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Speaker:The Honourable Basdeo Panday, Prime Minister of the Republic of Trinidad and Tobago
Date: February 11, 2000
Occasion: Statement on the expansion of the Atlantic LNG's operations in Trinidad and Tobago in the House of Representatives
Mr. Speaker:
With your leave Sir, before I move to the matter on which I rise to speak, I wish to
acknowledge, with deep sadness, the passing of a great Trinidadian, Aldwyn Roberts,
Lord Kitchener. We are all saddened at his passing and we share the grief of Lord
Kitchener's loved ones. We are, however, comforted by the knowledge that his
towering talent will ever be with us in the music created by this outstanding son of
the soil. I have proposed of Lord Kitchener's relatives that the Government wishes to
arrange an Official Funeral for this departed genius. Should their agreement be
forthcoming, National Flags will fly at half mast at all Public Buildings and on the day
of the funeral service; the State will meet the total cost of the funeral arrangements,
and the body will lie in State on the Catafalque at the place where the funeral service
is to be held. Mr. Speaker, were it not a breach of protocol, I would petition you, Sir,
to invite this Honourable House to rise in salute to a son of the soil, a brother to us all
whose life was lived in lifting the spirit of his people and of the world, for well beyond
a half of the twentieth century.
Mr. Speaker:
I now report to this Honourable House on a matter that is of signal significance in the
Government's conduct of the People's business. It is, as well, Mr. Speaker, a
development that will profoundly impact the lives of every citizen, conceivably for
generations to come.
Mr. Speaker:
The Cabinet evaluation of the Agreement that the Government has negotiated with
BP-AMOCO for the expansion of Atlantic LNG's operations has been the subject of a level of media attention and public discourse that is perhaps unprecedented in any transaction, at any stage, in the development of any investment project involving an international investor in our energy sector. For such public attention to be directed at this transaction in the middle of the Carnival Season is quite salutary, Mr. Speaker.
We would all recall that at a previous period of prosperity in this country - when we
were assured that money was not a problem - the manner in which the Government of
that day was responding to the windfall of petro-dollars generated by the OPEC oil
producing and oil pricing strategies, earned this country a number of indelible epithets:
Lee Kwan Yew, the creator of the Singapore as we know it, spoke of the "Carnival
Mentality" of Trinidad and Tobago. The Singapore Prime Minister was describing the
style of the then Government, and the extent to which that administration's "Now for
Now" mentality had infected the wider society. Others were to describe Trinidad and
Tobago as "The Arabs of the Caribbean," a term that intended nothing complementary
to the people of this country: A prominent West Indian Leader was moved to remark
that "Money was flowing through Trinidad and Tobago like a dose of "Salts".
Nothing complimentary in that either.
Mr. Speaker:
At the dawn of the Twenty First Century, Trinidad and Tobago, has enjoyed a four
year period of sustained economic growth and prosperity that has been widely
distributed amongst all sectors of the society. This country is now poised for a New
Prosperity. I give the guarantee, Mr. Speaker, that the New Prosperity that will be
enjoyed by the people of Trinidad and Tobago will not be dissipated by my Government
in instant gratification, or grandiose excesses as was this country's experience in the
early to mid-seventies, when money was not a problem. I give the guarantee, Mr.
Speaker, that the revenue that will flow into the treasury from the Atlantic Liquefied
Natural Gas expansion will be used to develop our country's human capital, to enhance
our intellectual resources. I give the guarantee, Mr. Speaker, that I will not deviate
from my mission to transform our country into a nation whose people are equipped
with the education, the training and the technological sophistication to firmly position
Trinidad and Tobago as a nation with First-World abilities, and as a global centre of
excellence. Mr. Speaker, we are well on the way to transforming our health services to
the most desirable standards.
