The tranquil islands of Trinidad & Tobago are an appealing place to rest one’s hat. Blessed with a top-quality refinery and a booming industrial hub, it is easy to assume business for the island is a laid back, easily profitable experience, especially for those in the shipping, oil and gas sectors. Yet even in this peaceful part of the Caribbean, life is never that simple – we spoke with Anne Ghent, CEO of Ventrin Petroleum, to see how the bunker company stays successful despite the strange tides keep blowing their way.
Ventrin Petroleum Company Limited is a company based in Trinidad able to provide bunkers to any vessels calling into the Gulf of Paria area, along the west coast of their industrious island. The company was started ten years ago by local Trinidadians who saw an opportunity to harness a niche market and capitalise on the industrial developments taking place in Trinidad & Tobago at the time. Anne Ghent, CEO, explained; “At the time, methanol was at the top of its game. There were, at that time, two methanol companies that owned about seven plants between them in Point Lisas – plants that still exist today. The Point Lisas Industrial Estate drew in large numbers of vessels coming to access the manufactured goods, including chemicals, that were being generated. So, local entrepreneurs saw an opportunity to provide bunkers to vessels calling at the port.” With a high amount of traffic coming to the Gulf of Paria, and in particular, to Point Lisas, the opportunity to supply demand seemed ripe. As well as establishing themselves to provide bunkers via Road Tank Wagon, Ventrin’s founders planned to maximise their profits by setting up a pipeline. “With the pipelines, the hope was these vessels could do their loading if it was methanol or ammonia, and they could be bunkered simultaneously while doing their cargo operations.”
It was a perfect plan for seizing the opportunity before them, and Ventrin has continued to develop and perfect its bunkering ever since. However, in Ghent’s opinion, the predicted boom in the company’s early years never fully came. “It was a really nice niche market, but it was never seen to catch the traffic that it expected”. Was the cause a lack of facilities? Far from it – Ventrin was well set up to provide a superior bunkering service, and continues to do so to this day. Originally an independent start-up, the company was gradually acquired by Staatsolie Suriname, and they are now 100% owned. Both within their company, and island-wide, the quality of service is undeniable. Yet, Trinidad has not held the monopoly on bunkering that one might expect; some would find this frustrating or disheartening, but between Ventrin’s experience and Anne’s own, she knows enough to understand what has held the region back. As we all know, with understanding come the ability to adapt and overcome:
“One of the reasons Trinidad hasn’t gotten the predicted success as a bunker hub has a lot to do with pricing. The pricing of bunkers is critical in whether or not you can attract ships. We have a refinery in Trinidad, and of course the best freight options for Ventrin will always be Trinidad – but the refinery prices in Trinidad are not the most competitive.” Surely customers value quality over cost? In most markets, a happy medium between the two tends to win out. According to Anne, in shipping, this is far from the case: “To a large extent, most are just interested in price. Our customers tell us frequently that they love our service, that they love how we operate, but most ship owners will ask for more than one price, and invariably, will go with the cheapest, regardless of other things. If you go into a port and you’re consistently getting a bad product, you might rethink that, but as long as ships aren’t hating their experience, they will go with the cheapest price. It’s the biggest cost of operating a ship, and owners/charterers are trying to cope with it.”
This sort of market, then, puts Trinidadian companies under pressure; they are well positioned geographically, located at a key industrial hub, and have a superior service to offer – and yet for many vessels, the cheaper deal is more attractive. It is a situation that has only become more complex as the oil industry has changed. The apparent gold mine, as seen by Ventrin’s founders and others in these industries, of course did not remain all that it was expected to be. “A lot has changed over time. The oil price has been doing what it has been doing, and methanol, which fetched top dollar some years ago, no longer does.”
As with all companies in shipping, oil and gas, the industry’s global decline raised a question for Ventrin – scale down, or invest outwards? Fortunately for the company, it is headed by a CEO with over 20 years of experience in the field. “I’ve been with Ventrin for about five years. Of that time, I’ve been CEO for three. Before Ventrin, I worked with Petrotrin for about 20 years: I’m a chemist by training, so I came into the sector through the laboratory, and then I moved across to marketing. When I left Petrotrin, I was actually the manager of crude purchasing department.”
