The Political Economy of Natural Gas in Trinidad and Tobago
University of Arizona
Global consumption of natural gas is projected to double by 2030, edging it past coal
to become the second most exploited source of energy in the world (EIA 2004). Gas has
gained popularity due to its relatively clean and efficient combustion when compared to
both coal and oil. Growth in demand is expected to be greatest in the United States,
Western Europe, China, Brazil and India, primarily for generation of electrical power to
be used by heavy industry and residences (Barnes et al 2006). As fate would have it, the
vast majority of natural gas reserves are located in areas distant from these purchasing
markets, and to further complicate matters, often in territories of states considered
politically unstable by Western standards. Therefore, the past several decades have born
witness to considerable technological and geopolitical acrobatics as multinational
corporations and state governments worked to provide or secure access to this
increasingly valuable resource.
Countries with gas fields are finding it more lucrative to extract and monetize their
reserves. One such state is Trinidad and Tobago (hereafter Trinidad), which has
succeeded in overhauling its economy largely around its gas sector in twenty years. The
boom in natural gas exploration and development has helped the twin-island nation
transform itself into a major player on the Western Hemisphere gas scene. A key factor
in Trinidad's recent economic growth has been revenue earned from the export of
liquefied natural gas (LNG).
Trinidad shifted the dynamics of the Atlantic Basin gas trade when the first carrier of
LNG left its Point Fortin production facility bound for Boston in April 1999. The
world's largest natural gas importer, the United States, was at that time seeking additional
feeds to supplement slumping domestic and Canadian pipeline supplies. Spain, being
peripheral to Europe's pipeline system, was also seeking to diversify its imports and
chose to support the Atlantic LNG venture. LNG projects in Algeria, Venezuela and
Nigeria were Trinidad's main competitors; however, political and technical challenges
had stalled their expansion processes (Shepard and Ball 2006). As a result, Trinidad
assumed a privileged position in an increasingly charged domain of Caribbean and
Atlantic energy geopolitics.
This paper will analyze the political and economic discourses that have emerged
with Trinidad's natural gas projects, both internationally and among Trinidadians. I
begin by reviewing the history of natural gas development on the island, with a particular
eye towards recent economic patterns and the significance of foreign direct investment
(FDI). Then I examine Trinidad's current petro-geopolitics, focusing specifically on
relations with the Venezuela, Jamaica and the United States. I conclude with some
questions on the local impacts of natural gas operations by discussing corporate social
responsibility and inspecting the success of industrial "local content requirements" in
History of an Industry
Trinidad's economy has been deeply reliant upon hydrocarbons for over a century.
Oil was first discovered on the island in 1886, and has been extracted since 1907
(Geological Society of Trinidad & Tobago 2005). Gas was either flared or used solely
for oil recovery until 1958, when Federation Chemicals engineered a process by which
gas could be employed for ammonia production (Shepherd and Ball 2006). In the 50's
and 60's, Trinidad, like many other non-Hispanic Caribbean nations, adopted the
strategies of the St. Lucian economist and Nobel Prize winner Arthur Lewis, who
stressed that industrialization and diversification were essential for economic
development. Lewis outlined a model for industry growth based on foreign capital
investment, meant explicitly as an alternative to dependence on agricultural exports. The
purpose of the strategy was to dismantle the plantation economy and alleviate the rising
unemployment it had generated by attracting foreign private investment to support an
export-focused manufacturing sector (Serbin 1990).
In Trinidad, this development process was highlighted as a key objective of Eric
Williams' People's National Movement (PNM) government by the mid 60's, particularly
in light of statements made by Britain in 1965 that they would give up the system of
Commonwealth preferential arrangements, by going into the European Common Market.
In other words, subsidies for agricultural products such as sugar, citrus and cacao would
be cut, resulting in devastation for these industries (Braveboy-Wagner 1989). In fact this
move did not occur for another several decades, yet Williams decided to take the juncture
as an opportunity to reduce Trinidad's dependence on Britain by aggressively
diversifying the economy. While this initiative had wide-ranging effects, it manifested
most significantly as an expansion of industries that could capitalize upon the island's oil
and natural gas reserves. A host of multinational corporations such as Alcoa and
Honeywell established large-scale industrial complexes that fed off natural gas to
produce aluminum, ammonia, methanol, iron and steel.
