One of the most important—and potentially most revealing—aspects of Finance Minister Davendranath Tancoo’s Monday Budget presentation is what he says about the energy windfall that landed in the Government’s lap in the third quarter of calendar 2026.
For the four or five readers of this column who are paying attention, this is not a minor accounting detail. It goes to the heart of the Government’s fiscal position and the credibility of the assumptions underpinning the 2027 Budget.
Between July 1 and September 30, Trinidad and Tobago benefitted from a remarkable combination of higher oil prices, sharply higher international LNG prices and increased Atlantic LNG production. My calculation is that the Government’s additional energy revenue during the quarter amounted to between $1.13 billion and $1.33 billion, or approximately US$166 million to US$196 million.
That is a windfall.
And because it is quite likely that Mr Tancoo and others in the Cabinet of Prime Minister Kamla Persad-Bissessar will seek to deny, minimise, misdirect or otherwise obfuscate this reality, it is worth being precise about what the word means.
A windfall is generally defined as an unexpected or unearned financial gain, profit or sudden increase in income. The International Monetary Fund (IMF) describes a windfall as “a sudden, transitory surge in income or export earnings driven by external shocks—such as spikes in global commodity prices, oil price booms, or shifts in the terms of trade.”
By that definition, the circumstances facing T&T in the third quarter of 2026 fit the description rather neatly.
Oil windfall
Assuming that T&T’s average oil production was about 55,000 barrels per day and that the third calendar quarter had 92 days. That would mean production of approximately 5.06 million barrels during the three months.
In presenting the 2026 Budget on October 13, 2025, Mr Tancoo based the Government’s oil price assumption on US$73.25 per barrel. At that price, the Government would have estimated total revenue from the 5.06 million barrels at approximately US$370.64 million during the third quarter.
The average price of Brent crude, however, was approximately US$95.95 per barrel during the quarter.
T&T produces three principal crude streams: Heritage Molo Crude, bpTT’s Galeota Mix and Woodside’s Calypso Crude. I am told that the first two traded at a premium to the Brent benchmark during the third quarter, while Calypso traded at a small discount.
Using Brent as the benchmark, therefore, the value of T&T’s crude production during the quarter would have been approximately US$485.5 million—US$95.95 multiplied by 5.06 million barrels.
There is another important consideration. T&T has a windfall tax for periods of high oil prices: the Supplemental Petroleum Tax (SPT), which is calculated on gross revenue from crude oil sales and increases when crude prices rise above US$90 per barrel.
Based on the price and production assumptions, it is estimated that the Government would have earned approximately US$93 million in SPT during the quarter.
The Government also collects royalties of up to 12.5 per cent on crude, petroleum profits tax at 50 per cent of net profits, the unemployment levy, estimated at 5 per cent of taxable profits, as well as the Green Fund levy, petroleum production levy and petroleum impost.
Taking these various revenue streams into account, the Government’s total estimated crude-oil tax take for the third quarter could be placed in the range of US$143.1 million to US$155.3 million, equivalent to approximately TT$973.6 million to TT$1.05 billion.
For the purposes of this analysis, I will use US$150 million, or approximately TT$1 billion, as the midpoint.
Natural gas windfall
The natural gas story is even more interesting because the third-quarter revenue increase reflects not simply higher international prices, but also structural changes in T&T’s LNG commercial arrangements and a significant improvement in Atlantic LNG’s production.
The first factor is the restructuring of T&T’s commercial arrangements with Atlantic LNG and its major shareholders, bpTT and Shell.
The landmark restructuring was formally completed and signed in London on December 5, 2023. Following a transition period, the comprehensive unitised commercial agreements took effect on October 1, 2024.
The new market-reflective formula effectively uncoupled T&T from the historically low-priced US Henry Hub market. Instead, the export netback pricing formula was linked to a basket reflecting international LNG and energy markets: one-third Europe’s Dutch TTF, one-third Asia’s Platts JKM and one-third Brent crude.
That change became particularly significant during the third quarter of 2026.
Global natural gas prices experienced substantial volatility, with European Dutch TTF prices averaging around US$20.80 per MMBtu and Asian JKM prices averaging approximately US$21.20 per MMBtu over the three-month period.
In September, Atlantic LNG produced approximately 1.1 million tonnes, its highest monthly production in four years, following the completion of major upstream field maintenance and optimisation at the facility.
The combination of higher international prices, the new market-linked pricing formula and improved Atlantic LNG production substantially increased the value of T&T’s gas exports.
On the estimates available to me, the LNG-related revenue for the third quarter could have been in the region of US$380 million to US$450 million, or approximately TT$2.6 billion to TT$3.0 billion. The precise amount will, of course, depend on the final realised prices, volumes and revenue-sharing arrangements.
The important point is that a substantial portion of this increase represents a windfall for the Government rather than the result of a permanent expansion in the productive capacity of the economy.
The international price spike of both oil and gas was driven largely by geopolitical disruption to global energy markets. The effective closure of the Strait of Hormuz disrupted major Qatari and Emirati LNG export routes and intensified competition for flexible spot cargoes.
Prices reached their highest levels since the 2022 energy crisis, with JKM reportedly peaking at approximately US$27.51 per MMBtu in mid-September before subsequently easing on reports of possible geopolitical negotiations.
The result was a substantial and largely unexpected improvement in the value of T&T’s natural gas exports during the quarter.
The Government’s windfall
When the estimated oil and gas gains are considered together, the scale of the third-quarter energy windfall becomes clear.
On the oil side, I estimate an additional Government take of approximately US$150 million, or TT$1.01 billion.
For natural gas, the available estimates suggest that the windfall component could also have been large, depending on the final realised prices and volumes.
Taken together, therefore, the Government’s additional energy revenue during the third quarter could reasonably be estimated at US$222 million, or approximately TT$1.5 billion.
That is the number that those interested in the performance of the T&T economy in fiscal 2026—and the prospects for fiscal 2027—should be watching closely.
The central question is no longer whether T&T received a windfall. The more important question is whether the Government will acknowledge its full scale and, more importantly, how it will use it.
A temporary surge in energy income is not evidence of a permanent improvement in the economy’s underlying earning capacity. Nor should an exceptionally favourable quarter in oil and gas revenues be used to create the impression that the country’s structural fiscal problems have somehow disappeared.
If the additional revenue is used to finance recurrent expenditure, T&T could find itself with a larger fiscal burden when energy prices normalise—as they surely will.
If, however, the windfall is treated for what it is—temporary revenue—and directed towards reducing debt, strengthening foreign-exchange reserves, financing productivity-enhancing investment and building the capacity of the non-energy economy, it could provide a valuable cushion against the next downturn in energy prices.
That is the test Mr Tancoo now faces.
Despite their claims otherwise, the Government did NOT create this windfall. Global energy markets did.
But Government will decide what happens to it.
And that decision will tell us far more about the credibility of the 2027 Budget than the size of the direct deposits to the Government's account at the Central Bank that arrive for the third quarter.
Mr Tancoo should move away from the recent convention of downplaying windfalls, given the many hands that are waiting to receive what they believe is theirs by right. Trinbagonians are intelligent enough to determine what is a temporary, unearned increase in revenue.
