'Clueless' IES only seeks our collapse – TOR

The Tema Oil Refinery (TOR) has criticised the Institute for Energy Security (IES) over what the management of TOR says are false allegations that it state-owned refinery had caused some $24 million financial loss to the state.

The loss, according to IES, was occasioned by a bad Sale and Purchase Agreement between TOR and British Petroleum.

TOR, on 19 October 2018 this year, took delivery of some 950,000 barrels of crude oil for processing after several months of inactivity but IES said the refined product is now stranded in tanks due to the failure of TOR to find off-takers for the product.

IES in a statement said TOR has already lost about $24.13 million as a result of the failure to adopt the appropriate hedging method coupled with the decline in the price of oil on the world market.

However, in a rejoinder dated Monday, 3 December 2018, the management of TOR rebutted the accusations.

“The assertion that the company has incurred a $24 million loss as a result of the drastic reduction in the prices of crude oil on the international market is false. It is based on the flawed assumption that there is a direct correlation between the drop in global prices and the price of TOR products on the local market. For the avoidance of doubt, a fall in the international crude oil price does not necessarily correspond to an equal degree of fall in the prices of petroleum products. The projection by IES thereby does not hold,” TOR said in the release.

"We take this opportunity to advise IES not to jeopardise the long-term business model between TOR and our strategic partners with stories that cannot be substantiated,” the statement added.

Below is the full TOR statement:

REJOINDER – TOR PLUNGED FURTHER INTO TROUBLED WATERS

CLUELESS IES ONLY SEEKS THE COLLAPSE OF TOR

The attention of the Management of Tema Oil Refinery has been drawn to a December 2, 2018 article published in some sections of the media by the Institute for Energy Security IES, under the heading - "TOR PLUNGED FURTHER INTO TROUBLED WATERS," and responds to the article as follows:

1. The assertion that the company has incurred a $24 million loss as a result of the drastic reduction in the prices of crude oil on the international market is false. It is based on flawed assumption that there is a direct correlation between the drop in global prices and the price of TOR products on the local market. For the avoidance of doubt, a fall in the international crude oil price does not necessarily correspond to an equal degree of fall in the prices of petroleum products. The projection by IES thereby does not hold.

2. IES's additional claim that TOR did not employ suitable techniques in managing the risk of a fall in price is untrue. Whereas the volatile nature of crude oil prices lies beyond the control of Tema Oil Refinery, any potential price risk arising from such volatility is however mitigated in a special arrangement with our suppliers.

3. The additional claim that there is no sight of the next parcel of crude for TOR is equally false. IES operates outside TOR and cannot therefore be privy to all of TOR's cargo dealing. Expected receipts of TOR’s cargo are in accordance with our program and should lead to a receipt of the next parcel of crude oil this month.

4. Contrary to the claims by IES, we wish to state that the interest of local off-takers in our products is paramount. TOR has sold some of the already refined products to both local and foreign entities. Additionally, pipeline efforts for the export of TOR products remain unchanged.

Management of Tema Oil Refinery refutes the various allegations which were contained in the said IES article. We take this opportunity to advise IES not to jeopardise the long-term business model between TOR and our strategic partners with stories that cannot be substantiated.

By Dr. Kingsley Antwi-Boasiako
Public Affairs Manager
Tema Oil Refinery