– to be based in Linden; have 4000 BPD start-up capacity
GuyEnergy, the company that had publicly announced its intention to build an oil refinery in Guyana since last year, is on course to completing its refinery by next year. This is according its Chief Executive Officer, Dr Turhane Doerga.
According to Dr Doerga in an interview with this publication over the weekend, the company is at the stage where the modules for the oil refinery are being built. And according to Dr Doerga, who is also well known as a rice miller, the structure should be ready for oil in the first quarter of next year.
“We are at the implementation stage. The modules are being built… we’ll be ready for early next year. The first modules being built is US$36 million. The total project is [over US$100 million],” he said, adding that they had no difficulties in garnering investors.
Dr Doerga noted that they do not have to be limited to purchasing oil from ExxonMobil, but rather can have extended access to the crude oil market. When it comes to capacity, he said that the aim is to have the refinery reach 10,000 barrels of oil per day.
“The startup is 4000 [barrels per day], within three months it will go to 8000. Because it’s the first set of modules, it’s going to be about 10,000. So it will be enough for the Guyana market. And then we have to cater for the Brazilian investors. And we’ll see how we can export to the Caribbean,” Dr Doerga informed this publication.
According to information from GuyEnergy, the refinery occupies 20 acres of land and will produce gasoline, diesel, jet fuel and some gases. The company also markets the project as one that will require a small tank farm, power plant and workforce, while leaving a minimal environmental impact.
Interest
It was only last year that a team of professional foreign investors had also expressed interest in establishing an oil refinery in Linden, Region 10 (Upper Demerara-Berbice), with the intention of providing technical skills training to the community’s workforce and education sector.
Prospects for the initiative were discussed when the team met with regional stakeholders, including Regional Chairman Renis Morian, at the office of the Regional Democratic Council (RDC) in Linden in November 2018.
The team was led by US-based Ghanian entrepreneur Quincy Sintim-Aboagye, who owns an oil company and Alfred Fafali Adagbedu, who is the Chief Executive Officer (CEO) of Seaweld Engineering Limited in Ghana.
Apart from the refinery, the team also expressed a desire to establish a hotel and to develop economic avenues for local farming. These developments were welcomed by Region 10 officials, not only for the overall economic benefits but particularly for the employment opportunities they would provide for the Linden community.
But if these investors were expecting any help from the Government in terms of subsidised crude oil, that prospect has been dismissed by the Government. Back in January of this year, Department of Energy Head, Dr Mark Bynoe had made it clear that local oil refinery operators will have to build oil at market prices.
“Anyone, who wishes to open a refinery can do so but they will not receive subsidised oil from the Department. That’s the crunch,” Bynoe had said, during a stakeholder engagement. He was backed up on this point by the Department’s oil and gas adviser, Matthew Wilks.
“Government doesn’t subsidise private businesses. That’s not the purpose of the Government. The Government has to maximise the revenue for the State to go into State expenditure and, equally, I don’t think people in this room would probably feel happy if we end up subsidising private entities,” Wilks was reported in sections of the media as saying.
Feasibility
With the Government already ruling out building a refinery of its own, the only takers for this initiative are from the Private Sector. The Government had previously hired a consultant, Pedro Haas, to carry out a feasibility study into constructing an oil refinery. The results of the study did not favour building a refinery, particularly one with a capacity to produce over 100,000 barrels per day.
In his study, Haas had looked at the cost of building an oil refinery with a capacity of producing more than 100,000 barrels of oil per day. The study had come up with a US$5 billion price tag in order to construct the refinery in Guyana.
The findings of a study had also recommended that the unit at the Finance Ministry should be equipped and its capacity boosted enough to understand the microeconomics of the petroleum industry. This is so that the unit can keep up to date with the daily calculations of market prices and feed into the global market.
The expert had also suggested that as an alternative to the establishment of an oil refinery, the Government could pursue maximising income from commercialising crude oil. Another suggestion was that the Government swap or toll crude oil for products on the global market or create joint ventures with offshore refineries, as well as acquire stock in refining companies.
However, the study was done at a time when ExxonMobil was the only operator in Guyana’s waters to find oil in commercial quantities. Members of the Private Sector have previously urged that the construction of a refinery be re-explored when more operators find oil.
