Identifier
Created
Classification
Origin
08PORTOFSPAIN253
2008-06-10 18:17:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Port Of Spain
Cable title:  

Secretary of Energy's visit to Trinidad reinforces

Tags:  EPET PREL ENRG EIND EINV CARICOM TD 
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VZCZCXRO5839
RR RUEHDE RUEHGR
DE RUEHSP #0253/01 1621817
ZNR UUUUU ZZH
R 101817Z JUN 08
FM AMEMBASSY PORT OF SPAIN
TO RUEHC/SECSTATE WASHDC 9212
INFO RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEAHLC/HOMELAND SECURITY CENTER WASHDC
RUCNCOM/EC CARICOM COLLECTIVE
RUEHHH/OPEC COLLECTIVE
RUEHBR/AMEMBASSY BRASILIA 0101
UNCLAS SECTION 01 OF 03 PORT OF SPAIN 000253 

SENSITIVE
SIPDIS

STATE FOR WHA/CAR, WHA/EPSC, EEB/IEC
DOE FOR OFFICE OF THE SECRETARY, OFFICE OF POLICY AND INTERNATIONAL
AFFAIRS, OFFICE OF ELECTRICITY DELIVERY AND ENERGY RELIABILITY
DHS FOR A/S BOB STEPHAN

E.O. 12958: N/A
TAGS: EPET PREL ENRG EIND EINV CARICOM TD
SUBJECT: Secretary of Energy's visit to Trinidad reinforces
bilateral energy relationship


SENSITIVE BUT UNCLASSIFIED - PROTECT ACCORDINGLY

UNCLAS SECTION 01 OF 03 PORT OF SPAIN 000253

SENSITIVE
SIPDIS

STATE FOR WHA/CAR, WHA/EPSC, EEB/IEC
DOE FOR OFFICE OF THE SECRETARY, OFFICE OF POLICY AND INTERNATIONAL
AFFAIRS, OFFICE OF ELECTRICITY DELIVERY AND ENERGY RELIABILITY
DHS FOR A/S BOB STEPHAN

E.O. 12958: N/A
TAGS: EPET PREL ENRG EIND EINV CARICOM TD
SUBJECT: Secretary of Energy's visit to Trinidad reinforces
bilateral energy relationship


SENSITIVE BUT UNCLASSIFIED - PROTECT ACCORDINGLY


1. (SBU) SUMMARY: During his May 12-13 visit to Trinidad and Tobago,
the Secretary of Energy reinforced the US-T&T relationship by
drawing attention to bilateral LNG trade and commending T&T for its
open market and regional leadership. At the same time, he flagged
U.S. energy company concerns that the GOTT needs to get incentives
right for upstream exploration and development. His messages on
alternative energy and biofuels received extensive press coverage.
Septels report on his discussion of energy infrastructure protection
with GOTT ministers. END SUMMARY.


2. (U) Secretary of Energy Samuel Bodman visited Trinidad May 12-13,
accompanied by Assistant Secretary of Energy Kevin Kolevar,
Assistant Secretary of Homeland Security Robert Stephan.
Accompanying from DOE were Foreign Policy Advisor Molly Williamson,
Deputy Chief of Staff Ben Getto, DAS William Bryan, Public Affairs
Director Andy Beck, Americas Director Gary Ward, and International
Relations Specialist Sam Browne. This cable reports on the
Secretary's interaction with industry and media, as well as
representational functions hosted by the PM and the Ambassador.
Septels report on the Secretary's formal meetings with PM Manning
and GOTT Ministers, which focused on bilateral cooperation to
improve energy infrastructure protection.

