everybody industry know that's a waste of time because you can't bring this to fruition. You can't monetize this thing within two years. It takes a lot longer than that. So the U.S. probably were just testing the waters as well, throwing out a bone to keep people quiet. But the reliance that the government continues to place on this is worrisome, or it should be worrisome because as you've outlined and others have outlined, there does not seem to be a Plan B.
And the lack of a Plan B is a dangerous thing, especially when all our eggs seem to be put into this basket.
And yes, we heard recently that there is some expression of interest in the government doing something about giving licenses or whatever else, but it does not seem to be enough.
And even people with industry would know that it takes a long time for those things to actually come to fruition.
Where do you see us?
[00:13:21] Speaker B: I want to just comment on what you just said there because one of the issues that you are raising, which is very important is, you know, this whole, this healthy discussion that we need. You know, as a country we must move forward and understand that there is something called participatory governance.
Citizens being able to participate and contribute their ideas towards development. We are a nation that you have spent a lot of money on tertiary education. You have spent a lot of money through gate. So give people an opportunity to be able to contribute, of course, constructive criticism. You mentioned as well, you know, the dependence on these, on these two year license. I think I just want to add to that. It's not so much just the two year, it's a possibility. You know, there's a very high probability that it can be, it will not be renewed. And you can't base a project on that kind of, you know, or that kind of, you know, very that type of uncertainty, especially investments of this size. Now Amina, we are talking about the NGC participating in this. So this is taxpayers money as well. We're talking about in the Dragon gas NGC having 30% stake which means they have to contribute 30% for the of the capital cost for the development of drag and gas. Plus they will have to contribute 30 towards the pipeline that is going to be linked into, you know, to the Hibiscus platform, the shelf Hibiscus platform which is located in north coast marine area. Of course that's because you have a pipeline coming from that platform straight into Atlantic LNG so that we could reactivate Atlantic. Now I mean having said that, they are good ideas, they are good concepts. You know, this is an example of two countries, you know, being able to utilize, you know, to look at a hydrocarbon deposit that would have been otherwise uneconomically viable. It's not viable in Venezuelan waters, can't be produced, but it can be, you know, utilized by Trinidad and Tobago and Venzuela is able to derive the benefits from it, you know, through payments etc, their royalties and taxes, etc. And they are able to benefit from it. So the two countries benefit because it's much needed gas. But we have to always look at what is the geopolitical landscape and how can it negatively impact. And that has always been the issue with Venezuela. Allow me therefore to speak to this Laura Humanity field as well, because that was one that we worked on. I mean I went to Venezuela in 2010 just after coming into government. I don't if you recall and signed that Lauren Manatee agreement. It was a unitization agreement for that field specific. There was a framework agreement before that in 2007 and then we had the 2010 agreement to be able to. And it's one of the reasons why the Laura Humanity accelerated. I was very concerned and I was. I still do not understand to this day why is it that that field was de unitized.
If it is, you are able to obtain an OFAC license for the coquina mannequin field which is across border field. So a separate and distinguishing between cross border and across the border. Right, I understand the Dragon Gas, yes. But you were able to get an OFAC license for cooking a mannequin which you are renewing again because that was one that was just renewed here I think in May of this year.
Why is it that you did not go for a Fact license for lower humanity. Why did we move forward? And you had to spend so much time and effort de unitizing that field after it was unitized. I mean, I don't even want to get into the technical issues with that field in terms of the de unitization process that is taking taken place for that field. But now I hear the minister, to my surprise, because when we unitize, we take. We go through all of these efforts between two governments to unitize a field because of the benefits to be derived from a common reservoir. You know, a hydrocarbon deposit that is straddling a maritime delimitation line. You know, the boundary, the maritime boundary. There are reasons why we try to unitize it. Because if you try to drill on one side, you know, there are issues that arise and you could do more damage and harm. You may not be able to maximize the recovery of the hydrocarbons in that deposit in that reservoir. So there are real benefits in terms of unitizing of fuel. And this is why countries all over the world go into unitization projects where there is a hydrocarbon dependent deposit straddling a. A boundary. Right. It's trans boundary. I didn't understand why all the effort to de unitize this now in 2019, because of the US sanctions. Why didn't you go for an OPAC license no to here today?
And you know, you started this whole project. You, you de unitize. We started to produce because you know, you need the gas. I understand that. I appreciate that, that we need the gas. 2.7 tcf. That is on our side, Humanities side. But you're now moving to go after Lauren. So don't you have. If you're going to go after Lauren, which is on the Venezuelan side, don't you need a license as well? How are you going to do that?
