The development of a new industry in Trinidad and Tobago

Apr 23, 2005 02:00 AM

The Government has moved one step closer to implementing new tax regimes for oil and gas collection in Trinidad and Tobago. Energy Minister Eric Williams confirmed that work on the oil aspect of the new tax system had been completed.
Following a function at The Normandie in St Ann's, Williams emphasised that the revamping the oil and gas tax regime was being handled by the Ministry of Finance and not his Ministry. But based on feedback coming to him, Williams said the oil side of regime was finished.

It comes at a time when Government has declared its intention to transform tax regimes is part of "capturing its fair share of economic rent while continuing to attract investment", according to Minister in the Ministry of Finance Conrad Enill. Back in February, Enill said a Bill for separate tax regimes for oil and gas collection would go to parliament by mid-2005.
The charge to change oil and gas tax laws is being led by a move to formalise the "rainy day" Interim Stabilisation Fund and replace it with a heritage and Stabilisation Fund. Enill estimates that by September 20, this account at the Central bank will hit $ 638 mm or more than TT$ 4 bn.

But taxation and energy sector experts have warned that Government's tax take should not be increased. Oil and gas taxation reform has been a long time coming. Enill has previously said the delay in the matter of petroleum tax reform was due to its complex nature.
He chastised private sector parties for lobbying for a reduction in the tax rate for petroleum corporations. Experts in the field cite Government's aim as one that will secure an appropriate share of the rents from gas for the country. Current royalty rates of 1.5 cents per thousand cf for domestic gas and 2 cents per thousand cf for export gas are regarded as extremely low by international standards.

Government has also charged that companies are exploiting a number of anomalies in the tax system which the State has sought to correct. Small independent operators do not view oil and gas tax reforms as necessarily good news.
South Chamber president Dr Jim Lee Young has complained several times of the plight of the independent operators on land and has warned that the sector is dying under the strain of a regressive tax regime. Developments like this continue amid high international oil prices but slightly lower production in Trinidad and Tobago.

Minister Williams revealed that average oil production up to February (the most current statistics) stood at 136,827 bpd, a "little below production levels". It was slightly below what was budgeted because of a few operational hiccups experienced by oil producer BHP Billiton, Williams said.
Gas production stood at 3.127 bn cfpd which converted to 539,000 boe, Williams told. Overall, the total average was 675,979 boe. Hours earlier, he had announced during a post-Cabinet press briefing that Government had approved four new oil and gas offshore production sharing contracts and that three more were under consideration.

Government isexpected to make a decision on onshore contracts possibly. This precedes Trinidad's hosting of the Fifth Ministerial Meeting of Gas Exporting Countries Forum in Port of Spain. The current membership of the forum is comprised on Algeria, Bolivia, Brunei, Egypt, Indonesia, Iran, Libya, Malaysia, Nigeria, Oman, Qatar, Russia, Trinidad, UAE and Venezuela.
Objectives of forum participants are to foster the concept of mutuality and creating an atmosphere of dialogue among oil and gas producing and consuming countries as well as dialogue between government and energy-related industries, Williams said.

Source: Trinidad Express
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