Former Saudi Arabian Oil Minister Sheikh Ahmed Zaki Yamani once famously said, “The stone age did not end for lack of stone, and the oil age will end long before the world runs out of oil.” His...
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Petrotrin crucial to the economy
At least two of the country’s leading economists have agreed that state-owned Petrotrin is strategically important to the country’s economy and to government revenue but said reform is also necessary.
“There is no doubt about the important contribution that Petrotrin has made to the country’s economy including the payment of significant sums to the Ministry of Finance. But that said, the question must also be asked if more can be accomplished,” economist Dr Ronald Ramkissoon told the Business Guardian.
For Dr Roger Hosein, lecturer at the University of the West Indies, Petrotrin is not just a major source of income for the government but the multiplier effect is such that towns like Gasparillo and Marabella depend on Petrotrin for their economic lifeblood.
These comments come in the wake of a revelation that during the last 12 years, the much maligned integrated oil producer, contributed close to $49 billion to government revenue, averaging more than $4 billion per year.
Its president Fitzroy Harewood told guests at a recent luncheon at the Energy Chamber: “We have talked about the fact that our support to the government is significant and over the period 2004 to 2016 we have ensured $49 billion to the government as a result of our operations and again Petrotrin is a significant contributor to T&T.”
He added: “Given the fact that we are selling more than 75 per cent of our finished product overseas, it is important to remember that Petrotrin is a net foreign exchange earner for this country. That is extremely important when you sit down and think about Petrotrin and you want to think about us casually and you want to shut us down with the swipe of a pen. Remember you are delivering the death kneel to a net foreign exchange earner of T&T.”
According to figures from the Extractive Industries Transparency Initiative, Petrotrin paid government $20 billion in taxes over the last five years. Put another way Petrotrin’s contribution alone would have been enough to pay for the country’s annual allocation to the Tobago House of Assembly in addition to the annual cost of URP and CEPEP.
Ramkissoon said he has no doubt that, going forward, Petrotrin must continue to play an important part in the country’s economy.
He acknowledged that the company had legacy issues that have led to several challenges including recent oil spills. He said the cost of fixing the legacy issues must be taken into account in valuing the company and its assets.
Ramkissoon also said he was pleased that the company has been able to increase its crude production over the last six months by 12 per cent.
“Petrotrin’s president indicated there has been an increase in crude production by 5,000 barrels of oil per day, which is very commendable. We, however, have to ask questions going forward about the lifting cost, productivity and why we have not been able to ensure Petrotrin can move to other jurisdictions and expand its reach,” said Ramkissoon.
Harewood shared that for Petrotrin to succeed it needs to increase its indigenous crude production. He said the company must be seen as an integrated company and that its production of crude must reduce its cost of raw material for the refinery, thereby improving margins.
“In February 2017, we were producing around 43,000 barrels of oil per day, (bo/d). So you saw the December figure that was 41,000 barrels. By February, we have been doing some work, and we have incrementally improved to 43,000 bo/d.
“Today, at the end of April, we are actually up to 46,000 bo/d. So we have been showing exactly what we have said, we are doing what we need to do in a low-price environment.
“We are not doing the massive capital projects in terms of the drilling etc, but we are treating with deferred production and the things within our infrastructure that we can deal with and release our bottleneck.
“We have been slowly working on those things and today our crude production is up to 46,000 bo/d and that is important,” Harewood added.
Dr Hosein said Petrotrin had to align productivity with wages and salaries and noted that Petrotrin employs more than 5,000 workers and the direct expenditure by company and workers have had a positive effect on business.