Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698929845622.pdf (Trinidad and Tobago)
Petrotrin Petrotrin Petroleum Company of Trinidad and Tobago Limited A N N U A L R E P O R T 2 0 1 5 Petrotrin Petrotrin A N N U A L R E P O R T 2 0 1 5 Table of Contents Our Mission, Vision and Values Board of Directors Corporate Information Corporate Governance Chairman’s Review Upstream Downstream HSE Report Corporate Social Responsibility Financial Review Financial Statements 1 3 5 9 15 19 27 39 47 57 61 OUR MISSION V I S I O N A N D V A L U E S Our Mission Petrotrin as the national petroleum company operates to optimise the returns from its resources for the benefit of its shareholders and the citizens of Trinidad and Tobago.
Our Vision A high performing energy organisation that delivers superior results to its shareholders every time, all the time.

We will be a premier fully integrated petroleum-based energy organisation, the preferred supplier in the Caribbean and Latin America, recognised for our responsiveness to our employees, customers, the State and other stakeholders.
We will make Petrotrin innovative, dynamic, viable, and efficient; safe in our operations and sensitive to the ecology; driven by customers, competent and empowered people, creative business ideas and appropriate leading technology.

Our Values People: We respect and trust people and value their ideas, are committed to their development and have the highest regard for human dignity.

All officers and employees must adhere to high ethical standards, honesty and integrity in the conduct of our business.
Performance: We strive constantly for professionalism, quality performance and continuous improvements through teamwork and technology, with the goal of providing products or services which meet or exceed the expectations of our stakeholders, at a cost which represents value.

Profit: We strive to create profits since it is the fuel for survival, growth and viability.
It keeps us in business, allows us to provide financial returns for our shareholders and to meet our obligations to our employees, suppliers, lenders and the State.

Positive Change: We will be open and honest in our communications so as to embrace and leverage on positive change, recognizing that every employee must be allowed to innovate and contribute to our learning organisation.
PETROTRIN ANNUAL REPORT 2015 1 BOARD O F D I R E C T O R S PROF. ANDREW JUPITER, FEI, FIMMM Chairman BEVERLEY JOHN Director ROY LLOYD Director ZAMEER MOHAMMED (DR.) Director LENNARD PRESCOD Director LINDA RAJPAUL Director RANDHIR RAMPERSAD Director PETROTRIN ANNUAL REPORT 2015 3 CORPORATE I N F O R M A T I O N Incorporation Petroleum Company of Trinidad and Tobago Limited (“Petrotrin”), was incorporated on 1993 January 21.
It is a limited liability company that is wholly owned by the Government of the Republic of Trinidad and Tobago.

The registered office of the Company is located at 1st Floor, Petrotrin Administration Building, Lamp Post No.50, Southern Main Road, Pointe-a-Pierre, Trinidad, West Indies.

Activities Petrotrin operates both onshore and offshore Trinidad.
Its principal activities are to explore for, produce, refine, manufacture, buy and sell petroleum and natural gas and otherwise deal in crude oil, natural gas and petroleum products.
Company Structure Board of Directors President Corporate Secretary Senior Manager Law & Land Management Chief Audit Executive Senior Manager Corporate Communications Senior Manager Corporate Planning & Business Development/ Advisor Manager Health, Safety & Environment Vice President Exploration & Production As at 2016 April 30 Vice President Refining Chief Financial Officer Vice President Human Resources & Corporate Services PETROTRIN ANNUAL REPORT 2015 5 Corporate Information Executive Leadership Team (ELT) The members of the ELT are as follows: FITZROY HAREWOOD President STEPHEN AWAH VP Exploration & Production (Ag.)
JONATHAN BARDEN VP Refining RONALD HUFF Chief Financial Officer As at 2016 April 30 NEIL DERRICK VP Human Resources & Corporate Services (Ag.)

Subsidiaries Petrotrin’s major operating subsidiary is Trinidad and Tobago Marine Petroleum Company Limited (Trintomar) in which it has an 80% shareholding.

The National Gas Company of Trinidad and Tobago Limited owns the other 20%.

Auditors The Company’s auditors are KPMG.


6 PETROTRIN ANNUAL REPORT 2015 CORPORATE G O V E R N A N C E Corporate Governance Petrotrin, the national petroleum company, operates to optimize the return from its resources for the benefit of its shareholders and the citizens of Trinidad and Tobago.

Board Structure and Composition The current Board, appointed by the shareholder on 2015 September 30, comprises of the Chairman, Andrew Jupiter, and six non-executive Directors.
The Board meets twice a quarter for which there is a formal schedule of matters reserved to it.

This includes: overall strategy and management; corporate structure and capital structure; financial reporting and controls; internal controls; and approval of the Annual Budget and Financial Statements.

Role of the Board of Directors The role of the Board of Directors is to represent the sole shareholder (the Government of Trinidad and Tobago) and to promote and protect the interests of the Company.
The Board’s responsibilities include that of governance, guidance, oversight, input into and final approval of Petrotrin’s strategies and performance objectives, the formulation of policies and high-level resource allocation.

The Directors bring a wide range of skills and international business experience to Petrotrin.

They also offer independent judgement on issues of strategy, performance and risk through their contribution to Board meetings and to the Board’s committee meetings.
The Chairman, Andrew Jupiter, is responsible for the leadership and management of the Board and, for ensuring that the Board and its committees function effectively.

Independent Professional Advice All Directors may seek independent professional advice in connection with their role as a Director.

All Directors have access to the advice and services of the Corporate Secretary.
PETROTRIN ANNUAL REPORT 2015 9 Corporate Governance Board Committees The Board has established committees to assist in exercising its authority, including the performance of the business.

There are six permanent committees of the Board, which are as follows: • • • • • • Audit Finance & Tenders Human Resources Operations Asset Management & Optimisation Major Projects A copy of each committee’s terms of reference is available from the Corporate Secretary’s office.
Audit Committee The Board of Directors has chartered its Audit Committee with direct responsibilities for oversight over the Internal Audit and Enterprise Risk Management functions.

The Committee reviews and approves the annual audit plan of the Company’s Internal Audit Department at the start of each fiscal year.
The Audit Committee also receives summarized reports of all audits, investigations and special reviews carried out by the Internal Audit department on a quarterly basis (or more frequently if required).

The President and Vice-Presidents also keep the Audit Committee updated on its progress in implementing audit recommendations.

The Audit Committee also meets with the external auditors about their service plan and the results of their work.
The Committee vetoes the half-yearly and year-end financial reports before they are sent to the full Board for approval.

Internal Audit Department The Internal Audit Department is responsible for the appraisal of the effectiveness, efficiency and adequacy of Petrotrin’s systems of internal control, enterprise risk management and corporate governance.

It has an approved charter and its independence is assured via its functional reporting line to the Audit Committee, and administratively to the President.
A risk-based approach is used in the development of the annual audit plan and in the planning of individual audit assignments.

10 PETROTRIN ANNUAL REPORT 2015 Corporate Governance Executive Management Except for those matters that the Board has reserved for its own decision-making, the President holds delegated authority to achieve the corporate objectives.
There are established policies and procedures and schedules, pertaining to the delegation of financial and human resource authorities to individual members of management.

Notwithstanding these further delegations, the President remains accountable to the Board for the authority delegated to him.
The Company’s Executive Leadership Team (ELT) is made up of the following members: • President • Vice President Refining • Vice President Exploration & Production • Vice President Human Resources & Corporate Services.

• Chief Financial Officer Responsibility for Internal Controls The Board is responsible for Petrotrin’s system of internal control and for reviewing its effectiveness.
It has delegated authority to the Audit Committee to assist it in fulfilling its responsibilities in relation to internal control and financial reporting.

The Company’s ELT and middle management continuously monitor and update the internal systems in order to ensure that the Company’s standards meet or surpass best international practice while tailored to meet the specific needs of Petrotrin.
Going Concern The Directors consider that, taking into account the assets and income of Petrotrin, the Company has adequate resources to continue in operational existence for the foreseeable future.

For this reason the Directors adopt the going concern basis for the financial statements contained in this Report.
Petrotrin’s Code of Ethics and Conduct All Directors and employees are required to comply with the Code of Ethics of Conduct, which is intended to help them put Petrotrin’s business principles into practice.

The Code clarifies the basic rules and standards they are expected to follow and the behaviours they are expected to apply.
PETROTRIN ANNUAL REPORT 2015 11 Corporate Governance Conflicts of Interest All Directors and employees are required to submit a signed Conflict of Interest declaration form annually or more frequently if necessary.

Certain statutory duties with respect to Directors’ conflicts of interest are in force under the Integrity in Public Life Act.

However, Directors are also required to submit Petrotrin Conflict of Interest declaration forms to the Corporate Secretary.
Completed declaration of interest forms from employees are reviewed by their supervisors to determine whether there are any actual or potential conflict of interest situations and, if so, to identify the actions to be taken to manage these conflicts.
Petrotrin’s SilentWhistle System Employees, contract staff and third parties with whom Petrotrin has a business relationship (such as customers and suppliers) may raise ethics and compliance concerns through the SilentWhistle system, which is operated by an external third party and available twenty four hours a day, seven days a week via telephone and the Internet.

Additionally, interested parties can communicate directly to the Chief Audit Executive by telephone, in writing or in person.
The above-described governance processes are but some of the ways whereby the Board of Directors and the Company’s management seek to provide the type of leadership and sound judgement that will keep Petrotrin aligned with global best practices and which ultimately benefit all stakeholders.

12 PETROTRIN ANNUAL REPORT 2015 Chairman’s R E V I E W Oil prices continued their fall in fiscal year 2014/2015 driven by persistent over supply and record inventory levels.
WTI prices averaged US$56.54/bbl for fiscal 2014/2015 compared to fiscal 2013/14 average of US$99.07.

The severe reduction in our E&P revenues impacted negatively on Petrotrin’s financial performance.

Refining margins were relatively robust averaging US$10.33/bbl compared to fiscal 2013/2014 average margin of US$6.38/bbl, however Petrotrin was not able to capitalize on these high margins due to relatively low average refinery throughput occasioned by unavailability of key refining units.
The combination of low oil prices, low refinery throughput and high operating expenses resulted in a net loss of TT$819 million for the fiscal year, PROF. ANDREW JUPITER, FEI, FIMMM Chairman though it must be noted that this loss was impacted by inventory write downs of TT$1,838 million.

In spite of lower oil prices Petrotrin continued with oil-winning capital expenditure and drilled 18 wells in our Land operations and 4 in Trinmar to minimize declines in our equity crude production.
Infrastructure work also continued in the South West Soldado Phase 1 Project.

Our E&P division recorded a net profit of TT$440 Million down from TT$1,265 Million in fiscal 2013/14.

In our refining division we were able to bring key process units online after extended downtimes and we continued with asset integrity upgrades to minimize our exposure to HSE incidents.
Notably in 2014/2015 all of our plants associated with the Gasoline Optimization Programme (GOP) were online and in the latter part of the year we saw marked improvements in throughput, availability, utilization and product yields.

Fiscal 2015/2016 will also be a challenging year for Petrotrin with the now accepted outlook for oil prices being “lower for longer” and refining margins forecast to be lower than those for FY 2014/2015.
For 2015/2016 our focus upstream will be on managing the decline of equity production by more diligent attention to old oil PETROTRIN ANNUAL REPORT 2015 15 Chairman’s Review production and implementation of a limited drilling programme targeting higher productivity drilling prospects.
In our downstream operations we will focus on activities aimed at improving the reliability of refining units to ensure continued improvements in throughput, availability and product yield and to progress the completion of the Ultra Low Sulphur Diesel (ULSD) Plant.

Aggressive cost reduction will be pursued across the board and we will continue with our asset integrity upgrade programmes.

With projected reductions in cash from operations, liquidity will have to be carefully managed.
Emphasis will be placed on developing a reduced capital program that must provide greater returns; aggressive reductions in our operating expenditure; ensuring the reliability of refinery units; asset integrity upgrades and building human resource competencies in critical areas.

All of this will be done keeping safety and environmental stewardship paramount.
16 PETROTRIN ANNUAL REPORT 2015 upstream U P S T R E A M UPSTREAM HIGHLIGHTS 2014-2015 Net Income After Tax (TT$ Millions) TT$440.0 (2014 – TT$1,265.0) Total Equity Production (Barrels Of Oil Equivalent Per Day) 71,149 BOEPD (2014-71,236 BOEPD) Capital Outlay (TT$ Millions) TT$1,246.0 (2014 – TT$1,431.0) Government Take (TT$ Millions) TT$1,431.0 (2014 – TT$4,380.0) Petrotrin is the largest crude oil producer in Trinidad and Tobago; our upstream operations include operated and non-operated assets onshore and offshore Trinidad.
The operated assets include the Trinmar offshore fields located in the Gulf of Paria to the southwest of Trinidad as well as its onshore fields across the southern portion of the island.

The non-operated (or Joint Venture) assets are located onshore in the southwestern portion of the island and off the north, east and west coasts of the island.
The company’s upstream operations are managed by the Exploration and Production (E&P) Division, which is organized into three main functional areas: EXPLORATION & PRODUCTION DIVISION EXPLORATION & DEVELOPMENT PRODUCTION OPERATIONS JOINT VENTURES Overview Fiscal 2015 saw the oil and gas industry negatively impacted as the weakening of the oil and gas prices continued from fiscal 2014 into fiscal 2015.
WTI crude price averaged US$56.54 per barrel in 2015, down almost $43 per barrel from 2014 (US$99.07 per barrel).
During the first four months of the year crude oil prices took a serious downward turn by almost 44 percent from an average of US$84.34 per PETROTRIN ANNUAL REPORT 2015 19 Upstream barrel in 2014 October to US$47.33 per barrel in January 2015, after which prices fluctuated between US$59.37 per barrel and US$42.89 per barrel, ending the year at US$45.47 per barrel (See Figure 1 – Oil and Gas Prices 2014-2015).
However, despite the low price environment we continued to be resilient as our efforts extended to several initiatives in order to facilitate the production improvement and monetization of our oil and gas reserves.

We continued to put emphasis on arresting the natural decline in our production and consciously strengthening our control over capital and operating expenditures.
Our efforts during the year included the processing of extensive 3D seismic coverage in Trinmar/North Marine acreages which was acquired in 2014, continued drilling, reactivation and development of South West Soldado and drilling and workovers both onshore and offshore.

The declining oil price impacted our division both operationally and financially.
Our new oil production was also limited as a result of a delayed resumption of drilling in Trinmar which resumed at end 2015 February and the reduction in third-party drilling due to low oil prices.

However, despite these challenges the Exploration and Production Division continued to be a key profit contributor to the company as we minimized production declines.

Our commitment to safety and to the environment remained of utmost importance as we worked toward improving our operational performance.
Figure 1 - Oil and Gas Prices 2014-2015 L B B / $ S U 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 - 30.00 25.00 20.00 15.00 10.00 5.00 - U T B M M / $ S U WTI Crude Price (US$/bbl) Henry Hub (HH) Gas Price (US$/mmbtu) 20 PETROTRIN ANNUAL REPORT 2015 Upstream Financial The Upstream Division reported a net profit after tax of TT$440 million for fiscal 2015 compared with TT$1,265 million in 2014, 65 percent lower than the previous year.
The decrease was mainly due to the sharp decline in oil price over the year which impacted our total revenue of TT$6.7 billion in 2015.

Our capital investment on major projects was TT$1.2 billion, 13 percent lower than the previous year.

Government Take from the upstream operations, via taxes and fees which include SPT, PPT, production levy, oil impost and royalties was TT$1.4 billion for the year.
Total proved reserves at 2015 fiscal year-end were 169.7 MMBOE compared to 175.9 MMBOE in the previous year (gas converted at 5.8 MCF/bbl).

Petrotrin’s reserves from our Joint Ventures decreased by 8.0 MMBOE during the fiscal year, mainly due to gas production from NCMA and Central Block.

Land reserves increased by 3.5 MMBOE and Trinmar reserves decreased by 1.6 MMBOE from the previous fiscal year.
2P Reserves (Proved plus Probable) were 245.3 MMBOE and 3P (Proved plus Probable plus Possible) were 312.3 MMBOE at fiscal 2015 year-end).
Figure 2 – Petrotrin’s Oil and Gas Reserves 2013 – 2015 E O B M M 200.0 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 - Total Petrotrin Joint Ventures Trinmar Land 2013 164.21 42.9 58.1 63.1 2014 1 75.9 38.9 56.5 80.5 2015 169.7 30.9 54.9 84.0 Production Total equity oil and gas production averaged 71,149 BOEPD for the year, comprising oil production of 45,166 BOPD and gas production of 150.7 MMCFD.
This represents a 1% decrease in oil equivalent from the previous year, with gas production increasing by 2 percent, and oil production decreasing by 1 percent.
PETROTRIN ANNUAL REPORT 2015 21 Upstream On Land, crude oil production averaged 12,821 BOPD, a decline of 300 BOPD from 2014 due to lower realised new oil production which was not adequate to set off the natural decline in old oil production, limited availability of workover rigs which resulted in a number of wells remaining off for longer periods and lower steam injection in the Forest Reserve UMLE and CRE Steamflood Projects.
Trinmar recorded an average crude production of 21,598 BOPD, 832 BOPD lower than 2014.

There were several factors which contributed to this decline, but mainly planned production in South West Soldado (SWS) not being realized due to delays in infrastructural works as well as the late commencement of drilling.

The Joint Venture Sub-Division continued to provide an alternative platform for growth and portfolio optimization.
Total barrels of oil equivalent from our third parties increased over the previous year.

Equity oil production from our Joint Venture (JV) Operations averaged 2,504 BOPD in fiscal 2015, 52 BOPD higher than the previous year while equity gas production averaged 138.38 MMCFD, 2 percent higher than fiscal 2014.

Our Lease Operatorship, Farmout and Incremental Production Service Contracts (IPSC) contributed an average of 9,039 BOPD for the year, a 7 percent increase over fiscal 2014.
Increase in third party production was mainly as a result of the continued gas supply of the Incremental Gas Sales Agreement in NCMA-1 block (18 BCF); increased oil production in the TSP JV due to new oil from four (4) wells drilled off Teak B platform in 2014 and a successful TSP Non Rig campaign in 2015 as well as increased oil production in IPSCs resulting from successful drilling in Goudron and recompletions in Catshill.
Figure 3 – Oil and Gas Production 2014-2015 Land Trinmar Joint Ventures LO/FO/IPSC/JVCVORR 80,000 70,000 60,000 D P E O B 50,000 40,000 30,000 20,000 10,000 - 22 PETROTRIN ANNUAL REPORT 2015 Upstream Figure 4 - Joint Ventures Production 2013 - 2015 (Oil & Gas) JOINT VENTURES Oil (BOPD) Lease Operatorships IPSCs Farmouts Joint Ventures Total JV (Oil) Total JV (Gas) Fiscal 2013 Fiscal 2014 Fiscal 2015 6,041 6,495 6,123 621 959 3,189 10,810 146.19 1,166 783 2,452 10,896 135.75 2,123 793 2,504 11,543 138.38 Exploration and Development activities in 2015 included the processing of 540 Km² of full fold Ocean Bottom Cable 3D Seismic in Trinmar which was acquired in 2014, with PreStack Time Migration and Reverse Time Migration-PreStack Depth Migration processing to be completed in fiscal 2016.
Our oil-winning programmes included eighteen (18 wells being drilled on Land and four (4) in Trinmar (impacted by late resumption of drilling).

Eighty-three (83) workovers were performed on Land and one hundred and twenty (120) in Trinmar.

Infrastructural upgrades in 2015 included platform refurbishments, strengthening of wells, fabrication and installation of minimal landings, fabrication and installation of pipelines and tank farm construction and upgrades.
Joint Venture highlights for fiscal 2015 included the signing of a new Joint E&P licence for the offshore East Brighton JV block on 2014 December 22 and the drilling of one (1) exploration well in the Parula West prospect and four (4) dvelopment wells in Oilbird field in the SECC JV.
Other third party achievements were the drilling of thirty (30) development wells in our Lease Operatorship Blocks, fourteen (14) development wells drilled in our Farmout (FO) Blocks and twelve (12) development wells via our Incremental Production Service Contracts (IPSC).

Health, safety and the environment continued to be of paramount importance with emphasis on HSE, Process Safety Management and Asset Integrity Management.
Our initiatives included twenty-one (21) HSE Leadership visits; two hundred and fourteen (214) Stakeholder Outreach Sessions, one hundred and forty-seven (147) Emergency Response Drill Plans, and a robust ongoing Inspection programme to monitor and assure the integrity of infrastructure and equipment.
PETROTRIN ANNUAL REPORT 2015 23 Upstream Way Forward/Outlook 2015-2016 With the extreme volatility of the oil price environment and its impact on the energy industry, our focus will be on sustaining strategies with an optimistic eye on oil-winning activities.

We have made key adjustments our capital plans and have reduced our forecast capital budget to $799 million, a 29 percent reduction compared to 2015.
Subject to the prevailing economic conditions we will maintain a level of drilling and workover activity to minimize the natural production decline and thereby also contribute to overall activity generation within the national economy.

Development of our employees will continue as we strive to strengthen the leadership, management and supervisory capability of our workforce.
The safety and integrity of our people, our assets and our environment will remain of paramount importance as we strive to deliver improved operational and environmental performance.

24 PETROTRIN ANNUAL REPORT 2015 downstream D O W N S T R E A M Year in Review - Oil Prices From the start of fiscal 2014/2015 to the end, crude oil prices plummeted by about US$40/bbl.

The fiscal year began with WTI trading around US$80/ bbl and ended around the US$40/bbl level.
Prices were mainly affected by events within OPEC, fundamentals (persistently high US crude stocks, faltering global demand), geopolitics (events in Saudi Arabia, Yemen, and Iran) and the global economy (crises in Greece and China).

For the year, prices more or less trended downwards vacillating between US$40-50/bbl – a far cry from last year’s US$100/bbl levels.
The plunge in oil prices which began in fiscal 2013/2014, continued in 2014 October when Saudi Arabia cut its official formula prices making cheaper crude available to its customers as it sought to defend its market share.

The OPEC meeting of 2014 November 27 proved to be a dramatic and decisive turning point for the oil market when OPEC decided to leave its 30 MMBPD production ceiling unchanged.

It abandoned its long-held policy of curbing oil production to defend prices.
Global oil prices were also being heavily pressured by the persistent high stock levels of crude with storage tanks brimming in all main refining centers.

US crude oil stocks were at the top of the five year average range for all of the year and similarly at the storage center of Cushing, record high inventory levels were observed.

In 2015 March and April, prices were pulled up towards the US$60/bbl level on tensions between Saudi Arabia and Yemen.
Saudi Arabia and its allies launched airstrikes in Yemen against the Houthis and forces loyal to the former President deposed in the 2011 Arab Spring uprisings.

The Saudi Arabia intervention in Yemen in March contributed to growing instability and unpredictability in the region.

While the physical supply risks were low, Saudi’s decision added a US$3-5/bbl to the risk premium according to analysts, which began to be priced in around late March.
In 2015 June and July, fears that contagion from the Greek debt crisis could affect oil demand growth, depressed prices.

The crash of the Chinese stock market in August and slowing Chinese demand in September pulled oil prices down to US$40/bbl levels which would become the new norm.

PETROTRIN ANNUAL REPORT 2015 27 Downstream Crude Market NYMEX West Texas Intermediate (WTI) averaged US$56.54/bbl for fiscal 2014/2015 - a precipitous decrease of US$42.53/bbl compared to US$99.07 for fiscal 2013/2014.
After four years when some of the highest average oil prices in history seemed to defy economic gravity, petroleum prices fell in mid 2014.

Technological innovations such as deepwater drilling and fracking let US producers extract oil and gas from previously impermeable shale, unlocking vast new resources and expanding supply.

Instead of lessening the glut by reducing output, Middle East exporters engaged in a price war to defend their market share.
Crude price had dropped to about US$43.00/bbl in 2015 March, the lowest since 2009, as US storage tanks brimmed with oil.

The price collapse forced high-cost drillers in the US to idle rigs while the major oil companies cut billions of dollars in spending.

Output in the main US shale regions continued to rise at the start of 2015 despite a steep drop in the number of onshore rigs drilling for oil.
According to EIA data, when production did finally start to fall after 2015 March, subsequent declines were slow.

The decline in shale oil production was not occurring as fast as Saudi Arabia had expected.

At its meeting in Vienna on 2014 November 27, OPEC rolled over its output target of 30 MMBPD.

This was the sixth consecutive rollover since the target was first agreed in 2011 December.
Unlike previous rollovers, when OPEC was content with prices well above US$100/bbl, the November rollover came after prices had plunged in the run up to the meeting.

By announcing its intention to keep output more or less steady in coming months, OPEC signaled that oil prices would have free rein to respond to other supply and demand inputs to strike a balance.
In 2015 January, the Saudi oil minister said that the 2014 November 27 decision not to cut production was about retention of market share and in defense of high-efficiency producers such as itself.

OPEC closed its ministerial meeting in Vienna on 2015 June 5 maintaining the 30 MMBPD ceiling and urging members to adhere to it.

Tensions were growing within the organization over market share with the possible return of Iran should sanctions be removed.
The fiscal year ended with some members calling for an emergency OPEC meeting to discuss the plunge in oil prices.

Product Market Generally the product markets exhibited typical behavior for the year under review.

Gasoline was the main growth demand product globally over the past year and gasoline crack spreads supported refining margins.

Low jet fuel prices supported the airline industry.

Gasoil demand was driven by heating requirements for winter in the US and Europe.
Demand for fuel oil continued to suffer with the shift towards more environmentally-friendly fuels as bunkers.

28 PETROTRIN ANNUAL REPORT 2015 Downstream Gasoline became the premium product in the global refining barrel.

The strong gasoline season in fiscal 2014/15 could be attributed to historically low US retail/ pump prices which encouraged driving and also the short fall in refinery output of high octane blend stocks.
Gasoline spreads to WTI were above US$20/bbl for 6 months of the year and hit a high of about US$33/bbl in 2015 July.

The fiscal year began with US gasoline stocks at the bottom of the 5-year average range but by 2015 January they were above the 5-year average range for the first time in over a year.

Gasoline spreads for March averaged US$23.19/bbl and were the highest in the last two years but in keeping with typical seasonal behavior where gasoline spreads tend to peak around March – May each year.
Spreads firmed above US$30/bbl in July on both sides of the Atlantic.

However with the end of the gasoline season, spreads dropped from August to September by about US$14/bbl.

of the Atlantic.

