A Financial Analysis of the Natural Gas Industry of Trinidad and Tobago

ABSTRACT The natural gas industry of Trinidad and Tobago is divided into the upstream and the downstream, the latter including the transmission company. Past financial data was collected for both the upstream and downstream, and a computer model was generated that incorporates the upstream with the downstream. Financial projections were made that took into account plant expansions or renovations to the year 1996. In this paper the relationships between gas price, profit and taxes for the upstream and downstream are investigated, and several combinations of upstream and downstream gas prices and their resulting effect on profitability and taxes are considered. An optimum gas price scenario is sought in order to facilitate further development of the gas industry. The significance of the natural gas industry as a foreign exchange earner is also discussed. The paper concludes that the current pricing system may be close to the optimum, if speedy development of the country's natural gas resources is the principal objective of the system.