GOVERNMENT is yet to review the feasibility study on the establishment of an oil refinery here but said it will be taking into consideration all advice received on the subject before making a decision.
Minister of State Joseph Harmon told reporters at his weekly post-Cabinet press briefing that it is important Guyana looks at all sides of the equation before deciding its path.
He explained that “at the appropriate time the minister (of Natural Resources) will bring a memorandum to Cabinet upon which we will cogitate and make a decision that is in the best interest of the people of Guyana”.
Meanwhile, in May, Pedro Haas, Director of Advisory Services at Hartree Partners which conducted a feasibility study for an oil refinery here revealed that the cost to construct a standard 100 barrel per day oil refinery would be US$5B.
Given the cost, Haas suggested that there be a creation of a robust unit within the Ministry of Finance, which should have both technical and professional relationship with the international oil companies exploring for oil here.
Speaking at a consultative forum in May at the Marian Academy on Carifesta Avenue, Haas revealed the findings of a study done on the establishment of an oil refinery in Guyana and suggested that the unit at the Finance Ministry should be equipped and credible enough to understand the microeconomics of the petroleum industry and be knowledgeable of the daily calculations of market prices, while being connected to the global market.
The expert said as an alternative to the establishment of an oil refinery, it would be best the government maximise income from commercialising crude oil, swap or toll crude oil for products on the international market, create joint ventures with offshore refineries, as well as acquire stock in refining companies.
Haas said whether an oil company is state-owned, domestic or internationally operated, from the standpoint of the government and in the interest of the State, the creation of a fiscal authority body, which would have knowledge of the market and taxes “in the proper way” is best. This, he noted, will enable a body to bring an educated discussion on the subject.
According to the expert, when a country decides to refine oil, it is inserted into an international economy. Being an internationally priced commodity, Haas noted that if a country decides to follow the route of selling a product at a lower level, “you are subsidising it and you are sacrificing the difference between the price that you could have sold that commodity at and the price that you are selling internally at.”
Haas said too that the feasibility study shows that Guyana would be destroying more than half the value of its investment should it decide to have an oil refinery.