However with the end of the gasoline season, spreads dropped from August to September by about US$14/bbl.

For the first quarter of the fiscal year, US Gulf Coast jet fuel was the most valuable of the distillates as was typically expected for this time of year.
In the US, a blizzard at the end of 2015 January forced flight cancellations throughout the US northeast, depressing jet fuel demand.

From 2015 January and for the rest of the fiscal year, USGC jet fuel and gasoil prices on average tracked each other closely.

Some airlines benefited to varying degrees from the lower jet fuel prices depending on their hedging strategies.

Gasoil spreads traded relatively steadily throughout the year within a range of US$15 – 17/bbl for the most part.
In October, diesel demand was boosted by strong growth in US consumption due to the economic recovery and a large agricultural harvest leaving middle distillate stocks in the Midcontinent at record lows in December.

Winter storms in the US northeast helped to prop up heating oil prices in the region.

At the start of 2015, distillate demand was on the upswing mainly due to the change in ECA bunker specifications.
New projects in the Middle East, Atlantic Basin and India were expected to add over 1 MMBPD of middle distillate supply to the Atlantic Basin/ Mideast / Indian markets.

This was expected to pressure global middle distillate markets.

The tightening of emissions regulations in northern Europe and North America waters this year continued to exert its effects on the fuel oil market.
The demand for fuel oil for use as bunkers plummeted so that the markets were not distinguishing between the 3 main fuel oil grades – NYH 1.0 % S, NYH 2.2 % S and USGC 3.0 % S. The price differential between these 3 progressively narrowed such that the average spread to WTI for FY 2014/2015 for all 3 grades was about negative US$6/bbl.
PETROTRIN ANNUAL REPORT 2015 29 Downstream Refinery Crude Oil Supply For the year ended 2015 September 30, the refinery processed an average of 122,192 BPD as compared to 111,162 BPD during the previous fiscal year.

Approximately 40 percent of the crude supplies comprised indigenous crude of which about 92 percent was Petrotrin’s own crude oil production and the remaining 8 percent sourced from other local producers.

Imported crudes made up about 59 percent of the crude supplies.
The selection and sourcing of imported crude oils continued to be influenced by compatibility of specifications, timely availability, reliability, cargo size and price.

A mix of term and spot contracts was utilized to secure reliable and cost-effective supplies of imported crude oil for the refinery.

The average price of crude oil supplied to the refinery in fiscal 2014/2015 was US$55.96/bbl as compared to US$100.05/bbl for the previous fiscal year.
This represented a huge year-on-year decrease of US$44.09/bbl.
The sources of crude oil processed by the refinery for FY 2013/14 and FY 2014/2015 are shown in Figure 1 below: Figure 1 - Crude Oil Sources, Volume Percent (FY 2013/14) 3rd Party Processing 0.5% Internal 39.4% (FY 2014/15) 3rd Party Processing 0.5% Internal 36.6% Foreign Purchases(Includes Calypso Crude) 55.9% Other Local Producers 4.2% Foreign Purchases 59.6% Other Local Producers 3.3% Product Sales Refined products were sold into five market channels: local, regional, extra-regional, international and bunkers, which are differentiated by geography, customer base, logistics and price.
In fiscal 2014/2015 the focus continued to be on maximizing refined product sales into the regional and extra–regional markets which provided the best netbacks.

30 PETROTRIN ANNUAL REPORT 2015 Downstream Gross sales in fiscal 2014/2015 averaged 121,136 BPD which was 10.3 percent higher than the previous year’s average of 109,830 BPD mainly due to increased plant utilization during the fiscal year.
Petrotrin continued to supply 100 percent of the local market’s requirements for jet fuel, gasoil and gasoline.

Premium market sales increased from 63,595 BPD in fiscal 2013/14 to 75,458 BPD in fiscal 2014/2015, an increase of about 18.7 percent.

The international market consisted of sales of fuel oil, vacuum gasoil (VGO) and gasoline.

Cargo sizes ranged from 220,000 to 350,000 barrels.
The volume distribution of refined product sales by market channel for FY 2013/2014 and FY 2014/2015 are shown in Figure 2 below: Figure 2 - Sales Volume, by Market (FY 2013/14) Bunkers 3% Local 26% 35% 39% (FY 2014/15) Bunkers 3% Local 24% - Extra Regional 15% Regional 17% Regional 16% Extra Regional 22% PETROTRIN ANNUAL REPORT 2015 31 Downstream Refining Margin The Refining and Marketing division recorded an indicative gross margin of US$10.33/bbl which was much higher than last fiscal year’s value of US$6.38/ bbl.
The actual indicative gross margin was significantly higher than the projected indicative gross margin of US$7.00/bbl mainly because realized spreads for all products (except jet fuel) were better than budgeted.
The main focus areas for the fiscal year 2014/2015 are summarized below: I R E F N E R Y I T H E P O N T E A P E R R E - - I Bringing key process units back online- COMPLETED Improving site-wide asset integrity and reliability- Improved Mechanical Availability Optimize all aspects of operations to increase income- Improved yields resulting in higher cash generation Put in place strategies & programs to deliver continuous risk reduction- Strong focus sustained Managing operating expenses- Higher utilization of rates resulting in lower unit cost of operation During the first two quarters of the fiscal period, the following key process units were brought online: • No.
4 Vacuum Distillation Unit (VDU) • No.

2 Visbreaking Unit (VBU) • Fluidized Catalytic Cracking Unit (FCCU) • C3/C4 Alkylation Unit • Sulphuric Acid Regeneration Plant (SARP) Table 1 below summarizes the main operational key performance indicators (KPIs) for the Refining Division, as compared to the performance in fiscal year 2013/2014.
Table 1 - Comparison of Operational KPIs Key Performance Indicator FY 2013/2014 FY 2014/2015 Crude Throughput, BPD Refinery Utilization, % Fuel Oil Yield, Volume % Gasoline Yield, Volume % Mechanical Availability, % Energy Intensity Index 111,162 122,192 38.9 45.1 17.0 74.0 220 54.8 35.4 22.6 85.8 180 32 PETROTRIN ANNUAL REPORT 2015 Downstream Crude Throughput Crude throughput averaged 122,192 barrels per day (BPD) for the fiscal period, as compared to the 111,162 BPD for the previous fiscal year.
Crude throughput was markedly higher from 2015 March onwards, as several key process units came online, which allowed for full-conversion of the crude oil processed.

Figure 3 below shows the monthly crude throughput for fiscal year 2014/2015, as well as a comparison with fiscal year 2013/2014 average performance.
Figure 3 - Crude Throughput y a D r e p s l e r r a B 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 FY2015 Monthly T/Put FY2015 Avg FY2014 Avg Refinery Utilization Refinery Utilization averaged 54.8 percent for fiscal year 2014/2015 as compared to 38.9 percent for the previous fiscal period.

Similar to the crude throughput, refinery utilization increased distinctly from 2015 February onwards, as the FCCU and Alkylation Unit came online.
Figure 4 below shows the monthly refinery utilization for fiscal year 2014/2015, as well as a comparison with fiscal year 2013/2014 average Figure 4 - Rfinery Utilization performance.

t n e c r e P 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 FY2015 Monthly Refinery Utilization FY2015 Avg FY2014 Avg PETROTRIN ANNUAL REPORT 2015 33 Downstream Fuel Oil Yield Fuel oil yield averaged 35.4 volume percent for fiscal year 2014/2015 as compared to 45.1 volume percent for the previous fiscal period.
2.2 percent Sulfur fuel oil spreads averaged (-US$6.54/bbl) for the fiscal year 2014/2015, which underscored the advantage of lowering the fuel oil yield by this significant amount.

Figure 5 below shows the monthly fuel oil yield for fiscal year 2014/2015, as well as a comparison with fiscal year 2013/2014 average performance.
Figure 5 - Fuel Oil Yield t n e c r e P e m u o V l 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 FY2015 Fuel Oil Yield FY2015 Avg FY2014 Avg Gasoline Yield Gasoline yield averaged 24.1 volume percent for fiscal year 2014/2015 as com- pared to 17.0 volume percent for the previous fiscal period.

This significantly increased the Division’s revenue, as gasoline spreads were the highest of all middle distillates, averaging US$17.86/bbl for the fiscal year 2014/2015.
Figure 6 below shows the monthly gasoline yield for fiscal year 2014/2015, as well as a comparison with fiscal year 2013/2014 average performance.

Figure 6 - Gasoline Yield t n e c r e P e m u o V l 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 34 PETROTRIN ANNUAL REPORT 2015 FY2015 Gasoline Yield FY2015 Avg FY2014 Avg Downstream Overall Product Yield Overall middle distillate yield – gasoline, jet, and gasoil, improved significantly in fiscal year 2014/2015 as compared to that of the previous fiscal period.
This was due mainly to the availability of the FCCU and the Alkylation units, as well as the higher on-stream time on other key process units such as Nos 4 VDU and 2 VBU, both of which were critical in lowering the fuel oil yield.

Figure 7 below shows the comparison of the overall product yields for both fiscal periods.
Figure 7 - Comparison of Overall Product Yields t n e c r e P e m u o V l 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 FY2014 Avg FY2015 Avg Direct Operating Expenses Direct Operating Expenses (DOE) was TT$1.90 Billion for fiscal year 2014/2015, as compared to TT$1.70 Billion for the previous year.
The higher operating expenditure in fiscal year 2014/2015 can be explained by: • Higher operating activity, as evidenced in the higher Refinery Utilization of 54.8 percent as compared to the 38.9 percent recorded in fiscal 2013/2014 • Higher maintenance activity in fiscal 2014/2015, which contributed to the higher Mechanical Availability of 85.8 percent in fiscal 2014/2015 as compared to 74.0 percent in the previous fiscal period • Inflationary pressures, resulting in increased cost of goods and services • Annual escalation factors in natural gas purchases and salary and wage rates DOE is traditionally expressed in unit cost per barrel of crude processed.
On this basis, the unit operating costs for the Division were US$6.58/bbl and US$6.57/bbl for fiscal periods 2013/2014 and 2014/2015 respectively.

However, this basis does not accurately represent the impact of the downstream process units on the operating expenses; this is better done when expressed in terms of utilized capacity i.e.

Utilized Equivalent Distillation Capacity (UEDC).


On this basis, the operating expenses for PETROTRIN ANNUAL REPORT 2015 35 Downstream fiscal 2014/2015 were US$0.96/UEDC as compared to US$1.21/UEDC for the previous fiscal period.

Figure 8 below shows the comparison of the DOE for both fiscal periods.
Figure 8 - Direct Operating Expenses (US cents/UEDC) C D E U / s t n e c S U 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 FY2015 Direct OPEX (US cents/UEDC) FY2015 Avg FY2014 Avg Mechanical Availability Mechanical Availability is a performance metric that indicates the reliability of a facility.

Mechanical Availability averaged 84.8 percent in fiscal 2014/2015 as compared to 74.8 percent for the fiscal 2013/2014, illustrating the improvement in asset integrity and reliability of the facility.
Figure 9 below shows the comparison of the Mechanical Availability for both fiscal periods.
Figure 9 - Mechanical Availability t n e c r e P 100.0 80.0 60.0 40.0 20.0 0.0 FY2015 Mechanical Availability FY2015 Avg FY2014 Avg Outlook for FY 2015/2016 The Downstream objectives for the budget year 2015/2016 are as follows:- Maximize Gross Margin • Cost effective acquisition of crude oil/feedstock • Maximize product sales premiums 36 PETROTRIN ANNUAL REPORT 2015 Downstream • Maximize sales volume into premium markets • Optimize crude and finished product inventories • Optimize process unit operations and yields to maximize production of high-value products Minimize Operating Costs • Improving all operating efficiencies • Timely turnaround of vessels Safe & Reliable Operations • 100 percent HSE compliance • Improving site safety performance • Reliable and cost effective receipt and delivery systems • Reducing flaring Satisfied Customers Asset Integrity and Reliability • Implementing an Asset Integrity Management System • Renewing critical infrastructure – tanks, off-sites, electrical Crude Acquisition Indigenous crude supply is projected to be 49,469 BPD.
To meet the planned refinery crude throughput, 94,201 BPD (approximately 4 car goes of 725 MB each per month) of imported crude would be required.

Imported crudes would be purchased such that the best economic, as well as refinery fit, is obtained.

Product Sales Budgeted sales for 2015/2016 are projected to be 144,206 BPD.

The demand in the local market is expected to remain approximately the same as for fiscal 2014/2015.
In the other markets, Petrotrin continues to capitalize on competitor supply interruptions.

Countries under the PetroCaribe Agreement will still purchase a portion of their product requirement from Petrotrin in order to guarantee security of supply.

In fiscal 2015/16 Petrotrin continues with its strategy of negotiating flexible volume contracts with major traders as a contingency for products that have been displaced by PetroCaribe.
Based on an average West Texas Intermediate (WTI) crude price assumption of US$45.00/bbl, other key operational targets for the Division for the fiscal year are: Key Performance Indicator Fiscal Year 2015/2016 Target Crude Throughput, BPD Refinery Utilization, % Fuel Oil Yield, Volume % Mechanical Availability, % 142.9 MBPD 75.0 25.0 95.0 PETROTRIN ANNUAL REPORT 2015 37 Health S A F E T Y A N D E N V I R O N M E N T Overview Petroleum Company of Trinidad and Tobago Limited is committed to ensuring our responsibility to operate in a manner that emphasizes the preservation of human health, environmental protection, operational safety and community goodwill.
We accept HSE as a “core value” to our organization and as such, have taken numerous steps to ensure that we meet and exceed our regulatory requirements and operate in a manner that is both socially and environmentally sustainable.
HSE Culture in Petrotrin is viewed in four (4) key aspects: • Each employee must routinely perform caring and safe behaviours for the benefit of others • All employees must hold HSE as a VALUE not a priority • Each employee must be willing and able to “go beyond the call of duty” on behalf of the safety of others • Each employee must feel responsible for the safety of their co-workers as well as themselves In an attempt to inculcate a “Zero Incident Culture” within all our operations, Petrotrin has developed, planned and implemented several structured Health, Safety and Environment (HSE) Strategies which are geared towards eliminating the root causes of incidents within the company and are centered on a management system approach.
Key Strategies Include: • Health, Safety and Environment Management System (HSE-MS) • Contractor HSE Management • Behaviour-Based Safety (BBS) Programme • Emergency Response and Preparedness • Process Safety Management (PSM) • Environmental Compliance Health Safety and Environment Management System (HSE-MS) A Health, Safety & Environment Management System (HSE-MS) framework has been developed for Petrotrin which establishes the structure of the Companywide Health, Safety and Environmental Management System.
Our HSE Policy sets the general principles for each element within the HSE Management System Framework, which are based on international standards.

As part of the HSE Management System implementation plan, HSE Management PETROTRIN ANNUAL REPORT 2015 39 Health, Safety and Environment System procedural manuals have been developed for all Divisions within Petrotrin.
Measuring and Monitoring HSE Performance HSE Leading Indicators Monitoring and measuring our HSE performance is a critical element of the HSE Management System.

HSE Key Performance Indicators (KPIs) have been established together with performance targets.

Additionally, to assess the level of HSE compliance to legislative requirements, as well as conformance to Company Policies and Procedures, HSE audits are conducted internally by the HSE department in accordance to ISO 19011 standards.
Contractor HSE Management Petrotrin has approximately two thousand (2000) contractor registered companies of which roughly one-third (1/3) are registered to perform high- risk activities within our operations.
As such, we have established a Contractor HSE Management Programme with the objective of ensuring compliance of all contractors with the relevant provisions of the health and safety legislation, the Safe to Work Trinidad and Tobago (STOW-TT) requirements and all other applicable regulations, policies and directions of the company.

The Contractor HSE Management Programme, is also a key element of Process Safety Management.
Safe To Work Trinidad and Tobago (STOW-TT) Initiative Petrotrin has adopted the STOW-TT initiative in 2011 and has taken the necessary steps to fulfil this initiative by mandating that all contractors involved in high risk work activities become STOW-TT certified by 2015 June 30 in the Refining and Marketing Division.

A STOW-TT generic manual was developed by Petrotrin and provided at no cost to assist contractors.
The ECTT was fully supportive of this initiative and has increased accessibility of the generic manual through their website.

Contractor HSE Communication Production Alliances HSE Committee Meetings: Petrotrin has engaged Operators and HSE personnel from the sixteen (16) Production Alliances Oil and Gas companies to foster knowledge sharing on HSE best practices in the industry, improved regulatory compliance and communication on key HSE issues.
Contractor HSE Forums: A total of three hundred and sixty-five (365) contractor companies attended seven (7) HSE communication forums/sessions which were conducted between the period 2014 October – 2015 March These communication sessions provided 40 PETROTRIN ANNUAL REPORT 2015 Health, Safety and Environment guidance about the benefits and the implementation of STOW-TT Management System within contractor companies.
Point Lisas Energy Association (PLEA) Committee Meetings and Workshops: Petrotrin is a member of the Point Lisas Energy Association (PLEA) and is represented on the PLEA HSE Committee.

All contractor employees working within the Refining & Marketing Division and Trinmar Operations are required to possess PLEA Passports.

On 2015 November 25, Petrotrin hosted a PLEA Workshop themed “Overcoming current facility challenges using PSM”.
Behaviour Based Safety (BBS) Programme This programme focuses on managing the ‘people’ side of safety with key emphasis on motivation and reinforcement of positive behaviours.

The main objectives of our Behaviour-Based Safety (BBS) Programme are to educate employees about safe and unsafe behaviours whilst using peer pressure to observe worker activities and rewarding targeted behaviours.
Executive Leadership HSE Ownership Petrotrin’s Management conduct on a periodic basis HSE leadership tours throughout the Company’s operations.

The main objective of these tours is to engage employees in direct interaction and conversation with Management, to provide feedback on HSE issues, HSE performance and non-conformance in the workplace.

These leadership tours form part of management’s Key Performance Indicators (KPIs).
Reward and Recognition Programme In keeping with Petrotrin’s Health Safety and Environment (HSE) Policy and its initiative towards improving HSE culture within the Company, a Reward and Recognition (R&R) programme has been developed and implemented to motivate and recognize employees on their positive HSE performance and improvement in safe behaviours.

This programme involves motivating and rewarding employees at all levels of the organisation including contractors for HSE excellence.
HSE Competencies/Training Effective health and safety management requires competency across every facet of an organization and every level of the workforce.

In keeping with our HSE Policy requirements, Petrotrin is committed to building an HSE culture through training and development.

This is also one of the key elements in our HSE Management System.
PETROTRIN ANNUAL REPORT 2015 41 Health, Safety and Environment HSE Communication Strategies HSE Week Activities / Earth Day / World Environment Day HSE Week is one of the most highly anticipated events in the Company’s calendar and most employees look forward to participating in events planned by various departments.

HSE week is commemorated with National HSE week which is held during the last week of April.
Petrotrin also joins the international community in recognizing Earth Day (April 22) and World Environment Day (June 05) with activities geared towards the preservation of the earth and the sustainability of the Environment.

HSE Committees The establishment and maintenance of a Health and Safety Committee is a legal requirement under the Occupational Safety and Health Act, 2004 (as amended 2006), Section 25E.
Several HSE Committees have been developed to facilitate participation between Petrotrin and our employees.

Regulatory Agency Meetings In an effort to maintain and foster healthy relationships with our regulators, Petrotrin hosts an annual meeting with all regulatory and State agencies.

The objective is to allow a two way communication to share information on regulatory and industry best practices.
This meeting is also used to keep abreast of new developments in regulation, to identify gaps and make recommendations for continuous improvement.

Safety Culture Surveys “Safety culture of an organization is defined as the product of individual and group values, attitudes, perception, competencies and patterns of behaviour that determine commitment to, and the style of proficiency of an organization’s health and safety management”.
Petrotrin’s HSE Department, used the Safety Culture Survey Tool developed by the Health and Safety Laboratory (HSL) of the United Kingdom to conduct Safety Culture Assessments within the Company as well as in ten (10) Production Alliances Companies.

The results were analysed using HSL software and detailed reports are generated with recommendations for the improvement of safety culture in the respective areas.
Emergency Response and Preparedness (ERP) Training Petrotrin has adopted the internationally recognised Incident Command Systems (ICS) for emergency response.

The ICS is a management system designed to enable effective and efficient incident management by integrating a combination of facilities, equipment, personnel, procedures, and communications operating within a common organizational structure.
ICS is normally structured to facilitate 42 PETROTRIN ANNUAL REPORT 2015 Health, Safety and Environment activities in five (5) major functional areas namely: Command, Operations, Planning, Logistics, Finance and Administration.
Emergency Response Units Petrotrin maintains approximately thirty-five (35) critical emergency response units including fire tenders, water tenders, foam carriers/wagons, utility vehicles, emergency response marine vessels and ambulances as part of its emergency preparedness and response to cover the Refinery Operations, Land North and East (LNE) and Trinmar Operations most of which operate on a twenty-four hours basis.
Emergency Response Plans and Drills for Fenceline Communities Petrotrin has completed emergency response plans for our fenceline communities in Marabella, Bennet Village Santa Flora, Pleasantville and Point Ligoure Tank Farm Point Fortin.

Drills were conducted within these communities in an effort to partner with and allow the communities to participate in, preparing for and responding to an emergency.
Oil Spill Response Capabilities (NOSCP and Mutual Aid Agreement) Petrotrin was one of the key stakeholders involved in the development of the National Hydrocarbon and Chemical Spill Contingency Plan (NOSCP) which was approved in 2013 January to address both land and marine pollution for Trinidad and Tobago.
Additionally, Petrotrin has membership with Oil Spill Response Limited (OSRL), in Fort Lauderdale, Florida USA, to provide tier three (3) emergency response equipment, dispersants and technical assistance.

Refinery Wide Evacuation Drill Petrotrin successfully conducted a Level three (3) evacuation drill exercise on 2015 May 27 for the Pointe-a-Pierre Refinery inclusive of a Refinery Wide Tabletop Exercise on 2014 November 20.
It involved more than 1300 personnel and was supported by over 300 emergency responders and observers.

Testing the effectiveness of the plan was one of the proactive measures being implemented to ensure that the Company and all related stakeholders are prepared to respond swiftly and decisively in the event of an emergency.
Process Safety Management (PSM) Process Safety Management is the proactive and systematic approach to managing highly hazardous chemicals by following the requirements of the fourteen (14) elements prescribed in the U.S.OSHA 29 CFR Part 1910.119.

Petrotrin also partnered with other energy companies to host a one day Process Safety Management Safety Conference in 2014, entitled “Preventing Major Accidents”.
The main objective of the conference was to collate experiences and share the lessons learnt from accidents and incidents within the oil and gas industry.

PETROTRIN ANNUAL REPORT 2015 43 Health, Safety and Environment Environmental Compliance Certificate of Environmental Clearance (CEC) Petrotrin’s continues to comply with legislative requirements.

For the fiscal 2014/2015, all new or significantly modified activities undertaken by Petrotrin were assessed by the Environmental Management Authority (EMA).
Petrotrin also completed its CEC applications for thirty-one (31) of its drainage basins with coverage for drilling a total of one thousand and eight (1008) wells within our Land, North and East Coast Operations.

This represents one hundred percent (100%) CEC coverage for the E&P License areas of our onshore operations.
Water Pollution Rules Source Registration Certificates – E&P Division Five (5) Source Registration Certificate renewals were submitted to the EMA for 2014-2015: Five (5) requests were also submitted to the EMA to eliminate previously registered discharge points, due to changes in operations which resulted in zero effluent discharge into the environment from these facilities.
Water Pollution Permits Petrotrin was issued four (4) Water Pollution Permits for the Pointe-a-Pierre Refinery, Point Ligoure, Point Fortin Central and Guayaguayare Tank Farms.

Each Water Pollution Permit is valid for a five (5) year period and has associated terms and conditions.

Under each Water Pollution Permit, a Best Management Practices Plan (BMPP) has been developed to minimize the number and volume of pollutants generated, discharged or potentially discharged at these facilities.
Environmental Preservation – Reducing Impact Waste Management (Water) Petrotrin proactively strives for full compliance with the Second Schedule of the Water Pollution Rules, 2001 (as amended).

The company has constructed and commissioned a Produced Water Treatment Plant at Los Bajos.

The plant treats produced water from the Barrackpore, Forest Reserve and Los Bajos Tank Farms to comply with the standards of the Water Pollution Rules thus reducing impact to the environment.
Additionally, treatment options for produced water from the Point Fortin facilities and the Refinery are being vigorously pursued.

Petrotrin Petting Zoo and Biodiversity Display Petrotrin is committed to investing in our youth by nurturing and developing youth awareness on environment and biodiversity thereby building the life skills of our nation’s children.
The Petrotrin Petting Zoo and Biodiversity Display are aimed at creating a significant educational link towards awareness and promotion of environmental conservation in Trinidad and Tobago.

44 PETROTRIN ANNUAL REPORT 2015 Health, Safety and Environment Summary Petrotrin has implemented a Health, Safety and Environment Management System in all areas which have resulted in improvement in overall HSE performance.
This was achieved through employee’s collective efforts and commitment to HSE as a core value and a personal responsibility towards our realization of the goal of zero incidents.

PETROTRIN ANNUAL REPORT 2015 45 CORPORATE S O C I A L R E S P O N S I B I L I T Y Petrotrin’s Corporate Social Responsibility (CSR) Initiatives Owing to its very unique position in the national economy, Petrotrin has always taken a holistic approach to its Corporate Social Responsibility (CSR) initiatives.
Petrotrin’s main CSR objective is to contribute towards the sustainable economic and social development of the Company’s employees, their families, fenceline communities and the wider society.

In keeping with this resolve, the Company places particular emphasis on education, culture, sports and youth development.

During the year, Petrotrin continued to invest in various programmes and projects throughout Trinidad and Tobago that promoted societal advancement and environmental preservation.
The Company’s commitment to sustainable development is not confined to its operations, but it also extends to the wider community.

Commitment to Community Throughout the years, Petrotrin has established long-standing relationships with various groups as this is seen as an integral aspect of responsible business management.

The Company’s focus is heavily centered on community empowerment, people development and overall engagement.
Its programmes are all geared toward achieving these overriding objectives and, as such, it invested time and resources into ensuring that its communities remain vibrant and progressive.

Football in Focus Petrotrin has always placed particular emphasis on supporting and developing successful sporting programmes.

