Could you please provide an overview of Republic Bank’s current involvement in the oil and gas sector?

Republic Bank’s involvement in the oil and gas sector is primarily in the services sub-sector of the economy. Large multinational players usually handle the funding of large and risky exploration activities, while direct involvement with the upstream is through state energy companies like Petrotrin. We finance the importation of oil to be refined and sold since Petrotrin refinery’s capacity is much greater than their production. We also assist multinational companies in acquiring customs bonds and importing equipment. In addition, we work with service companies in the acquisition of equipment.

There seems to be a disconnect between the oil and gas sector and the rest of the economy in Trinidad and Tobago. What are your thoughts on this?

It is true that the Trinidad and Tobago financial sector needs to become more involved in the energy sector. This could be achieved with the help of a more proactive local content policy, which would encourage a deeper relationship across the value chain. Venezuela and Suriname are examples of countries where the local state company plays a bigger role in those economies. Therefore, the right incentives can help put this in place.

How do you compare Trinidad and Tobago’s oil and gas sector to those of Colombia or Canada in terms of the finance sector’s involvement in operational and start-up costs and risk capital? Do you see an opportunity to increase levels of involvement?

There is certainly potential to increase the finance sector’s involvement in the operational and start-up costs and risk capital of the oil and gas sector in Trinidad and Tobago. However, for this to happen, there needs to be a change in the laws, regulations, and tax codes. The government needs to provide more incentives for banks to lend to the upstream exploration and production sector. At the moment, the lag between drilling, striking oil, and seeing returns is too much of a risk for banks to get involved. Furthermore, banks in Trinidad and Tobago are relatively small, and there needs to be an all-round partnership between the government and local banks to create a system of consortium lending to service the oil and gas sector.

How has Republic Bank been affected by the marked downturn in overall production coming out of Trinidad and Tobago in the past few years?

The vibrancy of the oil and gas industry determines the business that we get. Petrotrin’s current production is just under 45,000 barrels of oil per day, and the present administration has mandated them to increase their farm-out and leasing operations, which is expected to bear fruit in a few years’ time. Much of the production, particularly onshore, is not big enough for larger companies to invest in, but this is an ideal space for juniors to get involved, as is happening now. With the downturn, lending to the sector dropped, and service companies had less business. This trend has started to be reversed.

In what other ways can the finance sector get involved in the industry besides lending, and how can Republic Bank assist in this?

Another way in which the finance sector can get involved in the industry is through the stock market. Republic Bank sees opportunities for synergy in this arena. There is a secondary market in Trinidad and Tobago in which many investors buy to hold rather than buy to trade. In general, the regional stock markets are quite flat. If more companies could be encouraged to list and make the market more robust, the increased dynamism would benefit all. Republic Bank is available to advise companies on listing and pursuing their Initial Public Offerings (IPOs). Our liquidity situation is also very decent, and with the right circumstances, we have a great deal of money to lend. We are working with the Energy Chamber and others to convert some of the opportunities into projects.