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Challenges in managing the T&T Economic ‘Plane’ COTE Conference. Dennis Pantin October 09, 2008. Content of Presentation. What type of Economic ‘Plane’? Type of ‘Engine’ Type of ‘fuel’ ‘ Clear air Turbulence’ already at hand ‘Turbulence’ within ‘Turbulence’ down the road

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Challenges in managing the T&T Economic ‘Plane’ COTE Conference

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Challenges in managing the t t economic plane cote conference

Challenges in managing the T&T Economic ‘Plane’COTE Conference

Dennis Pantin

October 09, 2008

Content of presentation

Content of Presentation

  • What type of Economic ‘Plane’?

  • Type of ‘Engine’

  • Type of ‘fuel’

  • ‘ Clear air Turbulence’ already at hand

  • ‘Turbulence’ within

  • ‘Turbulence’ down the road

  • Proposals for managing turbulence/avoidance of another crash landing as in 1980s/early 1990s

Type of engine

Type of ‘Engine’?

  • 1. Oil Exports

  • 2.Natural Gas Exports

  • and their dominant role in Export earnings, Government Revenue, GDP

How dependant

How Dependant ?

How dependant1

How Dependant ?

Petroleum s contribution

Petroleum’s Contribution %

Growth in the energy and non energy sectors

Growth in the Energy and Non Energy Sectors

Source: Central Statistical Office

How dependant2

How Dependant ?

Types of fuel

Types of ‘fuel’

  • 1. Foreign Direct Investment and behind this foreign technology and know how

  • 2. Together with Foreign Demand and hence Prices

How dependant3

How Dependant

Map of t t gas market

Map of T&T Gas Market

Nominal oil prices 1986 2008

Nominal Oil Prices: 1986-2008

Real oil prices

Real Oil prices

Rising gas prices

Rising Gas Prices

Methanol ammonia prices

Methanol & Ammonia Prices

Clear air turbulence

‘Clear-air’ Turbulence

  • US/Canada, Europe/OECD recession and with outside probability of a global depression as a result of:

  • A. the US financial crisis and its spread effects internationally;

  • B. Its coincidence with a US Pres. Elections and the role of partisan politics;

  • C. Fact that ‘greed’ has long overwhelmed regulation

Turbulence within

Turbulence Within

  • ‘Extremists’ on the ‘plane’ who threaten to ‘crash land’ it as a result of ‘Mr. Big’ and the drug lords and the impact of the space made available to them by : A. weaknesses in security system;

  • And B. failure to fully grasp and treat as an emergency the underlying neglect of communities and groups which create the substrate for guns, gangs and a culture of violence and death

Turbulence ahead but on the radar

Turbulence Ahead but on the ‘Radar’

  • Climate Change

  • Ageing of the T&T Population exacerbated by impact of HIV-AIDs on working age population now and to come

  • Decline in Reserves of Oil and natural Gas

  • Inadequate National Savings in light of above projected forms of turbulence and

  • End of this hydrocarbon boom

Long term production decline

Long Term Production Decline

Oil producers 2008 ytd

Oil Producers 2008 (YTD)

Refinery output

Refinery Output

Petrotrin sales

Petrotrin Sales

How long

How Long?

Natural gas demand history projections 1965 2016

Natural Gas DemandHistory & Projections(1965-2016)

Gas reserves

Gas Reserves

Gas how long

Gas .How Long?

Oil and gas rtp compared

Oil and Gas RTP Compared

Medium term demand outlook

Medium Term Demand Outlook

Do we have the resources to satisfy this level of demand over the next 20 years???

Gas reserves discovery needed to maintain 12 year rtp

Gas Reserves discovery needed to maintain 12 year RTP

  • To maintain an RTP of say 12 years.

  • The Optimistic Scenario requires reserves addition at rate of 2.27 TCF/yr to 2030.

  • We need to find 50.6 TCF over the next 20 years!!!!!!

Inadequate savings

Inadequate Savings

Top ten oil and gas funds

Top Ten Oil and Gas Funds

Definitions in h stab fund

Definitions in H&Stab Fund

  • Petroleum revenues means the aggregate of the supplemental petroleum tax, petroleum profits tax and royalties collected under the Petroleum Taxes Act .IT DOES NOT INCLUDE UNEMPLOYMENT LEVY, THE OIL IMPOST AND SIGNATURE BONUSES

  • Petroleum Business means the business of exploration for and the winning of petroleum and natural gas-IT DOES NOT INCLUDE THE LIQUEFACTION OF NATURAL GAS.

Rules of withdrawal

Rules of Withdrawal

  • Withdrawals may be made from the FUND when petroleum revenues collected in any financial year fall below the estimated petroleum revenues for that financial year by at least 10% -

  • Amount limited to

    • 60% of the amount of shortfall of petroleum revenues for that year or

    • 25% of the credit balance of the FUND.

Rules of withdrawal1

Rules of Withdrawal

  • No withdrawals may be made from the Fund in any financial year where the balance standing to the credit of the Fund would fall below US$ one (1) billion if such withdrawal were made.

Fund update 1

Fund Update1

  • Board has approved an Investment Plan.

    • Short term investments- US/Treasury bills

    • Longer term US Fixed income securities

    • US./developed countries’ equities

  • First Audited Report submitted to Minister and Parliament

  • Source: Governor Central Bank speech to Rotary Club of POS – May 8th 2008.

Proposals for managing turbulence

Proposals for Managing Turbulence

  • Revision of oil price forecast to US $40-45.

  • Multi-stakeholder Advisory Group drawn from business, labour, NGOs, the university together with Central Bank and public service technocracy with mandate to prepare ‘Turbulence’ preparedness plan;

  • All party Committee to draw up consensus plan based on report of Advisory Group

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