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Company offers to buy Petrojam

Tuesday, January 15, 2019

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KINGSTON, Jamaica — A company has reportedly expressed interest in acquiring the State-owned oil-refinery Petrojam.

According to a timeline of events relevant to the Petrojam Refinery upgrade and share ownership released by the Ministry of Foreign Affairs and Foreign Trade, two offers were made by the company last year. The ministry did not identify the prospective buyer.

The timeline detailed that the chairman of Petrojam emailed the ministry on January 4 with copies of the two letters — one to the Petroleum Corporation of Jamaica (PCJ) offering to purchase PCJ's 51 per cent holdings for US$60 million and the other from Venezuelan state-owned oil and natural gas company, PDV Caribe, advising of a Jamaican company's offer to purchase its 49 per cent holdings for US$100 million.

The letters were dated December 27, 2018 and January 4, 2018, respectively.

However, the ministry has indicated that it is unable verify the authenticity of the offers as the letters “provided no information whatsoever as would be required from any reasonable business person, much less the government of a country, to support the bona fides of the offer”.

The disclosure follows a reiteration yesterday by the Government that it is committed to safeguarding the country's energy security and giving the assurance that it has made the right decision to retake ownership of the 49 per cent shares in Petrojam held by PDV Caribe.

Meanwhile, the ministry said it was only made aware of the offers on January 4 following briefings with stakeholders, including heads of missions of countries representing Jamaica's largest investment partners and development partners as well as Opposition spokesperson on energy Phillip Paulwell.

“It is interesting to note that within one hour of being asked by the Opposition spokesperson whether there had been offers to purchase the respective shareholdings of PDV Caribe and PCJ, and having replied that MFAFT had not been advised of same, MFAFT received an email advising of those exact types of offers,” the ministry's release said.

At the press conference yesterday, Foreign Affairs Minister Kamina Johnson Smith emphasised that the decision taken to retake ownership of the 49 per cent shares in Petrojam was out of recognition of a number of important factors.

These include the need to upgrade the refinery from as far back as 2006, the Jamaica Public Service Company's (JPS) decision to convert to liquefied natural gas (LNG) in 2019 as well as the fact that JPS makes up 50 per cent of Petrojam's market.

Additionally, new international regulations will make it difficult for Petrojam to sell heavy fuel oil and process it as it now does, which takes effect on January 1, 2020; and banking and operational risks caused by domestic and hemispheric issues and challenges experienced by Venezuela.

“Accordingly, it is important and in the interest of the Jamaican people that the Government of Jamaica take decisive and clear action. We are, as a Government, committed to ensuring that we do our very best to make decisions that will secure our energy sector in the interest of the Jamaican people, notwithstanding our appreciation or work with third-party states,” she said.

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