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Financial News

May 2009 Financial News

'Petrotrin needs US$68-a-barrel to stay afloat'

May 04, 2009

Petrotrin, the State-owned oil refining and exploration company, needs global crude oil price averages of at least US$68 a barrel in order for it to "survive" as it struggles to recover from its loss-making ways of the last six months.

Energy Minister Conrad Enill made the disclosure in an interview with the Express late last week as oil prices averaged US$53 a barrel as those markets struggled to regain last year's record average of US$147-a-barrel prices.

Enill said that he has "about three or four proposals" regarding a new US$3-4 billion oil refinery targeted for Pointe-a-Pierre, close to the Petrotrin refinery complex.

He said he was examining them but had not decided on whether or not that was a good deal at this point in time.

Saying that the ongoing international financial crisis which triggered the drastic decline in global oil prices from its record average of US$147.25 a barrel was not the issue, Enill said there have been no new refineries built in the last 30 years and none in the Western hemisphere because of the challenges surrounding the financing and the output.

"Right now, for example, Petrotrin, as a refinery needs a (US) $68-a-barrel of oil to survive. And, therefore, if you have the thing (new refinery) badly constructed, you could lose your shirt," Enill said.

Last December 30, the Express reported that Petrotrin executive chairman Malcolm Jones said that the company will have some very serious decisions to make in 2009 since it must cut its operating costs.

He disclosed that it went from a making a profit of $2 billion in 2007 to losing $200 million in the last three months of 2008 alone.

Saying that he has not looked at the latest figures, Enill said he "would suspect" that Petrotrin is continuing its loss-making trend that began late last year when oil prices plummeted to lows of US$39 per barrel.

"But that is not the issue. The issue is that we whether or not we believe, that on the basis of a higher price, whether or not the loss is something we could tolerate," he added.

Asked if the closure of Petrotrin or any part of its operations was being contemplated at all, Enill said: "Let me put it to you this way. I am not aware that the board and management is looking at that and quite frankly, that is a matter for the board. I don't get into that."

Furthermore, Enill said that the Government remains committed to the ongoing $2 billion upgrade of Petrotrin to make it more competitive by ensuring it can produce oil based products that meet the stringent environment criteria of the US and other markets.

"In fact, that may continue at a lower price because the cost of material going into it has come down. I mean steel came down from $12 to $2, from $1,200 per tonne to $365," Enill said.


Source:
Juhel Browne jbrowne@trinidadexpress.com
Trinidad Express
Monday, May 4th 2009

http://www.trinidadexpress.com/index.pl/article_news?id=161473016