Since royalties are paid in US dollars, around $19 million is lost every time the Australian dollar rises 1c above US56c. It is estimated that for every $US1 rise in the price of a barrel of oil above treasury estimates, an extra $20 million is added to Government coffers a year through royalties.
State Treasury and Finance director-general John Langoulant said Treasury's low oil price estimates of $US25 a barrel for the next six months had fire proofed the budget. However, he said low Treasury estimates of the Australian dollar at US56c would wipe out much of those gains, with up to $40 million lost in the next six months if the dollar averages US60c.
Mr Langoulant said he expected the oil boom to have a net positive effect on the 2002-03 Budget, but he said problems would surface in the first half of 2003-04 if the dollar remained strong and oil prices weak. Petroleum royalties from the North West Shelf project are expected to reach $429 million this year, $105 million more than budget forecasts.
