Development strategy and nationalisation in the oil industry of Trinidad Tobago : the case of Shell Trinidad Limited

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DEVELOPMENT STRATEGY AND NATIONALISATION IN THE

OIL INDUSTRY OF TRINIDAD-TOBAGO: THE CASE OF SHELL TRINIDAD LIMITED

A THESIS PRESENTED TO TO

THE LATIN A;vJERICAN FACULTY OF SOCIAL SCIENCES CFLACSO)

FOR THE DEGREE OF

MASTER IN DEVELOPMENT STUDIES

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DEVELOPMENT STRATEGY AND NATIONALISATION IN THE

OIL INDUSTRY OF TRINIDAD TOBAGO THE CASE OF SHELL TRINIDAD LIMITED

A THESIS PRESENTED TO

THE LATIN A~ERICAN FACULTY OF SOCIAL SCIENCES (FLACSO)

FOR THE DEGREE OF

MASTER IN DEVELOPMENT STUDIES

DIRECTOR: CO-DIRECTOR:

ASESSOR:

Sabine Fischer, (FLASCO), Quito

Mr. Carl Parris, Snr. Lecturer in Department of Government University of the West Indies, Trinidad.

Lcdo. Gonzalo Abad, Director of FLASCO, Quito

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CONTENT

Acknowledgements

.

Content

List of Tables Introduction

CMAPTER

1 HISTORICAL/THEORETICAL PERSPECTIVE 1.1 Theoretical Reference

1.2 Theoretical Adjustments

1.3 Conclusion

8

2 AN OVERVIEW OF Ti-lE OIL Il~DUSTRY IN TRI1HDAD 25 AND TOBAGO

2.1 British Capital and tne Oil Industry

2.2 U.S. Capital and the change in tne structure of tne Oil Industry

2.3 The Impact of tne 'Energy Crisis' on the Oil Industry.

3 AN INTERNAL ANALYSIS OF THE OIL INDUSTRY

3.1 Tne Oil Companies

3.1.1 Texaco Trinidad Limited

3.1.2 Amoco Trinidad Limited

3.1.3 Tesoro Petroleum Oil Com~any

3.1.4 Trinidad and Tobago Oil Company

3.2 Extension of the Oil Industry

47

4. THE Ii-1PORTANCE OF OIL RESOURCES TO TtiE 67 ECONOMY

4.1 Contribution to the Gross Domestic Product.

4.2 Contribution to Government Revenues

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CHAPTER

5

6

7

8

9

STATE ACTIVITIES IN THE ECONOMY 5.1 Political Ideology vis-a-vis

Development Strategy

5.2 The First Development Strategy Based Upon tne Unrestricted

Invitation of Foreign Capital 5.3 Implementation of the Policy of

Greater State Participation in the Economy.

5.3.1. The Transference of Oil Excedents to Otner Sectors of the Economy

5.3.1.1 Oil Excedents and Heavy Industries 5.3.2. Government Participation 1n

the Oil Sector

TME NATIONALIZATION OF SHELL TRINIDAD LIMITED

6.1 Shell's decision to liquidate its Trinidad Operations.

6.2 Alternatives Open to the Government 6.3 Factors affecting tne Government's

decision to nationalize.

CONCLUSIOj~

APPRENDICIS

SELECTED BIBLIOGRAPHY

78

110

124

127

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LIST OF TABLES

2.1 Crude Oil Production 1908-1910, 1910-1950 (bi-annually in Trinidad and TODago

2.2 Revenue Per Barrel of Oil Produced.

2.3 Annual Statistics on Crude and Gas Pro-duction 1968-1978

2.4 Annual Statistics on Refining,1968-1978

2.5 Annual Statistics on Crude Im~orts/ Exports,1968-1978

3.1 Annual Crude Oil Production in Trinidad and Tobago by Company, 1970-1978.

3.2 T~rougnput Levels of tne Texaco Pointe-a-Pierre Refinery, 1974-1978.

3.3 Average Product Distribution of Local Refine ries.

4.1 Annual Rates of Growth of G.D.P. of Trinidad and Tobago and the Oil Sector, 1967-1976.

4.2 Gross Domestic Product at Factor Cost by Sector of Origin, 1970-1977.

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4.4 Contribution of Oil Revenue to Total Recurrent Revenue in Trinidad-Tobago, 1968-1978.

4.5

4.6

5.1

5.2

5.3

5.3 (a)

Total Value of Domestic Imports

Total Value of Domestic Exports.

