(Trinidad Express, Sandhya Santoo, 7.Nov.2018) — Is super gasoline burning faster?
This is the claim by some motorists who are insisting that the fuel is burning faster, leading to lower mileage per litre and higher costs.
And many taxi drivers say that the Super gasoline is causing economic hardship. Some want the State to subsidize taxi drivers.
At the pumps, car owners would pay $4.97 for super gas, $5.75 for premium gas, and 3.41 for diesel fuel.
Vice president of the St Croix/ Barrackpore Taxi Drivers Association Narine Lochan said the fuel seems to be burning faster.
He said given the higher cost of super gas and premium, using regular fuel has become a preferred choice, despite the car manual recommendation that a certain octane of fuel be used.
“Super is burning out like water and we have to mix using regular gas because the cost is too much. We can’t get the distance we cover with the super now. What we need is for the government to subsidise taxi drivers. The gas is causing havoc to the taxi industry,” he said.
Lochan said the poor road conditions was adding to the woes.
He said many drivers have fewer passengers and attributed this to an increase in unemployment.
He said: “We seeing less people travelling because they are losing their jobs. Where we could get a lot of passengers during peak times, we seeing less and it’s not because there are new taxi drivers or “ph” drivers but it is because they are not travelling like they used to.”
Lochan said the use of Compressed Natural Gas (CNG) is not suitable for taxi drivers of the association given that there are limited CNG fuelling stations in south Trinidad.
“ By the time we go to fill our tanks with CNG and run a trip, we have to keep coming back to fill the tanks. You cannot keep running to the gas station three or four times a day. There isn’t enough stations that is even close for us to use and so you will not see many taxi drivers for our route using CNG,” he said.
The fuel being used at the pump was imported by State-owned oil refinery, Petrotrin, which received its first shipment of refiner fuel on October 27.
Sixteen shipments will be delivered over the next four months under an agreement with BP’s Latin America Integrated Sales and Trading Group.
Petrotrin Chairman Wilfred Espinet in a television interview this week said, “we do know for a fact that the fuels we imported are consistent in terms of the specifications of what we were producing in Trinidad and Tobago so there should be no effect”.
Espinet said the fuel brought in was a shipment of diesel.
Espinet said the fuel goes into an inventory and “although we may be transferring from tanks, there are times you are going to get residual in tanks that are going to mix with each other.”
President of the Petroleum Dealers Association Robin Naraynsingh said the statements being made are done so with limited and uninformed knowledge.
He said drivers must be cognizant of the size of the gas tanks, the millage and ensure that there is proper maintence of vehicles.
“They are saying things they don’t know. Every manufacture of a vehicle will tell you how much miles per gallon of fuel you get. They have to know what is the fuel consumption of their vehicles. If you say its burning out faster, are you doing city driving or highway driving? This thing is science, it’s not something you can just ‘feel’. Its burning faster, but faster to what?
People who are saying this have to be cognizant of what they are saying. What is their fuel consumption? How long you burn the engine for, the mileage.
Do proper maintenance, read the manual to car and learn about the fuel consumption of your vehicle.
The consuming public have to be more aware. Check vehicles if they are working properly, know that you are using the right octane level. If you buy regular you are using more,” he said.
The state-owned refinery is expcted to cease operations on November 30, and transfer its assets into new companies being set up.
Even as it does so, it now faces an onslaught from people attempting to illegally occupy its lands.
Newsday understands that patrols are expected to begin today, and illegal structures will be demolished.
Tomorrow, Petrotrin officials will go out with the company’s police to erect eviction signs.
Expected to be evicted is the Church of God of Prophecy, at Mussarapp Trace, Barrackpore. Also expected to receive an eviction notices are a Hindu temple at Mussarapp Trace and the million-dollar Point Fortin Early Learning Centre (ELC).
Both buildings are on the company’s lands and are close to oil wells.
Petrotrin recently served demolition notices to the pastor of Church of God of Prophecy, who was asked to stop holding prayer services at the church.
The church building is within 100 feet of an oil well and poses a serious safety risk.
Attorneys for the church and oil company have been engaged in a legal battle over rights to the land. The church’s pastor is contending they had been in occupation of the lands for more than 17 years.
Tomorrow’s demolition notice will be the final legal step to demolish the structure which will take place 14 days after.
Petrotrin also wrote to a woman, named Leion Howard, about the erection of the ELC at Bryce Road, Point Fortin.
In the letter, Petrotrin’s manager of Lands and Service, Gerard Lewis, accused Howard of unlawfully entering the lands at Bryce Road, east of oil well FW257 and west of oil well FW 191.
The letter alleges Howard cleared the land and began construction on it.
The building, constructed of steal beams and concrete blocks, has cost about $1.5 million so far.
Petrotrin’s letter also informed Howard that she refused to obey previous notices to cease construction.
The letter said a safety risk existed because of the proximity to its active wells. I
“Petrotrin hereby gives you notice to immediately deconstruct and remove the aforementioned concrete structure from upon the lands. Please further be advised that failure to acede to this request will leave us with no alternative but to vigorously seek to protect our interest in the lands,” the letter said.
Howard was also told to demolish the building within 21 days.
Contacted in Barbados yesterday, Petrotrin’s chairman Wilfred Espinet said people’s need for housing must not be at the expense of putting their lives at risk by constructing churches and schools near oil wells.
He said the company has embarked on a hectic campaign against invasion of its lands.
“We appreciate people need for housing, but we must strive to become a rule-based society in which each and everyone must not do things to suit themselves. It is unfortunate, but we have to do the right thing because you cannot put people lives at stake.”
(Trinidad and Tobago Newsday, Carla Bridglal, 18.Oct.2018) The government has announced a new state company, Guaracara Refining Company, into which the assets of the Pointe-a-Pierre refinery will be placed.
The refinery is scheduled to be shuttered by next month, and after the assets have been transferred to Guaracara, the company will advertise a “very broad” request for proposals (RFP), where any interested party can pitch their plan on how the refinery can be utilised.
“Everything will be open for discussion. At the end of the day, we feel we will get a proposal that is acceptable where we will no longer have this albatross around our neck called the refinery, but the assets can still be used in a productive way for the benefit of TT,” Energy Minster Franklin Khan said yesterday at the post-Cabinet media briefing.
Guaracara is one of five new companies created as part of the restructuring of state oil company Petrotrin, including Heritage Petroleum Company Ltd and Paria Fuel Trading Company, which will handle exploration and production and trading and marketing, respectively. Petrotrin as an entity will remain as a company to deal with legacy matters, and these will all be placed into one, Trinidad Petroleum Holdings Ltd.
Heritage and Paria were incorporated on October 5, but according to the Companies Registry, Guaracara is not yet listed.
Khan said a vesting order was being prepared to transfer Petrotrin’s exploration and production assets to Heritage and the terminal, port and pier assets to Paria. There will also be an assignment of exploration and production licences under the name of Petrotrin at the Ministry of Energy to Heritage.
“The transformation process is well on its way and going smoothly,” Khan said. The government hopes to have the new companies operationalized by the end of this year, he said. “All things being equal, 2019 will be a brand new year for the energy sector in TT,” he said. As it stands, all operations are still continuing under the name of Petrotrin. Khan added that all timelines are on schedule for the import and export of fuel and crude oil. The first shipment of fuel is expected around October 22-24 and the first crude export will be October 30-November 1. Neither Khan nor his Cabinet colleague Communications Minister Stuart Young could verify if Petrotrin had indeed retained a supplier for fuel. Khan said the company was “very close if not there already” when asked by reporters for the status, while Young said, given the information provided “I’m sure they have a supplier by now.”
Regardless, Khan said there would be a “seamless transition for the supply” of liquid fuel, liquid petroleum gas (LPG or cooking gas) and bitumen, and the country has a 20-day buffer supply should there be any lapse in delivery time.
Young also said that the price Petrotrin’s crude oil was fetching on the international market was well above the West Texas Intermediate price, the international benchmark price at which the TT budget is pegged. “We thought it would have been less than WTI. It’s even higher than we thought the crude was worth,” Young said.
(CMC, 3.Oct.2018) — The Trinidad and Tobago government Monday reiterated its position that it was necessary to close down the refinery of the state-owned oil company, Petrotrin, insisting that the company was losing billions of dollars (One TT dollar=US$0.16 cents) annually.
Finance Minister Colm Imbert, delivering the TT$51.7 billion budget to Parliament, said that the Keith Rowley administration had agreed following a “comprehensive assessment and analytical review of its operations” to shut down the refining and marketing business unit of Petrotrin.
“We are repurposing Petrotrin which would now focus on the full exploitation of its exploration and production activities and on a new terminalling business through which imports will now meet the demand of Trinidad and Tobago and the Caricom region for the refined products previously produced by the refinery,” Imbert said.
He said these would include motor gasoline, diesel, aviation fuel, liquefied petroleum gas and other derived and refined products.
He said in 1985 when a former people’s National Movement (PNM) had decided to purchase the failing refinery assets from the international private sector in a bid to save jobs, the situation has changed.
“Since that time, the refinery economics have further deteriorated as the refinery has failed to adapt to the changing fuel environment which demanded cleaner standards for fuel technologies in local and foreign markets.
“The continuing efforts over time by the managerial, technical and governance personnel to improve the efficiency of the refinery to meet the standards for the internationally marketable products fell short of requirements.”
Imbert said that all the major plant upgrades failed – from the gas optimisation plant to the ultra-low sulphur diesel complex and the gas-to-liquids plant – all experiencing substantial cost overruns in the process.
He said the cost of these upgrades has loaded the company with an unsustainable debt burden estimated at TT$12 billion of which TT$5.780 billion is due in August 2019.
“While the company continued to incur persistent losses, the gasoline optimisation programme saw its cost rise from TT$2.45 billion in 2005 to TT$12.6 billion when it was completed in 2013, the cost of the unfinished gas-to-liquids plant rose from TT$1.55 billion to TT$3.15 billion and that the cost of the ultra-low sulphur diesel complex rose from TT$791 million to $2.89 billion “
He said while the project is 98 per cent mechanically completed, it cannot be operated because the structural specifications were not followed, meaning that the foundation is faulty and cannot be used. It would take TT$2.5 billion to rectify the defects, Imbert added.
Petrotrin’s Pointe-a-Pierre refinery operations. Photo: Richard Charan
5000 JOBS
He said in the context of these managerial failures, the size of the employee-base at Petrotrin remained in the vicinity of 5,000, divided between the refining and marketing business unit and the exploration and production business unit.
“In addition, the monthly wage bill amounted to TT$183 million per month or TT$2.2 billion on an annual basis. Coupled with this wage bill, the medical plan was running at an annual cost to Petrotrin of approximately TT$245.0 million per year but with very low contribution rates by the employees ranging from TT$50 to TT $80 per month.”
Imbert said what is interesting about this TT$245 million, medical plan is that it currently covers 21,000 present and past employees and their unmarried family members under the age of 21 or under the age of 23 if still in school.
“It effectively covered a Petrotrin employee and spouse until death. This has to be one of the most generous medical plans in Trinidad and Tobago, if not in the entire Caribbean region,’ Imbert told legislators.
He said the survival of the company was only possible through the non-payment of TT$3.5 billion in taxes and royalties, in breach of the law, and the procuring of government guarantees in the amount of TT$1.5 billion for loans from financial institutions which have significantly increased the public debt.
“This has placed a severe burden on the Treasury and on taxpayers, especially in view of the fact that Petrotrin extracts 40,000 barrels per day of taxpayers’ oil, at a value of six billion dollars per year, for which taxpayers receive no benefit.”
Imbert said that despite the fact that Petrotrin is tottering on the brink, as recently as last month, it approached the Ministry of Finance for financial support by way of another government guarantee in the amount of US$56 million to purchase a cargo of crude oil, since the shipper refused to discharge the cargo without a guaranteed letter of credit.
“And just last week, Petrotrin approached the Ministry of Finance for more financial support to refinance debt instruments totalling a further US$180 million as they become due for payment,” Imbert said, telling legislators that in its current form the company “remains unprofitable and whatever scenario is analysed, it cannot generate a profit without drastic restructuring.
“The financials generated by independent consultants, both local and foreign, provide a grim outlook of a deteriorating financial situation which cannot be improved even if billions of dollars in capital are injected into the company, which capital is simply not available.”
He said the latest financials for the company are illustrative of a looming crisis which if left unresolved would have a serious impact on the national economy.
Imbert said the government will do all that it can to assist displaced workers at Petrotrin to transition to their new circumstances.
“We will provide all available support at our disposal. And we will work with the company to ensure that adequate funds are available to pay termination benefits on time and in full,” he said, adding ‘we are confident that the reinvented Petrotrin will resume its rightful place as a leader in the oil and gas sector of Trinidad and Tobago and will become a profitable and efficient entity that makes a positive contribution to the Treasury.
“May I also point out that the company has advised that it will continue to be a significant earner of foreign exchange, in the vicinity of US$200 million-plus per year, after it completes the transition to its new business model,” Imbert added.
Petrotrin refinery in Trinidad. Source: Trinidad Guardian
(LoopTT, Darlisa Ghouralal, 1.Oct.2018) — Severance packages for retrenched Petrotrin workers are expected to cost the State in the region of $2.6 billion.
