Fol­low­ing is the ad­dress to the na­tion on the re­struc­tur­ing of Petotrotrin de­liv­ered by Prime Min­is­ter Dr Kei­th Row­ley last evening.

Fel­low cit­i­zens, good evening.

Thank you for the op­por­tu­ni­ty to speak to you on two very im­por­tant mat­ters each of which has se­ri­ous far-reach­ing con­se­quences for all the peo­ple of Trinidad and To­ba­go. I re­fer specif­i­cal­ly to the re­cent­ly an­nounced suc­cess­ful con­clu­sion of the ne­go­ti­a­tions be­tween our coun­try and Venezuela on nat­ur­al gas sup­ply and the clo­sure of the Petrotrin re­fin­ery.

As you would all be aware, Trinidad and To­ba­go is heav­i­ly de­pen­dent on our in­volve­ment in the nat­ur­al gas in­dus­try by way of the pro­cess­ing and ex­port of nat­ur­al gas or gas-based prod­ucts such as methanol, fer­til­iz­er and oth­er prod­ucts. In fact, dur­ing the last fif­teen years or so our econ­o­my has be­come in­creas­ing­ly much more de­pen­dent on the rev­enues from gas as against earn­ings from oil. Even more re­cent­ly we have been ex­pe­ri­enc­ing sus­tained gas cur­tail­ment to our Pt Lisas plants and our na­tion­al re­serves have been dwin­dling. There were even ac­tu­al plant clo­sures with more con­cerns loom­ing on the not too dis­tant hori­zon.

In the face of these de­vel­op­ments and in this sit­u­a­tion, very ear­ly in the life of my Gov­ern­ment we gave gas sup­ply arrange­ments the high­est fo­cus and pri­or­i­ty. We opened and set­tled a gas price with our up­stream com­pa­nies BP and EOG, re­sult­ing in a mul­ti-bil­lion dol­lar ex­plo­ration and pro­duc­tion fren­zy in fields with­in our bor­ders. We opened, ne­go­ti­at­ed and set­tled key out­stand­ing gas con­tracts with the down­stream gas users at Pt Lisas. Even as some new gas is be­gin­ning to come on stream and there have been some in­ter­est­ing suc­cess­es in some new ar­eas, so far we are re­al­ly work­ing very hard to re­place what we are con­sum­ing with an eye on over­all grow­ing re­duc­tion in our re­serves.

Un­der these cir­cum­stances, we opened dis­cus­sions with Venezuela to get agree­ment on ac­cess to their large proven gas fields, just across our bor­der. These re­serves are eco­nom­i­cal­ly and lo­gis­ti­cal­ly more mar­ketable from Trinidad than from Venezuela. Suc­cess in such an ini­tia­tive would pro­vide an ex­ten­sion of our in­volve­ment in the gas busi­ness while it pro­vides op­por­tu­ni­ty for Venezuela to mon­e­tise some of its gas which oth­er­wise would not get to mar­ket in any fore­see­able time frame.

Af­ter dili­gent work on both sides of the bor­der the agree­ment which was signed on Au­gust 25, 2018 be­tween our Na­tion­al Gas Com­pa­ny (NGC), Shell and PDVSA, for the first time, clears the way for the con­struc­tion of pipeline in­fra­struc­ture to al­low us ac­cess to a Venezue­lan gas field. This his­toric de­vel­op­ment, built on the time-ho­n­oured diplo­mat­ic prin­ci­ple of good neigh­bourli­ness for the ben­e­fit of both na­tions, es­tab­lished a com­pet­i­tive gas pric­ing mech­a­nism which is suf­fi­cient­ly at­trac­tive to ex­cite de­vel­op­ment of the Drag­on field which is north-west of us, as well as on the south coast cross-bor­der fields which we share with Venezuela. It gives us some po­ten­tial to grow in the medi­um term and di­ver­si­fy our gas sup­ply base even as it al­most im­me­di­ate­ly adds to the pool of what is avail­able for cur­rent needs. This ini­tia­tive, for us, is about open­ing new doors to­wards se­cur­ing our fu­ture in an in­creas­ing­ly com­pet­i­tive in­ter­na­tion­al busi­ness. We've done it!

As a re­sult of the pri­or­i­ty and the at­ten­tion that we have giv­en it and the suc­cess­ful con­clu­sions which have at­tend­ed our sus­tained ef­forts I can to­day re­port to you that our gas in­dus­try and our fu­ture in this busi­ness that is so crit­i­cal to our well-be­ing, whilst not per­fect yet, is in much bet­ter shape than it was three years ago.

Petrotrin

Trinidad and To­ba­go, even though small in size, is a sig­nif­i­cant play­er on the glob­al stage, es­pe­cial­ly in the nat­ur­al gas and petro­chem­i­cal sec­tor. Over the past decades we moved im­per­cep­ti­bly from oil to gas. How­ev­er, we are still deeply con­nect­ed and in­volved in the pro­duc­tion, re­fin­ing and mar­ket­ing of oil, a busi­ness that has been strug­gling for quite some time. Such is our in­volve­ment in this busi­ness, that the li­a­bil­i­ties of the state com­pa­ny threat­en the cred­it rat­ing and the very fi­nan­cial sta­bil­i­ty of the coun­try as a whole.

I ask you to re­call that in Jan­u­ary 2017, in an ad­dress to the na­tion, I in­vit­ed you to turn your at­ten­tion to the trou­bling state of af­fairs at Petrotrin. At that time I alert­ed you to the com­plex­i­ty of the is­sues as­so­ci­at­ed with the com­pa­ny, in par­tic­u­lar, how it af­fect­ed all of us, the cit­i­zens, es­pe­cial­ly from a fi­nan­cial point of view. As an ex­am­ple, the in­ter­na­tion­al rat­ing agen­cies have con­sid­ered the coun­try’s sov­er­eign rat­ing sta­tus on the ba­sis of the trou­bled fi­nan­cial sta­tus of the oil com­pa­ny and strong­ly warn of fur­ther down­grades if noth­ing sig­nif­i­cant is done to im­prove our po­si­tion in this wors­en­ing ex­po­sure. I re­mind­ed you that there is a $US850 mil­lion bond (TT$6 bil­lion) that is com­ing due for pay­ment in the form of a sin­gle pay­ment in Au­gust 2019 and an­oth­er of al­most US$700 mil­lion that would be due soon af­ter.

