For many decades, Trinidad and Tobago has heavily depended on oil production as a primary source of revenue for the small Caribbean nation. Yet, as its oil reserves start to decline, the future looks increasingly precarious. Despite ongoing investments and new auctions intended for further exploration, the nation’s government faces a crucial decision: whether to endorse more invasive extraction methods or to pivot towards alternative energy options and foster economic diversification.
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In recent years, the neighboring state of Guyana has captured the attention of global oil companies seeking new investment opportunities in its largely unexplored oil fields. This interest has partly spilled over into Trinidad and Tobago, with oil firms eager to investigate whether similar untapped reserves might exist within its waters through advanced exploration techniques.
Historically, Trinidad and Tobago has held the title of the largest oil and natural gas producer in the Caribbean, ranking as the 17th largest natural gas producer globally. It houses some of the largest natural gas processing facilities in the Western Hemisphere, such as the Phoenix Park Gas Processors Limited, which boasts a processing capacity close to 2 billion cubic feet per day (bcf/d). According to Mordor Intelligence, Trinidad and Tobago’s upstream oil and gas market is projected to experience a CAGR of 4.4 percent between 2020 and 2030, with major oil corporations like BP, Repsol, and Shell continuing their operations in the region.
However, the imposition of U.S. sanctions on Venezuela has negatively impacted Trinidad and Tobago’s oil sector. In April, the U.S. Office of Foreign Assets Control revoked essential licenses pertaining to the Dragon and Cocuina gas fields that straddle the maritime boundary between Venezuela and Trinidad and Tobago, coinciding with further restrictions on Venezuelan oil production as stated by the previous administration.
The most recent auction for Trinidad and Tobago’s deepwater oil and gas exploration blocks failed to generate significant interest from foreign investors. Of 26 areas offered for bidding, only four received bids. China’s CNOOC placed bids on three blocks, while a consortium of smaller energy firms showed interest in one additional area. With limited deepwater energy players in the vicinity, the government is now turning its focus towards encouraging producers to ramp up natural gas output, thereby improving both processing capacity and export capabilities.
In another significant development, Trinidad and Tobago has inked an agreement with American oil giant Exxon Mobil to explore an area comparable to seven ultra-deepwater blocks. This partnership could potentially inject up to $21.7 billion into the country’s economy if commercially viable reserves are identified. This marks Exxon’s strategic return to Trinidad and Tobago after a two-decade absence, having departed in 2003 when previous offshore explorations did not yield the desired results. Their recent successful ventures in Guyana’s Stabroek block have likely prompted Exxon to reassess the exploration prospects in Trinidad and Tobago. What’s more, Guyana has astonished the region by rising to the status of the fifth-largest oil exporter in Latin America in less than a decade, with production volumes increasing from 400,000 barrels per day to over 660,000 bpd in just a few months.
