State of the Extractive Sectors Report 2022
Chair, TTEITI Steering Committee
A graduate of the University of the West Indies, Mr McGuire holds bachelor's and master's degrees in economics. He has also had extensive post-graduate management training at the Balanced Scorecard Collaborative, Harvard Business School, MW Kellogg School of Management, Oxford College of Petroleum Studies, and the London Strategic Planning Society. Mr. McGuire has had a distinguished career in Business spanning thirty years. He spent 23 years at the National Gas Company of Trinidad and Tobago Limited,( NGC) where he had managerial responsibility mainly for the Strategic Planning and Marketing process.
Since 2013, the Trinidad and Tobago Extractive Industries Transparency Initiative (TTEITI) has published an annual report on key developments in Trinidad and Tobago’s oil, gas, and mining sectors. This State of the Extractive Sectors Report 2022 is the latest effort to put leading economic indicators into context, describe how each sector works, and explain the ways in which both domestic and international developments impact government revenues and the resources available to citizens. The full country report to which this State of the Extractive Sectors Report 2022 refers covers a two-year period 1 October 2018 to 30 September 2019 and 1 October 2019, to 30 September 2020.
Key Takeaways
- Government earns the most from the oil and gas sector in a decade due to energy price spikes brought on by geopolitical tensions/ war in Ukraine
- Between 2004-2020, Government received $39.2 million in mining sector revenue but still owed over $200 million in outstanding royalties. Ministry of Energy to adopt drone technology to help improve revenue collection
- Between 2019-2021, the MEEI's PSC audit unit disallowed US$122 million in costs for PSCs and completed 123 revenue audits and 81 cost audits. However there are still 130 outstanding PSC revenue and 330 outstanding PSC cost audits
- Between 2016-2021, there were 836 oil spills in Trinidad and Tobago. 628 spills on land and 204 marine. MEEI to look into early detection system
Click to read the report
Welcome to Trinidad and Tobago’s eighth annual Extractive Industries Transparency Initiative (EITI) Report. The country has been implementing the EITI for over a decade and this year’s report arrives at a time when fears over a global recession, the war in Ukraine and supply chain challenges linger. The Covid-19 pandemic also continues to impact global economies. For Trinidad and Tobago, these events have had significant bearing on our economy’s performance.
In the early stages of the pandemic, depressed oil, gas and petrochemical prices contributed to the country’s deep economic recession. In 2022, global energy commodity prices have been buoyed by the global demand-supply imbalance caused by the war in Ukraine. Brent crude oil and Henry Hub gas prices have averaged US$104 per barrel and US$6 per mmBtu in 2022.
This temporary boost in energy commodity prices for 2022 has improved revenue collections. Royalties and production sharing contract share of profit are both expected to reach nine-year highs. The Minister of Finance also confirmed improved GDP, cash flow and Government’s plans to use the spike in revenue to tackle debt, reduce the budget deficit and importantly to fund a deposit to the Heritage and Stabilisation Fund. This will be the first deposit into the Heritage and Stabilisation Fund since 2013.
While the short-term revenue outlook is definitely promising, the country must look beyond the temporary fillip in prices and revenue. There are also structural issues to be addressed in the energy sector that will change the country’s energy landscape. These include the results of the deep water, shallow water and onshore bid rounds, the development of the Caribbean’s largest solar project, changes to the fiscal regime to incentivise more production, the restructuring of Atlantic LNG and a move towards liberalisation of retail fuel prices and reduction of the fuel subsidy.
Given these policy shifts and the changing nature of the global energy market, sharing up to date information on oil, gas and mining revenue and the future outlook for these sectors is key. This report reconciles Government's payments for fiscal years 2019 and 2020. However, the Trinidad and Tobago EITI’s (TTEITI) Steering Committee (SC) has included up to date information on the Government’s revenue from royalties and profit share from production sharing contracts and other key parameters for the period up to 2022.
Over the last year, we have been focussing on advancing the practice of systematic disclosure whereby EITI information becomes available at source within the relevant Ministry websites and is not confined to EITI Reports. The SC embarked on a pilot with the EITI International Secretariat, concentrating on developing a road map for systematic disclosure to be embedded in Government systems. Our new work plan for 2021-23, also targets an increase in mining sector participation in TTEITI and the passing of TTEITI legislation.
We recently welcomed the Estate Management and Business Development Company as a new EITI implementing mining company. The Minister of Energy has also been briefed on the benefits of EITI legislation. All of these focus areas will inform our performance in implementing the EITI Standard and our successfully achieving compliance for our second Validation assessment. This report therefore introduces several innovations.
Some of these innovations include divulging findings of studies on contract transparency and beneficial ownership. These innovations are being introduced because the EITI, as a dynamic initiative, is responding positively to the evolving challenges in its member countries while upholding an international standard and accommodating the different national realities and contexts.
In Trinidad and Tobago, the EITI continues to provide a collaborative mechanism and platform for developing and consolidating transparency and accountability in the nation's oil and gas sectors, the cornerstone of the national economy. The SC’s aim is also to ensure that the EITI is relevant to and effective in targeting national priorities, including digitalisation and local Government reform on participatory budgeting.
On behalf of the TTEITI Steering Committee and Secretariat, I wish to acknowledge with thanks the roles played by the stakeholders - Government, extractive companies and civil society - in guiding and supporting EITI implementation over the last year and in producing this report. In particular, I recognise the Ministry of Energy and Energy Industries and the Ministry of Finance’s Board of Inland Revenue and Investments Division for their contributions. Also, I recognise the EITI Independent Administrator, PKF Limited, supported by Engaged Consulting and Michael Barron Consulting, for their professionalism in carrying out the analysis for this report.
Finally, I want to thank the TTEITI Steering Committee and the Secretariat for their daily contributions to EITI implementation. I am optimistic that the information provided in this report will advance dialogue and debate on the country’s extractive sector. My fervent hope is that we all continue to support the EITI’s journey for the next decade and beyond.
Click below to read the rest of the State of the Extractive Sectors Report 2022
For a more complete understanding of the industry, download the full country report.
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