In T&T: Deepwater bids start flowing in

24 April 2012


Strong response to deepwater exploration potential. When last has there been an article on diversification initiatives?

THE government has already received 20 nominations for the six deepwater blocks up for bid at this year’s Deepwater Competitive Bidding Round, Energy Minister Kevin Ramnarine has said.

The blocks—TTDAA 1, TTDAA 5, TTDAA 6 and Block 25 (a)—are located off the East coast, while blocks TTDAA 28 and TTDAA 29 are off the north eastern coast.

Ramnarine said yesterday during the formal launch of the 2012 round at the Hyatt Regency (Trinidad) that the interest expressed should result in a very successful attempt to explore the country’s deepwater acreages.

Cabinet had approved the round on March 29, and April 5 was the official start date for nomination submissions. Bidding ends on July 30.

Evaluation for the bids will be conducted by a technical evaluation team comprising senior officials at the Ministries of Energy, Finance and the Attorney General, as well as senior officials of State enterprises. Successful bids will be announced six months to the date of order (April 5) – on or before October 4.

Successful bidders will be granted a contract for nine years with renewals for a term of 30 years from the date of the contract, if successful discoveries are made. Contracts offer a mix of water depths, hydrocarbon types and pools of production—all located close to blocks with known pools of production.

“This is the third bid round this government is pursuing and it carries with it tremendous hope for the future of the national energy sector,” said Ramnarine.

He added that the round had been aggressively promoted through road shows and advertisements in popular upstream websites. The Ministry has also reprocessed seismic data in order to improve technical confidence and more accurate interpretations of the basins, Ramnarine said.

The Petroleum Sharing Contracts (PSC) on offer are similar to the ones offered in 2010, when the government amended the tax regime that was implemented in 2006, which Ramnarine called “a disastrous taxable PSC that also required companies to carry state oil company Petrotrin as a part of their bid.”

“A lot have changed since then. We have moved back to the PSC where the company’s taxes are paid out of the Minister’s Share of Profits Petroleum and companies are no longer required to carry Petrotrin,” he said.

Additionally, in 2012 in order to increase deepwater exploration the government introduced incentives for international companies to invest in the sector. This was done by reducing the petroleum profits tax to 35 per cent, from 50 per cent. For taxation purposes the definition of deepwater was also amended from 400 m to 1000 metres for cost recovery rates. These cost recovery rates (tax breaks due to depreciation) were also increased from 60 to 80 per cent after considering similar PSC arrangements elsewhere in the world.

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