BP PLC CEO John Browne announced that his company will spend $2.5 billion over the next 3 years for exploration and development off Trinidad and Tobago's east coast. Addressing a luncheon held in the twin-island nation during a visit there last month, Browne said Trinidad and Tobago is one of BP's core operating areas and a growth area.
Browne said that the country likely would play a critical role in meeting future world natural gas demand, and that BP would be investing to find additional reserves.
"We see BP's [gas] production here in Trinidad and Tobago rising from around 400,000 boe/d to 550,000 boe/d by 2008. And all the reserves, contracts, and projects are in place to accommodate that growth," Browne said.
"We believe that there is even greater potential to come, and that's why we are planning to resume exploration drilling this summer in the Columbus basin so that we can establish the basis for a further increase in production capacity beyond [Atlantic LNG] Train 4," Browne said, noting that BP already invested $9 billion in E&D projects during the last 2 decades.
Trinidad and Tobago is the largest supplier of LNG to the US, accounting for 66% of the LNG imported into the US during 2003. BP also holds the largest percentage interest in Atlantic LNG Co. of Trinidad & Tobago and the single largest producer of oil and gas in Trinidad and Tobago.
Future supply, demand
Browne predicted that by 2015, 65% of the gas traded worldwide would come from six core areas: Russia, the Middle East, Africa, Indonesia, Australia, and Trinidad and Tobago.
He said the world's need for energy is growing at a tremendous pace, which would result in the need for additional oil and gas production. The increased demand is being fueled by several factors, not the least of which is population growth, Browne said.
"In many of the major markets, the scope for increased consumption is considerable. In China, for instance, per capita energy consumption is still very low—still only one fifth of the level in Europe and only one tenth of the level in the US, and because of sheer number of people involved, even modest growth in per capita demand in China is going to have a material impact on the global energy balance," Browne explained.
Browne said the increased demand would have to be met by a mixture of oil and gas, since renewables are a long way off from coming online. He added that gas would be favored because of environmental concerns, which were likely to be translated into public policy.
Energy security
Browne said that the growing need for energy and the uncertainty in several parts of the world, particularly in the Middle East, have made the issue of energy security important. He said Trinidad and Tobago will be a major beneficiary of this because it has a history of stability of supply.
"It seems certain that there will be a much greater focus on energy security because energy remains fundamental to the operation of a modern economy, because imports are growing, and because such a large proportion of the required supply is set to come from areas, some of which, to put it mildly, have not been noted for their stability," he said.
Browne added, "It is not clear, for instance, that all the investment which is necessary from now on in order to achieve a sound balance of supply against demand through the next decade and beyond can be made in good time."
Oil prices
On the topic of the recent high world oil prices, Browne forecast continued volatility in the market.
He said higher oil prices were being driven by a sustained period of strong discipline by the Organization of Petroleum Exporting Countries in relation to oil supply; a 10%/year increase in demand for oil in China and growth in other major economies, including Russia and India; and the continued volatility in the Middle Eastern market.
"Those are the factors shaping the short-term market and there is no immediate sign that any of them will change dramatically. I think we have to expect continued volatility," Brown said.
