The Economics of a Maranco Commercial Oil Find shows no Revenue Inflows until 2015
The Belize Coalition to Save our Natural Heritage with the assistance of an independent oil expert developed an economic profile of a Maranco Commercial Oil Find at South Canal Bank 1. The results of the economic profile showed that Government is not expected to receive any revenue inflows until 2015. This projection period for any revenue generation from a Maranco Commercial Oil find is important as Government has tied the salary adjustment for teachers and public service workers in the next fiscal year which is April 2014 to a commercial find at Maranco’s South Canal Bank 1. There is no projected revenue in 2014 and projected revenue inflows to the Government in 2015 is BZ$24 million.
Of interest is that Government receives inflows earlier than with other production sharing agreements (PSAs) as the cost recovery arrangements for Maranco are vastly different than the existing PSAs. Cost recovery for Maranco is 65% allowing Government to begin receiving funds from the production sharing much earlier than other PSAs which allow 100% of the production revenue to be used for cost recovery before the Government receives anything other than Royalty.
Using the production and cost data from BNE’s Spanish Lookout oil field, the existing terms of the Maranco Energy Belize Ltd. PSA and the Income and Business Tax (Amendment) Act cited as “Corporate Tax”, an economic profile was developed. It is clear that at this point no one, not Maranco, not the Government and certainly not the Coalition knows what, if any commercial volumes will be discovered at South Canal Bank 1 or within the Maranco Concession area therefore the economic profile is based on the following critical assumptions:
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