Trinidad Taking Over U.S. Oil Firms

The Caribbean nation of Trinidad and Tobago faces an exodus of U.S. oil companies. Their pending departure has stirred up a debate about the value of foreign investment in this country of just over a million people.

Oil is vital for Trinidad and Tobago, supplying over 90% of the country's export earnings. For the past 25 years, however, the development of this oil was left largely in foreign hands.

Texaco has oil fields and a refinery in Trinidad, and ranks as the largest landholder in the country, except for the government. Due to the declining world market for petroleum products, Texaco announced in mid-August that it was going to sell the refinery, but hold on to the oil fields.

Since then, Trinidad and Texaco have been negotiating the terms of the sale. We are "in discussion with the government of Trinidad and Tobago on the future role of Texaco in that country and these discussions cover a wide range of topics," a Texaco spokesperson says.

If the oil workers in the country had their way, the discussions would rapidly come to a close. The Oilfield Workers Trade Union, representing some 20,000 members, has renewed its demand that the government nationalize Texaco without compensation (see MM, January 1981). "Texaco is pulling out; in short, Trinidad is no longer of any value to Texaco. They therefore cannot reasonably expect to be paid for leaving what is to them of no value," the union argued in a 78-page memo submitted to the government. The Oilfield Workers claim that Texaco made "very large profits from its 26-year stay in Trinidad."

The government, however, is not moved by the union's case. "They propose almost every week to nationalize one thing or another," says Trevor Spencer, minister counselor at Trinidad's embassy in Washington. "It is not our practice to nationalize."

The other U.S. firm pulling out of the country is the San Antonio-based Tesoro Petroleum. "Basically, we believe our shareholders are better off if we effect a sale," says Richard Stewart, general counsel of the company.

Tesoro is not leaving quietly, though. It has kicked up a storm of protest in the country by demanding $200 million for the sale of its 49% share in the joint venture it holds with the government.

"The government of Trinidad and Tobago finds your offer price totally unacceptable." the minister of state enterprises, Ronald Williams, told the company in late September. "A large body of public opinion in this country is of the view that, having regard to the dividends amounting so far to TT$165 (U.S. $68.75) million which Tesoro has received from its investment and having regard to the fact that no new capital injection was made by Tesoro other than its initial investment, the appropriate purchase price should be U.S. $50,000." Williams stressed that "the mineral resources of the country represent the invaluable patrimony of the sovereign state of Trinidad and Tobago."

With both foreign oil companies on their way out, the Oilfields Workers Trade Union is pressing hard for full scale nationalizing. "Oil workers can run our industry," the union said in its statement to the government, adding that there is a great need for "rationalization of the entire industry." The union argues that "it is pointless, in a small oil producing and refining country such as ours, to have several separate and distinct companies carrying out their operations in total isolation from each other."

The union also claims that foreign oil companies - interested primarily in exporting - have prevented the country from establishing "linkages" with other sectors of the economy; such linkages could create an "internal dynamic" propelling the country through a strong period of "economic development." Says the union: "It is unacceptable to have potential industries being frustrated because of the policy of one or a few multinational companies."