–Vice-President Jagdeo clarifies; says intention is to have small refinery for national energy security

VICE-PRESIDENT Dr. Bharrat Jagdeo has said that the government’s decision to finally consider the creation of a local refinery is based solely on the goal of building national energy security, and is not part of any plan to become a major global or regional supplier of refined petroleum products.

“We’re not looking to become the refinery capital of the region; we said we need, for national energy security, a small refinery in the country. We don’t want to own it in government, but how do we get all of these bidders to work together? We’re only selling 30,000 barrels of crude per day to one person: The bidder that wins the RFP (Request For Proposal), or is most serious on building this refinery,” the Vice-President related.

Dr. Jagdeo pointed out that the country was also not pursuing refineries on a large scale, given the greenhouse emissions associated with such facilities, and Guyana’s pursuit of remaining a net-zero emissions country. Additional refineries would also require the government committing too much of its crude resources to local facilities.

“We are supporting a 30,000-barrel per day refinery for Guyana. The others, we’re not selling the crude to them; we’re not going to do a large refinery in the country, because, that means almost all of the government oil goes to them,” the Vice-President said.

It was early last month that President Dr. Irfaan Ali announced that the government would begin seeking a company for the establishment of a 30,000-barrel per day oil refinery, given the significant interest being shown. The President noted that the refinery would most likely be a modular one.

An oil refinery is an industrial processing plant where crude oil is transformed and refined into useable products, such as gasoline, diesel fuel, kerosene, and other fuel oils and products.
There has been growing support for Guyana to have its own refinery; the private sector has been lobbying for a modular refinery for some time now. A modular refinery is a simplified refinery that is less capital- intensive when compared with the traditional full-scale refineries.

The Berbice area, in the vicinity of Crab Island, is being considered as the most likely location for the refinery, as the facility will need to be located close to a river.
At Thursday’s press conference, Dr. Jagdeo noted that the government will be working along with the one successful bidder with an agreement to provide land and concessions, and the limited amount of crude.

“In the documents we put out in the proposal, we said government will provide the land; we will give the tax concessions; we will sell you 30,000 [bpd],” Dr. Jagdeo said.
The refinery will not be limited to selling fuel to the government, and will be allowed to sell locally or export, provided the price is competitive. However, having the local refinery will provide the government with options of guaranteeing local provision of refined products, in the case of global supply plights.

AVOIDING FUTURE PROBLEMS
“In a crisis, we can easily restrict the export and sell it for domestic consumption, because, with supply chain disruption, we can have any sort of problem in the future. We are not taking any risk for the future, and so this is for national security purposes; to have energy security at home, where we don’t run out of gas or diesel or anything like that. We’re pursuing this refinery, but not with government funds, and through an open process,” the Vice-President said.

Earlier this year, the world saw a global disruption in oil-and-gas supply when several countries instituted sanctions on Russia, a major oil supplier, over the country’s invasion of Ukraine. The situation resulted in the price for oil skyrocketing.

According to Dr. Jagdeo, the government has received a number of serious proposals, but has also seen “a lot of carpet-bagging companies”.
“They come here and say they can do refineries, and they want an MoU from the government, and they go and talk. I see one said they can do 10,000 jobs in Berbice; it’s all nonsense. A lot of it doesn’t make sense,” the Vice-President said.

He was at the time directly referencing a press release purportedly issued by Delta Energy and Petroleum Company (DEPCO), alleging plans to build four modular refineries, each with a refining capacity of 60,000 bpd.

“Everybody says that they can build a refinery now, and I saw one said they can build four refineries. I don’t know who would want to build four refineries; it doesn’t make sense,” the Vice-President said.

The government has noted that the response to the RFP will be used to determine a capable partner that will be selected to work with the government to complete the project, based on (i) the timeframes stipulated, (ii) evidence of financial and technical ability, and (iii) response to other requirements of this RFP.

Responses to the RFP must be submitted to the National Procurement and Tender Administration Board (NPTAB) by December 13, 2022.