Annual Growth of G.D.P. 1956-1962

Capital Inflows and Outflows due to Direct Foreign Investments, 1956-1967

Companies in which Government has Participation as of 1972.

Companies ln wnicn Government Equity is deld

by the Industrial Development Corporation(IDC), 1972.

5.4 Principal Cnanges in Government Holdings in Industrial and Commercial Enterprises since 1972, 1978

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I. 2. 3. 4. 5 . 6. 7 • 8 . 9. 10. II. 12. 13. 14. 15. 16. 17. 18. 19. 20. 2l. 22. 23. 24. AMOCO APIP B.P. BWI. FERTRIN FLACSO GDP ILDIS 1SCOTT LPG MNC NPMC OLADE OPEC OWTU 'PCOL PNM TEXTRIN TLL TOC TRINGEN TRINMAR TRINTES TRINTOC

127

-APPENDIX 1

ABBREVIATIONS

American Oil Company

Aid to Pioneer Industries Programme British Petroleum Oil Company

British West Indies

Fertilizers of Trinidad and Tobago Facultad Latinoamericana de Ciencias Sociales

Gross Domestic Product

Instituto Latinoamericano de Investigacio nes Sociales

Iron and Steel Company of Trinidad and Tobago

Liquified Petroleum Gas Multinational Corporation

National Petroleum Marketing Company Organizacion Latinoamericana de Energia. Organization of Petroleum Exporting

Countries

Oilfield Workers' Trade Union

Premier Consolidated Oilfield Limited Peoples' National Movement;

Texaco Trinidad Limited Trinidad Leaseholds Limited Trinidad Oil Company

Trinidad Nitrogen

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25.

26.

T

&

TEC

TWA

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-Trinidad and Tobago Electricity Commission Trinidad Workingmen's Association

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17.

18.

Dynadrill

Eastman Whipstock

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-Dynadrill ing Directional

Foreign Non-Resident

Drilling 19. Eccles Engineering Plant Cons.

20. Edeco

21. Four Square Ser. Co. Well Serv.

22. Genfab Cons. Ltd Pipeline Cons.

23. Gaffney, Cline

&

Assoc. Consultants

24. Halliburton, T'dad Cementing, etc.

25. Henderson Oil Tool

Foreign Local Foreign Local n.k. n.k. Foreign Resident Resident n.k. n.k. Resident 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. Co. Ltd. Hydrocarb Ingram Contractors International Oil-field. Services Iere Contractors Laurence Allisoon

&

Associates

Lor Irrternati.ona.l

Mason-Hing Asso-ciates

McDennot West Indies Co.

Mc CUllougn Servo

Magcobar

McClear Oilfield

&

General

Con-tractors NL Industries, Baroid Div. Well Repairs Gravel Packing Offshore Cons.

Power Tonga

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38. Oceanic Contractors 39. Oceanic Del Sud

40. Offshore Ligistics Caribbean

41. Oilwell Contractors

42. Petroleum Offshore Services Ltd.

43. Petros Services 44. Rcprostat Ltd.

45. Reliable Con-tracting Co.

46. Santa Fe Drilling

47. Schlumberger

48.' Seismograph Ser-vices Co.

49. Sercies Dowell Scblwnberger

so.

Skinner Marine

51. Solus Schall

52. . Santana Services

130

-Offsnore Constr. Offshore Platform Transportation Workboat Cnarter Well Repairs Workover Rig Well Services Map &Log

Reproduction Drilling Well-logging Services. Velocity Surveys Cementing, gravel-packing, logging, perforating Drilling (Maina) Engineering Inspection Dri11ing Rigs, Workovers

Foreign Non-Resident

Foreign ~on-Resident

Foreign Non-Resident

n.k.

n.K.

n,k. Resident

n.k. Resident Local Foreign ~on-Resident Forei~n Nrnl-Resident Foreign I~n-Resident Foreing Resident Local Resident Foreign Non-Resident 53. 54. 55. 56. 57. Southern Drilling Contractors Tidewater

T"dad Oilwell

Services

Terra Mar Tidex

Drill ing and We11

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-

131

-58. T'dad Well ContrQl Directional n.k. Resident Drilling

59. Trinpet Services Underreaming n.k. n.k.

60. Trincan Perforators Logging Perfor- n.k. n.k. ating

61- Trinity Well Ser- n.k. n.k.

vices

62. Trinidad Lease Drilling and

Operators Well Services n.k. n.k.