By the early 70's, it had become clear that passive reliance on outside investment
would not serve the country well economically. Much of the industry Trinidad had
attracted through tax breaks and other incentives was capital-intensive rather than labor-
intensive, resulting in minimal job-creation and monetary spillover. Unemployment
reached 17 percent in 1970, and the country bore a large fiscal deficit (Shepherd and Ball
2006). Barclay (2004) also notes, "the government made little attempt to augment the
modest managerial and technological capabilities of domestic firms". She argues that
Williams' administration neglected developing local institutions in its rush to create an
environment where foreign capital could flourish. With a well-organized, at times violent
Black Power movement added to this milieu, Trinidad found itself on the brink of a
socio-economic crisis of massive proportions.
The Arab oil embargo of 1973-74 could not have come at a more opportune time for
Trinidad. In 1972, the price of oil was roughly $3.00 per barrel, and by the end of 1974
its trading value had quadrupled to nearly $12.00 per barrel (Williams 2005). New
discoveries of crude off Trinidad's east coast paralleled the huge price spike, resulting in
substantial profits for the national coffers. Williams' government chose to roll this
windfall capital into large-scale social and economic infrastructural development
projects. One such venture was the construction of Point Lisas Industrial Estate, a 1000-
ha complex situated on a bay 25 miles south of Port of Spain. Point Lisas, with its deep-
water port and specialized machinery for bulk handling of methanol, ammonia, urea and
iron, was designed specifically to house industries dependent on natural gas (Barclay
2004). Also during this period, Trinidad's government adopted a more active managerial
stance over its oil and gas reserves, exemplified by its acquisition of Shell's operations in
1974 (Shepherd and Ball 2006). While it did not officially nationalize the industry, the
government established a clear agenda to ensure greater control over both oil and gas
production through increased administration vis a vis so-called "Third Way" policies,
which tacked between Trinidad's liberal economic platform and Cuba's communist
arrangement. Towards this end, the National Gas Company was established in 1975 and
given the charge of overseeing all aspects of gas trade within the country (Williams
Trinidad and Tobago rode the wave of surging oil prices through the 1970's to the
early 80's and experienced unprecedented economic growth, seeing its GDP rise from
US$1.3 billion in 1973 to US $8.1 billion in 1982 (World Bank 2003). However, the
global market could not then function with oil costs near $35.00 a barrel, and a
worldwide recession ensued. Government white papers from 1981 show that Trinidad,
concerned about signs that the oil sector was declining, began renewing their
commitment to favor natural gas "as a premium energy resource and as a potential
generator of foreign exchange"(Williams 2002:23). Nevertheless, they were not spared
the downturn, and entered a period of recession from 1983 to 1989. Part of Trinidad's
woes stemmed from the failure of its gas-based projects to realize their fiscal objectives.
According to Farrell (1987), the investment decisions in this sector had been based on
forecasts that proved naive. Ammonia and methanol prices had remained low, causing
these plants to fall well short of their financial expectations. The steel plant also stalled
during the early 80's, plagued by a host of problems including technical and managerial
ineptitude, gas supply breaks and anti-dumping fees imposed by U.S. importers.
Stumbling gas projects and the collapse of oil prices in 1985 undermined a Trinidadian
economy that saw unemployment rise from 9.9 percent in 1982 to 22 percent in 1990
(Shepherd and Ball 2006).
In 1989, with its external debt at US$2.5 billion, Trinidad and Tobago's government
was forced to seek aid from international lending agencies (Barclay 2004). The loan
conditions indicated that Trinidad must implement a series of stabilization and structural
adjustment programs. As a result, the government was compelled to shift radically away
from its Third Way policies of state economic involvement and towards the statutes of
the Washington Consensus, including liberalized trade and foreign exchange, divested
state assets and foreign investment incentives. The state in effect yielded the job of
economic development to the multinational private sector while it adopted a regulatory
capacity. This transition is outlined in a Green Paper on energy policy published by the
government in November 1992, with the key points summarized by Shepherd and Ball:
Shift to natural gas to monetize the island's most plentiful resource
Promote competition within the energy industry to maximize the government's take
and to attract new business to Trinidad and Tobago with the country's abundant
supplies of natural gas
Privatize local industry to promote efficiency and repay national debt (2006:275).
Multinational corporations responded to these favorable conditions immediately, and in
the early 1990's foreign direct investment jumped to nearly US billionn (Barclay 2004).
