Date: April 20th , 2019
It was recently reported that EOG Resources Ltd, a well-established oil and gas extractor, is currently enjoying an unprecedented 64% increase in the price this nation (NGC) must pay for natural gas compared to the 2016 contracted price. This sudden exorbitant 64% price increase is raising an alarm because NGC is currently, (according to previous unchallenged press reports), unable to sell Natural Gas (at its contractually obligated prices) to the downstream manufacturing sector, unless at a substantial loss.
Can our nation afford to further subsidize downstream industries which already enjoy a wide range of confidential contract “incentives”? If the difference in the price NGC must now pay EOG and the price it must sell to downstream industries is vastly different, then either the beleaguered taxpayer will be forced to carry this additional burden or these industries must close.
The article explains that if gas is made available to the downstream industries (at the 64% increased rates now being paid to EOG), the gas would cost these downstreamers more than their US counterparts. According to the article, disproportional natural gas costs in high gas consumption downstream manufacturers translates into a globally uncompetitive position. This could cause the collapse of several gas intensive manufacturers who are dependent on a reliable competitive gas supply/price and it could trigger a domino effect on our already contracting economy.
This Government must break its deafening silence and reveal who were its chosen negotiators and how could this fiasco occur under a watchful, brilliant and experienced Minister of Energy and Prime Minister? How could our “competent” negotiation team agree to pay prices that are more than we’re contracted to sell downstream users and above the price which is obtained in the USA? What were the unexplained factors which justify agreeing to a whopping 64% gas price increase? Our concern is deepened as we expect that contracted prices to downstream users on the one hand, and to EOG on the other, are irreversible and legally binding.
If this Administration do not change the Law to ensure “contract transparency” and public oversight, secret deals will continue to deprive our treasury and compromise the already shivering future of our contracting economy.
The Trinidad and Tobago Extractive Industries Transparency Institute (TTEITI) must expand its oversight beyond financial accountability to aggressively advocate for contract transparency. Surely the international EITI in Oslo are aware that financial accountability is useless if each EITI member nation does not have any globally comparative measure of what value is obtained in royalty tax for what volume is extracted. In other words, our nation needs to know what we earn in Royalty Tax and how that compares to the value earned by other mineral rich nations for the equivalent volume of mineral extracted. FFOS have described this revenue blind spot as “Value for Volume”.
The extractives crisis is amplified by the 2015, 2016 and 2017 Auditor General Reports which consistently complain that there is no regulatory oversight on how much minerals are being extracted and that royalties are therefore being calculated based on an “Honour System”.
This revenue weakness continues nonetheless and the auditor generals printed statements year after year appear to be falling on an otherwise preoccupied and unconcerned public administrators.
Oil and gas negotiation like all sales of national assets have had a reputation of being riddled with corruption. Tesoro, Trintopec, Trintoc, Petrotrin…. the list goes on ad nauseam. The extractive sector is the foundation of our unstable economy and requires the best minds, the greatest transparency and the most thorough accountability.
Our government needs to be reminded that ALL extractive resources belong to ALL of the people of Trinidad and Tobago. We are traumatized by energy instability such as Petrotrin’s closure, regular gas being denied to our fishers, and now this? The Minister of Energy appears to be fiddling while our gas dependent economy is literally on fire?
Shouldn’t a Prime Minister, as the nation’s most senior public officer, step in and lead, breaking his silence on this looming catastrophe? FFOS calls on Keith Rowley to come clean and give us a reasonable explanation. Gene Miles must be turning in her grave.