63. Venice Boat Vorp. Workboat Charter n.k. n.k.

64. Venwell Int. Mud Services n.k. n.k.

65. Well Services Well Repairs n.k. n.k.

Drilling, Rigs

66. Welex Logging,

Perfor-ating Services n.k , n.k.

67. Water &Oilwell

Service n.k. Resident

NOTES:

1. There is no guarantee that tnis listing is 'comprenensive'. It is based on information available wnich may not neces-sary be complete. (See Sources). Furtner, it only refers to tnose contractors whose activity is related most, uirect ly to the ~usiness of oil production. Tnere are several nundred contractors of a general nature employed by the oil companies engaged in activities from catering to

iardening to helicopter transport. These are not of concern to us nere in this study.

2. Functions identified are those wn1cn the data available suggest as some (at least) of tne functions performed. Many of tnese companies in fact provide awide variety of

services. Tne specification of functions ~rovided by tne companies in tne regis tration wi tn tile Regist r a r - General tend to be very broad and very general ~ in order, no doubt, to permit tne companies flexibility in wnat tney are li~ censed to do.

3. There are problems in identifying wnicn companies are truly local. I t is Known from otner information tuat many of

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132

-Re5istrar-General's Files are in fact for all practical

purpose~, really foreign. Hence companies have Deen

de-signated local only wrien from otner information this can be confirmed.

4.

Tnis listing of contractors relates only to triose wno ~er­ form specialized services related to tne core as~ects of the ~etroleum business. There are hundreds of contractors of all sorts WhO obtain business witn tne oil com~anies

engaged in everytning from grass-cutting to catering.

Foreign Companies

Local Companies

Nationality Unknown

TOTAL

25

12

30

67

SOURCES: Company data; Registrar General's Files; Central Statistical Office, Register of Business Establish-ments in Trevor Farrell. A tale of Twolssued:

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-APPBI-JDIX 3

THE PETROLEUM INDUSTRY - A DISAGGREGATION BY FUNCTION AND AREAS OF SPECIALIZATION

1. Exploration

Geology - Photogeology Geophysics - Geochemistry Seismology

Stratigraphy Paleantology Palynology Hydrodynamics

Gravimetry and Magnetometry Well Logging

Sedimentary Petrography Meteorology

Materials Supply Drawing

Surveying

2. Production

Drilling

Reservoir Engineering Gathering and Storage Pipelining

~ Tank Farm Management Marine

Gas Engineering

3. Refining and Petrochemicals

Processing, running of precess plants Storage, handling and transportation Utilities

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-4. Storage

5. Transportation - Marine - Pipeline - Road

6. Projects and Construction

7. Marketing and Distribution - Local

- Regional

- International

8. Reserach and Development

9. Information and Data Processing

10. Ancillary

Utilities - Electricity generation, Water Steam - Telecommunications

Maintenance, Macnine shops, other wor~snops

- General Engineering

11. Finance and Accounting

12. Economics and Planning

13. General Administration - General Management - Personnel

- Training

- Clerical, etc.

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-15. Purchasing

16. Public Relations

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-APPEr-IDIX 4

Projects being consiaered or explored in line witn Government's planned ~rogramme of securing meaninful partici-pation in apex industries in Trinidad and TODago.

1.

2.

3.

4.

5 .

6.

7 .

8.

9.

A Participation in Texaco (Trinidad) Inc., as well as tne acquisition of all Texaco distribution

outlets.

A participation witn W. R. Grace and_CompallY in Federation Cnemicals.

A joint venture with Texaco to produce certain petrochemicals.

A company to produce steel

An inter-governmental company to ~roduce aluminum.

An inter-governmental company to ~roduce corn and soya been.

An inter-governmental food corporation.

. An inter-governmental snipping corporation.

Joint-venture with Amoco, Kaiser, Beker and Tenneco to produce fertiliser.

In addition, discussions were underway witn United States and Japanese based firms to produce petrocnemicals, motor-car parts, processed food and animal feed based Oll petroleum

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- 136

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- 137 -APPE1-JDIX 5

The statement of Government policy towards private foreign inves~ment given in toe 1972 budget speecri stress toat altriougn toere would be continued invitation of private foreign capital, greater control over tne country's national resources must reside in tne country.

I .

2 .

3.

4 .

5 .

6 .

7 •

We welcome new foreign investment whico burgs ln expertise, new tecrinology and accessto export markets to assist and supplement national efforts

in our development.

