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Fake oil fiasco troubles Khan

Published: 
Tuesday, September 12, 2017

Energy Minister Franklin Khan said yesterday he was “troubled” that cash-strapped state-owned Petrotrin had paid for hundreds of barrels of crude oil it did not receive.

Khan made the comment at a press conference at his Port-of-Spain office, one day after Opposition Leader Kamla Persad-Bissessar raised the issue.

Following a UNC congress no Sunday, Persad-Bissessar said according to a Petrotrin internal audit report, there was a significant difference between the quantity of oil it was purchasing from operators A and V Oil and Gas Drilling managed by Haniff Baksh and the amount it had received from its Pointe-a Pierre refinery. She said the audit team found that Petrotrin was paying the operator for oil it did not produce or “fake oil” since October 2016. It was estimated that for the period January to June of 2017, Petrotrin would have over paid the company US$11.5 million which was in excess of TT$80 million.

Khan said while he was troubled Petrotrin paid for oil it never got, Persad-Bissessar’s attempt to implicate him, Prime Minister Dr Keith Rowley and the People’s National Movement in the matter was “unfounded and ill-advised.”

Asked if PNM had received money from Baksh or his company, Khan said, “Not to my knowledge.”

Asked whether Baksh is a friend of Rowley, which Persad-Bissessar had alluded to, Khan said he could not speak on behalf of the PM. Asked if Baksh was his friend, Khan said, “I know him as an operator in Petrotrin. I worked at Petrotrin. And he (Baksh) has been a contractor in the energy sector for a while, but I would not say we are friends.”

He also confirmed that Baksh’s daughter Allyson Baksh is a PNM senator. Khan said he also had no knowledge the previous board resigned based on the findings of the draft audit.

If the matter comes down to over claiming of oil, Khan said Petrotrin will have to seek legal advice. He said over the years there had been similar complaints with other operators leading to several investigations but nothing was proven. But he said the audit showed Petrotrin needed to “tighten up” on its systems of oil transfer, the accurate measurement of oil produced and shipped and leakages.

Khan admitted to praising the operator few weeks ago because they were recording significant increases in their production.

“At that point in time I thought it was reflective of a system that was working. I make no apologies for that as line minister, I deal with the facts that are before me.”

He added: “I want to give the country the assurance that we would not sweep it under the carpet and it is fully being investigated.”

Khan said the company was granted an incremental production service contract by Petrotrin in 2009, but in January of 2017, Petrotrin commissioned an internal audit into the discovery that there was a “discrepancy between the quantity of oil the refinery was receiving and the quantity of oil that exploration and production claimed to be shipping.”

Following the audit, a draft report was received by the ministry on August 4 and a final report was completed at the end of August and submitted to Petrotrin’s management. Khan said report will be reviewed by an audit committee of the new board, who will make final recommendations on a way forward and what action was necessary. He said he expected the final report in a few days.

Board meets on issue

In a release issued yesterday, Petrotrin’s manager of corporate communications Gillian Friday confirmed the investigation was in progress.

She said it was focused on the volumes for fiscal 2017 and the Ministry of Energy had been informed. She said Petrotrin’s production fields are predominantly in south Trinidad and production from both land and marine was approximately 44,500 barrels daily, which represents more than half of its local crude oil production.

Friday said the matter was reviewed by the new board at a meeting with management yesterday and the board noted the institution of more robust internal controls while the investigations are continuing. In addition, Friday said management has been mandated to apprise the board on a regular basis of the progress of its activities to resolve the issue and ensure greater assurance of production volumes.