PORT OF SPAIN, Trinidad – The Trinidad and Tobago government is defending the
decision to restructure the cash-strapped state-owned oil company, PETROTRIN, even
as the powerful Oilfield Workers Trade Union (OWTU) vowed to prevent “an agenda to
ensure the sale of the refinery”.
“I want you to stay the course to ensure that it does not fall into the hands of the
vultures, the one per cent. What we are doing is not just for ourselves. It is for the
benefit of all the citizens of Trinidad and Tobago,” OWTU President General Ancel
Roget told a union organised prayer session outside the official residence of Prime
Minister Dr. Keith Rowley on the outskirts of the capital on Sunday.
But Energy Minister, Franklin Khan, said that PETROTRIN’s current state of affairs has
the ability to “bankrupt” the country, describing the state oil company as moving
towards a black hole.”
Khan told a news conference Sunday that the “most fundamental issue the country
faces in terms of our economic fortunes or lack thereof” adding “if PETROTRIN is not
handled properly, it could bankrupt this country. It is as serious as that.”
Khan said, “Once PETROTRIN cannot face its bankers and put a plan in place to repay
its debt the obvious corollary is that they will need a government guarantee, which will
throw all our indicators way off course, our debt to equity all these things. And then our
repayment schedule, our debt servicing. It is unimaginable the dire consequences if not
He said past administrations including the ruling People’s National Movement (PNM)
“have kicked the can down the road” with respect to the operations of PETROTRIN and
warned it just could not continue as the company has serious systemic, structural and
operational issues which must be dealt with.
Khan told reporters that PETROTRIN “has a massive debt profile in excess of TT$13
billion and we all know about the famous bullet US$850 million payment due in
November 2019,” he said, warning “if something is not done “PETROTRIN and or the
Government will have to find a cheque of US$850 million to pay to the bondholders.
“As we speak, PETROTRIN owes the state TT$3.5 billion in outstanding taxes and
royalty that is the people’s money which is being consumed by a company to satisfy
whatever inefficiencies that operate in the company.”
Khan said the company is also saddled with high operating costs averaging between
US$30 to US$40 for the company to lift a barrel of oil and when oil prices are US$40 it
is obviously uneconomic.
He said the company is also generating no working capital to reinvest because it is
operating at a loss. He said PETROTRIN’s local crude production is a mere 40,000
barrels per day but the refinery has a capacity of 150,000 barrels daily.
Khan said in order to keep the refinery going the company has to import 110,000
“What compounds this matter is that for every barrel of crude refined the company
loses US$2.50 to three US dollars per barrel, so you importing oil to lose money”.
But he acknowledged that PETROTRIN is a “net user of foreign exchange, so here you
have your state oil company not bringing in any net foreign exchange, because the
amount they are spending to import crude and lose money on the crude they import, it
has made the refinery unprofitable.”
Khan also expressed concerned that salaries and wages account for 50 per cent of the
company’s operating cost.
“For an oil company to be skewed so badly that in excess of 50 per cent of its
operating cost is salaries and wages, something has to be fundamentally wrong,” he
Last week, the state-owned oil company announced that it would be making a
presentation “on the way forward” and that it had invited the OWTU to the presentation
Earlier this year, Prime Minister Rowley said a Cabinet-appointed committee and a new
board conducted various reviews of PETROTRIN’s operations and identified many
structural problems such as: an unwieldly operational structure and poor governance;
declining crude oil production; dwindling productivity; escalating manpower costs;
steadily increasing maintenance and capital costs; low refinery margins and poor asset
The committee found that the company stands to accrue TT$1.5 billion in losses over
the next five years and huge risks exist from ageing assets and infrastructure.
But as he addressed the prayer session on Sunday, Roget said the Government is
looking to sell the refinery and is trying to scale back on the number of workers in order
to ensure a sale.
Roget warned that hundreds of PETROTRIN workers could be placed on the breadline
after the company makes its presentation on the way forward.
“It is not a meeting, they are going to make an announcement,” he said, adding
“whoever they (Government) planning to sell the refinery to they want a much smaller
staff,” Roget said.
“It seems there is an agenda to ensure the sale of the refinery,” Roget said, telling his
audience that they should continue to fight for their “God-given right to be able to have
a job, and to secure and provide for families and communities.
“I want all of you to stay the course for justice, for equity, for truth, for good
governance, for Trinidad and Tobago and for the Petroleum Company of Trinidad and
Tobago,” he added. – CMC