One of the initiatives through which Trinidad and foreign investors sought to
monetize gas reserves was a liquefaction facility. Three previous attempts at LNG
projects on the island had failed-one in the early 1970's with Amoco, another in the
early 80's with Tenneco and Amoco once again in 1990 (Shepherd and Ball 2006). A
relatively small Boston-based company named Cabot LNG approached the government
of Trinidad and Tobago in 1992 to renew the discussion on developing an LNG export
terminal. Cabot owned the Everett LNG receiving facility north of Boston, and was
eager to secure a new source of gas to supply the expanding New England market.
Pipelines into the northeastern U.S. were minimal, and the Algerians only shipped LNG
during peak winter months when prices spiked. The Trinidad and Tobago National Gas
Company chose to promote Cabot's project, and together with Amoco and British Gas,
they signed a memorandum of understanding in late 1992. By 1995, these partners, now
joined by the Spanish oil and gas firm Repsol, had formed ajoint venture company
named Atlantic LNG to operate the export project (Shepherd and Ball 2006).
Construction of train 1 began in the town of Point Fortin on Trinidad's southwest coast in
1996, and the first carrier vessel arrived in Boston late April of 1999. A two-train
expansion project began in 2000, with train 2 coming online in August 2002 and train 3
in May 2003. Construction of train 4 commenced in 2003 and it shipped its first load
January 2006. Train 4 is currently the world's largest operating liquefaction terminal,
with a capacity of 5.2 million metric tons per annum (Atlantic LNG 2007).
Trinidad and Tobago's Prime Minister, Patrick Manning, has been a vocal proponent
of LNG export throughout his tenure, dismissing critics who lobby for greater allocation
of gas reserves to domestic, employment-intensive projects. Perhaps in response to this
argument, Manning's administration created a host of incentives to attract chemical
producers to the island, and the effort has paid off-as of 2002, Trinidad and Tobago led
the world in exports of both ammonia and methanol (Williams 2002). Foreign
corporations are also utilizing natural gas feedstock to produce butane, propane, urea,
butyl ether, steel billets and direct reduced iron (Barclay 2004). This rapid development
of the gas-fired heavy industrial and petrochemical sector persists presently, and has
helped expand the national GDP by 20 percent since 2005 (James 2007). However,
Trinidad and Tobago's failure to diversify industrially and its dependence on foreign
earnings have raised pressing concerns among analysts over the nation's rising inflation
rates and its economic resilience.
Caribbean Basin Gas Geopolitics
As natural gas, and LNG in particular, gained market value these past fifteen years,
Trinidad and Tobago found itself enmeshed in a dynamic set of political and commercial
relations, both regionally and internationally. Its traditional wariness of imperialist
advances from neighboring Venezuela and the United States led to cautious diplomacy
with these governments over oil and gas projects. However, Trinidad's drive to monetize
its gas reserves all but required that it engage with the two biggest players in the Western
hemisphere energy game. Of no less importance to Trinidad is its association with
Jamaica and other fellow CARICOM member states, who account for roughly 40 percent
of Trinidad's total exports annually (Lewis 2002). These relations are also contested
around issues of oil and gas, as Trinidad and Tobago attempts to provide CARICOM
nations with preferential pricing agreements while also satisfying the production demands
of its multinational corporate partners. Venezuela is attempting to undermine Trinidad
and Tobago's privileged economic role in the Caribbean through its PetroCaribe
initiative, which allows its participants to pay 60 percent of costs upfront for petroleum
products while financing the rest with long term, low interest loans. Currently most
CARICOM countries, with the notable exception of Trinidad and Barbados, have signed
on to PetroCaribe.
Relations between Trinidad and Venezuela are deeply nuanced, and framed by a
checkered history. The two nations, separated only by seven miles across the Columbus
Channel, have alternately abetted and destabilized each other's energy projects since
Trinidad's independence in 1962. Their diplomatic affairs have also been influenced by
long-standing differences and tensions between Latin American and English-speaking
Caribbean countries. Trinidad and Jamaica's request to join the Organization of
American States (OAS) was not met favorably by the Latin American members, who
openly distrusted the former colonies' continued ties to Great Britain (Serbin 1990).
After four years of debate and deliberation, Trinidad was granted accession in 1967.
Rather than easing sensitivities between Latin and Anglophone Caribbean states, the
OAS may have further differentiated them, particularly when blocs formed as other
newly independent nations joined. The line was drawn even more clearly in 1973 when
the English-speaking Caribbean states created CARICOM and excluded the Latin
Jacqueline Braveboy-Wagner (1989:48) characterizes Venezuela's policies towards
the Anglophone Caribbean during the 1960's and 70's as a "manifest destiny" initiative.
