Home' Trinidad and Tobago Guardian : February 2nd 2017 Contents BG8 | ENERGY
BUSINESS GUARDIAN guardian.co.tt FEBRUARY 2 • 2017
Advice on energy policy:
As the T&T Gov-
ernment is now
reviewing its tax/
Group based in the UK, is advising
the country to build its own model.
The UK has just moved away from
a fiscal regime model which heavily
taxes foreign companies and has now
made it easier for foreign companies
to invest in the North Sea.
"I would tell T&T to approach
it differently. I do not think what
the UK is doing is necessarily right
for T&T and our approach will be
relevant. I would say know and
understand where value is created
because it is the age-old argument.
If countries surrender and give away
production profits are we going to
attract investments in other ways?
"Be ready to surrender value in
some places in order to maximise
it in others. This will be my advise
to any government running a con-
tinental shelf like the UK," he said.
Campbell spoke to the Business
Guardian last week Monday at the
Hyatt Regency Hotel, Port-of-
Campbell is now a non-execu-
tive in his business interests. This
means he is no longer involved in
the day-today running of his busi-
ness and now has the opportunity
to focus on personal interests in de-
veloping links in business education,
promoting business innovation, and
linking academia and scientific re-
He is also an active member in the
Scottish business community.
Campbell established his own
business in 1985 and, has since,
established a group of specialised
engineering businesses serving the
marine, defence, energy and utility
Over a period of more than 25
years, IMES Group member com-
panies have supplied, and contin-
ue to supply, customers worldwide
applying engineering products and
techniques in a wide range of appli-
cations and industries.
This includes the development
of bespoke monitoring and load
measurement systems to the ma-
rine, steel, nuclear, oil and gas and
aerospace industries. Their products
work in harsh environments ensur-
ing clients have the level of reliability
and accuracy required.
IMES has engineered bespoke
solutions for clients providing
them with diagnosis of integrity
issues including subsea electrical
fault isolation through SETS (sub-
sea electrical test system), integri-
ty assurance with risers into FPSOs
through the RICS (riser inspection
camera system) and marine vessel
tailshaft integrity assurance through
Finance Minister and acting En-
ergy Minster Colm Imbert, at the
opening ceremony of the Energy
Conference in January, had said
that the Government will under-
take a review of the tax regime for
the energy sector.
Three weeks ago at the launch
of the Juniper platform in La Brea,
Imbert spoke about the importance
of reviewing the supplemental pe-
troleum tax (SPT).
"The initiatives to stimulate the
domestic energy sector will also in-
clude the review of the fiscal regime
for hydrocarbon production taking
into consideration the review under-
taken by the International Monetary
Fund and stakeholder feedback," he
He said the Government was mov-
ing to change the SPT regime from
the threshold price (which is US$50
a barrel) to a profit-based tax.
UK tax model
In the UK, the old petroleum
revenue tax rate has been reduced
from 35 per cent to zero per cent to
simplify the regime for investors
and level the playing field between
investment opportunities in older
fields and infrastructure and new
Campbell said they need to max-
imise the recovery of the oil, gas and
the hydrocarbon resources that they
have in the UK.
The UK produces about 43 billion
barrels of oil a day and the forecast is
that the industry has 20 to 30 years
again before deposits run out.
"The common wisdom is that
there is 20 to 25 billion barrels of
oil left. We will fail to access that if
we do not find the investment that
we need. We are not attracting in-
vestments because we are high cost.
At the moment, it looks like we are
going to be sub optimal in that.
"Also, we are not very efficient.
We have 65 per cent production
efficiency and the UK supply chain
only provides 45 per cent of the val-
ue against the value of spend of the
companies operating on the conti-
nental shelf," he said.
Based on this scenario, he said the
idea is to persuade the Government
to tax less to invite foreign invest-
"Instead of saying the Govern-
ment will change the tax regime
and change the regulatory regime
and then wait to see who invests,
they can come up with measures
to invite investments to get that 25
billion barrels of oil equivalent.
"One thing that has been done
is putting in place one of the most
competitive tax regime in the world.
The back-to-normal corporation tax
levels is 30 per cent for most of pro-
duction. The old, original tax, which
was 88 per cent, has been cancelled."
Campbell said now that they have
set up a solid fiscal regime, Britain
has to work on its competitive ad-
"Through this we have to get in-
vestments, so we can maximise the
recovery of the resources and from
that we have to maximise the value
that we get into the UK's economy
other than taxes."
He averages that energy's con-
tribution to the British economy is
about eight per cent.
"It is a very different perspective
from T&T. I heard at the opening of
Energy Conference that T&T has
lost 90 per cent of its revenue from
production profit taxes. But the UK
has lost 105 per cent. However, this
is a smaller percentage of the overall
UK economy," he said.
He said if a company in the ener-
gy sector has money to invest that
company will not look at the UK.
"The investor will look at coun-
tries where they will get better re-
turns. Major US producers are saying
why invest in the North Sea when
they can invest in shale and shale
is the game now.
"So the UK has to stand up and
compete aggressively or we will leave
15 billion barrels of oil equivalent in
the ground. And we are getting £50
billion per billion barrels. So that is
£ 750 billion of economic value add
that we will say goodbye to. We can-
not afford to do that," he said.
He estimates that if the UK is suc-
cessful in its new fiscal and regula-
tory regime for its energy sector, it
can earn up to a trillion pounds in
revenue from its industry.
"If you convert that to T&T's cur-
rency that is TT $10 trillion. I know
T&T's Government will get out of
bed for that money," he said.
He said new regulatory regime in
the UK was completed in October.
"It is a tax on corporate profits
so generally it is 30 per cent and it
is even coming down from that as
well. It is very low."
Future of the
Campbell said he expects that by
2035, 70 per cent of primary energy
sources in the world will still come
He adds that the world's reliance
on oil and gas will not stop in the
near or even medium future.
"People are talking about the elec-
trification of transport systems but
I have a problem with that. There
is an exponential growth of buyers
of electric cars but the problem is
only a few second time buyers. So
the danger is that the technology is
not ready and people go into it too
early and that puts people off the
He said he totally supports
de-carbonisation but he said it will
take a long time and must go through
different stages of evolution.
"In Scotland, we have massive
windmills. I now drive from my
home to the south of Scotland and
there are over 100 windmills but
the problem is that people do not
like them. The Government said 50
per cent of our electricity is being
supplied by renewable resources but
two weeks later we had a winter high
and 19 days with no wind," he said.
To add to this, Campbell said a
low price environment for oil and
gas means less incentive for people
to look at renewable energy as their
present energy needs are supplied
Tax royalty changes
can boost T&T revenues
chairman, IMES Group
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