Royalties on oil and gas extraction, Petrotrin restructure and more
Royalties on oil and gas extraction
The Finance Minister has announced that a 12.5 percent royalty rate would now be applicable across the board on the extraction of all gas, condensate, and oil.
Minister Colm Imbert made the announcement as he presented the 2017/2018 budget entitled “Changing the Paradigm,” on Monday afternoon.
Minister Imbert noted that the tax collected from oil and gas companies dropped by over 90 percent and added that it is unlikely that government will get corporation tax from these companies for the next seven years.
He said a such, in the present very difficult financial circumstances, all must share in the burden of adjustment.
Oil and gas prices expected to rebound
The rebound in oil and gas production over the medium term will be stronger than anticipated.
Minister Imbert, during his budget presentation, said oil production is now expected to reach around 85 thousand barrels per day by 2020.
He noted that the bpTT Juniper Platform which commenced gas production on August 17 would have peak output capacity to 590 million standard cubic feet.
Minister Imbert also added that the Angelin project is expected to produce up to 600 million standard cubic feet beginning at the end of 2019.
Restructuring of Petrotrin
The Finance Minister has said that state-owned Petrotrin cannot discharge its mandate in its current form and requires restructuring.
He has revealed that profits from Petrotrin fell from 37 billion dollars in 2012 to 16 billion dollars in 2016, with a debt burden of close to 12 billion dollars.
However, Minister Imbert noted that despite this, the state-owned company still has potential but needs transformative change for success.
T&TEC owes NGC over four billion dollars
T&TEC does not pay NGC for gas that is used to generate electricity, although contractually obligated.
In fact, Minister Imbert said T&TEC owes NGC over four billion dollars, which he said ultimately deprives this country of a dividend income.
He added that Petrotrin only paid two hundred million dollars in state royalties, a shortfall of 400 million dollars, which he said contributed to the 2017 deficit.
Minister Imbert also noted that Petrotrin must pay its taxes like any other company.
Forex management to focus more on supply and demand
The Finance Minister has said that unless we as a country change our taste for foreign goods, our exchange rate will continue to be under pressure.
During his budget presentation in parliament on Monday afternoon, Minister Imbert announced that the Central Bank will authorize Exim Bank as a dealer in foreign exchange, as an initiative to allow exporters to access forex.
Noting that foreign exchange management will now focus more on supply and demand, he said there will be an initial injection of 100 million US dollars.