Petrotrin
will survive PetroCaribe deal
PORT SPAIN
Petroleumworldtt.com
02 24 08
Venezuela's controversial PetroCaribe deal with
13 of the 15 Caribbean Community (Caricom) member
states will not lead to the death of Petrotrin,
says the State-owned refinery's executive chairman,
Malcolm Jones.
Trinidad and Tobago, through Petrotrin, has been
the main supplier of oil and oil products to the
Caricom market for decades. PetroCaribe is a deal
that would see the 13 member states paying market
prices for Venezuelan oil with the option of paying
a portion up front and financing the rest over
25 years at low interest rates. The programme threatens
to end this country's dominance as the main supplier
of oil and oil products to Caricom.
There had been initial concerns when the 13 Caricom
states began to finalise negotiations with Venezuela
for PetroCaribe two years ago, that it would have
dire consequences for the State-owned refinery.
As PetroCaribe appears to be on the verge of being
brought to life, Jones told Business Express in
an interview last week that this would not mean
the heart of the nation's only refinery, at this
time, will stop beating.
"It will not mean the death of Petrotrin
because we can find markets for the product, but
we have to prepare the product to get into that
market and that is what we're doing," Jones
said.
He said Petrotrin would only need to improve its
product to penetrate non-Caricom markets with higher
environmental standards- a process it has already
begun to undertake with its ongoing $2 billion
upgrade.
Making it better in the end
Jones said improving the quality of Petrotrin's
end products are the main objective behind the
expensive upgrade.
"And this we have to do because chances are
we are about to loose a lot of our West Indian
market because of PetroCaribe and therefore it
means we will have to get into other markets that
will require the more environmentally friendly
product," Jones said.
Within the last few years, Petrotrin has been
exporting 50,000 barrels of petroleum products
a day to the other Caricom member states.
In 2005, however, then Energy Minister Eric Williams
said the Government had been importing about 80,000
to 100,000 barrels of oil a day purchased at the
global market price to keep its operations going.
This situation still exists today.
Jones clarified that the Petrotrin upgrade is
not an expansion of its facilities at Point-a-Pierre
and would not allow it to be able to refine crude
other than heavy crude.
"What we are doing is we are actually improving
the quality of our product. We are not expanding
refinery capacity. We are improving the quality
of the product because we have to get the product
into different markets, into markets that are more
demanding in terms of the quality of the product," Jones
said.
He
then added: "The fact is that today one
is looking for lower sulphur product, looking for
better quality diesel, looking for more environmentally
friendly products and for us to get into those
markets we have to get the products up to that
grade and that is what the upgrade is about."
There are, however, plans to expand the nation's
existing refinery capacity.
And then there were two .
Jones
was interviewed by Business Express after he
attended the BG T&T and First Citizens Energy
Luncheon Series at the Hyatt Regency Hotel at the
Waterfront in downtown Port of Spain where Energy
Minister Conrad Enill announced plans for the construction
of a new refinery.
In his first major speech since becoming Energy
Minister after the November 5, general election,
Enill said the Government has approved the construction
of a new refinery at Petrotrin's facilities at
Point-a-Pierre at a cost of US$3-4 billion, some
three years after one of his predecessors in office,
Eric Williams, had first announced the Cabinet
was considering such a proposal.
The Petrotrin refinery is unable to refine the
light sweet crude oil extracted from the marine
reserves off the East Coast as it was not built
to do so.
This means the light sweet crude that is the main
source of the nation's oil income since the mid-1970s
is exported by upstream companies such as BHP Billiton
to be refined outside of Trinidad and Tobago.
"As a producer of approximately 150,000 barrels
of oil per day, the country would benefit from
being able to refine its own crude and convert
it into saleable products for the fuels retail
market," he said.
Getting more from more
Enill said that the new refinery would be export
oriented.
He further said that the low valued (bottom of
the barrel) products from the Petrotrin refinery
can be utilised as feedstock for the new refinery.
As if Petrotrin did not have enough adjustments
to make regarding PetroCaribe, it now has to prepare
to operate side by side with another refinery.
Although Enill did not disclose a date for the
commencement of the construction of the new refinery,
Jones does not appear to see it as a threat to
Petrotrin.
He noted that there is a lack of refining capacity
worldwide and an additional refinery does make
sense.
"We can only refine so much crude. The question
is one, you can build the refinery to refine the
type of crude you know have in Trinidad but the
refinery must be built with that in mind," Jones
said.
"You
cannot just take all of the crude produced on
the East Coast and refine it in the existing
refinery, you wouldn't maximise the potential.
But if you are building a new refinery, then you
could build a refinery that could deal with that."
When Enill spoke to reporters at the Energy Luncheon
Series event last week, Business Express asked
him why had it taken so long for the Government
to decide to build a refinery that can refine the
oil extracted from the local reserves.
He said it was not a matter of too little too
late.
Enill also made it clear that the decision to
approve the new refinery now was linked to PetroCaribe.
"Well I wasn't there to determine those issues
but I'm here now and you know, in so far as now
is concerned, we believe that now is the time to
do it based on a set of circumstances one of which
has to do with the refining of products for markets
other than Caribbean markets," Enill said.
Business Express also asked Enill how much this
country would really benefit from a new refinery
if it would be exporting its products.
"At the end of the day, we extract revenues
from the production of the resources, so that once
there is more production taking place you're gonna'
get more revenue," he said.
And with PetroCaribe becoming a reality and oil
prices hovering steadily at US$90 a barrel, the
Government and Petrotrin know the nation's oil
sector must change with the times.
Story
by Juhel Browne from
Trinidad Express
Trinidad
Express
Wednesday, February 20th 2008
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