Hydrocarbons in the Caribbean – Mr. Jehu Wiltshire

Updated On: Jan 24th 2018

Mr. Jehu Wiltshire – Representative Office of the Prime Minister, Barbados
Hydrocarbons in the Caribbean – Trinidad & Tobago Energy Conference 2018

Good Morning,

First of all let me wish you a year filled with success and prosperity and to thank you for extending an invitation to the Government of Barbados to this conference.

It is indeed an honour and pleasure to be here to share some thoughts with you at this forum.

The Minister in the Prime Minister’s Office, Senator The Hon. Darcy Boyce, who is responsible for energy, sends his regrets at not being able to participate in this session, as originally intended, since he has an inescapable commitment that requires his full attention in Barbados.

He attended last year’s event and was looking forward to being present this year. He has however expressed his wishes for a successful forum.

The theme for this event “Maximising Value Through Collaboration” is one of critical import as the energy sector takes on greater importance especially for Caribbean Small Island Developing States.

Let us placed this subject within the context of the international energy environment.

Ladies and gentlemen, we are all aware that global energy consumption will continue on its upward trend over the next thirty years.

Indeed the International Energy Outlook 2017 as presented by the International Energy Agency (IEA) projects that by 2040 global energy needs will increase by 30% with much of this consumption coming from the developing and emerging economies.

It is further projected that there will be increased consumption across all the major energy sources with renewable energy and natural gas being the fastest growing energy sources with energy efficiency playing an important role in dampening supply.

As countries seek to decarbonise their economies, natural gas will be an important source of energy as a bridge on the way to the greater use of renewable energy.

And yet, despite the projected exponential increase in renewable energy over the next twenty years, the IEA projects that the use of fossil fuels will still grow to 2040.

In other words, well into this century fossil fuels will still be an important source of energy in driving economies.

However, currently these are trying times for the oil and gas sector, as growth is predicted to slow significantly over the next year and overall profit is anticipated to fall to the mid-single digits for 2018.

Unfortunately, this sluggish outlook is supported by many of the biggest voices in oil with divergence emerging on how the latter half of 2018 will shape-up.

Whatever the outcome, the fact is that we as a region, (where oil imports account for over 20% of GDP and where we have some of the highest electricity rates in the world), require us to make every use of our available resources including fossil fuel sources of energy.

Most of the states in the region are Small Island Developing States who are most heavily impacted by climate change notwithstanding that we account for less than 1% of global emissions, and it may seem to be a contradiction that some of them, most notably Barbados, Jamaica and Grenada and the Bahamas are seeking to exploit their offshore petroleum acreage.

The fact remains, however, that the economies in the Caribbean are so trade dependent and so heavily indebted that we must use every resource at our disposal to build resilient economies.
All of these are considerations which have informed the preparation of our National Energy Policy.

The Government of Barbados has sought to engage a policy of dialogue and collaboration in terms of the establishment of our National Energy Policy which was approved last year.

This policy is a major component of the plans for the sector and places a strong emphasis on the necessary goals for achieving increased renewable energy penetration on our electricity grid, while seeking to lower the importation and consumption of fossil fuels and enhance energy efficiency.

The process of informing, drafting and finalising this Energy Policy was one which the Division of Energy oversaw in collaboration with all the stakeholders of the sector.

Such an approach led to the creation of a policy document that has taken note of all the sector contributors and aligns with policy objectives some of which they themselves have been responsible for suggesting.

Barbados is a small country which thrives on policy continuity.

Our quest to maintain energy sustainability did not just occur with the recent interest in renewable energy and energy efficiency as we have been for decades a leader in the use of solar water heater technology.

We have successfully built out from our previous success in that area to include the expansion into sustainable energy investments.

The Barbados National Energy Policy 2017 – 2037 was developed for Barbados with the aim of providing clear direction in the short, medium and long term, for various areas of development both in the renewable and non-renewable aspects of energy.

It is a policy document that spans all aspects of the energy sector and considers the energy industry in its broadest context.

It aims to provide a framework for moving the island from a fossil fuel based economy to one based principally on renewable energy sources and provides direction for managing the transition and ensuring viability from all points of view.

Indeed our vision is one of a 100% renewable energy island based on the use of biomass, solar and wind.

The policy also recognises the importance of the prudent use of resources in energy as a way to ensuring sustainability and a thriving economy so it highlights the importance of energy efficiency throughout the various sectors and subsectors in the industry. Some of the objectives within the policy are:

  • Achieving stability and predictability in energy prices over the long term.
  • Achieving affordability and access to all classes of consumers in energy products and services.
  • Establishing a consistent and comprehensive regulatory framework to govern activities in various energy sub-sectors.
  • Increasing the amount of renewable energy sources used in the energy mix to the extent that it can be accommodated from a technical and socio-economic perspective, among others.

All of the policy objectives within the National Energy Policy have been developed in an environment that is fully cognisant of the international outlook for renewable energy.

We remain fully aware that international growth in the renewable energy sector is likely to be bolstered by three main factors:

  1. an increasing commitment of utilities to decarbonisation,
  2. the fast growing deployment of renewables in emerging markets and
  3. a sharpened focus on resilience, especially in response to severe weather events.

Utilities, for the most part, are motivated by the prospect of electricity demand growth while responding to customer and shareholder preferences for environmental stewardship.

