Oil production must increase

He made the point while addressing a luncheon hosted by the Energy Chamber at Cara Suites Hotel and Conference Centre, Claxton Bay on Wednesday. Harewood’s address was titled, “Update on Petrotrin in the context of the ‘lower for longer’ price environment.” “The challenge we face is in a normal operation, people will be investing in assets that will bring a rate of return based on increased oil production or de-bottlenecking.

But we are in a situation where our ageing infrastructure is so acute have to put aside money just to deal with that to restore business,” he said.

“Do we abdicate responsibility to reduce the cost? We cannot! We can still try to reduce operating cost and we have identified and listed things that are of concern to us with respect to asset integrity.

The question is how we fund the changes required. It is a huge sum. Some of the numbers they have tossed up for tankers and pipes, if you were to accumulate that over the next four to five years, you are talking in the order of $16 billion,” he said. Harewood said seven tanks, one of which has been the source of a recent oil spill, have been identified as being in need of urgent repair and the company was working on two other tanks when the oil spill occurred.

“That tank was part of the seven we are doing, and this is the challenge we face and that is while we are dealing with one thing, something else is going to bite us,” he said.

Harewood said that refinery margins are an integral part of the company’s success but this is dependent on increased local crude oil production.

“If you can keep the cost of the raw material down, and maximize the cost of the finished product, then you going to make money so the refinery margins are extremely important and how do we keep the cost of the input material down, well we need to increase our local crude production, because whatever is the lifting cost to bring that crude to the refinery, that represents the cost of production,” he said, adding, “when you are buying crude, you are exposed to market forces.” “For Petrotrin to succeed we need to increase our local crude production,” he said noting that local crude production had risen from 41,000 barrels per day in December 2016 to 46,000 barrels per day in April 2017.

And regarding the recent oil spill which has reportedly reached the North-eastern coast of Venezuela, Harewood said the company’s aging infrastructure was a problem which would require a multi-billion dollar investment.

“I can’t give the cost for the recent incident, we are doing investigations into that but the issues are being dealt with. It is a challenge.

We have to reduce our operational expenses and how we treat with the question of improving the asset integrity at Petrotrin,” Harewood said.