In a recent response to counterarguments put forward by Siegfried Kenswil LLM, Suriname-based fiscal and legal advisor Roy Shyamnarain has stood firm on his original core position: compliance with Article 19 of Suriname’s Petroleum Law directly shapes the tax treatment of oil and gas (O&G) contractors operating in the country. Shyamnarain argues that despite extensive rhetoric, tangential references, and misattribution of claims in Kenswil’s rebuttal, the original conclusion remains entirely valid.
To clarify the scope and impact of Article 19, Shyamnarain emphasizes that the provision must be interpreted in conjunction with other key sections of the Petroleum Law, including Articles 1(b), 1(g), 11, and 20. When read as a cohesive legal framework, the text makes clear that the mandatory requirement for contractors to establish and legally register a local office in Suriname creates formal tax residency for that local entity. This tax obligation in turn dictates that taxable income for the contractor’s local office is calculated as total revenue generated from PSC activities minus eligible expenses directly tied to work conducted under that petroleum agreement.
The text of Article 19 itself lays out two core requirements: first, all contractors must maintain a permanent office in Paramaribo to carry out activities stemming from their petroleum agreement; second, this office must be registered in full compliance with national legal regulations. Article 20 of the law further requires that all areas covered by petroleum agreements are defined as individually numbered blocks, which leads to a critical tax implication: only revenue and expenses linked to operations within a single defined block can be counted when calculating a contractor’s taxable income. This means statutory rules limit cost deductions exclusively to expenses incurred for work within the specific block outlined in the contractor’s PSC, as required by Article 20. Article 11 of the law confirms that all provisions of Chapter IV, which includes Articles 19 and 20, apply to every existing petroleum agreement in the country.
Addressing a key argument from Kenswil that regulators have not historically enforced the requirement, Shyamnarain notes that non-enforcement of a regulation does not invalidate it or create legal rights for parties that fail to comply. The obligation to maintain a registered local office rests solely with the contractor, and inaction from Staatsolie, the Surinamese government, or the national tax service to date does not erase this requirement. Sooner or later, all contractors must meet this compliance obligation fully, he argues.
Shyamnarain adds that contractors actually have multiple flexible legal pathways to meet the local office requirement, based on his professional experience advising firms in the sector. The first option is for contractors to directly register a local branch of their existing foreign entity. The second is to establish a new locally incorporated subsidiary, transfer all PSC obligations to that subsidiary in line with Article 16 of the Petroleum Law and Article 44 of the model PSC, and have the subsidiary operate as the legal successor to the original contractor. The third option is to establish a foreign subsidiary, transfer PSC obligations to that entity under the same legal provisions, then have the foreign subsidiary register a local branch in Suriname to act as legal successor. The choice between these structures depends on the specific operational and financial circumstances of each contractor.
Contrary to claims that this interpretation represents new policy or evolving legal standards that conflict with existing agreements, Shyamnarain stresses that Article 19 has contained clear, unchanged language since the earliest PSCs were signed. This longstanding rule does not contradict the terms of any existing agreements, and contractors have always been aware of this obligation. This is explicitly confirmed in Article 35.1 of the standard model PSC, which states: “Pursuant to Article 19 of the Petroleum Law of 1990, Contractor and/or Operator shall have a legal representative in Suriname and maintain an office in Suriname for the purpose of carrying out Contractor’s responsibilities under this Contract. Any such office and/or representative(s) shall be registered as required by Applicable Law.”
In closing, Shyamnarain reiterates that full compliance with Article 19 means tax deductions for an O&G contractor’s taxable income are limited to only those expenses tied to operations within the specific block for which the contractor is required to maintain a local Suriname office. Whether this practice is labeled “fiscal ringfencing” or not is irrelevant; the law is clear on this requirement, he says. He adds that Article 19.2.1 of the model PSC further confirms that contractors acknowledge this tax framework, as it explicitly outlines that taxable income and expenses are calculated exclusively for activities tied to the specific contract, with all tax calculations aligned with the national Petroleum Law and Income Tax Act.
Closing with a pointed note, Shyamnarain says the unnecessary debate over this clear legal provision serves its own unstated purpose, and that no further discussion is needed on the matter.