Low oil price reduces Sovereign Wealth savings

The supply of oil will not go up unless the demand for it goes up, Yurendra Basnett, the PNG Country Economist, Asian Development Bank says.

He says the government has done the right thing by making estimates according to the trend of oil prices on the global market.

Deloitte, the organisers of the budget breakfast session held today at the Royal Papua Yacht Club, say  the PNG LNG project has been producing consistently in excess of its original rated capacity and this has softened the revenue impact of the reduced oil prices.

Meantime the Government expects the Sovereign Wealth Fund (SWF) to start operations in 2016 and there were some projections made prior when the oil prices were good.

In the savings component of the SWF it was projected that K7.5billion would be received from proceeds of the LNG, however due to the declining in commodity prices it is now estimated only a total of K3billion will be received.

It is also projected that K83.1million will flow into the SWF from the mineral and petroleum dividends.

Joy Kisselpar