Venezuela envisioned the decline of British colonialism as creating a power vacuum in
the region, and it was their intention to counteract both Cuban and American influence
through attractive commercial and financing programs. After the 1973 oil crisis, the
Carlos Andres Perez government intensified their regional involvement by directing
substantial economic assistance to the Caribbean through the Venezuelan Investment
Fund. Beneficiary countries had contingencies placed on loans requiring that they
participate in a series of development and energy cooperation projects, and use funds to
purchase Venezuelan goods (Serbin 1990). In 1975, Trinidadian Prime Minister Eric
Williams "sounded the alarm of Venezuelan economic and territorial imperialism, only to
see his warnings dismissed by Caribbean leaders anxious to profit from Venezuelan
largesse" (Braveboy-Wagner 1989:48). It is worth noting the remarkable parallels
between this conflict and the current tensions, more than thirty years later, surrounding
Hugo Chavez's PetroCaribe initiative, on which Trinidadian Prime Minister Patrick
Manning recently cautioned fellow CARICOM member states by saying, "It is a question
of cutting your own throat if you are not careful" (Observer 2006).
Despite these sensitivities, the neighboring countries have been flirting with a natural
gas partnership since the late 1990's. Venezuela has been unsuccessfully attempting to
build an LNG facility for over fifteen years, and while President Chavez remains
confident that a functioning Guiria LNG plant is imminent, he has expressed interest in
monetizing Venezuelan gas at Trinidad's Atlantic LNG facility during the interim period
(Williams 2003). The two governments have agreed to move towards the unitization of
gas fields that straddle their marine borders, in particular the major Loran and Kapok
fields that each hold estimated reserves of 6 trillion cubic feet (James 2007). Talks over
this unitization, first initiated in 2002, have proceeded slowly and stalled regularly over
disputes on quantities of gas on both sides of the border. Nevertheless, Prime Minister
Manning and President Chavez signed the first offshore unitization agreement in the
Western Hemisphere on March 20, 2007 (Javeed 2007). While the signing of this
agreement is quite remarkable, its execution would be nothing short of miraculous. As
recently as 2002, Benardo Alvarez, Venezuela's vice-minister of energy, announced that
"Venezuela is unwilling to allow its gas to be used to support the future expansion of the
Atlantic LNG plant at Point Fortin, Trinidad" (Oil & Gas 2002).
Diplomatic maneuvers aside, Venezuela is clearly reticent to assist Trinidad with its
gas projects. However, due to the constraints of its nationalized energy sector, Venezuela
has been unable to secure and sustain the foreign participation that is necessary to bring a
multi-billion dollar, technically demanding LNG facility online. In 1990, Royal Dutch
Shell, Exxon and Mitsubishi were invited by the Venezuelan government to participate in
the Cristobal Colon LNG project. However, perhaps in concession to the opponents of a
multinational corporate presence, the new LNG joint venture was offered access to gas
fields that were remote and challenging to develop (Shepherd and Ball 2006). After a
contentious period of debate and struggle, the project ultimately folded in 1997.
According to Minister Alvarez, the Venezuelan LNG project is 20 years behind, and
"playing catch up with Trinidad and Tobago" (Oil and Gas 2002). Therefore, at the
present moment, Venezuela is left with the choice of either leaving gas fields stranded, or
aiding its key (potential) LNG competitor by monetizing gas with Atlantic LNG in
Trinidad. This issue of unitization will be of central importance for relations between
Trinidad and Venezuela in the coming years, and will likely set fundamental precedents
for the geopolitics of energy in the Caribbean Basin.
At least since their independence in 1962, Trinidad and Tobago and Jamaica's
divergent paths towards decolonization have patterned the two nations' energy politics.
