Petrotrin refinery safely shut down and its assets vested to new entities

There has been a safe, in­ci­dent-free shut­down of all Petrotrin re­fin­ery op­er­a­tions and preser­va­tion and “moth­balling” of units is now in progress.

Fi­nance Min­is­ter Colm Im­bert con­firmed this sta­tus of Petrotrin op­er­a­tions in Par­lia­ment yes­ter­day, dur­ing de­bate on leg­is­la­tion to vest as­sets, un­der­tak­ings and oblig­a­tions of Petrotrin in­to three com­pa­nies which will com­prise the re­struc­tured en­ti­ty: Her­itage Pe­tro­le­um Co Ltd, Paria Fu­el Trad­ing Co Ltd and Guaracara Re­fin­ing Co Ltd. These were in­cor­po­rat­ed on Oc­to­ber 5 to man­age new busi­ness­es.

Her­itage Pe­tro­le­um will man­age ex­plo­ration and pro­duc­tion and hold re­spon­si­bil­i­ty for all E&P as­sets, in­clud­ing con­tracts, with rev­enue gen­er­at­ed through crude sales and crude stor­age.

Fu­el trad­ing and prod­uct sup­ply ac­tiv­i­ties will be un­der­tak­en by Paria Fu­el, which will al­so be re­spon­si­ble for lo­gis­tics, ter­mi­nalling and prod­uct han­dling. It’s ex­pect­ed to work close­ly with Her­itage Pe­tro­le­um.

Guaracara Re­fin­ing Com­pa­ny Lim­it­ed will be re­spon­si­ble for the preser­va­tion of re­fin­ery as­sets and pro­vid­ing util­i­ty ser­vices to Paria Fu­el Trad­ing and Petrotrin. The lat­ter will re­main in ex­is­tence and con­tin­ue op­er­at­ing al­though its ma­jor op­er­a­tions will cease on No­vem­ber 30.

On ces­sa­tion of re­fin­ery ac­tiv­i­ties, Im­bert said, “The last im­port­ed crude car­go was dis­charged Oc­to­ber 10, 2018, and crude pro­cess­ing at the re­fin­ery ceased on Oc­to­ber 19, 2018. The last process unit (FC­CU) was shut down on No­vem­ber 3, 2018, and re­fin­ery preser­va­tion and moth­balling is in progress.

“The Sul­phuric Acid re­gen­er­a­tion is still in ser­vice to con­vert all spent acid to fresh acid in sys­tem as part of the preser­va­tion ex­er­cise. The fresh acid would be sold lo­cal­ly for use in wa­ter treat­ment fa­cil­i­ties.”

Im­bert said the first car­go of lo­cal crude was suc­cess­ful­ly ex­port­ed on No­vem­ber 1, 2018.

On fu­el im­por­ta­tion, Im­bert added, “Through com­pet­i­tive bid­ding process in which rep­utable in­ter­na­tion­al sup­pli­ers were in­vit­ed, Petrotrin has so far se­cured four car­gos of gaso­line, jet fu­el and diesel which have al­ready been dis­charged at Pointe-a-Pierre over the end Oc­to­ber to ear­ly No­vem­ber,” he said.

“As part of its strat­e­gy to main­tain se­cu­ri­ty of sup­ply, Petrotrin main­tained ap­prox­i­mate­ly 14 days of sup­ply ex-re­fin­ery pro­duc­tion, thus af­ford­ing seam­less sup­ply of fu­el to lo­cal/re­gion­al mar­kets. A to­tal of 16 car­gos have been con­tract­ed that cov­ers sup­ply un­til ear­ly Jan­u­ary.”

As re­fin­ery op­er­a­tions are wound down, he said the start of the new cor­po­rate struc­ture must be ef­fect­ed to en­sure op­er­a­tion of the three com­pa­nies by De­cem­ber 1. He said the vest­ing pro­ce­dure is the same as was used in the 1990s when Trin­toc and Trin­topec’s as­sets were vest­ed with Petrotrin. Im­bert added it would have been too cost­ly, com­pli­cat­ed and would have de­layed start­up if tra­di­tion­al con­veyanc­ing mech­a­nisms were used.

All of Petrotrin’s is­sued/out­stand­ing shares and those in the new com­pa­nies have been trans­ferred to a new hold­ing com­pa­ny, Trinidad Pe­tro­le­um Hold­ings Lim­it­ed.

“Petrotrin re­mains op­er­a­tional as a mem­ber of the group of sub­sidiaries held by TPHL. This will al­low Petrotrin to meet out­stand­ing con­trac­tu­al li­a­bil­i­ties un­hin­dered and will elude the pos­si­bil­i­ty of Petrotrin bond­hold­ers im­pos­ing a re­quire­ment that they ap­prove the new struc­ture,” Im­bert added.

Im­bert al­so de­tailed progress in re­fi­nanc­ing Petrotrin’s US$850 mil­lion bond, due Au­gust 2019 – among prob­lems Gov­ern­ment cit­ed in jus­ti­fy­ing re­fin­ery clo­sure. He said Petrotrin ap­proached fi­nan­cial mar­kets in Oc­to­ber for a firm or con­sor­tium to re­fi­nance its long-term bonds payable in Au­gust 2019 and 2022.

“Four re­spon­dents were short­list­ed and in­vit­ed to present pro­pos­als on Oc­to­ber 15 to a team led by two of Petrotrin’s di­rec­tors and chief fi­nan­cial of­fi­cer. It was de­cid­ed two of the con­sor­tiums would work to­geth­er to ex­e­cute what was es­sen­tial­ly the fi­nanc­ing of a com­bi­na­tion of the Petrotrin ex­it costs as well as the two bonds,” he said.

“Con­sor­tiums com­prise Cred­it Su­isse, BladeX and FCB plus the team of Mor­gan Stan­ley and Ansa Mer­chant Bank. Over re­cent weeks, progress was made with re­fi­nanc­ing and they’re work­ing to­wards hav­ing the first tranche of the ex­it costs set­tled by No­vem­ber 30, 2018, and the bonds re­fi­nanced soon af­ter – well in ad­vance of the ter­mi­nal dates.”

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