Petrotrin’s president calls for restructuring

“For fiscal 2016/2017, the Company’s ability to repay its debt obligations including the US$850 million bond due in August 2019 remains a huge challenge,” Harewood stated, adding, “It is therefore patently obvious to all that the Company must be restructured and refocused to achieve amongst other objectives, a lower level of operating expense notwithstanding rising labour and material/ services costs.” Harewood’s observations were contained in a message to the company titled: “Strategic Direction 2017 and Beyond”, and dated 18 January, 2017.

In a candid letter, Harewood pointed that out over the past two years, Petrotrin had experienced a significant reduction in revenue due to the collapse of the world oil market, brought on by geopolitical events and burgeoning supplies, including the emergence of “unconventional oil.” “As an integrated oil company, Petrotrin responded to the changed market conditions by: Deferring a number of projects including our drilling program; Reducing our cost of operations including limiting discretionary expenses; maximising our refinery throughput to maximise revenue and cash inflows,” Harewood stated.

He noted that the decisions to protect Petrotrin’s business were implemented in the face of “declining local crude production and large debt obligations incurred with the financing of previous refinery modernisation projects, such as, the Gasoline Optimisation Project and the new Ultra Low Sulphur Diesel (ULSD) Plant.” Harewood stated: “The Company is also faced with major cash flow problems that affect our trade financing activities and the adequacy of our working capital funds. International and local banks which traditionally supported the Company’s operations, have been limiting the extent and volume of the energy risk exposures in their investment portfolios by applying more stringent financing criteria.” However, he noted that change had to occur at the company and urged employees to begin by increasing local crude production to produce better refinery margins.