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Sudden drop in production at Petrotrin raises questions
A Cabinet note has shown that in August, when the so called “fake oil” scandal first broke, there was a sudden and massive drop in the amount of oil that A&V Oil and Gas was reporting as its daily production compared to June.
The Cabinet note, which Business and Money has obtained a copy of, showed that A&V Oil and Gas—the company at the centre of the controversy—production fell by more than 60 per cent from close to 5,000 bo/d to a mere 1,744 bo/d over a two-month period.
According to the Cabinet note, in June, companies operating in Petrotrin under incremental petroleum service contracts (IPSC) had an average daily production of 5,664 barrels of oil per day (bo/d) and that was reduced to a mere 2,175 bo/d by August, during the height of the internal investigations by Petrotrin.
In was on August 17, that a Petrotrin internal report raised concerns about the amount of oil that was received by the refinery from A&V Oil and Gas compared to what the company claimed it had produced and sent to the refinery.
By September 10, Opposition Leader Kamla Persad-Bissessar raised the issue alleging there was corruption at the state-owned company, calling it “fake oil” and seeking to link the Prime Minister and the wider government to the issue.
This led to the appointment of Kroll Consulting Canada Co, a Canadian-based intelligence agency with over 40 years’ experience working with governments, government agencies as well as public and private companies globally in the fields of investigations, intelligence, risk analysis, cyber security, data breach response and e-discovery.
Only on Tuesday, Petrotrin issued a media release in which it revealed that the forensic audit will not be ready for another week.
The company said, “Since beginning the assignment on October 3, Kroll has completed all of the onsite work and are now engaged in the final stages of electronic data analysis. The company now expects that Kroll will submit its report to the board by mid-November 2017.”
It noted that Kroll reports directly to the board’s audit committee with respect to all aspects of its investigation and its assignment includes: a forensic audit in relation to the internal audit report; verification of the facts in relation to the report; identification of any relevant parties/entities from the standpoints of accountability and culpability; and identification of any systemic inadequacies or shortcomings which may have contributed to the findings.
The Cabinet note sought to explain the fall in production saying it was due to the natural decline of wells. The note read, “Production was lower at Petrotrin IPSC due to a natural decline from new wells, in addition to being taken offline to convert to pump.”
The note also showed that in August, Petrotrin had major losses in its refinery with the company loosing US$4.65 for every barrel of crude it refined in August.
This works out to more than $4 million a day or more than $120 million in August.
The Cabinet note read, “Net margin decreased from US$4.20/bbl in July 2017 to US$-4.65/bbl in August due to high operating expenses.”
It noted that in August, refinery throughput decreased by 9,751 bpd or eight per cent to 129,276 bpd which was partially due to the unplanned shutdown of the No 2 Hydro Treating Unit as a result of a failure on the hydrogen plant compressor.
It added that refinery unit cost, inclusive of overheads, increased from US$5.42/bbl in July 2017 to US$5.90/bbl in August 2017 due to higher operating expenses combined with lower throughput.