Nothing fosters national pride, camaraderie and unity better than battles won in the sporting arena be it: athletics, track, football field, basketball court or cricket pitch.
Not only does sport provide constructive use of time but it engenders discipline, teamwork and a generation of strong, determined and accountable people.

Women’s Football Development Programme In 2015, Petrotrin celebrated the third successful edition of its Women’s Football Development Programme.

This two-month long initiative is aimed at exposing young ladies, between the ages of 11 and 17, to the basic techniques of football.
Unlike prior years, the programme was expanded to accommodate not only secondary school students but also those from primary schools located in the communities neighbouring the Pointe-a-Pierre Refinery.

PETROTRIN ANNUAL REPORT 2015 47 Corporate Social Responsibility 2015 Women’s Premier League Football Petrotrin was the proud sponsor of the Petrotrin Oilers Football Team that competed in the Inaugural Women’s Premier League (WPL).
The Company was pleased to be a part of this new and exciting initiative, as the League’s mission – “to provide a platform in Trinidad and Tobago, for football that is high-quality, entertaining, promotes social values and encourages the participation of women and girls in sport” – was in keeping with the Company’s stated commitment to the development of the youth of the nation.
Fueling Futsal As part of its drive to support national progress in all aspects of sport, Petrotrin was the main sponsor of the 2015 National Futsal League.

The League ran from 2015 May to August and was held primarily to identify and prepare players for the national team.

At the completion of the League, some 44 players were selected and offered the opportunity to train with the National Futsal Team in preparation for the World Cup in Colombia in 2016.
Southern Games The Company maintained its sponsorship of the Southern Games which is held annually at Company facilities.

It is recognized as a premier cycling and track and field competition on the local sporting calendar.

Culture Petrotrin contributed to all national observances and festivals and actively encouraged employee participation in the plethora of art forms that constitute the fabric of our cultural landscape.
Celebrations of Divali, Eid and Emancipation Day, in particular, elicited full participation from employees and fenceline communities and have become significant events on the corporate calendar.

The annual Borough Day Celebrations at Point Fortin is another noteworthy example of national events that received financial and other practical support from Petrotrin.
Supporting the National Instrument Petrotrin supports and promotes national integration by recognising and celebrating national diversity and the promotion of all local art forms.

The Company’s strong support for the national instrument – the steelpan dates back to its predecessor companies but its support for various other national festivals and observances are demonstrations of its wider commitment.
Panorama 2015 The Company recognizes the steelpan not only for its prominence within the local music fraternity, but also for its role in the transmission and preservation of local culture, creation of employment; and its contribution towards building 48 PETROTRIN ANNUAL REPORT 2015 Corporate Social Responsibility relationships and improving communities.

In 2015, Petrotrin maintained sponsorship of four (4) bands and provided financial assistance to a further fourteen (14).
In addition to this, the Company also continued sponsorship of the Single Pan and Small Conventional Bands National Panorama Finals at Skinner Park, San Fernando.
The following were among the bands achieving notable success in 2015: • Petrotrin Phase II Pan Groove (2nd - Large Band Category) • Pan Elders (1st - Medium Band Category) • Supernovas (2nd - Small Band Category) • San Juan East Side Symphony (1st - Single Pan Category) Pan For Blue Petrotrin maintained its sponsorship of the 16th Edition of the Pan for Blue Competition, held annually as part of the Point Fortin Borough Week activities.
This steelband competition is designed to promote the use of the national instrument amongst primary schools within Pan Trinbago’s South/Central Region and also aims to promote well-rounded students through their involvement in music.

In 2015, nine (9) schools participated in the competition.
Siparia Police Youth Club’s Junior and Senior Steel Orchestras Petrotrin has been the main sponsor of the Siparia Police Youth Club (SPYC) since its formation in 2011 and has continuously provided support for many of the group’s programmes and activities.

SPYC has been heralded as the flagship among all Police Youth Clubs in the country and leaders in the community have worked assiduously to engage young persons in positive activities.
The Club focuses on maintaining a holistic approach to development and includes training not only in sports but also in life enhancement skills and talents.

The inclusion of pan in SPYC’s offerings in 2015 further builds on this approach by allowing the members to express themselves through a cultural medium.
Support for Pointe-a-Pierre Wild Fowl Trust (WFT) Petrotrin continued to offer financial and practical support to the WFT as it continues to be a model of nature and heavy industry co-existing in harmony.

Investing in Ideas Petrotrin believes in holistic and collaborative development that requires the joint effort of the home, the school, the state and the corporate community.

The Company’s support for education is therefore regarded as an investment in the nation’s development.
Petrotrin recognizes that developing critical thinking and encouraging excellence and creativity in our nation’s youth not only enhances the standard of learning in our PETROTRIN ANNUAL REPORT 2015 49 Corporate Social Responsibility schools but also ensures the cultivation of an empowered generation.

As such, the Company hosted an Art and Essay Competition themed “Exploring Creativity and Refining Ideas”.
This project was designed to build awareness about the Company, its operations and their impact on national development.

It challenged the creativity and knowledge of secondary school students between the ages of 13-18 years.

Participants were asked to submit their art pieces encapsulating a range of topics including “Petrotrin, One with the Environment” and “Petrotrin, A Pillar in the Community”.
In addition to art, creative writing was also promoted through several themes including “Shaping a Community, Developing a People” and “The Evolution of the Oil Industry of Trinidad and Tobago”.

Volunteerism in Action At Petrotrin, volunteerism is one of the virtues that is engendered amongst employees.

Volunteering not only improves the lives of those involved in the activity but it can help the less fortunate, foster compassion and strengthen communities.
The Company’s volunteerism thrust continues to grow through the help of generous employees.

Over 1,300 volunteers were engaged in the various projects implemented.

1.

Christmas Toy Drive Through the Christmas Toy Drive, over 2,500 gifts were donated by employees and distributed to homes within the Company’s fenceline communities.

2.

Walk-a-Thon for Disease Awareness Every year the Company hosts at least one (1) Walk-a-Thon to promote a cause and raise funds for various non-profit organizations.
Employees are educated about various diseases and in turn many make contributions towards organisations involved in treating and providing support to persons affected by these ailments.

Employees have raised and donated over $80,000.00 to the Voice of Lupus Foundation, the Scleroderma Care Foundation and the Trinidad and Tobago Diabetes Association to aid in educating the public and assisting those in need.

3.
3.

July/August Vacation Food Drive This well-received project has been in existence since 2013 and offers assistance to primary school children by providing them with food hampers donated by employees and the Company.

The initiative contributes significantly to the ability of families to feed their children during the vacation period when the meals provided under the School Nutrition Programme are not available.
In 2015, 85 children from 15 schools located across the Company’s various fenceline communities have benefited from this project and over 8,640 food items were donated by employees and the Company.

50 PETROTRIN ANNUAL REPORT 2015 Corporate Social Responsibility 4.

Craft Apprentices Volunteerism Service to others is one of the components of Petrotrin’s Craft Apprenticeship Programme and is considered key to the apprentices’ holistic development.
The apprentices have been involved in initiatives that not only impacted the organization but also enhanced institutions and the environment in the fenceline communities.

Marabella Family Crisis Centre, Ferndean’s Place in Point Fortin, the Soup Kitchen at St. Vincent De Paul in San Fernando and beaches at Palo Seco and Cedros have all benefitted from the commitment and dedication of the apprentices through refurbishment works and clean-up exercises.

5.
5.

Lending a helping hand to create Stronger Communities Petrotrin has also partnered with Habitat for Humanity and employees were actively involved in building the foundation of a home in Tortuga for a family in need.

In 2015 August, over 150 employees joined the Trinidad and Tobago Police Service (TTPS) Southern Division at Guaracara Park to participate in a walk against domestic violence.
Employees also participated in the Association of Female Executives of Trinidad & Tobago’s (AFETT’s) Annual Clothing Drive titled “Suit Me Up”.

In September, approximately fifty-four (54) bags of clothing items were donated by employees in response to AFETT’s call to action.
Our Commitment to People Petrotrin recognizes that its talent pool must be readily available to meet the needs of its business and therefore the Company focuses on building the capabilities of its human capital to meet both its short and long term requirements.

The Company views development as holistic and offers its employees various opportunities through academic learning, leadership and behavioural training, technical training and on-the-job immersions.
Graduate in Training (GIT) Programme Several recent university graduates were enrolled in the Horizon’s Graduate Trainee Programme which covers the period 2014 – 2017 and which is themed “DISCOVER PETROTRIN”.

This unique and carefully planned programme focuses on a more strategic learning experience for the trainees, while expanding the availability of mixed competencies in the Company’s professional talent pool.
Sixty-nine graduates were selected for exposure to on-the-job training, structured mentorship, graduate development plans and coaching.

The original two-year programme has been PETROTRIN ANNUAL REPORT 2015 51 Corporate Social Responsibility extended to two-and-a-half years to nurture graduates capabilities and attitudes required for their fields of study.

Craft Apprenticeship Programme The reintroduction of the Craft Apprenticeship Programme is critical to the sustainability of the Company’s operations.
The organization will benefit as it develops competent tradesmen and women in anticipation of the declining availability of technical manpower at the craft and technician levels.

The elements of the traineeship include customized, competency based training focused mainly on practical, field-based activity that is equipment and process specific; sound underpinning technical knowledge; and competence assurance through skills-based assessment and programme certification.
This programme is expected to instil a sense of ownership and pride that will propel the apprentices to work with integrity, put safety first and strike a balance amongst work accomplishments, wellness and service to community.

Executive, Management & Supervisory Development In 2014, the Learning and Development Department designed and implemented the Executive, Management and Supervisory Development (EMSD) Framework and undertook developmental programmes at all three levels.
The purpose of this Programme was to cultivate the leadership capability and capacity of those who currently occupy managerial and supervisory positions.

Central to the strategy was a commitment to develop and empower leaders through sustained learning with the purpose of achieving extraordinary business results.

The benefits to be derived from this intervention are aligned to Petrotrin’s Strategic Imperatives and are linked directly back to the strategic risks of the organization.
Employee Development An internal training calendar was developed based on the training and development needs captured from across the organisation via a structured training needs assessment process.

With a mandate to reduce training costs, many programmes were developed and delivered by internal Subject Matter Experts.

These programmes were geared to develop and enhance employees’ skills in achieving their key results as well as to close identified competency gaps.
Training covered business competencies in areas such as interpersonal skills, time management, conflict management, problem solving, communication skills and building relationships with internal and external stakeholders.

52 PETROTRIN ANNUAL REPORT 2015 Corporate Social Responsibility Pre-Retirement Seminars Pre-Retirement Seminars were conducted to provide employees with the information, guidance and tools necessary as they transition into retirement.
With an estimated nine hundred and sixty-eight (968) employees set to retire between 2014 October and 2019 September, the Company understands the challenges they will face and it is committed to ensuring that they receive the necessary counsel and guidance to facilitate a successful transition from working life to retirement.

Employee Engagement and Wellness Petrotrin seeks to maintain the equilibrium between preservation and profitability; both of which are priority goals for the organisation.
Striking the balance between these goals is a challenging task and the Company continues to pursue these objectives through the consistent improvement in health, safety and environmental practices across its operations.

Employee health and well-being are also of major concern to the Organisation.

Throughout the year, opportunities were consistently provided for employees to participate in healthy life-style activities whilst progressing both professionally and personally.
The Company’s Monthly Activities Programme was centered on providing opportunities for employees to improve their health, boost morale, build camaraderie and foster teamwork.

January 2015 - Women’s Obstacle Course - Stiletto Stumble Petrotrin hosted its first ever women’s obstacle course competition, exclusively for its female employees.

The event attracted 20 teams comprising 100 employees from across the Company’s operations.
This project achieved its objective of building employee morale and fostering team work.

February 2015 - Zumba Fitness Challenge One hundred employees registered to participate in the scheduled Zumba Fitness Challenge.

Zumba is a highly vigorous and intense dance fitness programme which combines physical exercises with Latin and international music.

This intensive build up for the 2015 Carnival season not only provided the right atmosphere but also the opportune time to host such an event.
March 2015 - Saturday Morning Walk/ Run/ Jog Beautiful morning walks were initiated to provide encouragement for those involved in Petrotrin’s “10,000 steps initiative” as well as for other employees simply wishing to participate in healthy activity.

Some 336 employees participated in the 4 events which took place across the Company’s various locations.
PETROTRIN ANNUAL REPORT 2015 53 Corporate Social Responsibility April 2015 - 10,000 Steps Challenge This three-month programme was geared towards encouraging a more active lifestyle and the 251 employees who registered were expected to record and complete at least 10,000 steps per day (the equivalent of walking approximately five miles).

Participant’s baseline figures (cholesterol, blood sugar, body mass index etc.)
were tested and progress was monitored by the Company’s wellness staff during the course of the programme.

May 2015 - Men’s Obstacle Course - Rough & Tumble This event was designed exclusively for male employees and was intended to promote team building and increase employee morale.

A total of 18 teams competed in a military style obstacle course consisting of nine challenges all requiring team collaboration and strategy to complete.
The teams tackled the course bravely, with most teams finishing the course in less than 10 minutes.

June 2015 - Karaoke Jam In a continued effort to promote friendly competition among employees, Petrotrin hosted an event dubbed “Karaoke Jam - Bringing the Eras Together”.

Participants competed in the Solo, Duet and Group Categories to showcase their vocal talents.
July 2015 - Blood Drive Approximately 100 employees and their dependents from across the organization volunteered to donate blood when Petrotrin partnered with the Trinidad and Tobago Blood Bank.

The drive focused on increasing education and awareness for such a noble undertaking.

A mobile unit was utilized for this project, thereby permitting employees to donate blood without having to actually leave their respective locations and minimizing the disruption to work operations.
August 2015 - Chow Down Competition Petrotrin hosted its first ever Chow Down Competition and 14 teams of employees from various locations participated in this highly competitive challenge.

The event allowed employees to demonstrate their culinary skills, including tasteful presentation of their prepared items.

September 2015 - Tour de Force Obstacle Challenge This was the final event for the fiscal year and was created to promote team building among employees and management.
Each team was required to include at least one member of Management.

It was intended to facilitate departmental co-operation and teamwork across all levels.

A total of 13 mixed-gendered and multi-generational teams participated in this event.
54 PETROTRIN ANNUAL REPORT 2015 financial R E V I E W Activities The Group is primarily engaged in integrated petroleum operations which include the exploration for, development and production of hydrocarbons and the manufacturing and marketing of petroleum products.
Financial Results The consolidated financial statements represent the combined results of the Exploration and Production, Refining and Marketing and Corporate Business Units and the subsidiaries Trinidad and Tobago Marine Petroleum Company Limited (Trintomar), Petrotrin EAP Services Limited (PEAPSL) and World GTL Trinidad Limited.

The Group’s focus for the financial year ending 2015 September 30 (FY2015) was aimed at reducing its loss in an environment of declining oil prices.
Cost cutting measures were implemented and steps were taken to improve asset reliability, thereby, increasing both production and throughput.

For FY2015, the Group realised a net loss after tax of (TT$822.9 million) resulting in an unfavourable variance of (TT$621.6 million), when compared to its loss of (TT$201.3 million) for FY2014.
This variance was mainly due to: • Lower average refined products sales prices, declining by 37.9% from US$106.13/barrel in FY2014 to US$65.89/barrel for FY2015 • Significant write down in inventories mainly due to the reduction in both WTI and refined product prices • Total equity crude production remained fairly constant in FY2015 compared to FY 2014.
Due to cash constraints, drilling projects, which would have increased production, had to be curtailed • Higher refined products sales volumes from 110,000 average daily barrels sold for FY 2014 to 121,000 average daily barrels sold for FY2015, an increase of approximately 10.3% • The gasoline optimisation project came on stream early in FY2015 resulting in the production of a higher percentage of high value refined products.
Due to the availability of these plants, refinery throughput rose during the year averaging 122,192 bopd for FY2015 compared to 111,162 bopd for FY2014 PETROTRIN ANNUAL REPORT 2015 57 Financial Review The average WTI crude oil prices for FY2015 and FY2014 were US$56.54/barrel and US$99.07/barrel respectively.

Average crude oil transfer prices for FY2015 and FY2014 were US$52.90/barrel and US$92.33/barrel respectively.
The netback to wellhead natural gas price decreased from an average of US$3.16/ mcf for FY2014 to US$1.74/mcf for FY2015.

Revenues of TT$19,751 million reported in FY2015 represented a decrease of 32.5% over that of FY2014.

Despite the decrease in sales prices, refinery margins increased from US$6.08/barrel for FY2014 to US$9.93/barrel for FY2015.

The Exploration and Production business unit recorded net earnings of TT$440.1 million, a decrease of 65.2% when compared to FY2014.
This was mainly due to lower crude oil transfer prices.

Despite higher refinery margins in FY2015 and the availability of the key plants in the refinery, Refining and Marketing operations still recorded a net loss of (TT$1,234 million) compared to a loss of (TT$1,187 million) in FY2014.

The Group’s asset base decreased to TT$37,507 million at financial year-end 2015 compared to TT$45,394 million at financial year end 2014.
This was mainly driven by decreases in intangible assets, inventories, trade and other receivables offset by deferred tax asset.

Total debt to equity and current ratios at financial year-end 2015 were 1.18 and 0.59 respectively, compared to 1.16 and 0.88 at financial year-end 2014.

Shareholder’s equity of TT$11,133 million at financial year-end 2015 represented a decrease of 8.3% compared to financial year-end 2014.
Petrotrin was reviewed by international rating agencies and was given a Standard & Poor’s credit rating of BB and Ba1 from Standard and Poors and Moody’s Investor Services.

In managing its liquidity, Petrotrin maintains sufficient cash on hand and short term credit facilities to meet its operational expenses, including the servicing of its financial obligations.
As at 2015 September 30, closing cash and cash equivalent balances were TT$1,731.9 million reflecting a cash outflow of (TT$76.4 million) from the TT$1,808.3 million balance as at 2014 September 30.

Short-term credit facilities available from various local and foreign banking institutions totalled TT$6,890 million of which TT$1,773 million was unutilized as at 2015 September 30.

Short-term loans amounted to TT$4,984 million and were secured at interest rates ranging from 1.03% to 2.39% per annum.
58 PETROTRIN ANNUAL REPORT 2015 Financial Review As at 2015 September 30, long-term debt totalled TT$8,169 million and comprised: • The GOP /ULSD loan of TT$5,349 million • The GOP loan of TT$2,757 million • NGC loan (re Trintomar subordinated debt) of TT$63 million Cash from operating activities provided TT$3,021 million in FY2015 and represented an increase of 229% from TT$917 million generated in FY2014.
During FY2015 there was a TT$3.0 billion settlement of fuel subsidy arrears which was offset by the payment of taxes.

The increase of TT$2.1 billion in cash from operating activities resulted mainly from lower payments of taxes to the Government of Trinidad and Tobago.

Cash used in investing activities totalled TT$1,351 million in FY2015 compared to TT$1,688 million in FY2014.
Greater emphasis was placed on investing in drilling activities at Trinmar (Soldado Project) in order to increase crude oil production.

The GOP and ULSD projects accounted for 6.16% of the total cash invested in FY2015, compared to 9.84% in FY2014.

Cash used in financing activities was (TT$1,915 million) for FY2015 compared to cash provided of TT$301 million for FY2014.

Net movement in short- term loans of (TT$615 million) and interest paid (TT$908.6 million) were the main uses of these funds.
The company is currently in discussions with financing sources and our shareholder to outline mutually acceptable conditions to provide liquidity to meet current obligations.

The shareholder is currently supporting the company by flexing certain taxes and royalties and has indicated its intent to provide the necessary support to allow Petrotrin to meet its obligations.
As we move forward and aggressively work toward facing the challenges ahead, we will remain committed to all our stakeholders by investing in core capital projects that will offer the greatest potential for the future growth and pursuing the right strategies as we aspire to become a market-driven, balanced integrated energy company.
PETROTRIN ANNUAL REPORT 2015 59 financial S T A T E M E N T S Petroleum Company of Trinidad and Tobago Limited Consolidated Financial Statements 2015 September 30 (Presented in Thousands of Trinidad and Tobago Dollars) Petroleum Company of Trinidad and Tobago Limited Consolidated Financial Statements | 2015 September 30 (Presented in Thousands of Trinidad and Tobago Dollars) Petrotrin Note 1 2 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 4 4.1 4.2 4.3 5 6 7 8 Independent auditor’s report Consolidated statement of financial position Consolidated statement of profit or loss and comprehensive income Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements: Reporting entity Basis of preparation Summary of significant accounting policies: Accounting standards and interpretations Basis of consolidation Property, plant and equipment and certain intangible assets Intangible assets Impairment of non-financial assets (excluding exploration and evaluation, development and production assets) Financial assets Inventories Trade receivables Cash and cash equivalents Share capital Trade and other payables Borrowings Current and deferred income tax Employee benefits Revenue recognition Leases Dividend distribution Financial risk management Financial risk factors Capital risk management Fair value estimation Critical accounting estimates and judgments Property, plant and equipment Intangible assets Impairment of fixed assets
 Page 6-76 6 7 8-23 8-10 11-13 13-17 17-18 18 18-19 19-20 20 20 20 20 20-21 21 21-22 22-23 23 23 24-33 24-32 32 33 33-36 37-39 39-41 42-43 Petroleum Company of Trinidad and Tobago Limited Consolidated Financial Statements | 2015 September 30 (Presented in Thousands of Trinidad and Tobago Dollars) Petrotrin Note Page Other costs related to exploration for and evaluation of oil and natural 43 gas resources
 Retirement benefit asset/(obligation) Available-for-sale financial instruments Investment in joint venture Investment in associate Net deferred income tax assets/ (liabilities) Income taxes recoverable Cash in escrow – shareholder Loans receivable Inventories Receivables and prepayments Cash and cash equivalents Share capital Borrowings Provisions Trade and other payables Short-term loans Revenue Other operating income Operating costs by nature Impairment (write-back)/losses related to investments Employee benefits expense (excluding retirement benefits) Finance income and costs Tax Contingent liabilities Commitments Related party transactions Interest in joint operations Cash generated from operations Subsequent events 44-50 51 51 52 52-54 55 55 55-56 56 57 57 58 58-60 60 61 61 61 62 62-64 65 65 65 66 67 68 69-72 73-74 75 76 INDEPENDENT AUDITORS’ REPORT Petrotrin Independent Auditors’ Report to the Shareholders of Petroleum Company of Trinidad and Tobago Limited We have audited the accompanying consolidated financial statements of Petroleum Company of Trinidad and Tobago Limited and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at September 30, 2015 and the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes comprising a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility Our responsibility is to express an opinion on the consolidated financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing.

Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, we consider internal controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at September 30, 2015 and its consolidated financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.
Chartered Accountants 2016 January 27 Port of Spain Trinidad and Tobago PETROTRIN ANNUAL REPORT 2015 1 Petrotrin Petroleum Company of Trinidad and Tobago Limited Consolidated Statement of Financial Position (Presented in Thousands of Trinidad and Tobago Dollars) ASSETS: Non-current assets Property, plant and equipment Intangible assets and goodwill Retirement benefit asset – pension benefits Available-for-sale financial instruments Investment in associate Investment in joint venture Net deferred income tax assets Income taxes recoverable Cash in escrow – shareholder Loans receivable Current assets Inventories Loans receivable Receivables and prepayments Cash and cash equivalents Total assets EQUITY AND LIABILITIES: Capital and reserves attributable to equity holders of the Company Share capital Retained earnings Currency translation differences Non-controlling interests Total equity Liabilities Non-current liabilities Borrowings Retirement benefit obligation– pension benefit Retirement benefit obligation – medical benefits Provisions Current liabilities Trade and other payables Current tax liabilities Current portion of long-term borrowings Short-term loans Provisions Total liabilities Total equity and liabilities Note 2015 2014 2013 As at September 30 6 7 10 11 13 12 $ 19,676,440 $19,989,157 $ 19,777,401 6,095,250 7,642,042 -- 2,322 444,500 2,420 32,582 30,305 -- 4,484,571 530,683 149,384 -- 1 3,391,901 530,683 109,858 -- 6,262,322 476,000 6,236 -- 1 1,866,668
 530,683 84,839 677 30,971,232 32,140,867 29,004,827 2,217,951 -- 2,586,441 1,731,918 6,536,310 37,507,542 $ 4,103,231 -- 7,341,872 1,808,300 13,253,403 $ 45,394,270 4,392,333 1,252 10,370,626 2,296,031 17,060,242 46,065,069 $ 2,272,274 8,777,931 138,165 11,188,370 (55,411) 11,132,959 2,272,274 9,778,451 137,875 12,188,600 (54,228) 12,134,372 2,272,274 10,031,042 240,204 12,543,520 (47,872) 12,495,648 7,714,660 8,114,376 8,580,512 28,500 2,969,100 4,501,291 15,213,551 -- 2,871,500 7,149,824 18,135,700 -- 2,604,500 5,685,073 16,870,085 3,596,439 2,123,495 454,185 4,984,394 2,519 11,161,032 26,374,583 3,935,390 5,156,100 454,479 5,565,006 13,223 15,124,198 33,259,898 4,798,238 7,449,362 458,016 3,979,968 13,752 16,699,336 33,569,421 $ 37,507,542 $ 45,394,270 $ 46,065,069 The notes on pages 6 to 76 are an integral part of these consolidated financial statements.
On 2016 January 27, the Board of Directors of Petroleum Company of Trinidad and Tobago Limited authorised these consolidated financial statements for issue.
________________________________Director ______________________________Director 2 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited Consolidated Statement of Profit or Loss and Other Comprehensive Income (Presented in Thousands of Trinidad and Tobago Dollars) Year ended September 30 Note 2015 2014 2013 Revenue Cost of sales Gross profit Administrative expenses Marketing expenses Other operating expenses Impairment (losses)/write-back Other operating income Operating (loss)/profit Finance income Finance costs Net finance costs Share of profit of equity accounted investees, net of tax (Loss) before tax Income tax benefit (Loss)/Profit for the year Other comprehensive income: Items that will never be reclassified to profit or loss: Currency translation differences Actuarial /(losses)/gains on retirement benefit asset – pension benefits Actuarial gains/(losses) on retirement benefit obligation – medical benefits Income tax benefit/(expense) on other comprehensive income Items that will be reclassified to profit or loss: Available-for-sale financial assets – net change in fair value Other comprehensive (loss)/ income, net of tax 26 28 28 28 28 29 27 31 31 31 11 32 10 10 32 $ 19,751,646 $ 29,250,644 $ 31,911,405 (19,253,844) (27,397,947) (29,933,141) 497,802 1,852,697 1,978,264 (1,269,983) (1,253,386) (1,234,208) (118,424) (223,854) (51,817) (651) 192,690 (750,383) 2,644 (957,823) (955,179) 2,376 (1,703,186) 880,214 (1,806) 9,488 306,542 689,681 3,228 (999,193) (995,965) 26,407
 (279,877) 78,537 $ (822,972) $ (201,340) $ (54,339) (20,854) (4,579) 303,444 967,728 2,410 (1,078,950) (1,076,540) -- (108,812) 124,517 15,705 400 (101,866) (395,100) 44,900 (188) 331,000 15,700 (160,700) (134,200) 200,513 (178,487) 57,900 (159,766) (105,628) 90,984 46 46 (170) (170) -- -- (178,441) (159,936) 90,984 Total comprehensive (loss)/income $ (1,001,413) $ (361,276) $ 106,689 (Loss)/Profit attributable to: Equity holders of the Company Non-controlling interests Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests (821,679) (1,293) $ (822,972) (194,521) (6,819) $ (201,340) $ (1,000,116) (1,297) (354,453) (6,823) $ (1,001,413) $ (361,276) $ 16,948 (1,243) 15,705 107,936 (1,247) 106,689 The notes on pages 6 to 76 are an integral part of these consolidated financial statements.
PETROTRIN ANNUAL REPORT 2015 3 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Consolidated Statement of Changes in Equity (Presented in Thousands of Trinidad and Tobago Dollars) Balance at 2014 September 30 Loss for the year Other comprehensive income: Currency translation differences Actuarial losses on defined benefit asset Actuarial gains on defined benefit obligation Change in fair value of available-for-sale financial instrument Income tax benefit on other comprehensive income Total other comprehensive income Total comprehensive income for the period -- -- -- -- -- -- -- -- Attributable to equity holders of the Company Share capital Currency translation differences Retained earnings Total $ 2,272,274 $ 137,875 $ 9,778,451 $ 12,188,600 -- (821,679) (821,679) Total equity Non- controlling interests $ (54,228) (1,293) $ 12,134,372 (822,972) 290 -- 290 110 400 -- -- -- -- 290 290 (395,100) (395,100) 15,700 15,700 46 46 200,513 200,513 -- -- -- -- (178,841) (178,551) 110 (1,000,520) (1,000,230) (1,183) (395,100) 15,700 46 200,513 (178,441) (1,001,413) 11,132,959 Balance at 2015 September 30 2,272,274 138,165 8,777,931 11,188,370 (55,411) Balance at 2013 September 30 2,272,274 240,204 10,031,042 12,543,520 (47,872) 12,495,648 Loss for the year Other comprehensive income: Currency translation differences Actuarial gains on defined benefit asset Actuarial losses on defined benefit obligation Change in fair value of available-for-sale financial instrument Income tax benefit on other
 comprehensive income Total other comprehensive income Total comprehensive income for the period -- -- -- -- -- -- -- -- -- (194,521) (194,521) (6,819) (201,340) (102,329) -- (102,329) 463 (101,866) -- -- 44,900 44,900 (160,700) (160,700) -- (170) (170) -- -- -- 44,900 (160,700) (170) -- 57,900 57,900 -- 57,900 (102,329) (58,070) (160,399) 463 (159,936) (102,329) (252,591) (354,920) (6,356) (361,276) Balance at 2014 September 30 2,272,274 137,875 9,778,451 12,188,600 (54,228) 12,134,372 Balance at 2012
 September 30 2,272,274 240,388 9,922,922 12,435,584 (46,625) 12,388,959 Profit (loss) for the year Other comprehensive income: Currency translation differences Actuarial gains on defined benefit asset Actuarial losses on defined benefit obligation Income tax benefit on other comprehensive income Total other comprehensive income Total comprehensive income for the period -- -- -- -- -- -- -- -- 16,948 16,948 (1,243) 15,705 (184) -- (184) -- -- -- 331,000 331,000 (134,200) (134,200) (105,628) (105,628) (184) (184) 91,172 108,120 90,988 107,936 (4) -- -- -- (4) (1,247) (188) 331,000 (134,200) (105,628) 90,984 106,689 Balance at 2013 September 30 2,272,274 240,204 10,031,042 12,543,520 (47,872) 12,495,648 The notes on pages 6 to 76 are an integral part of these consolidated financial statements.
4 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Consolidated Statement of Cash Flows (Presented in Thousands of Trinidad and Tobago Dollars) Year ended September 30 Note 2015 2014 2013 37 $6,631,979 $ 6,244,398 $ 6,028,880 (3,611,151) (5,326,537) 3,020,828 917,861 (2,709,688) 3,319,192 (1,321,779) (1,702,187) (1,787,791) Cash flows from operating activities: Cash generated from operations Tax paid Net cash from operating activities Cash flows from investing activities: Payments for property, plant and equipment and intangible assets Proceeds from sale of property, plant and equipment 37 16 Amounts deposited to shareholder escrow account (31,692) 208 -- (1,351,335) (1,687,800) (1,848,236) Investments available-for-sale Recovery on loans to related parties Disbursements of loans to related parties Interest received Net cash used in investing activities Cash flows from financing activities: Proceeds from short-term loans Repayments of short-term loans Repayments of long-term borrowings Interest paid Net cash (used in)/from financing activities Currency translation differences relating to cash and cash equivalents (Decrease)/Increase in cash and cash equivalents Cash and cash equivalents at start of year -- 14,129 4,793 (5,300) 2,627 2,013 (5,068) 3,105 9,394,464 12,145,804 (10,009,321) (10,527,866) (391,282) (908,610) (1,914,749) 168,874 (76,382) 1,808,300 (391,281) (925,611) 301,046 (18,838) (487,731) 2,296,031 Cash and cash equivalents at end of year 20
 $ 1,731,918 $ 1,808,300 $ The notes on pages 6 to 76 are an integral part of these consolidated financial statements.
34 (59,703) 124 1,877 (5,173) 2,396 9,520,265 (9,226,854) (391,281) (961,891) (1,059,761) 5,287 416,482 1,879,549 2,296,031 PETROTRIN ANNUAL REPORT 2015 5 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (Presented in Thousands of Trinidad and Tobago Dollars) 1 Reporting entity Petroleum Company of Trinidad and Tobago Limited (PETROTRIN) is incorporated in the Republic of Trinidad and Tobago.
The Group is primarily engaged in integrated petroleum operations which include the exploration for, development and production of hydrocarbons and the manufacturing and marketing of petroleum products.

The sole shareholder is the Government of the Republic of Trinidad and Tobago (GORTT).

The registered office is the Administration Building, Pointe-a-Pierre, Trinidad and Tobago, West Indies.
The consolidated financial statements of the Group as at and for the year ended 2015 September 30 comprise PETROTRIN and its subsidiaries (together referred to as the ‘Group’) and the Group’s interest in jointly controlled entities.
The following subsidiaries have been consolidated: Country of Name of Company Trintomar Trinidad and Tobago Marine Petroleum Company Limited (Trintomar) is principally engaged in developing and producing natural gas from the Pelican Field which originally formed part of the South East Coast Consortium area.

Incorporation Trinidad and Tobago Proportion of Issued Equity Capital held 80% Trinmar Trinmar Limited operated certain concessions in accordance with a Marine Operating Agreement dated August 1, 1960.
This company is now dormant.

Trinidad and Tobago 100% TNA United Kingdom 100 % Trinidad Northern Areas Limited (TNA) was formed for the specific purpose of holding certain licenses.

These licenses assign certain rights to explore for, drill, develop, produce and take oil, natural gas and other hydrocarbons from certain geological areas within the jurisdiction of Trinidad and Tobago.
PEAPSL Trinidad and Tobago 100 % Petrotrin EAP Services Limited (PEAPSL) provides counselling services for employees and third parties.

WGTL TL Trinidad and Tobago 100% WGTL TL was formed to undertake the construction, completion, ownership and operation of a gas to liquids plant to be located at Petrotrin’s Pointe-a-Pierre refinery complex.

The said plant is still in the construction phase.
6 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 2 Basis of preparation (a) Statement of compliance These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and effective for the year ended 2015 September 30.
The accounting policies that follow have been consistently applied to all years presented.

Where retrospective restatements were required as a result of the implementation of new accounting standards or changes to existing accounting standards, these have been applied to all comparative years presented.
(b) Basis of measurement The consolidated financial statements have been prepared on the historical cost basis, except for the defined benefit asset which is recognised at the net total of the plan assets, less the present value of the defined benefit obligation and the effect of the asset ceiling test.
(c) Foreign currency translation • Functional and presentation currency Items included in the consolidated financial statements are measured using the currency of the primary economic environment in which the Group operates (“the functional currency”).

The United States dollar is the Group’s functional currency.

The consolidated financial statements are presented in Trinidad and Tobago dollars, rounded to the nearest thousand, which is the Group’s presentation currency.
This is because its main stakeholders are the Government of the Republic of Trinidad and Tobago, the Ministry of Finance and its employees.

• Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
• Translation to presentation currency The financial position and results of the Group are translated into the presentation currency as follows: - assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; - income and expenses for the statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and - all resulting exchange differences are recognised as a separate component of equity.
(c) Use of estimates and judgements The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses.

Actual results may differ from these estimates.


The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 5.
PETROTRIN ANNUAL REPORT 2015 7 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3 Summary of significant accounting policies The significant accounting policies adopted in the preparation of these consolidated financial statements have been applied consistently to all periods in the consolidated financial statements and are set out below.
Certain comparative amounts have been reclassified to conform to the current year’s presentation.

3.1 Accounting standards and interpretations (a) New standards, amendments and interpretation adopted The following new standards, amendments and interpretation effective 2014 January 01, were adopted in the current year but had no significant impact on the consolidated financial statements of the Group.

Most of these new standards required enhanced disclosures.
• • • IAS 32 Offsetting Financial Assets and Financial liabilities – Amendments to IAS 32 (effective 2014 January 1).
This requires that “a financial asset and a financial liability shall not be contingent on a future event and shall be offset…when, and only when, an entity currently has a legally enforceable right to set off the recognised amounts…”The amendments clarify that rights of set-off must not only be legally enforceable in the normal course of business, but must also be enforceable in the event of default and the event of bankruptcy or insolvency of all of the counterparties to the contract, including the reporting entity itself.
The standard further clarifies the entity should have the intention to settle the asset and liability on a net basis.

IAS 36 Recoverable Amount Disclosures for Non-Financial Assets (Amendments – effective 2014 January 1).
This amendments is to reduce the circumstances in which the recoverable amount of assets or cash-generating units is required to be disclosed, clarify the disclosures required, and to introduce an explicit requirement to disclose the discount rate used in determining impairment (or reversals) where recoverable amount (based on fair value less costs of disposal is determined using a present value technique).

IFRIC 21 – Levies, (effective 2014 January 01).


This standard provides guidance on when to recognise a liability for a levy imposed by a government, both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain.
The interpretation identifies the obligation event for the recognition of a liability as the activity that triggers the payment of the levy in accordance with the relevant legislation.

It provided the following guidance on recognition of a liability to pay levies: o The liability is recognised progressively if the obligation event occurs over a period of time.

o If an obligation is triggered on reaching a minimum threshold, the liability is recognised when that minimum threshold is reached.
8 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3.
Summary of significant accounting policies (continued) 3.1 Accounting standards and interpretations (continued) (b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group: The following standards, amendments and interpretations to existing standards are not yet effective for accounting periods beginning on or after 2015 January 1.The Group is in the process of assessing their full impact on its consolidated financial statements: • • • IFRS 9 ‘Financial instruments part 1: Classification and measurement’ (effective 2018 January 1).
IFRS 9 was issued in 2009 November and 2010 October.

It replaces the parts of IAS 39 that relates to the classification and measurement of financial instruments.

The completed standard was issued in 2014 July, with an effective date of 2018 January 1.

IFRS 9 required financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost.

The determination is made at initial recognition.


The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.

For financial liabilities, the standard retains most of the IAS 39 requirements.
The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.

The additional amendments in 2014 July introduced a new expected loss impairment model and limited changes to the classification and measurement requirements for financial assets.
IFRS 10 Consolidated Financial Statements – (Amendment effective 2016 January 1) This amendment clarifies the accounting for loss of control of a subsidiary when the subsidiary does not constitute a business.

IFRS 11 Joint Arrangements (Amendment effective 2016 January 01).
This amendment requires an acquirer of an interest in a joint operation in which the activity constitutes a business (as defined in IFRS 3 Business Combinations) to: o Apply all of the business combinations accounting principles in IFRS 3 and other IFRSs, except for those principles that conflict with the guidance in IFRS 11. o Disclose the information required by IFRS 3 and other IFRSs for business combinations.
o The amendments apply both to the initial acquisition of an interest in joint operation, and the acquisition of an additional interest in a joint operation (in the latter case, previously held interest are not remeasured.)

PETROTRIN ANNUAL REPORT 2015 9 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3.
Summary of significant accounting policies (continued) 3.1 Accounting standards and interpretations (continued) (b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group: (continued) • IFRS 15 Revenue form Contracts with Customers (effective 2017 January 1).

This standard provides a single principles based five-step model to be applied to all contracts with customers.
The five steps in the model are as follows: o Identify the contract with the customer o Identify the performance obligations in the contract o Determine the transaction price o Allocate the transaction price to the performance obligations in the contracts o Recognise revenue when (or as) the entity satisfies a performance obligation.

• IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets (amendment effective 2016 Januay1).
This amendment is to: o Clarify that a depreciation method that is based on revenue generated by an activity that includes the use of an asset is not appropriate for property, plant and equipment.

o Introduce a rebuttable presumption that an amortisation method that is based on the revenue generated by an activity that includes the use of an intangible asset is inappropriate, which can only be overcome in limited circumstances where the intangible asset is highly correlated.
It provides guidance that expected future reductions in the selling price of an item that was produced using an asset could indicate the expectation of technological or commercial obsolescence of the asset, which, in turn, might reflect a reduction of the future economic benefits embodied in the asset.

• IAS 28 Investments in Associates and Joint Venture – (Amendment effective 2016 January 1).
This amendment clarifies the accounting for loss of control of a subsidiary when the subsidiary does not constitute a business.

• Disclosure initiative (Amendments to IAS 1), effective 2016 January 01, addresses some of th perceived problems with current disclosure requirements.
10 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 1.2 Basis of consolidation In these consolidated financial statements, subsidiary undertakings – which are those companies in which the Group, directly or indirectly, has an interest of more than half the voting rights or otherwise has power to exercise control over the operations – have been fully consolidated.
The investments in jointly controlled entities are accounted for using the equity method, and are recognised initially at cost.

(a) Subsidiaries Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights.
The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.
The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest.
The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.

If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in profit or loss.

(See Note 3.4 (a) for the accounting policy on goodwill) Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Inter-company unrealised losses are also eliminated but considered an impairment indicator of the asset transferred.

Accounting policies of subsidiaries have been conformed where necessary to ensure consistency to the policies adopted by the Group.

(b) Joint arrangements A joint arrangement is one in which two or more parties have joint control.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities required unanimous consent of the parties sharing control.

A joint venture is an arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

The results, assets and liabilities of a joint venture are incorporated in these consolidated financial statements using the equity method of accounting.
Under this method, the investment is carried in the statement of financial position at cost less any impairment in the value of the investment.

The Company assesses at each balance sheet date whether the investment is impaired, and if there is objective evidence that such loss has been incurred, the carrying amount of the investment is compared with its recoverable amount being the higher of its fair value less costs to sell and value-in-use.
Where the carrying amount exceeds the recoverable amount, the investment is written down to its recoverable amount.

Goodwill relating to the joint venture is included in the carrying amount of the investment and is not individually tested for impairment.

PETROTRIN ANNUAL REPORT 2015 11 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3.
Summary of significant accounting policies (continued) 1.2 Basis of consolidation (continued) The Consolidated statement of profit or loss and other comprehensive income reflects the Company’s share of the results of operations of the joint venture.

Unrealised gains and losses resulting from transactions between the Group and joint venture are eliminated to the extent of the interest in the joint venture.
The aggregate of the Group’s share of profit or loss of the joint venture is shown on the face of the statement of profit or loss and other comprehensive income as part of operating profit and represents profit or loss after tax and non-controlling interest in the subsidiaries of the joint venture.

Joint operations are joint arrangements whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.
The Group will from time to time acquire interest in joint operations to diversify both its Exploration and Production and Refining and Marketing operations.

These acquisitions represent the spreading of risk, taking advantage of private party experience, access to improved technology and capital resources, the opportunity to grow our reserves and assets and access to feedstock and/or product markets.
In other instances, as the State-owned oil company, there may be an obligatory State participation or the acquisition may be as a result of regulatory requirements, for example where reservoirs straddle boundaries.
The Company’s interest in joint operations is accounted for on a line-by-line basis in the consolidated financial statements; its share of the assets, liabilities, income and expenses incurred jointly with other partners, along with any liabilities and expenses incurred in relation to the joint arrangement.

The Company recognises the portion of gains or losses on the sale of assets by the Company to the joint operation that is attributable to the other ventures.
The Company does not recognise its share of profits or losses from the joint operation that result from the Company’s purchase of assets from it until it resells the assets to an independent party.

However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment loss.
(c) Associates An associate is an entity over which the Company has significant influence, but which is not a subsidiary or a joint arrangement.
Significant influence is determined through one or more of the following ways: (i) representation on Board of Directors; (ii) participation in policy-making processes, including participation in decisions about dividends and other distributions; (iii) material transactions between the Company and investee; (iv) interchange of managerial personnel; and (v) provision of essential technical information.

The Group’s share of associate investments is accounted for using the equity method described above.
12 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3.

Summary of significant accounting policies (continued) 1.2 Basis of consolidation (continued) (d) Non-controlling interests The Group applies a policy of treating transactions with non-controlling interests as transactions with parties external to the Group.
Disposals to non-controlling interests result in gains and losses for the Group that are recorded in profit or loss.

Purchases of non-controlling interests result in goodwill, being the difference between any consideration paid and the relevant share acquired at the carrying value of net assets of the subsidiary.
3.3 Property, plant and equipment and certain intangible assets (a) Oil and gas assets Oil and gas properties are aggregated exploration and evaluation (E&E) tangible assets associated with finding commercial reserves and development and production expenditures related to developing the commercial reserves discovered and bringing them into production, together with E&E expenditures transferred from intangible E&E assets.
The cost of development and production assets also includes the cost of acquisitions and purchases of such assets, directly attributable overheads, finance costs capitalised, and the cost of recognising provisions for future restoration and decommissioning.

Exploration and evaluation assets – Capitalisation Oil and natural gas exploration and evaluation expenditures are accounted for using the successful efforts method of accounting.
Under this method, costs are accumulated on a field-by-field basis and capitalised upon discovery of commercially viable mineral reserves.

If the commercial viability is not achieved or achievable, such costs are charged to expense.

Capitalisation is made within property, plant and equipment or intangible assets according to the nature of the expenditure.
Costs incurred in the exploration and evaluation of assets include: License and property acquisition costs - Exploration and property leasehold acquisition costs are capitalised within intangible assets until determination of commercially viable mineral reserves.

If commercial viability is not obtained these costs are written off.

Exploration and evaluation expenditure - Capitalisation is made within property, plant and equipment or intangible assets according to its nature.
However, the majority of such expenditure is capitalised as an intangible asset – including - Geological and geophysical costs.

Costs directly associated with an exploration well are capitalised until the determination of commercial reserves is evaluated.

If commercial reserves are found the costs continue to be carried as an asset.

If commercial reserves are not found, exploration and evaluation expenditures are written off as a dry hole.
Once commercial reserves are found, exploration and evaluation assets are tested for impairment and transferred to development tangible and intangible assets as applicable.

No depreciation and/or amortisation are charged during the exploration and evaluation phase.
PETROTRIN ANNUAL REPORT 2015 13 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3 Summary of significant accounting policies (continued) 3.3 Property, plant and equipment and certain intangible assets (continued) (a) Oil and gas assets (continued) Exploration and evaluation assets – Impairment Exploration and evaluation assets are tested for impairment when reclassified to development tangible and intangible assets as applicable or whenever facts and circumstances indicate impairment.
An impairment loss is recognised for the amount by which the exploration and evaluation assets’ carrying amount exceed their recoverable amount.

The recoverable amount is the higher of the exploration and evaluations assets’ fair value less costs to sell and their value-in-use.

For the purposes of assessing impairment, the exploration and evaluation assets subject to testing are grouped with existing cash generating units (CGUs) of related production fields located in the same geographical region.
The geographical region is the same as that used for reserves reporting purposes.
The following indicators are evaluated to determine whether these assets should be tested for impairment:  the period for which the Group has the right to explore in the specific area;  whether substantive expenditure on further exploration and evaluation in the specific area is budgeted or planned;  whether exploration and evaluation in the specific area have not led to the discovery of commercially viable quantities and the Group has decided to discontinue such activities in the specific area;  sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
Development tangible and intangible assets- Capitalisation Acquisitions, asset purchases and disposals Acquisitions of oil and gas properties are accounted for under the purchase method.

(See Note 3.2 for accounting policy).

Transactions involving the purchases of an individual field interest, or a group of field interests, are treated as asset purchases, irrespective of whether the specific transactions involve the transfer of the field interests directly, or the transfer of an incorporated entity.
Accordingly, the consideration is allocated to the assets and liabilities purchased on a relative fair value basis.

Proceeds on disposal are applied to the carrying amount of the specific intangible asset or development and production assets disposed.

Any excess is recorded as a gain on disposal, and any shortfall between the proceeds and the carrying amount is recorded as a loss on disposal, in profit or loss.
Expenditure on the construction, installation or completion of infrastructure facilities such as platforms, pipelines and the drilling of development commercially proven wells is capitalised within tangible and intangible assets according to its nature.

When development is completed on a specific field it is transferred to production assets.

No depreciation and/or amortisation are charged during the development phase.

See Note 3.12 for the accounting policy related to borrowing costs.
14 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3 Summary of significant accounting policies (continued) 3.3 Property, plant and equipment and certain intangible assets (continued) (a) Oil and gas assets (continued) Development/Production tangible and intangible assets – Impairment An impairment test is performed whenever events and circumstances arising during the development or production phase indicate that the carrying value of a development or production asset may exceed its recoverable amount.
The carrying value is compared against the expected recoverable amount.

The recoverable amount is the higher of an asset’s fair value less costs to sell and the value-in-use.

For the purposes of assessing impairment, assets are grouped at the lowest levels (its cash generating unit) for which there are separately identifiable cash flows.

The cash generating unit applied for impairment test purposes is generally the field.

These fields are the same as that used for reserves reporting purposes.
Production assets – Depreciation Oil and gas properties are depreciated generally on a field-by-field basis using the unit-of-production method.

Unit-of-production rates are based on production and proved producing reserves, which are oil, gas and other mineral reserves estimated to be recovered from existing wells with existing facilities using current operating methods.
Under the unit-of-production method, oil and gas volumes are considered produced once they have been measured through meters at custody transfer or sales transaction points at the outlet valve on the field storage tank.

Producing assets are generally grouped into cash generating units with other assets that are dedicated to serving the same reserves for depreciation purposes, but are depreciated separately from producing assets that serve other reserves.
The cash generating unit applied for depreciation purposes is generally the field, except that a number of field interests may be grouped as a single cash generating unit where the cash flows of each field are inter-dependent.

Provision for decommissioning costs Provision for decommissioning is recognised in full at the commencement of oil and gas production.
The amount recognised is the net present value of the estimated cost of decommissioning at the end of the economic producing lives of the wells and the end of the useful lives of refinery and storage units.

Such costs include removal of equipment, restoration of land or seabed.

The unwinding of the discount on the provision is included in profit or loss within finance costs.

A corresponding intangible asset is also created at an amount equal to the provision.
This is subsequently depleted as part of the capital costs of the production assets.

Any change in the present value of the estimated expenditure or discount rates are reflected as an adjustment to the provision and the intangible asset and dealt with prospectively.

When decommissioning liability is shared with other parties, as in the case of jointly controlled assets, the Group recognises as its provision, the proportion for which it is liable.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

The increase in the provision due to passage of time is recognised as finance costs.
PETROTRIN ANNUAL REPORT 2015 15 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3 Summary of significant accounting policies (continued) 3.3 Property, plant and equipment and certain intangible assets (continued) (a) Refining and other non-oil and gas assets All other property, plant and equipment are stated at historical cost less accumulated depreciation and less accumulated impairment losses.
Intangible costs capitalised within the refinery generally includes external consulting costs incurred in the upgrading of the refinery processes, management systems and implementation of new and upgraded technology.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
Refinery spares inventory is allocated to refining assets.

Repairs and maintenance, except for major overhaul costs (See Note 3.3 (c)), are charged to profit or loss during the financial period in which they are incurred.

Land is not depreciated.
Depreciation of other non-oil and gas assets is calculated using the following rates and methods to allocate the cost to their residual values over their estimated useful lives: Manufacturing plant and equipment 3.75% to 10% Refinery spares Floating property Transportation equipment Furniture and fixtures Domestic appliances Buildings Computer equipment/software (specialised) Computer equipment/software (non-specialised) Other supporting equipment and facilities 5% 20% 20% 20% 20% 5% 10% 33.3% 27.5% - straight-line - straight-line - diminishing balance - diminishing balance - diminishing balance - straight-line - diminishing balance - straight-line - straight-line - in the first year and 7.5% on a diminishing balance for subsequent years The expected useful lives of plant, property and equipment are reviewed on an annual basis, and if necessary changes in useful lives are adjusted for prospectively.
These assets are derecognised upon disposal when no future economic benefits are expected to arise from continued use.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within profit or loss.
Any change in the present value of the estimated expenditure or discount rates are reflected as an adjustment to the provision and the intangible asset and dealt with prospectively.

See Note 3.12 for the accounting policy related to borrowing costs.
16 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3 Summary of significant accounting policies (continued) 3.3 Property, plant and equipment and certain intangible assets (continued) (c) Major overhaul costs Major overhaul costs include catalyst costs and expenditure incurred in testing and inspection work carried out on manufacturing plant and equipment.
These costs are incurred at regular intervals over the useful life of the asset and are incurred to allow the continued use of the asset.

These costs are accounted for as a component of the asset.

Costs less residual value are written off over a period of 3-5 years on a straight-line basis.
3.4 Intangible assets (a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/joint venture at the date of acquisition.

