It has been over one month since the Ministry of Finance tabled in the National Assembly a fifty-one page document which it claims presents “preliminary proposals” to stimulate discussion on its plan for managing the flows from petroleum operations following first oil estimated to flow by the end of the first quarter of 2020. Central to the proposal are what is called the “fiscal rule”, embodied in the second element and that is a Natural Resource Fund to be established under a Natural Resource Fund Act.
I have projected that revenue from petroleum within the next calendar decade will account for approximately eighty percent of government revenues with both negative and positive implications for generations to come. Will we go the way of so many countries of which Nigeria, Venezuela and Democratic Republic of the Congo seem to be the poster children, unable to use their natural resources to improve the wellbeing of their people, reduce the wealth and income gap and fairly distribute their patrimony among all their people – born and unborn? Or could we follow the path of Chile and Botswana which have used very similar resources but pursuing a very different path, to transform their countries and the lives of their people? Of course in so many ways, Singapore, without any natural resources, has been an outstanding example, if not of a political model, but of what inspired vision and leadership can do for a country.
My selection from a range of the Government’s Take of Oil Revenue expected from 2020 to 2030 is set out in the Table below. For purposes of the projections I have selected production levels ranging from 120,000 barrels per day (bpd) in 2020 to 750,000 bpd in 2030. Note that these projections relate only to the Esso/Hess/CNOOC and the discoveries announced to date. That the oil price (OP) is one of the most volatile variables is well known and the projections cover a range of possible oil prices, from US$40 per barrel to US$80 per barrel and Cost Oil (CO) ranging from US$30 to US$50…..