Home' Trinidad and Tobago Guardian : August 13th 2015 Contents RAPHAEL JOHN-LALL
The impact of low oil prices is
pushing Government to review the
tax regime for oil royalties in the
next fiscal year, Energy Minister
Kevin Ramnarine said yesterday.
Noting that for the last nine
months oil prices have been hovering
around US$59.64 for a barrel, he
said: "We had some high months as
October and November were pretty
good. It is clear that the low price
environment is going to be around
for at least the next couple months.
We have to correct that anomaly
because clearly it (the Supplemental
Petroleum Tax) was not designed
for that low price environment.
"So people are saying they are
happy when the price of oil is
US$49 and when it is US$51 a barrel
they have to pay 33 per cent SPT.
From the point of view of having
a sustainable industry, we have to
have treat with that."
Ramnarine, who spoke with
reporters after delivering a lecture
on energy matters at the Arthur
Lok Jack Graduate School, Mt
Hope, said Government has options
with regard to reforming the Sup-
plemental Petroleum Tax.
"The way it is currently config-
ured is that below $50 a barrel it
goes to zero so that means there
are companies that have told me
they are happy when the barrel of
oil at US$47. That anomaly has to
be corrected and we are looking at
"The first is to move it to US$60
or US$70 or US$80 so that it
becomes zero at a higher price or
to put a sliding scale. Either one
of those options will be recom-
mended to the Ministry of Finance
for the budget," he said.
Ramnarine said this will not
affect gas prices as there is no Sup-
plemental Petroleum Tax on gas.
"What the Gas Master Plan is
saying is that we must have a com-
prehensive overhaul of the fiscal
regime. What we have done in the
last five years is make changes but
this is calling for an overhaul of
not only the tax royalty regime,
which is simple to change because
that requires amending the law, but
they are also recommending
changes to the production sharing
contracts which cannot be changed
by laws because they are contracts.
So it will require a lot of focus by
the ministries of Energy and
Finance," he said.
The minister cited the report of
a a Houston-based consultancy
group that Saudi Arabia is produc-
ing 10.4 million barrels of oil a
day---the highest production it has
ever had. Iraqi production is
approaching four million barrels of
oil a day and is scheduled to grow
as sanctions are being lifted and
US oil production is at its highest
in the last 40 years. All of this
shows there is a glut in the inter-
"On top of all that there is a slow-
down of the world economy for the
first six months of the year driven
by the Chinese stock exchange issue.
We look to be in a low price scenario
for at least the short term. By the
third quarter of next year, according
to data, that demand will begin to
outstrip supply again. But that is
just a forecast from a consulting
group," Ramnarine said.
He said the shale oil producers
in the United States are more
resilient than most people think.
"One major shale oil producer
visited the Ministry of Energy three
months ago and they told us that
they could survive at US$30 a barrel
and make a ten per cent return on
their investment. They have been
using new technology and evolving,"
Trading relations between China and
T&T would not change because of the
devaluation of that country's currency
Trade Minister Vasant Bharath said
"We continue to deal with China as
we continue to deal with any other
country with whom we've had economic
ties over the years," he said.
"Our investment in the port facilities
and dry docking facilities in La Brea is
not dependent on our trade relations
with China. It was through an Eximbank
loan from China.
"The impact on the Chinese economy
has no impact on our investment. The
purpose of the investment is to
encourage those ships which are going
through the Panama Canal to use T&T
as a base for dry docking facilities," he
Bharath said he does not expect the
value of those projects to affected by
devaluation of the China currency.
"At the end of the day our loans are
negotiated in US dollars so we would
have been borrowing in US dollars
through the Eximbank," he said.
The minister's comments followed the
second straight day of declines in
China's currency which sent global
stocks lower yesterday and raised
worries about weakness in the world's
• Twitter: @GuardianTT • Web: guardian.co.tt
Trade Minister says China investments in T&T intact
Stephen Solomon, executive vice president, Operations, at iQor, left,
answers questions from the floor at the official launch of the iQor Call
Centre in T&T, hosted by InvesTT at the Radisson Hotel in Port-of-
Spain yesterday. Sitting at the head table with Solomon are Trade
Minister Vasant Bharath, second left, Dustin Fleming, vice president,
Infrastructure, iQor, and Anthony chairman of InvesTT.
PHOTO: ANDRE ALEXANDER
Ramnarine on low energy prices:
Time to review
oil tax regime
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