Her career has reached many corners of the oil and gas sector, giving Ghent a broad understanding of her industry and her company’s needs. “They wanted someone with oil experience. Ventrin was an easy step for me – Petrotrin is a large-scale oil company, and Ventrin is just one aspect of that, which is bunkers. It’s a very competitive fraction, but a fraction none the less.”
So, how has this experience given Anne the insight to keep Ventrin operating competitively? Unlike some, she refused to become complacent or be lulled into a false sense of security; “I don’t think the price of crude oil is ever going to be as exciting as it used to be. There’s a thinking that when crude oil prices are down, ships use more fuel rather than less, because they’re less worried about the price. To be honest, I haven’t seen that. I think the ship owners have been having such a rough time themselves they haven’t yet been able to release their tight hold on the costs.” It is also likely that, as we have seen many times in Endeavour, fleets have expert management services charged with meticulous planning and finding cost-cutting solutions for their clients. “Exactly,” Anne agrees. “It’s a big part of business to be sure.”
“In Trinidad, when it comes to vehicles, most fuel at the pump is subsidised, meaning the price at our pumps remains constant across the country at any one time. However, if you live in Europe or North America, the price changes from one pump to the next, depending on who owns it. I imagine people plan where they will fill their cars depending on which pump gives them the best price: ships do exactly the same thing.”
This form of operation makes sense for fleet owners, but for companies such as Ventrin, it poses questions: reduce quality in order to better compete on price, or invest in diversifying your services? At Endeavour, we are always a firm supporter of the latter, and that is exactly what Ventrin is taking on.
“This is a very busy time for us. We have two tanks – one for gas oil and one fuel oil – and a number of pipelines, and we are upgrading the entire system. We have emptied the tanks, cleaned and inspected them, and it has been a similar story with the lines. We are replacing some of the lines, repairing and updating the system, and we are using the opportunity to upgrade our procedures, policies and training of our staff as well. We are expecting the project will be finished within the first quarter 2018. For now, we have suspended the use of our barges, and we are taking this time to regroup and assess how best to go back at the market. We are still doing some bunkering, however, largely via Staatsolie.”
Partly, the upgrades are required in order to remain compliant with recent, more stringent regulations. However, the project is largely an ambitious response to the current market. Having relied heavily on their bunkering services, Ventrin want to get their pipelines up and running again to give them a competitive edge – especially as they have recently acquired some surprise competition.
“In recent months, Petrotrin has come out with a barge. They have also been selling to us at the same price we are selling to our customers, which has really put us under some pressure, and makes it hard to compete now that they are offering this barge service as well. This is one of the reasons we’ve gone with our port upgrade. The one thing we do have to our advantage is our pipeline system – there’s big value to ships coming in and being given pipeline delivery, which is definitely cheaper than barge delivery. So, to keep competing, we have decided to focus on our port supply via pipeline.”
This is a timely and sly response to Petrotrin’s recent effects on the market, and one that will continue to benefit Ventrin’s profits whether or not Petrotrin remains in the barge delivery game. Anne has her doubts that they will; “We are playing the waiting game. We are in this for the long haul, and this is not their core business – they are a refiner. We have the experience, and I think they’re finding out that there’s a lot they don’t know about the market. They may well exit again, in which case we can pick up where we left off with barge deliveries. But in the interim, we are focusing on our pipelines.”
Curve-balls such as the ones Ventrin has been thrown since it was founded are make or break moments for a company – some expand and adapt, whilst others avoid the risks. More often than not, they who dare seem to win. “When your company’s going through a tough time it really makes you sit down and look at the possibilities, and really look outside the box about how you position yourself to sustain yourself.” As well as their changes to their staff processes and physical facilities, Ventrin is revisiting several contracts and licences to re-evaluate arrangements and how these impact on their maneuverability. This implies that they have several more exciting innovations bubbling under the surface; “We’re taking a multi-pronged look at where we are and where we see ourselves moving for the next ten years.” Come the second quarter 2018, it sounds as though Ventrin may emerge from their chrysalis as a new force to be reckoned with – we look forward to finding out, and filling you in when they do.