Arguably, both states vie to assume the role of intermediary power in the Anglophone
Caribbean, with Jamaica being the largest island and Trinidad traditionally being the
wealthiest. Modern relations date back to the West Indies Federation, which was
imposed in 1958 by the British who were intent on minimizing the burden of colonial
responsibility. Braveboy-Wagner (1989:39) notes that the Federation was torn asunder
by "intense disagreements" between Jamaica and Trinidad over the correct balance
between nationalism and regionalism that should be struck. Jamaica privileged the
former, and accordingly left the federation to seek independence. Trinidad declined to
join a Federation minus Jamaica, and it dissolved as Trinidad also obtained independent
status. Trinidad's frustration at Jamaica's departure from the Federation, "bred a legacy
of wariness and distrust, as well as a counter-productive sense of competition" towards
Jamaica (Braveboy-Wagner 1989:54). While there have been many examples of
multilateral agreement between Trinidad and Jamaica, this bitter sentiment continues to
impact diplomacy and terms of commercial exchange between the two states.
Jamaica first initiated discussions with Trinidad regarding an LNG agreement in
1993. The Jamaicans are interested in powering their bauxite refineries and electrical
plants with gas, which are currently oil-fueled. In the original memorandum of
understanding (MOU), Trinidad committed to supplying 158 million cubic feet per day to
a 1.5 million ton regasification terminal that would be build in Jamaica. The state-owned
gas companies of each nation agreed to create a joint venture firm to manage the project,
with Jamaica taking a 60 percent stake and Trinidad 40 percent (James 2007). However,
terms of the deal have subsequently faltered. Jamaica insists that under the auspices of
the CARICOM Single Market and Economy (CSME), Trinidad is obligated to provide
Jamaica with "national treatment" by selling LNG at the same price its own National Gas
Company buys natural gas. In 2006, Trinidadian Prime Minister Manning assured the
Jamaicans that a mutually acceptable pricing arrangement would be settled upon for the
long-term LNG provision scheduled to commence in 2009 (Bryan 2007). Trinidad
maintains, however, that the Caribbean gas price must bear some relation to Henry Hub
(the US natural gas benchmark), while Jamaica is holding out for pricing based on a
Recent statements by Trinidad's government have raised the charged discourse with
Jamaica over gas projects to a fever pitch. In March of 2007, the National Gas Company
of Trinidad and Tobago announced that it would not be able to supply Jamaica with LNG
by 2009 as planned, due to its own domestic demands (Bryan 2007). The response from
Kingston has been hostile, with threats of a "trade war" issuing from the Jamaican
manufacturer and commercial community, in order to compensate for the resultant trade
disadvantage. Commentators in Trinidad have also keyed in upon its government's
unrealistic promises to Jamaica and vocalized questions about the actual status of
Trinidad's natural gas reserves. Prime Minister Manning, however, publicly contends
that the Loran Manatee field, which Trinidad has agreed to unitize with Venezuela, will
yield gas for the Jamaica project (Javeed 2007). He maintains that Trinidad will uphold
the Jamaica deal upon completion of a planned Train 5 in Point Fortin, which will draw
gas from Loran, and is anticipated to go online in 2010. Jamaica, however, has already
entered into discussions with Venezuela regarding the feasibility of adding LNG to its
PetroCaribe initiative (Bryan 2007). While this option remains questionable due to
Venezuela's lack of an LNG facility, the case study underscores the volatility of the
energy politics between these three nations.
The United States
As the primary purchaser of Trinidad and Tobago's LNG, the United States plays an
influential role in the nation's energy affairs. However, Trinidad has recently shown
interest in diversifying its markets as other buyers outbid prices paid by the U.S.
According to Prime Minister Manning, "We have decided that we are not placing all our
eggs in one basket" (James 2007). Trinidad is discussing LNG deals with Brazil,
Mexico, Britain, South Korea and Japan, among others. Friction between Washington
and Port of Spain has risen not only due to this potential shift in supply agreements, but
also over Trinidad's negotiations with Venezuela on multilateral LNG projects. A
Washington official who chose to remain anonymous recently cautioned in a trade
journal that, "Trinidad and Tobago has to take into account the current tension in
relations between Venezuela and the U.S. Making a firm arrangement with Caracas on
this (LNG) is not very attractive at this time" (James 2005:15). As the U.S. looks
increasingly to LNG for its energy needs, diplomacy with Trinidad has become more
directed and pressing as Washington works to shore up vital trade contracts while also
countering moves by the Chavez administration to further extend its influence in the
The current relations between Trinidad and the US are situated within a history
punctuated by several main developments. The Caribbean Basin did not emerge as a sub-
region distinct from Latin America in U.S. hemispheric policy until the Carter
administration. In 1976, President Carter outlined a new approach to U.S.- Caribbean
relations based on a respect for the sovereignty of each nation, a strong commitment to
human rights and renewed support for economic development in the region (Serbin
1990). Trinidadian Prime Minister Eric Williams enjoyed a good relationship with U.S.
ambassador Phillip Habib during this period, and much of the bitterness carried over from
U.S. military presence on the island during the Cold War appeared to be dissipating
(Maingot and Lozano 2005).
