Fiscal Regime and Royalties

Royalty

The producing companies with operation that are under the exploration and production licences and which pay royalty on crude produced and gas sold are Repsol, BPTT, Petrotrin, EOG Resources and Mora Oil Ventures. Under the Petroleum Regulations, the Field Storage Value method is used to calculate royalty of all companies except one which uses the Fair Market Value methodology.

The field storage value is the aggregate values of the petroleum products - that is gasoline, gasoil and fuel oil - of a barrel of crude from which a refining allowance is deducted. The value of the products obtained depends on the quality of the crude oil with those with API gravity over 28 degrees having greater value than crude oils of lower gravity. The Fair Market Value methodology is the value obtained when the produced crude is multiplied by its market price.

The royalty rate is 12.5% for land and marine production. The royalty rate is 10% for marine production off the West Coast of Trinidad. There are also special sliding scale royalty rates for some marine production off the East Coast which extend to as much as 15%.

Royalty is paid quarterly on the 21st of the month following the end of the quarter.  Under the Petroleum regulations companies are allowed to pay royalty based on an estimate of liability which ensures that they meet the statutory deadline.

Subsidy/Levy

The Petroleum Production Levy and Subsidy Act provides for the collection of levy from oil producing companies and for the payment of subsidy to the wholesale marketing companies, in respect of the sale of petroleum products (gasoline, diesel, kerosene and liquefied petroleum gas) on the domestic market. 

The subsidy is provided in the first instance from the petroleum levy payable by the companies producing over 3,500 barrels of crude oil per day, which is capped at 4% of their gross revenue from the production of crude oil. The remainder of the total subsidy claim which is not provided from levy is borne by government. The Government is currently reviewing the method of payment of levy/subsidy arrangements to make it a more efficient operation.