Finance Minister Colm Imbert made the announcement based on initial estimates as he delivered the 2018/2019 fiscal package in Parliament on Monday.
State-owned oil company Petrotrin began its phased exit of the refining business on October 1.
This transition process is expected to be completed on November 30.
Approximately 4700 employees – 3500 permanent workers and approximately 1200 non-permanent workers – are expected to be affected in this restructuring exercise.
The Minister said 1400 employees are eligible for retirement packages in the closure of the Pointe-a-Pierre refinery, with some 800 workers to be recruited in Exploration and Production and 200 workers for the terminaling business unit.
He gave the assurance that support will be provided to the retrenched workers to ensure they make the transition to their new circumstances, as he expressed confidence that the transition will bring the Company back to a position of profitability.
“We are confident that the reinvented Petrotrin will assume its rightful place in the economy and positively contribute to the Treasury.”
The termination benefits will be paid on time, and in full, he continued.
Imbert added that Government remains open to any alternative proposal to the refinery, stating that the majority representative union, the Oilfields Workers Trade Union still has the first option to operate the refinery.
The Minister stressed that the closure of the refinery was a hard decision that had to be taken as it has been consistently losing over $2 billion over a number of years and, if left, unchecked will have a negative impact on Trinidad and Tobago’s economy.
(Energy Analytics Institute, Aaron Simonsky, 30.Sep.2018) — Members of the Energy Chamber of Trinidad & Tobago and a Petrotrin transition team meet to discuss issues related to closure of the Petrotrin refinery, among others energy related issues.
The officials discussed the impending closure of the Petrotrin refinery, located Pointe-à-Pierre, and new opportunities with the refocused exploration and production company and the terminal operations, announced the Chamber in an official emailed statement.
During the meetings, Petrotrin provided an overview of planned activities over the coming two to three months, including how the company would settle all outstanding valid contractual obligations.
(Trinidad and Tobago Newsday, Julien Neaves, 26.Sep.2018) — Energy Minister Franklin Khan has assured there would be no disruption in fuel supply to the travelling public with the closure of the Petrotrin Refinery next Monday.
Khan was responding to a question in the House yesterday from Pointe-a-Pierre MP David Lee on the strategic steps to ensure the supply of fuel was not disrupted with the closure of the Petrotrin Refinery on October 1, in a phased manner.
Khan reported the country consumes 25,000 barrels of liquid fuel per day or 3.9 million litres, comprising of aviation fuel, diesel, super and premium gasoline and small amounts of regular.
He said the refinery would be closed on a phased basis in October and upon its closure there would be a 20-day supply of fuel from stock. Khan said steps are currently being put in place for the importation of fuel from international traders and request for proposals from 13 reputable international suppliers and traders were currently out.
Prime Minister Dr Keith Rowley also responded to a question from Lee that given Government’s offer to the Oilfield Workers’ Trade Union (OWTU) of a preferential option to purchase the Petrotrin refinery if the Prime Minister could indicate the other options Government intends to pursue if this offer is not accepted by the OWTU. Rowley said it was Government’s position the refinery would be excised as a separate entity from the rest of Petrotrin’s business and be an independent asset. He said at that stage if OWTU puts forward a proposal to Government, the union would be given the first option. “They have indicated some interest is being shown pertaining to that.”
Lee asked if there were any other proposals but Rowley said he was not aware Petrotrin was in receipt of other proposals but interests have been expressed if the asset becomes available.
(Trinidad and Tobago Newsday, Yvonne Webb, 20.Sep.2018) — Days before Petrotrin’s refining operation ceases and workers are retrenched, a member of the board who would have participated in the restructuring exercise, has become the first casualty of the plan.
An internal circular from the company to all employees confirmed board member Randhir Rampersad has ceased to be a member of the board of directors. No reason was given for his departure, causing speculation among some workers.
The memo, signed by Sharon Morris-Cummings, advised employees to amend the director listing on the company’s letterheads to only reflect the remaining members – chairman Wilfred Espinet, deputy Reynold Ajodhasingh, Anthony Chan Tack, Nigel Edwards, Joel Harding, Selwyn Lashley, Eustace Nancis and Linda Rajpaul.
The Oilfield Workers Trade Union (OWTU), which also received a copy of the memo yesterday, said this warrants a probe. A spokesman said it is unusual at this point in the process of restructuring, for a Board member to leave without a reason. The trade union said it raises a lot of questions as to whether Rampersad was fired or if he resigned; and why.
(CMC, 19.Sep.2018) — The Trinidad and Tobago g overnment Monday said the compensation package for workers being laid off by the closure of the oil refinery of the s tate-owned company, Petrotrin could be more than TT$1 billion (one TT dollar=US$0.16 cents).
But energy minister, speaking in the Senate, said while he would not want to provide an accurate figure, the workers’ representatives, the Oilfields Workers Trade Union and the Petrotrin board of directors will meet on Tuesday to discuss termination packages for the affected workers.
“I personally said the packages will cost upward of one billion dollars and if you take the collective agreement and you do some basic calculations, it is obviously more than one billion.
“But the government and the board of Petrotrin are willing to sit down with the union and go through all the numbers and possibly offer some enhancement to that package,” he told legislators.
Last month, the government announced that it would be closing down the oil refinery after indicating that it was losing an estimated two billion dollars annually.
The Keith Rowley administration said that more than 2,500 workers would be laid off as a result and Khan told the Senate that the figure was 4,700.
“The termination packages and the benefits therein are currently being negotiated by the board of Petrotrin and the Oilfield Workers Trade Union, and a meeting is carded for tomorrow. So, in a sense, I wouldn’t want to pre-empt or prejudge what package they will come up with.
“As to the number of employees that will be impacted, the total number of permanent employees that will be impacted from the Petrotrin restructuring is approximately 3,500 permanent workers and approximately 1200 non-permanent workers,” he told the Senate.
(Trinidad Express, 17.Sep.2018) — Former Director of Energy Industries at Industrial, Jim Catterson, says closure of the Petrotrin refinery makes no economic sense. He said the closure would decimate south Trinidad.
Catterson said unemployment would rise and poverty would spread across the nation.
Speaking at a press conference at the Oilfield Workers Trade Union (OWTU) headquarters in San Fernando, Catterson said the Government must consider the proposal presented by the OWTU last week.
“Tens of thousands of people would be unemployed. These people would no longer contribute to the national economy through taxes. They would no longer contribute to the national economy. There would be a downward spiral of the economy into poverty,” he said.
Catterson said it was important that the government have further discussion with the OWTU and Petrotrin management.
“Get around the table and discuss the future of this industry and economy. It is the only way to resolve this situation. Find a way for the country to survive,” he said.
Catterson questioned why a government wanted to close the refinery and import petroleum products.
“Where would you get the foreign exchange to buy the things you need? And when you can produce these products yourself,” he said.
Catterson said oil workers were highly skilled, educated and knowledgeable and should be paid accordingly.
But he dismissed reports by Energy Minister Franklin Khan that salary and wages totalled 52 per cent of Petrotrin’s operating cost.
He said, “Salary and wages is under 10 per cent of the company’s operating cost. Oil workers are highly skilled, educated and handles equipment worth millions and potentially dangerous. So they should be highly paid.”
IndustriALL Global Union is a global union federation representing more than 50 million working people in more than 140 countries, working across the supply chains in mining, energy and manufacturing sectors at the global level.
(Jamaica Gleaner, 14.Sep.2018) — Barbados says it is holding discussions with a number of suppliers to replace the energy arrangements it had with oil refinery Petrotrin.
The refinery, based in Trinidad & Tobago, is locking down operations, a measure it blamed on increasing financial losses. The closure has led to the retrenchment of more than 1,700 employees.
In a statement on Wednesday, the Barbados National Oil Company Limited, BNOCL, said it currently imports gasolene from and sells its crude oil to Petrotrin, while diesel and fuel oil are sourced extra-regionally. It said kerosene is imported by the oil companies Sol and Rubis.
BNOCL said that at the time of the Petrotrin announcement regarding the closure of the refinery, it was exporting 260,000 barrels of crude oil annually to the Trinidad refinery and importing 60,000 barrels of gasolene on a monthly basis.
It said the annual contract with Petrotrin entailed the exchange of the crude oil for gasolene, which aided in the reduction of the foreign exchange cost, as the value of the crude offset the outlay for the gasolene.
BNOCL said its storage capacity for gasolene is 80,000 barrels. However, as of Wednesday, September 12, its gasolene stock was at 53,582 barrels, “which is enough inventory for 25 days”.
The inventory is expected to rise to 38 days’ supply, when Petrotrin delivers another 30,000 barrels of gasolene on Saturday, September 15.
BNOCL expects to receive its final shipment from Petron over the period September 24-28 of around 30,000 to 35,000 barrels.
Altogether, assuming the shipments arrive as scheduled, the oil company expects to have enough inventory to supply local needs to November 5, assuming a “usage rate of 2,000 barrels a day.”
The Ministry of Energy and Water Resources said that through BNOCL, it has been in discussion with a number of suppliers with a view to employing a similar arrangement to that with Petrotrin.
“The goal is to ensure that this country has a consistent supply of gasolene at an affordable price, while securing a market for Barbados’ crude oil. BNOCL has never had a stock-out of petroleum products and always has adequate inventory to service Barbados, and is ever mindful of the need to do so, particularly during the hurricane season,” the ministry said.
The Mia Mottley-led government also sought to assure Barbadians that “despite the closure of the Petrotrin refinery, there will be no shortage of gasolene in Barbados,” saying it was keeping on top of the situation.
(Trinidad and Tobago Newsday, Sasha Harrinanan, 12.Sep.2018) — Most everyone knows about the 1,700 workers who will be out of a job once Petrotrin closes its oil refinery in Pointe-a-Pierre. What fewer people know is that when confirmation of this came on August 28, some National Petroleum Marketing Co Ltd (NP) workers feared they too would lose their jobs.
This was revealed by Bernard Mitchell, CEO of NP during an interview with Business Day at St Christopher’s gas station, Wrightson Road, Port of Spain on September 5.
“There was some anxiety because when the story broke, there wasn’t clarity about what the implications would have been for NP. So there was a bit of anxiety but what we’ve done is engage our employees – indicate there’s no need to be concerned – at a staff meeting last week.”
Seated in a conference room on the first floor of the popular NP-branded gas station, Mitchell said NP’s customers too can rest assured the refinery’s closure will not affect their fuel supply.
“Whether it’s using the seabridge to Tobago, your car or your travel internationally, nothing has changed in terms of the delivery of fuel. Based on what Petrotrin has indicated, it’s their intention to purchase fuel and sell to us, (so) nothing really changes. If, however, we do have to purchase fuel ourselves, we might want to use a larger vessel to deliver more fuel to our sufferance wharf, rather than making more frequent trips on a smaller vessel.”
NP’s sufferance wharf – a licensed private wharf where dutiable goods may be kept until the duty is paid – is behind its head office in Sea Lots, Port of Spain.
Petrotrin will begin transitioning out of the refining business on October 1, but it has not said when the refinery is expected to cease operating. This is one of the questions Mitchell will ask Anthony Chan Tack – interim oversight team member and director in charge of refining and marketing at Petrotrin – when the two meet.
“We are one of their primary stakeholders, so Petrotrin would be meeting with us soon to determine whether there’ll be any changes and if we need to do things differently. Mr Chan Tack is my point of interface there because he’s the one overseeing the refinery side, so the delivery of fuel is through his area.”
Mitchell and Chan Tack held an initial conversation shortly after the August 28 meeting between Petrotrin and the Oilfields Workers Trade Union (OWTU) at the company’s corporate headquarters, Southern Main Road, Pointe-a-Pierre.
Chester Beeput – general manager of aviation and marine fuels at NP – joined the interview via speaker phone at one point to answer Business Day’s questions about possible upgrades to the sufferance wharf.
“We use an ocean-going vessel to transport refined fuels from Petrotrin to Sea Lots. It brings in roughly 25,000 barrels of product and (the wharf’s) draft is five metres. Dredging the channel down to seven metres allows you to go from 25,000 to between 30,000 and 35,000 barrels, depending on the vessel. The other element to consider is, if we dredge down to seven metres, we would now be restricted by the length. The current length of our vessel is roughly 100 metres. We can go up to a maximum of 120 metres,” Beeput said.
Mitchell added to this, explaining that if dredging is required, it would fall under the purview of the National Infrastructure Development Co Ltd (NIDCO).
“We have been in contact with NIDCO and they are in the process of looking at the issue…It’s only if the opportunity arises for us to purchase fuel internationally, that there would be some urgency in doing that (dredging). Remember, the model is for Petrotrin to continue supplying us with refined fuel, so there’s no need to dredge at this time.”
The supply of aviation fuel to state-owned Caribbean Airlines Ltd (CAL) and all other airlines which refuel in TT was also discussed.
Beeput said after the announcement, several airlines expressed concern about the possible impact on jet fuel supplies.
“They asked if we anticipated any disruptions. I explained that for all intents and purposes – based on the information we have – there would be no disruption because whether Petrotrin provides fuel via refining or via importation, the net effect on the airlines would be zero.”
