BP Trinidad says seeking efficiency during downturn

PORT OF SPAIN, May 28, Reuters - Squeezed by lower natural gas prices and rising costs, BP Trinidad and Tobago is focusing on increasing its efficiency this year, which could involve adjusting suppliers' contracts, the Caribbean nation's biggest hydrocarbons producer said on Thursday.

A BPTT representative told Reuters the efficiency drive could mean, for example, improved planning, setting more aggressive targets in drilling and work completion, and adjusting outside suppliers' contracts to reflect lower prices for oil and gas.

The company, a subsidiary of BP Plc (BP.L: Quote, Profile, Research), accounts for 55 percent of Trinidad and Tobago's hydrocarbons production and contributes 25 percent of annual national revenue.

BPTT's 2008 production totaled 457,000 barrels of oil equivalent per day. Some 96 percent of this production was natural gas and 4 percent was crude oil and condensate.

In a statement outlining cost and price pressures, BPTT said it currently faced natural gas prices that were 56 percent lower than 2008 prices, while operating and development costs had increased significantly over the past five years.

Unit operating costs had increased by 12 percent per year, while the cost of developing reserves had increased by 42 percent per project, the company said.

"As a result of this inflated operating and development cost profile, which is not yet reflecting the decrease in commodity prices and the cost of raw material in the international market, BPTT's focus in 2009 and beyond is on increasing efficiency in the way we work, managing our margins and our costs to ensure we continue to deliver value for the global BP organization and the country," BPTT said.

The company added it recognized the urgency and importance of maintaining its competitiveness during the economic downturn and was already seeing positive results of its efforts to increase efficiency, which would ensure the company was in a strong position when economic growth returned.

BPTT said it had paid $3.4 billion in taxes and royalties to the Trinidad and Tobago government from January 2007 to March 2009. The figure reflected payments on the petroleum profit tax, unemployment levy and supplemental petroleum tax on its revenue from crude and condensate output.