HERITAGE Petroleum Company Limited (Heritage) on Wednesday announced that oil exports have been resumed with the sale and export of 550,000 barrels of crude oil on June 19.
In a statement, Heritage said this was the company’s first cargo sale since April 30. The company recalled the decision was made to store rather than sell its crude when crude prices were at record lows at that time.
Heritage said, “This steep decline in oil prices, which forecasted a fall to as low as US$13 per barrel for Brent, was a consequence of a glut in the international market as a result of several global factors. The company said these included the slowdown of economic activity due to the covid19 pandemic and the “oil price war” between Saudi Arabia and Russia.
While it delivered strong performance during the first two quarters of fiscal 2019/2020, Heritage said the rapid decline in prices during the third quarter was challenging and required swift, robust but prudent action. Consequently, Heritage said it optimised the use of all 1.8 million barrels of tank storage available in Pointe-a-Pierre and Point Fortin until the crude prices recovered sufficiently.
The company observed that as governments around the world continue to ease restrictions on non-essential travel and trade, and with demand for petroleum products beginning to recover, Brent is now trading at approximately $US42 per barrel.
As a result, Heritage said it has benefited from this decision to store and to resume its sale of crude at much more favourable price and market conditions. Because of this storage strategy, which allowed for the deferral of the sale of the crude cargo to June, Heritage said it has earned approximately $88 million over and above what it would have received for just one cargo of crude if this had been sold at April/May Brent prices.
Heritage said last week’s sale and the successful implementation of the storage strategy was no small feat. The company thanked its employees, contractors and the wider Trinidad Petroleum Holdings Group for their collaborative efforts to bring about last week’s sale.
While it will take some time for the global oil industry to fully recover, Heritage said it continues to closely monitor the markets and work to ensure that the value gained from the export and sale of the country’s crude is fully maximised.