Petrotrin president Khalid Hassanali is forecasting a dim 2015, saying the state-owned oil company could lose 40-50 per cent in revenue due to the continuing sip in global oil and gas prices.
As such, he says the company has readjusted its budget and will also have to slash drilling and development programmes. The revised budget will take into consideration its revenue forecast over a five-year period, he said.
Hassanali made the comment following the opening of a workshop on incident command systems at Petrotrin’s staff club at Pointe-a-Pierre. He said the company suffered a loss last year and expected to do the same again this year.
“As you know, we are in a down cycle and in these down cycles we still have to prepare for when prices will ‘re rise.’
“We are experiencing about a 40 to 50 per cent loss in gross revenue but, like I said, we manage our cash flows very carefully in these times,” he said.
Hassanali’s statement comes mere days after Prime Minister Kamla Persad-Bissessar announced that Government would peg its national budget figure on US$45 a barrel for oil and $2.25 for gas, as well as various cutbacks in Government spending, due to the falling global prices.
Yesterday, Hassanali said Petrotrin would use the down cycle not only to optimise and restructure the company but also be prepared for when the prices began to rise.
Hassanali said the company would reduce spending on its drilling and developmental programmes as many of its aged assets needed to be replaced. The focus too, he said, would be on cash management rather than accounting profits.
He added: “We will continue to cut, maybe to a reduced extent, our drilling programmes, our developmental programmes, because we have an asset that has to be replaced.
“We have just come out of acquisition of seismic at the marine acreages in Trinmar. We have certain responsibilities there and we also have already started development drilling in terms of our land seismic so there is a lot of potential.”
Although the oil price ended yesterday at US$46.30 a barrel with gas at $2.81 per trump, Hassanali said that would be sufficient to withstand the current crisis, although he said that would only be for a short time.
He said there were several initiatives with the Ministry of Energy and Energy Affairs to manage cost carefully.
“If you think of that in terms of our lifting cost, in other words, the money that is required to take a barrel of oil out of the ground, we can manage at the current pricing scenario. We can manage on a cash basis, not forever, but we can manage for a period of time.”
Financial hole
Last month, Energy Minister Kevin Ramnarine announced in the Senate that Petrotrin had suffered a loss of $346 million in fiscal 2014 and had a total debt of $14.38 billion.
He made the comment as he appealed to Petrotrin workers not to carry through on a proposed strike action over the company’s claim that it could not increase salaries.
“This is not a time for acrimony at Petrotrin. This is not a time to break down Petrotrin but to build up Petrotrin,” he said.
Ramnarine said the company’s poor financial performance was partly due to losses by the refining arm of the company.
The way forward for the company was to increase its crude oil and gas production through its own efforts as well as from ventures, such as its lease operatorship, farmout, incremental production service contract (IPSC) and joint venture programmes.
He said improved production was expected from the Trinmar operations in the Jubilee field and the ongoing South West Soldado project.
Contacted yesterday, Petrotrin’s communications department said at the end of 2013-2014 fiscal period, the company revenue was TT$29.285 billion and there was a loss of $347 million. The main contributor to the loss was a low refinery margin.