Small independent oil and gas operators have expressed disappointment with the 2019/2020 fiscal package saying it was devoid of incentives for investors.
So said senior geoscientist at Touchstone Exploration Xavier Moonan, during a post budget interview with Guardian Media yesterday.
Touchstone Exploration has been involved in a transformational drilling programme which has the potential to significantly increase T&T’s oil and natural gas production for the next five years.
Moonan said,“The budget from a small oil and gas company and from small independent operators perspective has been disappointing. There is virtually no new incentives to drive onshore oil operations back to higher heights.”
Moonan said some youths were in favour of forming oil companies of their own. “While this is very possible and may happen in the near future, such risks need to be facilitated by the Ministry of Energy. Acreage needs to be offered, and offered with small independents in mind. So the terms of those leases need to be drafted to suit small independents,” he said.
Moonan said currently half of Heritage onshore oil production is from small independent operators.
“They have been leased blocks from Heritage. More should be leased and the process of approvals for drilling on those blocks should be made more efficient. We need to create an efficient environment so that small operators see an advantage in investing in T&T,” he added.
Moonan also noted: “ Value Added Tax (VAT ) arrears in the form of government bonds with a 1.5 per cent interest per annum is a means by which the government is trying to repay but its not attractive to companies.” He added, “but it is better than nothing.”
Moonan further said the change in SPT deductibility from 20 to 25 per cent is welcomed but it doesn’t yield much of a positive outcome for investment overall.
“The change in Capital allowance from 50/30/20 to 20/20/20/20/20 will damper short term investment and reinvestment.”
He added, “From a young professional perspective there doesn’t seem to be anything new. The same projects are still being rolled out. In some cases the digitalisation of Government business is actually happening so that is positive, but it needs to happen faster.”
Moonan said youths of T&T wanted to see more transparency in government business. The gas contracts and the details of oil and discoveries should be mandated by Ministry of Energy and Energy Industries (MEEI) to be published.
“We need to restore confidence in our energy sector since its still the pillar for growth. The closure and then sale of the refinery should have been crystal clear and not shrouded in secrecy.”
Moonan said the country as still awaiting details on the relationship between Heritage, Paria and the new refinery operator.
“Will the oil being produced by Heritage and other operators be mandated to be sold to this refinery? Will the prices that companies are getting now be maintained?” Moonan asked.
He said the government should keep investments attractive to small oil and gas operators who have successfully exploited existing oil wells.