It is with mixed feel­ings, one of sad­ness and of re­solve that I re­turn to this is­sue to­day, af­ter months of re­view, analy­sis and con­sul­ta­tions. As you are aware the fu­ture of Petrotrin has been the sub­ject of much neg­a­tive spec­u­la­tion for the past sev­er­al months but in­evitably we must come to the time of de­ci­sion mak­ing as we are forced to aban­don the pro­cras­ti­na­tion and fin­ger point­ing which have on­ly served to wors­en the even­tu­al out­come.

I ap­pre­ci­at­ed the im­por­tance of the oil and gas sec­tor to the well be­ing of Trinidad and To­ba­go be­fore be­com­ing Prime Min­is­ter and that is why two of the first ac­tions tak­en by the Cab­i­net soon af­ter Sep­tem­ber 2015 were to ap­point the Stand­ing Com­mit­tee of En­er­gy, the sub-com­mit­tee of Cab­i­net charged with the re­spon­si­bil­i­ty of de­cid­ing and di­rect­ing pol­i­cy in the oil and gas in­dus­try. We al­so ap­point­ed the boards of di­rec­tors of both Petrotrin and the Na­tion­al Gas Com­pa­ny of Trinidad and To­ba­go Lim­it­ed (NGC).

On Tues­day 28th Au­gust the board of di­rec­tors of Petrotrin, af­ter months of ded­i­ca­tion and hard work, in analy­ses and con­sul­ta­tions, met with its em­ploy­ees and their union rep­re­sen­ta­tives to an­nounce plans for changes that would be im­ple­ment­ed in the com­ing weeks and months to get the com­pa­ny on a path to sus­tain­able prof­itabil­i­ty. These mea­sures are ex­pect­ed to stop the tax­pay­ers fund­ing op­er­a­tions that are los­ing bil­lions of dol­lars and to stop the haem­or­rhag­ing of much val­ued, and much de­mand­ed, for­eign ex­change, US dol­lars. The pri­ma­ry ob­jec­tive of the an­nounced in­ter­ven­tions is to trans­form the busi­ness of the com­pa­ny from chron­ic mon­ey los­ing to a re­turn to prof­itabil­i­ty.

To some, these changes may ap­pear dras­tic, but the sit­u­a­tion at Petrotrin re­quires dras­tic ac­tion. It re­quires in­ter­ven­tion now, in fact be­fore now, but the coun­try’s de­ci­sion mak­ers, whilst know­ing the prob­lem, shied away from the neg­a­tive re­spons­es that were cer­tain to ac­com­pa­ny any cor­rec­tive ac­tion. In short, the Petrotrin fix was al­ways seen to be bad for pol­i­tics and even one’s po­lit­i­cal sur­vival but we have ar­rived at a place now where its on­go­ing fail­ure threat­ens the na­tion­al sur­vival.

Such is my lot.

I humbly ac­cept it as the em­bod­i­ment of the oath of my of­fice, to act “with­out fear or favour, with­out mal­ice or ill will” to any per­son or group of per­sons. This Gov­ern­ment does not have the lux­u­ry of not at­tend­ing to this age old prob­lem. Time is not on our side.

To those whose knee jerk re­ac­tion to this very re­al cri­sis is to threat­en chaos, to burn down the coun­try, to spew in­vec­tives, to de­mo­nize and toss in­sults, none of this as­sists in ad­dress­ing the is­sue in any mean­ing­ful way. This PNM Gov­ern­ment which was re­spon­si­ble for build­ing this coun­try knows that strength and com­pro­mise are not mu­tu­al­ly ex­clu­sive.

I would al­so like to re­mind our peo­ple that we did not al­ways have a re­fin­ery and a Petrotrin. We came to this place be­cause a PNM gov­ern­ment in an ear­li­er time took equal­ly far reach­ing steps to pur­chase and amal­ga­mate the fail­ing as­sets of the pri­vate sec­tor in vi­sion­ary lead­er­ship to bring about that which we are now called up­on to sal­vage and repo­si­tion.

In pre­sent­ing to you the new vi­sion for Petrotrin it is im­por­tant to de­scribe the jour­ney to this point.

The oil in­dus­try has and con­tin­ues to be a ma­jor in­dus­try in Trinidad and To­ba­go. It had its ear­ly be­gin­nings with the dis­cov­ery of oil in La Brea in 1857. The dis­cov­ery of oil cre­at­ed in­ter­est among a first wave of com­pa­nies such as Apex (Trinidad) Oil­fields Lim­it­ed, Unit­ed British Oil­fields of Trinidad (UBOT) and Trinidad Lease­holds Lim­it­ed (TLL). With pro­duc­tion in­creas­ing to one mil­lion bar­rels per day a num­ber of re­finer­ies, in­clud­ing the Point Fortin re­fin­ery in 1912 and in 1917 the Pointe-A-Pierre Re­fin­ery, were es­tab­lished.

As Trinidad and To­ba­go be­came es­tab­lished as a proven oil province, in­ter­na­tion­al oil com­pa­nies Roy­al Dutch (Shell), Tex­a­co, British Pe­tro­le­um and lat­er Tesoro be­gan op­er­a­tions in the coun­try. These IOCs were suc­ceed­ed by state-owned Trinidad and To­ba­go Oil Com­pa­ny Ltd (TRIN­TOC) and Trinidad Pe­tro­le­um Com­pa­ny Ltd (TRIN­TOPEC) which were merged in­to the Pe­tro­le­um Com­pa­ny of Trinidad and To­ba­go Lim­it­ed (Petrotrin).

The oil in­dus­try in Trinidad and To­ba­go has a che­quered past and has had to adapt to a se­ries of do­mes­tic and glob­al fac­tors to en­sure its sur­vival. The in­dus­try has gone through pe­ri­ods of boom and bust. The ini­tial ear­ly suc­cess in the 1920s prof­it­ed from the then oil boom and led to de­vel­op­ment of new pop­u­la­tion cen­tres in South West­ern Penin­su­la such as Hard Bar­gain, Re­trench and Point Fortin. How­ev­er, by the 1930s dis­cov­er­ies of large oil­fields in the USA con­tributed to an over­sup­ply sit­u­a­tion and a glob­al fall in oil prices. The com­bi­na­tion of low oil prices and labour is­sues con­tributed to the de­cline of oil prof­itabil­i­ty in the do­mes­tic econ­o­my. The lat­ter pe­ri­od 1940 to 1960 was a pe­ri­od of con­sol­i­da­tion and saw the en­try of the in­ter­na­tion­al oil com­pa­nies Shell, Tex­a­co and British Pe­tro­le­um.

