(Argus, 9.Oct.2019) — A new start-up company will acquire Trinidad and Tobago’s 160,000 b/d refinery for $700mn and resume operations by third quarter 2020, the energy ministry tells Argus.
Patriotic Energies and Technologies (Pet) is partly owned by Trinidad’s oil labor union OWTU, which has not commented directly on the pending transaction, citing confidentiality agreements.
The union has a preliminary commercial agreement with Swiss-based commodity trader Trafigura to supply Trinidad’s fuel needs “over the next few months” before the restart of the refinery, the ministry said. Trafigura confirmed to Argus that it has signed a memorandum of understanding with Pet for fuel supply. “Both parties have a strong defined understanding on how to support the deal,” Trafigura said.
Neither Pet nor Trafigura indicated the volumes involved. Since the closure of the Pointe-a-Pierre refinery in November 2018, Trinidad has been importing around 25,000 b/d of products on the spot market to meet domestic demand.
While in operation, the refinery supplied domestic and neighboring island markets with gasoline, kerosene, aviation fuel, diesel, fuel oil and LPG.
The government shut the century-old refinery because it was losing en estimated $310mn a year, and would require more than a $1bn in capital investment to stem the losses. Among the key financial challenges for Pet is the cost of imported crude feedstock. Trinidad produced 59,300 b/d of crude in January-July 2019, down by 11.5pc from a year earlier, according to the energy ministry.
Pet has received a three-year moratorium on all payments of principal and interest towards the purchase of the refinery, and a further 10 years to complete the payment, the government said.
The government has given Pet until the end of October to say how it intends to complete the transaction.
OWTU said in December 2018 that Pet’s shareholders would include Suriname-based private equity firm SunStone Energy and UK independent Mak England. Neither company has responded to a request for comment or confirmation of participation in the company that will buy the refinery.
“We expect that Pet will take its assignment seriously and work assiduously to meet the government’s conditions and timelines for submission of additional information and supporting documentation and a workable plan to finance the necessary preparatory work and get the refinery restarted,” Trinidad’s finance minister Colm Imbert said this week.
Pet will also need about $500mn in the refinery’s first year of operation to refurbish and upgrade several units, the ministry said.
The most significant of these pending projects is the completion of a 40,000 b/d ultra-low sulphur diesel (ULSD) unit that the refinery’s former owner, state-owned Petrotrin, had contracted Korea’s Samsung Engineering to deliver for $200mn.
Petrotrin cancelled the deal in 2016 after the energy ministry said the partially competed unit was defective. But the company had already spent $421mn on the plant, and said it would need another $300mn to complete it.
Pet’s bid for the refinery included “an approximate time for the start of preparation for the ULSD plant,” Imbert said, without giving details.
Pet outbid two short-listed competitors in the refinery sale — US private equity firm Beowulf Energy and German refiner and trader Klesch Group, the government said.