Petrotrin to upgrade Point a Pierre refinery

Sept. 23, 2003
Trinidad and Tobago's state-owned oil and natural gas company Petrotrin has announced it will spend $1 billion to upgrade its Point a Pierre refinery as it attempts to be competitive and make the island the refining center of the Caribbean and Latin America.

Curtis Williams
OGJ Correspondent

PORT OF SPAIN, Sept. 23 -- Trinidad and Tobago's state-owned oil and natural gas company Petrotrin has announced it will spend $1 billion to upgrade its Point a Pierre refinery as it attempts to be competitive and make the island the refining center of the Caribbean and Latin America.

Wayne Bertrand, the company's president of operations, said the upgrade will be done over the next 6 years with companies being invited to bid for contracts as early as yearend. Bertrand said Shell Global Solutions had performed a study on the refinery to determine what was needed to make it more profitable and had concluded that an upgrade would be required.

It is expected that the first set of contracts will be worth $300 million. Bertrand said the upgrade would not result in an increase in throughput capacity but was essentially designed to significantly reduce the amount of fuel oil produced at the plant in favor of higher valued products for markets in the Caribbean and the US.

"The reality is that 37% of the total output of this refinery is fuel oil." Bertrand said. "This cannot continue because fuel oil is $2-10 below West Texas Intermediate crude prices. How can you have a refinery with such a large percentage of its product slate being fuel oil?"

Environmental considerations
Bertrand noted that apart from the economic realities, the refinery had to improve its product slate to meet stricter environmental conditions both in the Caribbean Islands and in its major market areas. He said, "�the Trinidad and Tobago government has proposed a Caribbean gas pipeline. When that comes to fruition some of our Caribbean markets will be lost, in addition most of the fuel oil goes to the US Eastern Seaboard and with LNG and the need for cleaner fuel in the power sector there will be a reduction in the use of fuel oil and we have to prepare for that reality."

Bertrand said the upgrade would result in more gasoline being produced and the elimination of lead in gasoline at the refinery."

The 90-year-old refinery underwent a $360 million upgraded during 1991-97. That upgrade was designed to improve product quality by reducing the sulfur content and increasing octane. It also increased the refining capacity to 160,000 b/d from 100,000 b/d and upgraded the infrastructure, instrumentation, and environmental systems of the refinery.

At one time Trinidad had three oil refineries—at Pointe-a-Pierre, Point Fortin, and Brighton. Brighton shut down in 1978 and the one at Point Fortin closed in 1995.

At the lone refinery at Pointe a Pierre, there are eight products currently being manufactured: low propane gas, aviation fuel, motor gasoline, kerosine, gas oil, fuel oil, bitumen, and sulfur. The Trinidad market consumes 20,000 b/d of refined product. Trinidad and Tobago exports 50,000 b/d to the Eastern Caribbean, Guyana, and French Guyana; another 40,000 b/d are exported to the Northern Caribbean and Central and South America, while the US imports 50,000 b/d.

Bertrand acknowledged that there were very few companies that are getting involved in the construction of new refineries. He said, "It is becoming more difficult for companies to refine its products because of the stringent rules laid down by the environmental agencies with respect to emission.

"We also had to upgrade because we are in the business of processing crude oil and the sale of petroleum products in a safe, environmentally friendly, and efficient manner," he added.

Crude supplies
Bertrand said the company had considered shutting down its operations but that it was not in keeping with the government's goal and was not in the interest of the twin Caribbean Island nation.

He said building a new refinery would be too expensive a project. "We estimated that a new refinery would cost us $3-5 billion. As a result we though it prudent to go the way of upgrading the refinery," Bertrand told OGJ.

He said one of the difficulties facing the refinery was a shortage of local crude supplies. Out of the total throughput of 160,000 b/d, 65,000 b/d comes from Petrotrin's own supply while 95,000 b/d are imported from Brazil, Venezuela, Colombia, and West Africa.

Bertrand said he expected that to change with the coming on stream of the BHP Billiton Petroleum Pty. Ltd.-operated Greater Angostura oil and gas discovery made in 2001 on Block 2c off Trinidad's eastern coast. BHP and its partners Total SA and Talisman Energy Inc. received funding for the development earlier this year (OGJ Online, Mar. 11, 2003).

Bertrand said Petrotrin also was taking steps to look for a partner for the refinery project in hopes to reduce operating costs. Also Bertrand has targeted a reduction in salaries and wages of 33-42% of the company's total expenses, but explained that it was unlikely that the reduction would be done by retrenchment.

"Attrition and updating technology are two ways by which [cost reduction] could be done. Cost of materials and contracts will be reduced by 1%, and utilities from 32-37%," he said.