PORT OF SPAIN, Trinidad, CMC -The Energy Chamber of Trinidad and Tobago says the potential future decline in global liquefied natural gas (LNG) prices raises key considerations for a country like Trinidad and Tobago.
TotalEnergies’ Chief Executive, Patrick Pouyanné, speaking at the Gastech 2025 Conference in Milan last week, stated that the global LNG market is on a trajectory toward oversupply, posing the primary threat to the industry’s stability in the coming years.
TotalEnergies is a multinational, integrated energy company and one of the six most prominent oil and gas companies in the world. Pouyanné stated that the French-based company plans to increase its US LNG offtake from the current 10 million tonnes to 18 million tonnes.
Some recent projections indicate that overall natural gas use is expected to increase by more than 20 percent by 2050 compared to 2024 levels, and that the LNG market is projected to double by 2050 as it becomes an increasingly significant part of the overall supply.
Secretary General of the International Energy Agency (IEA), Fatih Birol, noted that the United States, Qatar, and Canada alone will add a combined 300 billion cubic metres (220.5 million tonnes) of additional LNG capacity through 2030.
Pouyanné also noted that as the price of LNG decreases, it can become competitive with coal in key growth markets.
The Energy Chamber stated that the potential future decline in LNG prices raises key considerations for a country like Trinidad and Tobago, where short-term energy commodity prices have a direct relation to the government’s revenue through taxes and other sources.
“LNG is Trinidad and Tobago’s major export and source of foreign exchange. Since the Russian invasion of Ukraine and Europe’s moves to stop imports of Russian pipeline gas, LNG prices in both Europe and Asia have been at a historically high level,” the Energy Chamber said.
It stated that European and East Asian LNG import prices are currently over $ 11.00 per million standard cubic feet (mmscf), compared to the US Henry Hub benchmark price of under $3.00.
The renegotiated Atlantic marketing arrangements mean that Trinidad and Tobago’s wellhead gas prices reflect these high Asian and European LNG prices; however, future LNG price decreases could put further strain on government revenue and foreign exchange earnings.
“This potential for declining LNG prices highlights the importance of a national policy where there is a range of different export routes for our natural gas, rather than relying solely on LNG.”
The Energy Chamber stated that maintaining a portfolio of different routes to monetize gas is a crucial strategic national policy consideration, underscoring the importance of ensuring a diversity of downstream gas processing facilities in the country, including petrochemicals such as methanol and ammonia.
“This means that there is a broader portfolio of export commodities and potentially provides some greater stability in export earnings and government revenue.”
Meanwhile, the Energy Chamber said that crude oil production in Trinidad and Tobago has experienced a steady decline since its peak in the late 1970s, when the country produced almost 230,000 barrels of oil per day.
It stated that there was a brief period of substantial increase from 2002 to 2006, but since then, production has fallen sharply, from 143,000 barrels per day to just over 50,000 barrels per day for the period from January to March this year.
“Most of the crude oil produced in Trinidad and Tobago comes from offshore marine areas. On average, over the last decade, approximately 68% of all crude oil produced came from offshore fields. The offshore production rate has declined more rapidly than the onshore rate. In fact, offshore production fell by 38per cent, a decline of 21,000 barrels, while onshore production declined by 24 per cent, a decline of 5,500 barrels over the same period.”
The Energy Chamber stated that, typically, offshore reservoirs deplete faster than onshore reservoirs due to geological and economic factors.
“Geologically, offshore wells operate under higher pressure, which leads to higher initial production rates. However, when this pressure drops, the decline can be rapid. Economically, offshore production is much more expensive than onshore production. The extremely high cost of building and operating offshore platforms and drilling rigs incentivizes the extraction of resources as quickly as possible.”
The Energy Chamber stated that, despite producing smaller volumes, onshore production has remained relatively stable over the past decade.
It said this is important because onshore production stimulates economic activity on land, allowing local, small-to-medium-sized companies to participate in the energy sector. These companies can use local currency for capital investment and generate foreign exchange from the oil sold.
Onshore production is primarily based in South Trinidad. It benefits local economies by contributing to economic activities for local businesses and contractors within the community, while also creating a wide variety of jobs.
The Energy Chamber stated that creating additional opportunities to encourage onshore activity is crucial for maintaining a stable base of activity in the energy sector. It noted that this can be achieved in several ways, including addressing issues in the fiscal regime to enable small operators to reinvest in their operations, drill new wells, and increase production.
“Recently, ExxonMobil signed a new production sharing contract (PSC) for the newly created Ultra Deepwater block (UD-1), reportedly seeking an oil play there. If successful, this could lead to an increase in future offshore production, along with the development of other projects from Perenco, bpTT, Shell, and EOG Resources,” the Energy Chamber added.
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