Fri | Dec 9, 2016

Petrojam doesn't buy petrol from Trafigura

Published:Tuesday | December 9, 2014 | 12:01 AM

THE EDITOR, Sir:

With reference to the letter to the editor, 'Jamaicans could be paying less for petrol' (Gleaner, December 1, 2014), Petrojam Limited wishes to clarify the following issues raised:

1 "While it's not clear if Petrojam has been purchasing LPG from Trafigura, one can only assume that at some point, it had to purchase supplies from Trafigura because of that company's control of supplies out of Trinidad."

Petrojam currently has no contractual arrangements in place with Trafigura, Beheer BV for the purchase of LPG.

2 "A look at the Mont Belvieu prices for propane over the past year shows an average of US$1.13 per gallon. However, Petrojam's ex-refinery prices to the local market averaged US$1.83 per gallon for a similar period. This is more than 60 per cent higher than the Mt Belvieu price. SIXTY PER CENT!"

While the Mont Belvieu prices are used as reference in the pricing of LPG in this region, there are several other cost elements that are added to this price in the determination of LPG prices in the Jamaican domestic market (and any other regional domestic market). Importantly, the freight on board price of LPG out of the United States Gulf and/or Trinidad has a significant premium to the Mont Belvieu Reference price. In addition, there are freight, insurance and terminal changes that need to be taken into account.

Product price movements at Petrojam also reflect movements in foreign-currency exchange rates, as well as changes (up or down) in the relevant Government of Jamaica taxes.

It should also be noted that the Jamaican LPG market is not only supplied by Petrojam and there is significant participation by other companies in the LPG supply matrix.

Our Ex-Refinery Pricing Policy is based on internationally recognised practices. At all times, the company seeks to be fair and transparent in its pricing strategy, as we endeavour to provide the nation with competitively priced petroleum products.

LATOYA PENNANT

PRO, Petrojam Limited

ltp@petrojam.com