Petrotrin sells jet fuel to NP, then NP sells that to airlines from its tanks at Piarco International Airport, Piarco and ANR Robinson International Airport, Crown Point.
Beeput said CAL pays NP in TT dollars while foreign-based airlines/aircraft pay in US dollars.
During his September 2 televised address to the nation, the Prime Minister said the OWTU “will be given the first option to own and operate (the refinery) on the most favourable terms.” Dr Keith Rowley’s offer was rejected the following day by OWTU president general Ancel Roget, who accused the PM of already having a potential buyer for the refinery.
Asked if NP was considering entering into a partnership with another entity to purchase the refinery, Mitchell immediately replied, “No, no, no.”
He later said this was “an unlikely scenario, at this point in time, because we have absolutely no information on that refinery. To make such a decision would involve detailed, in-depth analysis. Also, it’s not part of our core business.”
“We don’t have the expertise, we don’t have the background information and we don’t see what that’s going to do to add value if we change our business model to include (refining),” Mitchell told Business Day.
(Trinidad and Tobago Newsday, Melanie Waithe, 5.Sep.2018) — Petrotrin has been in operation for over 97 years, and now our legacy refinery as we know it, will close. Its transition is set to begin next month. The announcement was made on the eve of our 56th anniversary of independence and Ancel Roget, president of the Oilfield Workers’ Trade Union (OWTU) commented that a move to privatise the company would bring the country back to “plantation days.”
I offer the proposition that this decision of the Petrotrin board and Cabinet was not the best option, notwithstanding the massive debt with which the company has found itself burdened, due to decisions taken over the last decade. Unfortunately, the major stakeholders could not find common ground.
However, some experts believe there are wider and deeper economic and social implications that are hinged to this decision. I heard a former energy minister ask a pertinent question: was the decision based on the company’s balance sheet, or did stakeholders consider the effects on the economy. So, what were the other options available to the board?
Joint Trade Union Movement (JTUM) members responded to the news via a press conference and issued a statement in support of the plight of their fellow OWTU members. They took the news as a declaration of war on the trade union movement.
The OWTU had proposed a plan to focus on increased productivity, accountability, and achieving production targets, with employees taking full responsibility for performance. Its plan also addressed quick-win projects yielding an additional 2,000 barrels of oil daily, and multiple other initiatives in land and offshore areas. Increasing refinery efficiencies and reviewing from whom TT imports crude were among aspects of this plan.
OWTU’s education and research officer Ozzie Warwick said the Lashley team, chaired by permanent secretary in the Ministry of Energy Selwyn Lashley agreed with the union’s recommendations and commented, “It’s strange it didn’t recommend closing the refinery. But our plan will ensure Petrotrin’s survivability.”
According to reports, Petrotrin is heavily overstaffed, with deficiencies in technical competencies in key disciplines. Manpower costs accounted for between 47 and 50 per cent of recurrent expenditure. It’s net debt at financial year-end 2017 amounted to $11.4 billion while taxes and royalties owed to Government amounted to $3.1 billion. The company is projected to continue accumulating losses at a rate of about $2 billion a year, and left as is, a $25 billion cash injection is needed to keep Petrotrin afloat. Petrotrin also needs to improve the integrity of its assets, estimated to cost around $7 billion to prevent oil leaks for example. This is indeed a dying company.
An unfortunate circumstance is that now the company is apparently bordering on insolvency, as it has been operational only due to its non-payment of taxes, and the Government’s guarantees of short-term loans.
The Government had commissioned the now termed Lashley Report and a strategic review and transition report from McKinsey and Company Inc. After the Lashley Report was received by the energy sub-committee of the Cabinet, it was passed to the ministries of energy and finance and Petrotrin for deeper reviews and analysis, following which a new board was appointed to come up with a plan to turn the company around.
The Lashley Report recommended splitting the company into three divisions: land-based production; its marine operation, Trinmar; and refining and marketing. Energy Minister Franklin Khan had said no options are off the table, but the report failed to propose staffing cuts and steered clear of privatisation. These were glaring weaknesses in the Lashley recommendations. Is it because Lashley assumed that both options would meet trade union resistance? The restructuring proposal would also prove inconsequential.
In September 2017 Cabinet had agreed that the company engage the recognised majority union to discuss cost reduction and survival strategies.
The Prime Minister claims he had formally invited Roget for discussions in an attempt to work out a way forward but the invitation was declined. The union was also apparently invited to sit on the board, and that too was declined. When Government hosted the Spotlight on the Energy Sector at the Hyatt Regency Trinidad, the union once again declined the Government’s invitation.
I seriously question the union’s motives in its unavailability to consult and participate in good faith in discussions to find workable solutions for such an important state-sector company. Was this the best representation the union could have made in the interest of its members and our citizens? Was there sufficient consultation to generate the best ideas given the real-time situation at Petrotrin?
At the worker level, we all should sympathise and offer our collective support as their lives will be altered due to decisions made by others. Given the vacuum created, and the absence of business suggestions to offer alternative opportunities, we would be left with higher unemployment and affected communities.
The Government has now made a bold poker move by “bluffing” the union when the PM publicly offered to sell Petrotrin’s refining assets to the OWTU. This offer should not have surprised anyone, as all reports dealt with the asset integrity of the company, given that the plant is close to 100 years old and carries little, if any, value on Petrotrin’s books. Mothballing the plant would simply not be a strategic economic option, and therefore its sale to a private operator was always on the cards.
The question then is, if the refinery is sold, would the successor company inherit the terms and conditions of the collective agreements? In other words, would any new refining company be viewed as a legal successor to Petrotrin.
This move I think is a well played one, as it now challenges the union to “put its money where its mouth is”. It also provides the Government with the public relations and politically defensive cover of being worker sensitive, while at the same time putting the union into the space to do what they have been calling on Government to make happen.
What is now very clear is that the Petrotrin refinery is not too big to fail, as we have survived both the dismantling of CL Financial, as well as the closure of Caroni Ltd. This too we will survive.
(Trinidad and Tobago Newsday, Vashtee Achibar, 5.Sep.2018) — Industrial relations consultant Gerard Pinard wants to know whether Government considered every available option before it took the decision to close down the state-owned Petrotrin refinery. He said the decision was not a good one and will hurt the economy and the society because of the important role Petrotrin plays in the country.
Speaking with Business Day, Pinard a former chemical engineer with Trintoc, the predecessor of Petrotrin, said more information should have been made available for such an important development. He cited the announcement by the majority trade union in Petrotrin, Oilfields Workers Trade Union (OWTU) that it had taken them by surprise.
He said while everyone expected something to happen, no one expected it would be as drastic as sending home 2,500 people. He recalled OWTU leader Ancel Roget referring to a memorandum of agreement signed with the Government prior to the last general election, and a joint committee being set up to look into ways and means to make the company viable.
The IR consultant said Petrotrin is duty-bound to consult with the recognised trade unions and must engage them in matters that involve their future. He said the decision to close the refinery cannot be done unilaterally, and if this was the case then the employer (Petrotrin) could be found guilty of an industrial relations offence in the Industrial Court.
“I do not have the information. The union is saying that it came like a thief in the night. If that is so, then it was badly handled. If in fact there were discussions that it was going to happen the union is entitled to put forward alternative options and asked for continued discussions,” he said.
Continuing to press the point that the closure was not handled well, Pinard said it is not only about the workers who are to be sent home.
“There are over 6,000 retirees, over 5,000 contract employees, over 20,000 people who rely on the medical services mostly retirees and former employees and their families. The company runs a hospital and they provide medical benefits at subsidised rates for all these people. We do not know what is going to happen now to them. Will it continue? We don’t know.”
Apart from people directly connected to Petrotrin, Pinard said people in fence line communities of Petrotrin will feel the full impact of the closure.
“Tens of thousands of people from the southern communities, the whole of San Fernando, Pointe-a-Pierre, Marabella, Point Fortin, Santa Flora and Fyzabad depend directly or indirectly on Petrotrin for their livelihood. I don’t know how much thought has gone into that. You have to have job losses but we don’t have the information to say whether this was really the only alternative or the best alternative.”
Pinard said he was puzzled why a bailout, as was done in the case of Clico, was not used. “So my question really is whether TT, as an oil and gas based economy, did not think that our oil industry was strategically important enough to find some ways to save it.” He said Government could have considered writing off part of the debt or taking over part of the debt temporarily as was done in the case of CL Financial.
Pinard said he is not in agreement with Petrotrin chairman Wilfred Espinet that there must be a higher level of oil production to keep the refinery running.
“For the chairman to be talking about we only have 45,000 bpd production and saying the refinery needs 160,000 bpd and therefore you cannot run a refinery profitably, there are countries which have no oil at all and who have refineries operating because they have to import everything to process and refine. So that by itself could never be a reasonable conclusion. We are located right next to the country with the largest oil reserves in the world. Have they considered importing crude from Venezuela?”
He called on Government to explore every available option before taking such a drastic decision to send home workers. He said retrenchment and laying off should always be the last resort.
In an address to the nation on Sunday, Prime Minister Dr Keith Rowley Government had little choice but to close the refinery, stating Petrotrin would need a $25 billion cash bailout to stay alive. Petrotrin loses $2 billion a year, on a recurring debt of $11 billion.
He said the refining assets of would be placed in a new company for potential buyers, including the OWTU, while Petrotrin will focus on extraction and exportation of oil. The Prime Minister is due to meet trade unions, led by the OWTU, today, mostly likely to discuss the state of Petrotrin and the movement’s call for all workers to engage in a day of rest and reflection tomorrow in protest of Government’s economic policies.
(Stabroek News, 2.Sep.2018) — Trinidad Opposition Leader Kamla Persad Bissessar has raised the prospect of Guyana oil being used to rescue the beleaguered Petrotrin refinery but Prime Minister Keith Rowley last evening said the aged facility had no reasonable prospect.
Defending the decision by his government to close the over 100- year-old refinery, Rowley yesterday said he had no choice as the climbing debt was too much to saddle his country’s taxpayers with.
“Petrotrin was overburdened with debt. The net debt at financial year-end 2015 amounted to TT$11.4 billion,” Rowley told the twin-island nation in an address which was live streamed.
According to the Trinidadian Prime Minister, “Left as it is, Petrotrin will require an immediate TT$25 billion cash injection just to stay alive” and “there is no way that the company can find this money” as “no financier will lend it because the company simply will not be able to repay such an additional loan.”
He believes that it would be more feasible for the country to focus on exploration and production and export the 40,000 barrels of oil equivalent per day it produces and import the 25,000 barrels it needs for consumption.
“Today with a refining capacity of 140,000 barrels per day, the local production available for refining is 40,000 barrels. We really depend, mostly, on a daily importation of 100,000 barrels per day, which we refine at a significant loss.”
He would later add, “We consume less than 25,000 (barrels) of refined products. It makes far more sense to export the 40,000 that we produce and import what we need. Each barrel will be sold externally on the open market.”
Last week Tuesday it was announced that Petrotrin’s refining and marketing operations would be shuttered. With TT$8 billion in losses in the past five years and a bullet payment of US$850 million due in 2019, Petrotrin chairman Wilfred Espinet had said that terminating its refining and marketing operations and retrenching 1,700 permanent and casual employees was the only way to save the company after 100 years of operations in the industry. Petrotrin also owes the Trinidad Government more than TT$3 billion in taxes and royalties.
Rowley’s position last evening came even as that country’s former Prime Minister, Persad Bissessar called on him to pursue negotiations with Guyana to refine its oil there in order to save the company.
“I understand Guyana has found another well … can we not group in some way and find a way to work together as a CARICOM where we can help them refine their oil,” she told reporters on Saturday at her Legal Clinic Siparia Constituency Office and which was reported by the Trinidadian newspaper Newsday. Guyana won’t begin pumping oil before 2020.
“I am calling on him to let good sense prevail to be very cautious in making such a drastic and dangerous move, this will have a ripple effect throughout the economy and the country…of course they (Guyana) will build their own refinery but we have one and many of the units in the refinery at Petrotrin are new, so a lot of money has been invested on the refinery side and now they are shutting it down. It is total nonsense,” she added.
Currently, it is still unclear what the Guyana Government would do with its share – 12.5% – of profit oil from 2020 onwards, from its agreement with ExxonMobil but one government official said that several options are being explored.
One Minister yesterday said that it “Is an ongoing discussion and several workshops and engagements have been held. The options are to ask Exxon or to market, do our own marketing or take our share in kind and send it for refining somewhere. Several proposals have been received and the final decision-making process will be guided by the Department of Energy.”
Stake
Sources have told this newspaper that it has been suggested to the government that Guyana “takes a stake in the Petrotrin refinery and in this way acquire a strategic asset.” In that way, according to one source, Guyana could have its share of oil from the agreement with ExxonMobil and affiliates refined closer to home and secure jobs for persons in both countries.
But while it is still too early to tell what the Guyana and Trinidad governments will decide, a source said, “Guyana may gain a controlling or sizeable share and develop refining capacity and meet many of the outcomes from having a refinery without having to pay as much. Additionally, we can ensure that a percentage of labour is Guyanese who will have to be trained and also we can address some CARICOM integration goals.”
