Dec 2014 Financial News

Petrotrin total debt at $14.38b. Call for workers to recommit

Dec 04, 2014

Energy Minister Kevin Ramnarine yesterday appealed to employees of Petrotrin to recommit to the stabilisation and growth of the State-owned energy company. He made the comment in the Senate yesterday, even as the Oilfields Workers’ Trade Union (OWTU) has signalled its intention to initiate strike action over the company’s recent statement that it would not be able to increase salaries or pay backpay to workers due to a loss of $346 million in fiscal 2014.

Ramnarine added yesterday that the company had a total debt of $14.38 billion. While not specifically addressing the OWTU’s threat of strike action, the minister said now was a time for employees to work towards building the company. “This is not a time for acrimony at Petrotrin. This is not a time to break down Petrotrin but to build up Petrotrin,” he said.

Ramnarine said the way forward for the company was to increase its crude oil and gas production through its own efforts as well as from ventures, such as its lease operatorship, farmout, incremental production service contract (IPSC) and joint venture programmes. He said improved production was expected from the Trinmar operations in the Jubilee field and the ongoing South West Soldado project. 

Additional drilling capacity in both Petrotrin’s land and Trinmar operations was forecast to improve the company’s production and reserves position, he added. “In the interim, Petrotrin must tightly control cost. To do otherwise would be to endanger the company. We must not kill ‘the goose that laid the golden egg,’” Ramnarine told the Upper House.

“Petrotrin has tremendous potential for increasing its oil production and is actively pursuing multiple initiatives in this regard. It has started to put in place the building blocks to achieve this potential,” he said.

Refining arm hit hard
The minister said the company’s poor financial performance was partly due to losses by the refining arm of the company. He said that fall in Petrotrin’s gross refining margin “is a feature of a worldwide oversupply of refinery capacity compounded by the shale oil revolution which has seen American refiners benefit from cheaper crude oil and lower natural gas prices.” 

He said that development had led to the closure of some 60 refineries worldwide in the last five years, with a further 11 closures currently being contemplated. Ramnarine said: “In the Caribbean, two refineries have closed in recent years. In Europe 13 refineries have closed in the last five years.” He said the company had cut $340 million out of its operating budget for fiscal 2014/2015 but was still expected to incur a loss for the period at current oil prices and refinery margins. 

Salaries and wages account for 54.5 per cent of the company’s recurrent budget, compared to the benchmark of 35-40 per cent for national oil companies around the world, he said. “As at December 1st 2014, the company’s total debt is $14.38 billion. This figure is comprised of $6 billion in short-term debt and $8.38 billion in long-term debt. The weighted average interest rate on total debt is 5.54 per cent.

“The repayment figure for the long-term loan payments for 2014 is $1.26 billion and for 2015 that figure is $1.23 billion,” he added. Despite that, the minister said Petrotrin had never been a burden to the State and contributed between $2 to $5 billion annually to the national coffers.

Source:
Suzanne Sheppard
Trinidad Guardian
Thursday December 4, 2014

http://www.guardian.co.tt/news/2014-12-04/petrotrin-total-debt-1438b