Yet a dramatic shift occurred towards the end of Carter's term as increasing Cuban
militarization, the Sandinista revolution and a successful communist coup in Grenada led
to a more aggressive U.S. regional stance. Under President Reagan's leadership, the U.S.
intensified security activity in the Caribbean as part of its strategy to contain the Soviet
threat. Trinidad responded by once again distancing itself from the U.S. and adopting an
isolationist, Third World position in regional affairs, including its stance on the People's
Revolutionary Government in Grenada (Braveboy-Wagner 1989). By advocating
nonintervention in the Grenada case, Trinidad effectively alienated itself from the other
CARICOM nations and lost favor with the U.S. government. As Serbin notes:
The internal crisis unleashed within the government of the New Jewel Movement in Grenada
and the subsequent military occupation was probably the best opportunity that could have
presented itself to the Reagan administration for reaffirming U.S. hegemony in the region, an
action incurring relatively low military costs, but paying high political and psychological
dividends. The occupation of Grenada allowed the United States to neutralize leftist sectors
in the region, to isolate Cuba in the island Caribbean, and to promote certain governments,
such as those of Jamaica and Barbados, which at the time identified openly with U.S. policy
Shortly after the Grenada invasion, Trinidadian Prime Minister George Chambers
initiated a radical paradigm shift by realigning the economy around foreign investment,
accepting an IMF development package and announcing that, "the f6te is over and the
country must go back to work" (Maingot and Lozano 2005:50). Needless to say, by
embracing neoliberal economic policies, Trinidad and Tobago did much to improve its
standing with the United States. This new integrated alignment crystallized further when
Trinidad signed NAFTA in 1997.
For the past several decades, political and economic relations between the United
States and Trinidad have revolved primarily around natural gas products. While trade in
ammonia, methanol and fertilizers continues to be significant, the focus is increasingly on
Trinidad's LNG exports. In 2006, the United States imported roughly 580 billion cubic
feet of LNG, 67.6 percent of which came from Trinidad (Egypt, Nigeria and Algeria
provided the rest) (Gaul and Platt 2007). As its domestic production levels off and
demand increases, the U.S. expects to compensate with LNG imports. According to
Michael Zenker of the Cambridge Energy Research Associates, "The North American
markets are now dependent on the growth of liquefied natural gas. If we don't get LNG,
we don't have a plan B" (Burr 2005:29). The Bush administration has supported the
initiative by subsidizing and streamlining the regulatory process for the construction of
new re-gasification terminals, the majority of which are sited along the Gulf Coast (Gold
Ironically, the existing U.S. terminals are only importing roughly half the volume of
LNG they can handle. Why? The Americans are being aggressively outbid by Asian and
European buyers. As the industry consultant James Jensen notes, "there was a self-
indulgent, myopic belief that if the U.S. builds a terminal, everyone wants to supply us.
And that is what has been wrong" (Gold 2005:C1). Rather, overseas competition has
created a global LNG shortage, resulting in the rise of "spot-market" trading. Spot-
market refers to single cargo deals between a buyer and seller, in contrast to long-term
contractual agreements. Trinidad has been quick to enter the volatile, but highly
profitable spot-market trade in LNG, often to the detriment of the U.S. market. As Gaul
and Platt illustrate, "LNG netbacks to Trinidad and Tobago for cargoes shipped to Spain
and the United Kingdom in September 2006 were $9.17 and $5.32, respectively,
compared with $3.71 for shipments to the United States at the Lake Charles terminal"
(2007:6). Trinidad is also looking towards South Korea and Japan, which both rely on
LNG for over 90 percent of their natural gas supply, and have shown willingness to
outbid U.S. buyers.
The U.S. government's deep concern over terrorist attacks has also impacted its
LNG import project. LNG tankers and storage facilities have long been fretted over as
potential terror targets. In 2004, Candyce Kelshal, of Bluewater Defence and Security
Ltd., published "Radical Islam and LNG in Trinidad and Tobago", which outlines the
potential security risks the U.S. faces through its connections to Atlantic LNG. The
report focuses on a militant sect of Black Muslims, the Jamaat-al-Muslimeen, which in
1990 staged a coup wherein the prime minister and members of Parliament were taken
hostage. The coup was put down, but not before riots and looting had sacked much of the
capital, Port-of-Spain (Maingot and Lozano 2005). Nearly all of the militants were
offered amnesty and set free. This is an important challenge to LNG projects, one that
will require a further study all its own.
