Debunking the Oil Price Myth
Posted: Tuesday, February 15, 2005
By Stephen Kangal
In the face of the outright deception used recently by Junior Finance Ministers Senators Conrad Enill and Christine Sahadeo to deliberately complicate the mechanics for the calculation of the export pricing of T&T's crude oil (and hence revenues) I wrote (Express 14 Dec. p 12; Newsday 19 Dec. p .19) that T&T's Galeota, sulphur- free, light sweet East Coast crude was priced in the international markets at $US 1 above the Brent Crude Marker Price. The Ministers studiously avoided divulging this link subsisting between North Sea Brent and our Galeota crude. Brent is used to price two-thirds of internationally traded crude oil supplies.
However confirmation of the use of the Brent Crude Marker Price for our Galeota crude oil was provided by Trade and Industry Minister Ken Valley in Parliament when he outlined the mechanics to be applied in determining T&T's monthly contributions to the Caricom Oil Facility Fund. He said that T&T would contribute to the Fund only "… when the average (monthly) price of Dated Brent Crude oil exceeds US$30.00 per barrel".
Today and for the whole of last year Brent Crude was being traded at circa US$45.00 and yet we are being told that BPtt's crude shipments averaged US$38.00 per barrel in 2004. Is BPtt involved in commercial under- invoicing of its oil shipments to its overseas partners as a means of tax reduction? Readers will recall that Atlantic LNG openly under invoiced our lucrative LNG shipments for a considerable period under the guise that they were being sold on the low-priced Spanish market but were directly consigned for and delivered to the higher priced US LNG market. Millions of tax revenues were circumvented and lost to T&T since we supplied 80% of the LNG requirements of the USA. What action has been instituted against Atlantic LNG to collect the taxes not paid?
Will BHP Billiton's East Coast sweet crude, that I am certain cannot be commercially refined at Petrotrin, foist similar deceptive export practices on a lame Manning Administration? What is this Administration doing to curb or eliminate this wanton and obscene exploitation of our non-renewable energy patrimony by plugging the tax avoidance loopholes and negotiating a more equitable petroleum tax regime in the shortest possible time frame? Time means millions of dollars of our revenues are foregone.
At what price will Government sell to Petrotrin for wasteful initial experimental refining the first oil shipment from the BHP Billiton's Angostura Field of 350,000 to 500,000 barrels? Petrotrin's refinery is not configured to process light Galeota crude even though it underwent a recent upgrade. Must our oil price patrimony continue to be shrouded in political secrecy and leave room for graft, corruption and kickbacks? Why must BHP Billiton's 60,000 bpd production of light, low-sulphur crude whose API specific gravity can be expeditiously determined take 6 to 12 months, according to Energy Minister Eric Williams to determine its export price and hence tax our revenues on the world market (Guardian 15 Jan. p. 17)?
Rumour has it that former Amoco in the early 1970's pillaged our oil wealth for months before T&T Inland Revenue tax officials got into the action.
Finally what is the real initial daily production of the Angostura Field? The Prime Minister said it was 33,000 bpd at present and increasing to 70,000 bpd by the end of February. Several media reports (Business Express Editorial Jan.19; Business Guardian 27 Jan. p.7) indicated that initial starting production was 60,000 bpd.
Why this measure of duplicity and prevarication being visited on the tax-paying community who is being kept in the dark?
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