The New York Times
September 4, 1998
Trinidad and Tobago, an Economic Tiger in a Sea of Pussy Cats

          By LARRY ROHTER

               PORT OF SPAIN, Trinidad and Tobago -- The flights coming in from
               the United States are so packed with oil and chemical company
               executives hungry for a piece of the action here that reservations are
          hard to come by. Almost weekly, it seems, the government is announcing
          some natural gas find or new factory project at the booming Point Lisas
          Industrial Estate.

          While much of the rest of the Caribbean worries about making ends meet,
          this twin-island nation -- almost evenly divided between citizens who trace
          their ancestry to Africa and India -- is experiencing a burst of investment
          and growth. Thanks to the belated realization that its substantial natural gas
          reserves may prove to be even more valuable than its oil, Trinidad is rapidly
          emerging as the region's foremost economic success story.

          Since the beginning of the boom less than five years ago, the 50 U.S.
          companies now operating here have invested more than $4 billion, a
          remarkable figure in a country with only 1.3 million people. Seeking to take
          advantage of cheap and abundant energy supplies, petroleum, chemical and
          steel companies from Britain, Canada, Germany, India, Norway and Spain
          are also flocking here.

          In the process, "this country is becoming industrialized" and turning into a
          Caribbean tiger, said Krishna Persad, a leading Trinidadian oil and gas
          industry consultant. "If only 50 percent of what is being talked about
          actually comes to pass, you're going to be seeing a Singapore in the
          Western Hemisphere," he predicted.

          But as Trinidad government officials acknowledge, they must also resist the
          temptation to spend too much too soon and risk overheating the economy.
          Administering a bonanza, while more pleasant than coping with scarcity,
          offers hazards of its own. For confirmation of that, Trinidad need only look
          at its own recent past, or neighboring Venezuela, where billions of dollars in
          oil profits are said to have been squandered or pilfered.

          At the moment, though, "This country is booming, going gangbusters, and
          the boom is nowhere near peaking," a diplomat here exulted. "With all the
          recent finds and the plants coming on line, you're going to see a substantial
          level of activity for the next several years."

          In 1997, Trinidad's economy grew by 4 percent, compared with a 1.5
          percent contraction in 1993; over the same period, inflation has dropped to
          3.8 percent from 13 percent. Income per capita has risen to $4,290 from
          $3,920. The figures are in 1990 dollars.

          Fueling the boom are Trinidad's proven natural gas reserves of more than
          21 trillion cubic feet, up from 8.9 trillion just five years ago. David Wight,
          president of Amoco Energy Co. of Trinidad and Tobago, the local
          subsidiary of the U.S. oil and gas giant, said that figure was likely to double
          yet again, while Persad predicted reserves could eventually reach 75 trillion
          cubic feet.

          "Whatever the numbers turn out to be, they are big, comparable to
          anywhere in the world," Wight said. "Trinidad has already become a very
          big and active player, both in terms of natural gas resources and the
          downstream side, offering development opportunities here in-country and
          also significant export opportunities."

          The natural gas discoveries have coincided with a downturn in oil
          production as Trinidad's proven crude reserves dwindle. Output has
          dropped from a peak of 225,000 barrels a day in the late 1970s, when oil
          accounted for 80 percent of the country's export income, to 130,000 barrels;
          at current rates of production, existing reserves will be exhausted in little
          more than a decade.

          But with oil prices in decline and now "at their lowest level in a dozen
          years," explained Finbar Gangar, minister of energy and energy industries,
          "we have consciously diversified our economy away from oil."

          The basic strategy of Prime Minister Basdeo Panday's government, which
          took power late in 1995, has been "to widen and deepen our industrialization
          thrust," Gangar said.

          As a result, this Delaware-sized nation at the extreme southeastern tip of
          the Caribbean, just seven miles off the coast of Venezuela, is already the
          second-largest exporter of ammonia and methanol in the world. By the end
          of 1999, when the last of five plants built here during the last five years
          comes on stream, it is expected to become the largest exporter of both
          those key industrial products.

          "If you stand back and look at the broad picture, you can identify four major
          industrial thrusts," Persad said. "Gas is being used as raw material for
          petrochemicals, as fuel for steel plants, as fuel for aluminum projects, and is
          being liquefied and exported."

