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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. 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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  1. Challenges in managing the T&T Economic ‘Plane’COTE Conference Dennis Pantin October 09, 2008

  2. 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

  3. Type of ‘Engine’? • 1. Oil Exports • 2.Natural Gas Exports • and their dominant role in Export earnings, Government Revenue, GDP

  4. How Dependant ?

  5. How Dependant ?

  6. Petroleum’s Contribution %

  7. Growth in the Energy and Non Energy Sectors Source: Central Statistical Office

  8. How Dependant ?

  9. Types of ‘fuel’ • 1. Foreign Direct Investment and behind this foreign technology and know how • 2. Together with Foreign Demand and hence Prices

  10. How Dependant

  11. Map of T&T Gas Market

  12. Nominal Oil Prices: 1986-2008

  13. Real Oil prices

  14. Rising Gas Prices

  15. Methanol & Ammonia Prices

  16. ‘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

  17. 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

  18. 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

  19. Long Term Production Decline

  20. Oil Producers 2008 (YTD)

  21. Refinery Output

  22. Petrotrin Sales

  23. How Long?

  24. Natural Gas DemandHistory & Projections(1965-2016)

  25. Gas Reserves

  26. Gas .How Long?

  27. Oil and Gas RTP Compared

  28. Medium Term Demand Outlook Do we have the resources to satisfy this level of demand over the next 20 years???

  29. 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!!!!!!

  30. Inadequate Savings

  31. Top Ten Oil and Gas Funds

  32. 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.

  33. 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.

  34. 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.

  35. 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.

  36. 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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