Last evening, the Trinidad PM made no mention of Guyana or even hinted at restarting the refinery although he said that Petrotrin’s refinery assets would be placed in a separate company.
“We largely operate a business that is largely dependent on foreign oil inputs. All the other refineries in the region that had this same business model, Aruba, Curacao and St Croix have long since closed because they saw it as not a viable business,” Rowley said.
“Our Pointe-à-Pierre refinery is 101 years old and has reached the end of its commercially viable days it is now at a state where it is haemorrhaging cash and the cost of rehabilitating it is way more than its potential to ever be potentially viable, competitive or sustainable. The only commercially sound and viable option is to close the refinery, export Petrotrin’s oil and to import products,” he also noted.
The government of the US Virgin Islands last month approved a proposed US$1.4-billion operating agreement between itself and Arclight Capital Partners LLC, Boston, to restart the former Hovensa Refinery at Limetree Bay, St Croix. The refinery is scheduled for opening by the end of 2019. With an initial crude processing capacity of about 200,000 barrels per day according to the USVI government, the investment is expected to create 1,200 local jobs during construction and as many as 700 permanent jobs upon restarting the facility. The Hovensa refinery was a joint venture between Hess Corporation and Petroleos de Venezuela until it closed in 2012.
Rowley said that the Petrotrin model has outlived its usefulness and it was now time to accept that and equip the company to stand the test of the ever changing global economy.
“Petrotrin’s model has become obsolete and uncompetitive and its operating practices are inefficient. The company was nowhere in line with global industry standards and best practices. In fact the company’s operations are identified as being among the most inefficient in the world. The company if left as it is would continue to operate at a loss at a rate of aboutTT$2B a year. It is not a viable option, to do so is to saddle future generations with a huge debt burden. If not dealt with now, the negative effects will get worst and it simply cannot work. To break even would cost TT$7B and would involve significant staff cuts and an ultra-low sulphur refinery,”
He believed that the “Gross mismanagement of the national patrimony within the last decade” such as many cost overruns and delays in projects for the company was part of the reason government is now saddled with the large debt.
A committee, headed by TT’s former Energy Ministry Permanent Secretary, Selwyn Lashley, had reported on the dismal state of the company since 2016 and the report showed that in addition to receiving huge subsidies from the state, Petrotrin was not paying its fair share of taxes collected to government.
“Taxes and royalties owed to Government amounted to $3.1 billion as at February 28, 2017. The company was not complying with the tax laws and even when it collected taxes from companies that paid their taxes to Petrotrin for onward transmission to the Ministry of Finance, Petrotrin was huffing and utilizing those monies in its own operations.”
“Money that should be turned over to the Ministry of Finance is held within the company and that is illegal,” he added.
(Stabroek News, Marcelle Thomas, 2.Sep.2018) — A long-delayed Memorandum of Understanding (MoU) between Guyana and Trinidad on energy cooperation is expected to be signed in the coming weeks, according to Trinidad and Tobago’s Minister of Energy, Franklin Khan.
“The Government of Trinidad and Tobago is due to sign a memorandum of energy cooperation in the coming weeks, most likely there in Georgetown,” Khan told Sunday Stabroek via telephone.
The minister did not go into the details of the agreement and said that would be disclosed after the signing. He, however, emphasised that his government is willing to offer its assistance as this country prepares for first oil. “When the Government of Trinidad and Tobago is in Guyana, yes we will offer help and advice to the Government of Guyana on your emerging oil and gas sector and obviously seek their concurrence…,” Khan said.
No official from government was available for comment or to give details on what the agreement would contain. Minister of State Joseph Harmon, who is the minister responsible for oil and gas matters, was out of the country and would not be back until next week, his office said. Several calls to the recently-appointed Head of the Department of Energy, Dr Mark Bynoe, went unanswered.
Since 2016, discussions commenced between Guyana and Trinidad on an MoU under which the latter would provide various forms of support to the oil and gas sector in Guyana. Initiated during a visit here in 2016 by a Trinidad and Tobago delegation led by the then Energy Minister Nicole Olivierre, the MoU was expected to be signed at the end of that year but that did not happen. At the time, Minister of Natural Resources Raphael Trotman had said that the pact would see Guyana receiving support in a range of areas, including advanced technical training for local personnel in the industry.
News of the proposed energy cooperation agreement between Georgetown and Port-of-Spain comes days after the Trinidad and Tobago government inked an agreement with Venezuela to import natural gas from the Spanish-speaking country. That agreement would see the twin-island republic purchasing some 150 million standard cubic feet of natural gas per day from Venezuela’s prolific Dragon Field.
Meanwhile, sources told Sunday Stabroek that it has been suggested to government that Guyana “takes a stake in the Petrotrin refinery and in this way acquire a strategic asset.” In that way, according to one source, Guyana could have its share of oil from the agreement with ExxonMobil and affiliates refined closer to home and secure jobs for persons in both countries.
Last Tuesday, it was announced that Petrotrin’s refining and marketing operations would be shuttered. With TT$8 billion in losses in the past five years and a bullet payment of US$850 million due in 2019, Petrotrin chairman Wilfred Espinet had said that terminating its refining and marketing operations and retrenching 1,700 permanent and casual employees was the only way to save the company after 100 years of operations in the industry. Petrotrin also has a TT$12 billion debt and owes the Trinidad Government more than TT$3 billion in taxes and royalties.
According to the Trinidad Guardian newspaper, the Oilfield Workers’ Trade Union (OWTU) leader, Ancel Roget, had warned that the refinery will be sold to private investors, but Espinet had dismissed this, saying, “There is no likelihood of that refinery being sold.”
Khan told Stabroek News that Petrotrin’s closure does “not really” affect the opportunity for Guyana to still look to T&T to refine its oil or look elsewhere. “We have decided to close the refinery because of its present configuration and cost structure. It is losing money and it’s not sustainable in its current form,” he said. “However, other business models could be proposed,” he added.
‘Mindful’
But while it is still early to tell what the Guyana and Trinidad government will decide, a source said, “Guyana may gain a controlling or sizeable share and develop refining capacity and meet many of the outcomes from having a refinery without having to pay as much. Additionally, we can ensure that a percentage of labour is Guyanese who will have to be trained and also we can address some CARICOM integration goals.”
A government official believes that Guyana has to be mindful of such a move, given the recent agreement Trinidad inked with Venezuela and this country’s longstanding border controversy with Venezuela. “We have to be mindful of a growing relationship between Venezuela and Trinidad and Tobago and won’t want to compromise our energy security by having the asset in a nation where the government grows uncomfortably close with our main detractor…Venezuela may try to influence the [Trinidad and Tobago’s] relationship with Guyana,” the official said.
Khan was asked about possible perceptions and future implications of his country’s agreement with Venezuela but would only say, “We know of all the geopolitics and so on and will answer those questions then.” As to whether the government of Guyana ever discussed acquiring a stake in the now defunct Petrotrin refinery with Port-of-Spain, Khan said neither him nor his government has ever had that discussion.
Currently, it is still unclear what government would do with its share – about 14 percent – of profit oil from 2020 onwards, from its profit sharing agreement with ExxonMobil. As of last year, before the Department of Energy was formed, Trotman had ruled out this country investing in an oil refinery.
“We have done some studies on the feasibility of an oil refinery. We have opened that study for public debate and discussions… Government has concluded that it, as a government, cannot spend US$5 billion dollars in an oil refinery,” he had said.
The US$5 billion sum he referred to was the figure that Director of Advisory Services at Hartree, Pedro Haas, had told government it would cost to build a refinery here. Haas was hired by the David Granger-led APNU+AFC government to carry out a feasibility study for an oil refinery in Guyana. From his analysis, the cost to construct such a facility would be some US$5 billion, with at least half the invested amount lost upon commissioning.
ExxonMobil was asked by this newspaper if it has decided on a refining company to whom it would sell its share of crude. Through its Public and Government Affairs Officer Deedra Moe, the company responded: “We sell crude oil on the open market. ExxonMobil has an equity crude oil marketing group – an integrated operations, logistics and trading team – that operates around the world and is responsible for marketing ExxonMobil’s global production of crude oil and condensates.”
And while Guyana prepares for first oil in 2020, the government of the US Virgin Islands last month approved a proposed US$1.4-billion operating agreement between itself and Arclight Capital Partners LLC, Boston, to restart the former Hovensa Refinery at Limetree Bay, St Croix. The refinery is scheduled for opening by the end of 2019. With an initial crude processing capacity of about 200,000 barrels per day according to the USVI government, the investment is expected to create 1,200 local jobs during construction and as many as 700 permanent jobs upon restarting the facility. The Hovensa refinery was a joint venture between Hess Corporation and Petroleos de Venezuela until it closed in 2012.
Hess is one of the partners in ExxonMobil’s 6.6 million acres Stabroek Block operations, which last week announced its ninth oil discovery.
Moe was asked if ExxonMobil was looking at refining in St. Croix and responded, “I am not aware of anything regarding St. Croix.”
(Trinidad and Tobago Newsday, Carla Bridglal, 31.Aug.2018) — Severance packages for Petrotrin workers will cost upwards of $1 billion, Energy Minister Franklin Khan estimated yesterday. But compared to the Pointe-a-Pierre refinery’s annual loss—estimated at $2 billion—that’s a small price to pay.
Khan said the company was still “crunching the numbers” but will offer early retirement for people over 55, as well as “exit packages” for young workers.
“That formula is still being worked out. The figure will be huge because the base salary at Petrotrin is big.”
While the wages at the refinery aren’t necessarily the highest in the company, he said that department did have the highest overtime bill, but overtime doesn’t come into play in the determination.
Khan acknowledged the human impact of the 101-year-old refinery’s closure, saying as a former employee, he empathised with them.
“The numbers did not stack up, otherwise we would have put the economy at risk. Having said that, no matter what spin you put on it there are approximately 3,000 families affected. I am very much conscious of it, and so is the Prime Minister. My entire career was at Petrotrin. I know most of those workers. I supervised some of them. I have a great deal of empathy for them. That is why we would be working out proper packages. We want a spin-off effect like what happened in Couva and Chaguanas after Caroni (1975) Ltd closed down.” Even if the refinery is closed, there will still be lots of activity in the exploration and production side. “I’m not too concerned about La Brea, Santa Flora and Point Fortin. The South Western peninsula is good. The major challenges are the communities of Marabella and Gasparillo, the catchment areas for the refinery.”
The refinery will initially be transformed into a terminalling facility to import fuel in bulk for onward shipping to the Caricom market.
Khan added that even though the company will have to now import fuel, there will be no change to the fuel subsidy. The fuel subsidy is estimated to be $900 million this fiscal year. There’s also a subsidy on liquefied petroleum gas (LPG) or cooking gas, for about $500 million. Petrotrin absorbs the LPG subsidy, but state-owned fuel distributor, National Petroleum, absorbs the fuel subsidy, so the change at Petrotrin will not impact the current subsidy model.
Khan also defended the government’s reticence to publicly comment on the decision to close the refinery. Dr Rowley is expected to address the nation on Sunday. “The announcement was made by the board of directors. Everybody in this country says it’s political interference that killed Petrotrin, so we empowered the board. We gave them the autonomy to act. They made a proposal, it was approved by Cabinet. We don’t have to be on a ball-by-ball commentary in that regard because the very thing the population is accusing the politicians of is what you are asking me to do.”
(Trinidad and Tobago Newsday, Yvonne Webb, 31.Aug.2018) — Lennox Petroleum Services Ltd has initiated legal action against members of the Oilfield Workers Trade Union (OWTU), one day after they protested inside the company’s Princess Margaret Street, San Fernando office. CEO Wayne Persad has also applied for an injunction to prevent the union from trespassing on his premises or continuing “their illegal actions.”
In a statement, Persad claimed that on Wednesday, about 40 members of the OWTU forcibly entered the compound, assaulted a security officer and then searched the compound. He said they shouted his name and asked him to come out.
Persad said, consistent with their company’s emergency policies and procedures, the police was notified of the “intrusion” and responded within minutes of the report being made.
OWTU’s chief labour relations officer Lyndon Mendoza, who led the demonstration, questioned the large complement of heavily-armed officers who arrived in about six or seven marked police vehicles, when all the workers did was hold hands, pray and sing union songs. He said they went to Lennox Petroleum, an off-shore company, to deliver a letter on behalf of workers who were owed retroactive payment dating back some three years ago. He said collective bargaining arrangements were signed to this effect. He said the union was there to show solidarity with the workers.
In his statement, Persad said the acts committed were extremely unwarranted and were designed to intimidate management and staff.
He explained that by letter, dated August 27, the company was informed by the OWTU that the dispute which gave rise to the protest was reported to the Ministry of Labour. Given that the company was invited by the ministry to meet with the union on September 11, Persad said Wednesday’s action showed disrespect to the Industrial Relations Act and its process. He said the protest action was a clear attempt to circumvent the procedures stipulated under the act.
“At present, our company is in a transitional period as our majority shareholder/director/founder, Pamela Persad passed away on August 18. The timing of the protest less than a week after the burial of Mrs Persad was extremely insensitive.”