-------------- ---
US Energy Companies Share Perspectives, Concerns
-------------- ---


3. (SBU) In the Secretary's roundtable meeting with US energy sector
companies, several representatives voiced concern over the GOTT's
long-term strategy for natural gas resources. Noting the lack of
focus on developing new gas reserves or expanding LNG exports, one
industry professional commented that the market for petrochemicals
and metals was a distraction that contributed little to the

country's overall development. Another noted that after
commissioning the largest LNG train in the world at the end of 2005,
Atlantic LNG (ALNG) had difficulty sourcing enough gas to run at
capacity in 2006, and yet the GOTT was signing agreements to build
new energy-intensive projects like aluminum smelters. Companies
also cited inconsistent policies on local content. While some
foreign companies invested heavily in building up local engineering
capacity, for example in the LNG project and in local manufacture of
off-shore platforms, the GOTT recently awarded a US$1 billion
refinery upgrade project with no local content requirement
whatsoever.

--------------
Low Hanging Fruit is Gone
--------------


4. (SBU) A major concern of nearly all attendees was the perceived
lack of financial incentives for upstream exploration and
development. Upstream companies agreed that the financial risk to
reward ratio was not advantageous and was in fact stifling the
development of gas reserves. Noting that "the low hanging fruit is
gone" - referring to the large, shallow-water gas fields already
exploited - the group asked Secretary Bodman to press for GOTT
recognition that greater financial incentives are needed for
international oil companies to develop smaller and deep water
offshore gas fields. While T&T was a very attractive market five
years ago when drilling costs were low, the picture has changed due
to higher drilling costs and a larger GOTT take, in the form of both
production sharing and price splits. On the bright side, the GOTT
engaged an expert who has consulted with upstream companies in
recent months and is expected to recommend changes to the incentive
mix.


5. (SBU) The companies welcomed the infrastructure protection focus
of Secretary Bodman's visit. The inability of the GOTT to protect
the offshore platforms from incursion was a source of concern, with
one company calling for enforcement of a 500 meter buffer zone. In
a lighter moment, the Secretary observed there is usually great
fishing around offshore gas and oil platforms. Nearly all firms
represented voiced concern over threat interdiction capabilities and
poor coordination between company security and GOTT law enforcement
and military.

-------------- --------------
PM Credits Secretary's Role in Bilateral Relationship
-------------- --------------


PORT OF SP 00000253 002 OF 003



6. (SBU) During remarks at the opening of a large dinner at the
Prime Minister's Residence and Diplomatic Center in honor of the
visit, PM Manning warmly welcomed the Secretary. Speaking to over
100 guests, comprising GOTT and state-owned energy company officials
and spouses, the PM recounted how then-CEO of Cabot Industries
Bodman had intervened personally to overcome disagreements among the
original members of the Atlantic LNG (ALNG) consortium. Manning
went on to describe the Secretary as "T&T's best friend in
Washington," thanking the Secretary for keeping his door open and
engaging with the GOTT's priorities, most recently on protecting
energy infrastructure.

--------------
Public Messages
--------------


7. (U) Speaking at a breakfast meeting of the American Chamber of
Commerce (AmCham) in T&T on May 13, the Secretary highlighted T&T's
role in U.S. energy security, describing bilateral cooperation on
energy infrastructure security and conveying his desire to continue
and deepen that cooperation. He also made a strong pitch for
alternative energy, energy efficiency, and openness to private
investment that is needed to meet global demand for safe, clean,
reliable and diverse energy supply. He praised T&T for its record
of openness and transparency, as well as its leadership in resisting
non-market based energy supply arrangements. (See Post internet
site for text of remarks as prepared for delivery.)


8. (U) AmCham members posed questions on ethanol and food prices,
prospects for U.S. domestic oil exploration and expansion of LNG
imports, and proposals for a natural gas exporters' cartel. The
Secretary reviewed factors behind the rise in global food prices,
observing that corn-based ethanol production accounts for only 3 or
4 percent of a global increase of 40 percent. He also discouraged
international efforts to control energy supply, pointing out that
free markets are more conducive to the mobilization of capital
required for LNG projects. Asked whether he saw any cause for
optimism about energy, he noted Brazil's success on biofuels, adding
that he would like to see the U.S. tariff on ethanol imports removed
over time. He also observed that the free market is working in
T&T's upstream energy sector, where the GOTT has an opportunity to
reassess the terms it is offering in response to market signals
emerging from its 2006 bid round. (NOTE: Many international oil
companies refrained from bidding on deep water blocks offered in
2006 after the GOTT tweaked production sharing terms in its own
favor.)


