The PCJ building on Trafalgar Road, New Kingston.
The Petroleum Corp-oration of Jamaica's arrange-ment with Trafigura Beheer ran deeper than Nigeria, it emerged this week from within the state agency, which said Tuesday that it also buys oil from Ecuador on behalf of the Dutch trader.
But PCJ group managing director Ruth Potopsingh was unforthcoming with the details, saying the deals are not scheduled events but are executed on request.
"Trafigura has asked PCJ to bid for Ecuadorean oil," said Potopsingh, explaining that the South American country transacts oil sales 'state to state'. Potopsingh said the requests were ad hoc to explain why figures on PCJ's earnings from those deals were not immediately available.
But it puts a new spin on the six-year relationship between the two entities, which Opposition politicians have lambasted as a poor deal for Jamaica.
Practicalities
Potopsingh said there were a number of practicalities that went into the October 13th decision by the corporation board, chaired by John Cook, to continue the interim arrangement, chiefly that PCJ was due to make a lift of crude in October and would be penalised if it had no agent to do the shipment.
"If we didn't lift, we had to pay a five per cent penalty," said the PCJ boss. The penalty, payable to NNPC, is calculated on the value of the shipment.
The revelations came a day after the Contractor General launched its probe of the Nigerian/Trafigura oil deal.
"The Contractor General sent in officers (Monday)," said Potopsingh, adding that her agency was cooperating fully with the probe. "We welcome them; we welcome the investigation. We have handed the files to them."
Trafigura remains Jamaica's lifting agent for Nigerian oil, but PCJ plans to put the contract to tender before year end, Potopsingh said.
Her agency is now only awaiting word from Jamaica's resident ambassador to Nigeria, Paul Harker, who is compiling a list of lifters already pre-approved by the Nigerian National Petroleum Corporation (NNPC), the state agency from which Jamaica buys oil.
Harker has power of attorney on the NNPC deal.
Once PCJ has his list, it will invite the companies to bid.
"The board decided, given the new contract negotiations would take time, to retain Trafigura as agent," said Potopsingh.
Trafigura fronts the cost of the crude, and pays Jamaica a negotiated and fixed US12.5 cents per barrel lifted. What has never been revealed is the margin that Trafigura makes per barrel on the oil it lifts and markets under the Jamaica/Nigeria facility.
PCJ consultant Dr. Raymond Wright had previously conceded that getting at such information was difficult, even when Jamaica had Trafigura audited, hence the decision to switch from a profit sharing arrangement to a fixed price contract in December 2004. In those two years, however, crude has rocketed from an average of US$40 per barrel to its current US$60, having reached as high as $78 earlier this year - premiums which would have all gone to Trafigura, which trades commodities worldwide.
Jamaica, more precisely Petrojam Limited, a wholly owned PCJ subsidiary, also buys oil from Ecuador for its refinery at Marcus Garvey Drive, Kingston - a heavy crude that approximates the grade of Venezuela's oil but only when its usual supply sources fall short.
Petrojam per lift
The shipment of oil from the South American nations are arranged by Petrojam per lift, said Potopsingh. In the case of Venezuela, which supplies Jamaica with 21,000 bpd, Petrojam and Petr—leos de Venezuela SA decide on each occasion whether Jamaica would contract a ship, or whether PSDVA would ship it at cost to Jamaica.
The Ecuador arrangement, unlike the facility with Venezuela, gives no guaranteed access to crude; it simply allows Jamaica the opportunity to bid for supplies at market prices when the need arises.
Jamaica last bought Ecuadorean crude for its own refinery more than two years ago, said energy boss Potopsingh.
PCJ's continued ties with Trafigura were also assured into next year when it named the trader as its lifter in a letter to NNPC in September - though the Dutch trader's contract had expired from December 2005 before the company hit local news headlines for a $31 million transaction with Government minister Colin Campbell.
PCJ had decided to let the commodity trader's 'Terms of Sale' contract ride into 2006 for renegotiation at or around the same time that the NNPC oil lift contract was being renewed. The Dutch agent has done about five lifting this year.
"We decided to continue with Trafigura after December because we wanted to roll-over the matter to synchronise with the NNPC contract," said the group MD. Trafigura also had already fronted the US$1 million bond Jamaica is required to pay with each annual renewal of the NNPC deal.
Having made the lift in October, said Potopsingh, "next we go to tender," adding that the PCJ board would decide who would lead the new contract negotiations.
In the past, it would have been Dr. Raymond Wright, one-time head of the PCJ, who would lead such talks, but the geologist and energy expert has taken up a less rigorous assignment as consultant to the agency, for health reasons.
New lifter
Potopsingh says the selection of a new lifter will be done by selective tendering, adding that it was the practical thing to do since the lift contract with NNPC requires PCJ to use agents that the Nigerian corporation has pre-approved and already does business with, among them Trafigura.
Wright has said that a bid process was unlikely to be wrapped up before March 2007.
lavern.clarke@gleanerjm.com