In the ear­ly 1900s there were sev­er­al small re­finer­ies op­er­at­ing in Trinidad, in­clud­ing plants in Pa­lo Seco; San­ta Flo­ra; Brighton, La Brea and Point Fortin. These were all closed over time as they be­came non-vi­able, ei­ther be­cause of ag­ing tech­nol­o­gy or sup­ply and cost chal­lenges. The Point Fortin re­fin­ery was the last to be shut down in 1990 to make way for At­lantic LNG as Trinidad and To­ba­go shift­ed its em­pha­sis from oil to nat­ur­al gas.

Fol­low­ing a pe­ri­od of growth, the in­dus­try was be­set by ris­ing costs, com­pe­ti­tion from sup­plies of low cost crude from the Mid­dle East and Africa and con­struc­tion of new re­finer­ies in Eu­rope and the Unit­ed King­dom. This led to a de­cline in pro­duc­tion, prices, and the sub­se­quent with­draw­al, first by Shell, and then Tesoro and Tex­a­co from the do­mes­tic en­er­gy sec­tor.

Oil re­fin­ing start­ed in Point a Pierre in 1917 with a pro­duc­tion of 1200 bar­rels per day (bpd) and by the 1980s Tex­a­co, the own­ers of the re­fin­ery with a sup­ply of oil from all over the world took pro­duc­tion up to 355,000 bpd, much of it fu­el oil which was in great de­mand in those days.

By 1984 this re­fin­ing busi­ness was in trou­ble and los­ing mon­ey, fac­ing clo­sure by the in­ter­na­tion­al oil gi­ant. It was against this back­ground of un­cer­tain­ty and even de­spair that on Au­gust 30th 1984, un­der Prime Min­is­ter George Cham­bers, the al­ready an­ti­quat­ed and fail­ing re­fin­ery was pur­chased for $189.2 mil­lion of which $98m was paid in cash and the bal­ance paid in re­fined prod­uct over a ten-month pe­ri­od.

In March 1985, a few months af­ter we bought the Tex­a­co re­fin­ery, an ar­ti­cle in the New York Times re­port­ed, “The Gov­ern­ment agreed to buy the mon­ey-los­ing re­fin­ery, of­fi­cials say, main­ly to save more than 3000 jobs.”

It was against this back­ground that our ne­go­ti­at­ing and ad­vi­so­ry team which in­clud­ed Dod­deridge Al­leyne and Eu­ric Bobb, two of our most dis­tin­guished sons of this na­tion, ad­vised that the re­fin­ery through­put be im­me­di­ate­ly cut back to 120,000 bpd and it was not­ed even then that there was a need for re­fin­ery up­grade to re­duce the high yield of fu­el oil. To­day with a re­fin­ing ca­pac­i­ty of 140,000 bpd the lo­cal pro­duc­tion avail­able for re­fin­ing is 40,000 bar­rels. We re­al­ly de­pend most­ly on a dai­ly im­por­ta­tion of 100,000 bpd which we re­fine at a sig­nif­i­cant and con­stant loss. With the help of in-depth analy­ses by lo­cal and for­eign ex­per­tise we have looked at a num­ber of op­er­a­tional busi­ness mod­els for the re­fin­ery op­er­a­tions and they all in­di­cate that the re­fin­ery is and will con­tin­ue to be an in­creas­ing mon­ey los­er. In fact, the analy­ses show that the rest of the com­pa­ny, Ex­plo­ration and Pro­duc­tion, if op­er­at­ed prop­er­ly and sep­a­rat­ed from the re­fin­ery it could be a good busi­ness which could pro­duce hand­some div­i­dends to the share­hold­er, the tax­pay­ers of Trinidad and To­ba­go. It is this ad­vice that has fi­nal­ly been ac­cept­ed by the Cab­i­net af­ter about a year of in­ten­sive work.

With­in hours of the last meet­ing with the board to sign off on the ac­cep­tance of this di­rec­tion and on this de­ci­sion to close the re­fin­ery and get out of the oil im­por­ta­tion busi­ness, I as Prime Min­is­ter, re­quest­ed a meet­ing with the ma­jor­i­ty trade union, the ven­er­a­ble OW­TU. This meet­ing took place at the Of­fice of the Prime Min­is­ter on Tues­day 21st Au­gust, 2018. Tough as it was and emo­tive as the sit­u­a­tion is, in the pres­ence of a group of min­is­ters and pub­lic ser­vant and a sev­en-man ex­ec­u­tive group from the union, the Gov­ern­ment out­lined the whole sce­nario of the con­clu­sion of the year­long ex­er­cise and in­di­cat­ed to some sur­prise that in or­der to mean­ing­ful­ly re­struc­ture the com­pa­ny the re­fin­ery op­er­a­tions must cease.

There is no gain­say­ing the fact that we have ben­e­fit­ed well from the Cham­bers gov­ern­ment pur­chase in 1984 but we have been strug­gling with the re­fin­ery since then. In the mean­time as our oil pro­duc­tion fell con­sis­tent­ly the cost of op­er­a­tions in­creased vir­tu­al­ly un­con­trol­lably and we ba­si­cal­ly op­er­ate a re­fin­ing busi­ness which is large­ly de­pen­dent on for­eign oil in­puts. All the oth­er re­finer­ies in the re­gion which had this same busi­ness mod­el, in Cu­ra­cao, Aru­ba and St Croix, have long since closed be­cause they saw it as not a vi­able busi­ness. In Trinidad and To­ba­go we sol­diered on and took the op­por­tu­ni­ty to the fur­thest that we could car­ry it and that is where we are now.

Per­mit me a mo­ment, this evening, to share with you, the stake­hold­ers, the cit­i­zens of Trinidad and To­ba­go, who are the own­ers of Petrotrin, why these changes are nec­es­sary now and how we got to the de­ci­sions that were an­nounced last week.

The Petrotrin from TEX­A­CO

Sad­ly, the new en­ti­ty Petrotrin which was en­trust­ed with the coun­try’s proven oil re­serves has failed to ful­ly de­liv­er on our ex­pec­ta­tions. There have been many in­stances and/or arrange­ments which can on­ly be de­scribed as gross mis­man­age­ment of the na­tion­al pat­ri­mo­ny. Every project with­in the past few decades has been sub­ject to mas­sive cost over­runs and lengthy de­lays.

