Trinidad and Tobago’s Proposed Energy Alliance

By Riyad Insanally

News Americas, WASHINGTON, D.C., March 26. 2023: Last month, Trinidad and Tobago (T&T) Energy Minister Stuart Young proposed a Caribbean energy alliance involving Guyana, Suriname and, of course, his own country. In broad terms, he was offering T&T’s established capacity to process oil and gas from Guyana and Suriname, and T&T’s expertise to help the two relative newcomers build capacity to manage their offshore resources. While Guyana really is the new kid sitting on blocks of ever-increasing resources, at least in the Stabroek Block, it should be borne in mind that Suriname has been a small-scale oil producer since 1982, pumping around 15,000 barrels per day (bpd) from onshore wells. It consequently also has some experience and expertise to share.

Presumably, the Minister is offering T&T’s experience of 100-plus years in the oil industry not only in terms of his country’s successes but also with regard to mistakes made and pitfalls to be avoided. Details regarding the energy alliance proposal are however sketchy. The most we know is that, at the opening session of Guyana’s International Energy Conference on February 14, T&T Prime Minister Keith Rowley declared that T&T was “a viable option” for countries seeking to optimise the speedy monetisation of their hydrocarbon resources without incurring substantial capital expenditure. In this respect, he elaborated that T&T is offering its 10 ammonia plants, seven methanol plants and four LNG facilities to process natural gas from neighbouring countries, as well as proposing taking its 140,000-bpd oil refinery out of mothballs.

In a panel discussion, later that day, on Regional Collaboration, Mr Young revisited the proposal, with important contributions also being made by Robert Persaud, Foreign Secretary in Guyana’s Ministry of Foreign Affairs and Dr Dax Driver, CEO of T&T’s Energy Chamber, the representative private sector organisation for the country’s energy industry.

To add to his Prime Minister’s earlier announcement, Mr Young posited that Guyana, Suriname and T&T need to come together to provide energy security for the region, stressing that T&T has “the intellectual capacity and… the resources.” He placed particular emphasis on natural gas as “the energy fuel of the future”, arguing that the global demand for LNG, ammonia and fertilisers should drive regional collaboration among the three countries to develop their gas reserves.

Clearly, based on what the Prime Minister and Energy Minister had to say, the proposed alliance is of high economic importance to T&T. According to Inter-American Development Bank figures, T&T’s economy contracted every year between 2015 and 2021. Crude oil production has been declining steadily from 144,000 bpd in 2005 to just around 60,000 bpd in 2022.[i] While increasing global demand for natural gas in 2022 has been beneficial to the T&T economy, the country’s LNG sector is operating at 75% capacity, with one of its four liquefaction trains having to be shut down in 2021 due to a lack of natural gas. For this reason, T&T has welcomed the conditional US waiver of sanctions on Venezuela (for which it had long been lobbying), which would allow it to develop the Dragon Field in Venezuelan waters. For this reason, too, T&T would be keen to process natural gas from Guyana and Suriname.

Notwithstanding the obvious element of self-interest in the T&T proposal, regional cooperation to promote energy security among the three southern Caribbean producers of hydrocarbons makes a whole lot of sense. For Guyana, at least, there should be no need to reinvent the proverbial wheel, especially at this early stage of the development of its oil and gas resources. Making use of T&T’s existing capacity and facilities therefore has a certain logical appeal in the context of economies of scale, Guyana’s own lack of domestic technical capacity and the need to avoid white elephant projects. Even as more specific details regarding the proposed energy alliance are awaited, the precise modalities for collaboration and the delivery of natural gas would have to be thoroughly thought out and carefully negotiated.

During the aforementioned panel discussion, Dr Driver underlined Mr Young’s point that there is a lot of capacity in T&T that is available to the entire region, more especially Guyana, adding that regional collaboration can be and should be private sector driven. In this respect, he stated that the private sector – presumably the T&T private sector – could drive industry standards across the region, specifically in terms of safety, skills training, competence development and certification. He also opined that the CARICOM Single Market and Economy (CSME) could be used as the framework to facilitate intra-regional investment and business opportunities. This is all very reasonable.

For his part, Mr Persaud agreed that small size demands collaboration but made it clear that regional collaboration on energy security should naturally lead to collaboration on finding solutions to food insecurity. In other words, regional collaboration should go “beyond energy.” One hopes that the message, put very diplomatically, was not lost on his T&T colleagues. For it is no secret that there have been tensions between Guyanese and Trinbagonians over the newfound eagerness of T&T firms to do business in Guyana.

Moreover, Guyanese businesspeople have long been irritated by non-tariff barriers to trade in T&T, particularly in agricultural products, which continue to frustrate the implementation of the CSME and undermine all the rhetoric about regional collaboration and closer economic ties in CARICOM. Indeed, a case in point is the recent fuss in Georgetown regarding T&T’s failure, either through bureaucratic sloth or an absence of political will, to amend an archaic 1935 Act, which prevents the importation or even the trans-shipment of honey from Guyana to other parts of the region. This is a  breach of the Revised Treaty of Chaguaramas, which among other things lays the basis for the CSME, and in defiance of decisions of CARICOM’s Council for Trade and Economic Development (COTED).

For CARICOM, regional collaboration is not only central to the regional integration project, it is an absolute imperative. CARICOM’s energy security strategy is built around harnessing hydrocarbon resources to reduce import dependence, pursuing energy diversification and developing renewables. The idea that Guyana, Suriname and T&T could anchor energy security in the region is not new but, as yet, it has not been fleshed out. The T&T proposal could therefore very well be an important step in this direction, by combining the resources of Guyana, Suriname and T&T, and by leveraging the latter’s considerable experience, technical capacity and facilities.

As Dr Driver has pointed out, the CSME already provides something of a framework for the pursuit of deeper public and private sector partnerships in the region. Now that a formal alliance has been mooted, Mr Young should be encouraged to put some concrete proposals on the table. At the same time, his government would do well to build trust among all regional partners by taking a holistic approach to regional collaboration, especially by showing real commitment to implementing the provisions of the CSME.

EDITOR’S NOTE: Dr Riyad Insanally, CCH was a career diplomat for 31 years and last served as Guyana’s Ambassador to the United States of America and Permanent Representative to the Organization of American States, from September 2016 to June 2021. He is currently a Senior Fellow at the Caribbean Initiative of the Atlantic Council’s Adrienne Arsht Latin America Center and Senior Advisor for the Caribbean at the Transnational Strategy Group, both in Washington, DC, and a Fellow with the Caribbean Policy Consortium.