No new 100 percent foreign-owned enter~rises will be allowed in key sectors of tne economy and national participation in joint ventures involving new

foreign firms must be of meaningful participation.

Alienation of land will not be permitted.

Existing foreign-owned enterprises~usttake steps to facilitate national participation,including in particular worker-participation.

Certain areas of our economy are reserved exclusively for national effort.

All firms, wnatever tne structure of tneir owner-snip, must in their operations give ample opportu-nity to transfer to nationals tne SKills, ~nowledge

and expertise required to run tne business.

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138

-An integral part of our overall policy towaras

foreign investment is to diversify the sources of investment

funds and in particular, to seek the participation in our

national development of European and Japanese cavital and

entrepreneurship, an addition to capital from tne traditional

sources such as the United Kingdom, tne United States of

America and Canada". Current policy in this regard seeks to

further diversify the sources of investment~ capital

SOURCE: White Paper No. 1 on Public Sector Participation in

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' -GRAIG, CAMACHO, FARRELL, '

-- -- ' -- ' --

,

FAJNZYLBER, GIRVM·J, ' -GONICK, GUNDER,

- 139

-S~LECTbD BIBLIOGRAPHY

Lloyd. "Outlines of a Model of Pure Plantation Economy" in SESe Vol. 17 No.3. Jamaica.Mar-Dec. 1968.

and Kari LEVVIT. "Character of Caribben Economy" in George Beckfort (ed). CarioDean bconomy SESe Jamaica, 1975.

Susan. Notes on Sociological Aspects of the Crisis of Succession in Trinidad and Tobago in "Ideas and Issues in Contemporary Affairs". Department of Government. UWI. Jamaica ed. J. b.Greene, 1974.

Daniel (comp.). Detates Sobre 1a Teorfa de 1a De-pendencia. La Sociologia Latinoamericana.

Tevor. "The Multinational Corporations, the Petro-leum Industry and Economic Uncierdeve10pment in

Trinidad and Tobago. Unpubl. PH.d Tnesis, Cornell University, 1974.

"A Tale of Two Issues: Nat iona Li.z.at i on , tn e Trans-fe r of Tecnnology, and tne Pet roleum 1'-1u1 tina tiona1s in Trinidad and Tobago". Mimeograph, Trinidad, 1979.

"In Whose Interest?" Nationalizationand Bar g a i.ni ng with the Petroleum Multinationals. Tne Trinidad and Tobago Experience. Mimeograp.n. Trinidad.

Fernando y Martinez Terrago Trinidad. Las Empresas Transnacionales. Expansi6n a Nivel Mundial y Pro-yecci6n en la Industria Mexicana. Fondo de Cultu-ra Economica. Mexico, 1976.

Nor man et . al. "Readings in tne Pol it ical Economy of the Caribbean. New World Publication. Jamaica, 1971.

"Multinational CoriJorations and uependent Under-development in Mineral-Export Economies in SES". Vol. 19 No.4. Jamaica, December 1~70.

Gy. "Metropole tlinterland Themes" in Canadian Dimension. Vol. 8, No.6. March-April, 1972.

Frank A. "Sociology of Development and

Under-development of Sociology in Latin America. Under-development or Revolution. Article ~rintect for

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JACOBS, JOHJ~SON , ' -LEWIS, LEWIS, MARCIAL, MICHALET,

MC I l'1TYRE ,

MOSQUERA,

PARRIS,

POST,

- 140

R., "Butler vs. tne King." Key CariDbean Publi-cations. Trinidad, 1976.

Howard. "The Politicial Uses of Commissions of

Enquiry: Tne Imperial-Colonial West Indies Context. The Foster and Moyne Commissions in SES. Vol. 27, No.3. Jamaica, Sept. 1978.

---"Oil, Imperial Policy and tne Trinidad ni sturo anc e s 1937 in Contemporary Sociolo&ical Reader (fortn-coming) ed. Susan Craig. UWI. Trinidad.

Arthur. "Laoo ur in the West Indies. 'I'ne bi r tn of a Workers Nove me nt!". A New Beacon Publication. Trinidad, 1977.

Vaugnn. "Comment on Multinational Corporations and Dependent Underdevelopment in Mineral-Export

tco-nomies SES. Vol. 19, No.4. Jamaica, Decemoer, 1~70.

Rubio Correa. OPEP. "Imperialismo y el Tercer

Mundo. "Centro de Estudios y Promocion ael Desarro-110 . " Lima, 1976.

