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TURNING AROUND PETROTRIN

The trinidad Guardian / The current predicament facing Petrotrin and whispers about how Government will undertake to restructure the company is one that affects us more deeply than most would want to admit.

Petrotrin is the single largest indigenous producer of oil and the company has found itself in a position where its investment grading is poor; its cash position is suffering; its assets are over-leveraged, and its capacity to attract financing for capital spending is severely constrained.

The reasons, and who and what groups are responsible are not as important right now as the need to immediately dedicate hard work to Petrotrin being restored as a successful, revenue generating leader in the regional energy sector.

As a former strategic advisor to a Minister of Energy, I offer these brief suggestions on how a medium term plan can ultimately result in long-term success.

For the sake of a nation that is sliding at an uncomfortably rapid rate, we must put political differences aside for the good of not the current or past administrations, but for 1.3 million people with an invested future in Trinidad and Tobago.

I do hope that the Prime Minister, Minister of Energy and Energy Industries and the executive as a whole can consider the merits of these ideas:

(i) A refinery must consume enormous amounts of electric power. Become the first (the leading) indigenous energy company to generate electric power using a combination of wind and solar sources (there is more than enough space). Set objectives such as within 24 months, 20 per cent of Petrotrin’s power needs will be supplied by renewable sources, even if its running the administrative offices or powering the transmission station;

(ii) Adopt more enhanced oil recovery methods to get the most out of existing wells. Even if this accounts for 200 more barrels per day (combined); it’s 200 more than we’re producing now;

(iii) Focus on reprocessing seismic data using more contemporary methods, there could be oil and gas under your feet and the old data won’t show it;

(iv) Create business units out of the major parts of the company – E&P, marketing, refining and force the business units to adopt value for money/return on investment management and corporate governance codes;

(v) Create a holding company that will buy out the debt from the E&P and refining units to free the assets for much more effective leveraging in capital investments;

(vi) Work towards an IPO for Petrotrin within the next 18 months (or reasonable period), force the company to transform itself and give the people of Trinidad and Tobago the chance to become shareholders (make the Government a minority shareholder);

(vii) Operations management needs to be tightened and become more alert to simple maintenance issues that can become major operating obstacles. I am aware of simple issues that would have cost hundreds of thousands in maintenance that become million dollar headaches because executive management was not alert enough to identify and address the issues;

(viii) The company’s rating must be affected by its operating procedures which could be out of date. Is the company ready for a man-made or natural disaster? Are contingency measures in place to protect oil installations and employees to ensure production is not affected in a disaster, etc…;

(ix) Never underestimate the value of social responsibility – not just for public affairs, but to make Petrotrin an accepted and valued participant in the communities it is operating in;

(x) Consider whether the marine operations (Trinmar) may benefit from being freed from being a subsidiary of Petrotrin. Make it a business unit of the company, decrease operating costs and focus more on capital investments in shallow and deep sea exploration, even if through partnerships with other companies that are preparing to explore in the deep;

(xi) Most of all – bite the bullet and do not decrease staff – a Petrotrin operating at its best will need all the young and mature expert staff it can get!

We have one of the region’s foremost energy experts, Andrew Jupiter, now heading Petrotrin as chairman and the immediate history of governance with the likes of Carolyn Seepersad-Bachan and Kevin Ramnarine having put their hands into the mix should mean that a complete strategy for Petrotrin would not be a difficult undertaking.

As an aside, it is also essential for the health sector to become a partner to the energy transformation being proposed; most of the major health facilities have sufficient land space for solar and wind power generation banks. The win-win here is that the hospitals and major facilities can ensure they have cheaper back up power for essential services and equipment, and the sector as a whole can find a valid way to reduce operating costs without reducing jobs.

Roger D Ramcharitar is a former government strategic, political and communication advisor.

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