Opposition Senator Wade Mark. –
OPPOSITION Senator Wade Mark queried the Government’s energy revenues in view of modest global oil and gas prices recently but Finance Minister Colm Imbert was unfazed, saying new formulas for TT’s energy sales have kept the country in a healthy financial position, in a matter on the adjournment of the Senate on Tuesday.
On Tuesday night, the website oilprice.com indicated the WTI oil price as US$76 per barrel and the Henry Hub natural gas price as US$2.74 per MM BTU.
Mark said, “The motion before us is for the Government to provide this country with the effect of the decline of the price of natural gas prices on the 2023 budget and on TT’s economy.” He claimed “a major economic hurricane is brewing” that could have catastrophic consequences for TT’s economy and society.
“The budget was set in terms of natural gas at US$6 per MM BTU and in the case of crude oil it was set at US$92.50 per barrel.”
Mark said his latest check had found the WTI price at US$76.81, Brent Crude at US$83.89 and natural gas at US$2.77.
TT’s oil is sold at prices close to the WTI price.
He said TT was now in crisis, with an alleged collapse in oil and gas prices meaning the budgeted numbers would be in trouble.
Mark said the budget was set at $57.8 billion, but the Government must say by how much recent low energy prices would worsen this year’s initially predicted budget deficit of $1.5 billion.
Finance Minister Colm Imbert said the Prime Minister’s work to travel to meet oil and gas companies, supported by Energy Minister Stuart Young, meant TT’s gas was not sold at the Henry Hub price.
“That was the UNC way. What the Keith Rowley Government did was immediately negotiate new formulas for the derivation of revenue for the country and the people of TT.
“So the LNG netback price, for example, is influenced to a significant extent by the price of gas in the UK using a benchmark called NBP, and also it is influenced to some extent by a benchmark in the Far East, the JKM, which is the Japan/Korea benchmark.”
The netback price refers to a price for which the LNG is sold at a specific place minus the cargo’s transport costs for delivery.
“As we speak here today, although Henry Hub is US$2.70, the NBP price for natural gas in the UK is US$16 and the JKM price for natural gas in the Far East is US$16.”
Imbert said Rowley had negotiated a new formula for TT’s gas based on the three benchmarks – Henry Hub, NBP and JKM – which had produced “significant additional revenue from LNG.”
Imbert said Rowley and Young had negotiated so that TT’s natural gas is now sold to local petrochemical manufacturers at a price that reflects the price fetched by ammonia and methanol. “So if you don’t know and you just go on the internet and see that Henry Hub is US$2.77, you would simply be completely oblivious to the fact that we get revenue in a completely different way.”
He said data showed TT was holding its own and nowhere near to the spectre of collapse suggested by Mark, whom he accused of talking nonsense.
Imbert promised a mid-year review in April when all figures and facts would be presented, so the country would know TT’s fiscal position.
“I looked at the overdraft percentage this morning and instead of the 90 and 95 per cent I used to see in 2017 and 2018 and 2019, the overdraft this morning was 43 per cent.”