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EITI report provides data on Petrotrin

Published: 
Tuesday, September 4, 2018
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The decision to close the Petrotrin refinery has dominated discussion on social media, traditional media as well as in the privacy of our homes. This decision is not only a financial issue but also an emotional one. Petrotrin’s workers and their families worry about making ends meet, the driving public are uneasy about the impacts on the price of gas and small energy service companies are concerned about the very survival of their businesses. Where does the Extractive Industries Transparency Initiative (EITI) fit into this discussion?

The principles at the heart of the EITI requires countries to publish accurate information on key aspects of their natural resource management including how much tax and social contributions companies are paying and where this money ends up on a national and regional level. The initiative also promotes reconciliation of company and Government production, disclosure of beneficial owners of companies and gives concrete recommendations on how countries can improve their tax collection, audit and assurance and even data management systems.

Importantly, EITI reports provide independently verified data on oil, gas and mining company tax payments to Government and other critical information. Given this mandate, the TTEITI is well placed to counter some of the misinformation filtering into the public domain on Petrotrin. The tripartite nature of the initiative where Petrotrin, the OWTU and the Ministry of Energy are members of the TTEITI Steering Committee also give the TTEITI a unique perspective on the matter.

The following are excerpts from the latest EITI report on issues related to the company.

Petrotrin’s Upstream Tax Contribution

From 2010-2016, Petrotrin paid TT $20.3 billion in taxes, royalties and other statutory obligations to Government. During this period only bpTT with $37.1 billion and NGC with $32.3 billion contributed more to Government revenue from the upstream oil and gas sector. In 2014, the company’s payments peaked at $6.7 billion. However, by 2016, the company’s payments declined dramatically to TT $123 million.

Chart 1 – Petrotrin Upstream Tax Payments 2010-2016

It is important to note that EITI Reports capture information from the upstream oil and gas sector and therefore does not capture payments linked to Petrotrin’s refinery.

The value of Petrotrin’s refined products

For many years, there have been complaints that energy trading companies operate under a veil of secrecy and citizens could not tell how much Petrotrin’s refined products or even NGC’s LNG cargoes were traded for on international markets. However, in recent times, this practice has been challenged and disclosure on commodity trading is becoming the norm. The Trafigura Group, one of the world’s leading energy commodity trading companies recently started to publicly disclose what it paid to SOEs such as Petrotrin and NGC for their refined products or LNG cargoes. The company now reports the actual value and volume of products purchased from these SOEs.

In December 2016, Trafigura disclosed, via its ‘Responsibility Report’, that in 2016 it paid Petrotrin US $506 million for 10,586 thousand barrels and 1425 thousand tonnes of refined products. In 2014 and 2015 the company paid Petrotrin and T&T LNG Ltd (a subsidiary of NGC) a total of US$507 million or approximately TT $3 billion for 5,381 thousand barrels of refined products and 2.81 million barrels equivalent of gas respectively (see Table 1).

The company also reported that in 2013 that it paid Petrotrin and Trinidad and Tobago LNG Ltd. a total of US$503.16 million for 3,880 thousand barrels of refined products and 1.74 million barrels-equivalent of gas. It is important to highlight that Trafigura is not the only trading company that conducts business with local SOEs despite the company paying US $864 million between 2014-2016 for Petrotrin’s refined products.

Petrotrin’s social expenditure

SOEs in the energy sector have had a long history of investing in social and infrastructure projects in several national communities. Petrotrin is no different and the company has made investments in sports, civic life, culture and even skills training and capacity building. Between 2012 and 2016, Petrotrin invested $65.5 million in social projects (see Chart 2). These projects included sponsorship of steel orchestras, reforestation programmes and technical and vocational apprenticeship programmes.

Chart 2 – Petrotrin CSR Payments 2012-2016

Conclusion

Petrotrin has been and will continue to be a company integral to T&T’s energy sector story. The company has contributed billions in revenue to Government, employed thousands and its petro-products have contributed to Caricom energy security. Many local energy service companies have gained valuable experience working for Petrotrin and some have even expanded to other energy provinces, using Petrotrin as a springboard. As this new chapter is written, several communities, families and companies will be impacted for better or worse.

Despite these changes, the TTEITI will continue to monitor and provide citizens with independently audited and verified data on the company’s contribution to the national economy and national development.

For more information on Petrotrin and to view the findings of the latest EITI Report please visit www.tteiti.org.tt

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