Mr. Norman Christie, Regional President, BP Trinidad & Tobago
Congratulations to the Energy Chamber for once again organizing the signature annual energy event for the Region.
“Maximizing Value Through Collaboration” is a great theme! I am personally committed to not letting a downturn go to waste, so the idea of maximizing value is music to my ears; and I am convinced that collaboration is a real source of competitive advantage.
At BPTT, 2017 was a special year of value creation for country and company. We started two major gas producing projects – the Trinidad Region Onshore Compression project, popularly called TROC, and Juniper. These two projects added close to 800 mmscfd of well needed natural gas production capacity. We discovered the Savannah and Macadamia fields, thereby adding over 2 TCF of gas in place to our natural gas resources. We renegotiated our gas sales agreement with NGC, resulting in greater certainty of future natural gas supply to power and petrochemicals customers. We sanctioned the Angelin project and made good progress towards delivering first gas from the project in 2019. We performed major construction activities at the Galeota Expansion Project and we upgraded our accommodation facility on our Mahogany B platform. There is a lot more that I could mention but I’ll pause and yield to the old adage that a picture is worth a thousand words. Let’s view this very short video.
We did all that you just saw while improving our safety performance and sticking to our Values. What is also of extreme importance is that none of these accomplishments were achieved by BPTT’s singular efforts – all were done through collaboration.
SIGNIFICANCE OF SUCCESSES
Let me briefly illuminate the significance of these collaborative successes.
Starting with production, BPTT promised to increase production in 2017. We did just that. Compared to 2016, BPTT’s overall production grew by 15 percent, and NGC specifically benefitted from an 18 percent increase in the floor established for volumes received from BPTT.
Turning to spending, BPTT promised to continue to invest heavily if the environment remained attractive and we did just that. Our capital expenditures exceeded US$1 billion last year. In fact, 2017 marked an important milestone because we completed the spend of US$6 billion in investments that we promised 5 years ago. Now, as we consider spending, it is also important to discuss local content where we have also made promises. There was significant value retained in the local economy due to BPTT’s 2017 activities. Of course, local content varies from project to project depending on the nature of the activity. For capital projects requiring major spend on specialized heavy equipment and material such as steel the value retained was in the 20 percent range, but for operational expenditures, the value retained was in the 60 percent range.
And finally, I must address how significant the 2017 successes are to the future of the industry. I stood in this spot on several occasions, speaking about BPTT’s confidence in Trinidad & Tobago’s untapped hydrocarbons. I often stated that greater clarity was needed in government policy to pave the way for new developments in the Upstream. I promised that BPTT would collaborate with stakeholders to shape policy that would shore up the future of the local energy sector.
Through collaboration with almost all stakeholders in our sector, I can now say that on some key aspects of policy, the required clarity was delivered by the government in 2017. This clarity along with the renegotiation of our NGC contract paves the way for future production from fields such as Angelin and the new exploration discoveries.
PROMISES MADE, PROMISES KEPT
Clearly, because of collaboration across the sector, I can proudly say two things about BPTT’s experience in 2017: 1. promises made, promises kept; and 2. The delivered promises help to maximize value for Trinidad and Tobago.
REFLECTIONS ON COLLABORATION
In light of the above-mentioned successes resulting from collaboration, I would like to use the rest of my time to share two significant personal reflections on collaboration.
My first reflection is that collaboration is often hard work but it pays huge dividends.
The TROC project provides a classic example of just how challenging industry collaboration can be. The BPTT operated project utilizes compressors located on Atlantic’s compound and impacts multiple pipelines in the national natural gas network. Approximately 20 different entities were involved in pulling this project together, and approximately 20 commercial agreements had to be negotiated and numerous local and foreign contractors engaged.
The negotiations process that paved the way for the sanction of Angelin provides another good example. The process involved the NGC, the Ministries of Energy and Finance, the Natural Gas Task Force led by Mr. Wendell Mottley and the office of the Prime Minister. BPTT had to collaborate with all these entities, and as has been widely reported, the honourable Prime Minister played a crucial role in related meetings in Houston last year, demonstrating collaboration at the highest levels.
