Sat | Jun 25, 2022

Trinidad confirms talks with preferred bidder for oil refinery

Published:Wednesday | June 1, 2022 | 12:08 AM
Prime Minister of Trinidad and Tobago, Dr Keith Rowley.
Prime Minister of Trinidad and Tobago, Dr Keith Rowley.

Prime Minister of Trinidad & Tobago Dr Keith Rowley confirmed Tuesday that negotiations have started with a preferred bidder regarding the purchase or lease of the oil refinery at Point-a-Pierre that’s owned by Petrotrin.

Rowley, addressing the three-day Energy Conference of Trinidad and Tobago, told delegates that three final bids were received in April 2022 and were evaluated by Trinidad Petroleum Holdings Limited, TPHL, and government officials.

One of the bidders has since entered into exclusive negotiations with TPHL and the T&T government with the aim of negotiating a definitive agreement and securing committed financing.

The bidder was not disclosed.

“We expect that the process and selection of the preferred bidder will be soon finalised. In keeping with our commitment to transparency and accountability, the relevant details of the outcome of the evaluation of the bids will be disclosed on the completion of the exercise,” Rowley said.

The government closed the oil refinery in south Trinidad in 2018 after complaining that it had been losing billions of dollars annually.

Patriotic Energies, a company formed by the Oilfield Workers Trade Union, had sought to buy the refinery, but that plan collapsed in January 2021.

Over the weekend, Opposition Senator Wade Mark told a news conference his political party, the United National Congress, understands that an American company called Quanten was the preferred bidder for the refinery.

“Government argument to close the refinery … we want to tell Trinidad & Tobago, was flawed and based on a misunderstanding of Petrotrin’s business model, as well as a misunderstanding of the accounts of that company,” Mark told reporters..

Mark, who asserted that the refinery was valued at US$7 billion, said the question for shareholders and owners of Trinidad Petroleum Holdings Limited, which was formed after Petrotrin was shut down, “is who is Quanten Inc?”

“What qualifies this company to operate our US$7 billion asset refinery? What is this entity’s claim to fame to become the successful bidder?” he said.

Minister of Energy Stuart Young issued a statement describing Mark’s comments as “destructive UNC mischief”.

Young said the sale of the refinery is being handled by THPL advisers and international experts, who periodically report progress to the Ministry of Finance and the Ministry of Energy.

... Review of oil and gas tax regime under way

The Trinidad & Tobago government is conducting a comprehensive review of the country’s oil and gas taxation regime to ensure it remains an internationally competitive destination for hydrocarbon investors.

Speaking at the 2022 Energy Conference of Trinidad and Tobago, Prime Minister Dr Keith Rowley said Tuesday that that the review encompasses capital allowances, petroleum profits tax, supplemental petroleum tax and royalty, both onshore and offshore, in shallow water and deep-water.

The three-day confab is organised by the Energy Chamber of Trinidad & Tobago.

“However, as we move to identify new resources, we have to manage available resources,” said PM Rowley.

“Management of our hydrocarbon resources has not been without challenges. A combination of COVID-19, low commodity prices and technical issues have set back levels of both oil and gas production. However, with the ease in the pandemic and new activity both oil and gas production are set to rise,” he said.

With new production coming on stream in 2022 and 2023, gas production is projected to increase to 3.2 trillion cubic feet by 2024.

Rowley said, however, that gas supply between 2024 and 2027 would be tight before improving in 2028 with the coming on stream of mega projects, the Manatee and Calypso.

“However, the key to a sustained gas industry will be the exploration and development of our hydrocarbon resources as well as access to cross-border natural gas resources. Hence the aggressive bid-round programme,” he said.

The PM told the conference that as the global energy transition leads to structural changes in energy markets, there is a risk of diminution of oil and gas revenues, which have been the major drivers of T&T’’s socio-economic well-being.

“Therefore, it is in our interest to expeditiously take steps to monetise the country’s abundant oil and gas resources. The latest gas reserve audit established that at year end 2020 technically recoverable resources amounted to 23.2 trillion cubic feet and prospective resources at 55.2 tcf,” he said.

“Whereas the latest oil audit, established 3P reserves at 455.3 million barrels and prospective resources amounted to 3.2 billion barrels with 90 per cent being in our deep-water province.

In Trinidad a bid-round for deep-water exploration, covering 17 blocks, is scheduled to close Thursday, June 2. Seven licensing rounds were previously closed by the first quarter 2022 and another eight licensing rounds are expected to close by year-end

Trinidad is in the market seeking investors the same as regional countries such as Suriname, Colombia and Brazil have closed successful bid-rounds. There are also upcoming rounds for Guyana’s deep-water blocks, Brazil’s sub-salt blocks and Ecuador oil blocks, Rowley said.

“... So we know that we are competing for exploration capital,” he added.

CMC