The question of energy security has come into focus over the past few weeks as the Russian invasion of Ukraine has exposed the strategic weakness of Europe’s energy mix.
A significant, and rapid, pivot away from reliance on imported Russian gas is needed, but how can this be done in a meaningful way? One obvious answer is to support the development of gas imports (by LNG) from other parts of the world, with the almost limitless resource of the US shale formations being seen as a potential long-term solution. However, a significant challenge comes in the time required to develop the infrastructure required to take natural gas and convert to LNG for export. Even projects that have been scoped can take between 4 and 6 years to come to market. This is where Trinidad can provide an opportunity in the short to medium term.
Trinidad and Tobago – the opportunity and the challenge
Trinidad and Tobago is a mature producer of oil and gas and prior to the rise of shale oil and gas in the US had been a major player in the LNG market in the Western Hemisphere. Atlantic LNG has been a reliable supplier in the past and the 4 train complex has the capacity to supply 15 MTPA  to the LNG market. It is currently providing less than half of that with the Prime Minister of Trinidad and Tobago citing ‘availability, volumes, ownership and markets’ as the reasons for decline. 
The Opportunity – Markets
As noted, the immediate need for Europe to diversify gas sources presents a clear opportunity for Trinidad & Tobago and Atlantic LNG to secure favorable agreements that can utilize their existing capacity with blue chip customers. With excess LNG liquefaction capacity of close to 8 MTPA , Trinidad & Tobago has the opportunity to add 11 BCM to Europe’s energy mix and do this in less time than a new greenfield LNG export scheme.
The Challenge Part 1 - Resource Availability – Geology and Geopolitics
The most obvious constraint comes from the question of ‘availability and volumes’ with upstream resources under development in significant decline. While there are infill opportunities that can be accelerated by local producers such as EOG, BP, BHP and Shell the mature shallow water province is insufficient to plug the gap in capacity. The most likely available resources, as noted by the Trinidad & Tobago Gas Master Plan , are to be found in either shared resources with Venezuela or stranded assets wholly within Venezuela. Trinidad & Tobago are trying to move these projects along and have secured agreements to provide a route to market for the gas in the Dragon field (wholly within Venezuela) via existing Trinidad & Tobago infrastructure. Unfortunately, the sanctions in place against Venezuela have hampered this effort. In the meantime, Trinidad & Tobago have turned their attention to cross border shared resource where they can extract their volumes for use locally such as the Manatee development . There may be reluctance to work with the Venezuela government, but this would provide a significant boost to the economy of Trinidad & Tobago which has shown itself to be a stable and productive member of the international community.
The Challenge Part 2 – Ownership
An additional complexity of this challenge is the maze of ownership and industry segmentation within the structure of the Trinidad & Tobago gas sector. Ownership of the different Atlantic LNG trains has been under discussion between the parties for a number of years (Primarily between Shell, BP and the government of Trinidad & Tobago). When combined with the demarcation between upstream, midstream (NGC) and downstream users this all leads to a variety of interests that may not always be aligned. Now is the time to re-think objectives and reset these relationships with the common goal of capturing the opportunity that is in front of the industry in Trinidad & Tobago.
Trinidad and Tobago - Now is the time
The Objective - Becoming a strategic partner for Europe through the supply of LNG, Urea, Fertilizers and Methanol products in their time of need. This would almost certainly be a better proposition for the country than fighting the low-cost US market in the global marketplace.
Shell and BP are both significant participants in the region. Whilst return on investment is important for all companies, being seen to be a responsible corporate partner for Europe also has benefits. With talk in Europe of windfall taxes being applied why not take the lead and drive a solution that brings benefit to both Trinidad & Tobago and Europe? BP, for example, have identified 6 developments than can be brought to market to utilize the existing capacity.
For Europe the thought of subsidizing hydrocarbon initiatives is at odds with current climate change policy but perhaps they could support the build-out of offshore wind in Trinidad as part of a strategic partnership. By expanding production to meet the needs of Europe, Trinidad & Tobago would be accelerating the end of their production and will need to be supported in the transition to other forms of energy. With Europe’s leadership on Offshore Wind there is a clear benefit for both groups in cooperating.
For the government and people of Trinidad and Tobago this could be an opportunity to reverse the decline of their primary industry and create a valuable relationship with the world’s largest single market. This will require simplification of ownership and profit sharing across the value chain as well as international collaboration to access resources. Whilst it is a complex challenge, everything should be done to secure a successful outcome and create a win-win outcome for all parties.
Scott Munro - Regional Director for the Americas Region
Scott Munro is Archer Knight's Regional Director for the Americas Region. A shareholder in the company, Scott, based in Houston, Texas, has been in the offshore energy space for over 25 years, having previously held senior leadership and project engineering roles in McDermott and Technip. He leads Archer Knight's consultancy, market intelligence and M&A advisory in the Americas region.
 Atlantic LNG, "Our Business Our Trains," Atlantic LNG, [Online]. Available: https://atlanticlng.com/our-business/our-trains/ [Accessed 12 March 2022].
 K. C. Rowley, "Trinidad and Tobago’s Quest to Stay in the World Energy Business," 7 March 2022. [Online]. Available: https://www.opm.gov.tt/trinidad-and-tobagos-quest-to-stay-in-the-world-energy-business [Accessed 10 March 2022].
 Central Bank of Trinidad & Tobago, "Statistics Output Monthly," Central Bank of Trinidad & Tobago, [Online]. Available: https://atlanticlng.com/our-business/our-trains/ [Accessed 12 March 2022].
 Poten & Partners, "Trinidad & Tobago Gas Master Plan," Ministry of Energy and Energy Affairs, Port of Spain, 2015.
 Argus Media, "Shell to Tap Major Gas Field off Trinidad," 19 October 2021. [Online]. Available: https://www.argusmedia.com/en/news/2265044-shell-to-tap-major-gas-field-off-trinidad. [Accessed 12 March 2022].