Goodwill on acquisition is included in intangible assets.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.

Previously recognised impairment losses on goodwill are not reversed.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash generating units for the purpose of impairment testing.

The allocation is made to those cash generating units or groups of cash generating units that are expected to benefit from the business combination in which the goodwill arose.
(b) Computer software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.

These costs are amortised over their estimated useful lives (ten years for specialised software, three years for non-specialised software).

Costs associated with maintaining computer software programmes are recognised as an expense as incurred.
Development costs that are directly associated to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met: it is technically feasible to complete the software product so that it will be available for use; • • Management intends to complete the software product and use or sell it; • there is an ability to use or sell the software product; • it can be demonstrated how the software product will generate probable future economic benefits; • adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and the expenditure attributable to the software product during its development can be reliably measured.
• PETROTRIN ANNUAL REPORT 2015 17 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3 Summary of significant accounting policies (continued) 3.4 Intangible assets (continued) (b) Computer software (continued) Directly attributable costs that are capitalised as part of the software product include software development, employee cost, and an appropriate portion of relevant overheads.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred.

Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

(c) Other intangible assets This comprises intangible costs associated with tangible PP&E structures.

Refer to Note 3.3 (a).


3.5 Impairment of non-financial assets (excluding exploration and evaluation, development and production assets) Intangible assets that have an indefinite useful life (including goodwill) and/or are not yet available for use are not subject to amortisation, and, therefore, are tested annually for impairment.

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash generating units).
Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversals of the impairment at each reporting date.

1.6 Financial assets 1.6.1 Classification The Group classifies its financial assets in the following categories: loans and receivables and available- for-sale.

The classification depends on the purpose for which the financial assets were acquired.

Management determines the classification of its financial assets at initial recognition.
(a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

They are included in current assets, except for maturities greater than twelve months after the reporting date, which are classified as non-current assets.

Loans and receivables are classified as loans receivable and trade and other receivables in the statement of financial position.
(b) Available-for-sale financial instruments Available-for-sale financial assets comprise financial instruments in unquoted equity.

They are included in non-current assets unless Management intends to dispose of the investment within 12 months of the reporting date.
18 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3 Summary of significant accounting policies (continued) 1.6 Financial assets (continued) 1.1.1 Recognition and measurement Loans and receivables as well as available-for-sale financial instruments are initially recognized at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses, while available-for-sale financial instruments are recorded at cost less impairment.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Translation differences on monetary financial assets and liabilities are recognised in profit or loss.
The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired.
If any such evidence exists for available for sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss.

Impairment losses on equity instruments recognised in profit or loss are not reversed.

Impairment testing of trade receivables is described in Note 3.8.
3.7 Inventories Inventories of crude oil and refined products are stated at the lower of cost and net realisable value.

Cost is determined using the weighted average cost.

(a) Crude oil The cost of purchased crude oil for the month is valued using the weighted average cost.

The cost of produced crude oil for the month is computed on the basis of the related month’s production costs.

Net realisable value is based on the market prices of an equivalent grade of crude oil.
(b) Refined products Refined products are valued at the lower of the cost of producing the refined products and net realisable value based on current market prices.

The total product cost is comprised of the production cost of own crude, the cost of purchased crude and the total refinery expenses (adjusted to exclude incremental expenses related to the processing of crude for third parties).
Net realisable values are refined products sales prices as quoted in the ‘Caribbean Postings’ and the ‘Platts Oilgram’ at the close of the reporting period.

When inventories of refined products are sold, the carrying amount of those inventories is recognised as an expense in cost of sales in the period in which the related sale is recognised.
The amount of any write-down of inventories to net realisable value and all losses of inventories is recognised as an expense in the period the write-down or loss occurs.

The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the cost of inventories recognised as an expense in the period in which the reversal occurs.
PETROTRIN ANNUAL REPORT 2015 19 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3 Summary of significant accounting policies (continued) 3.7 Inventories (continued) (c) Materials and supplies Inventories of materials and supplies are stated at the lower of cost and net realisable value.

Cost is determined using the weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business less applicable variable selling expenses of the materials and supplies.

Refinery spare parts are considered refining assets (See Note 3.3 (b)).

3.8 Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables.

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 120 days overdue) are considered indicators that the trade receivable is impaired.
Any provision for impairment is recognised in profit or loss within cost of sales.

When a trade receivable is uncollectible, it is written off against the provision for impairment account for trade receivables.

Subsequent recoveries of amounts previously written off are credited against cost of sales in profit or loss.
3.9 Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and cheques issued but not yet presented to financial institutions.

Cash and cash equivalents are subject to insignificant risk of changes in value.

3.10 Share capital Ordinary shares are classified as equity.
3.11 Trade and other payables Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

3.12 Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred.

Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised over the period of the borrowings using the effective interest method.
This amount is capitalised during the construction period of the qualifying asset, and upon completion of the asset, it is recognised in profit or loss until the maturity of borrowings.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
20 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3 Summary of significant accounting policies (continued) 3.12 Borrowings (continued) Borrowing Costs Specific and general borrowing costs incurred for the construction of qualifying assets are capitalised during the period of time required to complete and prepare the asset for its intended use.
Interest on general borrowings eligible for capitalisation is determined by applying a capitalisation rate to expenditure on qualifying assets.

The capitalisation rate is the weighted average of borrowing costs applicable to the borrowings of the Group, that are outstanding during the period, other than specific borrowings.

Other borrowing costs are expensed.

3.13 Current and deferred income tax The tax expense for the period comprises current and deferred income tax.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is also recognised on carry-forward unused tax losses.
It is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
3.14 Employee benefits (a) Pension asset (liability) Retirement benefits for employees are provided through two (2) defined benefit plans, which are funded by contributions from employers and employees.

The schemes are generally funded through payments to trustee-administered funds as determined by periodic actuarial calculations.
A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The asset (liability) recognised in the statement of financial position in respect of defined benefit pension plans is the fair value of Plan assets less the present value of the defined benefit obligation at the reporting date, together with adjustments for the effect of the asset ceiling test.

The pension asset (liability) is calculated annually by independent qualified actuaries using the projected unit credit method.
PETROTRIN ANNUAL REPORT 2015 21 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3 Summary of significant accounting policies (continued) 3.14 Employee benefits (continued) (a) Pension asset (liability) The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government securities and high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are immediately credited or charged to other comprehensive income.

Past service costs are recognised immediately in profit or loss, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period).

In this case, the past service costs are amortised on a straight-line basis over the vesting period.
(a) Other post-employment obligations The Group provides post-employment healthcare benefits to its retirees under two (2) medical plans.

The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period.

The expected costs of these benefits are accrued over the period of employment, using an accounting methodology similar to that for defined benefit pension plans.
Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions are immediately recognised in other comprehensive income.

These obligations are valued annually by independent qualified actuaries.

3.15 Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities.
Revenue is shown, net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below.

The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved.
The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
22 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 3 Summary of significant accounting policies (continued) 3.15 Revenue recognition (continued) (a) Sales revenue Revenues from sales of products are recognised upon transfer of risks and rewards associated with the ownership of products.
In particular, revenues are recognised: - for crude oil, generally upon shipment; - for natural gas and natural gas liquids, when the natural gas is delivered to the customer; - for refined products, generally upon shipment.

Revenues are recognised upon shipment when, at that date, the risks of loss are transferred to the acquirer.
Revenues from the sale of crude oil and, natural gas produced in properties in which Petrotrin has an interest together with other producers, are recognised on the basis of Petrotrin’s working interest in those properties (entitlement method).

(b) Royalty income Royalty income is recognised on an accrual basis in accordance with the substance of the relevant agreements.

Royalty income is comprised mainly of overriding royalties from lease operator and farmout arrangements.
(c) Interest income Interest income is recognised on a time-proportion basis using the effective interest method.

When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flows discounted at original effective interest rate of the instrument.

Interest income on impaired loans is recognised using the original effective interest rate.
(d) Marine income and processing fees Marine income and processing fees are recognised upon delivery of services and customer acceptance.

Marine income is comprised mainly of wharf dues, barging fees and tug and launch hire.

3.16 Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

3.17 Dividend distribution Dividend distribution to the Group’s shareholders is recognised as a liability in the related subsidiary’s financial statements in the period in which the dividends are approved.
PETROTRIN ANNUAL REPORT 2015 23 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 4 Financial risk management Risk management framework The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Board has established the risk management department which is responsible for developing and monitoring the Group’s risk management policies.

4.1 Financial risk factors The Group has exposure to the following risk from its use of financial instruments: • market risk (including commodity and other price risk and interest rate risk); • • credit risk; liquidity risk.
The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

The Group does not at this time use derivative financial instruments to hedge its risk exposures.

(a) Market risk (i) Commodity and other price risk The Group purchases approximately 60% of the total crude that is processed at the refinery.
As a result, with respect to this stream of crude oil supply, the Group is exposed to fluctuations in the differential between the price of crude oil purchased and the prices at which refined products are sold.

Own-crude production makes up the remaining 40% of total crude oil processed at the refinery.

The Group is therefore exposed to fluctuations in the market prices of refined products derived from this stream of crude oil supply.
The Group is also exposed to fluctuations in the prices of liquefied natural gas (LNG) sales, which is sold at market prices.

As a result of these market price fluctuations the Group may in the future use established over-the- counter swaps, for crude oil, refined products and natural gas, or other appropriate instruments, to hedge exposures in order to protect budgeted revenues and margins.

The Company does not currently have any such hedging instruments in place.
Other price risks arise due to the possibility that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.
The Group is affected by changing prices of equity instruments mainly classified as investments available-for-sale with fair value movements recognised in shareholders’ equity.

In the years ended 2013 September 30 to 2015 September 30, Management deemed the price risk impact on equity instruments classified as available-for-sale to be immaterial.
24 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 4 Financial risk management (continued) 1.1 Financial risk factors (continued) (a) Market risk (continued) (ii) Foreign currency risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.
The functional currency of the Group’s cash flows is the United States dollar (USD) since the Group’s major product, oil is priced internationally in USD.

Foreign currency transaction exposures mainly arise on the Group’s sales or purchases in currencies other than USD.

Also foreign currency translation exposures arise from financial instruments denominated in currencies other than USD.
The following exchange rates were used in translating United States dollars to Trinidad and Tobago dollars at year-end and in conversions during the year: Year-end Average rate during the year 2015 6.34535 6.34396 As at September 30 2014 6.35830 6.40534 2013 6.41950 6.40987 The following tables demonstrate the sensitivity of the Group’s profit before tax to a reasonably possible movement of the USD against the TTD holding all other variables constant.
Assets Income taxes recoverable Cash in escrow – shareholder Receivables * Cash and cash equivalents Financial assets Liabilities Borrowings Trade and other payables Current tax liabilities Short-term loans Financial liabilities * excludes prepayments Note TT$ As at 2015 September 30 Other US$ Total 15 16 19 20 22 24 25 530,683 -- 1,154,875 317,194 2,002,752 (30,607) -- -- -- -- -- -- -- 149,384 1,125,849 1,414,724 2,689,957 530,683 149,384 2,280,724 1,731,918 4,692,709 (8,138,238) (8,168,845) (2,407,571) (3,866) (1,185,002) (3,596,439) (2,123,495) -- -- -- -- (2,123,495) (4,984,394) (4,984,394) (4,561,673) (3,866) (14,307,634) (18,873,173) Net currency exposure (2,558,921) (3,866) (11,617,677) (14,180,464) Reasonably possible change in exchange rate 1% 1% Effect on profit before tax (25,589) (39) -- -- -- (25,628) PETROTRIN ANNUAL REPORT 2015 25 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 4 Financial risk management (continued) 4.1 Financial risk factors (continued) (a) Market risk (continued) (ii) Foreign currency risk (continued) As at 2014 September 30 16 19 20 22 24 25 Assets Income taxes recoverable Cash in escrow – shareholder Receivables * Cash and cash equivalents Financial assets Liabilities Borrowings Trade and other payables Current tax liabilities Short-term loans Financial liabilities * excludes prepayments Net currency exposure Reasonably possible
 change in exchange rate Effect on profit before tax Note 15 TT$ 530,683 Other -- -- 4,615,646 122,212 5,268,541 -- 5 -- 5 US$ -- 109,858 Total 530,683 109,858 2,396,234 7,011,807 1,686,088 1,808,300 4,192,180 9,460,648 (30,607) -- (8,538,248) (8,568,855) (1,638,655) (1,323) (2,295,412) (3,935,390) (5,156,100) -- -- (5,156,100) -- -- (5,565,006) (5,565,006) (6,825,362) (1,323) (16,398,666) (23,225,351) (1,556,821) (1,318) (12,206,486) (13,764,703) 1% (15,568) 1% (13) -- -- -- (15,581) 26 PETROTRIN ANNUAL REPORT
 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 15 16 17 19 20 22 24 25 Assets Income taxes recoverable Cash in escrow – shareholder Loans receivable Receivables * Cash and cash equivalents Financial assets Liabilities Borrowings Trade and other payables Current tax liabilities Short-term loans Financial liabilities * excludes prepayments Net currency exposure Reasonably possible change in exchange rate Note TT$ As at 2013 September 30 US$ Other Total 530,683 84,839 1,929 530,683 -- -- -- -- -- -- 84,839 1,929 7,019,864 5 3,066,337 10,086,206 265,856 7,816,403 -- 5 2,030,175 2,296,031 5,183,280 12,999,688 (30,606) (2,613,474) (7,449,362) -- -- (9,007,922) (9,038,528) (944) (2,183,820) (4,798,238) -- -- -- (7,449,362) (3,979,968) (3,979,968) (10,093,442) (944) (15,171,710) (25,266,096) (2,277,039) (939) (9,988,430) (12,266,408) 1% 1% -- -- -- (22,779) Effect on profit before tax (22,770) (9) (iii) Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments.
The Group is exposed to cash flow or market interest rate risk mainly on its short-term bank deposits and short-term loans.

These transactions are negotiated at fixed rates but are subject to repricing risk.

Short-term deposits were repriced daily in 2015 (2014: 1.5 days and 2013: daily), while short-term loans had maturities of 59-180 days in 2015 (2014: 88-209 days and 2013: 119-180 days).

The Group monitors its interest rate risk using interest rate sensitivity and gap analyses.
Sensitivity analyses were conducted to determine the effect on net profit with all other variables held constant on next year’s results.
2015 As at September 30 2014 2013 Fixed rate instruments Financial assets Financial liabilities Variable rate instruments Financial assets Financial liabilities $ $ $ 2,322 $ 2,420 $ 4,182 (13,153,239) $ (13,150,917) (14,133,861) (13,018,496) $ (14,131,441) $ (13,014,314) 1,731,918 $ 1,808,300 $ -- -- 1,731,918 $ 1,808,300 $ 2,296,031 -- 2,296,031 PETROTRIN ANNUAL REPORT 2015 27 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 4 Financial risk management (continued) 1.1 Financial risk factors (continued) (a) Market risk (continued) The table below summarises the Group’s exposures to interest rate repricing risk.
Effect on profit after tax Year ended September 30 2015 2014 2013 $ 17,319 $ 18,083 $ 22,960 (17,319) (18,083) (22,960) Change in interest rate: Increase by 1% Decrease by 1% (i) Fair value risk The Group is exposed to fair value risk on 100.00% of its long-term borrowings which are fixed.

The Group’s preference is for fixed rate debt but considers market conditions at the time of loan negotiations in making fixed versus floating rate decisions.
There is no significant exposure to fair value risk on other financial instruments.

The table below shows the carrying amounts and fair values of both long term and short term borrowings.

The carrying amounts of short-term borrowings approximate to their fair values.
Carrying values $ (8,168,845) 2015 Fair values $ (8,552,425) As at September 30 2014 Fair values $ (10,371,123) Carrying values $ (8,568,855) Carrying values $ (9,038,528) 2013 Fair values $ (10,832,448) ( 4,984,394) (13,153,239) (4,984,394) (13,536,819) (5,565,006) (14,133,861) (5,565,006) (15,936,129) (3,979,968) (13,018,496) (3,979,968) (14,812,416) Borrowings Short-term loans The valuation technique used in measuring the fair value of borrowings is described below: Financial instrument Valuation technique Debt securities The fair value of borrowings was derived by discounting all future cash flows at prevailing market interest rates that ranged from 7.69% to 8.31% (2014:3.91% to 4.20%; 2013: 4.72% to 4.83%).
The discount rates used to derive the fair value of the bonds represent the borrowing rates if Petrotrin were to access the market at year-end.

This pricing is derived from Bloomberg’s screen shot of price based on the yield to maturity (YTM) on the associated bond at year-end.
28 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 4 Financial risk management (continued) 1.1 Financial risk factors (continued) (b) Credit risk Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts due causing financial loss to the Group.
It arises from cash and cash equivalents, deposits with banks and other financial institutions as well as credit exposure to trade and other customers including outstanding receivables and committed transactions.

For banks and other financial institutions, only independently rated parties with a minimum rating of ‘BBB’ are accepted.

If trade customers are independently rated, these ratings are used.

The Group has no significant concentration of credit risk.
Credit risk is mitigated by internal policies that require sales of products to be made to customers with favourable credit ratings.

This requires companies to have a minimum of an investment grade rating from reputable rating agencies, irrevocable letters of credit issued and confirmed by rated banks or payment in advance.
The maximum exposure to credit risk for trade and related parties balances, by geographic region was as follows: Local Regional 2015 As at September 30 2014 2013 $ 1,715,413 $ 5,839,839 $ 8,847,008 194,045 166,121 465,157 International Gross trade and related parties 307,244 $ 2,216,702 582,796 $ 6,588,756 604,831 $ 9,916,996 An analysis of the credit quality of trade and related parties that were not impaired is as follows: Less than one year trading history* Customers between one and four years trading history* Customer with over four years trading history* Higher risk * excludes higher risk As at September 30 2015 $ 86 2014 2013 $ 9,666 $ 207,909 61,680 28,953 51,193 2,084,978 6,293,234 9,167,891 229 -- $ 2,146,973 $ 6,331,853 $ 562 9,427,555 Included in local revenues arising from direct sales of product is approximately 19.32 % (2014: 19.70%; 2013: 23.95%), which arose from sales to Trinidad and Tobago National Petroleum Marketing Company Limited (NPMC), the Group’s largest customer in Trinidad and Tobago.
As at 2015 September 30, outstanding receivables from NPMC represented 33.42% (2014: 40.75%; 2013: 54.14%) of local receivables and 28.19% (2014: 36.60%; 2013: 48.56%) of total receivables.

The risk from NPMC is minimal as both Petrotrin and NPMC are State owned.

Although part of the outstanding balance is past due, historically NPMC has settled its debt to Petrotrin.

The fair values of trade and other receivables approximate their carrying amounts.
PETROTRIN ANNUAL REPORT 2015 29 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 1 Financial risk management (continued) 4.1 Financial risk factors (continued) (b) Credit risk (continued) The table below is an aging of the gross trade and other receivables balance, excluding prepayments and taxes: As at September 30 2015 2014 2013 Fully performing $ 625,655 $ 1,738,229 $ 2,133,136 Past due but not impaired: within 30 days 31 to 60 days 61 to 90 days over 90 days Impaired Total 966,832 200,018 205,314 267,307 1,320,429 646,151 411,692 2,891,772 1,420,910 578,885 350,043 5,600,766 250,744 2,515,870 $ 403,959 $ 7,412,232 639,345 $ 10,723,085 The movement in the provision for impairment of receivables during the year was as follows: Balance at start of year Exchange adjustments Charge for the year (Note 28) Receivables written-off during the year as uncollectible Year ended September 30 2015 $ (403,959) (32) (68,386) 2014 $ (639,345) (146) (164,424) 2013 $ (459,991) 3 (179,544) 221,633 399,956 187 Balance at end of year $ (250,744) $ (403,959) $ (639,345) The maximum exposure to credit risk at the respective reporting dates is the carrying values of the following financial assets: cash-in-escrow, available-for-sale financial instruments, loans receivable, receivables and prepayments and cash and cash equivalents.
The Group’s maximum exposure totalled $4,148,750`(2014:$8,928,851; 2013: $12,472,775).
As at September 30 Note 2015 2014 2013 Assets as per statement of financial position Available for sale financial instruments 11 $ 2,322 $ 2,420 $ 6,236 Cash in escrow – shareholder Loans receivable Trade and other receivables excluding prepayments and taxes Cash and cash equivalents 16 17 19 20 149,384 109,858 -- -- 84,839 1,929 2,265,126 7,008,273 10,083,740 1,731,918 1,808,300 2,296,031 $ 4,148,750 $ 8,928,851 $ 12,472,775 30 PETROTRIN ANNUAL REPORT 2015 Petrotrin 1 Financial risk management (continued) 4.1 Financial risk factors (continued) (b) Credit risk (continued) 4 Financial risk management (continued) 1.1 Financial risk factors (continued) (c) Liquidity risk Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) The table below is an aging of the gross trade and other receivables balance, excluding prepayments and taxes: As at September 30 2015 2014 2013 Fully performing $ 625,655 $ 1,738,229 $ 2,133,136 Past due but not impaired: within 30 days 31 to 60 days 61 to 90 days over 90 days Impaired Total 966,832 200,018 205,314 267,307 250,744 1,320,429 646,151 411,692 2,891,772 1,420,910 578,885 350,043 5,600,766 403,959 639,345 $ 2,515,870 $ 7,412,232 $ 10,723,085 The movement in the provision for impairment of receivables during the year was as follows: Balance at start of year Exchange adjustments Charge for the year (Note 28) Receivables written-off during the year as
 uncollectible Balance at end of year Year ended September 30 2015 $ (403,959) 2014 $ (639,345) 2013 $ (459,991) (32) (68,386) (146) (164,424) 3 (179,544) 221,633 399,956 187 $ (250,744) $ (403,959) $ (639,345) The maximum exposure to credit risk at the respective reporting dates is the carrying values of the following financial assets: cash-in-escrow, available-for-sale financial instruments, loans receivable, receivables and prepayments and cash and cash equivalents.
The Group’s maximum exposure totalled $4,148,750`(2014:$8,928,851; 2013: $12,472,775).
As at September 30 Note 2015 2014 2013 Assets as per statement of financial position Cash in escrow – shareholder Loans receivable Trade and other receivables excluding prepayments and taxes Available for sale financial instruments 11 $ 2,322 $ 2,420 $ 6,236 Cash and cash equivalents 1,731,918 1,808,300 2,296,031 149,384 109,858 -- -- 84,839 1,929 2,265,126 7,008,273 10,083,740 16 17 19 20 $ 4,148,750 $ 8,928,851 $ 12,472,775 Liquidity risk is the risk that the Group will be unable to meet its payment obligations when they fall due under normal and stress circumstances.
In managing its liquidity risks, the Group maintains sufficient cash on hand and committed credit facilities to meet its operational expenses, including the servicing of financial obligations.

The Group’s treasury function co-ordinates relationships with banks, borrowing requirements and cash management.

The Group believes it has access to sufficient funding by using undrawn borrowing facilities to meet foreseeable borrowing requirements.
At 2015 September 30, the Group has short-term credit facilities with various foreign and local banking institutions totalling $6,889,619, of which the sum of $1,773,404 was unutilised.

The Company monitors future cash flows and has access to other diversified funding sources, if required, to manage its liquidity.

The Group has a long-term debt rating of Ba1 (stable outlook) and BB+ (stable outlook) assigned by Moody’s and Standard and Poor’s respectively.
The table below presents the financial liabilities payable by the Group by remaining contractual maturities at the reporting date.
As at 2015 September 30 Contractual cash flows Carrying values Financial liabilities $ Total $ Less than 1 year Between 1 and 2 years Between 2 and 4 years 5 years and over $ $ $ $ Borrowings Trade and other payables (excluding statutory liabilities) Short-term loans (8,168,845) (10,896,949) (1,140,673) (1,055,143) (7,389,985) (1,311,148) (3,251,809) (4,984,394) (3,251,809) (5,029,744) (3,251,809) (5,029,744) -- -- -- -- -- -- (16,405,048) (19,178,502) (9,422,226) (1,055,143) (7,389,985) (1,311,148) As at 2014 September 30 Contractual cash flows Carrying values Financial liabilities $ Total $ Less than 1 year Between 1 and 2 years Between 2 and 4 years 5 years and over $ $ $ $ Borrowings Trade and other payables (excluding statutory liabilities) Short-term loans (8,568,855) (12,014,258) (1,166,211) (1,080,527) (2,091,408) (7,676,112) (3,486,102) (5,565,006) (3,486,102) (5,600,517) (3,486,102) (5,600,517) -- -- -- -- -- -- (17,619,963) (21,100,877) (10,252,830) (1,080,527) (2,091,408) (7,676,112) PETROTRIN ANNUAL REPORT 2015 31 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 4 Financial risk management (continued) 1.1 Financial risk factors (continued) (c) Liquidity risk (continued) As at 2013 September 30 Financial liabilities Borrowings Trade and other payables (excluding statutory liabilities) Short-term loans Contractual cash flows Total Less than 1 year Between 1
 and 2 years Between 2 and 4 years 5 years and over $ (13,259,751) $ (1,212,500) $ (1,114,424) $ (2,158,400) $ (8,774,427) Carrying values $ (9,038,528) (4,315,475) (3,979,968) (4,315,475) (4,000,468) (4,315,475) (4,000,468) -- -- -- -- -- -- (17,333,971) (21,575,694) (9,528,443 ) (1,114,424) (2,158,400) (8,774,427) 4.2 Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, to maintain a strong credit rating and an optimum capital structure in order to provide returns for its shareholders and benefits for other stakeholders.
The Group’s capital structure consists of share capital, reserves and retained earnings and adjustments are made based on economic conditions.

To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

No changes were made in the objectives, policies or processes during the years ended 2013 September 30 to 2015 September 30.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital.

Net debt is calculated as total borrowings (borrowings, current portion of long-term borrowings and short-term loans, as shown in the statement of financial position) less cash and cash equivalents.

Total capital is calculated as total equity as shown in the statement of financial position plus net debt.
The Group’s policy is to maintain a gearing ratio of less than or equal to 50% and an investment grade credit rating.
Gearing ratio As at September 30 Total borrowings Less: Cash and cash equivalents 2015 2014 $ 13,153,239 (1,731,918) $ 14,133,861 (1,808,300) 2013 $ 13,018,496 (2,296,031) Net debt Total equity Total capital Gearing ratio 11,421,321 11,132,959 $ 22,554,280 12,325,561 12,134,372 $ 24,459,933 10,722,465 12,495,648 $ 23,218,113 50.64% 50.39% 46.18% 32 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 4 Financial risk management (continued) 4.3 Fair value estimation The carrying amount of the following assets and liabilities: cash, investments, trade receivables and payables, other receivables and payables and short-term borrowings approximate to their fair values.
During the period, there were no changes in the classification of financial assets, neither were there transfers between levels of the fair value hierarchy.