Persad also denied that it employs over 250 workers or that any of their workers are members of the OWTU. He said none of the protestors were employees of his company, neither were they authorised to be on the compound.
(Trinidad and Tobago Newsday, Carla Bridglal, 30.Aug.2018) — On the eve of the country’s 56th anniversary of Independence, the board of Petrotrin announced it was shutting down the state oil company’s refinery and marketing operations, choosing instead to focus on exploration and production.
Over 2,500 jobs will be affected, and all refining jobs — about 1,700 — will be terminated as the company begins its transition period on October 1.
The tragedy of Petrotrin goes beyond the immediate impact of job losses, though. One of the major casualties of this decision is the 101-year-old Pointe-a-Pierre refinery – once the crown jewel in a collection of state enterprises that has now lost its lustre, a beacon of nationalism whose light is now dulled.
“We are now 101 years old in the refinery business and the purpose of getting into it is no longer relevant, but we are holding on to it because there are emotional ties. And because it is there, what we’ve done now as a board is look at it hard and said, ‘Hey, let’s start from a clean sheet’,” chairman Wilfred Espinet told a media conference on Tuesday.
In the beginning
The Pointe-a-Pierre refinery has had a storied history. First set up in 1917, it was once the biggest in the British Empire. During World War II the refinery was identified as an asset to be “protected at all cost” as a major supplier of aircraft fuel for the Allied forces. In 1940, refining capacity in Trinidad and Tobago was recorded at 28.5 million barrels per year.
In 1956, US company Texaco acquired the refinery, and in 1985, the government, through Trintoc (1974) bought over Texaco’s assets except Trinmar. In 1993, Trintoc and Trintopec were incorporated into Petrotrin. The board had most recently claimed that as part of the restructuring, initiated on March 1, it would split the company’s operations into two arms — exploration and production and refining and marketing. The announcement to shut down the refinery, then, came as a surprise to most.
It’s a bold move, because the nostalgia surrounding Petrotrin and Pointe-a-Pierre is palpable — especially for south Trinidad. The livelihoods of thousands more than 5,000 direct employees of the company are intertwined with the refinery — from restaurants to the technical service providers who have had their base in and around the San Fernando/Marabella area, including Vistabella and Gasparillo.
“It’s a whole domino effect,” said president of the San Fernando Business Association, Daphne Bartlett.
Local historian Prof Brinsley Samaroo has likened the refinery’s end to the closure of Caroni (1975) Ltd, which also had rippling effects throughout local communities of south and central Trinidad.
“The refinery was crucial to the development of Trinidad, from Claxton Bay to San Fernando and beyond. The whole area was developed when the refinery was opened and the opportunities it provided,” he told Business Day.
It’s likely we’ll see a repetition of the economic displacement that happened after Caroni was shut down, and similar areas, like south and central, he said. This time may even be worse though — when Caroni closed, the refinery was still running, providing an economic buffer for the area.
“People in south depend directly on the oil industry. The whole economy hinged on the oil industry since the closure of the sugar factory and we haven’t been able to diversify the economy since then, so we continue to depend on oil. The closure of the refinery is not a good sign and I think we are in for a rough period for the whole country,” Samaroo said.
Many questions to answer
For the wider economy, though, there are still questions that need to be answered. The Petrotrin refinery provided cheap fuel for the local market. Now the country will have to import the equivalent of 25,000 barrels of oil per day to supply the economy, although the amount will hopefully be offset by the how much the company produces — about 40,000 barrels per day. Nonetheless, this will likely require some adjustment, most notably to the fuel subsidy. According to the TT Energy Chamber, over 90 percent of Petrotrin’s sales to the local market have been fuel — 46 per cent is from gasoline, 37 per cent from diesel, and 11 per cent from jet fuel. Five per cent is from liquefied petroleum gas (LPG or cooking gas), but the company has said it will continue to supply this.
“About 20 per cent of the refinery’s output is consumed locally. The refinery is our sole source of gasoline, diesel, and jet fuel. If we don’t have an operational refinery we will of course have to import fuel. Another 17 per cent is exported to Caricom with the main markets being Jamaica, Barbados and Guyana. These countries will have to source fuel extra-regionally,” former energy minster and now consultant and lecturer Kevin Ramnarine said.
He was also concerned about the uncertainty of the subsidy. “The fuel subsidy is based on the ex-refinery price. Since there will be no refinery there will be no ex-refinery price. So, what happens to the subsidy? The country will likely spend about $900 million this year subsidising liquid fuels to the population,” he said.
Rooting out debt ‘cancer’
Petrotrin’s lack of competitiveness has consistently been cited by the board as the fundamental reason for restructuring. In February, during a presentation to a joint select committee of Parliament, the board noted that the company’s key performance indicators, when placed against international benchmarks put the company at the “lowest of the low” in terms of competitiveness.
The refinery has a nameplate capacity of 140,000 barrels of oil per day — it therefore has to import 100,000 barrels a day to remain viable, making it a net consumer of foreign exchange.
“We had a continued programme of looking at all sorts of ways to make this work. We came to the conclusion that if we wanted to be able to pay back the debt, and if we wanted to be able to have a profitable company that could be sustained over time, we would have to take out what was the cancer of the operation and that would have been the refining and marketing.”
And the company has a lot of debt: over $10 billion — including $3 billion to the government. It requires a $25 billion cash injection to stay alive, and next year, a US$850 million bullet payment on a bond issue comes due. In dire tones on Sunday, Energy Minister Franklin Khan said the company had the potential to bankrupt the country.
Even some of the government’s biggest critics have agreed that something needed to be done to get the company back to profitability.
“Things definitely needed to be restructured,” said Bartlett. Ramnarine agreed, especially in the context of the debt burden of the company
Save the refinery
Despite the board’s claims then, that it needed to cut out the “cancer” of the refinery, though, Ramnarine and Bartlett believe the refinery could have been salvaged.
“I don’t think Petrotrin would have bankrupted the country. Petrotrin and its refinery are completely redeemable but there is a need to push for efficiency and cost reduction. US refineries are currently experiencing a ‘golden age’ and are running at record levels in response to robust domestic and international demand for gasoline and fuel oil. The paradigm in the refining business is competitiveness. Having said that we need to appreciate that the country spent US$1.6 billion on the refinery in the last decade and we have some relatively new plants there such as the continuous catalytic reforming plant (Cat Cracker), the iso plant and the acid/alkyl plant,” he said.
Bartlett said instead of shutting the refinery, the country should have instead looked towards improving it to take advantage of opportunities in places like Guyana, which is currently experiencing the first waves of an oil boom.
“We know it can be viable because of what’s happening in Guyana. State-owned companies do not belong to politicians. A decision like this should have been made with open discussion. It makes me wonder, did they think this decision through or did they just want to get rid of it?”
(Trinidad and Tobago Newsday, Sasha Harrinanan, 29.Aug.2018) — Former energy ministers Kevin Ramnarine and Carolyn Seepersad-Bachan, both of whom served under the previous administration, are asking if Petrotrin’s board considered the wider impact of closing its refinery.
Ramnarine, in a statement after the board’s announcement yesterday, said “the closure of the refinery has to be considered against the impact it has on the economy, (including) the impact on hundreds of contractors and energy service companies who also employ thousands of people. There is the impact on the fence-line communities of Marabella, Vistabella, Gasparillo and San Fernando.”
Seepersad-Bachan, speaking with Newsday, asked if Petrotrin had “considered the possibility of other job cuts related to the refinery’s closure. What about all the other small contractors and spin-off service operations that support Petrotrin’s refinery at this point in time?” Expressing concern about how meaningful planned consultations can be in such a relatively short period – the refinery’s operations will start being phased out from October 1 – the Congress of the People (COP) political leader said her party will soon hold a series of “national conversations” on the matter.
Ramnarine highlighted the supply impact locally and regionally of the impending closure.
About 20 per cent of the refinery’s output is consumed locally. It is TT’s “sole source of gasoline, diesel, jet fuel et cetera. If we don’t have an operational refinery, we will of course have to import fuel.
(Energy Analytics Institute, Ian Silverman, 29.Aug.2018) — It’s official: Petrotrin or the Petroleum Company of Trinidad and Tobago Limited will cease to operate its lone refinery located at Pointe-a-Pierre.
What follows are details about the company, as per its website.
OUR COMPANY
We are an integrated oil and gas company, engaged in the full range of petroleum operations including the exploration for, development of and production of hydrocarbons, and the manufacturing and marketing of a wide range of petroleum products.
Our position in the energy sector is strengthened by more than 100 years of predecessor experience in crude oil production and manufacturing in this country. (See Our History)
Our organization, Petroleum Company of Trinidad and Tobago Limited (Petrotrin) was incorporated on January 21, 1993 to consolidate and operate the petroleum producing, refining and marketing assets of State-owned enterprises: Trinidad and Tobago Oil Company Limited (Trintoc) and Trinidad and Tobago Petroleum Company Limited (Trintopec). In 2000, these assets were further extended with the acquisition of Trinmar Operations.
As a state-owned Company, Petrotrin is under the direct control of the Minister of Finance acting as Corporation Sole.
The Ministry of Energy and Energy Affairs is the line ministry that provides the specialized technical analyses and statutory approvals for the Company’s operations, while ensuring adherence to the Government’s policy guidelines. (See Governance)
Today, we are Trinidad and Tobago’s largest crude oil producers. We also have an interest in some natural gas production. Our operations and partnerships cover most of the island of Trinidad and much of the waters surrounding the island of Tobago.
We operate Trinidad and Tobago’s only petroleum refinery. Our refinery has a full conversion capacity of up to 168,000 bpd and average throughput of approximately 112, 974 bpd. Our petroleum products are sold locally and as well as to customers across the Caribbean, Latin America and the eastern seaboard of the United States of America. (See Our Operations)
We are one of the largest employers in Trinidad and Tobago with a dedicated workforce of more than 5,000 people. Our team is committed to optimizing our energy resources for the benefit of our stakeholders. As such, we are committed to operational excellence, personal accountability and sustainable practices throughout our operations. (See Sustainable Development)
Together, our people, rich history, extensive operations, sustainable practices, long standing relationships and strategic mid-Atlantic location have strengthened customer confidence in our position as a leading supplier of petroleum products.
Petrotrin’s Board of Directors
FREQUENTLY ASKED QUESTIONS
What is Petrotrin’s main business?
Petroleum Company of Trinidad and Tobago Limited (Petrotrin) is an integrated oil and gas company engaged in the full range of petroleum operations including the exploration for, development of and production of hydrocarbons, and the manufacturing and marketing of a wide range of petroleum products.
When was Petrotrin incorporated?
Petrotrin was incorporated in January 1993, merging selected assets of state owned Trinidad and Tobago Oil Company (TRINTOC) and Trinidad and Tobago Petroleum Company (TRINTOPEC).
Our roots can however be traced to the beginning of commercial oil production in Trinidad and Tobago through predecessors who were listed among the nation’s earliest prospectors in oil and gas.
Who owns Petrotrin?
Petrotrin is a limited liability company, wholly owned by the Government of the Republic of Trinidad and Tobago. The Company is under the direct control of the Minister of Finance as Corporation Sole. The Ministry of Energy and Energy Affairs is the line ministry that provides specialized technical analyses and statutory approvals for our operations while ensuring adherence to Government’s policy guidelines.
How many people are employed by Petrotrin?
Petrotrin has a combined workforce of more than 5,000 employees, the majority of whom are in the core operating areas. Indirect employment is also provided for thousands more.
Where is Petrotrin’s Refinery located?
Our Refinery is located at Pointe-a-Pierre, on the west coast of Trinidad on 2,000 acres of land, approximately 56 kilometres north of San Fernando along the coast of the Gulf of Paria.
What types of products are processed at Petrotrin’s refinery?
Our main refined petroleum products include Liquefied Petroleum Gas, Aviation Fuel, Motor Gasoline, Diesel and Fuel Oil.
Where are Petrotrin’s E&P operations located?
Petrotrin’s E&P operations are spread across the southwestern peninsula of Trinidad. The Company also has E&P operations offshore. Petrotrin operates several E&P offices located at Santa Flora, Point Fortin, Penal, Guayaguayare and Forest Reserve.
OUR PRODUCTS
Avjet Kerosene
Aviation Jet Fuel is a grade of kerosene intended for aircraft powered by turbine engines due to its high flashpoint.
Aviation Gasoline
Aviation Gasoline or Avgas is a grade of gasoline used in the internal combustion engines of aircraft. With a higher octane than Motor Gasoline, Avgas is highly refined so that it remains in a liquid state at low pressure in high altitude.
Diesel Heating Oil
Diesel is an important transportation fuel used in diesel engines found in vehicles, heavy machinery, boats and even power generators.
Fuel Oil
Heavier than diesel, fuel oil is typically used for heating, bunkering and other industrial purposes. Low and medium sulphur fuel oils are available at Petrotrin. Typically, the material is low pour, low metals with less than 8% asphaltenes.
Liquified Petroleum Gas
Liquefied Petroleum Gas or LPG is a group of gases, mainly propane and butane, that have been liquefied under high pressures. LPG is used in a variety of ways including heating, cooking and refrigeration.
Sulphur
At Petrotrin, pelletized sulphur is available for loading in bulk by conveyor belt.