The Local Experience of Natural Gas Projects
The costs and benefits of Trinidad's natural gas production for its citizens remains a
contentious, while often muffled, debate. Government and industry spokespersons laud
the positive impact gas projects have had on employment and public services, while
community members and advocacy groups protest environmental and health hazards they
associate with gas facilities (Williams 2003). A pressing question concerns the degree to
which largely multi-national corporate gas-based enterprises produce benevolent
spillovers that support domestic economies and livelihoods. On the other hand, how are
the toxic spillovers (i.e. pollution & forced relocations) that invariably result from large-
scale gas and chemical projects mitigated against by state and corporate policies?
Scholars have paid very little attention to the localized experience of the oil and gas
industry anywhere, much less in the particular case of Trinidad and Tobago. This section
attempts to situate the Trinidad example within a broader analysis of the local impacts of
and responses to hydrocarbon production.
In late 2001, Trinidadian Prime Minister Williams initiated a new plan for
"sustainable gas development", which stressed utilizing energy sector growth as a
catalyst for investing in local capabilities and promoting wealth at the grass-roots level.
The Prime Minister insisted that his government was, "not being superficially about
ensuring the attainment of minimal local content quotas in energy operations. Far from
it, we are encouraging a collaborative approach between our partners to assist locals to
take on more value-added roles, management, and ownership in our economy" (Williams
2002:22). While Prime Minister Williams' initiative was greeted with optimism by civic
leaders and in the national press, its actual implementation would face serious challenges.
First, most natural gas production projects simply do not create a large number of jobs.
While a substantial amount of labor is required for the construction phase, LNG plants,
offshore gas developments and chemical facilities are not significant generators of
employment when operating (Shepherd and Ball 2006). Furthermore, due to the effects
of modernization, the global trend in the oil and gas industry is towards a consolidated
number of higher-paying and coveted industrial and service sector jobs. As Ross (2001)
notes, these industries tend to be "enclaves" which yield minimal linkages, or
employment opportunities, and provide few non-state multiplier effects.
In order to overcome such challenges and ensure that oil and gas projects have
domestic linkages, a host government must institute aggressive policies and legislation to
bring about their stated objectives. Trinidad has historically pulled up short of these
directed actions. Barclay notes that the oil boom of the 1970's was a "golden opportunity
for Trinidad and Tobago to use the foreign investor to enhance its indigenous
technological capabilities" (2004:489). Yet by failing to formulate and implement
selective intervention policies towards foreign corporations, the Trinidadian government
was unable to tie sustained domestic development programs to the oil and gas sector. By
the late 70's and early 80's, Trinidad had initiated an export-oriented, gas-intensive
strategy for economic growth, providing additional opportunities for directed policy to
support indigenous capacity building. Once again, the administration failed to capitalize.
The evidence suggests that the planners were well aware of technology policy problems such
as the need for locals to acquire the technical skills to operate the facilities. Yet no policies
were devised to develop such skills. Neither the local university nor the local technical and
vocational institutes offered training programs for this industry. Little attempt was made to
define the areas in which local capability could be built over the long term and the specific
technologies that foreign firms could contribute (Barclay 2004:491).
When, in 1989, Trinidad moved towards structural adjustment programs, liberalized trade
and exchange markets, the government's power to establish domestic linkages with
transnational oil and gas projects further eroded.
During the past decade, Trinidad has begun imposing 'local content requirements' on
foreign-owned companies operating in its natural gas industry. While the government
definition of local content remains unclear, this policy is intended to at minimum ensure,
on a contract-by-contract basis, that a specified percentage of labor and service is
domestic. Critics assert, however, that corporate compliance with these requirements is
inconsistent at best, due to the lack of any state agency tasked with monitoring adherence.
For example, one of the reported conditions for developing the first Atlantic LNG train
was that $100 million be spent by foreign firms on the services of local companies.
