Perhaps there is no better way to describe Trinidad and Tobago’s presence in the ‘fete’ that is the oil and gas industry than by using the words of the country’s most famous soca singer; since it was born, the country has been a constant player in global energy markets. In fact, Trinidad and Tobago celebrated 100 years of commercial oil production in 2008, a feat achieved long before the country gained its independence from Great Britain in 1962. Trinidad and Tobago has been a presence in the world of hydrocarbons since its inception; indeed, it has not missed out yet.

To an outsider, life in Trinidad and Tobago may well seem like one never-ending fete; Trinbagonians enjoy ‘liming’ at any and every opportunity they get—‘liming’ is a British-inspired term of unclear origins today used to describe essentially any form of social gathering. In such a diverse country, opportunities to lime are never hard to come by. From the more family- and food-oriented festivals of Eid and Diwali to the official three-month Christmas season before the country’s world-famous Carnival, a good celebration is never too far away. As intrinsic to Trinidadian culture as celebrating is, so is its oil and gas sector.

Overview: Current Operations

Claims as to where the first successful oil well was drilled are disputed, with Philadelphia and Trinidad and Tobago vying for the honor. Regardless, the first successful oil well drilled in the country (and possibly the world) was in La Brea in 1857. Since then, the industry has come a long way, peaking at a total oil production of 240,000 barrels of oil per day (bopd) in 1978. The country’s offshore production is dominated by a few of the industry’s bigger players; BP, formerly Amoco, has seen Trinidad and Tobago become its biggest hub, while BG, BHP, EOG and Repsol all have significant offshore operations as well.

In tandem with these bigger players, Trinidad and Tobago’s fields have provided the ideal space for juniors to operate, with companies such as Canada’s Niko Resources being the largest landowners in the country. The most recent deepwater bidding round drew attention from an even wider array of locations including China, Azerbaijan, Israel and Saudi Arabia. UK-based Centrica Energy purchased PetroCanda’s Trinidadian assets in August of 2010 and has already seen the country become a promising prospect for future development.

From its peak production in 1978, Trinidad and Tobago’s 2011 average in crude oil production was just over 90,000 bopd and the energy sector’s contribution to Trinidad and Tobago’s energy sector was just under 45%, down from a high of 50% in 2006. While crude oil production has decreased significantly over the past few decades, Trinidad and Tobago’s daily natural gas production has nearly tripled, going from 1.5 bcf per day in 2001 to just over 4 bcf today, signaling a shift from an oil-based economy to a nat-

“They call me Mr Fete, since I born I never miss one yet.’ –Machel Montano

ural gas-based economy, a change which has been developing for quite some time now. With proven non-associated natural gas reserves at 13.4 tcf in comparison to a 3P total of just under 30 tcf in 2011, even with a downturn in production, Trinidad and Tobago’s gas reserves hold significant promise. Where oil was the mainstay of the country’s production for the better part of its history, today the natural gas-based sector is the fashionable commodity.

The country’s first, oldest, and now only refinery at Point-a-Pierre has been in operation since the 1930s and is today operated by the national oil company, Petroleum Co. of Trinidad and Tobago Ltd., more commonly known as Petrotrin. In the face of falling output, the Petrotrin refinery’s output has remained more or less stable in the last ten years; the government-owned company has traditionally imported crude oil for refining and further sales given its capacity of approximately 150,000 bpd, which is currently greater than the national output. Plans to engage in a Clean Fuels Program and increase the efficiency of the refinery and to explore bunkering opportunities at the Panama Canal reflect optimistic growth plans for Petrotrin and indeed signal a hopeful outlook for the industry.

“Houston’s Secret”

Trinidad and Tobago’s proximity to and close trade relationship with the U.S. has earned it the designation “Houston’s Secret.” Where in the earlier part of the 20th century, the country accounted for over 30% of Britain’s oil production, more recently Trinidad and Tobago’s chief business partner is the world’s chief consumer of energy, the U.S.. With the majority of its exports going to its northerly neighbor and the remainder going to a handful of Far Eastern and Caribbean countries, it is no surprise that Trinidad and Tobago had fallen somewhat below the global radar.

With a steady, high-demand market mere hours away, Trinidad and Tobago quickly became the Caribbean’s most prosperous nation with a GDP per capita of $26,000; around 40% of this GDP is provided by the hydrocarbons sector. Unlike its island neighbours, Trinidad and Tobago has not seen the need to develop a tourism industry and, in the face of consistent oil growth, has not taken advantage of its climate and fertile lands to maintain or revive its once-vibrant agricultural industry. The country’s infrastructure, though significantly better than most other Carribean Community (CARICOM) nations, seems to be lacking the organization and efficiency that one might argue a country with billions in annual oil and gas revenues should have. Like so many resource-rich developing nations, most of its other industries are only in their infancy in comparison to the energy sector.

Still, one hesitates to label Trinidad and Tobago as a victim of “Dutch Disease.” Although only 50 years old, it is one of the more stable oil and gas jurisdictions today and holds great potential for continued development. As Kamala Bhoolai, Energy Consultant to local law firm Mair and Company, puts it, Trinidad and Tobago’s investment environment is “attractive, because we have a well-established legal system, a democratic government, solid infrastructure, a highly educated workforce, a liberalized currency regime and a strategic location.” Ms Bhoolai has worked on structuring Production sharing contracts (PSCs) in Southern Africa and South Asia and finds the regulatory framework of Trindad and Tobago to be notably more favorable in comparison.

If the vibrant downstream petrochemicals industry is seen as a separate industry to the upstream oil and gas sector, then certainly Trinidad and Tobago’s economy is successfully diverse. Unfortunately, the two are so closely intertwined, this is a near impossible distinction to make. Even so, there is widespread agreement both within and outside the industry that other avenues of economic development need to be pursued. The question to ask about Trinidad and Tobago, then, is not whether it suffers from Dutch Disease but whether the nation has become too dependent on its energy sector and on the heels of its remarkable successes, too complacent in its continued development.

It is an exciting time to be examining Trinidad and Tobago’s oil and gas sector, as the country looks to diversifying its economy, both beyond the energy sector and within it. Diversification of the economy, however, must include a diversification within the energy sector. Trinity Exploration and Production CEO Joel Pemberton reminds us that the idea of “Trinidadian investment” does not—and should not—only mean creating the right environment for investment in the country. While Trinbagonians have long been known throughout the world for their expertise and knowledge in the industry, the abundance of successful service companies and models for industrial integration that exist in Trinidad and Tobago could potentially prove highly successful around the world.

The country ranks very low in the World Bank’s ‘Ease of Doing Business’ survey and despite its political stability, needs to make itself more competitive to more relevant markets than just North America. In a word, what is required is reinvention. Reinvention will be key to recovering from a downturn that has plagued the market for the past two years, it will be key to developing further what already exists in the country and attracting increased investment from abroad, and it will be key in ensuring Trinidad and Tobago’s place as a global—not just regional—hub for the oil and gas industry. In order to continue taking advantage of its significant remaining resources, Trinidad and Tobago needs to reinvent its energy sector, both from within and on the outside.