Former Petrotrin president disapproves of A&V Oil settlement

FORMER Petrotrin chairman Wilfred Espinet has disagreed with the arbitration settlement reached between Trinidad Petroleum Holdings Ltd (TPHL) and A&V Oil and Gas Ltd on September 21.

On that day, TPHL announced a settlement in an arbitration dispute with A&V Oil, which it described as a “win-win for Petrotrin, TPHL and TT.” The settlement arose out of the matter that was described as the "fake oil scandal."

A&V Oil will receive $18 million as full and final payment for any and all damages suffered by it in connection with the termination of the production sharing contract. TPHL said this settlement avoids the payment of millions of dollars in damages to A&V Oil, which was awarded by an arbitration panel. In addition to the $18 million payment, A&V Oil will get a new exploration licence with national oil company, Heritage Petroleum. Heritage will enter into an enhanced production service contract (EPSC) with A&V Oil for the purchase of crude oil for a period of ten years as an indication of the cordial nature of the settlement.

In a paid newspaper advertisement, Espinet observed the spotlight was on A&V after it won its challenge of Petrotrin's findings at arbitration. "The current board of directors of TPHL, the company that was established by the former board to take control of Petrotrin's assets and restructure them to achieve commercial viability, took a decision to settle with A&V Oil and Gas Ltd to the tune of $120 million and, granted the company a new ten-year enhanced production services contract."

He said, "The TPHL settlement went against the 'extremely strong view' expressed publicly by TPHL's own legal team, which had recommended that the company immediately appeal the judgement." Having been privy to the findings of Kroll Inc and Gaffney Cline and Associates, engaged by Petrotrin in this matter, Espinet said, "I share the lawyers' view."

He said recent statements by A&V Oil attorney Ramesh Lawrence Maharaj SC and company chief executive Hanif Baksh for the judgement to be made public "in my opinion, is an attempt to sanitise the situation." Espinet said based on the findings of Kroll and Gaffney Cline, Petrotrin's board of directors terminated A&V Oil's contract and placed "the "$84 million in escrow pending a resolution of the situation."

He recalled that in 2017, A&V Oil had "invoiced Petrotrin $84 million for crude oil it had allegedly produced but, according to Petrotrin's internal audit report, the invoice was inconsistent with the volumes received at the Pointe-a-Pierre refinery."

Espinet said subsequent claims made by Opposition Leader Kamla Persad-Bissessar in relation to that report gave birth to the "fake oil scandal", with a political dimension of Baksh being a close friend of the Prime Minister.

While a Trinidad Guardian editorial last week echoed Maharaj's call for the judgement to be made public, Espinet said the editorial, "failed to acknowledge the actions taken by the former board of Petrotrin directors, which provided the basis for the termination of the A&V Oil and Gas contract."

Espinet said the Petrotrin board that he chaired "did not cost the taxpayers of Trinidad and Tobago millions of dollars as erroneously stated in some quarters." He explained that the $120 million being paid to the company consists of the $84 million "that was in escrow while the A&V Oil and Gas matter was being settled through arbitration; approximately $16 million in invoices that had been subsequently proffered by A&V Oil (according to a newspaper report) and the $18 million that the current board of directors (of TPHL) agreed to pay A&V Oil and Gas as a settlement."

Espinet added, "The latter sum is the only new cost to taxpayers and this was agreed to by the current board." He said in 2017, Petrotrin reported a loss of $2.4 billion after tax. Espinet reminded the public that Petrotrin was closed in November 2018 and in 2019, Heritage Petroleum Ltd, took over Petrotrin's exploration and production assets and recorded a profit of more than $1.4 billion for the ten-month period in 2019.