Expect further declines in natural gas production this year and the country is running out of fiscal space are the observations of one economist and a former Energy Minister.
Former energy minister Kevin Ramnarine said the country’s natural gas production is expected to further decline in 2021.
Ramnarine’s comments came after Finance Minister Colm Imbert revealed that the country’s economy is in peril as a result of a decline in oil and gas production and low international commodity prices.
In an interview with Guardian Media Ramnarine said the challenges facing natural gas production warrants a national discussion.
He said: “Natural gas production in 2020 was 15 per cent lower than it was in 2019 and that’s a significant drop in natural gas production. Mainly we have seen significant declines coming from BPTT, the country’s largest natural gas producer.”
According to Ramnarine this decline is likely to continue into 2021 adding that the production of natural gas is at the heart of the country’s economy.
On Wednesday, Finance Minister Colm Imbert said taxes from oil companies were down by $268 million or a whopping 39.7 percent. This he said was a direct result of depressed prices for oil and gas, and lower than expected production volumes.
Imbert noted that non-tax revenue which includes a large component of Royalties on oil and gas was also significantly down.
“We were expecting to get $2.7 billion from non tax revenue which is primarily royalties and as you can see we are down to a little below $2 billion. Royalties on oil and gas were down by $800 million or 40 per cent and that is as a result of depressed oil and gas prices and lower than expected petroleum volumes.”
He also expected government to receive extra-ordinary receipts from oil and gas companies arising from the negotiations that “the honourable Prime Minister did with Shell, BP and those companies when he travelled around the world to various headquarters.”
Imbert said: “We expected to get extra-ordinary receipts from those companies of about $100 million and that’s down by 98 per cent because its based on profits in the oil and gas sector.”
Meanwhile economist Dr Vaalmiki Arjoon said T&T’s debt levels are escalating while revenues continue to decline, an unhealthy sign for the economy.
“We are not just in a COVID pandemic. We have also found ourselves in a debt pandemic. We still have to repay this debt. It is all well and good to say other countries are borrowing and like them we can’t escape it but we have to have a concerted plan,” Arjoon told Guardian Media.
He said Government must implement ways to increase revenue in a meaningful way.
Dr Arjoon noted that continuously dipping into the Heritage and Stabilisation Fund was also unwise especially for future generations.
“How much money are we leaving our future generation with if you’re using the HFS and at the same time leaving them with the responsibility of having to pay out more and more debt?” Dr Arjoon asked.
Dr Arjoon agreed with the Finance Minister that the country’s reliance on debt to pay salaries is unsustainable.
He said: “If you don’t have the revenue to pay them then many of them will start facing cuts in salaries and some of them unfortunately will start facing losses in their jobs.”
The economist added that Government needs to fundamentally address the current challenges as putting a bandaid on it will not work.