<article><p class="lead">A new start-up company will acquire Trinidad and Tobago's 160,000 b/d refinery for $700mn and resume operations by third quarter 2020, the energy ministry tells <i>Argus</i>.</p><p>Patriotic Energies and Technologies (Pet) is partly owned by Trinidad's oil labor union OWTU, which has not commented directly on the pending transaction, citing confidentiality agreements. </p><p>The union has a preliminary commercial agreement with Swiss-based commodity trader Trafigura to supply Trinidad's fuel needs "over the next few months" before the restart of the refinery, the ministry said. Trafigura confirmed to <i>Argus</i> that it has signed a memorandum of understanding with Pet for fuel supply. "Both parties have a strong defined understanding on how to support the deal," Trafigura said.</p><p>Neither Pet nor Trafigura indicated the volumes involved. Since the closure of the Pointe-a-Pierre refinery in November 2018, Trinidad has been importing around 25,000 b/d of products on the spot market to meet domestic demand. </p><p>While in operation, the refinery supplied domestic and neighboring island markets with gasoline, kerosene, aviation fuel, diesel, fuel oil and LPG.</p><p>The government shut the century-old refinery because it was losing en estimated $310mn a year, and would require more than a $1bn in capital investment to stem the losses. Among the key financial challenges for Pet is the cost of imported crude feedstock. Trinidad produced 59,300 b/d of crude in January-July 2019, down by 11.5pc from a year earlier, according to the energy ministry.</p><p>Pet has received a three-year moratorium on all payments of principal and interest towards the purchase of the refinery, and a further 10 years to complete the payment, the government said.</p><p>The government has given Pet until the end of October to say how it intends to <a href="https://www2.argusmedia.com/en/news/1982253-trinidad-selling-refinery-to-unionled-group?backToResults=true">complete the transaction</a>.</p><p>OWTU said in December 2018 that Pet's shareholders would include Suriname-based private equity firm SunStone Energy and UK independent Mak England. Neither company has responded to a request for comment or confirmation of participation in the company that will buy the refinery.</p><p>"We expect that Pet will take its assignment seriously and work assiduously to meet the government's conditions and timelines for submission of additional information and supporting documentation and a workable plan to finance the necessary preparatory work and get the refinery restarted," Trinidad's finance minister Colm Imbert said this week.</p><p>Pet will also need about $500mn in the refinery's first year of operation to refurbish and upgrade several units, the ministry said.</p><p>The most significant of these pending projects is the completion of a 40,000 b/d ultra-low sulphur diesel (ULSD) unit that the refinery's former owner, state-owned Petrotrin, had contracted Korea's Samsung Engineering to deliver for $200mn. </p><p>Petrotrin cancelled the deal in 2016 after the energy ministry said the partially competed unit was defective. But the company had already spent $421mn on the plant, and said it would need another $300mn to complete it.</p><p>Pet's bid for the refinery included "an approximate time for the start of preparation for the ULSD plant," Imbert said, without giving details.</p><p>Pet outbid two short-listed competitors in the refinery sale — US private equity firm Beowulf Energy and German refiner and trader Klesch Group, the government said.</p></article>