Charles Albert. Le Capitalisme Mondiale Presses Universitarie de France, 1976.

A. and B. WATSON. "Studies in Foreign Investment in the Commonwealth, No.1. Trinidad and Tooago ISER UWI. Trinidad, 1970.

M., Ricardo. "Crisis Petrolera y Nacionalizacion del Petroleo." Unpubl. w.d.

Carl D. "Capital or Labour? "Tne Decision t o

In-troduce tne Industrial Stabilization Act in Trinidad and Tobago, March 1965. Working Paper No. 11 ISER.

Jamaica, 1976.

-Ken. "Arise ye Starvelings. Tne Jamaica Rebellion of 1938 and its Aft e rrnat n , Institute of Social

Studies. Tne Hague. 1~78.

RYAN, Selwyn.

Tobagol l •

"Race and Nationalism in Trinidad and ISER, UWI. Trinidad, 1~74.

'

-SILVA

"Tne Politics of Successionl l

• A Study of Parties

and Politics in Trinidad and Tobago. UWI. Trinidad. (wd) .

L., Ivan. "Estr ate gi a de Desarollo. J~acionaliza­

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SANDOVAL-MORENO, J.F. Dependent Ecuador. Sussex.

141

-Commodities, International Trade and Economic Growth: Bananas and Oil in M. Pail. Dissertation. University of September, 1977.

SIf'1Gti, Kelvin. "Economy and Polity in Triniaad 1917-1938. Unvubl. Pn.d. Tnesis, 1974. UWI. Trinidad.

ST.CYR Eric. "Tae Crisis of Succession in Trinidad and Tobago". Some Factual Economic Background to the Current Crisis in "Ideas and Issues in Contem-po r a ry Affairs", De p a rt ment of Government Ui'H.

Jamaica ed. J. E. Greene, 1974.

SUDAMA, Trevor. "Tne Model of tne Plantation iconomy. Tfie Case of Trinidad and Tobago." Monograpn.

SUNKEL, Osvaldo. "Transnational Capitalism and National Disintegration in America" in SESe Vol 2L 1~0. 1,

Jamaica, Marcha, 1973.

TENNASSEE, Paul Nehru. "Venezuela. Los Obreros Petroleros y la Lucha por la Democracia". EFI Publicationes. Caracas, 1979.

WILLIAMS, Eric. "History of the People of Trinidad and Tobago". Andre Deutsca, 1964. London.

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- 142

-PUBLICATI01'JS

INSTITUTO Latinoamericano de Planificaci6n Econ6mica y Social Boletfn de Planificaci6n 8-9, Sept. 1979. Ano 3.

CENTRAL Statistical Office. Annual Statistical Digest 1976/77. No. 24. Government of Trinidad and Tobago.

COMERCIO Exterior Vol. 8 Agosto 1979. La Polltica Petrolera de Algunos Paises Exportadores.

CONVENTION Report on "Best Uses of Our Petroleum Resources" Vol. 1, held January 13-15, 1975, sponsored by the Government of Trinidad and Tobago.

DUN'S

MINISTRY

MINISTRY

Review: May 1975, Tne Financier. Sept. 7, 1~79.

of Petroleum and Mines: Monthly Bulletin on tne Petroleum Industry in Trinidad and Tobago. Various issues.

of Petroleum and Mines: Official documents on ttle Oil Industry in Trinidad and Tobago.

MINISTRY of Planning and Devlopment. troleum Industry, 1969-1979. and Tobago. Nov. 1979.

A Review of the

Pe-Government of Trinidad

NACLA:

NATIONAL

Latin America and Empire Re~ort. Oil in t~e Carib-bean Focus on Trinidad. Vol X No.8. October 1976.

Advisory Council of Trinidad and Tobago. Annual Report for tne Year 1977.

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143

-against ~lobal Texaco-Exploiter of Our Labour

and Natural Resources. Memorandum 1978.

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Official Documents on the Oil Industry in Trinidad and Tobago.

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1963-1964.

THE ENERGY Crisis 1973-1974. Four addresses by Dr. Ric Williams

Prime Minister of Trinidad and Tobago.

UNECLA Statistical Yearbook for Latin America 1975.

Economic Activity - 1977 - in tne Cariobean.

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Sector Participation in Industry. Government of

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Financial Times.

Trinidad Guardian - daily newspaper of Trinidad and Tobago.

Figure

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Referencias

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