(Trinidad and Tobago Newsday, 7.Oct.2021) — The Energy Chamber of Trinidad and Tobago has called for immediate reform of the supplemental petroleum tax (SPT) and value-added tax (VAT) refunds to spur investments in oil production.
In a statement on Wednesday, it said the changes introduced in 2020 for small onshore producers have contributed to increased activity onshore and new discoveries.
The chamber was responding to the 2022 budget presented on Monday, when Finance Minister Colm Imbert said the Government intended to do a comprehensive review of the oil and gas taxation regime to ensure international competitiveness in hydrocarbon.
It added that further commitments by Imbert at the TT Manufacturers’ Association post-budget forum were also welcomed, and it looked forward to working closely with the Government in the review process.
“If these changes were extended to the offshore crude oil producers and the production thresholds raised, then we believe we would have seen some investment decisions being taken very quickly and new production being brought into production.
“This change to SPT would also have been very beneficial to the state-owned Heritage and their efforts to identify new joint venture partners to build on their initial success in turning around production from their acreage,” the Energy Chamber pointed out.
Continued investment in upstream production, it said, was needed even as the country transformed its energy industry to a lower-carbon future and a diversified economy.
It recommended that the chamber’s Fiscal Reform Task Force report, a detailed analysis of the sector, which was delivered to Imbert and Minister of Energy and Energy Industries Stuart Young, should be considered.
The report, which was handed over in August this year, the chamber said, highlighted areas for changes and immediate implementation that could unlock some projects awaiting a final investment decision.
It said, “The Fiscal Reform Task Force found a fundamental review exercise was warranted and that this should take into consideration all aspects of the energy fiscal environment, with a view to creating an environment appropriate for a mature basin that allows existing participants to continue to invest and new participants to enter and to prosper.
“We would welcome a process where some recommendations could be fast-tracked, even as all of the issues are being resolved.”
Additionally, the Fiscal Reform Task Force recommended changes to the flat royalty rate for the gas industry.
“The current structure is particularly challenging for smaller and more marginal fields, especially if they are distant from existing infrastructure. It also acts as a disincentive for exploration investments and ultimately impacts the entire value chain.
“Changes to royalties may not have had the same short-term impact on developments of new fields as the SPT changes but could have helped spur on new exploration activity and investment decisions for more marginal fields, to maintain the targeted plateau of gas production in the medium-term.”
The chamber hoped the changes would be implemented soon, as it said this could boost the 2022 bid rounds.
By Ria Chaitram