Managing director of Petrojam Limited, Winston Watson (left), in discussion with general manager of Jamaica Cane Product Sales Karl James (centre) and Jamaica Exporters' Association's president Marjory Kennedy at the launch of National Exporters Week, Hilton Kingston hotel, New Kingston, June 23.

Petrojam is this year's winner of the JEA Million iDollar Club award, recording US$408 million of exports in 2007. - Contributed

Petrojam Limited, likely Jamaica's most lucrative company and operator of its sole refinery, last year grossed $89.8 billion (US$1.26 billion), and is set to top that record by two billion dollars as world oil prices climb and the company presses ahead with a multibillion expansion project.

The only other company known to come close to its turnover is power producer Jamaica Public Service Company, which last year reported sales of $54 billion.

Petrojam this week was recognised by the Jamaica Exporters Association with its 'Million Dollar Award' for racking up US$408 million (J$28b) of sales to foreign markets, which loosely translates to about one-third its top-line income.

The energy company manufactures and sells asphalt, diesel oil, unleaded gasolene, turbo fuel, heavy fuel oil, liquid petroleum gas, and kerosene - some of those finished products are supplemented by imports, mainly from Trinidad - but also derives income from its shipping and bunkering operations.

The 35,000 barrel per day refinery is fed crude from supply markets, chiefly Venezuela under the PetroCaribe agreement, but also Mexico under the long-standing San Jose Accord, and Ecuador through spot market purchases.

The refinery is at the early stage of a three year upgrade, a US$720 million (J$51.8 billion) project, financed partially by US$130 million of equity.

The project was last estimated at US$500 million, but Petrojam managing director Winston Watson had warned previously that the price could shift depending on the outcome of the precursor FEED assessment that would determine the depth of engineering works required on the Kingston plant.

Retooling

Total spend to date is $2.18802 billion, with another $1.271 billion projected this year.

The idea is to retool to levels that allows the plant to handle 50,000 barrels of oil per day, but also capable of processing heavier and, by implication, cheaper grades of crude.

The project is a joint venture between Jamaica and Vene-zuela's PDVSA, which has acquired 49 per cent of Petrojam for US$63 million as part of the deal and is expected to contribute additional equity financing.

It's not clear whether the US$130 million of equity is to be entirely financed by Venezuela.

Profitable company

Petrojam is a profitable company, cushioned by a growing surplus of $4.7 billion and largely unencumbered by debt, outside of $1.8 billion of long-term borrowings last year.

Its multibillion invoicing levels notwithstanding, the energy company's annual profit is counted in the millions.

Last year, when the refinery outputted 17.7 million of finished products, its procurement and production costs ratcheted to $85.4 billion.

Revenues in the same period to March 2008, rose by $12 billion or 16 per cent to $89.8 billion - up from $77.4 billion at March 2007 - but gross profits were flat at $4.3 billion, while operating profit dropped by more than 50 per cent and net profit by 37 per cent to $291 million.

Petrojam estimates that it will sell 18.24 million barrels of finished products this year - just under six million of which is targeted for external sales and another 12 million barrels for the local market - and that it will cost $86.7 billion to finance raw material purchases, other imports, and production.

"Petrojam is expected to maintain 83 per cent of the local Petroleum market share on the assumption of a slightly more stable price market," the finance ministry said back in March in its public sector bodies report.

The Kingston refinery is projecting revenues of $92 billion this year and profit of $467 million, but events - the violent movements in world energy prices year to date, some pushed by speculation - might since have overtaken those forecasts.

business@gleanerjm.com