The Gaso­line Op­ti­miza­tion Pro­gramme, which in 2005 was es­ti­mat­ed at a cost of US$350 mil­lion (ap­prox TT$2.450 bil­lion), was com­plet­ed in 2013 at a cost of US$1.8b (ap­prox TT$12.6b).

Its Gas to Liq­uid Project, which orig­i­nal­ly es­ti­mat­ed at a cost of US$165m (ap­prox TT$1.155b), was aban­doned af­ter Petrotrin had in­curred in ex­cess of US$450m (ap­prox TTD$3.150b) and its as­sets were re­cent­ly sold for US$35m (ap­prox TT$245m).

The lat­est of these projects, the Ul­tra-Low Sul­phur Diesel Project, was es­ti­mat­ed to cost US$113m (ap­prox TT$791m) and to date Petrotin has ex­pend­ed US$413m (ap­prox TT$2.891b). Whilst the project is 98% me­chan­i­cal­ly com­plet­ed it can­not be op­er­at­ed be­cause the struc­tur­al spec­i­fi­ca­tions were not ad­hered to, mean­ing the foun­da­tion is faulty and can­not be used and what is worse no one nor any en­ti­ty has been held ac­count­able for this ex­pen­sive trav­es­ty. The cost to rec­ti­fy this omis­sion is es­ti­mat­ed at US$350m (ap­prox­i­mate­ly TT$2.450b), mon­ey which we do not have and can­not eas­i­ly bor­row.

Un­for­tu­nate­ly, the night­mare does not end with these dis­as­trous projects, the com­pa­ny now bor­ders on in­sol­ven­cy as its cost of op­er­a­tions far ex­ceeds its rev­enue. Sur­vival has on­ly been pos­si­ble through the non-pay­ment of tax­es and roy­al­ties ow­ing to the Gov­ern­ment as well as the procur­ing of Gov­ern­ment guar­an­tees for loans from fi­nan­cial in­sti­tu­tions.

On its as­sump­tion of of­fice in 2015 the Gov­ern­ment recog­nised that Petrotrin would be a ma­jor chal­lenge. There­fore, as stat­ed, one of the ear­li­est de­ci­sions of this ad­min­is­tra­tion was to ap­point a broad-based Com­mit­tee, chaired by En­er­gy ex­pert Sel­wyn Lash­ley, for­mer Per­ma­nent Sec­re­tary in the Min­istry of En­er­gy. It al­so in­clud­ed Labour rep­re­sen­ta­tives and Leroy May­ers, for­mer Per­ma­nent Sec­re­tary of the Min­istry of Fi­nance. They were to do an overview of the sit­u­a­tion and make rec­om­men­da­tions.

Fol­low­ing up­on the Lash­ley re­port be­ing sub­mit­ted to the En­er­gy Sub Com­mit­tee of the Cab­i­net it was sub­ject­ed to sep­a­rate re­view and deep­er analy­sis by the Min­istry of En­er­gy, the Min­istry of Fi­nance and by Petrotrin it­self. Sub­se­quent to the re­port of all these en­ti­ties a new board was ap­point­ed with a man­date to re­view the en­tire state of af­fairs of the com­pa­ny and come up with a clear busi­ness plan for its turn­around. This work has been done.

In 2016 the man­age­ment of Petrotrin pro­vid­ed an up­date on the com­pa­ny’s op­er­a­tions and its fi­nan­cial sit­u­a­tion. The pre­sen­ta­tion was not re-as­sur­ing and high­light­ed the fol­low­ing:

Cash flow Chal­lenges - the then cur­rent glob­al prices for crude and pe­tro­le­um prod­ucts im­pact­ed neg­a­tive­ly on Pe­tro­le­um op­er­a­tions and as re­sult the com­pa­ny was seek­ing a guar­an­tee for short term work­ing cap­i­tal cred­it sup­port. At the end of 2015 short term loans al­ready amount­ed to US$715m (ap­prox. TT$5.005b).

De­fi­cient As­set In­tegri­ty - The de­fi­cien­cies have been re­flect­ed in ma­jor spills. The sum of $7b was es­ti­mat­ed for the re­quired up­grade and main­te­nance work for plant, equip­ment and in­stal­la­tions. La Brea, the Gulf of Paria, the south­west­ern penin­su­la and the Venezue­lan ter­ri­to­ry have al­ready ex­pe­ri­enced this night­mare.

De­clin­ing land and ma­rine pro­duc­tion - Oil pro­duc­tion av­er­aged 45,000 bar­rels per day and to this day con­tin­ues de­cline. This de­cline was par­tial­ly due to the com­pa­ny’s cost of ex­plo­ration and pro­duc­tion and al­so due to the use by the com­pa­ny of its cash re­sources on the re­fin­ery side in­clud­ing that pur­chase of ap­prox­i­mate­ly 100,000 bar­rels of crude oil per day, in­stead of us­ing the cash on ex­plo­ration and pro­duc­tion.

Man­pow­er - the com­pa­ny was heav­i­ly over­staffed and there were de­fi­cien­cies in tech­ni­cal com­pe­ten­cies in key dis­ci­plines. Man­pow­er costs then ac­count­ed for about 47% of re­cur­rent ex­pen­di­ture and the com­pa­ny was ex­plor­ing a re­duc­tion in staffing.

Fi­nan­cial Fore­cast - Man­age­ment pro­ject­ed a loss of $648m in 2016 and re­turn to prof­it of $635m by 2020. Debt was pro­ject­ed to fall from $12.3b in 2016 to $7.2b by 2020. The ac­tu­al loss for 2016 turned out to be not $635m but $4.3b. Man­age­ment’s pro­jec­tions were far re­moved from re­al­i­ty. Un­for­tu­nate­ly, this kind of dis­con­nect from re­al­i­ty is shared by oth­er key el­e­ments of the equa­tion.

The Lash­ley Re­port of June 2017 was re­ceived by a Gov­ern­ment alarmed by the de­te­ri­o­rat­ing fi­nan­cial po­si­tion of Petrotrin. The sit­u­a­tion cried out for in­ter­ven­tion and re­struc­tur­ing

That Lash­ley Team’s as­sess­ment of Petrotrin is in­struc­tive and out­lined the fol­low­ing:

* Petrotrin’s oil pro­duc­tion has been in steady de­cline.