We are well on the way to upgrading and expanding our physical infrastructure to
meet the needs of an industrialised society rapidly moving forward. That is why
decades after it should have been done, a new airport is now under construction. We
are well on the way to delivering potable pipe born water to all, this year. We are
already established as a country with an administration that stands out for the speed
and sophistication with which we do business with the world. Now, our greatest
challenge is centered on increasingly rapid human development for those who have
not been able to keep pace with the rest of the country. The key to our country's
future is education, Mr. Speaker. We are on the way to transforming our education
system and our education facilities so that the large numbers of young people, who
would otherwise have faced a future of hopelessness, will now have equal opportunity
for an education of a standard that will be second to none.
All of this will be facilitated by the benefits that will flow to the people of Trinidad and
Tobago from the historic Agreement which Cabinet has approved for the new Atlantic
Liquefied Natural Gas Trains. The great public interest in these negotiations could only have been aroused and examined in a truly participatory democracy such as I have been sought to fashion in Trinidad and Tobago. All the issues have been publicly ventilated.
Mr. Speaker:
Two new "trains" or plants will be added to the one already in place at Atlantic LNG.
These two new plants will triple the production and export of LNG from the current 3
millions tonnes per year, to 9 million tonnes by the year 2003. BP-Amoco, British Gas
and Repsol will finance the new Liquefied Natural Gas Trains at a cost of some Seven
Billion Trinidad and Tobago Dollars. This will be the largest investment in any single
project in the history of Trinidad and Tobago, probably in this part of the world. The
participating companies are all major, reputable, leaders in global energy industries.
The mere fact that companies of this stature, influence and global reach have
committed such vast sums of money in Trinidad and Tobago in this project defines our
country as a location with outstanding capacity to host international investments at a
significant level by global standards.
This investment underscores Trinidad and Tobago's current outstanding rating as an
investment option, as determined and designated by Standard and Poor. This country's
financial rating at Triple B-PLUS, which authoritatively positions us at INVESTMENT GRADE, is not the result of any natural evolutionary process, Mr. Speaker. The high
regard in which Trinidad and Tobago is currently held in the International investment
community is the direct result of the initiatives which the government has introduced
in this country's fiscal and investment policies since 1995. We have brought superior
business skills and technical competence to the management of the nation's energy
resources. Very importantly, Mr. Speaker, we have succeeded in eliminating much of
the red tape and many of the impediments which, prior to 1996, had delayed,
disrupted and driven away investment projects that could have brought immense
benefit to the people of Trinidad and Tobago.
Investment of this magnitude, Seven Billion Dollars, brings immeasurable benefits and
opportunities to the people of Trinidad and Tobago. I will give examples of these
benefits, Mr. Speaker.
This project will provide direct employment for an estimated 3,000 people at the peak
period of construction. The spin-off effects from economic activity at this level will
generate substantial numbers of new jobs in our small business and micro business
sectors. The Government of Trinidad and Tobago will receive a projected
One-Point-Five Billion Dollars every year, over a 20 year period. This is a total of
Thirty Billion Dollars that will be flowing into the Treasury, Mr. Speaker.
Very significantly, Mr. Speaker, the Government of Trinidad and Tobago has not
conceded any Tax Holidays in this mega-project.
Mr. Speaker:
Tax dollars will flow into the treasury from Day One, so to speak. We have insisted
that expenditures on the procurement of locally manufactured goods and services be
in the region of One Billion Dollars. This represents a windfall boost to the local
contracting and supply sector and will provide additional job opportunities with large
and small operations within that sector. Naturally, Mr. Speaker, Liquefied Natural Gas Trains Two and Three will be a major catalyst for growth and development in the South West Peninsula of Trinidad and Tobago, which, despite past periods of national affluence, was left as one of the truly depressed areas in this country. Atlantic Liquefied Natural Gas will be obligated to provide Thirty-One Point Five Million Dollars to the National Energy Skills Centre. This capital contribution will finance the construction of the Trinidad and Tobago Institute of Technology, an institution that will fill a significant and inexplicable gap in our national education system. Such an institution is an imperative as Trinidad and Tobago's transitions into a technology-driven world economy, in a technological age. In addition to the initial Thirty-One Point Five Billion Dollars, further annual payments of One Million Dollars for Twenty years, thereafter, will go to the National Energy Skill Centre from Atlantic Liquefied Natural Gas. It is expected that the graduates of the National Energy Skills Centre willbe employed in the Atlantic Liquefied Natural Gas Trains Two and Train Three expansion. The University of the West Indies will benefit from a contribution of Four Million, Four Hundred Thousand Dollars, spread over a seven-year period. This will Funda Chair in Environmental Engineering. This is noteworthy, Mr. Speaker, and will allay concerns about the developers' sensitivity to the impact of the project on the environment. We have also negotiated on-the-job training for apprentices and professionals.
