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Petrotrin survival linked to plant coming onstream
If cash-strapped Petrotrin does not complete and commission its ultra-low sulphur diesel (ULSD) plant by 2021 at a cost of US$300 million, the oil company may have to close its doors.
This was part of the discussion that emerged from a Joint Select Committee on Energy Affairs, chaired by Colm Imbert, as employees of State-owned Petrotrin were yesterday grilled at the Parliament Building, Port-of-Spain.
In delivering a presentation on a way forward for Petrotrin, its chairman Wilfred Espinet admitted that the company had an 18 months transition period coming out of the Lashley report and five-year plan to help them become sustainable which would require substantial finances, while they were currently remodelling the way they operate.
Imbert pointed out to Espinet that Petrotrin’s debt to the Treasury was approaching $3 billion.
The committee also heard that Petrotrin’s upstream and downstream businesses have been functioning within the bottom of the fourth quarter of the industry.
Stating that this was a period of uncertainty, Espinet said they were going into changes of regulations that will impact on them “having to spend on the ultra-low sulphur (plant). If we don’t spend on it we are closing down Petrotrin.”
The ULSD plant is part of Petrotrin’s clean fuels upgrade programme and its continuing effort to improve profitability at the Pointe-a-Pierre based refinery.
Espinet said it was imperative that they get all its employees and lenders on board so they can continue to operate its refinery after 2020.
Imbert queried if the project was not completed if the refinery would become uncompetitive and obsolete.
Espinet said in 2020, the new regulations in terms of the sulphur content of diesel comes into force and without the plant, they would not be able to sustain the refinery as they would have to look for a market to sell its diesel at discounted prices.
He added that Petrotrin was not an efficient refiner and without the ULSD completed, this would result in the company losing more money.
Imbert questioned if Petrotrin did not complete the project in the next three years, if they would not be able to sell its diesel at competitive prices regionally and internationally.
“So the current production of the refinery would not be commercially viable except in unusual markets. So you are saying that in order for the refinery to continue as a going concern you have to do the ultra-low sulphur project?” Imbert asked.
Espinet said the cost to finish the project was US$300 million, which must be completed by 2021.
JSC member Gerald Ramdeen asked Petrotrin’s director Nigel Edwards what the projected cost of the ULSD plant was, and when construction started.
Edwards said the figure was US$112 million with construction beginning in 2009.
So far, Edwards said Petrotrin has injected US$421 million with another US$300 million needed.
Ramdeen stated that while this was a critical project for Petrotrin’s sustainability, its costs “had now ballooned to over US$700 million.”
Ramdeen said Petrotrin has been operating like a “runaway train,” stating that somebody has to be held accountable for this state of affairs.
The committee also heard that Petrotrin had not yet found a replacement for its outgoing president Fitzroy Harewood who submitted his resignation last November.
Harewood’s last working day is next Wednesday.
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