Linda Hutchinson-Jafar, Business Writer
A drilling rig in the twin-island republic of Trinidad and Tobago as depicted on gstt.org. (TSP) fields and is also involved with PetroCanada in the North Coast and the Gulf of Paria.
Trinidad and Tobago's state-owned integrated energy company, Petro-trin, has successfully raised US$750 million from a bond offering to fund its Gasolene Optimisation Project (GOP).
The project includes the construction of five new plants, which are already well-advanced.
The transaction which attracted investors from the U.S., Europe, Asia and the Caribbean and was oversubscribed by US$2 million, is the largest investment grade deal ever done in the Caribbean.
The 15-year amortising bond has a three-year moratorium on principal repayment.
The notes were rated Baa2 by Moody's and BBB+ by Standard & Poor's.
The bond has a final maturity of 2022, and amortises in 24 semi-annual equal payments starting in 2010, with an average life of 9.25 years.
Citigroup Global Markets Inc acted as the sole book-running manager, while Calyon Credit Agricole CIB was the co-manager.
Dennis Evans, managing director, Citibank (Trinidad & Tobago) Limited said the bond was not government guaranteed but completed on a purely stand-alone basis and on Petrotrin's balance sheet strength and performance.
"In fact the first question most people asked was if this deal was guaranteed by the government of Trinidad and Tobago which was understandable for a transaction of this size," he said.
Proceeds to financeproject
Petrotrin will use the net proceeds of the bond issue to finance a large portion of the cost of the projects under the GOP which are expected to be completed by the first quarter of 2009.
These include the Fluid Catalytic Cracking Unit upgrade, the Pre-Fractionation/Isomerisation Unit, the Continuous Catalytic Regener-ation Platformer and the Alkylation Unit and Acid Plant.
Under a separate refinery upgrade programme, Petrotrin is constructing a diesel hydrotreating and dearomatisation plant which is being financed with internally generated funds.
Malcolm Jones, executive chairman, Petrotrin said the successful completion of the GOP will result in the company bringing cleaner and more environment-friendly transport fuels to regional and international markets.
"This will impact positively on our profitability and viability well into the future. It will also enable us to honour all of our contractual commitments, " he said.
Other benefits include an increase in finished gasolene yield of the refinery of approximately 40 per cent; improvement of the quality of the gasoline pool in terms of an increase in the motor octane number and a reduction in the benzene and sulphur content and overall improvement in the premium product yield.
Improved energy efficiency
It will also lead to improved energy efficiency and environmental compliance and economic maintenance of throughput at 168, 000 bpd.
Petrotrin's major investment programme also comes at a time when the company is looking for new markets as it is being edged out of their traditional markets in the English-speaking Caribbean market by Venezuela's PetroCaribe, which offers soft financing for oil.
Petrotrin sells around 60,000 barrels of oil a day to the Carib-bean, while under PetroCaribe, regional countries can purchase up to 185,000 barrels of oil per day.
With more countries coming on board to take advantage of getting preferential terms to purchase oil, Petrotrin is bracing for a fall-out in its revenues andhas been putting plans in place to go into new markets in Latin America and the U.S with higher-quality products.
Petrotrin which has been in the oil and gas business for over 100 years, through its predecessor companies, is also increasing its involvement in the growing gas market through its joint venture participation in the North Coast Marine Acreage and in the Central Block.
It also has a partnership with Canada-based Talisman in the Eastern Block, and also offshore Mayaro with Canadian Superior.
It has also joined with Repsol YPF in the Teak/Samaan/Poui
(TSP) fields and is also involved with PetroCanada in the North Coast and the Gulf of Paria.
"Proceeds from these gas initiatives have impacted positively on gross revenue base, " Jones added.
Dominant market position
Petrotrin has a dominant market position in Trinidad and Tobago, supplying all of the domestic demand for refined products with the exception of certain lube oil products.
It also control the operation of almost all of the country's onshore oil fields and all of its refining capacity.
Jones said the current business scenario is characterised by shrinking worldwide refinery capacity, while the market is demanding increased output of high-quality transportation fuels. It is also marked by supply disruptions due to war and geopolitical uncertainty.
"These factors, among others, are expected to keep crude, natural gas and product prices very competitive in the short to medium term," said the CEO.
"Petrotrin intends to fully exploit this window of opportunity."
Conrad Enill, junior Finance Minister, said the Trinidad government expects Petrotrin's production of gasoline to be optimised and its refining operations not only made more efficient but also meet the environmental requirements for clean fuels.
"Oil prices have been increasing consistently since 2002 and so have gas prices. The combination of these two factors has been generating higher levels of public revenues thus creating the fiscal spacewhich has allowed the Government to scale-up socio-economic and public infrastructure expenditure. The drive by Petrotrin to improve its economic and financial efficiency represents therefore, a step in the right direction," said Enill.
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