–but gov’t more in favour of modular variety

MINISTER of Natural Resources, Raphael Trotman, has said that the government is not entirely opposed to the idea of a local oil refinery, as they are open to suggestions about modular types.

“We have not closed the door to a refinery,” he said Friday. “The Japanese Government, through its oil-and-gas master plan, will produce some studies for us about the possibilities.”

The plan has as key objectives the development of Guyana’s domestic oil industry; the creation of a balance in the domestic usage and exportation of products from indigenous oil and gas; the harmonisation of the industry in keeping with Guyana’s ‘green’ development agenda; and the quantifying of the economic feasibility of the plans.

In addition to suggestions contained in the plan, Minister Trotman said the government is open to looking at proposals from the private sector about modular refineries.
He said they need to look at every available possibility, because the local market is small, so they would have to explore international markets and possibly build a refinery to produce oil for export.

It has been reported time and again that when production starts in 2020, there will be an estimated 120,000 barrels of oil per day, which will increase to 320,000 per day by 2022, and at least 500,000 by 2025.

According to the minister, Guyana utilises only 12,000 to 15,000 barrels of oil per day, and most of it goes to the Guyana Power and Light (GPL) and the mining industry.
Government also anticipates that local fuel consumption might very well drop when they start producing natural gas and hydro-power.

“So we do not need that much fuel locally,” he said, adding: “Having a refinery is one thing, but we must have markets…
“For instance, we need to see whether it would be in the best interest to ship it out to the furthest market and use the earnings for local development.”

One of the suggestions that have been put forward so far, he said, is to build a small refinery with the capacity to produce about 20,000 barrels of refined oil per day.
He said that with production from that small refinery, they would be able to supply the mining industry as well as a presumably large market in northern Brazil.

Although there have been discussions about such possibilities, the minister reiterated that the government had said no to a large refinery because of the estimated large amount of money that would be spent to construct it.

Director of Advisory Services at Hartree Partners, Pedro Haas, who did a feasibility study, said the construction of an oil refinery here to process some 100,000 barrels daily would have to be a political decision.

He had explained that it would cost up to US$5B to construct a local refinery, and that Guyana would be likely to see a negative rate of return on its investment at approximately US$3B.

While the adviser said the large facility would cost a lot, the Stabroek News had reported that local company GuyEnergy was expected to build a modular refinery in Region 10 at a cost of about two per cent of what a paid international consultant to government had said might be needed here.

According to ‘Stabroek’, it was expected to be completed “way before” ExxonMobil’s 2020 estimated production start date; and GuyEnergy is forging ahead, stating that the venture would cost about US$100M.