Economist predicts $22 billion budget

Local Economist, Gregory Mc Guire, has projected a budget of approximately $22 billion for the 2003/2004 fiscal year based on oil prices of at least $25 or $26 per barrel.

He attributed these weaker oil prices, as compared to last year’s price of $31, to the current situation in post-war Iraq which, the International Monetary Fund predicts, could lead to volatility on the global market. Mc Guire, who is also manager, strategic planning, National Gas Company, was speaking yesterday at a seminar organised by the Trinidad and Tobago Economics Association on the hydrocarbon sector and its implication for the 2003/2004 budget.  Mc Guire said many predict that it will take as long as three years for Iraq to reach its previous capacity of 0.8 billion barrels per day, but the attitude of the Organisation of Petroleum Exporting Countries (OPEC), which recently cut its production capacity, was an indication that Iraq would catch up faster than anticipated. “The level of inventories at OPEC are such that if they do not cut production, it would create a surplus on the market,” he maintained.

This year he said was a highly positive one, with receipts for oil and gas standing at 33 percent higher than was expected. It would also appear that oil production was ten percent higher this year than last, which can be linked to additional compensatory production and additional associated production or oil associated with gas. A big factor, he added, was the fact that Government had based its previous budget on a $22 oil price, when in fact the realised price during the fiscal year stood at $31, which was 40 percent higher than the projected figure. “By rough calculations,” he maintained, “the combination of these two things would yield about $800,000,000. Mc Guire predicted that Government revenue would not only come from oil, but that a significant amount could be linked to the gas industry, especially in light of increased production of the Atlantic LNG Train 4 project.