          In addition to the methanol and ammonia complexes, plants that will
          produce urea, ethylene, fertilizers and other industrial chemicals are
          completed or under construction, many of them at the Point Lisas Industrial
          Estate on the coast south of here. The Indian steel company Ispat already
          has one plant here and has committed to another, government officials said.
          Negotiations are under way with Brazilian interests to refine iron ore mined
          in the Amazon and with other foreign investors interested in building an
          aluminum smelter here.

          "Brazil, Guyana, Jamaica and Suriname have no shortage of supply of the
          raw materials required" for such plants, Gangar said. "It's a welcome bit of
          synergy when countries in the immediate geographic region have vast
          supplies of raw materials and Trinidad and Tobago can supply the energy."

          The country's showcase project is the $1 billion Atlantic LNG Co. of
          Trinidad and Tobago complex in southern Trinidad, which officials here say
          is the largest single industrial investment ever made in the Caribbean.
          Amoco has taken a one-third interest in the project, joined as partners by
          British Gas, a unit of Centrica; Repsol of Spain; Cabot LNG Ltd., and the
          state-run National Gas Co. of Trinidad and Tobago Ltd., and is already
          talking of expansion early in the next century.

          Production of 3 million tons a year of liquefied natural gas is scheduled to
          begin in the second quarter of next year, with the bulk of production initially
          scheduled to go to Spain. But some output is also intended for New
          England, where, as Amoco's Wight noted, "the wintertime demand for
          energy far exceeds the pipeline capacity." Trinidad would be the closest
          supplier of LNG.

          Since Trinidad and Tobago achieved independence from Britain in 1962,
          Amoco has traditionally been the dominant player here. But the Panday
          government, in what one diplomat described as an effort to increase its
          leverage, has adopted "a conscious policy of avoiding overdependence on
          any one company." That has led the government to award several recent
          offshore drilling contracts to Amoco's main rivals.

          Amoco's share of total production here has dropped to 60 percent from 80
          percent, according to government estimates, and is likely to continue to fall.
          But Wight said his company was more than satisfied with its situation, in
          part because "we've had a high degree of exploratory success."

          That track record, he explained, has "elicited a huge amount of competition.
          Everyone is here now," including ARCO; Conoco, a unit of Du Pont;
          Exxon; Royal Dutch/Shell and Texaco.

          The uncertainties of international politics have also lent a hand. For
          European energy companies like Repsol of Spain, countries like Algeria and
          Nigeria may be closer, but domestic turmoil and widespread corruption in
          those energy-rich countries have made Trinidad a more attractive place to

          "Ours is not the cheapest gas on the market," acknowledged Frank Look
          Kin, president of National Gas Co. of Trinidad and Tobago. "But we believe
          we have the advantage of a legal system based on British law and a high
          degree of honesty and transparency."

          Wight agreed. "We're still working from contracts and concessions that
          date from independence," he said, which have not been tinkered with or
          renegotiated despite several changes of government. "That is rare and
          really important to a businessman."

          There are also huge reserves of natural gas, seven times larger than
          Trinidad's, in nearby Venezuela. But the leading candidate in the
          presidential election there later this year, Hugo Chavez, has threatened to
          review contracts with foreign oil companies, leading to suggestions by many
          executives that Trinidad would be the best place to process not just local
          gas reserves, but also those of Venezuela, which are concentrated in the

          "We need to develop a fair amount of Trinidad's reserves first, but we
          believe there is an opportunity there," Look Kin said when asked about the
          issue, adding that he and other government officials have talked with their
          counterparts in Caracas about the matter. "There is recognition on both
          sides that because of pure geography, Trinidad would seem to be the
          appropriate place to process some Venezuelan gas."

          The high regard in which Trinidad is held by foreign investors contrasts
          sharply with the image it had two decades ago, when the local oil boom was
          at its peak and profligate spending was the order of the day. This time
          around, chastened government officials say they are determined to maintain
          fiscal discipline and funnel the country's riches into much-needed
          infrastructure projects.

          "We know it's rare to get a second chance, and we are trying very hard not
          to make the same mistakes as in the past," Vishnu Ramlogan, president of
          the government's economic promotion agency, the Tourism and Industrial
          Development Co. of Trinidad and Tobago, said. "We're not going to let
          inflation and conspicuous consumption run away and overheat the
          economy. This time there is a consensus our new-found wealth must be
          prudently managed."