Petrotrin needs to cut staff, $1B upgrade to survive

Petrotrin will have to cut staff and pump one billion dollars into a “defensive upgrade” to ensure its viability, said Wayne Bertrand, Head of Operations at the State-owned company. 

He also said by the end of next month, Petrotrin expects to make a profit of TT $300 million. Speaking at an energy luncheon organised by the South Chamber of Industry and Commerce at Cara Suites, Claxton Bay, yesterday, Bertrand said that part of Petrotrin’s strategic direction was cutting staff. “Petrotrin has to reduce staff, we have some plans,” he told reporters in an interview later. He told the businessmen at the luncheon that Petrotrin could not afford to shut down. “We cannot shut down, we are not allowed to shut down,” Bertrand said following his presentation titled, “Strategic Directions for Petrotrin,” noting that the  impact on the economy, especially South Trinidad would be tremendous. Bertrand said that Petrotrin was looking at “another defensive upgrade,” as a way to deal with increased external challenges.  

Petrotrin, he said,  needs to be prepared for the Free Trade of the Americas (FTAA) along with any fluctuations on the oil market. He noted too  that “the Common External Tarrif (CET) protects us from the rest of the world.” According the Bertrand, three options were put on the table: close down the refinery, construct a new one or upgrade. A new refinery, he said, would cost about TT$3-4 billion, while an uprgade would cost about one billion. He also noted that the refinery may have to cut staff. After evaluating the costs associated with each option, it was determined that the cheapest and easiest route would be the upgrade, said Bertrand. “We really need along side this upgrade, to improve the refinery’s performance by 2006,” said Bertrand.

Because of the high costs associated with this upgrade, Petrotrin is currently looking at partners to invest about US$300 million into a joint venture by 2006. A joint venture, said Bertrand, will allow the refinery to share capital, upgrade risks, crude, access technology as well as tap into markets and diversify. He added that a joint venture will dissolve the existing corporate culture. “We want to drop the State company culture and we will get this from a commercial partner,” said Bertrand. He went on to describe the challenges that resulted in the upgrading of the refinery. They include a high cost structure and a low margin product mix. “Essentially what this means is that we make too much fuel oil and we sell at less than the cost of crude.  Also we have a high manpower count of about 1,700 people at the refinery,” said Bertrand. There have also been significant changes to fuel quality and increased competition from regional refineries like Curacao and Aruba, he said.