Motor Gasoline
Lighter than Diesel Fuel, Motor Gasoline is the main transportation fuel used in cars and light transportation vehicles. Motor Gasoline has different grades with varying octane numbers that remark on a fuel’s resistance to knock.
We manufacture motor gasolines to customer specifications. We supply the local, regional, Latin American and US Gulf Coast markets.
Petrotrin workers being addressed by OWTU president general Ancel Roget. Photo: Trevor Watson
(Trinidad Express, 28.Aug.2018) — It’s official. Petrotrin’s refinery is to close. And 2,600 workers will be impacted.
The Petrotrin Board of Directors met Tuesday August 28 with its employee representative unions and the Company’s management to announce plans to end Petrotrin’s oil refining operations at Pointe-a-Pierre and to redesign entirely its Exploration and Production business.
According to a statement from Petrotirn, the restructuring exercise is geared to curtail losses at the state owned oil company and get it on a path to sustainable profitability.
Approximately 2,600 permanent jobs will be affected – the redesigned Exploration and Production business will have approximately 800 workers and all 1,700 jobs in refining will be terminated. Petrotrin is committed to cushioning the effects of any fallout that occurs from the planned changes.
The announcement follows months of careful review and analysis by the Company’s Board of Directors, which was appointed last September to identify the problems at Petrotrin and take the steps necessary to make the Company self-sustainable and profitable.
Petrotrin has lost a total of about TT$8 billion in the last five years; is TT$12 billion in debt; and owes the Government of Trinidad and Tobago more than TT$3 billion in taxes and royalties.
The Company currently requires a cash injection of TT$25 billion to stay alive –– to refresh its infrastructure, and to repay its debt –– and even with that, if left as is, it is projected to continue losing about TT$2 billion a year.
Chairman Wilfred Espinet said: “With the termination of the refining operations and the redesign of Exploration and Production, Petrotrin will now be able to independently finance all of its debt and become a sustainable business.”
OWTU president general Ancel Roget. Photo: Trevor Watson
“Petrotrin is no longer producing enough oil to operate the Pointe-a-Pierre refinery efficiently: We are producing approximately 40,000 barrels of oil a day and the refinery operates at a capacity of 140,000 barrels a day, so we have to go to the market to buy about 100,000 barrels of oil to make up the shortfall. This results in a net loss in foreign exchange.”
The refining of oil will be phased out and the Company will import the refined products (gasoline, diesel, aviation fuels, etc.) that the country needs –– approximately 25,000 barrels of oil equivalent a day. All of the Company’s oil will be exported.
Espinet said: “Our goal is for Petrotrin be an internationally competitive and sustainably profitable leader in the local energy sector; and an employer of choice, that is a source of national pride.”
The period of transition will commence on October 1, 2018.
According to the company, the Board of Directors is taking all requisite steps to facilitate a smooth and efficient period of transition with safety and the security of the country’s fuel supply being its two priorities.
Petrotrin will be meeting with all of its stakeholders during the coming weeks to discuss how the proposed changes may affect them.
Petrotrin’s Pointe-a-Pierre refinery operations. Photo: Richard Charan
(Trinidad Express, Ria Taitt, 28.Aug.2018) — The Government has decided to shut down the refinery of State oil company Petrotrin.
The country can no longer afford to continue to refine oil and lose billions of dollars in this process, a senior Cabinet source told the Express yesterday.
The company will instead be expanding its operations in oil exploration and production, the source said.
The source said Oilfields Workers’ Trade Union (OWTU) president general Ancel Roget was told “in no uncertain terms that the major restructuring at Petrotrin will be that Trinidad and Tobago would be moving out of the refinery business because it does not have oil to refine”.
(Energy Analytics Institute, Ian Silverman, 27.Aug.2018) —Trinidad and Tobago is relying on Russia as its main source of imported crude oil.
Between January and June 2018, the small twin-island country imported over 15 million barrels of crude oil from the [Petrotrin] refinery. Of that, 40% of the crude oil imports came from Russia, 29% from Colombia, 22% from Gabon, 8% from Canada and 1% from Barbados, announced Trinidad and Tobago’s Energy Chamber in a twitter post.
Caribbean Economist Marla Dukharan commented on the situation in the following twitter post.
(MEEI, 24.Aug.2018) — The Ministry of Energy and Energy Industries (MEEI) has been monitoring the impacts of the 6.9 magnitude earthquake which occurred on Tuesday 21st August, 2018 at 5:31 p.m. that reportedly caused some property damage across the country.
Reports from the energy sector companies have, so far, indicated that there have been no visible structural damage to offshore and onshore infrastructure, although assessments are currently ongoing.
Some companies, such has Shell, opted to shut-in offshore facilities to conduct such assessments.
In particular, with respect to Trinmar, some offshore installations have been minimally impacted, the most serious being structural damage to the Block Station Bridge on Platform 4 in the Main Soldado Field. A team of Construction Engineering personnel has since examined the damage with the aim of developing measures to rectify the situation. Plans for corrective measures to restore workmen facilities and other general utilities are also being finalized.
At the Petrotrin Refinery, there have been no reported disruptions, save and except impacts to the loading arm for loading vessels with petroleum products. As such, there is expected to be delays in loading vessels for the time being.
There have been reported impacts to office buildings in Port of Spain such as Albion Plaza, Shell House, NPMC Sea Lots, and Atlantic.
NP has assured that there is an adequate and available supply of fuel at its service stations.
The National Gas Company (NGC) has indicated that there was no damage to its facilities and infrastructure. Atlantic LNG’s facilities and infrastructure at Point Fortin were not affected and continue to produce.
Further, there have been no reported damage to any of the following organisations/facilities:
Petrochemical Plants
— Methanol Holdings Trinidad Ltd
— Point Lisas Nitrogen Ltd
— Yara & TRINGEN
— Caribbean Nitrogen Company & N2000
Natural Gas Liquids Facilities
— Phoenix Park Gas Processors Ltd Power Generation
— Trinity Power Ltd
— PowerGen
— Trinidad Generation Unlimited
The Ministry is awaiting responses from other stakeholders. As assessments continue the public will be advised on any further developments accordingly.
(Trinidad and Tobago Newsday, Carla Bridglal, 21.Aug.2018) – After nearly two years of negotiations between this country and Venezuela the deal that will allow TT to process gas from the Dragon gas field is expected to be finalised tomorrow.
A release from the Office of the Prime Minister (OPM) said the agreement on the final terms for the development of the across the border gas from Venezuela’s Dragon gas field will be signed tomorrow by representatives of the National Gas Company, Venezuela’s state oil company, PDVSA, and Shell, the multinational energy giant with the rights to drill the Dragon field.
OPM said A “high-level Venezuelan delegation” will also participate, along with representatives of the TT Government, to witness this “historic event.”
In late June, Stuart Young, then a Minister of State in the Officer of the Prime Minister, said while discussions were almost complete, price was the main sticking point.
In December 2016, Prime Minister Dr Keith Rowley had visited Venezuela, and along with that country’s President, Nicolas Maduro, signed an agreement that put the plan in motion for TT to process Dragon’s gas.
First gas then was estimated by 2020; that timeline is still on track. Young had given reporters a timeline of 18 months to two years to get first gas here—providing the deal is signed soon.
A special purpose vehicle between multinational energy giant Shell and the National Gas Company (NGC) has been created to lay down the infrastructure; Shell’s pipelines, including those in the North Coast Marine Acreage will be used to transport Dragon’s gas to the Hibiscus platform off the north-west coast of Trinidad and only 18 kilometres away from the gas field.
Hibiscus is jointly owned by the TT government and Shell. The first tranche of Dragon’s production will yield about 150 million standard cubic feet of gas per day (mmscfd), or 26,505 barrel of oil equivalent per day (boed). For comparison,
Petrotrin produces 43,000 barrels of oil per day and 130 mmscfd; bpTT’s Juniper well, which came on stream in the latter half of 2017, produces about 590 mmscfd.
The Dragon field is part of the Mariscal Sucre natural gas complex off the Caribbean coast of Venezuela, north west of Trinidad. That Dragon is just one of the fields in a total acreage reserve of 14.7 trillion cubic feet of gas. Dragon alone contains 2.4 tcf.
(Energy Analytics Institute, Aaron Simonsky, 20.Aug.2018) – Payments by major oil and gas companies to the government of the twin-island nation of Trinidad and Tobago totaled $114.7 billion during 2010-2016.
That’s according to figures posted by Strategic Energy Advisor Kevin Ramnarine, who is also the Former Energy Minster of Trinidad and Tobago.
Ramnarine provided the data in a post on LinkedIn.
The payment amounts by major companies to the Trinidad and Tobago government by company follow:
(Trinidad and Tobago Newsday, Yvonne Webb, 10.Aug.2018) – State-owned oil company Petrotrin said a message circulating on social media that the company is on strike is not true.
The message which started circulating on WhatsApp and Facebook, from Tuesday evening, stated that Petrotrin is on strike and workers are blocking gas tankers, from leaving the Petrotrin compound.
The messenger advised drivers to fill their gas tanks soon as possible. Petrotrin said the message has no truth and may be meant to panic the public. Officials said they did not know from where the mischief originated or why. Petrotrin speculated it could have been misconstrued after a meeting of the representing Oilfield Workers Trade Union (OWTU) meeting with workers outside the Pointe-a-Pierre compound on Monday evening.
At the meeting, OWTU’s president Ancel Roget told a large gathering of oil workers that their jobs were on the line. He told them they will be heading to the Prime Minister’s official residence at La Fantasie, St Ann’s on August 26, “to pray and parang.”
The union as part of the Joint Trade Union Movement, is also gearing up for a day of rest and reflection on September 7, the third anniversary of the People’s National Movement victory at the polls, to demonstrate its disappoint ment with the present administration.
Education and research officer Ozzi Warwick said the turnout on Tuesday was large and agreed this could have caused a misunderstanding of what was going on with the oil workers.
However, he confirmed, “workers are not on strike. The union has not served any strike notice to Petrotrin. The union is not aware of any worker blocking any tanker from leaving the compound. This is not true.”
(Energy Analytics Institute, Ian Silverman, 31.Jul.2018) – That’s according to reports in a local newspaper.
“The refinery at PetroTrin has a capacity of 140,000 barrels of oil per day (bopd); the company produces about 42,000 bopd – a shortfall of about 100,000 bopd, which must then be imported,” reported the daily newspaper Trinidad and Tobago Newsday.
(The Sterling Report, Yanique Leiba-Ebanks, 29.Jul.2018) – Petroleum Company of Trinidad and Tobago Ltd (affectionately known as Petrotrin) is the state-owned oil company in Trinidad and Tobago. Its crude oilfields are located across the south-western peninsula of Trinidad, off the east coast of Trinidad, and in Point Fortin. The country’s economy primarily emphasises oil and petrochemicals, with oil contributing 40 per cent of GDP.
This is what contributed to Trinidad’s enormous wealth as measured by its Net International Reserves which stand at 9.4 months of imports (Dec. 2017) vs. 19.8 weeks for Jamaica (June 2018).
This also led to the country having “A” rated debt as compared to single “B” for Jamaica.
All this changed when oil prices started to decline and their debt was downgraded to BBB+ which is still investment grade, but after further deterioration of the economy, S&P moved its outlook to negative in April.
WHY DO WE CARE ABOUT PETROTRIN?
Petrotrin issued a US$850-million bond that matures in August 2019. While the company has issued other bonds, this was the most attractive to investors. The bond is/was one of the most popular bonds in the market.
The reasons were simple: firstly, everyone in Jamaica was familiar with Trinidad, secondly, the bond has a very short maturity — it matures in 2019, and thirdly, the coupon rate is fixed at 9.75 per cent.
In many ways it was a no-brainer, and given the importance of oil to Trinidad, it was assumed that it was implicitly guaranteed by the Government.
SO WHAT WENT WRONG?
Investors became jittery when the financials showed that the company recorded a massive loss of TT$2.2 billion in 2017. According to a Moody’s report, the cash flow (as at September 2017) was woefully inadequate for repaying the debt maturing in 2019.
The updated figure shown in the financials as at June 2018 shows approximately US$200 million of cash against total debt of US$1.728 billion and a current ratio that is much less than one.
Furthermore, it was announced that Petrotrin was going to split operations and reorganise in February 2018. This was against the backdrop of a deteriorating economy in Trinidad where real GDP growth contracted by 6.0 per cent in 2016 and 2.6 per cent in 2017.
Real GDP growth (Annual percent change) 2014 2015 2016 2017 2018
Trinidad and Tobago -0.3% 1.5% -6.0% -2.6% 0.2%
Source:IMF
LATEST DEVELOPMENTS
Petrotrin has recorded an after-tax profit of TT$85.6 million for the quarter ended June 30, 2018. This compared to a loss of TT$517.5 million in the previous quarter.
Petrotrin was given the green light to terminate contract with A&V Oil amidst a scandal where the company paid $100 million to A&V Drilling, for oil which was not supplied. In addition, findings showed that the reservoir was incapable of producing the volumes in question.
