Trinidad has long been coveted as a prospective hunting ground for oil and gas exploration, writes Peter Ker.
Talk of bold new ventures in exciting territory was hardly the expectation when BHP Billiton summoned the investment community to Texas this week.
But amid the sermons about capital restraint and productivity, the company still found time for some unbridled optimism about a destination that could become its next big thing.
Trinidad and Tobago is usually considered part of the idyllic Caribbean islands chain, yet geologically it is defined by the South American continent and Venezuela's giant Orinoco River.
The Orinoco has been pouring sediment for millions of years into the patch of sea floor in which Trinidad stands, and - just as the Mississippi River has done for the Gulf of Mexico - it has created a fertile hunting ground for oil and gas companies. That much has been known for a long time, and several companies including BHP have had modest exposures to Trinidad for more than a decade.
Its ranking in BHP's global portfolio has never been significant enough to warrant its own accounting line item, with its contribution usually grouped with minnows such as Pakistan and Algeria under the inglorious title "Other".
So there was a degree of surprise this week when BHP executives suddenly started describing Trinidad as "unique", "very exciting" and capable of becoming the petroleum division's third "core area" beside the US and Australia.
So what's changed?
"Until recently, the fiscal terms on offer in Trinidad did not allow us to make a satisfactory return on the risk of undertaking a deep water exploration program," explained BHP's petroleum exploration president David Rainey.
"Others clearly felt the same because during the last decade a number of bid rounds (for offshore acreage) were held and nobody came, nobody participated."
With an economy dominated by oil and gas, Trinidad has traditionally sought to keep a significant finger in the corporate pies that have scouted its territory for oil and gas. Commercial producers typically had to strike "petroleum sharing contracts" with the government, and consensus among the companies was that contracts were weighted too far in the government's favour.
Trinidad is a well developed, educated, parliamentary democracy, and Peter Landau of Range Resources - one of the few other ASX listed companies working there - reckons it suffered from over-governance.
"From a stability perspective it's fantastic, but it was probably considered too bureaucratic ... [the costs] "probably didn't justify the capital expenditure," Mr Landau said.
But the government clearly got the message, and over the past year it has launched a range of initiatives to lure companies back.
Tax write-offs on exploration spending and drilling were increased dramatically, and in some cases companies will be able to deduct 100 per cent of exploration spending from their tax instead of 10 per cent under the previous regime.
Further generous tax provisions were introduced for the development phase of oil and gas production, and for mid-stream refiners, in a bid to create a pro-growth economy.
"What they've now done is introduce a whole lot of incentive measures that basically encourage increases in production, and exploration spending. The incentives ... streamline the process for getting wells drilled," said Mr Landau, whose company is already producing onshore oil in Trinidad.
With the fiscal settings to their liking, BHP swooped, picking up five deepwater blocks at tender, four of which are wholly-owned.
The Trinidad government has since claimed those tenders compel BHP to spend $US565 million ($633 million) in Trinidad, and a further $US459 million in
BHP will conduct a seismic survey across those blocks next year, and hopes to drill its first wells in 2016.
"This deepwater play has been something that we've been watching for quite some time," said BHP's petroleum boss Tim Cutt.
"We are very excited about it and the potential that Trinidad holds to become an additional core area for us."