* That Petrotrin was over­bur­dened with debt. The net debt at fi­nan­cial year-end 2015 amount­ed to $11.4b. Gov­ern­ment pro­vid­ed guar­an­tees for short term loans of US$230m (ap­prox­i­mate­ly TTD$1.610b) to sup­port its op­er­a­tions and to meet fi­nan­cial oblig­a­tions.

* Tax­es and roy­al­ties owed to Gov­ern­ment amount­ed to $3.1b as at Feb­ru­ary 28, 2017.viz the com­pa­ny was not com­ply­ing with the tax laws and even when it col­lect­ed tax­es from com­pa­nies that paid their tax­es to Petrotrin for on­ward trans­mis­sion to the Min­istry of Fi­nance Petrotrin was huff­ing and uti­liz­ing those monies in its own op­er­a­tions.

* The com­pa­ny was un­prof­itable and the out­look was for a wors­en­ing of op­er­a­tions un­less there was a sig­nif­i­cant cap­i­tal in­jec­tion (which could on­ly come from the Gov­ern­ment which in its cur­rent fi­nan­cial sit­u­a­tion is in no po­si­tion to un­der­take these kinds of bailout ex­pen­di­tures).

* There was a need for a par­a­digm shift in the gov­er­nance and man­age­ment of Petrotrin.

Based on its find­ings the Team sub­mit­ted two rec­om­men­da­tions:

* The im­po­si­tion of gov­er­nance arrange­ments, which al­low for trans­paren­cy and ac­count­abil­i­ty, in­clud­ing the se­lec­tion of mem­bers of the board, and the com­pa­ny be man­aged as com­pet­i­tive busi­ness, aimed at be­com­ing a vi­able en­ti­ty.

* The com­pa­ny be re­struc­tured as three in­de­pen­dent busi­ness units, name­ly Trin­mar, Land Ex­plo­ration and Pro­duc­tion and Re­fin­ing and Mar­ket­ing.

In keep­ing with Gov­ern­ment’s com­mit­ment to trans­paren­cy, a meet­ing was held by the Min­is­ter of En­er­gy and En­er­gy In­dus­tries with the OW­TU which was led by its Pres­i­dent Gen­er­al on Wednes­day 19th Ju­ly 2017 where the re­port was dis­cussed.

At the meet­ing the Min­is­ter of En­er­gy and En­er­gy In­dus­tries out­lined the un­sat­is­fac­to­ry fi­nan­cial po­si­tion of Petrotrin, which for the nine months end­ed June 30, 2017 in­clud­ed the fol­low­ing:

* Trin­mar loss of $124m;

* Re­fin­ing and Mar­ket­ing loss of $1.038b;

* Work­ing Cap­i­tal Deficit of $6.577b; and

* Roy­al­ty and Tax­es to Gov­ern­ment of $3.220b owed to the Min­istry of Fi­nance un­der law.

The Min­is­ter al­so shared with the OW­TU the rec­om­men­da­tions of the Lash­ley Com­mit­tee for the re­struc­tur­ing of Petrotrin. The OW­TU sup­port­ed the idea of re­struc­tur­ing Petrotrin in­to Busi­ness Units, the need for greater ac­count­abil­i­ty and the strength­en­ing of the board of di­rec­tors.

It is note­wor­thy that in 2017 the com­pa­ny’s au­di­tors ad­vised that it write off over $4b in ac­cu­mu­lat­ed loss­es. This had a se­ri­ous im­pact on Petrotrin’s bal­ance sheet at a time when it was al­ready fi­nan­cial­ly crip­pled.

Fol­low­ing its re­view, Cab­i­net in Sep­tem­ber 2017 ac­cept­ed the re­port and rec­om­men­da­tions of the Lash­ley Com­mit­tee for the re­struc­tur­ing of Petrotrin. The de­tails and specifics of that re­struc­tur­ing was now to be worked out and ac­tioned

Cab­i­net al­so agreed that:

* The re­struc­tured Petrotrin must be man­aged and gov­erned as a com­pet­i­tive busi­ness, aimed at be­com­ing a sus­tain­able prof­itable en­ti­ty.

* The com­pa­ny en­gage the recog­nised trade union rep­re­sent­ing the em­ploy­ees of Petrotrin to dis­cuss cost re­duc­tion and sur­vival strate­gies re­quired for the com­pa­ny to con­tin­ue.

In or­der to treat with this very se­ri­ous and ur­gent as­sign­ment by Sep­tem­ber 2017 the Gov­ern­ment of Trinidad and To­ba­go ap­point­ed a new board of di­rec­tors at Petrotrin and gave it a clear and spe­cif­ic man­date - to iden­ti­fy the spe­cif­ic prob­lems at Petrotrin and take the steps nec­es­sary to make the com­pa­ny sus­tain­able and prof­itable.

Pri­or to the ap­point­ment of the new board of Petrotrin, I in­for­mal­ly in­vit­ed the Pres­i­dent Gen­er­al of the OW­TU to dis­cuss the way for­ward for Petrotrin, in an­tic­i­pa­tion of the out­come of the work of the new board but un­for­tu­nate­ly this in­vi­ta­tion was de­clined. It has al­ways been my prin­ci­ple in deal­ing with Petrotrin to en­gage all stake­hold­ers and pro­vide us all with op­por­tu­ni­ties to work to­geth­er to find so­lu­tions. I al­so in­vit­ed Labour to sit on the new board of Petrotrin but that too was de­clined. It should al­so be not­ed that when the Gov­ern­ment host­ed, at the Hy­att, the Spot­light on the En­er­gy Sec­tor, once again the OW­TU de­clined, on the grounds that they were not in­vit­ed.

Notwith­stand­ing these re­spons­es, the Gov­ern­ment stayed fo­cused on the task ahead and on which it was firm­ly en­gaged. The re­port of the team (the Lash­ley Com­mit­tee) ap­point­ed to re­view the op­er­a­tions of Petrotrin and make rec­om­men­da­tions for its re­struc­tur­ing was laid as a Pa­per in the House of Rep­re­sen­ta­tives and re­ferred to the Joint Se­lect Com­mit­tee on En­er­gy Af­fairs on Fri­day No­vem­ber 10, 2017.

