(Trinidad and Tobago Newsday, 22.Mar.2022) — Finance Minister Colm Imbert said Trinidad and Tobago can expect to enjoy quite higher earnings from the sale of crude oil and natural gas, even as he boasted of foreign reserves now at US$6.7 billion or eight months of import cover, well in excess of a $3 billion international benchmark.
He gave the good news in the Senate on Tuesday in reply to Independent Senator Amrita Deonarine’s private motion which urged the Government to state a policy for foreign exchange (forex) allocation to applicants in light of current tightness in the forex market.
Since the February 24 start of the Russian invasion of Ukraine and resulting condemnation and sanctions against Russia, a major energy producer, oil and gas prices have risen globally.
Imbert said he expected the energy sector to provide the banking sector with more foreign exchange.
“When we look at the outlook for crude oil and condensate production and we look at outlook for gas production, what we are seeing is that there is going to be significant improvement over the medium term.”
He said the Ministry of Energy was working on a number of initiatives which he did not detail.
“But certainly with the enhanced prices we are getting at this point in time, because we had all expected an oil price of US$65 per barrel for fiscal 2022, but when I look at the actual oil-price for today I am seeing US$115. So we had budgeted on US$65 and we are getting US$115. We don’t know how long that will last.
“The international energy agencies that have a track record of fairly reasonable forecasting on oil prices are telling us we are looking at US$90 in the foreseeable future. But we’ll see. Oil prices are subject to all sort of events that are completely outside the control of most of us.
“But the fact of the matter is we do expect enhanced forex inflows from the energy sector as a result of the increased prices.
“Gas prices are also quite promising.” He recalled a shift in TT’s gas exports from a North American market to Europe, the Far East and South America at prices significantly higher than that of the US-benchmark price known as Henry Hub, named after a key hub of nine interstate pipelines in Louisiana distributing 1.8 billion cubic feet per day.
Imbert said, “Henry Hub is US$5.16 (per MMBtu) today. The gas price that is used in the budget is what is called a net-back price, which is the posted price of the gas minus the shipping and other processing costs. But we are achieving a net-back price for our gas – when you take the three or four geographic areas that our gas goes to, which is South America, the Far East, Europe and North America – we are achieving a net-back price that is quite a little bit more than budgeted in the October 2021 budget.
“So we do expect some increase in inflows in fiscal 2022 from the energy sector.”
Earlier he traced the energy sector’s sales of forex to private banks from US$3.4 billion (2015) to US$2.1 billion (2017) to US$1.88 billion (2020) to US$2.97 billion (2021.)
Imbert’s good news gave a counterpoint to a warning at a recent event, Conversations with the Prime Minister, where Dr Rowley said the Government could not maintain past levels of subsidy on the price of petrol at the pump, alluding to possible increases for drivers parallel to the current rise in international oil prices.
“We will see how much funding we can find to take the pressure off the population, but they cannot be insulated completely,” Rowley had said, warning any full removal of the subsidy would send premium gasoline from $5.75 per litre to $7.58, super gasoline from $4.97 to $7.46, and diesel from $3.71 to $6.58.
Earlier in the Senate, Energy Minister Stuart Young said the 2020 Ryder Scott Report had said TT’s gas industry was moving in the right direction. He declared, “The outlook for natural gas production is positive.”
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By Sean Douglas
