Trinidad's Gas Slump Shapes Its Regional Alliances

Trinidad and Tobago's economy contracted 0.5% in 2025, while real output fell another 1.8% in the first quarter of 2026. The deeper problem is stubborn dependence on energy exports, which generate more than 70% of the country's foreign-exchange earnings, according to the 2027 budget statement released Oct. 12, 2026. Natural-gas production now averages about 2.4 billion cubic feet a day, down 45% from its 2014 peak of 4.4 billion.

The budget statement linked the decline to the permanent closure of Atlantic LNG Train 1 and several petrochemical plants. For a two-island republic with 1,367,764 people, those shutdowns carry weight. The country accounts for about 0.2% of Latin America and the Caribbean's 667 million people and about 0.35% of the region's US$7.4 trillion economy. Income per person is US$18,967, well above the regional US$11,095, but below Guyana's US$32,414 and Barbados' US$28,365.

The Fiscal Squeeze

The government faces a tight budget. Its revised fiscal 2026 estimate puts the deficit at TT$7 billion, or about US$1.03 billion. For fiscal 2027, the budget projects revenue of TT$59.729 billion, about US$8.82 billion, and a deficit of TT$3.639 billion, equal to 2.1% of gross domestic product. The projections use planning assumptions of oil at US$77 a barrel and gas at US$5.00 per million British thermal units. The budget calls these assumptions, not market forecasts.

Some cushions remain. Gross official reserves covered 5.8 months of imports at the end of June 2026, while the central bank held US$5.3 billion in foreign assets in August. Headline inflation averaged 0.3% in the second quarter. From April through August, the Trinidad and Tobago dollar stayed between TT$6.77 and TT$6.78 to the U.S. dollar.

Betting on Gas, and on Washington

The government's response is to pursue more gas. The budget expects new domestic supply from the Aphrodite and Manatee Plus fields in 2027. Manatee Plus is due to deliver first gas in late 2027, with peak production of 600 million cubic feet a day. BP's local arm won a licence for Loran Phase II and agreed to buy Woodside's 70% stake in the Calypso field. Finance Minister Davendranath Tancoo said the Loran licence could allow the country to monetize potentially more than 4 trillion cubic feet of cross-border and regional gas using existing infrastructure.

That cross-border gas depends on rules set in Washington. U.S. general licences announced Feb. 13, 2026, established a legal framework for certain oil and gas activities in Venezuela and along the shared sea border. Taxes and royalties owed to Venezuela's government or its state oil company must go into an account designated by the U.S. Treasury. Washington has shifted its position on particular fields, too: it revoked licences for the Dragon and Manakin-Cocuina gas fields in April 2025, then issued a six-month Dragon licence in October 2025. The terms for any deal could change.

Prime Minister Kamla Persad-Bissessar said Sept. 9 that she expects Venezuelan gas to reach Trinidad and Tobago within a year, pointing to agreements signed with BP and talks with Shell. No new gas contract has been published.

A Government Out of Step With Its Neighbors

Persad-Bissessar's United National Congress won 26 of 41 seats in the April 28, 2025, election. Since then, her foreign policy has moved away from CARICOM's. She has publicly supported U.S. military operations in the southern Caribbean Sea, a position many CARICOM leaders didn't share. Trinidad's Newsday reported that the two governments signed a Status of Forces Agreement in December 2024. On Dec. 15, 2025, the foreign ministry approved U.S. military aircraft using Piarco and ANR Robinson airports for what the United States described as logistics and personnel rotations. The approval set no end date. A U.S. radar that arrived in Tobago in November 2025 was dismantled by March 16, 2026, and the foreign ministry hasn't said what U.S. presence remains.

After meeting Persad-Bissessar in Basseterre on Feb. 25, 2026, Secretary of State Marco Rubio called Trinidad and Tobago a strong U.S. partner in the Caribbean. A State Department readout said the two sides reaffirmed cooperation on energy security and drug and firearms trafficking. Trade favors Washington: U.S. goods exports to the islands reached US$3.12 billion in 2025, compared with US$2.68 billion in imports, leaving the United States with a US$446 million surplus, according to the Census Bureau.

Relations with Venezuela broke down in 2025. In October, Venezuela's National Assembly declared Persad-Bissessar persona non grata after she supported U.S. pressure on Nicolás Maduro's government. U.S. forces took Maduro to New York on Jan. 3, 2026, and Delcy Rodríguez assumed power in Caracas. Then relations thawed quickly. After Foreign Minister Sean Sobers visited Venezuela, the two governments issued a joint statement Sept. 3 describing a new era and a roadmap for trade, energy, agriculture, the environment, culture and collective security. When Persad-Bissessar and Rodríguez met in New York on Sept. 23, their statement said the Venezuelan side indicated that Persad-Bissessar was persona grata. Both leaders agreed to make official visits. No dates have been announced.

Strain Inside CARICOM

Trinidad and Tobago is one of CARICOM's four founders under the Treaty of Chaguaramas, signed July 4, 1973. Port of Spain hosts the Caribbean Court of Justice and the Association of Caribbean States. But the government's relationships with the bloc have frayed. Persad-Bissessar left the February 2026 summit in Saint Kitts early, before leaders extended Secretary-General Carla Barnett's term, and skipped a special meeting April 10. Her government argued the reappointment breached the Revised Treaty of Chaguaramas because it wasn't on the agenda and the Community Council had made no recommendation. Summit chair Terrance Drew of Saint Kitts and Nevis said leaders acted by the required majority.

At the July summit in Saint Lucia, leaders agreed to seek an advisory opinion from the Caribbean Court of Justice under Article 212. The Court said July 28 that it had received no request. Here's the irony: Trinidad and Tobago still sends final appeals to the London-based Privy Council, while Barbados, Belize, Dominica, Guyana and Saint Lucia use the regional court. At that same summit, Port of Spain offered the National Prosthetics Centre and Couva Children's Hospital for regional use.

The Guyana-Venezuela border dispute is before the International Court of Justice, which held hearings on the merits May 4 to 11, 2026.

Why This Matters:

A country that earns more than 70% of its foreign exchange from a shrinking energy sector has little room to maneuver, and its choices now tie its fortunes to decisions made in Washington. The U.S. Treasury decides where Venezuelan royalties flow; licences have been revoked and reissued within months. That's a fragile base for public budgets that fund health care, schools and social programs. The decline in gas production also reveals the cost of relying on one commodity without a clear diversification plan. Regionally, a CARICOM founding member is at odds with the community over treaty procedure and security policy, even as the bloc tries to resolve disputes through its own legal institutions. How leaders settle the secretary-general question, and whether Port of Spain engages with the regional court, will test how strongly collective rules still bind small states facing pressure from larger powers.