Mr. Speaker:
The Government intends to generate additional and significant added value to that
which will be generated in the national economy by the new LNG trains. One significant initiative will be the establishment of a world class Ethylene complex in this country. Ethane will be the basic feed stock for an ethylene-based petrochemical complex in Trinidad and Tobago. Ethane from the Atlantic Liquefied Natural Gas Expansion will supplement existing domestic sources to ensure the flow of raw materials to maintain such a plant. This Ethylene complex will enable Trinidad and Tobago to add greater value for its gas-based developments. It will create additional business and new jobs for our citizens. It represents more than Six-Billion-Dollars in direct investment, with significant creation of permanent jobs in manufacturing industries associated with Polyethylene. Mr. Speaker, some 2,500 direct jobs will be created during the three years of the Ethylene complex. It follows that a substantial number of indirect jobs will also be generated by this project. An important immediate outcome of the protracted negotiations with BP-Amoco over the Expansion Project, is that the price of gas supplied to the National Gas will be reduced by Twelve percent of prevailing prices. This will, to some extent, reduce the burden which the National Gas Company has to carry as a result of the revenue shortfall which the company has had to endure since Methanol prices fell by some 40% in 1998.
Mr. Speaker:
The main beneficiaries of increased gas demand in this country over the past 6 years
were the gas producers. In their pricing terms to the National Gas Company, the gas
price escalated annually while a significant portion of National Gas Company's revenues were linked to world prices of petrochemical products.
The reduction in gas prices to the National Gas Company will amount to an estimated
One-Hundred-and-Fifty Million Dollars per year to the National Gas Company. The
Government intends to negotiate with the other gas producers, British Gas, Texaco
and Enron Oil & Gas for similar relief.
Mr. Speaker:
One of the major issues in the negotiations with BP-AMOCO is the security of gas
supply to meet this nation's future domestic needs. We have assured gas reserves of
25 years, based on the present demand for gas and taking Trains Two and Three of
Atlantic LNG into account. We recognize the need to increase our proven reserves,
given the expansion of Atlantic LNG. BP-Amoco is committed to drilling at least one
additional exploratory well on the East Coast before December 2000. This is in addition to the two exploratory wells which are currently being drilled by an international consortium in which BP-Amoco is a partner. These three wells are expected to increase our gas reserves significantly.
Mr. Speaker:
Since 1995, despite the sharply depressed oil prices that hit us in 1998 and early 1999
Trinidad and Tobago has enjoyed unprecedented growth in exploration activities, both
onshore and offshore. During the past four years, new production-sharing contracts
have been successfully negotiated. From the deep-water bid rounds in those bids,
Trinidad and Tobago has been paid Five-Hundred-and-Fifty Million Dollars in signature bonuses. This, Mr. Speaker, is an unparalleled achievement in this country's history.
The companies involved in new exploration activity have budgeted some Three-Billion
Dollars for their work programmes here over the next few years. They will drill Twenty Six exploration wells. This level of expenditure and activity is unprecedented in this country's energy sector.
Mr. Speaker:
Deep-water drilling demands cutting edge technology and our entry into this field of
exploration is another milestone in the long history of this country's energy sector.
