Finance Minister, Larry Howai said the changes to the fiscal regime to make oil and gas investments internationally competitive to attract foreign capital investment have led to resurgence in the domestic energy sector.
Delivering the feature address at the opening of the Energy Chamber of Trinidad and Tobago’s annual Energy Conference, he highlighted some of the changes including reduction of the Petroleum Profits Tax to 35 percent for deep water blocks, bringing the tax rate in line with competing jurisdictions for deep water blocks. Other changes include a revision to the Supplemental Petroleum Tax regime, introduction of base rates and a sliding scale mechanism for both marine and land operations and the implementation of sustainability incentives for mature marine and small marine oil fields.
As a result of improvements to the energy tax regime, more in-depth seismic data and an aggressive marketing programme, the government managed to conclude most of the successful deep-water bid rounds in 2013 when there were 12 bids for five of the blocks on offer. Changes to the fiscal regime have also led to an expansion of investment which includes the US$2.1 billion Juniper Project.
The Finance minister said the country is also witnessing a marked increase in drilling activity, a significant increase in foreign and domestic direct investment, discoveries of new reserves of oil and natural gas and the stabilization of oil production.
Focusing on the declining oil prices which are expected to remain below the original budgeted level of USD80 per barrel in the current fiscal year, Minister Howai said his Ministry is continuously evaluating the impact of falling oil prices and the implication for government’s revenue projections.
Although revising the budget using conservative assumptions of an average of US$45 per barrel of oil and US$2.25 per mmbtu for gas, the Minister of Finance said this may still not be enough.
“We need to be prepared to recalibrate our fiscal position as time goes by, based on the evolving fiscal situation,” he said, adding that his ministry remains confident that the nation’s financial buffers are strong enough to address the immediate concerns of the recent decline in oil prices.