Late last year, an illuminating piece from Oilprice.com titled ‘This Century-Old Refinery Is Up For Sale’ gave a telling account of Trinidad and Tobago’s Petrotrin refinery closure. Indeed, the title alone speaks volumes. From the onset, the piece notes the changing global energy landscape and unceremoniously cards the refinery closure as an inevitability; not unlike other refinery closures around the world at that point in time. The topic that did generate more discussion in the piece however was the intent to sell and reopen the refinery. This was deemed questionable at best and highly problematic at worst. Was this perspective spot on or grossly uninformed? How can we adapt either way to secure a less tenuous future for ourselves?
A Matter Of Cost
Reopening a refinery isn’t so simple. Indeed, as the saying goes, the ‘candle may cost more than the funeral’. It would require tremendous investment, expense, retrofitting, upgrading or even rebuilding some infrastructure entirely. Consequently, once operational, the refinery would have to secure its upstream and downstream logistical situation. Who will it sell to and produce for? How much raw product will it process and at what scale? Will it meet expectations or return to the inefficiency that led to its closure in the first place? The union believes it can address all these problems while the government believes it lacks the capital to do so.
Quite curiously, in 2019 and early 2020, media discussion on the refinery deemed it certain that it would be sold to the OWTU Union and be reopened by 2020’s end. As we sit in 2021 that clearly hasn’t come to pass with bids rejected then resubmitted amidst heated public discussion on the matter. By February’s end, TT’s minister of finance rejected Patriotic’s bid one last time calling it the end of that process as the refinery’s future returns to the open market. How has the market changed since this closure, however? For one, the COVID-19 pandemic saw demand for oil and petroleum products sink at an exponential pace. Shuttered industry, reduced activity and continuous lockdowns in developed nations meant that oil prices sank at its worst or remained stagnated at best. This has changed somewhat as we’ve entered 2021 due to major producers agreeing to production quotas and cutbacks to their daily production rates. With supply now matching demand, prices are a bit steadier.
A Tenuous Future
As of late February, WTI Crude Oil prices sat comfortably at around 60USD per barrel compared to mid-late 2020’s average price of around 42USD per barrel. Will this last or even improve, however? All things considered, the general trend seems to be the downsizing of traditional petroleum energy. In fact, consider a global energy giant like BP. In recent times they’ve since branched out into renewables with investments in renewable startups and attempts at directing some of their capital to wind and solar operation. What’s really interesting however is their announcement that they’ll reduce their oil and gas production by 40% in the next decade and redirect the freed up resources to renewable energy investment and development. How well they stick to this roadmap remains to be seen though with certainty they have begun making their opening moves in initiating this evolution.
Thus, for a small island developing nation like Trinidad & Tobago where does this place us; especially if the world’s giants are now looking to, quite literally, ‘greener’ pastures? Put simply, we need to reassess our priorities as well. Currently, the government aims to continue with oil exploration, drilling and marketing via the recently opened Heritage Petroleum Company. This is a good initiative to continue utilizing TT’s energy reserves and ensure a presence in its energy sector however it would be folly to become wholly reliant on it as a primary source of revenue.
In fact, we must also consider that many companies are now eying neighbouring Guyana as a lucrative alternative for energy investment. Already blessed with gold and bauxite, the mainland nation saw comfortable growth in 2020 where many others contracted and faltered economically. With all eyes on its neighbour’s oil boom, TT should consider finally delving into renewable energy investment.
First and foremost, renewable energy is a noble goal but also requires high-tech investment. In looking at renewables, TT should consider both expanding its own renewable energy generation as well as attempting to invite ‘Green’ companies to its shores to conduct their business. They’ll need a good reason though, especially when the nation’s rating in Economic Competitiveness, Ease of Business, GDP to debt ratio and other indicators looked at by investors is not what it should be. How can these things be reformed and changed? Put simply that’s an entire treatise’s worth of points to make however initial moves can involve an initiative to crack down on corruption as well as more accessible and open free markets that won’t scare away business in an already difficult with heavy tax burdens and piles of red tape.
Indeed, digitizing and streamlining bureaucracy while stimulating increased commercial activity through smarter, less punitive taxation can go a long way towards attracting more business both long and short term. We don’t just want to adopt renewable energy. We want to transform ourselves from an energy industry hub to a renewable energy hub. Why not use our base as one of the more industrialized Caribbean nations to create local renewable energy industry? Consider manufacturing solar panels for regional use or leading initiatives in tidal or ethanol-based power. We have a number of high starch crops that be used as biofuel and for ethanol creation. For example, a 2009 scientific study noted that cassava, with its high tolerance to drought and heat, could be an ideal biofuel crop.
These are things we should be looking at, not for the future but immediately. The more we can wean ourselves off of economic monoculture and single resource dependence is the less painful our overall future outlook shapes up to be. Put simply, let’s start taking this thing seriously.