5 Critical accounting estimates and judgments Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The preparation of these consolidated financial statements requires Management to apply accounting methods and policies that are based on difficult or subjective judgments, estimates based on past experience and assumptions determined to be reasonable and realistic in the circumstances.
The application of these estimates and assumptions affects the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the reporting date and the reported amounts of income and expenses during the reporting period.

Actual results may differ from these estimates given the uncertainty surrounding the assumptions and conditions upon which the estimates are based.
Summarised below are the accounting estimates that require the more subjective judgment of Management.

Such assumptions or estimates regard the effects of matters that are inherently uncertain and for which changes in conditions may significantly affect future results.

(a) IAS 19 valuation The valuation of the Group’s pension plans assets and expected liabilities are calculated in accordance with IAS 19(R) requirements.
The actuarial valuation for the pension benefits and post-employment medical costs are computed by qualified actuaries using Management’s assumptions for discount rate and data supplied by Management; expected rate of return on Plan assets; future salary increases and medical expense inflation rates.

Each of these principal actuarial assumptions can and will change in the future (See Note 10).
(b) Oil and gas reserves The oil and gas reserves are assessed by Management and audited by external engineers in accordance with the Standards pertaining to the Estimating of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers.

Engineering estimates of the Group’s oil and gas reserves are inherently uncertain.
Proved reserves are the estimated volumes of crude oil, natural gas and gas condensates, liquids and associated substances which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.
Although there are authoritative guidelines regarding the engineering criteria that have to be met before estimated oil and gas reserves can be designated as proved, the accuracy of any reserve estimate is a function of the quality of available data and engineering and geological interpretation; the accuracy of assumptions and judgment.

There may be substantial upward and downward revisions to the results of drilling, testing and production after the date of the estimate.
In addition, changes in oil and natural gas prices could have an effect on the value of proved reserves as regards the initial estimate.

Accordingly, the estimated reserves could be materially different from the quantities of oil and natural gas that ultimately will be recorded.
PETROTRIN ANNUAL REPORT 2015 33 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 5 Critical accounting estimates and judgments (continued) (b) Oil and gas reserves (continued) Estimated proved reserves are used in determining depletion and impairment expenses.
Depreciation rates on oil and gas assets using the Unit-of-Production basis are determined from the ratio between the amount of hydrocarbons extracted in the year and proved producing reserves existing at the year-end increased by the amounts extracted during the year.

Assuming all other variables are held constant, an increase in estimated proved producing reserves decreases depreciation, and amortisation expense.
On the contrary, a decrease in estimated proved producing reserves increases depreciation, depletion and amortisation expense.

Also, estimated total proved reserves are used to calculate future cash flows from oil and gas properties, which serve as an indicator in determining whether a property impairment test is to be carried out or not.

The larger the volume of estimated reserves, the less likely the property is impaired.
(c) Lease licences It is assumed that licences to develop oil and gas properties acreages will continue to be extended to the Group by the Government of the Republic of Trinidad and Tobago throughout the remaining productive lives of the related fields.

The Group’s estimates of reserves, the estimated provisions for decommissioning and the impairment assessments are based on this assumption.
(d) Impairment of assets (i) Goodwill The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 3.4 (a).

This requires an estimation of the ‘value-in-use’ of the cash generating units to which the goodwill is allocated.
Estimating a ‘value-in-use’ amount requires Management to make an estimate of the expected future cash flows from the cash generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

Further details are given in Note 7.


(ii) Financial assets Financial assets excluding trade and other receivables are assessed at each reporting period to determine whether there is any objective evidence that they are impaired, while trade and other receivables are reviewed quarterly for impairment.
In determining whether an impairment loss should be recorded in profit or loss, the Group makes judgments as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows.

This evidence may include observable data indicating that there has been an adverse change in the payment status of customers, or national or local economic conditions.
The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly.

If there is objective evidence that an impairment loss on loans receivable carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.
The carrying amount of the asset is reduced, with the amount of the loss recognized in profit or loss.
34 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 5 Critical accounting estimates and judgments (continued) (d) Impairment of assets (continued) (iii) Other assets Property, plant and equipment and intangible assets are assessed for possible impairment if events and changes in circumstances indicate that the carrying amount may not be recoverable.
If assets are determined to be impaired, the carrying amounts of those assets are written down to their recoverable amount.

This is the higher of fair value less costs to sell and value-in-use determined as the amount of estimated discounted future cash flows.

For this purpose, assets are grouped into cash generating units based on separately identifiable and largely independent cash inflows.
Impairments can also occur when decisions are taken to dispose of assets Impairments, except those relating to goodwill, are reversed as applicable, to the extent of the changes in the events and circumstances that triggered the original impairment.

Estimates of future cash flows are based on Management’s estimates of future commodity prices, market supply and demand, product margins and, in the case of oil and gas properties, the expected future production volumes.
Other factors that can lead to changes in estimates include restructuring plans and variations in regulatory environments.

Expected future production volumes, which are based on proved reserves, are used for impairment testing because the Group believes this to be the most appropriate data for expected future cash flows.

Estimates of future cash flows are consistent in the Group’s business plan.

A discount rate based on the Group’s marginal cost of debt is used.
Assumptions on future oil prices tend to be stable because the Group does not consider short-term increases or decreases in prices as being indicative of long-term levels.

The future prices used in impairment testing are determined after assessments of drivers; historical analysis, trends and statistical volatility are part of this assessment as well as analysis of possible future global and regional economic conditions.
(e) Decommissioning and environmental obligations (i) Decommissioning obligation Obligations related to the removal of tangible equipment and the restoration of land or seabed, once operations are terminated, requires the recognition of significant provision for decommissioning.
Estimating the future cost of asset removal is difficult and requires Management to make estimates and judgments because most of the removal obligations are many years in the future, and related contracts and regulations often contain vague descriptions of what constitutes removal.

Asset removal technologies and costs are constantly changing, as well as political, environmental, safety and public relations considerations.
The criticality of these estimates is also increased by the accounting policy used that requires entities to record the fair value of a liability for decommissioning in the period when it is incurred (typically at the time the asset is installed at the production location).

When the liability is initially recorded, the related fixed asset is increased by a corresponding amount.
Over time, the liabilities are increased for the provisions due to reflect the passage of time and any change of the estimates following the modification of the future cash flows or the discount rate adopted.
The recognised decommissioning liability amounts are based upon future retirement cost estimates and incorporate many assumptions such as expected recoverable quantities of crude oil and natural gas, time to abandonment, future inflation rates and the risk-free rate of interest adjusted for the Group’s credit costs.

(See Note 23).
PETROTRIN ANNUAL REPORT 2015 35 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 5 Critical accounting estimates and judgments (continued) (e) Decommissioning and environmental obligations (continued) (ii) Environmental liabilities Together with other companies in the industries in which it operates, Petrotrin is subject to national, regional and local environmental laws and regulations concerning its oil and gas operations, productions and other activities, including legislation that implements international conventions or protocols.
Provision for environmental costs is made when it becomes probable or certain that a liability has been incurred and the amount can be reasonably estimated.

If a new regulation or a notice of a regulation violation is received, and it is likely to have a financial impact, a provision will be recorded.

(f) Income taxes The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made.
36 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 6 Property, plant and equipment Exploration and Evaluation $ Development Subtotal Production Refining and Marketing $ $ $ $ Other Businesses and Corporate $ Total $ Year ended 2015 September 30 Opening net book amount 19 215,743 215,762 1,605,973 17,618,078 549,344 19,989,157 Exchange differences Additions Transfers Depreciation charge Closing net book amount As at 2015 September 30 Cost Accumulated depreciation (26) 738 (8,446) 125,932 (8,472) 126,670 2,829 (117,945) (115,116) 5,740 184,801 115,116 (36,795) 605,809 -- (1,046) 25,562 -- (40,573) 942,842 -- -- -- -- (295,831) (904,250) (14,905) (1,214,986) 3,560 215,284 218,844 1,615,799 17,282,842 558,955 19,676,440 3,560 215,284 218,844 6,301,727 23,172,723 775,822 30,469,116 -- -- -- (4,685,928) (5,889,881) (216,867) (10,792,676) Net book amount 3,560 215,284 218,844 1,615,799 17,282,842 558,955 19,676,440 Exploration and Evaluation Year ended 2014 September 30 Opening net book $ amount Exchange differences Additions Transfers Disposals Depreciation charge Closing net book amount 13 (4) 10 -- -- -- 19 As at 2014 September 30 Development Subtotal Production Refining and Marketing $ $ $ $ Other Businesses and Corporate $ Total $ 180,728 180,741 1,690,435 17,363,984 542,241 19,777,401 8,022 67,357 (40,364) 8,018 67,367 (40,364) (25,732)
 157,134 40,364 (174,720) 933,134 -- (5,072) 26,049 -- (197,506) 1,183,684 -- -- -- -- -- -- (19,088) -- (19,088) (256,228) (485,232) (13,874) (755,334) 215,743 215,762 1,605,973 17,618,078 549,344 19,989,157 Cost Accumulated depreciation Net book amount 19 215,743 215,762 5,869,105 22,610,498 751,660 29,447,025 -- 19 -- -- (4,263,132) (4,992,420) (202,316) (9,457,868) 215,743 215,762 1,605,973 17,618,078 549,344 19,989,157 PETROTRIN ANNUAL REPORT 2015 37 Petrotrin Petroleum Company of Trinidad and Tobago Limited
 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 6 Property, plant and equipment (continued) Exploration and Evaluation $ Development Subtotal Production Refining and Marketing $ $ $ $ Other Businesses and Corporate $ Total $ Year ended 2013 September 30 Opening net book amount Exchange differences Additions Transfers Disposals Depreciation charge Closing net book amount As at 2013 September 30 Cost Accumulated depreciation Net book amount 743 1 12 (653) (90) -- 13 13 -- 13 107,169 107,912 1,748,277 16,877,383 523,899 19,257,471 451 90,475 (17,367) -- 452 90,487 (18,020) (90) (3,803) 182,496 18,020 (1,278) 382 1,140,066 -- -- (65) 30,833 -- (5) (3,034) 1,443,882 -- (1,373) -- -- (253,277) (653,847) (12,421) (919,545) 180,728 180,741 1,690,435 17,363,984 542,241 19,777,401 180,728 180,741 5,886,511 21,912,981 732,747 28,712,980 -- -- (4,196,076) (4,548,997) (190,506) (8,935,579) 180,728 180,741 1,690,435 17,363,984 542,241 19,777,401 Depreciation expense of $1,200,081 (2014:$741,460; 2013: $907,124) has been charged in cost of sales, while $14,905 (2014: $13,874; 2013: $12,421) has been charged in other operating expenses.
Included in production assets under depreciation, is an impairment loss of $11,815 (2014; reversal of previous years impairment loss of $3,189; 2013: impairment loss of ($3,220).

No impairment losses were recorded for Refining and Marketing assets during 2015 (2014: nil; 2013: $272,169).

Costs not subject to depreciation totalled 2015 $5,745,532 (2014: $13,629,010 ; 2013: $ 12,218,369).
These are assets under construction in Refining and Marketing and Corporate as well as Exploration and Evaluation and Development costs.
Assets under construction (excluding Exploration and Evaluation and Development costs) Production assets Refining and Marketing assets As at September 30 2015 2014 2013 $ 594,390 4,533,098 $ 1,018,123 12,005,199 $ 640,775 11,658,636 Other Business and Corporate assets 399,199 389,926 378,993 Included in Refining and Marketing assets is an amount of $219,205 (2014: $220,300; 2013: $221,205) capitalised in respect of specific borrowing costs.
These are actual borrowing costs incurred, less any investment income earned on temporary investment of borrowings.

Borrowing costs were incurred on financing for the Ultra- Low Sulphur Diesel (ULSD) project.
38 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 6 Property, plant and equipment (continued) Included in development assets and Refining and Marketing is interest capitalised during the year, on general borrowings of $10,506 (2014: $11,253; 2013: $10,093) and $28,368 (2014: $11,290; 2013: $11,985) respectively.
The capitalisation rate on general borrowings is 1.86% (2014: 1.86%; 2013: 1.30%).
7 Intangible assets Year ended 2015 September 30 Opening net book amount Exploration and Evaluation Development Subtotal Goodwill Production Refining and Marketing Software Costs Total $ $ $ $ $ $ $ $ 706,738 1,887,251 2,593,989 252,159 3,904,550 845,336 46,008 7,642,042 Exchange differences (2,805) (9,188) (11,993) (514) (4,214) (1,872) 132,859 -- (60) 5,824 (18,653) 960,818 Additions Revised decommissioning cost Transfers Disposals Amortisation charge Closing net book amount As at 2015 September 30 Cost Accumulated amortisation 12,722 809,413 822,135 -- -- -- 53,687 (1,107,136) (1,053,449) -- -- -- -- -- -- -- -- -- -- -- (2,933,101) (43,562) 1,053,449 -- -- -- -- -- -- (2,976,663) -- -- 567,328 (72,109) (7,513) 487,706 770,342 1,580,340 2,350,682 251,645 2,720,871 727,793 44,259 6,095,250 770,342 1,580,340 2,350,682 386,635 13,260,356 1,351,731 185,855 17,535,259 -- -- -- (134,990) (10,539,485) (623,938) (141,596) (11,440,009) Net book amount 770,342 1,580,340 2,350,682 251,645 2,720,871 727,793 44,259 6,095,250 PETROTRIN ANNUAL REPORT 2015 39 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 7 Intangible assets (continued) Exploration and Evaluation Development Subtotal Goodwill Production Refining and Marketing Software Costs Total $ $ $ $ $ $ $ $ Year ended 2014September 30 Opening net book amount Exchange differences Additions Revised decommissioning cost Transfers
 Disposals Amortisation charge Closing net book amount 270,896 1,581,597 1,852,493 254,585 3,748,431 365,093 41,720 6,262,322 (5,966) (2,258) (8,224) (2,426) (45,652) (3,247) (416) (59,965) 469,917 611,835 1,081,752 -- (28,109) -- -- (303,923) -- -- (332,032) -- -- -- -- -- -- -- -- -- 117,965 -- 14,304 1,214,021 666,923 332,032 (439) 511,839 -- -- -- -- -- 1,178,762 -- (439) (914,710) (28,349) (9,600) (952,659) 706,738 1,887,251 2,593,989 252,159 3,904,550 845,336 46,008 7,642,042 As at 2014 September 30
 Cost 706,738 1,887,251 2,593,989 387,424 14,969,709 1,398,139 180,391 19,529,652 Accumulated amortisation Net book amount -- -- -- (135,265) (11,065,159) (552,803) (134,383) (11,887,610) 706,738 1,887,251 2,593,989 252,159 3,904,550 845,336 46,008 7,642,042 Exploration and Evaluation $ Development Subtotal Goodwill Production $ $ $ $ Refining and Marketing $ Software Costs $ Total $ Year ended 2013 September 30 Opening net book amount Exchange differences Additions Revised decommissioning cost Transfers Disposals Amortisation charge Closing net book amount 283,556 797,690 1,081,246 254,537 5,816,977 768,582 40,923 7,962,265 807 21,536 1,731 904,548 2,538 926,084 -- (30,562) (4,441) -- (122,372) -- -- (152,934) (4,441) -- -- -- 48 -- -- -- -- -- (13,606) 155,064 15 -- (83) 8,675 (11,088) 1,089,823 (1,135,751) 152,934 -- (348,697) -- -- -- -- -- (1,484,448) -- (4,441) (1,227,187) (54,807) (7,795) (1,289,789) 270,896 1,581,597 1,852,493 254,585 3,748,431 365,093 41,720 6,262,322 As at 2013 September 30 Cost Accumulated amortisation Net book amount 270,896 1,581,597 1,852,493 391,153 14,063,571 894,760 167,696 17,369,673 -- -- -- (136,568) (10,315,140) (529,667) (125,976) (11,107,351) 270,896 1,581,597 1,852,493 254,585 3,748,431 365,093 41,720 6,262,322 40 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago
 Dollars) 7 Intangible assets (continued) Amortisation write-back/(charge) of $495,219 (2014: $943,059; 2013: $1,281,994) has been charged in cost of sales while 2015, $7,513 (2014: $9,600; 2013: $7,795 has been charged to other operating expenses.
Impairment losses of $146,025 were recorded in the year ended 2015 September 30 while there were no losses recorded for years ended 2013 September 30 and 2014 September 30.

Costs not subject to amortisation totalled $2,350,682 (2014: $2,593,989; 2013: $1,852,493).

Included in production assets is an amount of $31,397 (2014: $36,020; 2013: $35,157) in respect of assets under construction and a net amortised amount of $152,550 (2014:$1,542,233; 2013: $1,061,307) in respect of decommissioning costs.
The remaining amortisation periods for these decommissioning costs are one (1) to fifteen (15) years.

Included in refining and marketing assets is a net amortised amount 2015 $751,526 (2014: $843,286; 2013: $352,795) in respect of decommissioning costs.

The remaining amortisation periods for these decommissioning costs are one (1) to thirteen (13) years.

Included in Development assets is interest capitalised on general borrowings of $39,255 (2014: $40,898; 2013: $37,721).
The capitalisation rate on general borrowings is 1.86% (2014: 1.29%; 2013: 1.30%).

(a) Impairment review of goodwill In accordance with International Accounting Standard 36 - Impairment of Assets, the test for the impairment of goodwill was calculated based on the average 5-year forecast of prices as approved by Management.

Prices beyond the 5-year period were assumed to be constant.
Goodwill is allocated to the Group’s cash generating unit, Trinmar Operations’ Soldado field, as this is the unit to which the goodwill is associated.

The recoverable amount of the Trinmar Operations oil and gas reserves was based on value-in-use calculations.

These calculations use the pre-tax cash flow projections based on proved reserves covering a 15-year period.
The key assumptions used for the value-in-use calculations are as follows:  price per barrel of crude of *US$55.49 (TT$352.13) and price per mscf of natural gas of *US$1.35 (TT$8.54), estimated using the market assumptions of the Company’s Budget for the year ending 2016 September 30 and 2016-2020 Business Plan;  the future cash flows were adjusted to reflect risks specific to the cash generating unit and risks surrounding the cash flows.
These cash flows were discounted using a rate of 6.00% per annum;  the maximum economic life used for the valuation of reserves was fifty (50) years as this represents Management’s estimation of the economic productive life of the field at current rates of extraction;  supplemental petroleum taxes and other levies on production volumes were calculated at prevailing rates;  the cash flow beyond the 5-year period were extrapolated using projections based on constant prices and constant costs;  the carrying value at 2015 September 30 is $251,645.
Given that there was no significant change in assets and liabilities and that the likelihood of the carrying value exceeding the recoverable amount at the time of the test to be remote, Management believes that there are no reasonable assumptions that would cause the carrying value to exceed the recoverable amount.

The impairment test revealed that this asset was not impaired as of 2015 September 30 and consequently no write down of goodwill is required.
*Oil and gas prices quoted above are not expressed in thousands of dollars.
PETROTRIN ANNUAL REPORT 2015 41 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 8 Impairment of fixed assets In assessing whether a write-down is required in the carrying value of a potentially impaired intangible asset, or an item of property, plant and equipment, its carrying value is compared with its recoverable amounts.
Unless otherwise indicated, the recoverable amount used in assessing the impairment charges (described below) is its value-in-use which is derived using a discounted cash flow model.

The future cash flows are adjusted for risks specific to the asset and are discounted using a pre-tax discount rate of 6.00%.

This discount rate is derived using a 20-year US treasury rate adjusted for specific risks related to country, industry and company.
Exploration and Production The value-in-use is based on cash flows expected to be generated by the projected oil and natural gas production profiles up to the expiration of the licence agreement.

Key assumptions used for the value-in-use calculations are as follows:  revenues were derived using projected production and future prices.
This data was obtained from market experts (See Note 5(b));  direct operating costs were projected based on past experience and available historical data on lifting costs;  the time horizon used for the valuation of the reserves was fifty (50) years as this represents Management’s estimation of the economic productive life of the field at current rates of extraction;  supplemental petroleum taxes and other levies on production volumes were calculated at prevailing rates;  the cash flow beyond the 5-year period were extrapolated using projections based on constant prices and constant costs; The group recorded impairment losses on three fields of $157,840, (2014: reversal of previous years’ impairment losses of $3,189 ; 2013: impairment loss of $3,220) with respect to one cash generating unit.
It is estimated that an increase in the cost of capital by 5% would not cause the carrying amount to exceed the recoverable amount.

In light of lower crude oil and gas prices subsequent to the year ended 2015 September 30, a sensitivity analysis was done using average forecast prices based on the 2016-2020 Business plan.

(Cash Flows showed one additional cash generating unit as being impaired.
Exploration and Evaluation assets In accordance with IFRS 6, exploration and evaluation assets are assessed for impairment annually or if there are any indications that the assets might be impaired.

There were no facts and circumstances indicating that the Group should test these assets for impairment.
The following indicators were evaluated to determine whether these assets should be tested: the period for which the Group has the right to explore in the specific area; • • whether substantive expenditure on further exploration and evaluation in the specific area is budgeted or planned; • whether exploration and evaluation in the specific area have not led to the discovery of commercially viable • quantities and the Group has decided to discontinue such activities in the specific area; sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
42 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 8 Impairment of fixed assets (continued) Amounts related to exploration activities were written off in the Consolidated Statement of Profit or Loss and other Comprehensive Income in the year ended 2015 September 30 of $5,930 (2014: $nil; 2013: $4,530).
Refining and Marketing The Group assesses its fixed assets for possible impairment in circumstances which indicate that the carrying values of the assets may not be recoverable.

Such indicators include changes in the Group’s business plans, changes in product prices leading to an unprofitable performance, low plant utilization and evidence of physical damage.

If there are low refining and marketing margins during an extended period, the Group may need to recognise impairment charges.
The Group estimates value-in-use using a discounted cash flow model.

The key assumptions, to which the calculation of value-in-use for the Refining and Marketing division is most sensitive, are refinery gross margin, capital expenditure and discount rate.

The average value assigned to the refinery gross margin during the plan period is based on * US$10.10 per barrel.
For the purpose of determining value-in-use, risk-adjusted cash flows for a period of 18 years have been used at a discount rate of 6.00% per annum.

Refining and marketing recoverable amount exceeds its carrying amount by $1,462,012.

Based on sensitivity analysis, a change of 1% in the cost of capital would change the value-in-use by $1,445,305.

A change in gross margin of *US$0.50 /bbl would change the value-in-use by $1,387,339.
*Oil and gas prices quoted above are not expressed in thousands of dollars.

9 Other costs related to exploration for and evaluation of oil and natural gas resources Costs related to exploration activities that were expensed in the year ended 2015 September 30 were $5,930 (2014: $nil;, 2013: $4,530).
Assets and liabilities related to the exploration for and evaluation of mineral resources other than those presented in Notes 6 and 7 above are as follows: Payable to contractors and operators $ 4,802 $ 8,498 $ 3,472 2015 As at September 30 2014 2013 Net cash used in operating activities Year ended September 30 2015 $ (5,930) 2014 $ -- 2013 $ (4,530) Net cash used in investing activities $ (47,712) $ (421,907) $ (20,673) PETROTRIN ANNUAL REPORT 2015 43 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 10 Retirement benefit asset/ (obligation) 10.1 Employee benefits The majority of the Company’s employees participated in one of the Company’s two (2) pension plans (the Plans).
The Plans are of the defined benefit type and are established under Trust with the following Trustees: Pension Plan Membership Trustee Petrotrin Employees’ Pension Plan (PEPP) All employees excluding exTrintopec monthly rated employees Republic Bank Limited – Trust and Asset Management Division Trintopec Staff Pension Plan (SPP) All ex-Trintopec monthly rated employees RBC Trust Limited The SPP is exempt approved under the Income Tax Act whilst the PEPP is yet to be approved by the Board of Inland Revenue and registered with the Central Bank.
The Plans are funded to cover pension liabilities in respect of service up to the reporting date.

They are subject to independent actuarial valuations at least every three (3) years, on the basis of which the independent qualified actuary certifies the rate of employer’s contributions which, together with the specified contributions payable by the employees and proceeds from the Plans’ assets, are expected to be sufficient to fund the benefits payable under the Plans.
Employees contribute to the Plans at a rate of 7% of pensionable pay (basic salary, wages and cost of living allowance), reducing to 4% after 31 years’ pensionable service.

For the year ended 2015 September 30, the employer’s contribution rate was 14% of pensionable pay for PEPP and SPP.

The Pension Plans pay: • Pensions calculated on the basis of service, accrual rate and pensionable salary, and are subject to a limitation of 66 2/3 % of final pensionable earnings.
Upon retirement, the member has an option of either 100% monthly pension or 75% reduced monthly pension plus a tax-free lump sum.
The pension is guaranteed for 15 years and payable for the lifetime of the member; • Death after retirement benefit equal to a lump sum of three (3) months pensionable basic earnings at time of retirement; • Death in service benefit of refund of contributions plus interest in addition to four (4) times member’s annual pensionable earnings at the time of death; • Disability benefit equal to 60% of pensionable earnings at time of disability for a fixed period, but not after age 60; • Spousal benefit of 50% of the pension the pensioner was in receipt of at the time of retirement and 65% for Trinmar pensioners after guaranteed period expires.
A full independent actuarial valuation of the Plans was carried out as at 2013 September 30 and revealed that the funding level of the PEPP was 107% whilst that of the SPP was 147%.

The aggregate market value of assets of the former Plans that now form the PEPP stood at $9,286,800 as at 2013 September 30 while that of the SPP stood at $1,754,300.
44 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 10 Retirement benefit asset/(obligation) 10.1 Employee benefits (continued) There are 2 self-administered Medical Plans for healthcare in respect of employees and retirees of the Company.
All employees are eligible for membership in the Petrotrin Employees Medical Benefit Plan and the Trinmar Plan, where the coverage includes major medical expenses, hospitalisation, dental and optical care.

