SPT29 Nov 2017 21:58
The position earlier this year before the latest budget. Adds fuel to the fire that something is probably imminent IMO.
''The SPT is levied on revenue, rather than profit, and was originally intended as a windfall tax, kicking in when international oil prices rose higher than $50 a barrel. That price level is no longer seen as particularly high, and companies are being penalised with a particularly heavy tax when prices are at $50-60 per barrel. Given that 2017 prices are widely predicted to move up into that range, the SPT is now considered by private sector operators to be a significant disincentive to new investment. In his September 2016 budget speech, Imbert said that the government was reviewing the country�s oil and gas taxation regime, on advice from IMF experts. He said that there was a proposal to replace the SPT with a new cash flow-based tax, to simplify and reduce tax levels, and to introduce �a moderate fixed-rate royalty in the order of 10-12%.�
However, progress has been slow, and a promised round of government-industry consultations on the subject has not yet taken place. At the time of the January 2017 Energy Conference, Imbert again referred to the review of the fiscal regime carried out by the IMF, and described reform of the SPT as an issue that had to be confronted. In addition, Imbert referred to government concern over transfer pricing of LNG exports, which some officials believe may reduce tax revenues. He described the issue by saying, �There is significant disparity in value accruing to [the] government as compared to that received by energy companies and their associates from the monetisation of this country�s hydrocarbon resources.� This, he said, made it necessary to �realign the interests of the companies and the government� so as to �ensure equitable outcomes for all parties�.
Two other key decisions are seen as becoming urgent. One relates to the future of Petrotrin, the state-owned oil company that is active both upstream (as an oil producer) and midstream (where it operates the refinery). Petrotrin has been recording heavy financial losses. It lacks the funds to invest in developing primary and secondary recovery in its existing fields, but increasing local oil production is seen as critical to stemming losses at the Pointe-a-Pierre refinery by increasing the proportion of indigenous crude used as feedstock there. Imbert noted that Petrotrin accounts for more than 50% of the country�s crude oil production, and said the government was looking to implement a range of strategies in 2017 to boost its onshore and offshore output (see analysis).''
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