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BHP projects, amendment to Petroleum Tax can be game changers for T&T – Energy Chamber
https://oilnow.gy/featured/bhp-projects-amendment-to-petroleum-tax-can-be-game-changers-for-tt-energy-chamber/
armatrading
Undoubtedly.
Rossannan - Indeed, but it will be a significant factor for any oilco planning ahead, and for those who might be thinking of farming into a T&T play.
armatrading
The significance of SPT reform for the longer term cannot be underestimated. While WTI remains around $40 it has less significance though.
https://energynow.tt/blog/a-future-for-oil-in-tampt
The small oil companies in this sector have been clamouring for changes to the oil taxation regime for many years and especially for changes to the SPT. This is a topline tax on revenue that kicks in as soon as prices average over US$50 per barrel and it has proven to be a significant disincentive to investment. The tax was originally introduced as a windfall tax in 1981 when US$50 was a very high price for oil. The small oil companies, supported by the Energy Chamber of Trinidad and Tobago, have long argued that this is no longer a windfall price and the effect of the tax is to push small oil companies into a negative cash flow position when oil is in the US$50-60 range, and hence acts as a significant disincentive to investment.
Small oil companies, as well as the local contractors and service companies who service this sector, were therefore delighted when they read the proposal in the People’s National Movement election manifesto that the floor when the SPT came into effect would be raised to US$75 per barrel. With the success of the PNM in the August 2020 Parliamentary elections, the industry is now closely anticipating the national budget announcement due on October 5th 2020 to see if the Minister of Finance carries through on the promise made in the manifesto.
This change in SPT for the small oil companies, coupled with the coming on stream of the Ruby project and deepwater exploration success, might just give new life to the over-one century- old Trinidad and Tobago oil industry.