9. (U) In a press availability immediately following the AmCham
event, the Secretary said that as the U.S. seeks to increase LNG
imports, he hopes to see T&T's LNG exports to the U.S. increase. He
offered assurance that market-based energy trade between the two
countries would not change under a new U.S. administration. He also
voiced confidence that T&T will expand its role as a reliable
supplier, notwithstanding regional competition from Venezuela's
PetroCaribe initiative. While declining to predict oil price
trends, he urged consuming nations to respond to high prices by
improving efficiency and investing in alternative fuels. (NOTE:
Local press covered the Secretary's visit extensively, highlighting
in particular his messages on alternative energy and the
ethanol-food prices issue.)

--------------
Raising T&T's Profile
--------------


10. (U) At a small luncheon with energy and government leaders at
the Ambassador's residence, Foreign Minister Gopee-Scoon described
an initiative to revamp T&T's diplomatic image and re-tool its
foreign missions in order to focus on energy and trade. She cited
T&T's technical assistance to African countries on developing
natural gas based industries as an example of this new thrust.
(NOTE: Former DOE Assistant Secretary Karen Harbert suggested to
former Energy Minister Eric Williams that GOTT seek ways to share
the Trinidad experience in developing and bringing LNG to market.
T&T could serve as an example to South American and African
countries as these regions seek to develop energy resources based on
market based principles.) The GOTT Cabinet had approved a note
allocating funds to train T&T diplomats in these areas. As a way of
raising T&T's profile in the U.S., DOE Foreign Policy Advisor
Williamson suggested that the GOTT approach the Smithsonian
Institution on the possibility of featuring T&T in the Smithsonian's
annual Folklife Festival on the National Mall in Washington DC.

PORT OF SP 00000253 003 OF 003




11. (U) Secretary Bodman encouraged Professor Ken Julien, president
of the University of Trinidad and Tobago (UTT) and chairman of the
GOTT's Natural Gas Export Task Force, to consider fielding a team
for DOE's annual Solar Decathlon, also held on the National Mall, as
a way of promoting research on alternative energy. Julien lamented
the lack of incentive to develop solar energy in T&T, where
electricity rates are among the lowest in the hemisphere. He
ascribed Barbados' success in promoting solar water heaters to the
fact that consumers there pay four times as much for electricity as
in Trinidad. He also suggested that political sensitivity around
electricity rates is high for T&T, comparable to gasoline and diesel
price sensitivities in Jamaica.

--------------
Visit to Atlantic LNG Facility
--------------


12. (SBU) Together with the Permanent Secretary (PS) in the Ministry
of Energy, Leroy Mayers, and the Chairman of the National Gas
Company, Frank Look Kin, Secretary Bodman visited Atlantic LNG
(ALNG) on Tuesday May 13. Having played a critical role in the
development of ALNG's Train 1 as CEO of Cabot Corporation in the
mid-1990s, the Secretary was interested to see the dramatic
expansion of ALNG's plant. Robert Fryar, COO of ALNG, updated the
Secretary on ALNG's operations, which now include four trains and a
production capacity of 15 million tons of LNG per year. Fryar also
led the delegation on a tour of the facility. Discussing the future
of the gas industry in T&T and the gas fields T&T shares with
Venezuela, PS Mayers commented that T&T has an umbrella agreement
with Venezuela, but that the specifics on operational development of
the cross border gas fields have yet to be negotiated. He indicated
that the GOTT was waiting on Venezuela so they could move forward
and joked about the importance of being "nice to one's neighbors."

AUSTIN