PORT OF SPAIN, Jan. 27 -- Trinidad and Tobago has announced major changes to its fiscal terms for energy companies operating in the country and those seeking new blocks in its 2010 bid round.
The government made the announcement at an energy conference hosted by the South Trinidad Chamber of Industry and Commerce at which it announced that it will continue to use production-sharing contracts but will eliminate taxes on the PSCs. Instead, Trinidad and Tobago will collect its revenues via profit oil.
Energy Minister Conrad Enill told the conference: “Our new PSC will be similar to the 1995-96 models in which companies were allowed to evaluate their risks and offer an adequate share of profit petroleum. This is intended to reduce some of the inherent risks and encourage potential investment.”
Enill admitted that the world outlook for oil and gas was not as attractive as it was 18 months ago and in the circumstances the twin-island nation had to be more competitive.
Enill said concessionary arrangements will be put in place in areas and activities where incentives for revitalization and sustainability are required, such as in the mature offshore oil acreages and on land where enhanced oil recovery projects are undertaken.
He said, “Specifically, the incentives will directly impact on the supplemental petroleum tax rates that will be payable by companies. In so doing, it will provide companies with additional financial flows to reinvest in the upstream sector. This new regime will address small, mature fields and tailend production and will allow for a situation intended to encourage new investment while allowing current production levels to be sustained.” Trinidad and Tobago produces 115,000 bo/d and 4 bcfd of gas.
Under the new fiscal terms, there is a distinction between ‘shallow’ and what is referred to as ‘average’ water depths. In the shallow fields, the government has maintained its windfall taxes but it kicks in whenever crude prices are above $70/bbl and gas prices are $6/MMbtu. In average water depts., the windfall taxes kick in at $80/bbl for crude and $7/MMbtu for gas.
Director of Resource Management Helena Inniss-King revealed that there will be additional benefits for companies operating in both the shallow and average-water depths with an increase in the percentage of cost recovery companies can claim.
Inniss-King said, “We had some comments on the cost recovery, that it was too low, and we have increased the cost recovery for the shallow water to 50% and for the average water depth 55%.” Average water depth are blocks in more than 400 m of water.
Trinidad and Tobago says the new fiscal regime was arrived at after consultation with the major oil and gas companies operating in the country.
BP PLC Chief Executive Officer Tony Hayward called for a new fiscal regime in Trinidad and Tobago. During a recent visit, Hayward said he was confident that BP Trinidad & Tobago (BPTT) and the Patrick Manning administration will reach agreement on the new terms.
BPTT produces 450,000 boe/d from its Trinidad and Tobago operations.
Trinidad and Tobago will offer seven blocks in shallow and average water in this year’s first quarter and has announced that later this year will offer blocks in its deepwater areas—in water 1,000-3,500 m deep.