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Petrotrin paid for ‘fake oil’

Published: 
Saturday, November 18, 2017
Forensic audit confirms initial findings
Petrotrin’s Chairman Wilfred Espinet

It is now official. Two external audits have confirmed that there was a discrepancy between reported oil production in the Exploration and Production Operations in the Catshill Field operated by A&V Oil and Gas and the actual production receipts at Pointe-a-Pierre discovered by Petrotrin’s Internal Audit Department in the period January to June 2017.

Petrotrin chairman Wilfred Espinet is now assuring that the board will be taking “decisive action” in the so-called ‘fake oil’ matter.

The allegation, first contained in an internal audit report dated August 17, was confirmed in a forensic audit report submitted by external consultants Kroll Consulting, of Canada, and also in a report commissioned from global gas consultants Gaffney Cline, which found that the Catshill reservoir was “not capable of producing the volumes in question.”

No other details of the findings of the reports from the two external agencies or recommendations made were immediately forthcoming in a release issued by Petrotrin on the matter yesterday.

But figures provided in the internal audit report for the period July 1-12, signed by Petrotrin’s Chief Audit Executive Rajkumar Bissessar, showed a daily average of 3,589 barrels per day had dropped significantly in the period July 13-31 and August 1-10, when production declined to 1,369 barrels and 1,396 barrels of oil. The shortage reported for July, according to the report, was 36,302 barrels, down from 111, 006 barrels in June. The internal audit team estimated production for the month of June would have been “over-stated by about 90,000 barrels, which works out to an overpayment of US$2.97 million.” For the six-month period January to June, it was estimated that “Catshill over stated its production by at least 350,000 barrels and Petrotrin would have overpaid US$11.5 million (TT$80 million).” As a result, Petrotrin was said to have paid royalties of approximately US$1.86 million to the Government for crude oil “not received during the period 2017 January to June.”

While the initial audit was for the period January to July 2017, the Petrotrin board has now commissioned the Internal Audit Department to widen the scope of its investigation into matters dating back to 2016.

Commenting on the way forward yesterday, Espinet said the company will now be moving to take “the appropriate actions internally and to bring the matter to the attention of the relevant authorities.” He cautioned, however, that while the reports from the two external agencies confirmed the discrepancy found by the internal audit, “it was critical for the board to continue to exercise due care and deliberation in how it proceeded.”

He added, “While we plan to take decisive action, we need to ensure that any claim or action we take is not impeded by a misstep. In this case, doing it right is more important than doing it quickly, and so it would be premature to articulate any specific actions at this time.”

However, he gave the assurance Petrotrin’s board remains committed to maintaining a focused approach in addressing all issues.

The allegations against A&V were first made on a political platform by United National Congress leader Kamla Persad-Bissessar at a meeting where she raised questions about the relationship between Prime Minister Dr Keith Rowley and A&V owner Haniff Nazim Baksh.

On September 14, Rowley admitted Baksh was his friend and he had called him when the allegations became public. But Rowley also made it clear on the political platform that the party would not protect individuals who engage in corruption.

In a text message response to the result of the audit last evening, Rowley said: “As is expected the board of Petrotrin, without hindrance, has involved the expertise of professionals to carry out an independent review of the operations at Petrotrin, within which serious allegations have been made. Now that this exercise has confirmed the discrepancies reported, it is now to be further expected that the board will continue to treat with any and all matters as the circumstances require to ensure that the company’s interest is protected and all aspect of law are observed.”

He added: “Petrotrin reports to the Ministry of Energy and it is to be expected that the ministry will be kept advised as all matters of operational accountability are reviewed.”

The issue of the so-called ‘fake oil’ allegations resulted in Baksh sending pre-action protocol letters to Persad-Bissessar and the Petrotrin chairman.