On Monday British Petroleum (bp) announced the sale of its petrochemicals business line to INEOS for US$5 billion, including its 36.9 per cent stake in the Atlas methanol plant in Point Lisas, Trinidad.
bp’s petrochemicals business has two components — aromatics and acetyls — with manufacturing taking place at plants in Asia, Europe, the US. Last year the company produced 9.7 tonnes of petrochemicals.
According to bp Chief Executive Officer Bernard Looney, “This is another significant step as we steadily work to reinvent bp. These businesses are leaders in their sectors, with world-class technologies, plants and people.
“In recent years they have improved performance to produce highly competitive returns and now have the potential for growth and expansion into the circular economy,” he continued.
Though the sale is good news for bp’s leadership, the CEO admitted that move could blindside its employees and so he will ensure the company will “do our best to minimise uncertainty”.
“I am confident however that the businesses will thrive as part of INEOS, a global leader in petrochemicals,” he added.
However, former Minister of Energy and Energy Affairs Kevin Ramnarine contends that the situation in which bp’s Trinidad and Tobago operation finds itself is more ominous than the company projects. In a letter to Caribbean News Global, he pointed out that bp’s decision to sell its petrochemical operations follows “announcements of staff cuts of 10,000 employees and a write-down of [US]$17.5 billion in value.
“The latter is an indication that the oil and gas fields, including those in Trinidad and Tobago under bp’s control, are valued less than previously thought,” Ramnarine continued.
He pointed out, further, that company’s sale of its petrochemical business comes at a time when the coronavirus crisis has crippled global oil and gas businesses and price wars in the first quarter of 2020 have eroded the value of crude.
In fact, the divestment, which forms part of a US$15-billion divestment strategy for the energy giant to raise new funds, comes “a full year ahead of schedule, demonstrating the range and quality of options available to us”, according to Chief Financial Officer Brian Gilvary, who negotiated the deal.
But this does not leave enough time for the Trinidadian economy to adjust, Ramnarine argues, and will come as a shock since bp plays a critical role in the country’s energy sector.
“Inevitably, these changes will eventually cascade to Trinidad and Tobago. Given that bp is the largest economic player in the Trinidad and Tobago economy, the Government and policymakers must be cognisant of the changes taking place with bp plc,” he said
Ramnarine is not the only stakeholder who believes the sector is in a precarious position. Just last month, Professor Kenneth Julien — considered as T&T’s energy czar — argued in a Trinidad and Tobago Express article that the Point Lisas Industrial Estate needs to evolve. He also received the support of retired permanent secretary in the Ministry of Finance, Andrew Jupiter.
Concerns over the state of Point Lisas may have begun at the start of 2020 when chemical and environmental solutions company Yara International ASA announced the closure of its wholly owned ammonia plant in Point Lisas on December 31, 2019.
“Plant profitability has also been impacted by lower ammonia prices, and in addition negotiations with The National Gas Company of Trinidad and Tobago (NGC) have failed to reach an agreement that could sustain plant operations,” Yara International ASA stated at the time.