The com­mit­tee dis­cussed the re­port at a num­ber of meet­ings, which in­clud­ed pub­lic hear­ings with both Petrotrin and the Min­istry of En­er­gy and En­er­gy In­dus­tries.

Now that the ac­tu­al de­ci­sions have been tak­en in keep­ing with the rec­om­men­da­tions and re­views, pro­fes­sion­al ex­perts’ overviews and de­tailed analy­sis, it is disin­gen­u­ous for any per­son, es­pe­cial­ly those in­volved, to plead lack of trans­paren­cy and sud­den­ness of Gov­ern­ment ac­tion which should now be set aside in favour of “con­sul­ta­tion” and “Par­lia­men­tary” dis­cus­sion. These calls are noth­ing but self-serv­ing, stalling tac­tics and po­lit­i­cal sub­terfuge, in­tend­ed to main­tain the sta­tus quo, even as the com­pa­ny sinks dai­ly in­to a deep­er quag­mire and the whole coun­try’s fi­nan­cial sit­u­a­tion be­comes more ex­posed to dis­as­trous down­grade if the Petrotrin prob­lem is not ad­dressed.

Petrotrin is Trinidad and To­ba­go’s largest state en­ter­prise. It op­er­ates in the in­dus­try that has been the coun­try’s lifeblood for more than a cen­tu­ry. It has with­in its port­fo­lio some of Trinidad and To­ba­go’s most prized land and off­shore oil and gas acreage.

This is a com­pa­ny that is sup­posed to be one of the ma­jor con­trib­u­tors to the na­tion­al econ­o­my. When such an en­ter­prise is los­ing mon­ey to the point where it can’t com­ply with the law, we have a ma­jor prob­lem. As I said be­fore, Petrotrin has be­come, for some time now, a ward of the trea­sury in­stead of a con­trib­u­tor to the trea­sury.

What this sit­u­a­tion means is this:

a) mon­ey that the com­pa­ny should turn over to the min­istry of Fi­nance is held with­in the com­pa­ny for its own use (il­le­gal)

b) mon­ey that is with the Min­istry of Fi­nance and need­ed to ser­vice the health sec­tor, so­cial ser­vice and oth­er na­tion­al pri­or­i­ties has to go to the Petrotrin to keep it afloat. This re­flects it­self in short­ages of health care staff, in­suf­fi­cient med­i­cine in the hos­pi­tals, re­duc­tions in CDAP and sim­i­lar de­pri­va­tions.

In the ed­u­ca­tion sec­tor we have many schools where con­struc­tion has been stalled for want of funds and over­all, con­trac­tors who did de­vel­op­ment works for the state are owed hun­dreds of mil­lions which we are strug­gling to pay, so that chil­dren all over the na­tion can get their ed­u­ca­tion in a safe and com­fort­able en­vi­ron­ment.

There are ur­gent sus­tained pri­or­i­ties in Na­tion­al Se­cu­ri­ty where we have had to ground four he­li­copters be­cause we can­not af­ford to pay the mil­lions to main­tain them.

In the so­cial ser­vices sec­tor, we are un­able to pro­vide an ex­tra dol­lar to the vul­ner­a­ble peo­ple who need it most, nor can we bring a few more needy per­sons on­to the pro­grams even though their cir­cum­stances war­rant the as­sis­tance. We are hav­ing dif­fi­cul­ty con­vinc­ing Pub­lic Ser­vants that they can­not look for­ward to any sig­nif­i­cant pay in­creas­es since the mon­ey is just not there to do so at this time. Yet the Min­is­ter of Fi­nance is hav­ing to back­stop huge loss­es at the re­fin­ery with lit­tle or no hope of re­cov­ery.

So you see fel­low cit­i­zens this is not just a Petrotrin is­sue. We are all in this to­geth­er. We have all been pay­ing to­wards the loss­es and debt that I men­tioned. We are all pay­ing to keep the bad sit­u­a­tion go­ing and we will all ben­e­fit when we fix it.

The cur­rent board of Petrotrin sought to get a thor­ough un­der­stand­ing of the sit­u­a­tion at the com­pa­ny and worked with ‘best in class’ ad­vi­sors and pe­tro­le­um in­dus­try ex­perts - both lo­cal and in­ter­na­tion­al - to de­ter­mine pos­si­ble op­tions giv­en the com­pa­ny’s crit­i­cal fi­nan­cial state and its de­te­ri­o­rat­ing as­sets. This is an op­por­tune mo­ment for me to tell you that the nine mem­ber board of Petrotrin is one of the most qual­i­fied and ex­pe­ri­enced state en­ter­prise boards, de­spite sug­ges­tions oth­er­wise.

From the on­set it was ap­par­ent that while there was some po­ten­tial on the Ex­plo­ration and Pro­duc­tion side of the busi­ness, Re­fin­ing & Mar­ket­ing was at best mar­gin­al. The re­fin­ery was los­ing mon­ey on every bar­rel of oil it re­fined.

In De­cem­ber 2017, the new board met with the Gov­ern­ment to present its find­ings and lat­er met with Petrotrin’s unions and its em­ploy­ees to do the same.

The Gov­ern­ment al­so met with the OW­TU and oth­er unions in Feb­ru­ary 2018 and amongst the is­sues dis­cussed it was in­di­cat­ed to the unions, in­clud­ing the OW­TU, that the Gov­ern­ment was in­tend­ing to have a pub­lic sym­po­sium with rep­re­sen­ta­tives of the busi­ness com­mu­ni­ty, labour and gov­ern­ment to dis­cuss the en­er­gy sec­tor, this was the “Spot­light on En­er­gy”. It was in­tend­ed that the state of Petrotrin should be ad­dressed at the Spot­light on En­er­gy; un­for­tu­nate­ly, labour ad­vised that this sem­i­nal event should not be held and re­fused to at­tend or par­tic­i­pate in this na­tion­al dis­cus­sion. Labour was the first stake­hold­er body to be in­formed of this in­tend­ed ini­tia­tive.

It was recog­nised that the com­pa­ny and unions had a com­mon in­ter­est with re­spect to the sur­viv­abil­i­ty, sus­tain­abil­i­ty and prof­itabil­i­ty of Petrotrin. Notwith­stand­ing its prof­itabil­i­ty in the dis­tant past, the com­pa­ny and the unions un­der­stood that Petrotrin must be­come com­pet­i­tive with­in the prin­ci­ple of in­ter­na­tion­al bench­marks to be prof­itable.

