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
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
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.
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."
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.
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.
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.
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.
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."
"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
"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