Govt
fails to attract deep water investors
By Curtis Williams
Trinidad Guardian
Port
Spain
Petroleumworldtt.com
12 17 06
Energy
Minister Dr Lenny Saith yesterday admitted that
the Government had “gotten the package wrong
for the deep water blocks and must now go and get
it right.”
His
comment comes after his ministry staged the most
unsuccessful bid round in T&T’s history,
since the introduction of Production Sharing Contracts
in the mid 1990s.
The
ministry received a sole bid for one of the eight
blocks on offer.
It
meant that 11 of the 12 companies which paid millions
of dollars for 2D seismic to be shot over the Ultra
Deep Atlantic did not bid.
The
Energy Minister said the Government was still convinced
that the Ultra Deep was the next frontier where
massive finds will be made.
The
rejection of the blocks did not in his view mean
that the companies were convinced there was no oil
to be found in the deep water.
“We
are of the view that the Ultra Deep is the next
province and this has not changed our view. What
it says is that we have not gotten the package right
and we will have to do that on the next occasion.”
he said.
The
Energy Minister said he will have to speak with
the technical experts in the Ministry of Energy
to determine what went wrong.
Saith
said: “When I go into office I will have to
speak with the technical experts and hear what they
have to say. They would have spoken to the companies
and would have a better idea of what went wrong.
I will also have to speak with people in the Ministry
of Finance and determine what is the best way forward.
But we will fix it.”
The
Sunday Guardian has spoken with several senior officials
of major oil companies and they all say the Government
“became greedy” and the terms and conditions
of the new PSCs were too tough for them.
The
officials did not want to speak on the record because
they have to “continue doing business with
the Ministry of Energy and the government”
but were adamant that the terms made the Ultra Deep
too risky to justify the investment.
They
also accused the Ministry of finance of “railroading”
the Ministry of Energy in coming up with the terms
of the new production sharing contracts.
Under
the new PSCs Government has increased its take of
the revenues and has increased the amount of taxes
companies have to pay.
Minister
in the Ministry of Finance Conrad Enill defended
the new PSCs, saying it was in keeping with the
modern trends and was designed to ensure the country
got its just economic rent.
Enill
said, “It is the same method we used in the
other taxation restructuring we did. We used the
same team to review the PSC and went to the same
international professor and he basically gave us
what was the conventional current regime in the
world.”
Enill
added: “From where we sit, we negotiate on
what we consider to be our competitive position
when compared to the rest of the world, and look
at what is taking place in other jurisdictions in
coming up with our terms and conditions.”
Enill
said that at this point in time he didn’t
have the information on what happened but he was
aware that companies had been trying to see him
on the PSC and other fiscal matters but has not
as yet been able to accommodate them.
The
Minister said: “If we have to review the PSCs,
then so be it; we will do that.”
The
relatively small size of the blocks was also an
issue with the companies as was the quality of the
seismic which the companies told the Sunday Guardian
was of poor quality.
In
addition, there has not been a single find in deep
waters off Trinidad’s east coast and with
wells costing US $100 million each the companies
were simply not prepared to take that chance.
The
Trinidad Guardian
Sunday 17th December, 2006
Copyright
©2006 The Trinidad Guardian . All Rights Reserved.