This is evidenced in the growing decarbonisation of large sectors of the economy such as transportation, heating and cooling and industrial processes.

It is understood that renewables are now the cheapest form of new power generation in key markets and emerging economies are expected to overtake developed countries in installed wind and solar capacity in the near future.

This secures the position of renewable energy technology and reinforces the long term vision for the sector as one of continued strong growth.

The new age of renewable energy is supported by powerful enablers such as robust customer demand across multiple business segments and global regions, declining prices, decarbonisation and the drive to boost resiliency.

Bearing this in mind, and together with the work of the National Energy Policy, the Government of Barbados has also benefitted from working closely with the International Renewable Energy Association (IRENA) to develop a Road Map that will help with the implementation of some of the goals and targets we have set for ourselves within this sector.

The National Energy Policy speaks to a 19% reduction in the use of fossil fuels by 2022, a 38% reduction by 2027, a 56% reduction by 2032 and a 75% reduction by 2037 along within a reduction in electricity consumption through targeted energy efficiency measures.

The projects, programmes and policies to derive these reductions are to be coordinated within an implementation plan which will be shortly drafted for the consideration of the Cabinet.

These objectives will tie with the Road Map completed by IRENA in 2016 which aligns with the same policy goals for the government.

Indeed the work previously completed by IRENA on matters of grid capacity and the technical issues which will arise beyond a specific amount of renewable uptake to our grid formed part of the basis of discussion when the work of the national energy policy was being completed.

The policy has also focused on the use of hydrocarbons particularly in terms of the Offshore Petroleum Programme.

The Division has drafted a medium-term strategy for the Offshore Oil and Gas Sector. This sector came to the fore in 2007 with the initial launch of our Offshore Oil and Gas Bid Round.

Thus far, the Division has successfully negotiated exploration licenses for two blocks with BHP Billiton and awarded a block to Repsol in an offshore acreage that comprises over 70,000 square kilometres. We expect exploration to begin within the next year and will be making every effort to so.

Going forward, it is the intention of the Division to expose our offshore acreage internationally because despite being a high-risk frontier region, Barbados is fortunate in that the industry continues to show sustained interest in our offshore acreage with a number of companies waiting for Government to restart its licensing efforts which we will undertake within the next year.
We have established a robust regulatory regime in terms of our offshore petroleum legislation and we have sought and will continue to ensure that we learn from other jurisdictions.

Since we are a tourist oriented country we have been careful as to how we proceed in the development of the sector since we wish to ensure the preservation of our coastal and marine environment.

We consider that collaboration is important to those new CARICOM states (Jamaica, the Bahamas, Grenada and Guyana) that are now getting into oil exploration and production.

Trinidad has had over one hundred years of oil production and is well placed to provide some guidance to these countries in a formal way.

It is interesting that Barbados had requested some technical assistance from the Commonwealth Secretariat to assist in the development of its Offshore Petroleum Programme and the lead person on that mission was a Trinidadian who had previously worked in that country’s energy Ministry.

There really needs to be greater south-south cooperation and collaboration in the development of the region’s petroleum resources. Probably there needs to be a regional database of regional experts or a “think tank” of the region’s best minds in this area.

I am suggesting that in the same way that countries in the region would apply to the Commonwealth Secretariat for technical assistance in the development of their petroleum resources, probably the government of Trinidad may wish to establish such a programme for its CARICOM neighbours.

We believe that you certainly have some important lessons to share especially as regards local content where it is very important that the region develops its own resources.
Similarly in natural gas.

Barbados has had over fifty years of onshore oil and gas production. The Woodbourne oil field was discovered in the 1960s and since then over 250 wells have been drilled to date with over 10 million barrels of oil and over 22 billion cubic feet of associated gas have been recovered.

Production has however declined from a high of…. in the 1990s to an average of 650 barrels of oil and …. of gas.

There are in excess of 20,000 domestic, commercial and industrial gas customers in Barbados and the decision was taken back in 2016 to import natural gas when there was a shortage of this product in the 2015 tourist winter season.

We now import….. of Liquefied Natural Gas from …We would have much rather preferred this product to be from our neighbour Trinidad.

We had since 2004 been exploring a natural gas pipeline from Trinidad to Barbados and the French islands but this has proven to be uneconomical and this idea has subsequently been abandoned as the cost of smallscale LNG has fallen and in view of the growth of renewable energy.

The point that I am seeking to make here is that even though the region seeks to increase the penetration of renewable energy in the energy mix, natural gas offers a bridge to the future in terms of decarbonising our economies.

I understand the issues in respect of the natural gas shortage in Trinidad but I urge that any subsequent resolution of the problem leads to opportunities for small scale LNG supply in the region within the context of a collaborative effort among Trinidad and CARICOM states.

As a region, the CARICOM Secretariat continues to offer the support which it deems best suited to these times.

The opportunities it has provided for collaboration among the member states are worthy of note and include the preparation of the CARICOM Energy Policy, the establishment of the Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE) (which is being hosted in Barbados), the preparation of the Caribbean Sustainable Energy Roadmap and Strategy (C-SERMS), which is designed to build on existing efforts in the region to provide CARICOM Member States with a coherent strategy for transitioning to sustainable energy.