All retirees are eligible for membership under the Petrotrin Retirees’ Medical Assistance Plan and the Trinmar Plan where the coverage includes limited medical expenses, hospitalisation for surgery only, dental and optical care.
Provision has been made in respect of these medical benefits due to retirees only.

No cover is provided to former deferred pensioners even after their pension comes into payment.

An updated valuation of all of the Plans’ assets and expected liabilities as at 2015 September 30, was carried out by independent actuaries in accordance with the requirements of IAS 19 revised.
This valuation is based on the most recent full actuarial valuation at 2013 September 30, rolled forward to reflect developments since that date which would have a significant effect on the defined benefit obligation and service cost and on up-to-date asset values.

Financial assumptions used in the 2013 valuation are revised to reflect prevailing current economic conditions while the demographic assumptions remain identical to those used in the latest full actuarial valuation.
The charge to the Profit and Loss includes current service cost, net interest on net retirement benefit/obligation, past service cost and administrative expenses.
Asset/(Obligation) in statement of financial position: Retirement benefit (obligation)/asset - Pension benefits Retirement benefit obligation - Medical benefits Expense recognised in profit or loss: Net pension cost Net benefit cost As at September 30 2014 2013 2015 (a) $ (28,500) $ 444,500 $ 476,000 (b) (2,969,100) (2,871,500) (2,604,500) $ (2,997,600) $ (2,427,000) $ (2,128,500) Year ended September 30 2015 2014 2013 (a) (b) $ (238,600) $ (241,400) $ (244,700) (217,400) $ (456,000) (199,800) (441,200) $ $ (182,900) (427,600) PETROTRIN ANNUAL REPORT 2015 45 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 10 Retirement benefit asset/(obligation) (continued) (a) Retirement benefit (obligation)/asset - pension benefits The amounts recognised in the consolidated statement of financial position for both plans are determined as follows: Present value of defined benefit obligation Fair value of Plan assets Surplus Effects of Asset Ceiling Net retirement benefit (obligation)/asset As at September 30 2015 $ (10,451,200) 10,845,800 2014 $ (10,421,200) 11,314,700 394,600 (423,100) $ (28,500) 893,500 (449,000) $ 444,500 2013 $ (10,296,500) 11,007,700 711,200 (235,200) 476,000 $ This (obligation)/asset represents the present value of the (increase)/reduction in future contributions, as advised by the actuaries.
Movement in present value of defined benefit obligation during the year: As at September 30 Defined benefit obligation at start of year $ (10,421,200) $ (10,296,500) 2015 2014 Current service cost Interest cost Members’ contributions Re-measurement: -Experience adjustments Benefits paid (261,100) (505,100) (83,500) 173,400 646,300 (265,500) (501,200) (85,600) 178,000 549,600 2013 $ (10,031,300) (256,400) (487,800) (82,900) 5,400 556,500 Defined benefit obligation at end of year $ (10,451,200) $ (10,421,200) $ (10,296,500) Movement in Fair Value of Plan assets during the year: As at September 30 2015 2014 2013 Fair Value of Plan assets at start of year $11,314,700 $11,007,700 $ 10,406,400 Interest income Return on Plan assets, excluding interest income Company contributions Members’ contributions Benefits paid Administrative expenses 555,700 (616,900) 160,700 83,500 (646,300) (5,600) 542,900 512,500 68,900 404,600 165,000 85,600 (549,600) (5,800) 163,400 82,900 (556,500) (5,600) Fair Value of Plan Assets at end of year $ 10,845,800 $ 11,314,700 $ 11,007,700 46 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 10 Retirement benefit asset/(obligation) (continued) (a) Retirement benefit(obligation)/asset - pension benefits (continued) Movement in the asset recognised in the consolidated statement of financial position: Retirement benefit asset at
 start of year Net pension cost Re-measurement recognised in other comprehensive income 2015 As at September 30 2014 2013 $ $ 444,500 (238,600) $ $ 476,000 $ 226,300 (241,400) $ (244,700) (395,100) 44,900 331,000 Company contributions paid 160,700 165,000 163,400 Retirement benefit (obligation)/asset at end of year $ (28,500) $ 444,500 $ 476,000 Contributions to post-employment benefit plans for the year ending 2016 September 30 are expected to be approximately $159,000.
The amounts recognised as part of administrative expenses in the consolidated statement of profit or loss was determined as follows: Year ended September 30 2015 2014 2013 Current service cost $ (261,100) $ (265,500) $ (256,400) Interest income on Plan assets Administrative expenses Net pension cost (Note 27) 28,100 $(5,600) (238,600) $ 29,900 $ (5,800) $ (241,400) 17,300 (5,600) $ (244,700) Re-measurements recognised in Other Comprehensive Income: Year ended September 30 2015 2014 2013 Experience gains/(losses) $ (443,500) $ 246,900 $ 410,000 Effect of asset ceiling Re-measurements recognised in other comprehensive income 48,400 (202,000) (79,000) $ (395,100) $ 44,900 $ 331,000 The actual return on the Plan assets was: Actual return on Plan assets $ 61,200 $ 611,800 $ 917,100 As at September 30 2014 2015 2013 PETROTRIN ANNUAL REPORT 2015 47 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 10 Retirement benefit asset/(obligation) (continued) (a) Retirement benefit (obligation)/asset - pension benefits (continued) The Plans’ assets are fully invested in a diversified general portfolio fund managed by the various Trustees.
Asset allocation is as follows: Locally listed equities Overseas equities Bonds Mortgages Mutual Funds Cash and cash equivalents Fair value of Plan assets at end of year As at September 30 2015 $ 3,597,800 1,594,900 5,051,600 12,100 95,600 493,800 $10,845,800 2014 $ 3,641,000 1,638,700 5,458,400 16,500 100,400 459,700 $11,314,700 2013 $ 3,507,600 1,503,500 5,059,800 22,200 97,400 817,200 $ 11,007,700 The principal actuarial assumptions used were as follows*: Discount rate Future salary increases * Percentages shown are per annum As at September 30 2015 5.00% 4.75% 2014 5.00% 4.75% 2013 5.00% 4.75% No allowance was made for increases to pensions in payment or deferment.
This is consistent with the basis used in previous years.

Any pension increases granted are thus treated as a once-off event and would give rise to a past service cost under IAS 19 in the year of implementation.

An allowance for future administrative expenses of 0.5% of pensionable earnings was assumed in the respective years.

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics.
Post-retirement mortality is obtained from the Standard PMA (80) and PFA (80) tables centred in year 2010 for current pensioners and 2020 for future pensioners.
These tables translate the average life expectancy in years and experience history of a pensioner retiring at age 60 as follows: Mortality assumptions: Life expectancy at age 60 for current pensioners in years Male Female Life expectancy at age 60 for current members aged 40 in years Male Female As at September 30 2014 21.0 25.1 21.4 25.4 2013 21.0 25.1 21.4 25.4 2015 21.0 25.1 21.4 25.4 48 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 10.
Retirement benefit asset/(obligation) (continued) (a) Retirement benefit (obligation)/asset - pension benefits (continued) Sensitivity Analysis The calculation of the defined benefit obligation is sensitive to the assumptions used.

The following table summarises how the defined benefit obligation as at 2015 September 30, would have changed as a result of a change in these assumptions.
1% pa higher $ 1% pa lower $ - Discount rate (1,048,600) 1,288,300 - Future salary increases 316,600 (278,400) An increase of one (1) year in the assumed life expectancies shown above would increase the defined benefit obligation at 2015 September 30, by $166,000.

The sensitivities were calculated by re-calculating the defined benefit obligations using the revised assumptions.
(a) Retirement benefit obligation - medical benefits Movement in Present Value of Retirement Benefit Obligation: Retirement benefit obligation at start of year $ (2,871,500) 2015 2014 $ (2,604,500) 2013 $ (2,378,900) As at September 30 Current service cost Interest cost Re-measurement: (76,400) (71,900) (141,000) (127,900) (66,000) (116,900) - Experience Adjustments 15,700 (160,700) (134,200) Benefits paid by Company (net of retiree contributions) Retirement benefit obligation at end of year 93,500 104,100 $ (2,969,100) $ (2,871,500) $ 91,500 (2,604,500) Reconciliation of Opening and Closing Balance Sheet Entries: Retirement benefit obligation at start of year Net benefit cost Re-measurements recognised in other comprehensive income Benefits paid by Company (net of retiree contributions) Retirement benefit obligation at end of year As at September 30 2015 2014 2013 $ (2,871,500) $ (217,400) (2,604,500) $ (199,800) (2,378,900) (182,900) 15,700 (160,700) (134,200) 104,100 $ (2,969,100) $ 93,500 (2,871,500) $ 91,500 (2,604,500) PETROTRIN ANNUAL REPORT 2015 49 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 10.
Retirement benefit asset/(obligation) (continued) (b) Retirement benefit obligation - medical benefits (continued) The amounts recognised as part of administrative expenses in profit or loss were determined as follows: 2015 Year ended September 30 2014 2013 Current service cost Interest on retirement benefit obligation Net benefit cost (Note 28) $ (76,400) $ (141,000) (217,400) $ $ (71,900) $ (127,900) (199,800) $ (66,000) (116,900) (182,900) Re-measurements recognised in Other Comprehensive Income: Experience gains/(losses) 2015 $ 15,700 Year ended September 30 2014 $ (160,700) $ 2013 (134,200) Summary of principal assumptions used were as follows*: Discount rate Medical expenses increases * Percentages shown are per annum.
Sensitivity Analysis As at September 30 2015 5.00% 5.75% 2014 5.00% 5.75% 2013 5.00% 5.75% The calculation of the defined benefit obligation is sensitive to the assumptions used.

The following table summarises how the defined benefit obligation as at 2015 September 30 would have changed as a result of a change in the assumptions used.
- Discount rate - Medical expenses increases 1% pa higher $ (404,000) 511,400 1% pa lower $ 519,100 (409,300) An increase of 1 year in the assumed life expectancies shown above would increase the defined benefit obligation at 2015 September 30 by $164,000.

The sensitivities were calculated by re-calculating the defined benefit obligations using the revised assumptions.
50 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 11.
Available-for-sale financial instruments La Brea Industrial Development Company Limited (LABIDCO) Colonial Life Insurance Company Limited (CLICO) Metal Industries Company Limited Lake Asphalt of Trinidad and Tobago (1975) Limited (LATT) As at September 30 2015 2014 2013 -- 2,132 190 -- -- 2,229 191 -- 3,983 2,060 192 1 $ 2,322 $ 2,420 $ 6,236 There were no disposals during the year and no impairment loss was recorded in the year ended 2015 September 30 (2014 and 2013: nil).
During the year ended 2015 September 30, the Group recovered $4,669 related to one of its investments, and in turn reversed the equivalent amount of previously recognised impairment losses.

These investments are not rated.

12.


Investment in joint venture World GTL Trinidad Limited (WGTL TL) $ -- 2015 2014 $ 1 2013 $ 1 As at September 30 At inception in 2006, WGTL TL was a jointly controlled entity between World GTL St Lucia Limited and Petrotrin, with common stock shareholding of 51% and 49% respectively.
Pursuant to the Guarantee Contribution Agreement of 2007 January 12, relating to the funding requirements for the Gas-to-Liquid plant, Petrotrin financed cost overruns which were to be borne by World GTL Inc. Due to significant increases in capital construction costs and the inability to meet project completion dates for the Gas-to-Liquids plant being constructed by WGTL TL, Petrotrin in its capacity as lender placed this jointly controlled entity in receivership on 2009 September 25.
The asset was fully impaired in the year ended 2009 September 30.

No additional impairment losses or reversals of previous impairment losses were recorded in the years ended 2010 September 30 to 2015 September.

No financial statements were received from WGTL TL for the years ending 2010 September 30 to 2015 September 30.

Therefore, Petrotrin’s share of losses/profits could not be determined.
On 2011 February 01, the Receiver published a notice advertising the sale of an unfinished Gas-to-Liquids plant and other assets of WGTL TL.

On 2010 February 24, Petrotrin commenced arbitration against the WGTL Parties in the International Court of Arbitration of the International Chamber of Commerce (the “ICC”) seeking the transfer of the common stock shares of WGTL TL to Petrotrin as required by the Guarantee Contribution Agreement.
On 2015 April 07 the Parties entered into a Settlement Agreement and on 2015 April 08 they requested that the Court (Southern District of New York) order entry of Consent Judgments confirming Final Arbitration Awards.

As a result WGTL TL is now a wholly owned subsidiary of Petrotrin.

The value of the shares owned by Petrotrin in WGTL TL has been reported at $1, until a valuation being undertaken by an independent consulting firm is completed.
PETROTRIN ANNUAL REPORT 2015 51 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 13.

Investment in Associate La Brea Industrial Development Company Limited As at September 30 2015 2014 2013 (LABIDCO) $ 32,582 $ 30,305 $ -- LABIDCO is principally engaged in the promotion and development of an industrial estate as well as marine infrastructure facilities at La Brea.
Petrotrin currently holds a 19% share of equity interest in this associate, and has significant influence through representation on the Board of the investee and participation in the policy making process.

The Group recognised a share of profit of $2,376 during the year ended 2015 September 30 (2014: $26,407; 2013: $nil).

14.
14.

Net Deferred Income Tax Assets/(Liabilities) Deferred income taxes are calculated on all temporary differences under the liability method using tax rates of 55% (Exploration and Production Operations (E&P)) and 50% (Refining and Marketing Operations (R&M)).
The movement of the deferred income tax account is as follows At start of year Credit for the year: Recognised in profit or loss (Note 32) Recognised in other comprehensive income At end of year As at September 30 2015 3,391,901 $ 2014 1,866,668 $ 2013 $ 98,683 892,157 200,513 4,484,571 $ 1,467,333 57,900 3,391,901 $ 1,873,613 (105,628) 1,866,668 $ Deferred income tax assets are recognised to the extent that realisation of the related tax benefit is probable.
52 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 14.
Net Deferred Income Tax Assets/(Liabilities) (continued) Deferred income tax assets and liabilities in the statement of financial position, and the deferred tax credit to profit or loss, are attributable to the following items: As at 2014 September 30 (Charged)/Credited As at 2015 September 30 Other comprehensive income Profit/(loss) $ $ $ $ 1,522,355 3,840,535 98,787 250,372 (227,900) 59,879 (8,298) (1,452,229) 3,751 (3,740) 41,169 -- -- -- 208,811 1,573,936 2,388,306 102,538 246,632 22,080 8,872,421 1,829,505 -- 10,701,926 14,356,570 478,335 200,513 15,035,418 Deferred income tax assets Retirement benefit obligation Provision for abandonment Vacation leave payable Interest payable Retirement benefit asset Tax losses carried forward Deferred income tax liabilities Accelerated tax depreciation (E&P) (2,847,128) Accelerated tax depreciation (R&M) (8,061,015) 606,356 (233,318) -- -- (2,240,772) (8,294,333) Accelerated tax depreciation (Trintomar) Exchange gain ( 8) (4,122) -- (4,130) (56,518) (10,964,669) 44,906 413,822 -- -- (11,612) (10,550,847) Net deferred income tax assets 3,391,901 892,157 200,513 4,484,571 PETROTRIN ANNUAL REPORT 2015 53 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 14.
Net Deferred Income Tax Assets/(Liabilities) (continued) As at 2013 September 30 (Charged)/Credited As at 2014 September 30 Other comprehensive income Profit/(loss) $ $ $ $ 1,390,803 3,031,604 97,119 244,770 6,777,907 11,542,203 (2,251,639) (7,171,321) (254,184) 1,609 (9,675,535) 51,202 808,931 1,668 5,602 2,094,514 2,961,917 (595,497) (889,694) 48,734 (58,127) (1,494,584) 80,350 -- -- -- -- 80,350 -- -- (22,450) -- (22,450) 1,522,355 3,840,535 98,787 250,372 8,872,421 14,584,470 (2,847,136) (8,061,015) (227,900) (56,518) (11,192,569) Deferred income tax assets Retirement benefit obligation Provision for abandonment Vacation leave payable Interest payable Tax losses carried forward Deferred income tax liabilities Accelerated tax depreciation (E&P) Accelerated tax depreciation (R&M) Retirement benefit asset Exchange gain Net deferred income tax assets 1,866,668 1,467,333 57,900 3,391,901 As at 2012 September 30 (Charged)/Credited As at 2013 September 30 $ Profit/(loss) $ Other comprehensive income $ $ 1,270,333 3,607,680 92,549 267,308 4,661,743 9,899,613 (3,152,539) (6,521,806) (120,844) (5,741) (9,800,930) 98,683 297,224 (576,076) 4,570 (22,538) 2,116,164 1,819,344 (176,754) -- -- -- -- (176,754) 1,390,803 3,031,604 97,119 244,770 6,777,907 11,542,203 900,900 -- -- (649,515) (204,466) 71,126 -- 71,126 (105,628) 7,350 54,269 1,873,613 (2,251,639) (7,171,321) (254,184) 1,609 (9,675,535) 1,866,668 Deferred income tax assets Retirement benefit obligation Provision for abandonment Vacation leave payable Interest
 payable Tax losses carried forward Deferred income tax liabilities Accelerated tax depreciation (E&P) Accelerated tax depreciation (R&M) Retirement benefit asset Exchange gain/(loss) Net deferred income tax assets 54 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 15.
Income taxes recoverable As at September 30 2015 2014 2013 $ 530,683 $ 530,683 $ 530,683 These amounts represent overpayments of Petroleum Profits Taxes resulting from re-filing of tax returns to claim previously un-utilised tax losses.

16.
16.

Cash in escrow - shareholder As at September 30 2015 2014 2013 $ 149,384 $ 109,858 $ 84,839 The new land licences agreements effective in the year 2006, contain a clause requiring Petrotrin to establish an escrow account at an approved financial institution in the name of the Minister of Energy and Energy Affairs.
Cash reserves, calculated based on production volumes, are to be accumulated in the account for use as a contingency fund for remediation of pollution arising from Petroleum operations carried out under the licenses, as well as the eventual decommissioning of wells and facilities in the licensed areas.

The Minister has sole discretion to access these funds in the event that Petrotrin fails to effect any environmental clean-up, properly abandon wells or decommission facilities.
However, once the Company fulfils all decommissioning obligations to the satisfaction of the Minister, and upon determination of the license, the Minister shall return all existing funds in the escrow account to Petrotrin.

17.
Loans receivable (a) Point Fortin LNG Exports Limited (b) World GTL Trinidad Limited (WGTL TL) in receivership of which: Current portion Non-current portion At end of year As at September 30 2015 -- $ -- -- $ 2014 -- $ -- -- $ 2013 $ 1,929 -- 1,929 $ $ $ -- -- -- $ $ -- -- -- $ $ 1,252 677 1,929 Beginning of year Disbursements Impairment loss (Note 28) Reversal of previous impairment losses (Note 28) Recoveries Exchange differences End of year $ -- 5,300 (5,300) -- -- -- $ -- $ $ 1,929 5,068 (5,068) 88 (2,013) (4) 3,386 5,173 (5,173) 420 (1,877) -- $ -- $ 1,929 PETROTRIN ANNUAL REPORT 2015 55 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 17.
Loans receivable (continued) (a) This amount represents a non-interest bearing loan, which was Petrotrin’s share (19.5%) of Point Fortin LNG Exports Limited’s (PFLE) funding request of its shareholders.
Under the PFLE Shareholders/ Affiliates Facility Agreement of 2002 May 01, Petrotrin along with the other shareholders of PFLE agreed to each make available a revolving working capital facility of an amount up to a total of US$10,000 (TT$63,583) for an initial period to 2009 June 30, with any outstanding amounts being repayable in full by 2009 December.

This loan was fully repaid in 2014 July.


(b) At a meeting held on 2009 November 18 the Board of Directors agreed that all funds advanced by Petrotrin to the Receiver will form a secured loan between Petrotrin and the Receiver, at an interest rate of 10.37% for a term of three (3) years with a one (1) year moratorium on principal repayment.

A full provision for impairment was recognised on this loan receivable at 2010 September 30 (US$42,452/ TT$268,809*).
Additional disbursements of TT$5,300 were made in the year ended 2015 September 30 (2014: TT$5,068; 2013: TT$5,173).

A full provision was also made for these amounts.

* This US$ amount has been converted to TT$ at the rate prevailing at the date of the transaction.

18.
18.

Inventories As at September 30 2015 2014 2013 Materials and supplies $ 673,725 $ 738,642 $ 599,562 Less: provision for obsolescence Crude oil Refined products (62,474) 611,251 532,109 (69,724) 668,918 (64,663) 534,899 1,250,575 1,152,417 1,074,591 2,183,738 2,705,017 $ 2,217,951 $ 4,103,231 $ 4,392,333 The Group recognised an increase of $8,007 (increase of $5,061 in 2014 and a decrease of $8,545 in 2013) in the provision for obsolescence of its inventories.
56 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 19.
Receivables and prepayments Trade receivables Less: provision for impairment of trade receivables Related Parties Less: provision for impairment of receivables Other receivables Less: provision for impairment of other receivables 2015 $ 1,037,434 (821) 1,036,613 As at September 30 2014 $ 3,457,277 (62,120) 3,395,157 2013 $ 4,192,596 (115,082) 4,077,514 1,179,268 (68,908) 1,110,360 3,131,479 (194,783) 2,936,696 5,724,400 (374,359) 5,350,041 299,168 (181,015) 118,153 823,476 (147,056) 676,420 806,089 (149,904) 656,185 Trade and other receivables excluding prepayments and taxes Taxes recoverable Prepayments Trade and other receivables including prepayments and 2,265,126 15,598 7,008,273 3,534 10,083,740 2,466 305,717 330,065 284,420 taxes $ 2,586,441 $ 7,341,872 $ 10,370,626 20.
Cash and cash equivalents Cash at bank and in hand Short-term bank deposits As at September 30 2015 2014 2013 $ 488,666 $ 332,458 $ 372,587 1,243,252 1,475,842 1,923,444 $ 1,731,918 $ 1,808,300 $ 2,296,031 The weighted average effective interest rate on short-term deposits was 0.21% (2014: 0.26% ; 2013 0.18%).

These deposits have an average maturity of one day (2014: one and a half (1.5) days; 2013 : one (1) day).
PETROTRIN ANNUAL REPORT 2015 57 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 21.

Share capital As at September 30 2015 2014 2013 Authorised 300,000,000 ordinary shares of no par value Issued and fully paid 300,000,000 ordinary shares of no par value $ 2,272,274 $ 2,272,274 $ 2,272,274 22.
Borrowings The carrying amounts of borrowings are stated below: Gasoline Optimisation Project /Ultra Low Sulphur Diesel Plant Gasoline Optimisation Project Other As at September 30 2015 2014 2013 (a) (a) (b) $ 5,349,063 $ 5,351,312 2,757,435 3,155,132 62,347 62,411 $ 5,395,013 3,580,804 62,711 Total borrowings (at fixed rates) $ 8,168,845 $ 8,568,855 $ 9,038,528 of which: Current portion Non-current portion $ $ 454,185 7,714,660 $ 454,479 $ 8,114,376 458,016 8,580,512 8,168,845 $ 8,568,855 $ 9,038,528 Maturity of non-current borrowings Later than 1 and less than 3 years $ 785,559 $ 785,890 $ 792,259 Between 3 and 4 years 5 years and over 5,742,877 1,186,224 7,714,660 $ $ 393,910 6,934,576 8,114,376 $ 397,036 7,391,217 8,580,512 Weighted average effective interest rates: Year ended September 30 - bank borrowings (medium and long-term) 2015 8.48% 2014 8.36% 2013 8.26% 58 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 22.
Borrowings (continued) (a) Gasoline Optimisation Project/ Ultra Low Sulphur Diesel Plant Description US$850 Million US$750 Million Carrying value at 2015 September 30 Carrying value at 2014 September 30 Carrying value at 2013 September 30 Currency TT$5,349,063 TT$5,351,312 TT$5,395,013 USD TT$2,757,435 TT$3,155,132 TT$3,580,804 USD Type of Notes offered by Petrotrin Senior Unsecured Notes under 144 A/ Reg S Senior Unsecured Notes under 144 A/ Reg S Ratings Date of loan Fixed coupon rate Yield Tenor Moratorium Interest payments Ba1/BB+ by Moody’s Investor Services and Standard and Poor’s respectively Ba1/BB+ by Moody’s Investor Services and Standard and Poor’s respectively 2009 August 14 9.75% per annum 7.28% 10 years -- 2007 May 08 6.00% per annum 7.46% 15 years 3 years on principal repayments Payable semi-annually on August 14 and February 14 commencing on 2009 August 14 Payable semi-annually on May 08 and November 08 commencing 2007 May 08 Principal repayments Bullet 24 equal semi-annual instalments on each May 08 and November 08 of US$31,250/ TT$200,503 beginning November 08,2010 Maturity Redemption 2019 August 14 2022 May 08 Subject to optional redemption Subject to optional redemption The proceeds of the Notes were used to finance the Gasoline Optimisation Project (GOP), and to construct the Ultra Low Sulphur Diesel (ULSD) Plant.
The GOP was an extensive upgrade of the refinery, which, upon implementation will enable Petrotrin to produce increased volumes of higher quality environmentally satisfactory gasoline.

The GOP includes the addition of an upgraded Fluidised Catalytic Cracking 0Unit (FCCU), a Naphtha Pre-Fractionation Unit (PFU), an Isomerisation Unit, a Continuous Catalytic Regeneration Platformer Unit (CCR), an Alkylation Unit/Acid Plant and all associated utilities and offsites.
All plants achieved commercial production during 2013.

The ULSD Plant is a high pressure, catalytic, hydrotreating process utilising the SynSat licensed process technology.

Upon implementation, Petrotrin will produce improved quality diesel that will meet new local and international quality specifications.
In addition, the new ULSD Plant will provide additional value as it would enable our refinery to process a broader range of crude oils, and can result in the substitution of relatively expensive crudes with some that are less expensive, improving overall margins.

Mechanical completion on this project is estimated at 2016 June.

Standard Investment Grade covenants apply including limitations on liens, limitations on sale and leaseback transactions and limitations on consolidation, merger and sale of assets.
PETROTRIN ANNUAL REPORT 2015 59 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 22.

Borrowings (continued) (a) Gasoline Optimisation Project/ Ultra Low Sulphur Diesel Plant (continued) Petrotrin is required to furnish to the Trustee and Holders of the Notes, its quarterly and annual audited financial statements.
The former is due within 60 calendar days after the end of each of the first three financial quarters and the latter within 150 calendar days after the end of each fiscal year.

