Energy Chamber supports Govt’s renegotiation of contracts plan

The Energy Chamber of T&T says it is in full support of the Government’s position that citizens must benefit from the wealth which comes from the energy sector. However, it says the challenge for any government in a resource-rich country is to put the legislation, systems, policies, procedures and contractual provisions in place to ensure this takes place.

In a statement yesterday, the Energy Chamber said, “To create value from its natural resources, governments often need to attract very significant levels of investment from companies who possess the capital, the right technical know-how and the experience to safely and effectively monetize these resources.

“As the Prime Minister stated, this involves creating a stable partnership between the State and the oil and gas companies; something which T&T has done well over many decades. T&T has been very successful in attracting investment from international companies which have the highest standards in terms of protecting the health and safety of employees and contractors, communities and the environment.”

At Wednesday’s Spotlight on Energy conference, Prime Minister Dr Keith Rowley said the time had come for the contracts of multi-nationals to be re-negotiated. He had also said T&T had given incentives to extent that it is now in a loss making financial position and this cannot happen any longer, adding T&T’s revenue from energy had decreased from $20 billion to $1 billion.

Commenting on this, the Energy Chamber said, “Given the current revenue situation facing the country, it is reasonable for the Government to want to revisit some of the contractual arrangements in the sector, where there is an opportunity to receive higher economic rents.

“In the Spotlight on Energy hosted by the Ministry of Energy and Energy Industries, the Government specifically cited the marketing agreements for LNG. The fact that the marketing contracts for LNG from Train 1 come to an end this year provides the opportunity to renegotiate those contracts to ensure that more value flows back to T&T.”

On the issue of the Government saying it would like to revisit the marketing arrangement for LNG processed through Trains 2, 3 and 4, the Chamber said it “recognises the rights of parties to respectfully revisit contracts or regulations when conditions change.”

“In any renegotiations, the Government must be mindful of our well-deserved reputation as a jurisdiction that fully respects commercial contracts,” the Chamber said.

“We must ensure that this reputation is preserved or even strengthened in this process. n this regard, we were pleased by the relevant statements made during the Prime Minister’s closing remarks which suggest that he is so minded.”

Regarding Government’s commitment on local content, the Chamber said it welcomed the renewed focus of the Government on local content.

“The Energy Chamber has championed increased local content for many years and we hope that the renewed focus on this issue by the Ministry of Energy will be sustained and will move beyond a statement of intent to definitive actions that will assist value retention in country.”