A final example is the establishment of the T&T Upstream Operators Group in 2017 after many years of discussion. This collaborative effort is already reaping benefits such as the pursuit of a common Persons on Board or POB aviation system for all offshore operators.
In all of these examples of collaboration, there were tough times, frayed nerves, and tested relationships but through them the country is reaping benefits.
My second reflection is that a lot more collaboration is needed. Notwithstanding BPTT’s successes in 2017, we will be the first to say there is still a lot more to be done. From a financial perspective, despite all our successes, BPTT is still being heavily funded by its shareholders. We need to return to positive free cash flow and that will require even greater collaboration across the industry.
BPTT is also mindful of the fact that our 2017 successes do not paint the complete picture for the industry. I relate to this is in the way that a cricket batsman might relate to scoring a century while his team is losing. Of course, we celebrate the successes of 2017 but that celebration is tempered by the circumstances faced by others in the industry and country. Atlantic and the downstream still need more gas. Local contractors are still feeling the effects of contraction in the industry. Important contracts between NGC and petrochemical players still need to be negotiated. And of course, government revenue from the industry is still way below historical levels, not because of overly generous past fiscal policies but because we are still adjusting to the shock of a precipitous drop in commodity prices coupled with lower national oil and gas production. At the end of the day, BPTT will only feel truly successful when the industry, and most importantly the people of Trinidad & Tobago are successful.
What this means though, is that we need more collaboration not less. There are unfortunately still voices in and around the industry that see our challenges as an opportunity for division. They sadly miss the point that so much more value can be generated when we work together. Collaboration is not a feel-good concept that makes you want to sing “One Love One Heart, let’s get together and feel alright.” Collaboration is practically potent and a source of competitive advantage.
If I sound passionate about this point, it is because I am. You see, while I have lauded the benefits of collaboration on BPTT’s successes, I must also confess that one of my lowest moments in 2017 and in fact in my almost 12 years here in Trinidad, occurred with the loss of Angelin fabrication in Trinidad because of inadequate collaboration.
We must learn from our experiences. There are other platforms to be built but creating a competitive, successful fabrication industry will require all stakeholders to work together, energy companies, Government, fabricator, service companies, unions and the community. And, it will require other operators and not just BPTT contracting for fabrication in-country. BPTT’s next platform, Cassia C, is still in the planning stage. We are currently reviewing all options, including local fabrication. However, any decision to build locally will depend on how competitive the local fabrication industry becomes.
Last year, the Honourable Prime Minister, Dr. Keith Rowley, called on operators to “Bring your platform blueprints and come.”
That prize is still attainable. We are achieving so much in the energy sector by working together. We must adopt a similar approach to local fabrication.
At BPTT we are committed to knowledge transfer to improve competitiveness in Trinidad & Tobago. So, I am delighted that we will be hosting a small delegation to Mexico in a few days to see the Angelin platform in the fabrication yard in Mexico before it sets sail for Trinidad and see what we can learn. I am also delighted that BP’s Global Head of Upstream Operations, Fawaz Bitar is here with us today and will be sharing some global perspectives on collaboration later this morning.
I remain optimistic because of what we accomplished in 2017. This was not just the result of one year of investments and activity but rather multiple years of investments and sticking to the plan despite major changes in the environment. I know that there are some who are thinking about giving up on the industry and on the country. For BPTT that does not feature in our thinking. We are encouraged by the people of Trinidad & Tobago, – the young people who have immense promise, and the older people who have contributed so much to create many things that are the envy of the world. We remain focussed and committed. We subscribe to the African proverb that if you want to go fast go alone. If you want to go far go together.
Far is where we want to go with resultant success and prosperity for the people of Trinidad and Tobago. “Together We Aspire, Together We Achieve.”