Cur­tis Williams

cur­tis.williams@guardian.co.tt

State-owned Her­itage Pe­tro­le­um has said it plans to sell scrap iron as part of its strat­e­gy to raise cash amidst the crash of oil prices.

In a re­lease the com­pa­ny said it had iden­ti­fied ad­di­tion­al cash-gen­er­at­ing op­tions 'such as the sale of ob­so­lete as­sets in­clud­ing scrap iron and sup­ply boats which we ex­pect will yield sig­nif­i­cant rev­enue'.

The com­pa­ny ad­mit­ted that this is an un­prece­dent­ed time for Trinidad and To­ba­go, the world and the glob­al oil in­dus­try and Her­itage Pe­tro­le­um Com­pa­ny Lim­it­ed has not been in­su­lat­ed from all that is oc­cur­ring.

As a re­sult it is al­so in dis­cus­sions with its cred­i­tors on new fi­nanc­ing arrange­ment for the bil­lion dol­lar debt that it is re­pay­ing on be­half of Petrotrin.

The com­pa­ny in re­lease said it was hav­ing: "Dis­cus­sions and ne­go­ti­a­tions with fi­nan­cial in­sti­tu­tions on fi­nanc­ing arrange­ments and loan re­pay­ments aris­ing out of lega­cy Petrotrin debt oblig­a­tions."

Her­itage has al­so ne­go­ti­at­ed sig­nif­i­cant sav­ings with En­er­gy Ser­vice Com­pa­nies which have re­duced their rates ag­gres­sive­ly.

"These mea­sures have re­sult­ed in a cap­i­tal ex­pen­di­ture re­duc­tion of 49% and an op­er­at­ing ex­pen­di­ture re­duc­tion of 21% in the re­vised Her­itage bud­get which will be con­stant­ly re­viewed." the com­pa­ny not­ed.

It has al­so placed a freeze on re­cruit­ment, save for crit­i­cal jobs and these mea­sures are ex­pect­ed to con­tin­ue for the rest of the 2020 fis­cal year.

Faced with a pre­cip­i­tous fall in crude prices Her­itage has al­so de­cid­ed to store its oil rather than sell it at record low prices .

This means the com­pa­ny will for the time be­ing stop ex­port­ing oil.

Her­itage con­firmed it has the abil­i­ty to store its present pro­duc­tion for up to two and a half months and sources say it would pre­fer wait it out, hop­ing for bet­ter prices, rather than ef­fec­tive­ly give away its oil.

Oil fu­tures have crashed and crude is sell­ing at less than ze­ro dol­lars a bar­rel, the low­est in his­to­ry as the US has run out of stor­age and oil pro­duc­ers now have to pay peo­ple to take their crude,

It costs Her­itage US$25 to pro­duce a bar­rel of oil ac­cord­ing to En­er­gy Min­is­ter Franklin Khan who re­cent­ly made the rev­e­la­tion on CNC3's busi­ness show.

The com­pa­ny said it has been pro­duc­ing 41,000 bar­rels of oil per day and it has stor­age ca­pac­i­ty to hold three and a half mil­lion bar­rels.

As a re­sult it will not be ex­port­ing and the com­pa­ny will re­ly on its cash on hand to pay its bills.

Oil prices have crashed as de­mand has plum­met­ed due to the COVID-19 pan­dem­ic.

Mul­ti­ple sources at Her­itage tell GML that the hope is that de­mand will pick up in the next six­ty days, and with it glob­al prices, as world economies start to re­open.

Her­itage usu­al­ly re­ceives the price trad­ed for West Texas In­ter­me­di­ate plus US $5 a bar­rel.