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Editorial | Get energy market opinion from CCJ

Published:Sunday | July 17, 2022 | 12:10 AM

At their summit in Suriname earlier this month, Caribbean Community (CARICOM) leaders promised to pursue energy security for the community by, among other things, “utilising and harnessing hydrocarbon resources in the region towards reducing dependency on external resources”.

Added the summit’s communiqué: “Heads of Government agreed to pursue energy diversification and security through making use of significant assets in the region with immediate existing capacity in LNG and fertiliser for agriculture.”

But, as is too often the case with declarations by CARICOM’s leaders, their statement was cryptic and imprecise, leaving it open to myriad interpretations, without placing specific responsibilities on anyone to do anything. The danger – in the absence of a clear policy underpinned by legal, or treaty obligations on the allocation and pricing of the strategic resources in the single market and economy – is that the energy status quo in the region will remain unchanged in the near term. Those countries endowed with hydrocarbon resources will, in the current environment, garner significant economic benefits, while the balance of payments deficits of energy-deficient members will soar.

Which is why this newspaper believes that not only should the CARICOM’s leaders, or the community’s secretariat, urgently clarify and provide additional details on the Suriname statement on energy. Moreover, we believe that member states, or perhaps Jamaica, should ask the Caribbean Court of Justice (CCJ), acting in its original jurisdiction as arbiter of the Revised Treaty of Chaguaramas, for an advisory opinion on the treatment of strategic resources, including energy, in the CARICOM Single Market and Economy (CSME).


While the war in Ukraine and the West’s sanctions on Russia triggered the global crisis on energy, causing a spiral in the price of oil – which accounts for over 90 per cent of energy consumed in most of CARICOM’s economies – the issue of the economic allocation of the fossil fuels produced in the community has been contentious for decades.

In the 1970s, before CARICOM’s thrust to transform itself into a single market and economy, the then Jamaican prime minister, Michael Manley, nudged his Trinidad and Tobago and Guyana counterparts, Eric Williams and Forbes Burnham, towards creating aluminium smelting capacity in the region. It would be anchored in Jamaica’s bauxite and alumina and Trinidad and Tobago’s natural gas and oil for the energy-intensive smelting process. It was contemplated that Guyana, which then primarily exported refractory bauxite, would develop its hydropower potential and move into smelting.

That idea floundered, in part because the partners couldn’t settle on the allocation of resources, especially Port of Spain’s energy. Matters were further complicated by Dr Williams’ distrust of the separate JAVAMEX aluminium smelting project Mr Manley was pursuing with the Venezuelan and Mexican presidents, Carlos Andrés Pérez and José López Portillo. Dr Williams at the time also entertained serious reservations about Venezuela’s intentions in the Caribbean.

The energy question contentiously resurfaced in the late 1990s into the early 2000s in two fronts: with respect to Trinidad and Tobago’s emergence as CARICOM’s manufacturing power, in large part because of the cheap energy enjoyed by its factories, and Jamaica’s ultimately failed bid to source natural gas from Port of Spain for its project to convert electricity generation from oil to gas. Many regional critics contended that in its domestic pricing of energy, Trinidad and Tobago was effectively subsidising its manufacturers. Indeed, in some quarters, Trinidad and Tobago, which enjoyed huge trade surpluses with its partner, was also accused of “deindustrialising” the rest of CARICOM.

In Jamaica’s case, there were questions of what price Port of Spain should supply gas to Kingston and what obligation, if any, Trinidad and Tobago had to sell the commodity to regional counterparts. In the end, despite direct talks between Jamaica’s Prime Minister P.J. Patterson and Trinidad and Tobago’s Patrick Manning, and an MOU promising supplies, it turned out the Trinidadians had no natural gas to sell. Their supplies were already committed to external markets.


The hydrocarbon situation, however, has shifted substantially in recent years. While Trinidad and Tobago, with proven reserves of 10.53 trillion cubic feet, remains a significant player in the natural gas industry, it has been supplanted by Guyana as an oil producer since following the discovery of crude off the Guyanese coast. With proven oil reserves of over 11 billion barrels, Guyana is producing around 340,000 barrels per day (bpd), more than 70 per cent above Trinidad and Tobago’s oil output that is expected to rise to over one million bpd within three years.

It is also expected that it may soon be able to harness natural gas, given its estimated reserves of 16 trillion cubic feet. Further, oil discoveries off the coast of Suriname, another CARICOM member, will lead to significant oil and gas production in that country within the next three to five years. Suriname currently produces in the region of 20,000 bpd.

CARICOM, appropriately, has stressed the need for a transition to renewables and Jamaica to have half of its electricity generated from these sources by the mid-2030s. Nonetheless, during this period of transitioning, and even afterwards, regional economies will still need fossil fuels. There should be a clear policy on how these products, when they are produced within CARICOM, are traded and priced in what is supposed to be an emerging seamless economic space. The same should apply to all other strategic commodities, including, in Jamaica’s case, bauxite.

Surprisingly, while the Revised Treaty of Chaguaramas highlights agriculture, industry, trade, transport and competition as specific areas of policy development within CARICOM, and outlines frameworks for how the community should function within these arrangements, there is no specific mention of energy. This is a shortcoming that ought to be addressed, with the help, in the immediate circumstance, of the CCJ.