IT is not a simple matter to sell crude oil, Congress of the People (COP) leader declared at a COP meeting in Marabella on Thursday.
She scotched Government’s plans to export crude instead of exporting products refined from crude at Petrotrin’s Pointe-a-Pierre plant now carded for closure.
Seepersad-Bachan, a former energy minister, said Trinidad crude oil is highly acidic and can only be sent for processing at refineries specially designed to handle this type of naphthenic oil. This means TT has limited options for export and so had needed early on to start developing relationships with potential buyers. Government has not done so, she hit.
Any exports would consist of deposits of crude collected from all over Trinidad each with its own chemical characteristics and blended together, she said, adding the quality and quantity of oil making up a shipment must be assessed in a foreign lab, so the overall character of the shipment can be known.
But this is a complex process that has not yet begun, she complained. “So how do you know the price it will fetch and which market you will get?”
Seepersad-Bachan took issue with Finance Minister Colm Imbert’s recent claim that the crude will sell for US$60 per barrel. She said such a figure ignores requisite discounts to the price due to factors such as the high sulphur content of TT oil. “Also no-one has taken into consideration the shipping cost,” Seepersad-Bachan added.
She challenged Government’s claim that the refinery is losing money, saying it has a gross profit (gross refinery margin) of US$9 to US$10 per barrel. Even subtracting US$4.50 in operating costs and US$1 in overheads, this leaves US$3.50 in net profit per barrel.
This net profit is put to good use, of which US$2.40 per barrel is paid to service Petrotrin’s loans, including interest on two bond loans of US$850 million and US$750 million, she said. “So they are paying their debts. If you shut the plant, who will pay that cost?”
Noting the US$3.50 also pays the cost of retiree benefits, she said the refinery’s closure will not make these obligations disappear. She also asked if Government plans for profits from crude sales to cover the US$2.40 payments.
Seepersad-Bachan said the refinery closure would drain foreign exchange reserves. She said at present the refinery creates the “value-added” for the refined oil used in TT and exported from TT. More so Government pays in TT dollars to buy crude-oil in TT to be processed at for the refinery, even as 15,000 barrels per day (bpd) of TT crude that is refined by Petrotrin is exported as a foreign exchange earner.
However, she said the Government’s plans to import 25,000 barrels per day (bpd) of refined products would be at a price of US$89 per barrel ($2.2 million), would exceed its earnings from exporting 40,000 bpd at a price of some US$50 per barrel ($2 million.) The imports would eat up foreign exchange, she said.
While arbitration is under way for the refinery’s Ultra Low Sulphur Diesel plant, she wondered whether a closure of the refinery could harm’s Petrotrin’s claim for compensation in this.