Young: Trinidad and Tobago now paying US$1m for Dragon field taxes

ENERGY Minister Stuart Young said on May 13 that Trinidad and Tobago is already paying an unstated portion of over US$1 million ($7 million) per year in taxes to Venezuela for the much-awaited Dragon gas field.

He was replying to a listed question by Pointe-a-Pierre MP David Lee in the House of Representatives, asking what payments will the National Gas Company (NGC) make to Venezuela before gas is produced based on Venezuela's licence granted to Shell and the NGC.

Young expressed his confidence in the deal going ahead, hinting that the US authorities did recognise the need for an extension to their Office of Foreign Asset Control (OFAC) licence to Trinidad and Tobago.

He said the OFAC licence was not granted to Shell but specifically to the TT Government and expires at the end of October 2025.

"Shell was not the applicant nor the holder of that licence."

He said days ago, Shell's number two executive told him that Shell has not requested any 15 year extension of the OFAC licence, unlike what Young said Reuters had been wrongly reported.

"What I can tell the people of TT is that I continue to be directly in conversation with those in the White House responsible for OFAC etcetera, as we pursue the interest of TT.

"At this stage there is absolutely no indication of anything that will be deleterious to our specific amended licence .

"And they recognise as well, that for us to be able to pursue and bring this has to market an extension will be necessary and we don't foresee any difficulties with that."

Young said the payments due to Venezuela consisted of royalty, a special commission of five per cent, surface tax and social contributions totalling US$1 million, and a confidential signing bonus.

"NGC Exploration and Production Limited has a minority share-holder in the licence will be required to make its share of the above payments in this regard."

Lee sought clarification, as to which payments were to be made pre-production or at the start of gas production.

Young replied, "As is normal with licences of this type, as I said there is a signing bonus to be paid in instalments. By definition that means that time has begun. So that will be paid prior to production, in instalments. There is some tied to feed and some tied to post-feed."

He said other payments will only be due after production begins, namely royalty and a special consideration of five per cent of the income earned from export of gas from the Dragon field.

"The annual surface rental and social contributions of US$1 million per year are to be made now, during this period, on an annual basis as is normal with licences of this type.

"For example, in TT we charge our upstreamers with exploration and production licence and production-sharing contracts even before they begin exploration and production. Such types of fees then sponsor scholarships for people of TT."