Home' Trinidad and Tobago Guardian : January 19th 2017 Contents BG14 | FINANCE
BUSINESS GUARDIAN guardian.co.tt JANUARY 19 • 2017
Petrotrin: The oil story needs to flow
Petrotrin has been very much
in the news over the past few
weeks; first with the threat
of strike action and then the
interim settlement which has
dominated the headlines. The
Prime Minister saw it fit to address the nation
on the issue and that in itself has created a fair
measure of controversy.
From my vantage point we remain, as a
country, too myopic in our approach to these
matters. The Opposition's primary focus seems
to be on how the wage settlement would be
funded and commentators, in general, are pre-
occupied with the impact this would have on
other wage negotiations.
But there is a bigger picture to consider.
Few have stopped to consider that the Prime
Minister's address is the second in about four
months in which Petrotrin and the energy sec-
tor have been the primary focus. In between, we
had the signing of a natural gas deal with Ven-
ezuela. In addition, we also had what seemed
to be the failure of BHP Billiton to discover oil
as part of its recent drilling programme as well
as the arrival of the Juniper platform.
The question is: who is the representative
from the Government connecting the dots for
the population to properly and fully understand
what is taking place within the energy sector?
Who is guiding us as to how the pressing
issues of the day are being dealt with and who
is outline the prospects for a rebound in this
critical sector in the economy?
We have changed the Minister of Energy
recently and the current energy minister is
reportedly dealing with a health issue. So,
how is this critical sector being managed? We
would do well to appreciate---as I have written
many times over the years---that a key ingre-
dient in achieving any economic objective is
confidence. It is confidence that will see new
business ventures being explored and with it
jobs created. It is confidence that will see the
reduction in the alleged hoarding of foreign
If confidence is a key ingredient in economic
progress then credible information is a key in-
gredient in engineering confidence. Not only
must it be credible but it must also be timely
and relevant to decision making. Clearly we
are nowhere close to achieving this objective.
It was in September 2016---prior to the read-
ing of the 2016/17 Budget but after the Prime
Minister's address where he touched on the
state of the energy sector---that I wrote the
following under the headline: Budget 2017:
fuel subsidy, oil and Petrotrin:
"The Prime Minister in his recent address to
the nation lamented the fall off in oil and gas
production indicating that across both oil and
gas that we have underinvested and overhar-
vested our energy resources to the point where
supply for both oil and gas is a critical issue.
"For the upcoming 2017 Budget I would
therefore expect nothing less than a com-
prehensive and multi year plan as it relates to
this crucial pillar in our economic fortunes."
To date, we are yet to have such an account.
This is the case despite the fact that the issue of
fuel subsidy and its removal is a critical com-
ponent of the financial life of every individual
in this country.
Back in September the following was put
forward for consideration:
"Transport is a key cost for any endeavour
both business and personal. Decisions are taken
every day and a lack of transparency on the
plan for fuel subsidies and the overall intention
of successive governments as it relates to the
sector is counterproductive to say the least.
"The cost of fuel for transportation and
how this sector will evolve is a key ingredient
in any discussion around the road network in
this country. There is the unfinished highway
to Point Fortin and two new road networks are
being proposed. Since the time of the Manning
administration, the country has been served
with the innuendo of toll roads. This is another
factor that goes into the cost of transportation
and once again there is no clarity on this is-
sue. The cost of fuel and the cost to use a road
will no doubt impact the demand and supply
Given all this uncertainty and lack of in-
formation, how does one expect the private
sector to step forward en mass to support the
initiatives of the Government?
What is likely to happen is that those busi-
ness interests close to the current adminis-
tration will be able to leverage on their rela-
tionships and act accordingly, effectively front
This, of course, has been a feature of all ad-
ministrations past; eventually leading to claims
of corruption and nepotism.
There are already rumblings from union
sources suggesting that privatisation initiatives
within the energy sector are being designed to
accommodate special interests. I am not here
to pass judgment on that assertion except to
say that everyone will be better off if we know
and understand the lay of the land.
This, of course, brings us to the issue of
Four months ago, we were warned by the
Prime Minister that a major restructuring
needed to take place at Petrotrin, that there
would be consultation with the union and that
time was of the essence because bonds that
were due needed to be refinanced.
Should we not have a detailed account of
what, if anything, has happened over the past
four months and also be provided with very
detailed timelines of, at the very least, an ac-
The 2017 Budget spoke about a joint-venture
arrangement with Lake Asphalt. We have had
little details since. National Petroleum may
soon be selling fuel in an environment where
the price is unregulated. There is an explo-
ration, production and refining operation at
Then there is the Gas Master Plan which is
now carded for March 31 of this year.
Are all these initiatives and activities being
co-ordinated and, more importantly, does the
public understand what is going on?
Every energy producer over the past two
years has undergone huge restructurings in
order to reduce their costs. Here, in T&T, we
are fixated on our falling production levels.
More than anything else this reflects a lack of
a coherent strategy for the sector.
Anyone involved in running a business will
know and appreciate that increasing oil pro-
duction is pointless if the incremental output
is not profitable. So, while we lament the fall-
ing production and need to take steps to boost
production levels, step should have been the
restructuring required to ensure that margins
Oil prices have fallen and they are unlikely
to return to the levels of just a couple years
ago. The cost curve of every producer in the
world that wants to remain active has come
down. What is the status regarding Petrotrin?
We talk about restructuring and privatisation
but do we have any sense as to the timeline
involved? Do we have the time to do what we
say we want to do?
For reference, consider Saudi Aramco, the
state-owned oil company of Saudi Arabia.
In 2016, they announced the intention to
have an initial public offering (IPO) for the
company. Many here in T&T would have noted
this but what has escaped us is that the timeline
for this IPO is 2018. A functioning, operat-
ing, world-class oil company has given itself
a two-year timeline towards the achievement
of a capital market objective.
The bottom line is that the time for reports
and studies is long gone. We are at a stage where
we need to be decisive in our approach.
Before the oil can flow the oil story needs to
start flowing, otherwise there will be serious
consequences to face in the future.
Ian Narine can be contacted at ian.narine@gmail.
Anyone involved in
running a business will
know and appreciate
that increasing oil
production is pointless
if the incremental
output is not
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