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Oil company on slippery slope


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DOUBT has been cast about the continued viability of the Barbados National Oil Company Limited (BNOCL).According to an audit done by PricewaterhouseCoopers for the year ending March 31, 2009, the group company had an accumulated deficit of $95 891 385 and a shareholder deficit of $44 676 576. BNOCL’s financial statements also reflected a net loss of $48 812 806.“These conditions indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern,” the chartered accountants indicated.These findings were revealed in the BNOCL’s 2009 annual report which was laid in Parliament on Tuesday. The BNOCL group includes three fully owned subsidiaries and a marketing division, namely: Barbados National Oilfield Services Limited; Barbados National Terminal Co. Ltd; and Barbados National Oil Holdings Limited.The report noted the losses had been incurred as a result of the removal of the subsidy on the price of refined petroleum products in September 2008.“As a result, the group’s ability to continue as a going concern will be dependent on the continuing financial support of the group’s principal shareholder, the Government of Barbados and its bankers,” the report stated.It was indicated that as a result of financing subsidies on gasoline, diesel and electricity, BNOCL’s marketing division incurred an operating loss of $65.7 million for the year in review. However, the company’s upstream operations earned a profit of $14.5 million that led to the company reporting an overall net operating loss of $51.1 million. The group company utilised $80 million in its operations mainly to purchase products and to satisfy loan interest obligations. It repaid $7.8 million in long term loans and issued $10.2 million in share capital. This resulted in BNOCL’s opening bank overdraft of $26.2 million increasing to a net overdraft of $103.1 million at year-end.According to figures, production of both crude and natural gas fell when compared with production for the previous year. Crude oil fell by four per cent from 291 944 barrels to 280 674. Natural gas production fell by 4.2 per cent from 748 307 to 717 017 million cubic feet. The report indicated that the wells in Barbados did not have the level of reserves to continually supply natural gas at the going rates for any appreciable time. It noted the sustained supply of natural gas to the National Petroleum Corporation (NPC) could only be guaranteed on the basis of the economic production of oil.