Petrotrin’s busi­ness mod­el has be­come ob­so­lete and un­com­pet­i­tive and its op­er­at­ing prac­tices are in­ef­fi­cient. The com­pa­ny was nowhere in line with glob­al in­dus­try stan­dards and best prac­tice. In fact the com­pa­ny’s op­er­a­tions are iden­ti­fied as be­ing among the most in­ef­fi­cient in the world.

Left as it is, Petrotrin will re­quire an im­me­di­ate $25b cash in­jec­tion just to stay alive. There is no way that the com­pa­ny can find this mon­ey. No fi­nancier will lend it be­cause the com­pa­ny sim­ply will not be able to re­pay such an ad­di­tion­al loan. The Gov­ern­ment cer­tain­ly can­not ask you, the tax­pay­ers, un­der our cur­rent cir­cum­stances to bank-roll this state of af­fairs. If not fixed, on this scale, the com­pa­ny is pro­ject­ed to con­tin­ue ac­cu­mu­lat­ing loss­es at a rate of about $2 b il­lion a year.

Main­te­nance of the sta­tus quo is not sus­tain­able. It is un­for­tu­nate­ly not a vi­able op­tion. To do so is to sad­dle fu­ture gen­er­a­tions with a mas­sive debt bur­den and, at the same time, un­der­mine the Gov­ern­ment’s abil­i­ty to fund ur­gent and nec­es­sary in­fra­struc­tur­al works and so­cial de­vel­op­ment. This af­fects every cit­i­zen of Trinidad and To­ba­go. If not dealt with now, the neg­a­tive ef­fects will sim­ply just con­tin­ue to get worse by the ac­cu­mu­la­tion of more debt.

To get the re­fin­ing side of the busi­ness to a point where it might have a chance to break even would cost $7b. This would in­volve sig­nif­i­cant staff cuts, huge as­sump­tions re­gard­ing ef­fi­cien­cy im­prove­ments, a new Ul­tra Low Sul­phur Diesel fa­cil­i­ty and in­fra­struc­ture up­grades, all of which are im­pos­si­ble to fi­nance.

The Gov­ern­ment’s vi­sion is for Petrotrin to be prof­itable and in­ter­na­tion­al­ly com­pet­i­tive and a leader in the lo­cal en­er­gy sec­tor; an em­ploy­er of choice and a source of na­tion­al pride.

The board is de­vel­op­ing a mod­el for Petrotrin that is de­signed specif­i­cal­ly to man­age its as­sets to yield the most val­ue for Trinidad and To­ba­go.

The com­pa­ny will be bet­ter struc­tured, with im­proved work process­es and the ca­pac­i­ty to re­spond quick­ly to changes in the in­ter­na­tion­al mar­ket.

Our Point-a-Pierre re­fin­ery is a hun­dred and one years old and has reached the end of its com­mer­cial­ly vi­able days. It is now at a stage where it is haem­or­rhag­ing cash and the cost of re­ha­bil­i­tat­ing it is way more than its po­ten­tial to ever be prof­itable, com­pet­i­tive or sus­tain­able.

The on­ly com­mer­cial­ly sound and vi­able op­tion is to close the re­fin­ery; ex­port Petrotrin’s oil which will be pro­duced by an ef­fi­cient and ag­gres­sive ex­plo­ration pro­gramme and to im­port prod­ucts to re­place those pre­vi­ous­ly sup­plied by the Point-a-Pierre re­fin­ery. This will move the com­pa­ny from a state of chron­ic mon­ey los­ing to one which will turn a tidy prof­it for the tax­pay­ers.

The re­fin­ing as­sets of Petrotrin can now be put in a sep­a­rate com­pa­ny for op­por­tu­ni­ty at­ten­tion. The OW­TU will be giv­en the first op­tion to own and op­er­ate it on the most favourable terms.

The de­ci­sion to close the re­fin­ery was tak­en af­ter de­tailed analy­sis and deep in­tro­spec­tion. This is not a de­ci­sion that was made light­ly or eas­i­ly. Op­tions were ex­plored and re­viewed. We sent the board back on a num­ber of oc­ca­sions to con­sid­er dif­fer­ent sce­nar­ios and pos­si­bil­i­ties. At every step the ef­fect on work­ers and their fam­i­lies and the com­mu­ni­ties that re­ly on re­fin­ery op­er­a­tions was con­sid­ered.

Work­ers and Con­trac­tors

The Gov­ern­ment is acute­ly aware of the trau­mat­ic ef­fect of this de­vel­op­ment on all the work­ers, their fam­i­lies and the wider fence line com­mu­ni­ties such as Mara­bel­la, Point-a-Pierre, Gas­par­il­lo, San Fer­nan­do and sur­round­ings. In or­der to min­imise the over­all neg­a­tive ef­fects of this in­evitable de­ci­sion to get out of re­fin­ing the Gov­ern­ment will en­sure that the work­ers who are sur­plus to the re­quire­ment of the re­newed ef­fort leave the com­pa­ny with an at­trac­tive sep­a­ra­tion pack­age that should be well re­ceived and backed up by the as­sured pen­sion pay­ments to come. The wider pop­u­la­tion in these fence-line com­mu­ni­ties will ben­e­fit from some de­lib­er­ate ad­di­tion­al Gov­ern­ment ex­pen­di­ture on in­fra­struc­ture and so­cial sup­port.

Every­one in­volved in this process is acute­ly aware of the very sig­nif­i­cant im­pact that these the de­ci­sions will have on Petrotrin’s em­ploy­ees and their fam­i­lies. The dif­fi­cult fact is that we had no choice. To have left the com­pa­ny as it was would have on­ly made the sit­u­a­tion worse. The de­ci­sion would have been tak­en out of our hands and we would not have been in a po­si­tion to cush­ion the ef­fect of the changes.

By mov­ing to fix the com­pa­ny now, we are in a po­si­tion to treat em­ploy­ees with care and con­cern by soft­en­ing the ef­fects of the re­quired ad­just­ments. The com­pa­ny will treat every em­ploy­ee with dig­ni­ty and pro­vide ser­vices such as fi­nan­cial ad­vice and em­ploy­ee as­sis­tance pro­grammes for psy­cho­log­i­cal sup­port.

Work­ers are ex­pect­ed to re­ceive sig­nif­i­cant fi­nan­cial pack­ages up­on ties be­ing sev­ered with the com­pa­ny.

