Guyana still open to suggestions on building own oil refinery

By Samuel Sukhnandan

Government has not ruled out building an oil refinery in Guyana, although an overseas oil and gas industry expert has warned that establishing such a facility in the country would be unprofitable.

Natural Resources Minister Raphael Trotman told Guyana Times International in an interview that the Government was still open to receiving suggestions from persons in the Private Sector.

“I think what we are interested in hearing from now, is someone who can put up a good model, to show that perhaps a smaller refinery that will meet our needs could work. So, we have not closed our minds to the possibility of a refinery…we are open to receiving good and viable suggestions,” he remarked.

Trotman said Government was already in receipt of several proposals; however, he stressed that there was a need for these proposals to be matched with empirical data.

While he did not give a clear indication as to when a decision could be made, Trotman said Government would have to look at the proposals, bearing in mind the timeframe before production begins.

“I can’t say; I mean we are still some way off from production, but certainly some early decision has to be made before 2020,” he told this publication.

The Minister said one of the key considerations would be the creation of jobs. “There are refineries in other parts of the world which may not be turning an economic profit, but they provide other benefits.”

According to him, most of the decisions would be made by “political imperatives”. However, Trotman said he hoped that the economic importance would not be lost when a final decision was made.

Earlier this month, a feasibility study about Guyana building an oil refinery was shared with the public, at a consultation.

Director of Advisory Services at the United States-based Hartree Partners, Pedro Haas had said that the cost to build a refinery that would produce 100,000 barrels of oil per day was US$5 billion, with a construction period of 50 to 60 months.

This cost not only caters for the off-site location and other facilities, but takes into account the cost for energy, hydrogen supply, water and docking.

However, even with a smaller oil refinery, Haas said, there was a high possibility of Guyana getting a negative rate of return on investment of between US$2 billion and US$3 billion.

Some Guyanese here and abroad believe that Guyana should build its own oil refinery, because even if this is done at zero profit, it has the potential to create between 3000 and 6000 jobs. More than that, Guyana could become the exporter of more than 100 by-products, including fertilisers.

Most recently, there have been overtures from the Government of Trinidad and Tobago for the refining of Guyana’s oil, where a formal proposal could be made in this regard.

Government has said the current-below-optimum operating positions of Suriname and Trinidad bring into stark focus the need for Guyana to be careful in considering whether or not to have a refinery.

Some US$500 million has already been set aside to build an onshore oil and gas facility at Crab Island, at the mouth of the Berbice River. The facility, which will largely support ExxonMobil’s offshore oil exploration and production operations, will include heliports, and supplies, maintenance and transportation hubs.