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Govt to revise fiscal regime for energy
Only four months after the fiscal regime for oil and gas companies was revised via T&T’s 2012/2013 national budget, a Cabinet committee has been set up to revise it again.
During the budget debate four months ago, Energy and Energy Affairs Minister Kevin Ramnarine announced three changes to the fiscal regime, following consultation with, and at the request of the Energy Chamber of T&T, his former employer. Last October 15, Ramnarine told Parliament the 2012/2013 budget “contained three fiscal provisions to stimulate exploration and production in the energy sector.” Referring to one of the three “provisions,” he said that “the industry, for a very long time, has been lobbying for the harmonisation of these rates.”
Minutes after Energy Chamber President Roger Packer called for fresh reform of the fiscal regime, saying that last year’s was not enough to secure the industry’s future, Ramnarine made the announcement. They were both speaking yesterday at the T&T Energy Conference hosted by the T&T Energy Chamber at the Hyatt Regency in Port-of-Spain.
“Last week Cabinet approved the establishment of a committee to review and make recommendations for the reform of the fiscal regime. This committee is to be chaired by the permanent secretary in the Ministry of Energy, Vishnu Dhanpaul, and includes distinguished public servants from the Ministries of Energy and Finance,” Ramnarine said.
“This committee will be consulting with all stakeholders in the energy sector and has terms of reference that include heavy oil development and reform of the existing production sharing contract regime. The committee will report its recommendations in six months, just in time for the national budget of course; and ladies and gentlemen, we must always remember, in that regard, what got us here may not take us there.”
Ramnarine also announced that the Ministry, in collaboration with the Caricom Secretariat, will host a historic COTED-energy meeting in Port of Spain on March 1. COTED is the Caribbean Community’s Council for Trade and Economic Development.
“This will bring together ministers with responsibility for energy for one day to discuss a way forward for the Caribbean with respect to energy. It is also noteworthy that later this year Prime Minister Kamla Persad-Bissessar assumes the chairmanship of Caricom,” he said.
The minister displayed a graph that he said demonstrated a correlation between economic growth and rig days, although rig days would be irrelevant to onshore production.
“In the upstream sector an excellent proxy for activity is Rig Days. In 2012 we recorded 2788 Rig Days which is a 27 per cent increase on the figure for 2011. It is also the highest Rig Day count since 2007. While it is difficult to accurately forecast Rig Days, we expect that in 2013 we would cross the 3000 Rig Day mark as exploration and development drilling accelerate. A broader view holds that Rig Days seem to be a good proxy for economic growth as the graph shows,” he said.
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