Energy Minister Franklin Khan said yesterday a probe is being conducted into the “fake oil” scandal at Petrotrin as he distanced himself and the People's National Movement (PNM) from the company in question—A&V Oil and Gas Ltd.
He said the company and its owner never gave any money to the party. He also admitted that the Petrotrin employee concerned was screened by the PNM as a 2015 general election candidate.
Petrotrin's internal audit report alleged there was “wilful misconduct” on the part of the employee while executing his duties during the period January to June 2017.
Attempts by the Express and TV6 to reach the employee for comment yesterday were futile.
The “fake oil” issue was raised by United National Congress (UNC) leader Kamla Persad-Bissessar on Sunday at the party's national congress in Couva where she cited an internal audit report dated August 17, 2017 which alleged that the lease operator—A&V Oil and Gas Ltd—had inflated its oil production figures and defrauded Petrotrin of almost $100 million.
Persad-Bissessar also alleged the lease operator was a PNM financier and had close ties with senior Cabinet officials.
“Petrotrin has been paying the operator for oil it has not produced. They have been paying for fake oil,' she said, adding that she intends to write to the authorities including the police for an investigation.
The Express tried to reach the owner of A&V Oil for comment yesterday on the allegations but his secretary said he was out of office and wouldn't be back.
Khan accused Persad-Bissessar of putting a “political spin” on the audit report of which he himself does not yet have the final copy.
“I want to go on record as also saying that the PNM, the Prime Minister nor the Minister of Energy had absolutely nothing to do with this matter and it is solely under the remit of Petrotrin's board and management.
“There is an investigative process going on at Petrotrin which should be allowed to continue,” Khan said at a news conference at the Energy Ministry in Port of Spain.
Khan said he as Energy Minister will “not attempt to influence the outcome and actions on this matter in any way”.
He stressed that this issue was seeking the attention of Petrotrin's new board and management committee and there is a process to be followed.
“The actions Petrotrin may deem necessary does not require any ministerial approval or ministerial intervention. It is solely under the remit of the Petrotrin board and management,” he said.
Khan explained that the company in question was granted an Incremental Production Service Contract (IPSC) by Petrotrin in 2009 but Petrotrin still holds the licence for the acreage and goes into an arrangement for the operator to work the lease by investing his own money by drilling and other activities.
He said both parties split the incremental production or new oil on an agreed percentage and this “business model” was successfully implemented at Petrotrin.
Khan stressed that the ministry itself has “absolutely no” official dealings with the operator in this model.
He explained that in January 2017, Petrotrin commissioned an internal audit into the discovery that there was a discrepancy between the quantity of oil the refinery was receiving and the quantity that exploration and production claimed to be shipping.
He said a draft interim report from the internal audit report was received by the Energy Ministry on August 4 indicating that additional work needed to be done.
The minister said he does not have the final report but hopes to by this week or early next week as it is being reviewed by the audit committee of the new board.
Khan after making a five-minute statement was grilled by the media on alleged PNM ties with the company. The following questions were asked:
Q: Is it true that the company is a financier of the PNM?
Khan: Not to my knowledge. I don't know what is a financier of the PNM. The PNM raises funds when it has to fight an election and several people come into that.
Q: Is the company owner a friend of the Prime Minister?
Khan: I wouldn't be able to speak on behalf of the Prime Minister in that regard.
Q: Are you all friends?
Khan: He is my friend? I know him. I wouldn't say we are friends. I know him as an operator in Petrotrin. I worked at Petrotrin and he's been a contractor in the energy sector for a while.
Q: Has the PNM ever gotten money from this particular individual or from his company?
Khan: Not to my knowledge.
Q: Is it possible that the party would have received money and you just not be aware?
Khan: The party cannot receive money in an official capacity under the PNM counter and I am not aware.
Q: So, are you saying categorically that the PNM has not received money? (from this company)
Khan: The PNM as a party has not received (money).
Screened by PNM
Khan also said the Petrotrin employee was screened as a election candidate and he (Khan) was part of the screening committee.
The minister said the employee of Petrotrin has no relation to his screening as a candidate.
“We divorce the politics from your professional duty,” he said, adding that he has no information that the employee was set to resign his position.
Pressed as to why he held the news conference if the issue is a Petrotrin matter, Khan said it was because the former prime minister tried to “implicate” the PNM, the Prime Minister and himself in the matter.
Asked if the allegations warrant the attention of the Fraud Squad, Khan reiterated that he did not want to pre-judge the matter and it is being reviewed by the audit committee of the board.
“Let the investigative process reach its final conclusion and then we will see where it takes us,” he said.
Khan said a lot of Petrotrin's systems are not metered and a system called “gauging” is used.
He said if there is a tank with a capacity of 5,000 barrels, “you take a dip stick and gauge the tank and the level of which the oil is... there you would know from calculations as to how much volume is in that tank.”
He said when the oil is pumped out of the tank you take another dip stick and measure the “low dip” and then there is a record of the differential volumes.
The minister said he makes no apologies for praising A&V Oil and Gas Ltd in the Parliament in the past because at that time the company was reporting that they were recording significant increases in their production and he thought it was reflective of a system that was working.
Asked if he has spoken to Prime Minister Dr Keith Rowley about the matter, Khan said Rowley, who left last week for California, USA, for a medical check-up has not been accessible.
Asked what he meant by this, he said: “When I say not accessible, he's probably flying, he has to go from California to New York. I was not able to communicate with him over the period.”
Questioned on whether he would have revealed the contents of the report had Persad-Bissessar not disclosed it, Khan said based on what the report had in it, he would have.