Debe housewife Rita Chanka raised her eyebrows with a worried facial expression when she heard Finance Minister Colm Imbert yesterday mention property tax coming into effect next year.
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Minister Ramnarine: US$1.4b of FDI for energy in 2013
Foreign direct investment (FDI) in T&T’s energy sector rose from US$501 million in 2010 to US$1.4 billion in 2013, said Energy Minister Kevin Ramnarine. In 2011, the FDI figure was US$1.7 billion and US$2.2 billion in 2012.
“The numbers for the last three years are the highest on record for the energy sector in nominal terms. They represent a significant increase in activity in the upstream side of the energy sector where we explore for and produce oil and natural gas,” Ramnarine said. He was speaking on Wednesday in Parliament on the investment climate in the energy sector over 2007-2013 and the investment forecast for 2014-2016.
He said data gathered by the Ministry of Energy’s Research and Planning department indicate that total investment by both foreign and local companies will average over US$3 billion per year between 2014 and 2016. This is over $US 9 billion in investment in the next three years with the emphasis on the upstream.
Investor confidence in the energy sector is related to the fiscal incentives that have been provided in every budget for the last four years. These include reduction in petroleum profits tax for the deepwater, increase in the rate of cost recovery for the deepwater, harmonisation and simplification of the supplemental petroleum tax regime, introduction of incentives for development of small fields and mature marine fields, introduction of incentives for drilling into deeper horizons and a restructuring of the system of tax allowances for exploration and development.
“Four years ago, the major multinational oil and gas companies operating in this country had no growth story to tell their shareholders. Fast-forward to 2014 and the picture is very different. In the case of BP, there is optimism around the results of the Ocean Bottom Cable (OBC) seismic that has given them a much better understanding of the geology of the Columbus Basin.
“In the case of BG, there are progressive plans around Blocks 5c and 5d. In the case of BHP, there is tremendous optimism around the deepwater where they have partnered with BP and Repsol. Finally, in the case of Repsol—which incidentally owns 30 per cent of bpTT—there is newfound optimism around the Teak, Samaan and Poui fields, which are now subject to a two rig drilling programme,” Ramnarine said.
28 active PSCs
The minister said there are currently 28 active production sharing contracts (PSCs) in T&T dating back as far as 1974. “These contracts are administered by the contracts management division of the Ministry of Energy. Of these 28 active PSCs, 12 (almost half) were signed in the last four years. “In addition, in the last three years, we have signed three exploration and production licenses. These 12 production sharing contracts and three licenses are valued at almost US$2 billion in investment in work programmes,” he said.
Ramnarine said in addition, in 2013 the Ministry of Energy commenced and concluded the first dedicated land-based bid round in 14 years. Arising out of this, three blocks were awarded to three companies: Range Resources, Touchstone and Lease Operators Ltd. These licenses will be finalised shortly.
“In addition, another deep water bid round was launched in August 2013 and closed in March 2014. An announcement will shortly be made with respect to two deepwater blocks arising out of that bid round. These two new deepwater PSCs will bring to nine the number of deepwater blocks under PSC. Our deepwater province has been opened up to exploration and that is a historic development. A discovery of oil in the deepwater will only be realised as production by the early part of the next decade,” Ramnarine said.
Major upstream projects
Some of the other major upstream projects in the period 2014 to 2016 include the BP Savonette drilling project, which is now complete and the BP Juniper project, which is expected to commence in 2015 and will require the fabrication of a new platform. The capital expenditure for this is estimated at US$2.1 billion and will make available 1.1 trillion cubic feet of natural gas.
“This will move bpTT from a two-rig operation to a three-rig operation. At present BG and Chevron are undertaking the development of the Starfish field with first gas expected in October 2014 at a cost of US$550 million. Other developments include Petrotrin’s South West Soldado project and the EOG Resources Oilbird project. Ramnarine said further evidence of the positive investment climate is evident by the fact that in the last two years T&T has had five new discoveries of natural gas or oil.
1. Bayfield’s (now Trinity) EG 8 discovery in Galeota
2. Petrotrin’s Jubilee discovery in Trinmar’s Cluster Six
3. BP’s discovery of one trillion cubic feet of natural gas in Savonette 4 well
4. Trinity’s TGAL 1 discover in Galeota
5. Repsol’s Teak Bravo North discovery in its Teak Samaan and Poui acreage.
“In the downstream sector, the Ministry of Energy and State-owned National Energy continue to pursue new projects that are in different stages of maturity. The development of the Mitsubishi- Massy Methanol to Di-methyl ether project is now in an advanced stage. The project represents a US$850 million investment.