G.O.B. experts refute oil company?s claims
The nation may still be waiting for the actual text of the Senate Social Security report, but in the meantime there’s no shortage of other issues emanating from Belmopan. This morning the petroleum controversy returned to the front burner as the Ministry of Natural Resources sought to seize the high ground in the battle with the only company to ever find oil in Belize. News Five’s Janelle Chanona reports.
Susan Morrice, B.N.E. Director
?Changing from twenty-five to forty percent today is disastrous.?
Sheila McCaffery, B.N.E. Director
?We would simply pack up and we will go to another place in the world that has better conditions and more stable conditions. And believe me we have those choices.?
Janelle Chanona, Reporting
Following a passionate press conference last week by officials of Belize Natural Energy over tax increases, this morning government representatives went on the defensive.
Ismael Fabro, C.E.O. Ministry of Natural Resources
?If B.N.E. was to follow up on that, we would take that at that point, we will cross that bridge at that point if they followed up on their threat. I don?t know if Andre could add to that.?
Andre Cho, Director of Petroleum
?To add to what Mr. Fabro said, if they leave, we?d tell them, ?Thank You?. And an option would be for the government to hire a services company, a services contractor to produce the field for us, for a percentage. Simple.?
The controversy in Belize?s one year old oil industry emerged after an announcement by the Musa administration that it would increase the industry?s twenty-five percent income tax to forty percent.
In stating its position on the issue, B.N.E. executives have maintained that if it pays a forty percent tax, the company would be left with little or no profit, as operational costs would take up the bulk of gross receipts from petroleum sales. But G.O.B.?s petroleum experts say, not so fast.
Andre Cho
?To give you a metaphor, it?s a piece of cake, it?s readymade. A lot of companies have come; even the other operating companies in Belize as well as other companies that are interested in applying for exploration licenses in Belize have come and visited the site. And they are amazed at how it?s readymade for them.?
Dr. Ram Ramanathan, G.O.B. Oil Expert
?As far as the Spanish Lookout terrain is concerned, it is one of the easiest terrains in the geological classification. Because you drive up to the well site, inspect everything, probably a few steps you will take and then again you are in your car. So in terms of accessibility, the Spanish Lookout field is the most easily accessible field. So when you set a production cost for such areas, it would be the minimal. That is where I cited two to three dollars per barrel would be the production cost for such fields.?
According to Dr. Ram Ramanathan, a fifty-fifty split of net profits is a fair shake.
Dr. Ram Ramanathan
?The geology of Belize still remains difficult to understand, still poses problems to solve and continues to be hard to explore for further oil to be found. The proposed amendments therefore in my sincere opinion, is to clear the existing ambiguity in the income and business tax laws in Belize, and to have an income tax rate that would give a fair and equitable share both for the government as well the operating companies. The government take percentages are directly proportional to the cost of operations. There is absolutely nothing wrong if a company wants to be aggressive in its exploration policy and invest more money to find more oil, but it should not be at the cost of the government.?
Ismael Fabro
?Production work continues. Petroleum crude is still being extracted and transported to the Big Creek port storage facility.?
As for concerns that all activity had ceased in Spanish Lookout, tonight we understand that pending the completion of an Environmental Impact Assessment, a stop order was issued on the construction aspect of the project as B.N.E. had intended to lay pipe lines and begin building storage facilities on the outskirts of the community.
Martin Alegria, Chief Environmental Officer
?In the case of B.N.E. we have been learning quickly. The operations of B.N.E. from the drilling of wells to actual what we refer to as commercialization of production went through in a swift time and yet, they were, B.N.E. was referring to that portion, that phase as testing; appraisal phase, which in our opinion was basically production or commercialization.?
And that pace is pushing the petroleum department to beef up its staff.
Andre Cho
?Right now there?s no real check and balance out in the field that?s why we are hiring these technicians to be there. But B.N.E. is not stealing the oil if that?s what you?re asking.?
Ismael Fabro
?Everyone is excited about what this discovery of oil in Belize can do to our economic development. Imagine since this find B.N.E. has already exported three hundred and forty-four thousand barrels of oil sold, and sold twenty-four thousand barrels locally. That amounts to somewhere around nineteen million U.S. dollars. Just think of what the future of this industry could look like.?
So far the only oil deposit to the treasury has been three hundred thousand U.S. dollars in royalties. Another similar sum is expected this week. As for the tax receipts, those funds will await the work of the accountants.
Reporting for News Five, I am Janelle Chanona.
Trinidadian oil expert Dr. Cleavon Louis is expected back in Belize at the end of the month to facilitate a way forward on the tax issue. We also understand tonight that an audit of Belize Natural Energy is currently underway to determine the company’s true operational costs.
