Rowley Govt blindsided again… Why Repsol sending home 190 workers

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The planned separation of up to 190 energy workers marks the second time in weeks that the Rowley regime has been blindsided by mass layoffs.

In both cases, the authorities could have anticipated operational cutbacks by major multinational companies.

The decision of Repsol Trinidad to offer voluntary separation packages to the bulk of its workers come as the Madrid, Spain-based company has been rocked by the decline in oil and gas prices.

The company only recently slashed its workforce in Canada by 15 per cent in the face of the slump in crude oil prices.

In February, the publicly-traded Spanish company announced that it had recorded a US $2.26 billion loss in its worldwide operations for the final quarter of 2015.

In March, Moody’s Investor Service gave Repsol a “negative rating.”

The rating was based on earnings and cash flow projections from “sustained oil weakness, as well as execution and integration risks related to the company’s strategic plan.”

A senior company official was quoted as saying: “We expect Repsol to generate negative free cash flow and show weaker cash flow projection metrics in 2016 and 2017.”

Moody’s said an improved performance would be based on “an accelerated cost reduction and efficiency programme, along with reduced capital spending programme.”

It was clear, therefore, that Repsol – formerly called Talisman Energy Inc., — would reduce its international operations.

The company’s Trinidad and Tobago could be considered to have temporarily peaked, according to industry sources.

A discovery of 40 million barrels of oil in the TSP fields of the south-east coast in 2014 has been the high point of its local operations.

The oil discovery was the fifth in two years for the company.

Repsol admitted then that the discovery benefitted from “fiscal reforms” of the then government “to incentivise exploration and production in mature fields.”

Energy producers are no longer enjoying that enabling environment.

Production is expected to start next year on the Juniper offshore gas project, in which Repsol has a 30 per cent stake.

But the company may have determined that, with the low energy prices, there would not be much positive financial returns on the projects.

That could have prompted a strategic decision to cut back on investments in this country.

Repsol operates in several countries around the world, with some 24,000 employees.

The company has been in this country since 1995 and had previously boasted of its “commitment to the economic and social development of Trinidad and Tobago through tangible actions.”

The decision to propose separation to workers shocked Energy Minister Nicole Olivierre and Labour Minister Jennifer Baptiste-Primus, who both said they did not anticipate the measure.

Olivierre was quoted as telling a daily newspaper: “I would not know what Repsol’s intentions are.”

But on-going critical industry intelligence and analyses of the financial performance of key energy players could give the authorities an indication of future plans.

All energy companies – including the giant bpTT – are reviewing costs in light of the decline in prices.

Sources are saying that more cutbacks are expected in the all-important sector.

Steel multinational ArcelorMittal recently pulled out of T&T and threw almost 700 workers on the breadline.

The corporation has been hit by low steel prices, caused largely by China’s dumping on the world market.

ArcelorMittal was also frustrated by local labour problems.

The steel producer has also shutdown major operations in Britain.

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