Seepersad-Bachan: US$45 oil price may be too high to base budget on

FORMER energy minister and Congress of the People head Carolyn Seepersad-Bachan said the Government may be hanging its hat too high by predicating the budget on an oil price of US$45 and natural gas price of US$3 per mmBTU. She said the global oil price on Tuesday was US$38.

“US$45 per barrel – I hear everybody very optimistic about prices rebounding. US$3 is also still a very high estimate.

“My concern is that even if they do rebound, are they going to stay there for any length of time, when you look at the situation globally with oversupply?

“The minute prices go back up, won’t the shale producers come back into business (and so push back down oil and natural gas prices by oversupply)?”

Seepersad-Bachan spelt out the current oversupply problem by saying oil storage facilities globally are currently maxed out.

“They have no more storage. This is what we’ve been suffering with for the past year. That is what caused prices to go negative at one time.

“It all depends on the US administration that comes in on November 3. If you get a Trump administration, he is going to do everything, if prices rebound, to make sure that they are back to producing and exporting oil and gas.”

On the fate of the Pointe-a-Pierre refinery, Seepersad-Bachan was very concerned at the length of time it had been idle, saying the plant will deteriorate meanwhile, adding to the cost of restarting it.

“Every day it is idling it is more money to refurbish and bring back into production. Lines are getting more corroded, while vessels are deteriorating.

“I don’t understand what is taking them so long.”

She said the Government must do a due diligence of the financing, operations, human resources and environmental liability of the favoured bidder, Patriotic Technologies, which has a month-end deadline for a sale to be agreed.

Seepersad-Bachan, a former NP chairman, recalled that one of her concerns in heading to a liberalised market has always been that gas stations must be cleaned up, such as replacing any tanks leaking fuel onto the compound and so despoiling the surroundings.

She also said rather than any guarantee of profit margins for stations on the sale of their gas, which drivers are attracted to stations to buy, the real profits are made in items sold in their Quik Shoppe-style facilities.

Seepersad-Bachan was unfazed by the Government’s planned removal of the gas subsidy, saying this will have no effect at the current low world gas prices, but this could change if global prices rise. She saw a mismatch between the prices for which the State buys natural gas from the upstream (producers) and that at which it sells to the downstream (users.)