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Trinidad & Tobago’s hydrocarbon resource and, in particular, its natural gas have
enabled it to become the most industrialised Caribbean nation. Foreign investment in the
Energy Sector accounts for over 90% of the country's export earnings.
The country is well experienced in exploration, production, refining and other process
plant type operations, for example, petrochemicals. Gas is used for electricity
production, petrochemical, liquefied natural gas, metals, heavy industrial and light
industrial use. One Gas to Liquids plant and one AUM complex are under construction,
and Government is curently promoting the construction of an aluminium smelter. Other
projects, such as additional steel and ethylene plants have been discussed, but do not
now appear to be on the "front burner" as a result of the 2008-2009 recession. Trinidad
and Tobago is the world's largest exporter of ammonia and methanol.
In this Chapter, Grantley L. Wiltshire, Partner and Nadia Henriques, Associate in the
firm’s Energy Practice Group provide investors with an overview of the Trinidad &
Tobago Energy Sector.
The Role of the Energy Sector in the Economy
The Energy Sector has long been important to the economy. As of 2008, it accounted for
approximately 50% of the country’s gross domestic product, and represented over 90% of
the country’s export earnings.
The first oil deposits were discovered in 1866 and serious drilling first undertaken in
1907. Crude oil production commenced in 1908 and the first oil refinery was established
in 1912. Exploration for offshore oil commenced in 1954. Production of natural gas has
been increasing rapidly since the mid seventies. Gas is now more important to the
economy than oil. The gas is used primarily for electricity generation, petrochemical
manufacture, LNG production, steel and metal production, cement manufacture and light
industry.
Reserves
As at 1st January, 2009, the country’s non-associated natural gas reserves were stated by
Ryder Scott as:
Proved reserves - 15.3 tcf
Probable reserves - 8.4 tcf
Possible reserves - 6.2 tcf
Further, there are what are termed "exploratory resources" of 29.6 tcf. Natural gas from
most fields in Trinidad & Tobago is primarily “sweet” gas (0.1% - 0.35% carbon dioxide
and negligible sulphur).
According to the Ministry of Energy and Energy Industries oil reserves as at 1st January,
2007 are stated to be as follows:
• Proven - 605 million barrels
• Petrochemicals 27%
• Power Generation 7%
• LNG 60%
• Gas Processing 1%
Ammonia
• Trinidad Nitrogen Co. Ltd. (a joint venture between the State and Yara), with two
plants;
• Point Lisas Nitrogen Ltd (formerly Farmland MissChem Limited), a joint venture
between Koch Nitrogen and Terra Industries, with one plant.
• Caribbean Nitrogen Co. Ltd., (“CNC”, a joint venture between several non-
Trinidad and Tobago companies and one local group already involved in
Methanol production), with one plant.
Petroleum Taxes
Companies involved in the business of petroleum production and refining pay taxes on
profits from the business under the Petroleum Taxes Act (Petroleum Profits Tax). There
is also a Supplemental Petroleum Tax at scales based on oil prices.
Marketing business which was previously charged to tax under the Petroleum Taxes Act
has, with effect from 1st January, 1997 been taxed under the Corporation Taxes Act.
Corporation Taxes
Most other Companies in the sector, (Petrochemicals, metals etc.,) will be liable to
taxation under the Corporation Taxes Act. For further information, please see the section
on Taxation.
Reliefs
Certain reliefs from taxes may be applicable for new projects under various facilities and
incentives provided by law. See the section: Incentives to Invest for more information.
Additional
Further information on the Trinidad & Tobago energy sector is available at
www.energy.gov.tt