Home' Trinidad and Tobago Guardian : September 18th 2014 Contents SEPTEMBER 2014 • WEEK THREE www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
Petrotrin president Khalid Hassanali is prom-
ising that by the middle of 2015, production
of low suphur diesel will finally begin and
the upgrade come to an end. In an interview
with the Business Guardian, Hassanali said
he intended to meet with the lead contractor
Samsung Engineering to work out the issues
between Petrotrin and the contractor with a view to having
the project completed.
"I intend to meet with Samsung and I feel confident that
we will be able to reach an agreement so that we can quickly
complete the project," Hassanali said.
The project is now almost two years behind schedule, millions
of United States dollars in the red and has been hurting
Petrotrin s refining and marketing operations. This has meant
that Petrotrin is being kept afloat by its exploration and pro-
duction division, and particularly high oil and gas prices.
The company s margins have been hurt so much that it has
sought to reduce its losses at the bottom of the barrel by
simply reducing its overall production with the refinery s pro-
duction reduced by one third.
Had the diesel project got going, it could have refined 40,000
barrels of diesel per day and attracted high margins.
Prior to becoming president, Hassanali was the person
directly responsible for the project as part of his overall respon-
sibility, at that time, for projects at Petrotrin. He admitted
this, but said there had been improvements in the way this
project was run when compared to the Gasoline Optimisation
Programme (GOP) which went over budget by more than US$1
billion and was several years behind schedule.
Petrotrin s GOP commenced in November 2005 under the
Malcolm Jones-led board and was to be the first phase of the
refinery upgrade. But the project was mired in controversy
with massive cost overruns and years behind schedule.
Meanwhile, the ultra low sulphur diesel unit is being con-
structed as part of Petrotrin s Clean Fuels Programme as part
of its continuing effort to improve the profitability of the
Pointe-a-Pierre refinery to meet the challenges of tightening
product specifications. When completed, the plant will enable
Petrotrin to meet stringent new diesel quality specification,
sulphur and aromatics in the local, regional and international
Petrotrin has blamed the shale revolution in the United
States and lower crude prices at Cushing, Oklahoma, for its
decision to significantly reduce its refinery throughput to
120,000 bo/d from 180,000 bo/d.
Refineries in both Aruba and the US Virgin Islands have
been shuttered as Caribbean refineries are facing higher prices
for crude on the international market than many US refineries,
which are benefiting from the continued bottleneck at Cush-
While the 30 per cent reduction in refinery throughput is
hurting the company s bottom line, Hasannali insists that
Petrotrin---an integrated company---is allowing its exploration
and production arm to carry the ball for the while.
Mado Bachan, Petrotrin vice-president of refining and mar-
keting, said there are significant challenges now facing the
company s R&M business. He explained that Petrotrin has
imported 60 per cent of the crude needed for refinery feedstock,
while 40 per cent of the crude has come from domestic pro-
Bachan explained that with global spare refinery capacity
averaging nearly 20 million bbl of refined products in 2014,
it puts a cap on margins.
He said, "It s your gross margins that affect your profitability
because it is from your gross margins that you have to find
money for your operating costs, including utilities, inputs,
labour and so on."
Bachan said the closure of refineries in the Caribbean was
not necessarily a global trend because there continues to be
construction of modern, highly efficient refineries. As an
example, he pointed to Saudi Arabia, which is adding refining
capacity as it seeks to refine more of its own crude.
He said the shale development is happening against a back-
drop of the US not being able to export its crude, but being
able to export refined products. Bachan argued this meant US
oil producers can largely only transport crude to refineries in
In addition, Petrotrin has reduced its sales of refined product
to the US east coast market, instead of concentrating on its
premium markets in the Caribbean. Hassanali said the solution
was more domestic crude production, which will reduce the
refinery s reliance on higher-priced crude.
Upgrade project to end in 2015
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