TORONTO (Reuters) - Canada’s Atlantic province of Newfoundland and Labrador more than doubled its budget surplus forecast to C$1.27 billion for fiscal 2008-09 on Tuesday, but it warned it may fall into deficit if oil prices remain low.
The provincial government projected a surplus of C$544 million earlier this year but increased its forecast due largely to lofty oil prices and higher oil production during the first eight months of the year.
It warned, however, that it could face a deficit of several hundred million dollars next year and more deficits in years to come if oil prices, which plummeted from record highs in July, continue to remain below $60 a barrel.
“Newfoundland and Labrador is well positioned, but not immune, to this global financial turmoil,” Jerome Kennedy, the province’s minister of finance, said in a statement. “And, make no mistake about it, we are seeing an impact.”
Newfoundland and Labrador is the site of Canada’s offshore oil industry, and the province’s coffers have fattened with revenues from the Hibernia, Terra Nova and White Rose oil fields as oil prices climbed to a record above $147 a barrel in the summer.
Premier Danny Williams has sought to gain a bigger share of the region’s energy wealth by taking interests in new projects, such as the planned Hebron oil field.
However, prices have tumbled with the global economic crisis and were just above $43 a barrel on Tuesday.
Reporting by Frank Pingue; editing by Peter Galloway