Trinidad & Tobago Oil & Gas Report Q2 2014 - New Market Report

From: Fast Market Research, Inc.
Published: Thu Mar 20 2014

We have modestly revised up our average hydrocarbon production growth forecasts for Trinidad & Tobago (T&T), from 0.7% year-on-year (y-o-y) over the next decade to 1.2% y-o-y for oil, and from 1.3% y-o-y to 1.4% y-o-y for natural gas. There are still significant risks, including the mounting technical difficulty and expense involved in the discovery and production of T&T's oil and gas, as well as a more competitive market. Indeed, these factors account for our still relatively tempered growth forecasts.

That said, increasingly aggressive steps by the government to incentivise hydrocarbon production, such as favourable fiscal and contractual terms for companies, seem to have begun luring investment back to T&T's oil and gas sector. We note that January - with the announcement of the 2013 onshore bidding results due as well as the closure of the 2013 deepwater licensing round - looks set to be a key month which could further solidify the trend of greater foreign interest or represent a sharp disappointment for the government.

Full Report Details at

The main trends and developments in the Trinidad & Tobago (T&T) oil and gas sector

* We will be closely watching the outcome of T&T's onshore and offshore licensing rounds, which we see as key signals indicating the level of foreign interest in the country's acreage and thus crucial to determining long-term production potential. The 2012 deepwater licensing round was declared a success, having attracted 12 bids for five of the six blocks on offer. Bidding companies included BG Group, Repsol, Centrica, BHP Billiton, Cairn, Kosmos and Elenito T&T. That said, January 2014 will be a key month for T&T. The results of the 2013 onshore round will be released, with preliminary reports suggesting that the government has received 11 bids for the three blocks. Further, the end of the month will see the deadline for the submission of bids for the 2013 deepwater round.
* Crude, natural gas liquids (NGL) and other liquids production declined significantly in recent years, falling from 178,236 barrels per day (b/d) in 2006 to 118,950b/d in 2012. This was primarily due to declining output from T&T's ageing oil fields, along with extensive maintenance and field disruptions. However, production is beginning to level off, and we are forecasting a modest increase in output over the coming decade. While the rapid depletion of mature fields, and the high level of costs associated with exploring T&T's deepwater acreage has long kept us cautious, we note that the government has taken increasingly aggressive steps to woo investment, increasing tax incentives and offering favourable licensing terms. As such, we are forecasting moderate production growth to around 126,860b/d in 2017 and 135,569b/d by 2023. Further, we note that at present there is arguably greater upside than downside risk.

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