Senior multi-media reporter
peter.christopher@guardian.co.tt
The average price of T&T’s natural gas exports during the first nine months of the 2024 fiscal year is down compared to the same period in 2023, says economist Dr Valmikki Arjoon. And he says the decline in energy revenue is impacting the overall revenue collected by the Government.
He explained that energy revenues for the first nine months of the current 2024 fiscal year, are approximately $10.2 billion which is $10.8 billion lower than the energy revenues earned for the same period in the 2023 fiscal year. That is a decline of 51.4 per cent.
“In fact, when we look at the data for the first nine months of the last fiscal year, the energy revenues were just under $21 billion. Now these lower revenues for this year, they aren’t just because of lower production levels, but also because of lower gas prices on the international market relative to the last fiscal year,” said the economist.
However, Arjoon explained that the returns were far lower for the first nine months of this fiscal year compared to last year. The returns were in fact good compared to even some of the pre-pandemic years due to the government’s renegotiation of energy prices for the sector.
“What is noteworthy is that the energy revenues for the first three quarters of this fiscal year are in fact higher than the energy revenues from the immediate pre-pandemic era. So what the data shows us is that the revenues earned for the first nine months of this year are in fact higher than the energy revenues for the same period in fiscal 2018 by about 2.4 billion, and higher than the energy revenues earned in fiscal 2019 for the same period by about 1.2 billion, despite production being higher in those years by well over 1 billion standard cubic feet of gas per day,” said Arjoon.
“What this is telling us is that the energy revenues for this year so far are actually higher than the revenues from the immediate pre pandemic era, and this is likely because of the renegotiated higher gas prices that we now receive. And these gas prices are of course, a weighted average of the global prices that doesn’t just include the conventional Henry Hub, but they also include other prices like the Japan Korea Marker, the Dutch Title Transfer Facility and the UK National Balancing Point.”
Arjoon said the prices in these three benchmarks tend to be higher than the Henry Hub benchmark, which has helped T&T earn higher gas revenues, despite production levels being lower than the pre-pandemic era.
However even with this adjustment, the economist said the prices currently are still well below the prices on the market last year and as a result the government has been placed in a bit of a financial bind.
“Because prices are still lower, this would have caused the total tax revenues for the government for the first nine months of this year to be about $5 billion lower than last year. The taxes on income and profits have fallen by about $8 billion and of course, because of these slashed revenues, that would have pushed a speed of borrowings to meet our fiscal spending obligation.
“We’ve recently seen that the reserve requirement was lowered to free up an additional $3.9 billion of additional liquidity in order to facilitate more borrowings for the government from the local market,” said Arjoon.
On Monday, the Energy Ministry put out a news release stating that while there was a dip in natural gas production in June, production outputs were set to normalise for the remainder of the year.
The release said “preliminary data shows that natural gas production for the month of July 2024 increased to 2.3 bcf/d and further increased to 2.7 bcf/d in August with production for Q4 2024 projected to average at 2.5 bcf/d.”