IMF stated that oil output is improving due to exploration and refinery upgrades by Petrotrin. It added that Trinidad & Tobago’s growth may be flat or somewhat negative this year but the economy “may be starting to turn a corner as a result of a projected recovery” in the energy sector.
Local and global banks are already in talks with Petrotrin about restructuring the bonds and general liability management.
As a result investors are concerned about the refinancing options available to Petrotrin, especially in light of a recent announcement that the Government will not be guaranteeing any new debt and low cash flows. However, as listed under the latest developments, talks are underway regarding the restructuring of the bonds.
In addition, Petrotrin is a significant contributor to Trinidad and Tobago’s GDP and as such, it would be financial suicide to let it fail, but if you hold this bond, keep a track of the developments and act accordingly.
Yanique Leiba-Ebanks, CFA, FRM is the AVP, Pensions & Portfolio Investments at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at www.sterling.com.jm Feedback: If you wish to have Sterling address your investment questions in upcoming articles, e-mail us at: info@sterlingasset.net.jm
(Trinidad and Tobago Newsday, Carla Bridglal, 26.Jul.2018) – The board of Petrotrin has outlined a plan to reorganise and restructure the state oil company in a bid to make it more competitive and become a viable asset to the people of Trinidad and Tobago. The unions, including the most vocal majority Oilfield Workers’ Trade Union (OWTU) agree that this is the best strategy to move the company into a sustainable future. Yet nearly four months after the board started the restructuring process, and three months after both parties signed a memorandum of agreement that this is the path they must take, together, the process has reached a stalemate. It’s a strange stasis — both parties agree on the fundamental challenges and solutions, but neither is willing to concede to the other in an effort to get the ball rolling on a mutually beneficial outcome.
The union believes the board is reneging on its promise to meet with them. The board insists that the union has not adequately put forward a plan to discuss. The union insists it wants the company divided into four subsets, each with a division head to oversee operations — land exploration, marine exploration, refining and marketing, and the hospital. The board has already split the company into two — upstream (exploration and production) and downstream (refining and marketing). And as far as they are concerned, the union is squabbling over superficial nomenclature. The union, for its part, believes the board lacks the proper expertise to run an oil company.
The board still appears to be going ahead with its 18-month turnaround plan, but if it is to make any material changes to things like staffing, for example, it will need union buy-in.
And while it doesn’t seem like the Board and the union have made any inroads recently, at least for a formal meeting, there was a clash of the titans of sorts, when chairman of Petrotrin, Wilfred Espinet, and OWTU president general Ancel Roget agreed to sit on a panel moderated by journalist and director of the Lloyd Best Institute, Sunity Maharaj last Wednesday, in front of a packed auditorium, filled mostly with a boisterous union crowd, at the Government Campus Plaza Auditorium in Port of Spain.
“Let me make it abundantly clear what they (the unions) are trying to do is make noise of things that are not really important. The important thing is to make the company viable. It has to be competitive and to do that it has to focus on operations as a clear part of the strategy,” Espinet said.
It’s the Board’s mandate to restructure the company so it can become profitable and sustainable, he said. Petrotrin needs to operate like an international company, and think beyond TT oil, he said. Oil is a commodity and to be able to keep operating, the company needs to be able to sell that oil.
The refinery at Petrotrin has a capacity of 140,000 barrels of oil per day (bopd); the company produces about 42,000 bopd — a shortfall of about 100,000 bopd, which must then be imported.
The OWTU agrees. In fact, one of Roget’s major points was that the company needed to be more efficient in hiring skilled personnel to operate and manage the company’s exploration and production activities. There are some sectors, like human resources that are overstaffed, he said, while several technical sections, like marine have several vacancies; the refinery alone has over 100 vacancies for operators, he said. If wages are a significant part of the company’s expenses, it’s only because the shortage of experienced staff meant people had to pull double and even triple shifts.
“We have an overburdened top management structure; the structure we have proposed does not carry all of that ‘fat’ of management because it is not necessary. What is necessary is a management that is focused and accountable,” Roget said.
Time is of the essence, he said, especially if the company is to take advantage of rising commodity prices, and the OWTU wants to begin a process that will move the company forward, with competent management void of politics.
Both men stubbornly stuck to their message, and sometimes tiresome rhetoric. Espinet reiterated the mandate of the Board to go ahead with the reorder regardless, and Roget made veiled threats of “taking a particular course of action to force them to do what they need to do.”
Yet despite the similarities of their arguments, both parties still can’t seem to agree, much to the bemusement of observers like the third panelist, energy consultant Anthony Paul.
“It’s remarkable to me how much convergence I’m hearing and yet we are focusing on the divergence,” Paul said. So while the OWTU and the Board could both agree that governance structures and efficiency in production need to be improved, the one thing that seems to be missing from the equation is a shift in culture. “We know the challenges of getting the right people and competencies; putting in place systems of governance and management for operations. There may be disagreement with numbers and those are easy to fix. But there’s an elephant in the room that is not being addressed yet and I’ll put it out there. It’s about culture. An organisation needs a culture to guide the way they behave and their ethics,” he said, adding that both parties needed to listen to and learn from each other. Petrotrin was facing a precipice, he said, and neither party would fare well if the company went over and for that not to happen, things need to change.
(Trinidad Guardian, 19.Jul.2018) – Petrotrin chairman Wilfred Espinet said cost reduction initiatives undertaken by the interim executive team installed at the energy company resulted in a second quarter profit after tax of $85.6 million.
“The installation of a new executive team from the beginning of March and the implementation of the strategies developed together with experts’ advice produced noticeable results in reducing cost and cutting waste,” he said.
“The mandate given to the board, to make Petrotrin a sustainable profitable entity, through proper governance and management of a competitive business, is planned in three phases: Survive, Thrive and Grow.
For the past three months, the focus was on the first phase, “Survive”. Discretionary spending that was not adding tangible benefits to the operations was reduced and we concentrated on cutting waste.”
Espinet said results for the period ended June 30 followed a loss of $517.5 million for the quarter ended March 31.
Recently published results showed a decrease in the state owned company’s operating costs of $92.4 million when compared to the same quarter last year and a decrease of $41.9 million when compared to the quarter ending March 31.
In addition, Petrotrin earned $18 billion in revenue for the nine months ending June 30 —a 21.2 per cent increase with the corresponding period in 2017, which Espinet was due to higher oil prices.
He said in a statement accompanying the financial results: “Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) increased to $1,767.4 million, or 80 per cent more than the 2017 result for the comparable period. Despite the enhanced operating results, the Group incurred a loss before tax of $242.8 million which translated to a loss after tax of $500.7 million,” the chairman said.
Petrotrin’s asset base decreased to $31.6 billion compared with $37.4 billion for the corresponding period in 2017.
Espinet explained: “This was primarily because of the write down of our fixed asset balance for an impaired asset and the reclassification of previously capitalised borrowing cost on the ULSD project to expense.
Total debt to equity and current ratios as at June 30, 2018, were 3.49 and 0.52 respectively, compared to ratios of 1.07 and 0.41 as at June 30, 2017.
“Shareholder’s equity of $3.3 billion as at June 30, 2018, represented a decrease of 69.73 per cent when compared with the period ending June 30, 2017.”
The chairman said Petrotrin is embarking on the next phase of its restructuring programme, Thrive, where the focus will be on “designing the organization built for purpose around its operational units.”
He added: “As we embark on this phase, we will consult with all stakeholders to garner support for what is undoubtedly a monumental exercise that will have a profound impact on all the citizenry of Trinidad and Tobago.
“The board is encouraged by the level of support and extraordinary efforts from employees and is committed to finding a sustainable solution that is equitable to all stakeholders.”
(LoopTT, 9.Jul.2018) – Cleanup operations continue following a leak at the Couva Marine 2 Well.
Personnel with the Energy Ministry and Petrotrin’s Incident Command team have been monitoring the leaking wellhead and assessing the nature and impact of the hydrocarbon emissions.
The leak, which was initially reported last Wednesday, is a combination of gas and light oil.
The incident command team met on Sunday to manage the impacts of the incident and to safely bring the matter to a safe conclusion.
The focus of the Incident Command Team over the past few days has been on analysing available data on the wells in the area and the development of strategies to bring the well under control. In doing so, the safety of personnel has been the number one priority.
A number of possible scenarios, including the drilling of a relief well, have been developed and proposed solutions are being evaluated.
The primary considerations in evaluating the various strategies have been the health and safety of personnel and to mitigate further negative impact on the environment.
In this regard, assistance has been sought from the multinational energy companies operating here, as well as foreign entities with which Petrotrin is affiliated, who have experience with the management of oil spills and well control incidents.
As of Sunday, an orange substance, which appears to be emulsified oil, appeared on Carrat Shed and Coffee beaches.
Containment booms with skimmers are being deployed in the area of the leaking well and cleanup crews were mobilised to effect remedial work in any affected areas.
Visits were made to the Carrat Shed and Coffee beaches to determine potential impact.
The Director of Maritime Services has issued an advisory to marine craft operators that “extreme caution is advised and requesting that they maintain a distance of 5 nautical miles”.
This advisory will remain in effect until the situation is resolved. Both Petrotrin and the Coast Guard will maintain patrols in the area and aerial and marine surveillance exercises will continue.
The Ministry urges fisherfolk and other marine craft operators to observe the maritime advisory and to stay clear of the area to avoid injury and also to allow those involved in containment and control activities to do so without impediment.
The Ministry assures that all necessary measures are being taken to ensure that a solution is obtained to repair the leak, and will continue to provide updates as further information becomes available.
(Prensa Latina, 9.Jul.2018) – A fuel leak in the Couva platform, in the Gulf of Paria, Trinidad and Tobago, continues today after four days of being initiated, before which the government requests international assistance.
Since last Thursday, the well has been pouring hydrocarbons in this area, shared with Venezuela, which represents a major environmental risk for the region, local sources reported.
Initially the country requested help from the Petrotrin state refinery to close the well, however, the company does not have the technology required for such action.
For this reason, the government decided to ask for international help to put an end to this spill that, according to official sources, could be caused by a recent earthquake that exploded the head of the well, which began to pour from the surface of the seabed at about 12 meters deep.
Meanwhile, Secretary of Fishermen and Friends of the Sea, Gary Aboud, has called on mariners to steer clear of the site as it is volatile and highly flammable.
It is believed that the oil spill was triggered by a recent earthquake that caused the head of the well to pop, spewing the emissions, up from the surface of the seabed, about 40 feet below.
(Trinidad Express, Aleem Khan, 4.Jul.2019) – High oil prices on their own appear to be good neither for Trinidad and Tobago nor Barbados, according to statements by an International Monetary Fund (IMF) senior economist, and Petroleum Company of Trinidad and Tobago Limited (Petrotrin) Chairman Wilfred Espinet, over the last week.
On June 27, for the second time, Espinet pointed out that Petrotrin is a net consumer of foreign exchange as it pays more for the crude oil than it earns from selling crude products. Espinet first raised the issue in Couva on May 4 while addressing an agglomeration of chambers of commerce.
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(Stabroek News, 3.Jun.2018) – The creation of a National Oil Company (NOC) will be “a disaster” for this country warns former Government Advisor on Petroleum, Dr. Jan Mangal who says that Guyana should learn from the experiences of sister Caribbean countries, Trinidad and Tobago and Jamaica.
However, the government says that it has been advised by a number of international organizations, including Chatham House of the UK, that a NOC would be beneficial to this country.
“Here we go again with national oil companies in the Caribbean. Both Petrotrin (Trinidad) and Petrojam (Jamaica) are in the news because of corruption,” Mangal said as he urged Guyanese to not support a call for the establishment of one here.
“Guyanese: Please remember these two nations have much larger and better run economies than ours, and much stronger institutions. Hence imagine what will happen in Guyana, with our weaker capacity, if elements in our government and their private sector cohorts are allowed to create a national oil company with access to our oil. It will be a disaster,” he added, pointing to recent scandals in Jamaica and neighbouring Trinidad and Tobago.
Recently, Jamaica’s Petrojam, which supplies a range of domestic, transportation and industrial petroleum products in that country, was hit with a number of allegations of corruption and victimisation. It saw questions surrounding the use of public funds snowballing in recent weeks during which there has been an outcry for Prime Minister Andrew Holness to act, the Jamaica Gleaner newspaper has reported.
Over in Trinidad and Tobago, a forensic audit report by the Canada-based Kroll Consulting Canada found that the state-owned Petrotrin paid a company, A&V, for oil produced between January and June of 2017, which it did not receive. In September, Petrotrin announced that it had launched an investigation into the reports of inconsistencies in the volumes reported from its exploration and production fields.
Mangal, whose contract as an Advisor to President David Granger ended in March of this year, has said that he will, “Outline the mechanism used by some oil companies and their local friends (in government and in the private sector) to defraud needy people in countries around the world, like in Guyana.”
But government says that although the establishment of a NOC is not in its immediate plans, there will be one formed sometime in the future and that it has been advised by several international organizations that it was the way to go.
“Government has been advised by several international organizations, foremost amongst which is Chatham House though Dr. Valerie Marcel, that the NOC is the direction we would be headed. We believe we will get there one day but it is not a matter that is on our list of immediate,” Minister of Natural Resources Raphael Trotman told Stabroek News when contacted.