In Re­fin­ing and Mar­ket­ing, ap­prox­i­mate­ly 1,700 per­ma­nent work­ers will be af­fect­ed. In Ex­plo­ration and Pro­duc­tion, em­ploy­ment lev­els are to be re­duced from 1,700 work­ers to ap­prox­i­mate­ly 800 per­sons. A large num­ber of these work­ers, those over 50, may be able to ex­it by way of at­trac­tive ear­ly re­tire­ment pack­ages.

As the com­pa­ny now fo­cus­es on sig­nif­i­cant ex­pan­sion of ex­plo­ration and pro­duc­tion ac­tiv­i­ties, this will pos­i­tive­ly im­pact the com­mu­ni­ties of the south west­ern penin­su­la. It will be a sig­nif­i­cant re-in­vig­o­ra­tion of the oil econ­o­my in these ar­eas bring­ing much new or ex­pand­ed busi­ness not just for Petrotrin but op­por­tu­ni­ties for the many ser­vice com­pa­nies which will be as­so­ci­at­ed with this new busi­ness mod­el.

In the com­ing weeks the Gov­ern­ment will take part in the an­nounce­ment and par­tic­i­pa­tion in at least two sig­nif­i­cant in­dus­tri­al projects in the south­west­ern penin­su­la. Ini­tia­tives like these will cer­tain­ly con­tribute to the new be­gin­ning that we are work­ing to­wards.

In­creased drilling and pro­duc­tion works, both on land and off­shore, are to be ex­pect­ed in the new busi­ness mod­el. There will be in­creased use of ser­vice con­trac­tors and sup­pli­ers and this should cush­ion the ef­fects of loss of some op­por­tu­ni­ties at the re­fin­ery.

Na­tion­al Fu­el Sup­ply

Trinidad and To­ba­go con­sumes less than 25,000 bar­rels of re­fined prod­ucts a day (gaso­line, diesel, jet fu­el, etc.). The de­tailed eco­nom­ic analy­ses have shown that it makes far more sense for us to ex­port the 40,000 bar­rels of oil that we cur­rent­ly pro­duce and im­port the fu­el we need. The com­pa­ny will now fo­cus on in­creas­ing the pro­duc­tion of bar­rels of oil and each bar­rel will be sold ex­ter­nal­ly on the open mar­ket.

This will help to im­prove the coun­try’s earn­ing po­ten­tial.

In cater­ing for the na­tion’s needs the com­pa­ny will move smooth­ly in­to bunker­ing of re­fined prod­ucts for sup­ply­ing the re­gion­al mar­ket with­out hav­ing to lose mon­ey through our own re­fin­ery in­ef­fi­cien­cies.

This week’s an­nounce­ment is a first step in that di­rec­tion, it is now for every­one in­volved - the lead­er­ship, the em­ploy­ees, sup­pli­ers, con­trac­tors, lease op­er­a­tors and labour rep­re­sen­ta­tives to trans­form this po­ten­tial in­to re­al­i­ty.

With the ter­mi­na­tion of the Re­fin­ing busi­ness and the re­design of Ex­plo­ration and Pro­duc­tion, Petrotrin can now in­de­pen­dent­ly fi­nance all of its debt and be­come a sus­tain­able busi­ness. It will al­so ease the bur­den on the Min­istry of Fi­nance there­by mak­ing more re­sources avail­able to ser­vice the needs of the wider pop­u­la­tion in all ar­eas of na­tion­al de­vel­op­ment.

There is op­por­tu­ni­ty for new en­tre­pre­neur­ship to grow and work­ers and busi­ness­es should not be mis­led and fall prey to mis­in­for­ma­tion and fear mon­ger­ing.

Change like this is al­ways dif­fi­cult and even trau­mat­ic; but the good of the coun­try must look ahead.

We see this as an op­por­tu­ni­ty to save the coun­try from fi­nan­cial dis­as­ter and turn­around a sit­u­a­tion that had be­come an un­sus­tain­able drain on tax­pay­ers. But let us not be nalve, there are el­e­ments in our so­ci­ety who do not view this change the same way but see it as an op­por­tu­ni­ty to fur­ther their own ends in mis­chief mak­ing.

I am ap­peal­ing to all those di­rect­ly or in­di­rect­ly af­fect­ed to be strong and have faith in your coun­try.

I want to give you the as­sur­ance that the same re­solve that took us to make the de­ci­sion to close the re­fin­ery is the same strength of char­ac­ter which will see this Gov­ern­ment put your anx­i­ety ahead of any oth­er con­sid­er­a­tion and will un­der­take to al­lo­cate re­sources so that calm and pros­per­i­ty will soon re­turn to you and your neigh­bour­hoods.

Dur­ing this dif­fi­cult pe­ri­od of tran­si­tion and un­cer­tain­ty there will be those who have dif­fer­ent views on the way for­ward; this is on­ly nat­ur­al; it is im­por­tant that every­one who works for or with Petrotrin re­mains com­mit­ted to op­er­at­ing in the best in­ter­est of all the peo­ple of Trinidad and To­ba­go and ac­knowl­edge their oblig­a­tion to the na­tion.

We ap­peal for the un­der­stand­ing and sup­port of all con­trac­tors and em­ploy­ees (per­ma­nent; tem­po­rary or ca­su­al) at this crit­i­cal time in the com­pa­ny’s his­to­ry. Un­nec­es­sary work stop­pages and oth­er con­trived in­dus­tri­al ac­tions are not in the na­tion’s best in­ter­est. This will on­ly ob­struct the al­ready em­bat­tled com­pa­ny, and de­lay this ir­re­versible and un­avoid­able process geared to­wards con­vert­ing a mon­ey los­ing com­pa­ny in­to a prof­itable en­ter­prise for the ben­e­fit of the en­tire na­tion.

It is my sin­cere hope that you will rec­og­nize the im­pli­ca­tions that such ac­tion can have on our stake­hold­ers, in­clud­ing those to whom we are heav­i­ly in­debt­ed and ask that you make the best de­ci­sion not just for you but for your chil­dren.

Let us all work to­geth­er to make the Petrotrin the suc­cess it can be. I am con­fi­dent all per­sons will place na­tion­al in­ter­est at the fore­front and that the re-in­vent­ed Petrotrin will as­sume its right­ful place in the oil and gas sec­tor of Trinidad and To­ba­go.