OANDO PLC has been selected as the preferred bidder for the lease of the Guaracara refinery, as announced by Minister of Energy Stuart Young. He said the decision was primarily based on Oando's strong financial track record, highlighting its $1.5 billion acquisition of ConocoPhillips' assets in Nigeria.
Speaking at a media briefing at Whitehall on February 27, Young said Cabinet had taken "considerable time" discussing the decision.
"We had robust conversations and interrogations," he said, emphasising the significance of the decision.
Young provided context on the decline of Petrotrin, lamenting when government took office in 2015. He said Petrotrin was struggling with losses of $361.5 million in 2014, which escalated to $1.2 billion by 2016.
During this period, domestic oil production sharply dropped from 144,000 barrels per day in 2005 to 78,000 barrels by 2015.
"The situation worsened in the years that followed, dropping further to 42,000 barrels per day by 2016. The refinery, capable of processing 175,000 barrels of oil per day, found itself unable to meet production demands as oil output fell drastically."
He said that led to importing crude oil, adding to the company's losses.
"The increasing import costs of crude contributed to a loss of $5 to $7 per barrel processed at the refinery."
Young said In 2016, Petrotrin registered a staggering loss of $4.3 billion, bringing the cumulative losses over a three-year period to approximately $5.9 billion. With a looming bond payment of US$850 million due in August 2019, "the situation became unsustainable."
He described the decision to lease the refinery to Oando as a pivotal step in addressing the challenges in the oil sector.
"The government believes that Oando's financial strength and expertise will help revitalise the refinery and contribute to the country's energy future."
He said in February 2017, Cabinet made the decision to create the Lashley Committee to review the operations at the refinery and make recommendations for its restructuring. By November 2017, the committee recommended it be restructured.
"The government maintained full transparency regarding the restructuring and the creation of new entities such as TPHL, Heritage, Paria and Guaracara."
By October 2018, Cabinet approved officials from the Ministry of Finance with the specific mandate to address the restructuring. At that time, rating agencies warned if Petrotrin was not restructured, the US$850 million bond could not be refinanced, which would have affected the country's rating.
In November 2018, the decision was made to restructure the company and establish Trinidad Petroleum Holdings Ltd (TPHL) as a holding company. Paria was created to handle fuel supply, importing and exporting 50 per cent of the fuel, while the other 50 per cent remained for domestic consumption.
Despite the refinery's closure, Young said fuel continued to be available at pumps across the country without interruption.
He said both Heritage and Paria had been profitable, with Heritage payi