The major oil companies in the world are all now in Trinidad and Tobago, exploring for
new reserves of oil and gas. It can confidently be predicted that given the information
we have acquired from the technologies as now available, we will continue to add
considerably to our existing reserves in oil and gas. We are encouraged by significant
new finds of natural gas by such companies as BP-Amoco, British Gas/Texaco, EOG
Trinidad Ltd., and BHP/ELF. These new finds are at the level of Ten Trillion Cubic Feet of natural gas. We might not be exactly floating in oil, Mr. Speaker, but there is concrete evidence that in assessing the security of Trinidad and Tobago's supply of natural gas over the next several decades, the only thing we have to fear is fear itself.
We also have reason to be confident about our prospects for increased oil finds. More
local oil will allow Petrotrin to increase refinery margin and profitability by reducing its
current dependence on imported crude. We have only to consider, Mr. Speaker, that
since 1995, gas reserves have almost tripled, expanding from 8.5 to 22 trillion cubic
feet. Mr. Speaker, though it might be a possibility, it is highly improbable that we will
face a situation in which BP-Amoco and our other gas suppliers will find themselves
unable to meet their delivery obligations to their local customers. Were such an
unlikely situation to occur, BP-Amoco, under the just approved agreement, will give
the highest priority to meeting the requirements of Trinidad & Tobago Electricity
Commission's residential, commercial and light-industrial customers. Should other
suppliers be unable to deliver their contracted volumes to Trinidad & Tobago Electricity Commission, BP-Amoco is committed to reasonable endeavours to meet any such shortfall.
Mr. Speaker:
As can be readily seen, specific measures to meet contingencies which have triggered
concerns in certain quarters are integral to the Agreement giving the green light to
Atlantic Liquefied Natural Gas Trains 2 and 3.
Moreover, Mr. Speaker:
In the event of unexcused failure by BP-Amoco to deliver sufficient gas to meet the
National Gas Company's contractual entitlements, BP-Amoco will pay liquidated
damages to the National Gas Company on the same basis as it pays to its foreign
buyers. This has never been negotiated by any previous administration in this country,
Mr. Speaker. Mr. Speaker, our successful negotiations with Atlantic LNG must be seen in the context of four years of ground breaking initiatives in the management of this country's energy sector. Not suprisingly, the global energy industry is now referring to the "Trinidad and Tobago Model" for the development of national energy resources in developing countries. This country's energy sector contributes close to 18% of total government revenues. It represents 22% of our Gross Domestic Product and 67% of Trinidad and Tobago's exports. The revolutionary transformation of the energy sector since 1995 has been matched by, and is simultaneous with other developments of considerable importance and benefit to this country. In every sector, we have had notable success in redressing the imbalances, the inequities, the accumulated neglectthe abandonment and the excesses of previous governments. We have renegotiated the 1991 Gas Supply Contract, entered into by the National Alliance for ReconstructionGovernment and as a result the country will save Twenty-Six Million Dollars per year for the remaining life of the contract. We also intend to renegotiate the 1992 and 1993 Gas Supply Contracts entered into by the People's National Movement.
Mr. Speaker:
I take this opportunity to confirm that Government has successfully negotiated
agreement with Caribbean Nitrogen Company for the establishment of a new Eight
Hundred Thousand Dollars ammonia plant. The start-up of construction on this project
is imminent. Caribbean Nitrogen Company is a Consortium made up of EOG Resources, Duke Energy, CL Financial, Ferrostaal and Kellogg, Brown & Root. These two projects, the Atlantic LNG expansion and the Ammonia Plant, will bring the total aggregate of foreign direct investment in the energy sector of Trinidad and Tobago, both upstream and downstream, over the past four years, to close to Thirty-Five Billion Dollars. This places Trinidad and Tobago in a most envied position regionally, if not globally.
Mr. Speaker:
We have the fastest growing natural gas industry in the world. The Atlantic Energy
Train Two and Train Three expansion will effectively make Trinidad and Tobago the
LNG hub of the Western Hemisphere. We also propose to capture the value-added
areas of ethylene, aluminum and gas-to-liquids.
Mr. Speaker:
I wish to express my thanks and appreciation to all who participated in the
negotiations of this contract, which will be signed after vetting by the Attorney
General.
I thank you, Mr. Speaker.