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Khan: EOG paid state $15b in six years

Published: 
Thursday, November 16, 2017

EOG Resources paid $2 billion in taxes and royalties to government last year, says Energy Minister Franklyn Khan. In total, the company paid $15 billion to the Government over a six-year period.

In a speech at a ceremony to mark the company’s 25th anniversary as an operator in T&T, Khan noted that EOG had paid more money to the treasury than all the other oil and gas multinational companies excepting bpTT.

“In terms of its financial contribution to the State, excluding State Enterprises, EOG has out-performed some of its more illustrious peers.

The TT EITI Report on the financial contributions of extractive industries to the State for the period commencing fiscal 2011 to 2015 revealed that EOG ranked second only to BP in financial contributions in the form of royalty, taxes and other payments,” he said.

Khan broke down EOG’s financial contribution over the period 2011 to 2016 as follows:

• 2011- TT $2.9 billion

• 2012- TT$2.4 billion

• 2013- TT $2.1 billion

• 2014- TT $2.7 billion

• 2015- TT$2.6 billion

• 2016- TT$2.0 billion

“This is an outstanding achievement given your portfolio of assets and size relative to the other upstream companies. It is also important to note your revenue
Energy Reporterstreams are based on sales to NGC to whom all your gas is sold,” he said.

The Energy Minister noted that in the 2018 Budget, Government decided to standardise the rate of royalty at 12.5 per cent which would affect the company since it is subject to royalty on all its production.

Khan noted that in the South East Coast Consortium (SECC) Licence for Blocks 1, 2 and 3 there is a graduated rate royalty rate on gas, which rises from 5 per cent to 15 per cent, with 15 per cent being applicable to production over 200 mmscfd.

He said: “Therefore, the change in the royalty rate may provide some relief to EOG. In relation to its production sharing contract, EOG has had the benefit of cost recovery which has ranged from 45 per cent to 65 per cent and which worked to the benefit of both the contractor and the state. As the phase ends, returns to both parties should improve.”

The minister also revealed that the recent deal between the NGC and EOG for the continued supply of natural gas to the domestic market was for a five year period. He said this emanated from the Houston meetings convened in March 2017 between Prime Minister Dr Keith Rowley and the heads of BP, EOG and Shell.

“Over the next five years, EOG’s capital expenditure on its upstream operations is projected at approximately US$1 billion. This, when added to prior investment of US$1.8 billion, will bring total investment in Trinidad by EOG to US$2.8 billion,” Khan said.

He said EOG currently has an “impressive portfolio of assets, which comprise nine offshore platforms with 54 oil and gas wells. Total production to date is 2.7 Tcf of gas and 36 million barrels of oil.”

The minister praised EOG for producing small pools of gas and said it was due to the company’s excellent track record that larger players like bpTT have trusted it to be the operator in joint ventures.

“The company is operator of all blocks, including JVs (joint ventures), which is a testimony to the confidence in EOG’s technical capability and HSE practices. This confidence has not been unfounded as EOG has delivered to its partner’s expectation and continues to conduct its operations in a safe manner, achieving one million man-hours in 2017 to date without a lost-time incident,” he said.

EOG is, at present, the third largest producer of natural gas inT&T, slightly behind Royal Dutch Shell.

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