So this is my other problem. So okay, there may be an agreement. When we de unitize, you only extract as much as 2.7. I see. I think recently I noted Shell was moving forward very quickly. I think they submitted what we call the environmental impact assessment for that, the Manatee side. But if you're going to go after Lauren, why de unitize the field economically? You now have reduced benefits from a de unitized field. So if you're going to go after. Why are you going after Manatee separately from Lauren? It just does not make sense. Are we really trying in a time when we are looking at declining hydrocarbon resources, especially natural gas, why are we not looking at strategies to maximize the recovery as opposed to just going along? Why are we not looking at optimized approaches. If we are so concerned about this very critical resource that is depleting at a very rapid pace and which we need to sustain our petrochemical sector, the POINT Visas and Atlantic lng. And you know, I've always maintained, even when many years ago I used to be on this program, I've always maintained the petrochemical sector being more important. Trinidad and Tobago, you know. You know, because if you look at the many tangible and intangible benefits, you know, to the country in terms of not only terms of foreign exchange, the knock on effect of the foreign exchange earnings, you know, the employment generation, you know, the stimulation of the service industry, etc. Etc. There and even technology transfer and so on. So I didn't understand this. So it. The government strategy in terms of how they're dealing with these, you know, with this particular issue and responding to the geopolitics is not clear to me. Their strategy is not clear. And I would imagine that if, yes, you went after the OFAC license for cooking a mannequin, which by the way that entire thing is about what one tcm.
But you're talking now about Laura and Malate. You went with a de unitized and with a unitized approach you would have been able to utilize some of that, which is in my time. I remember very clearly when we negotiated, we negotiated that we would have been able to set up service industries on this side of the border on the southern, southern, you know, on the southern part of Trinidad and Tobago, the southern coastline. And we would have been able to utilize because of the, you know, the technical problems that Venezuela will face. And getting gas into the Venezuelan mainland we would normally use, we could, you know, be negotiated using the 7.3 TCF on the lower end side that will feed Atlantic LNG even if it meant through a tolling facility to keep the plant operating. So these, that was the whole, you know, the whole strategy behind the LoRA to understand to day, you know, what is really, I am not seeing a very clear strategy and we can't be ad hoc when we are talking about the, about, about the energy sector. And I find we have a level of arbitrariness taking place instead of clear defined long term plans. And savage, allow me to say this many, many, many years ago, probably on this forum, probably before your time. I can't remember if you were here. This would have been around 2002, 2003, 4 when you know, I was in the Senate as an opposition senator and you know, there was fierce debate about Atlantic LNG train 4 because of the consumption. That was a very huge train that was coming. Yes, a lot of revenues to the country for an exchange, but the risk of depleting the rapid pace at which our reserves would have been depleted. Many people remember me talking about the, you know, the reserve to, you know, the 20 year supplier. Let me just, you know, the production to what we call, you know, the reserve to production ratio, which tells us, when we calculate that reserve to production ratio, we were coming up with just 10 years of gas. And I constantly warned, I constantly warned that, you know, I'm not here saying because I said it, but you know, we constantly warned, warned, warned, won many warnings that if you go with this project, nobody's against the project. We were very clear on that. However, going with a project like that means that you were renewing a number of license with the multinational, the various multinational companies to supply gas to that Atlantic LNG train for. We were saying in that negotiation you must obtain ironclad agreements for what we call minimum work programs to continue exploration in other fields. We must get those commitments, those ironclad commitments so we would not be in the situation that we are in today. We predicted that there will be shortages of gas. We predicted curtailments when I was there and you know, people thought I was preaching, you know, gloom and doom again, but we were trying to face reality and you know, we were saying this is what this country needs to do to protect its interest, its natural, its national interest, its national patrimony. This is how we protect it, by ensuring that we achieve these measures in, you know, our negotiations so that we don't face it today. Yeah, I mean, what was that 10 years ago? Where are we today?
2002, this is what, 20, 24? Where are we today?
[00:24:26] Speaker A: What you're saying to us should make an already worrisome situation more so.
[00:24:34] Speaker B: The point is, the point I'm making here, Satish, is not, I'll be trying to say who did what. And I want to be very careful about, you know, you know, I'm not about that. I'm saying that for us to come now and wake up one morning and say, hey, you know, the way we carry order. But, oh, we are so surprised by all of this. Oh, this happened, you know, oh my gosh, we didn't know this curtailment would take place. These shortages is very unfair to the people of this country. When we suppose we ought to have been able to predict and foresee this was so foreseeable, why today? And this is what we were supposed to be planning for. That's what government's supposed to be doing. And I make that generally across the board for all governments that we are supposed to be able to plan and strategy and implement strategies for long term, for long term protection of the, of the national revenues of this country. And that's my problem. You can't come today and say, hey, we didn't know this and hey, we need to go to preventative and yes, we urgently need that gas. And that's why we have to de. Unitize. You know, this was going to happen, you know that the energy sector, the global energy sector was going to go through a major reform which has been talked about today. We predicted that since then, in 2010, we predicted that the world energy sector is going to be changing. There's going to be structural changes in the energy sector mainly because of the whole issue of the climate change goals and so on, by the way, which Mr. Trump has already signaled he's going to withdraw from, which is going to make it even easier for him if he withdraws from those multilateral agreements such as the Paris Agreement. So it's going to make his, the products of the US the oil and natural gas based products, even more competitive in the world market because he's not going to be, that regime is not going to be adhering to climate change codes. So I just wanted to make that.
