Tax reform in T&T

10th June 2026

Most of the commentary on the Finance Bill currently being debated in Trinidad & Tobago’s Parliament has concentrated on the increase in fines, fees and penalties contained in the legislation.   There are, however, two measures in the Bill that have a much greater significance as far as I am concerned, namely the reduction in the royalty rate for marginal offshore gas fields and the increase in capital allowances for investments into these fields. 

It is well known that over time most of the bigger and more prolific shallow water gas fields in Trinidad & Tobago have already been brought into production. Newer gas fields are often smaller and more complex, meaning that their cost per unit of production is higher and the economics are more challenging. This has meant that while the downstream industry has been starved of gas, there have been small, stranded gas fields remaining undeveloped, simply because the maths does not make sense to bring them into production.

The new legislation applies to gas fields with probable reserves less than 300 billion cubic feet (bcf) and whose calculated rate of return is less than 15%. 

There are long discovered resources, such as the Onyx field, located within the TSP license between the Poui and Teak fields, off Trinidad’s south-east coast, that have remained undeveloped because the economics have not made sense under the current tax regime.   The hope is that the reductions in the royalties and the increases in the capital allowances will now make these offshore fields economic and they will be brought into production. 

These changes will be of most significance to companies operating under exploration and production (E&P) licenses, though the legislation also states that they will apply to Production Sharing Contracts (PSCs). In the case of resources within PSCs there will have to be a renegotiation of terms between the operator and the Ministry of Energy and Energy Industries, but the new royalty and capital allowances will provide a benchmark that can be used to agree new terms.  For companies operating under E&P licenses there will also be a process to apply for a certificate from the Ministry of Energy that determines if a particular field meets the definitions for the new lower royalties and more generous capital allowances. 

This means that if the benefits of the new tax regimes are going to be reaped, the Ministry of Energy will need to work expeditiously to have all of the processes and reviews in place to issue the new “marginal field” certificate quickly. There have, unfortunately, been times in the past when tax reforms have been announced but nobody has ever been able to access the concessions due to administrative inertia; the energy audit tax credits introduced in 2010 being a good example. 

These changes to the tax regime should be welcomed by all, as they should mean more revenue for the Government and more gas for Point Lisas.  New field development also means more work for local service companies and contractors and more jobs; smaller, shallow water fields will typically have higher levels of local content for each dollar invested. A focus on small and marginal gas fields is something that should have been on the front burner for many years, even as Trinidad & Tobago also pursued the big new deepwater fields, like Calypso, and gas imports from Venezuela. 

I hope that this means that the government is willing to also explore changes to other oil and gas taxes that have held back the industry.  Tax reform for the oil and gas industry is going to bring in a whole lot more revenue than increased fines for sawmills.