Failure to comply with the above reporting requirement does not constitute an event of default in accordance with loan documentation.
(b) Other The National Gas Company of Trinidad and Tobago Limited As at September 30 2015 2014 2013 $ 62,347 $ 62,411 $ 62.711 This represents the balance owed to NGC by Trintomar in respect of a Shareholders Loan provided to meet the shortfall in funding required to complete the Pelican Development Project back in 1993.

This is an interest free, unsecured loan with no fixed terms of repayment.
Whilst the lenders have agreed not to request repayment of any part of this loan balance within the foreseeable future, the loan is still repayable on demand.

23.
Provisions Decommissioning costs At start of year Revised costs estimates Charge to profit or loss: - Finance charge (Note 28) - Utilisation Translation differences At end of year of which: Current portion Non-current portion At end of year 2015 $ 7,163,047 (2,976,663) 338,652 (5,257) (15,969) As at September 30 2014 $ 5,698,825 1,178,762 2013 $ 6,772,205 (1,484,448) 344,987 (2,954) (56,573) 411,621 (2,774) 2,221 $ 4,503,810 $ 7,163,047 $ 5,698,825 2,519 4,501,291 4,503,810 13,223 7,149,824 7,163,047 13,752 5,685,073 5,698,825 This represents Management’s best estimated cost of dismantling exploration and production assets at the end of the producing lives of the fields and the refinery at the end of its useful life and includes the costs of environmental remediation.
The estimated decommissioning cost at the end of the producing lives of fields is reviewed annually and is based on engineering estimates and reports.

Provision is made for the estimated cost of decommissioning at the reporting date.

The provision has been estimated using existing technology, at current prices, and discounted using a risk adjusted rate of 6.00% (2014: 4.75%; 2013: 6.15%) per annum.
The reduction in decommissioning costs in the year ended 2015 September 30 is mainly due to a higher discount rate applied over extended producing lives of the fields ($2,815,761), combined with a reduction in cost structures ($160,882).

The payment dates of total expected future decommissioning costs are uncertain but are currently anticipated to be between 2017 and 2065.

60 PETROTRIN ANNUAL REPORT 2015 Petrotrin 24.
Trade and other payables Trade payables Due to related parties Benefits due to employees Accrued expenses Accrued interest Other payables Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 2015 $ 755,400 143,265 716,620 1,177,443 157,343 301,738 As at September 30 2014 2013 $ 1,141,084 177,134 640,685 1,170,024 163,192 193,983 $ 1,595,051 189,800 596,656 1,564,862 165,399 203,707 Trade and other payables excluding statutory liabilities 3,251,809 3,486,102 4,315,475 Due to Government of Trinidad and Tobago - Royalties - Taxes other than income taxes Trade and other payables including statutory liabilities 240,587 104,043 331,112 118,176 310,150 172,613 $ 3,596,439 $ 3,935,390 $ 4,798,238 25.
Short-term loans Short-term loans $ 4,984,394 $ 5,565,006 $ 3,979,968 Short-term loans during the year were unsecured with effective interest rates ranging from 1.03% to 2.39% (2014: 0.97% to 1.63%: 2013: 1.16% to 1.85%) per annum.

They had varying maturity dates of 59 to 180 days (2014: 88 to 209 days; 2013: 119 to 180 days).

26.
Revenue Refined products sales $ 18,496,292 $ 27,274,110 $ 30,178,270 Year ended September 30 2015 2014 2013 Natural gas sales Crude oil sales Royalty income Natural gas liquids sales Other revenue 489,302 269,105 456,322 39,626 999 714,297 444,605 737,235 79,421 976 $ 19,751,646 $ 29,250,644 $ 459,066 494,308 714,843 63,626 1,292 31,911,405 PETROTRIN ANNUAL REPORT 2015 61 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 27.
Other operating income Year ended September 30 Marine income Processing fees Income from utilities Interest on receivables Other income 28.
Operating costs by nature 2015 2014 2013 $ 53,783 $ 51,329 $ 4,909 7,137 72,237 54,624 2,902 44,556 153,992 53,763 $ 192,690 $ 306,542 $ 46,994 2,644 48,209 152,269 53,328 303,444 (a) The following items are included in cost of sales; administrative expenses; marketing expenses and other operating expenses from continuing operations: Year ended 2015 September 30 Cost of sales Administrative expenses Marketing expenses $ $ $ Other operating expenses $ Total $ 11,588,957 1,422,327 -- -- -- -- 1,420,981 1,750,898 1,838,584 (495,219) 1,200,081 795,634 61,739 -- -- -- -- -- -- -- -- 430,752 13,669 2,626 -- -- -- 68,321 -- -- -- -- 217,400 -- 66 29,548 8,007 238,600 -- -- -- -- -- -- -- -- -- -- -- -- 11,588,957 1,422,327 2,278,354 1,750,898 1,838,584 7,513 (487,706) 14,905 1,214,986 -- (16) -- 447,047 (16) 217,400 26,026 26,026 -- -- -- -- 68,387 29,548 8,007 238,600 28,162 (32,941) 54,059 3,389 52,669 19,253,844 1,269,983 118,424 51,817 20,694,068 Purchases Production taxes Employee benefits expense (excluding retirement benefits) (Note 30) Production and refining expenses Movement in inventories Amortisation of intangible assets (write-back)/charge(Note 7) Depreciation (Note 6) Operating lease rental Gain on disposal of property, plant and equipment (Note 37) Net benefit cost (Note 10) Loss on foreign currency exchange Charge for bad and doubtful debts (Note 4.1 (b)) Directors and key management remuneration (Note 35) Increase in provision for inventory obsolescence (Note 18) Net pension cost (Note 10) Other
 expenses/(income) Total 62 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 28.
Operating costs by nature (continued) Year ended 2014 September 30 Cost of sales Administrative expenses Marketing expenses Other operating expenses Total $ $ $ $ $ 18,670,197 2,994,485 -- -- -- -- -- 18,670,197 -- 2,994,485 1,373,705 762,911 121,264 -- 2,257,880 Purchases Production taxes Employee benefits expense (excluding retirement benefits) (Note 30) Production and refining expenses 1,609,710 Movement in inventories Amortisation of intangible assets (Note 7) Depreciation (Note 6) Operating lease rental Loss on disposal of property, plant and equipment (Note 37) Net benefit cost (Note 10) Gain on foreign currency exchange Charge for bad and doubtful debts (Note 4.1 (b)) Directors and key management remuneration (Note 35) Decrease in provision for inventory obsolescence (Note 18) Net pension cost (Note 10) Other expenses Total 423,121 943,059 741,460 451,767 -- -- -- -- 199,800 -- 164,187 237 -- -- -- 11,115 5,061 241,400 -- -- -- -- -- -- -- -- -- 1,609,710 -- 423,121 9,600 952,659 13,874 755,334 9,926 4,962 -- 466,655 -- -- -- -- -- -- -- 19,319 19,319 -- 199,800 (41,711) (41,711) -- -- -- -- 164,424 11,115 5,061 241,400 26,256 22,936 97,628 724 147,544 27,397,947 1,253,386 223,854 1,806 28,876,993 PETROTRIN ANNUAL REPORT 2015 63 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 28.
Operating costs by nature (continued) Year ended 2013 September 30 Cost of sales Administrative expenses Marketing expenses Other operating expenses Total $ $ $ $ $ Purchases Production taxes Employee benefits expense (excluding retirement benefits) (Note 30) 20,524,093 3,097,212 -- -- -- -- 1,415,815 726,499 60,561 Production and refining expenses 1,582,302 -- -- -- -- -- -- -- -- Movement in inventories Amortisation of intangible assets (Note 7) Depreciation (Note 6) Operating lease rental Loss on disposal of property, plant and equipment (Note 37) Net benefit cost (Note 10) Gain on foreign currency exchange Charge for bad and doubtful debts (Note 4.1 (b)) Directors and key management remuneration (Note 35) Decrease in provision for inventory obsolescence (Note 18) Net pension cost (Note 10) 578,444 1,281,994 907,124 297,928 -- -- -- 180,471 5 182,900 -- (927) -- 9,504 (9,993) -- 1,448 244,700 -- -- -- -- -- -- -- -- -- -- -- -- 20,524,093 3,097,212 2,202,875 1,582,302 578,444 7,795 1,289,789 12,421 919,545 5,775 5,780 -- 182,900 (4,548) (4,548) -- -- -- -- 179,544 9,504 (8,545) 244,700 123,411 16,706 902 -- 315,536 Other expenses/(income) 77,751 53,373 (7,124) (589) Total 29,933,141 1,234,208 54,339 20,854 31,242,542 64 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 29.
Impairment (write-back)/losses related to investments Impairment loss related to loans receivable: - WGTL TL in receivership Reversal of previous impairment losses: - CLICO - PFLE - LATT Year ended September 30 2015 2014 2013 18 $ 5,300 5,300 $ 5,068 5,068 $ 20 (463) 5,173 5,173 (174) (420) -- (4,669) $ (4,649) $ (88) (14,005) (14,556) -- $ (594) Net impairment losses/(write-back) $ 651 $ (9,488) $ 4,579 30.
Employee benefits expense (excluding retirement benefits) Year ended September 30 2015 2014 2013 Salaries and wages benefits Allowances Overtime Other personnel costs Medical services Travel plan Voluntary Selective Separation Plan Housing aid Savings plan $ 1,501,918 220,966 280,560 40,953 92,085 22,590 -- 19,531 33,774 $ 1,482,686 199,564 340,597 37,408 61,053 23,534 387 20,714 31,242 National Insurance 65,977 60,695 $ 1,443,994 191,225 319,608 47,523 69,067 26,571 1,735 20,819 33,128 49,205 31.
Finance income and costs - Bank borrowings - Finance charge on decommissioning costs (Note 23) Finance costs Finance income: $ 2,278,354 $ 2,257,880 $ 2,202,875 $ (619,171) $ (654,206) $ (667,312) (338,652) $ (957,823) (344,987) (411,638) $ (999,193) $ (1,078,950 - Interest on short-term investments Finance income and costs 2,644 $ (955,179) $ 3,228 (995,965) $ 2,410 (1,076,540)) In the year ended 2015 September 30, the Group incurred interest on borrowings of $697,300 (2014: $717,647; 2013: $743,554), of which $78,129 (2014: $63,441;2013: $59,799) was capitalised as interest on general borrowings and $219,205 (2014:$220,300; 2013:$221,205) capitalised as interest on the ULSD Project.
(See Notes 6 and 7).

PETROTRIN ANNUAL REPORT 2015 65 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 32.
Tax (a) Amounts recognised in profit or loss Year ended September 30 2015 2014 2013 Tax (benefit)/expense: Current tax $ 11,943 $ 1,388,796 $ 1,749,096 Deferred income tax (892,157) (1,467,333) (1,873,613) The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the basic tax rate applicable to profits as follows: $ (880,214) $ (78,537) $ (124,517) Loss before tax Tax calculated at a rate of 55% - Expenses not deductible for tax purposes - Income not subject to tax - Effect of investment tax credit (uplift) - Prior year tax adjustment - PPT - R&M deferred taxes rate reduction - Difference due to translation - Under (over) provision of prior year income taxes Year ended September 30 2015 $ (1,703,184) 2014 $ (279,877) 2013 $ (108,812) $ 935,471 $ (13,905) 425 126,387 (11,750) (146,444) (27,725) 153,932 (24,923) 6,395 175,305 (14,558) (143,317) (44,652) $ 59,848 (26,101) 81,246 239,996 (9,042) (135,621) (3,984) 17,755 (29,645) (81,825) $ 880,214 $ 78,537 $ 124,517 (b) Amounts recognised in other comprehensive income: Actuarial gains/(losses) on retirement benefit (obligation)/asset – pension benefits (395,100) 44,900 331,000 Actuarial (losses)/gains on retirement benefit obligation – medical benefits 15,700 (160,700) (134,200) Income tax (expense)/benefit on actuarial gains/ (losses) 200,513 57,900 (105,628) 66 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements
 (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 33.
Contingent liabilities (a) Housing loan guarantee The Group has guaranteed mortgage-housing loans amounting to approximately $6,320 (2014: $7,052; 2013: $8,076) made by various financial institutions to its employees participating in the housing aid scheme operated by the Company.

(b) Letter of credit The Group has an outstanding letter of credit facility with a financial institution for $131,821/US$20,775 (2014: $133,029/US$20,922; 2013: $133,257/US$20,758) which expired on 2015 December 31.
This credit facility was established to meet Petrotrin’s 15% share of its abandonment liability with respect to its TSP Joint Venture.

(c) Litigation Contractors’ claims against the Group amounted to $46,668(2014: $43,715; 2013: $330)).

There are a number of other legal claims against the Group amounting to $29,132 (2014: $30,776; 2013: $29,316 )) in the ordinary course of business, including employment and pollution.
At present, it is not possible to predict the outcome of such legal proceedings; however, the Group believes that they will be resolved with no material impact on Group operations, financial position or liquidity.

(d) Customs bonds Contingent liabilities of the Group in respect of custom bonds amounted to approximately $3,308 (2014: $2,528; 2013: $3,483).
(e) Severance payments The Group has several union agreements, which provide for severance payments on the retrenchment of any member who has one or more years of service.

If and when such retrenchment occurs the Group shall negotiate with the union the amount of severance to be paid which will be in addition to any other benefits to which the employee may be entitled.

No provision has been made for such a contingent liability in these consolidated financial statements.
(f) Financial support guarantee Further to a letter of guarantee dated 1999 September 23, as the major shareholder in Trintomar with respect to abandonment liabilities, the Group has provided a guarantee of financial support in the event Trintomar cannot meet its normal operating commitment.
PETROTRIN ANNUAL REPORT 2015 67 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 34.
Commitments (a) Capital commitments Capital expenditure contracted for at the reporting date but not yet incurred is as follows: Property, plant and equipment $ 1,917,926 $ 1,559,888 $ 786,348 As at September 30 2015 2014 2013 (b) Operating lease commitments – where the Group is the lessee There were no operating lease commitments at 2015 September 30 (2014 and 2013: $nil) The lease expenditure charged to the profit or loss during the year is disclosed in Note 27.
(c) Sales commitments The Group has entered into long-term sales contracts with a number of its customers.

At the reporting date, these amounted to approximately $3,095,739 (2014: $7,127,027; 2013 $6,578,128).

This is for the delivery of contracted volumes.

The selling price used to value the commitment is a formula based on Platt’s reference price, which is then forecasted based on Petroleum Institute Research Associates forecasts.
Sales price at the actual date of sale is based on the pricing formula referenced to the Platt’s posting.

(d) Purchases commitments There were no purchases commitments at 2015 September 30 (2014 and 2013: nil).

68 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 35.
Related party transactions In the ordinary course of its business Petrotrin enters into transactions concerning the exchange of goods, provision of services and financing with affiliated companies and subsidiaries as well as with entities directly and indirectly owned or controlled by the Government of the Republic of Trinidad and Tobago.

Most significant transactions concern: • Sale of refined products to Trinidad and Tobago National Petroleum Marketing Company Limited.
• Purchase of natural gas from The National Gas Company of Trinidad and Tobago Limited.

• The exploration for and production of crude oil and natural gas through joint arrangements.
The following is a description of trade and financing transactions with related parties: Name of Company/Equity The Government of the Republic of Trinidad and Tobago (GORTT) -Taxes and royalties -Taxes other than income taxes Entities under common control Trinidad and Tobago National Petroleum Marketing Company Limited The National Gas Company of Trinidad and Tobago Limited Gross receivables $ As at 2015 September 30 Payables Commitments $ $ -- 78 1,833,212 103,660 884,966 (42) 254 84,164 -- -- -- -- The Government of the Republic of Trinidad and Tobago (GORTT) - Taxes and royalties - Other Entities under common control Trinidad and Tobago National Petroleum Marketing Company Limited The National Gas Company of Trinidad and Tobago Limited Year ended 2015 September 30 Cost Revenue Goods $ Services $ Goods $ Services $ 1,229,621 224,363 -- -- -- -- 14,597 324,233 -- -- 4,425,109 9,271 -- -- PETROTRIN ANNUAL REPORT 2015 69 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 35.
Related party transactions (continued) Name of Company/Equity Gross receivables $ Payables Commitments $ $ The Government of the Republic of Trinidad and Tobago (GORTT) -Taxes and royalties - Taxes other than income taxes Entities under common control Trinidad and Tobago National Petroleum Marketing Company Limited The National Gas Company of Trinidad and Tobago Limited Joint ventures World GTL Trinidad Limited -- 115 5,487,119 116,978 2,788,650 231 175 36,200 92,931 -- -- -- -- -- -- Year ended 2014 September 30 Cost Revenue Goods $ Services $ Goods $ Services $ -- -- 4,039,426 370,342 -- -- -- -- 11,176 297,832 -- -- -- 6,719,452 7,906 -- 17,784 -- -- The Government of the Republic of Trinidad and Tobago (GORTT) - Taxes and royalties - Taxes other than income taxes Entities under common control Trinidad and Tobago National Petroleum Marketing Company Limited The National Gas Company of Trinidad and Tobago Limited Joint venture World GTL Trinidad Limited -- 70 PETROTRIN ANNUAL REPORT 2015 Petrotrin 35.
Related party transactions (continued) Name of Company/Equity The Government of the Republic of Trinidad and Tobago (GORTT) -Taxes and royalties - Taxes other than income taxes Entities under common control Trinidad and Tobago National Petroleum The National Gas Company of Trinidad and Tobago Limited Joint ventures World GTL Trinidad Limited Point Fortin LNG Exports Limited The Government of the Republic of Trinidad and Tobago (GORTT) - Taxes and royalties - Taxes other than income taxes Entities under common control Trinidad and Tobago National Petroleum Marketing Company Limited The National Gas Company of Trinidad and Tobago Limited Joint venture World GTL Trinidad Limited -- Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) As at 2013 September 30 Payables $ Commitments $ Gross receivables $ -- 84 7,758,207 171,465 5,334,532 -- 121 50,149 -- -- -- -- 75,758 1,929 -- -- 5,064 -- Year ended 2013 September 30 Cost Revenue Goods $ Services $ Goods $ Services $ -- -- 4,516,856 358,192 -- -- -- -- 11,176 310,405 -- -- -- 7,047,303 9,249 -- 14,943 -- -- PETROTRIN ANNUAL REPORT 2015 71 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 35.
Related party transactions (continued) Compensation of directors and key management personnel: Compensation of persons with responsibility for key positions in planning, direction and control functions of the Group, including executive officers (key Management personnel) consist of the following: Year ended September 30 2015 2014 28,708 $ 10,280 $ 2013 8,833 840 29,548 $ 835 11,115 $ 671 9,504 Short-term employees benefits Long-term employees benefits $ $ 36.
Interest in joint operations The Company has a shared control in the following joint operations which are all based in Trinidad and Tobago: As at September 30 2015 Effective Interest 2014 Effective Interest 2013 Effective Interest 19.50% 35.00% 30.00% 40.00% 30.00% 16.00% 27.50% 25.00% 15.00% 20.00% 20.00% 10.00% 15.00% 35.00% 35.00% 20.00% -- -- 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 19.50% 35.00% -- 40.00% 30.00% 16.00% 27.50% 25.00% 15.00% 20.00% 20.00% 10.00% 15.00% 35.00% 35.00% 20.00% 30.00% 30.00% 20.00% 20.00% 20.00% -- -- -- 19.50% 35.00% -- 40.00% 30.00% 16.00% 27.50% 25.00% 15.00% 20.00% 20.00% 10.00% 15.00% 35.00% 35.00% 20.00% 30.00% 30.00% 20.00% 20.00% 20.00% -- -- -- NCMA Block 9 Unitisation – Offshore Central Block East Brighton Block Moruga West Point Ligoure, Guapo Bay, Brighton Marine (PGB) South East Coast Consortium South West Peninsula Parrylands ‘E’ Block Teak, Samaan, Poui (TSP) Block 1a Block 1b Block 22 Block 3A Galeota Guayaguayare Shallow Guayaguayare Deep Block 2ab Mayaro/Guayaguayare NCMA 2 NCMA 3 NCMA 4 Rio Claro Block Ortoire Block St. Mary’s Block 72 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 36.
Interest in joint operations (continued) These joint operations are involved in the exploration for and production of crude oil and natural gas.

They represent unincorporated, jointly controlled operations.

The Company’s interest in the assets, liabilities and expenditures of these ventures are included in the relevant components of the Company’s financial statements.
The following table sets out summarized financial data of the Company’s share of the assets and liabilities and material revenue and expenses of these jointly controlled operations.
These amounts are included in the Company’s statement of financial position and profit or loss and other comprehensive income: Block 9 – Offshore Teak, Samaan, Poui (TSP) Joint operations Central Block South East Coast Consortium As at 2015 September 30 Other Total $ $ $ $ $ $ 536,942 83,096 -- 19,952 374,850 54,904 -- 66,563 194,708 17,925 13,145 19,899 173,429 64,366 41,157 1,251 253,339 1,533,268 5,601 225,892 4,840 13,136 59,142 120,801 Year ended 2015 September 30 398,159 272,045 118,744 205,640 (373,535) (305,005) (127,477) (124,628) 20,063 (12,526) 1,014,651 (943,171) 17,043 15,630 (12,246) (69,567) (7,830) (56,970) Assets: Property, plant and equipment Current assets Liabilities: Current liabilities Commitments Revenue Cost of Sales Income tax expense Assets: $ $ $ $ $ $ As at 2014 September 30 Property, plant and equipment Current assets Liabilities: Current liabilities Commitments 773,073 108,164 -- 23,511 425,522 71,235 242,297 18,699 -- 49,247 36,220 15,194 108,943 44,740 98,401 3,631 193,923 6,748 1,743,758 249,586 6,081 9,500 140,702 101,083 Year ended 2014 September 30 Revenue Cost of Sales Income tax expense 605,975 452,655 165,738 (402,619) (350,531) (146,196) 257,231 (90,565) 55,053 1,536,652 (16,086) (1,005,997) (150,627) (104,095) (81,273) (118,942) (35,366) (490,303) PETROTRIN ANNUAL REPORT 2015 73 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 36.
Interest in joint operations (continued) Block 9 – Offshore Teak, Samaan, Poui (TSP) Joint operations Central Block South East Coast Consortium As at 2013 September 30 Other Total Assets: $ $ $ $ $ $ Property, plant and equipment Current assets Liabilities: 940,471 267,665 296,361 140,151 69,936 29,491 Current liabilities -- -- Commitments 53,407 52,544 41,294 19,035 88,136 68,413 78,326 4,674 175,926 1,768,559 5,501 313,492 20,031 12,462 139,651 142,122 Year ended 2013 September 30 Revenue 365,449 474,397 131,208 322,353 314,555 1,607,962 Cost of Sales (456,949) (373,074) (130,718) (87,293) (35,780) (1,083,814) Income tax expense 35,877 (39,215) (57,305) (147,105) (221,146) (428,894) The commitments related solely to expenditure for which vendors have been contracted.
There are no contingencies related to the Group’s interest in these ventures.

There are no contingencies related to the Group’s interest in the joint ventures.

No disclosure of amounts relating to the completion of the Gas-to-Liquids Plant has been included as work has temporarily ceased.

These commitments related solely to expenditure for which vendors have been contracted.
74 PETROTRIN ANNUAL REPORT 2015 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 37.
Cash generated from operations Reconciliation of profit before tax to cash generated from operations: Operating Activities (Loss) before tax Amortisation of intangible assets Utilisation of decommissioning provision Depreciation Impairment losses related to investments Impairment write-back related to investments Foreign currency translation loss Finance costs Finance income (Gain)/Loss on disposal of property, plant and equipment Share of profit of associate Net pension cost Net benefit cost Taxes other than income taxes Pension contributions paid Post-employment medical benefits paid Changes in working capital: Decrease in accounts receivables and prepayments Decrease in inventories Decrease in other liabilities Cash generated from operations Note 2015 2014 2013 Year ended September 30 $ (1,703,186) $ (279,877) $ (108,812) 7 23 6 29 29 31 31 28 13 10 10 10 10 (487,706) (5,257) 1,214,986 5,300 (4,649) 43,172 957,824 (2,644) (16) (2,376) 238,600 217,400 566,797 (160,700) (104,100) 4,214,812 1,771,557 (127,835) 952,659 (2,954) 755,334 5,068 (14,556) 25,584 999,193 (3,228) 19,319 (26,407) 241,400 199,800 1,644,693 (165,000) (93,500) 1,289,789 (2,774) 919,545 5,173 (594) 5,248 1,078,950 (2,410) 5,780 -- 244,700 182,900 1,797,360 (163,400) (91,500) 3,028,877 283,006 352,145 621,566 (1,325,013) (104,786) $ 6,631,979 $ 6,244,398 $ 6,028,880 In the cash flow statement, proceeds from sales of property, plant and equipment and intangible assets comprise: Net book value (Notes 6 and 7) (Gain)/Loss on disposal (Note 28)
 Proceeds from sales Year ended September 30 2015 2014 2013 $ -- $ 19,527 $ 5,814 (16) 19,319 5,780) $ 16 $ 208 $ 34 PETROTRIN ANNUAL REPORT 2015 75 Petrotrin Petroleum Company of Trinidad and Tobago Limited 2015 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago Dollars) 38.
Subsequent events (a) Contingent liabilities - Letter of credit To meet Petrotrin’s 15% share of its abandonment liability with respect to its TSP Joint Venture, a letter of credit facility for $131,821/US$20,775 (2014: $133,029/US$20,922; 2013: $133,257/US$20,758) was established with an expiry date of 2015 December 31.

Effective 2016 January 01, a new facility was established for $134,063/US$21,128 with an expiry date of 2016 December 31.
(b) Lower Crude Oil, Natural Gas and Refined Products Prices Subsequent to year-end, 2015 September 30, crude oil, natural gas and refined products prices used by the Group in its Value in Use assessments declined significantly in the range of 20% to 30%.

Management expects that the high level of volatility displayed currently in these prices will only be for the short-term.

It is Management’s view that in the long-term, these prices will rebound in excess of those used in the respective valuations.
76 PETROTRIN ANNUAL REPORT 2015 Petrotrin PETROTRIN ANNUAL REPORT 2015 77 Petrotrin Petrotrin Petroleum Company of Trinidad and Tobago Limited A N N U A L R E P O R T 2 0 1 5 Southern Main Road, Pointe-a-Pierre, Trinidad, West Indies Phone: (868) 658-4200 | Fax: (868) 652-1315 Website: www.petrotrin.com