[00:26:32] Speaker A: Point, sorry, that, no, I mean the explanation is necessary for the listener to understand fully what's really going on and where we are because we are not in a good place. And anybody who tells you that we're in a good place playing smart with stupidness because the writing has been on the wall for a long period of time. It just seems as though as a nation we've not done some of the things that we probably needed to do. And now when it's this close to the crunch, you're running around like a head. Let's check in, trying to get the job done.
We're almost out of time for the interview because you have some messages to take us up to the top. How do you see this situation with our energy unfolding if things do not change for the better?
[00:27:20] Speaker B: I mean, I like to think of them, I like to think of scenarios and you know, we, I think we want to have to look at prior to rising as well because, you know, you have to take into consideration that if the OFAC license are not renewed, which is, you know, even more possible, the probability increases now with this new administration, this new U.S. administration and you know, given As I said, you know, Mr. Trump and what he has said, what his objectives are in terms of putting energy first.
And now you're talking about a Secretary Rubio who has also signaled that sanctions should be, there should be even grievous sanctions. I think that one thing that we have to do is get those. We have to start proving up. We will go through a difficult time when there will be a shortage.
If the scenario plays out, that we don't get over license renewed, if they are renewed, they're still, they're still very vulnerable. And even when that gas starts coming on, I mean, there's this projection that we will get Manatee gas. So we only have that Manatee gas to depend on. And I mean, they're predicting when, in what, about two years that, that, you know, first gas from that field. My problem is with natural gas, unlike oil, you have natural declines right away. We've always said that the way natural gas graph we, you know, we are able to show that as soon as you start a production that fuel starts producing. You need to have another field coming on to maintain and sustain that level of production because the production starts declining. That's how natural gas, you know, that's how natural gas fields operate. So I think it is, it is very important for us to understand that it also means. So I, I'm saying what I think we should be doing is getting aggressively involved, getting our bid rounds, you know, taking an aggressive approach to bid rounds, which, you know, I've always maintained. And allow me to say this, I saw during the 1995-2000 period under Mr. Pandey when at that point in time, you know, there were aggressive bid rounds. Two big rounds are here.
The landscape of the energy sector in this country changed drastically in that we had so many new players. You know, I mean, I had the opportunity of participating. I participated in LNG train 1 negotiations and 213. And I remember seeing the landscape change because, you know, the country went out and they marketed and they carried these bid runs, whatever it comes. And it's the same thing I maintained when I was in the Senate in the period when we were in opposition. Then subsequent to that, when I came in as a Minister of Energy, I indicated and signaled that we will be running two bid rounds because I saw the success of that two bid rounds a year. The very, one of the very bid rounds is the Deepwater bid round. Today everybody's talking about, you know, you know, the fines, the cancer field and all of that. Do you know that came out of that Bedroom that the point I'm making that bit wrong took place and closed in January. It started, we opened it in September of 2010 and it was closed in January 2011. The results were out. Now with that, look at it, 2011 to 2024, you know about the sequel scans that is to again explain the long term nature of exploration and development of hydrocarbon resources in this country. So we have to take that time frame into consideration. So having said that, I have no, I've always been advocating for getting two bid rounds a year. I mean during the partnership government, after those two bid rounds, we did not maintain that as well. I noticed recently this government running a bid run every year. So it's a good start. They have just done three bid runs, one per year. But they need to get to about two bid runs per year. That's my recommendation to get this board rolling. In the meantime, we have to be honest with the population. We have to know where we stand. We cannot be, you know, fooling the population anymore with respect to our foreign exchange earnings. We have to take some steps to conserve foreign exchange earnings. The foreign exchange in this country because it's going to be required for critical and essential. Critical supplies. Essential supplies, I would imagine, medicine, you know, pharmaceuticals, etc. So these are issues that we have to address as a nation and the government has to appreciate that. The other issues that we have to address is, you know, going forward is how are we going to look at new revenue streams, you know, looking at new sectors of the economy. I mean, let's face it, and I said this on the last time I was here on this program, Mr. Trump was able to win that election in the US based on the economy. Jobs, jobs, jobs, jobs. Our young people in this country need jobs. We need a change, a radical change in strategy going forward to chart a new course for Trinidad and to be. Because we seem to be slipping behind. And let me just say this, there are some fine, there are some, what we call a lot of undiscovered potential for hydro, undiscovered hydrocarbon potential in the region. Fernandebago is going to be slipping far and far behind. When you look at Suriname, Guyana and even, you know, to the north, northern part of the Caribbean of the Caribbean Sea, there is a vast amount of potential. So, so we are not going to be energy leaders anymore in the region. And we have to take that into consideration. We have to be able to find new ways. Today we have an educated workforce. We have a lot of young people who have co graduated with tertiary education and modern skill sets. We need modern 21st century jobs. We need to start creating them now.
[00:33:24] Speaker A: That's. We're gonna have to leave it. We definitely need a part two to this because there's a lot more that we need to discuss. But as we're gonna have to leave it now, I want to thank you for being with us here this morning and giving us your opinion, your insight into some of these very, very important matters. My pleasure.
[00:33:38] Speaker B: As always, thank you very much. And especially good morning to all of you. And God bless your listeners and your status.
[00:33:45] Speaker A: That's how we drop the catches on our interview with former Energy Minister Carolyn Siposak Bachan.
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