Trinidad sells Petrotrin refinery to oil workers trades union

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.

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