Enill unfazed by sliding oil price
PORT SPAIN
Trinidad &Tobago Newsday
Petroleumworldtt.com
17 10 08
ENERGY Minister Conrad Enill says he is unfazed by Thursday's fall in global crude-oil prices to a 22-month low of US$52.37 (for Brent Crude) and US$56.16 per barrel (for NYMEX light sweet crude). The local Budget is predicated on a US$70 oil-price
Speaking to this reporter during the Senate tea-break in Parliament on Thursday he admitted that each US$1 drop in oil-prices lasting a year, wipes $100 million off of TT's revenues, Enill said: “If it drops in any one month, one is really not sure what impact that is going to have. So really what you are going to be doing is waiting and seeing.”
He said the Government is looking at several scenarios. “We know exactly if the price stays low for a particular period of time then we know exactly what we have to do. We have already told Ministries to start looking at non-discretionary spending and develop plans on the basis of contingencies. So that's where we are. So for example if you had a project you were thinking about, now would not be a good time to look at it. So those are the kinds of proactive steps that are being taken, recognising what we see in the global situation”.
Told that Russia has halved its forecast of the oil-price, he replied that each country had to look at its own situation of oil-price and how that impacts on revenues.
“If Trinidad and Tobago's structure was as it was in 1980 we would be very concerned, because the structure then was such that gas was not dominant, but oil was dominant. So, now our focus is really on gas and what is happening with gas prices”. But Newsday said gas prices also fell yesterday.
Enill replied: “Sure, gas is going down but we have six destinations and we have the benefit of climate issues. Gas is used for heating in the United States (as winter approaches). Usually gas behaves like that - if you look at last year you would see that there is a cyclical nature to the prices going up and down. So what you do is smooth it out over the year and see where your revenues are. The volatility of the prices is something we are not unfamiliar with. We manage it on an ongoing basis, and we look at it to see if it is going to affect us, and if it is then we take steps to deal with it.”
So, did he disagree with TT Chamber of Commerce president, Ian Collier's, remarks that the Government has a business-as-usual approach?
“When the Government speaks, there are lots of decisions that are taken by investors and the general public, so a government has to be sure that when it speaks, it speaks from a position of analysis and an understanding of what the realities are. That is what this Government is doing. At this point in time we are looking at how the events are playing out, because if you look at the people who are in fact doing the predictions, in any one week you are finding that the predictions are changing at a rate. What is suggests is that there is a lot of volatility in the information that is coming to us.
On that basis, one needs to simply spend some time and look at scenario-planning, and that is what the Government is doing and has done. Therefore what we are now looking to see is on the basis of how the information is unfolding, which scenario we would select as the most possible scenario going forward, and on that basis we will act.”
Story by Sean Douglas
from Trinidad & Tobago Newsday
Trinidad
& Tobagp Newsday
Saturday, November 15 2008
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