Further, he added, “The rationale for a NOC is always that countries get a greater share of the revenue and at the same time gain valuable experience. We are keeping the idea alive but there is no discussion when.”
Other experts have also said that they believe that an NOC, if properly equipped with needed regulations and insulated from politics, would serve beneficially to the people of Guyana.
“State controlled oil major, is an absolute must! And the sooner, the better. NOCs control approximately 75% of the world’s oil market and 90% of the world’s oil reserves, evidence that having NOCs have become a normalcy. The advantages of an NOC are unlimited. In recent years, NOCs have developed global reach and influence,” a former United States Department of Energy Manager, Dr. Vincent Adams had told this newspaper, in an interview earlier this year.
“With the proper contract arrangement with the NOC representing the Government’s interest, the arrangement allows for personnel from the NOC working alongside their IOC counterparts and `learning by doing’, ultimately acquiring the ability to operate both within its own jurisdiction and abroad; thus, bringing revenues back to their home countries,” he added.
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Most significantly, Adams believes, is that NOCs provide a vehicle for state participation and the ability to drive greater local content and capacity building in terms of directing the purchase of local goods and services. “The lessons learned from bauxite was that we were not ready for nationalization, since we failed to build the capacity to manage on our own upon nationalization. An NOC will give us that capability and strengthen our position in negotiations,” he asserted.
Using his country’s experience as a model, former Minister of Energy of Trinidad and Tobago, Kevin Ramnarine had also this year advised on an NOC but stressed that it must be insulated from political interference.
“This company’s board and management must be insulated from politics as is the case with Statoil (Norway) because if it is not, you will get a call to hire somebody’s nephew,” Ramnarine said.
“I would recommend that whatever state companies you form, it doesn’t have to be all, put part of the equity on the stock exchange,” he added.
He pointed to Norway’s Statoil and Russia’s Gazprom among other companies saying that Guyana can earn needed revenue through the establishment of such companies.
Pointing to the detriment of a state company influenced by politicians, as witnessed in his home country, he emphasized that before such a decision be taken here the companies must be removed from politics. “There is also the whole issue of political influence in state enterprises in Trinidad. When we look at the Norwegian company Statoil, their Board of Directors are independent, and for example the workers of Statoil get to vote on who should be a director…you begin to dilute the political influence in the company,” he posited.
The former People’s Partnership Energy Minister recommended that Guyana set up three state-owned companies. “I am going to recommend that Guyana sets up three state enterprises, one to participate in the upstream, alongside with companies like Exxon, one to focus on infrastructural development and one to focus on marketing of products… our new production-sharing contracts in Trinidad allow the ministry to market their own hydrocarbons,” he said.
(Trinidad and Tobago Newsday, Julien Neaves, 27.Jun.2018) – Guyana and its eight oil finds can be a game changer for state-owned Petrotrin and TT, says National Gas Company (NGC) Chairman Gerry Brooks.
He was speaking during a presentation at the Chamber of Industry and Commerce’s Business Outlook breakfast meeting held on Wednesday at the Chamber’s offices, Westmoorings.
Brooks said Guyana’s eight finds equated to 500,000 barrels of oil and 120,000 by 2018.
He added the Guyanese were “shopping” in Mexico and had help from the International Monetary Fund.
“We have to go there in a very professional manner, a very engaging manner, a very thoughtful manner.”
Brooks said “everybody” was in Guyana and there was excellent specialised oilfield services including from Repsol.
“There is a lot of expertise. There is a lot of opportunity for Trinidad and Tobago.”
He said NGC was leading the charge and the expectation was that there would be a mutual cooperation agreement which will find a framework for the countries to work together.
“We will work closely with the State companies (in Guyana).”
(Trinidad and Tobago’s Newsday, Richardson Dhalai, 10.May.2018) — Trinidad and Tobago has been involved in the petroleum sector for over 100 years and is the largest oil and natural gas producer in the Caribbean.
However, by the early 1990s its hydrocarbon sector moved from being primarily an oil-based economy to a mostly natural gas-based sector with the construction of the LNG trains at Point Fortin.
The energy sector accounts for around 32 per cent of the country’s gross domestic product (GDP).
In Finance Minister Colm Imbert’s October 2, 2017 budget he said, “Despite the challenges posed by the low price environment, the energy sector faces a very positive outlook based on a number of new gas projects which are scheduled to start production over the next two to three years.”
He said a new tax regime would also be introduced to provide incentives for increased exploration and production that should set the stage for increased oil and gas output.
Oil production for the first five months of 2017 had levelled off at 73,500 barrels per day (bpd), the minister had said, as compared with 73,800 bpd for the corresponding period of 2016, although this amount was well below the rate of 100,851 bpd in May 2010.
The 2018 budget was pegged on an oil price of US$52 and a gas price of US$2.75 per mmbtu.
On May 8, Bloomberg was reporting that Brent crude, the main international benchmark, was trading at US$73.44 while WTI crude, TT’s benchmark, was trading at US$68.29. Natural gas was down slightly to US$2.72 mmbtu.
Five months into the 2018 fiscal year, Energy Minister Franklin Khan presented the first public account of the energy sector at the Hyatt Regency, Port of Spain on March 14. His presentation was themed Our Oil, Our Gas, Our Future.
He said TT continued to be an important oil and gas producing hub and cited the major multinational energy giants which continued to maintain a presence in the country, such as bpTT, Shell, BHP, EOG Resources and Perenco.
He said the upstream companies had committed to spend over US$10 billion in exploration and development activities over the next five years, with the effects already being felt as of December 2017. Natural gas production, which had fallen to 3.2 bcf/d per day had reached a daily production of 3.8 bcf/d.
The US$10 billion is expected to be spent on capital goods such as rigs, sub-sea equipment, seismic equipment, platforms, turbines and pipes with the exception of platforms.
The investments include the BP Angelin project, which is due to come on-stream in 2019 and is expected to provide in excess of 550 mmscf/d.
The other projects include De Novo energy exploration of Block 1 (a) off Trinidad’s west coast; the East Coast and North East Coast development projects of Shell, such are Starfish, Dolphin, Dolphin Deep, Endeavour and Bounty fields, and the Cassra and Orchid on the North East Coast.
BHP has also announced a deep-water natural gas discovery in Block 5 on the East Coast, with preliminary assessments indicating between five to ten tcf of gas with a high probability of oil.
Approximately nine exploration wells are expected to be drilled, including three deep-water wells.
Khan said TT’s gas reserves, based on the last Scott Reserves audit, were 22.7 tcf and gas resources were estimated at 43.7 tcf.
He said the audit information did not include the gas finds of the BHP discovery in Block 5 or the BP Savannah and Macadamia fields of 2 tcf.
“Our gas reserves are consumed at the rate currently estimated at 3.5bcf/d or 1.2 to 1.4 tcf per annum,” he said, adding this was divided between LNG production (60 per cent) and the downstream industries including power generation, which consumed 40 per cent of the gas supply.
Currently 99.8 per cent of power generation is fuelled by natural gas and 0.2 per cent by diesel.
He said data from the Ministry of Energy and Energy Industries and the Ministry of Finance reveal that taxes and royalties collected from the sector have been on a downward trend.
He said energy sector revenue, which peaked at $28 billion in 2008, fell to $1 billion in 2017 and cited falling energy prices as playing a part for the reduced revenue.
According to the Ministry of Energy, TT’s 2017 crude oil production stood at 71,824 bpd while its refinery output at Pointe-a-Pierre is 135,000 bpd.
The country’s proven oil reserves is 199.54 million barrels, while probable reserves are 85.46 million barrels and possible reserves are 124.77 million barrels.
Natural gas production is currently 3.4 bcf/d with proven reserves standing at 43.45 million barrels; probable reserves at 24.39 million barrels and possible reserves at 30.83 million barrels.
Meanwhile, State-owned oil company Petrotrin has identified the South West Soldado Field Development as one of the most immediate opportunities for increasing indigenous crude oil production.
The project, which is divided into three phases, is currently in its first phase of execution, which includes the installation of a temporary compression and production facility, drilling of eight new wells and the reactivation and workover of inactive wells.
The first phase also includes the installation of a new gas sales pipeline; installation of additional infrastructure and submarine pipelines to accommodate the increased production of fluids (inclusive of gas lifting capability for the reactivated wells) and the installation of replacement main oil bulk line from RP10 to RP1.
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(Energy Analytics Institute, Pietro D. Pitts, 22.May.2017) – In recent weeks PDVSA has reported at least three accidents: Petrotrin oil spill in Sucre state and incidents at its Cardon and Curaçao refineries.
The writing on the wall continues to point to a cash-strapped state oil company with an inability to make investments, retain top talent, organically grow oil production, and let alone take on the leadership role in Venezuela’s upstream, downstream, or midstream sectors. The stand-alone events at PDVSA’s Cardon and Curaçao refineries demonstrate conditions at the company’s refineries continue to deteriorate as expected due to a lack of investments, upgrades and maintenance by the state oil entity.
(Energy Analytics Institute, Ian Silverman, 21.May.2017) – PDVSA reiterated in a twitter post that once the authorities from Trinidad and Tobago notified the company of the Petrotrin oil spill that it activated a local contingency plan.
(Energy Analytics Institute, Piero Stewart, 20.May.2017) – PDVSA announced that clean-up activities continue along the Venezuelan coast off Sucre state, related to the spill of crude oil at the Pointe-à-Pierre refinery in Trinidad and Tobago, reported the state oil co. in an official statement.
After reviewing clean-up activities along the Paria Peninsula, PDVSA President Eulogio Del Pino announced Venezuela had removed 80% of the spill fuel.
“We flew over Cocal, Pata, and Puerto Hierro beaches as well as Pato Island and observed that the clean-up process is above 80%,” said Del Pino. “The remaining impact is minimum.” We have removed 80% of the fuel from the spill that had reached La Caracola beach in Margarita Island, said Del Pino. Oil also reached Los Roques; however, the impact was minimum, PDVSA reported.
PDVSA is awaiting a visit from Petrotrin to discuss the oil spill. “Petrotrin [officials] will visit all the affected areas,” said Del Pino.
(Energy Analytics Institute, Aaron Simonsky, 13.May.2017) – PDVSA has intensified contingency measures to counter the ill effects of an oil spill that occurred last week in neighboring Trinidad and Tobago.
Oil from the spill has reached the Venezuelan eastern coast including the Bay of Morro de Puerto Santo and Cipara beach in the Arismendi municipal in Sucre state as well as other coastal areas such as La Caracola in Valdez beach, Punta Ballena and El Ángel, all located in Nueva Esparta state, announced PDVSA in an official statement.
PDVSA’s Zone 5 Contingency Plan was activated on April 25, 2017 to counter the leakage of fuel oil from Petrotrin’s Pointe-à-Pierre Refinery located in Trinidad. PDVSA personnel continue to conduct maritime and aerial inspections along the areas affected by the spill and primarily of the Paria Peninsula in Sucre state and the southern area of Nueva Esparta state. PDVSA did not provide estimates as to how much oil may have reached Venezuelan coastal regions nor did it provide details of the potential environmental impact of the leakage.
(LGO Energy plc, 4.Jan.2017) – LGO Energy plc provided a further update on its plans to recommence production drilling at the Goudron Field in Trinidad following its announcement of December 21, 2016.
The company’s local operating subsidiary, Goudron E&P Limited (GEPL), received approval from the Petroleum Company of Trinidad and Tobago (Petrotrin) and the Ministry of Energy and Energy Industries (MEEI) for the first of its planned Mayaro Sandstone infill wells, currently designated H18E G11(5). That well will be drilled vertically to a total depth of 1,250 feet and is expected to intersect the Mayaro Sandstone oil pay between 650 and 1,050 feet.
GEPL has awarded a drilling contract to Trinidad specialist drilling contractor Sadhna Petroleum Services Company Limited for the drilling for two firm and a number of optional wells on a turnkey drilling basis using a small footprint conventional (rotary table) drilling rig. Site preparation will be conducted by Sadhna and will commence as soon as practical, after which rig mobilisation and drilling are anticipated to commence without delay. Individual wells are expected to take about 14 days to drill and complete for immediate production.
LGO has engaged Bedrock Drilling Limited, a UK based specialist drilling engineering company, to provide drilling engineering supervisory support to the drilling program. Bedrock will provide a site supervisory team during drilling and additional engineering and advisory support to GEPL.
Permission to drill the second Mayaro Sandstone infill well in the program, designated H18E N4, was sought from Petrotrin and the MEEI in December 2016 and approval is expected to be received shortly after which site preparation is expected to commence immediately following the site work at H18E G11(5).
GEPL has outline approval for up to 45 new wells in the Goudron Field and a program of up to 70 infill production wells to the field-wide Mayaro Sandstone oil pay is contemplated, commencing with the current initial well program which will be expanded based on results and the availability of funding.
The information contained in this announcement has been reviewed and approved by Neil Ritson, Chief Executive Officer and Director for LGO Energy plc, who has over 38 years of relevant experience in the oil industry. Mr. Ritson is a member of the Society of Petroleum Engineers (SPE), an Active Member of the American Association of Petroleum Geologists (AAPG) and is a Fellow of the Geological Society of London (BGS).
