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Petrotrin—then and now

Published: 
Sunday, September 2, 2018

Tuesday’s announcement of the impending closure of Petrotrin’s Pointea- Pierre refinery and the laying off of 1,700 workers may have come as deja vu for those old enough to remember the last time the country was faced with a similar situation.

It was in 1985, at the start of a deep and protracted recession, that the then George Chambers administration decided to buy the Texaco refinery in an effort to save jobs. The decision was hailed by the Trade Union Movement as a commitment to the control of the commanding heights of the economy and at ensuring the country’s patrimony was nationalised.

Thirty three years on and it appears that while the country was in charge of its patrimony and the commanding heights of the economy, it failed to manage the company in such a way thatmade it sustainable.

Politics, mismanagement, corruption and a non-compromising trade union have combined to see what looks like the death knell of the refining business in T&T.

The failure of the refinery was indeed predicted by the late economist Dr Trevor Farrell and successive administration failed to tackle the issue head on.

Various governments never brought the country into its confidence on the challenges facing the company and on how, by taking hard but timely decisions, the refinery may have been saved.

In the following New York Times article, it shows that from its inception, the purchase of the refinery was a gamble and makes us ask if— as T&T—we should have risen to the challenge of transforming the local refining business and whether we all failed in our duty to keep those responsible for the refinery accountable for their lack of performance.

—Curtis Williams

NEW YORK TIMES ARCHIVES | 1985

Trinidad to keep refinery going

With world oil prices down and many refineries closing, the Government of T&T has reluctantly bought the sprawling Texaco Inc. refinery on the east coast of Trinidad.

The Government agreed to buy the money- losing refinery, officials say, mainly to save more than 3,000 jobs and avoid expensive imports of oil products.

‘’We didn’t want to take over Texaco,’’ said Ronald Jay Williams, Trinidad and Tobago’s Minister of State Enterprises in a recent interview in Trinidad.

‘’They told us they were leaving. We had no choice.’’

As Prime Minister George M Chambers and Texaco executives were signing the purchase agreement at the end of March, the Exxon Corporation was formally closing its refinery in nearby Aruba while the Royal Dutch/Shell Group and the Government of Curacao were continuing negotiations concerning the future of the Shell refinery in Curacao. Shell had said earlier that because of continuing losses it would have to close the refinery unless the Government bought two-thirds of the operation.

Better sites elsewhere

Refineries have been shutting down not only because of the oversupply of oil in international markets but also because many companies say they find it more cost-effective to refine crude either where it is produced or where it is sold rather than at intermediate points such as the Caribbean islands.

The Caribbean refineries were built mainly to produce fuel oil for utility companies and factories in the northeastern United States. These customers have reduced their needs through energy conservation and in some cases have shifted to cleaner-burning and less-expensive natural gas. The refineries, some of them built more than 50 years ago, also find it difficult to compete with more efficient modern plants. The refineries in Trinidad and Curacao have been operating far below capacity, as did the plant in Aruba. The Bahamas Oil Refining Company in Freeport reportedly is operating at about a third of its capacity, and the Amerada Hess Corporation says it is reducing its refinery operations at St. Croix in the United States Virgin Islands by two-thirds.

Lost jobs’ social impact

Government officials in Curacao say they are no more eager to buy a refinery than the Government in Trinidad was but are also worried about both the social and political impact of thousands of jobs being lost.

Officials in Aruba said they never seriously considered buying the Exxon refinery because of the huge cost that would be involved.

Unlike most other islands in the Caribbean, Trinidad and Tobago have their own oil wells, although they do not produce enough petroleum to efficiently run the Texaco refinery and the refinery that the Government has been operating. Still, even limited production capability makes the operation of a refinery more feasible for Trinidad than for Aruba and Curacao, oil experts say.

Trinidad agreed to pay Texaco $189.2 million—$98 million in cash and the rest in petroleum products over 10 months. Texaco kept its most productive offshore oil fields and two other undeveloped offshore tracts. Prime Minister Chambers said negotiations would continue for these properties, but there was no immediate comment from Texaco.

Improvements are urged

Many people in the Government believe that by stepping up the amount of crude oil the refinery processes and by making some technical improvements, Trinidad can stem the losses that the plant has been sustaining and break even. Some suggest that making a profit may even be possible, but others predict that the Government will suffer huge losses.

‘’It would have been cheaper to put all the workers on the dole,’’ said Trevor Farrell, a Cornell graduate who is a specialist in oil and energy economics and teaches at the University of the West Indies campus in Trinidad.

Oil experts disagree on how much crude is needed for the refinery to break even but agree that a substantial amount will have to be imported.
(Joseph B Treaster, New York Times)

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