Policy makers recently estimated that local content in reality achieved approximately
$25-33 million (Barclay 2005). It is worth noting that industry representatives make the
reasonable claim that local service providers are in many cases not globally competitive,
or fail to have necessary training. Partially in response, Trinidad's government has asked
both foreign and local firms to make financial contributions to aide national human
resource development. These monies support technical training institutes designed
specifically to prepare people for work in the energy sector. Yet the state did not
establish a cohesive, legally binding system for securing this funding. As a result, some
transnational firms have come to view these contributions as a tax, and since the
obligation is not constituted by an act of parliament, they refuse to pay (Barclay 2005).
The aims, along with the structural weaknesses, of Trinidad's content requirement
and corporate contribution programs bear a striking resemblance to those of the corporate
social responsibility (CSR) movement. According to the World Business Council for
Sustainable Development, CSR is "the continuing commitment by business to behave
ethically and contribute to economic development while improving the quality of life of
its workers as well as the local community and society at large". CSR gained momentum
during the 1990's due to the critical attention an increasingly effective global human
rights advocacy network was able to draw towards a series of corporate disasters. Facing
public relations backlashes and boycotts, oil and gas companies in particular moved
quickly to draft codes of conduct which outlined their dedication to issues such as
community development and environmental responsibility. Yet from the start, CSR was,
as Watts notes, considered by corporations to be "an explicit endorsement of voluntary
approaches rather than mandatory regulation" (2005:394). Therefore, as the oil slicks
dissipated after a tanker spill or as the memory of Ken Saro-Wiwa in Nigeria began to
fade, transnational corporations were able to view CSR as a voluntary add-on to their
business portfolio. Without mandatory regulations aggressively monitored by the host
state, initiatives such as Trinidad's content and contribution programs, and CSR
agreements the world over, will remain frail statutes intermittently upheld at the whims of
The Siren Song of Boom and Bust
It is clear that natural gas has provided Trinidad and Tobago with a much-needed
economic boost, visible from its rising national GDP, capital improvement projects and
fleet of new sports cars in Port of Spain. In the realm of energy geopolitics, Trinidad has
assumed a privileged position for a country of its size. Yet questions have emerged about
the development path it has chosen. In a dramatic turn from its statist approach during
the 1970's, Trinidad's government has stepped back from its active, interventionist role
in the nation's economic affairs. Rather, with a style much akin to the one prescribed by
the World Bank and IMF, the government has adopted a facilitating stance, largely
entrusting the economic development of the country to foreign firms. The problem here
is that the overriding concern of corporations is net gain, which will inevitably be
privileged over the long-term capacity building of its host nation. Trinidad's inability to
implement corporate intervention policies has resulted in its citizens possessing only
static technological capabilities, the underdevelopment of local downstream and
supporting firms, and weak domestic training institutions (Barclay 2004). It could be
said that Trinidad is falling headlong into the boom and bust trap all over again. Rather
than investing in the domestic production apparatus and laying the foundation for new
economic diversity, Trinidad's government appears to be relying on natural gas and
foreign exchange to keep the country secure.
Not all Trinidadians feel secure tying their future to natural gas. Experts claim that
the host of proposed gas-fed projects, including two new LNG terminals, a steel mill and
a fertilizer plant, will run well ahead of available supplies (James 2007). Residents are
also mounting protests against the adverse environmental and health affects they
associate with the multitude of chemical and industrial operations on the island (Williams
2003, Ragoonath 2003, Fernandes 2006). Very little is known about how the costs and
benefits of natural gas production are distributed across socio-economic, racial and
geographic categories in Trinidad. Field research must be conducted in order to
adequately address these critical issues.
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Harvey, D. (2005). The New Imperialism. Oxford: Oxford University Press.
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(21 April 2007).
From: Judith Rogers [firstname.lastname@example.org]
Sent: Saturday, March 29, 2008 3:38 PM
To: Erich Kesse
Subject: FW: A CSA paper...
Attachments: Trin LNG Paper2.doc
Paper2.doc (85 KB)
I've sent CDs by post.
From: email@example.com [mailto:firstname.lastname@example.org]
Sent: Friday, June 08, 2007 5:50 PM
To: Judith Rogers
Subject: Digi archive
Hello, Judith we met briefly at the conference last week. I took the signature form
for submitting my paper, and thought you would be there for awhile, but your poster was
gone by the time I returned. So I've attached the paper here, and have the form signed.
How can I send it to you? And also, this may not be the final draft of the paper.
Should I send you another version as I edit more? What is your timeline?
Thanks, and let me know as your project develops.
Department of Anthropology
University of Arizona