The Trinidad Government has agreed to a proposal from Patriotic Energies and Technologies Ltd, a company owned by the country’s Oilfield Workers Trade Union (OWTU), to restart the former state owned Petrotrin refinery.
In a series of announcements, the Government said that it was granting Patriotic a three-year moratorium on the US$700m purchase price and interest, and a further ten years to pay the US$700m it offered for the refinery. It said that Patriotic now has a month to present a ‘satisfactory and comprehensive’ work plan on how it intends to complete ten key deliverables that will bring the 160,000-bpd refinery back into operation.
According to the Republic’s Finance Minister, Colm Imbert, the company will now spend a “more realistic” US$500m to refurbish the refinery in the first year. Imbert said that he did not expect the refinery to have the same number of workers as Petrotrin.
Speaking to the media the minister said that some 77 bids were initially received which were narrowed down to 25 of which eight then submitted non-binding offers. When bids closed in August, final bidders were Beowulf Energy, a private US company, Klesch, a Swiss based group, and a local entity, Patriotic.
He said Cabinet decided on Patriotic since it had the most “reasonable” response and bid more than Klesch which offered nothing, and Beowulf which offered US$7.6m over fifteen years. He also told the media that it was Cabinet’s decision to defer Patriotic’s payment “as it would guarantee the refinery’s restart if it wasn’t burdened by the need to come up with that cash immediately” and meant that the company “could get on with the business of refurbishing and restarting”.
Noting that restarting the refinery was a high priority because of the contribution it made to the Republic’s GDP, he said that without the previous high level of debt servicing and overstaffing government believed the new operators would have a good chance of success.
Addressing media concerns that the refinery was going to a union whose members in the past had been blamed for Petrotrin’s failure, Imbert said that the union had been able to arrange to partner with one of the largest fuel traders in the world on marketing their product and were linked to well established financial institutions in terms of financiers. The details however of who is behind the union remains confidential. Imbert later said that a memorandum of understanding that Patriotic will sign with Trafigura, the Singapore-based commodity traders would only be for marketing. Trinidadian media reports suggest that the OWTU will shortly name its financing sources.
Commenting to the Trinidad Guardian, OWTU’s President, General Ancel Roget, said that the workers rehired to work at the refinery would be represented by the OWTU but said there would be “no nepotism, no political interference in the running of the refinery this time”.
Trinidad’s Opposition Leader, Kamla Persad-Bissessar, has however been critical of the decision, raising questions about the sale of the refinery. She said that while the opposition UNC had no objection to the refinery’s local acquisition, she wanted to know how a company incorporated in December 2018 was able to provide the finance and expertise, who its financial backers were, and why the Cabinet agreed to a moratorium on the offer Patriotic made.
Among the challenges facing the refinery, which is expected in future to have a 140,000bpd capacity will be it source of feedstock. When the refinery last operated it was importing crude from multiple sources and is now one of several Caribbean nations including Curacao, Jamaica, the Dominican Republic, and Aruba facing refinery viability challenges. Meanwhile, the debate continues as to whether Guyana should construct a refinery to handle the estimated 5.5bn barrels identified in the first 13 of the 16 discoveries made by Exxon Mobil and Tullow, with some commentators suggesting a better and more ecologically sound option might be to refine in Trinidad.
Separately, Trinidad’s National Security Minister and Minister in the Office of the Prime Minister, Stuart Young, has met with the Venezuelan President, Nicolas Maduro, and his ministers in Caracas to discuss energy and national security. Last year Trinidad’s Prime Minister, Dr Keith Rowley signed an agreement in Caracas that will allow the Republic to access gas from Venezuela’s Dragon Field. The pipeline carrying the gas will run to Shell’s Hibiscus platform off Trinidad’s North Coast and will be built and owned by the country’s National Gas Corporation and Shell Trinidad with the cost of the construction of the pipeline estimated at US$150m.
This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.