She just said her first word, Doc! Ma-ma! She talking, boy she talking! Ma-ma! How old is she? Six months! She only six months and she talking.
You are here
No bar to Petrotrin purchasing Russian oil
The Petrotrin refinery at Pointe-a-Pierre—already under local scrutiny because of the oil spill at the end of July—could find itself in the international spotlight if there is an escalation in US sanctions on Russia, following revelations that the facility is a significant importer of Russian crude oil. The Eurasian country banned a wide array of food imports from Western countries on Thursday in a spiraling sanction war amid the worst ties between Russia and the West since the Cold War.
In retaliation against Western sanctions, Russian President Vladimir Putin on Wednesday signed a decree imposing a one-year ban on the importation of all agricultural, raw and food products. The ban by Russia prevents the country from importing beef, pork, poultry, fish, cheeses, fruit, vegetables and dairy products from Australia, Canada, the European Union, the United States and Norway.
Since March this year, the United States, the European Union, Japan and Australia have introduced a range of sanctions against Russian entities and individuals after Moscow’s annexation of Crimea, which was formerly part of Ukraine, and its involvement in armed standoff in Ukraine’s southeast.
Information on the Ministry of Energy’s Web site (consolidated monthly bulletins of June 2014) indicates that Russia supplied Petrotrin with 1,440,812 barrels of crude oil between January and June, 2014, representing about 15.1 per cent of total imports for the six-month period, which amounted to 9,485,466 barrels.
The data also reveal that Russia is the third largest supplier of crude to T&T in 2014 following Gabon (with 59.8 per cent or 5,671,826 barrels) and Colombia (with 15.6 per cent or 1,482,831 barrels). In January, the Breaking News Web site reported that for the period January to November 2013, T&T imported 2,550,002 barrels (bbls) of crude oil, of which 28 per cent came from Russia (some 723,476 barrels) while 40 per cent from Colombia (some 1,024,519).
In April and June, Petrotrin accepted two 720,000-barrel cargoes of Russian Ural-blend oil—which meets the product specifications of the Petrotrin refinery. Petrotrin has been importing Ural-blend crude from Russia since April 2008. In an interview with the Sunday BG on August 2, Petrotrin president Khalid Hassanali, said the company had taken a decision to stop production at the cat cracker unit of the refinery in February for economic reasons.
Without the production from the cat cracker, the Petrotrin refinery currently processes about 120,000 barrels of heavy crude oil, producing a variety of products including diesel, gasoline, cooking gas and jet fuel. The T&T market for fuel accounts for between 15,000 and 20,000 of Petrotrin’s throughput, he said. Hassanali said although the refinery, as currently configured, has a capacity to refine between 160,000 and 168,000 barrels per day, if Petrotrin produced at the maximum capacity its losses would increase.
The cat cracker is the unit at the refinery at Pointe-a-Pierre that Petrotrin upgraded at huge expense, starting in 2006, to increase its capacity from 26,000 to 35,000 barrels per stream a day of gasoline with higher octane ratings and lower production costs of heavier crude.
“We are trying to optimise, not maximise, the throughput at the refinery,” said Hassanali. The oil executive said, “if refinery margins continue to be compressed, the company as a whole expects to lose money in 2014, despite the advantage that it has of being able to produce equity crude.” Several oil refineries in the Caribbean have been forced to close in recent years because of margin compression, Hassanali noted.
Without the cat cracker, Petrotrin is producing 120,000 barrels, with roughly 50,000 boppd of which is coming from local crude. This means that Petrotrin is required to import about 70,000 barrels of oil per day. Responding to questions on Wednesday, Hassanali said that Petrotrin had spent US$1.3 billion importing crude oil between January and July. In brief responses by e-mail to questions sent to him on the issue of the potential impact of the company’s imports of Russian crude:
Q: Is all of the crude (some 70,000 barrels a day by your estimate) currently coming from Russia?
A: Crude is purchased from diverse sources and geographic locations.
Q: Do you think the US pressure on the international community to sanction Russia will have an impact on Petrotrin’s imports on Russian oil?
A: At this time the suppliers with whom we trade are not impacted by sanctions and hence we are not affected.
Q: Has Petrotrin explored the possibility of getting similar quality crude from other sources?
A: Petrotrin currently purchases crude oil with similar quality from other regions.
Q: Have the existing sanctions impacted on Petrotrin’s ability to pay for the Russian crude?
A: Our ability to pay for Russian crude oil has not been affected.
Q: Can you confirm that, year-to-date, Petrotrin has spent about US$7 million a day importing crude (which would mean 217 days X 7 million = $1.5 billion).
A: Over the last seven months, Petrotrin has spent approximately US$1.3 billion on a variety of imported crude oil from different parts of the world.
The US State Department, responding to questions from the Sunday BG on Thursday, advised companies and countries to be vigilant when dealing with counterparts in Russia.The Sunday BG had enquired whether T&T risked running afoul of US foreign policy if imports continued:
“The United States has imposed financial prohibitions on a number of Russian financial institutions and energy companies and has also sanctioned numerous Russian defense firms, senior Russian government officials, members of President Putin’s inner circle, and Ukrainian separatist leaders involved in undermining Ukraine’s sovereignty.
“We urge all businesses to exercise vigilance to ensure that they are not dealing with a sanctioned individual or entity. A list of sanctioned individuals and entities is available on the US Treasury Department’s Web site and the private sector is encouraged to reach out to Treasury’s Office of Foreign Assets Control (OFAC) for guidance on a case-by-case basis. “We also encourage all companies to monitor developments in Russia carefully as they make decisions about doing business there.”
Asked whether it would stop purchasing Russian crude, the state-owned energy company said that, at this point, its suppliers are not under any sanctions and that payments for its Russian cargoes are made through US banks that, to date, have raised no objections to processing these payments.
However, following the shooting down of the Malaysian Airlines aircraft over Ukraine on July 17, Petrotrin took the precaution of investigating the possibility of securing an alternate source of supply of crudes with similar chemical properties to Russian crude. The company also disclosed that it had placed an order for a shipment of Russian crude before the Malaysian Airline incident and that the cargo will be accepted.
The US imposed sanctions on Russian individuals and entities on March 16, April 28 and July 16 and July 29. In the July 16 announcement, the Department of Treasury announced that it was imposing sanctions that prohibit US persons from providing new financing to two major Russian financial institutions (Gazprombank OAO and VEB) and two Russian energy firms (OAO Novatek and Rosneft), limiting their access to US capital markets.
The Treasury announcement makes it clear that trade in goods between the US and Russia was not being sanctioned, stating: “We have not blocked the property or interests in property of these banks/companies, nor have we prohibited transactions with them beyond these specific restrictions.” The announcement also made clear that the prohibition on providing new financing to the named Russian companies was limited to US persons.
Later Friday, T&T’s Ministry of Foreign Affairs said in a statement that it was “monitoring the situation.”
User comments posted on this website are the sole views and opinions of the comment writer and are not representative of Guardian Media Limited or its staff.
Guardian Media Limited accepts no liability and will not be held accountable for user comments.
Guardian Media Limited reserves the right to remove, to edit or to censor any comments.
Any content which is considered unsuitable, unlawful or offensive, includes personal details, advertises or promotes products, services or websites or repeats previous comments will be removed.