Now Available: Trinidad & Tobago Oil & Gas Report Q1 2014

From: Fast Market Research, Inc.
Published: Mon Dec 02 2013

Despite efforts by the government of Trinidad and Tobago (T&T) to bolster hydrocarbon production, we take a cautious long-term view, forecasting that over the coming decade oil output will expand by an average of only 0.7% year-on-year (y-o-y) while natural gas production will grow by 1.3% y-o-y. Indeed, while improved fiscal and contractual incentives are likely to draw some international oil companies, the mounting technical difficulty of discovering and producing T&T's hydrocarbons, combined with an increasingly competitive market is likely to temper production growth.

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

* T&T launched its 2013 deepwater bid round in August, with the submission deadline on January 2014. This round is likely to attract interest from international oil companies (IOCs), given the back of the success of the last bidding round.
* Crude oil production declined significantly over the past decade, falling from 162,300 barrels per day (b/ d) in 2002 to 119,000b/d in 2012. This was primarily due to declining output from T&T's ageing oil fields, along with extensive maintenance and field disruptions. That said, production is beginning to level off, and we are forecasting a modest increase in output over the coming decade. Namely, we expect production of crude oil, natural gas liquids (NGLs) and other liquids will be around 125,600b/d in 2017 and 129,800b/d by 2022. We note though, that at present there is arguably greater upside than downside risk.
* The government of T&T has declared the 2012 deepwater licensing round a success. The round 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. Each of the blocks lies in water depths of between 1,500m and 2,000m. In late January 2013, the government also stated it was interested in accepting bids for onshore oil blocks in an effort to boost production. Preliminary information indicates at least three blocks will to be opened up for auction, representing the first onshore bidding round to be held since the late 1990s.
* Overall domestic gas demand in 2012 was an estimated 23.4bn cubic metres (bcm). Development of gas-based industries is a priority for T&T's government, which aims to maximise the use of its gas reserves to create value-added products for export. The construction of fertiliser, aluminium and petrochemicals facilities should see the country's demand for gas grow to 27.6bcm in 2017. The upward trajectory of gas demand should continue, reaching 32.7bcm by 2022 if the development of these gas-intensive industries continue.

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