Arguments for an oil refinery in Guyana

Mar 12, 2017 Letters

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Dear Editor,
In an article in another section of the media captioned, “Trotman to seek clarity on Guyana utilising Suriname’s oil refinery”, Minister Trotman spoke of the possibility of refining our crude in Surinam or in Trinidad.
Refineries are designed in accordance to the type of crude it is going to refine. Trinidad and Suriname’s refinery is designed to refine heavy and sour crude. American Petroleum Institute (API) determines the quality which ranges from 17 to over 50, but 99% of the crude found is between 17 and 46 API. Above 35 API is light. Below 27 API is sour so if the API of the crude is above 36 that is good for us. I happen to know the API but would not disclose same as it’s not my place. Suffice to say that it is sweet and light.
But back to refining; Suriname’s refinery only has a capacity of 15,000 barrels a day so even if it could process our crude it does not have the capacity, since the four wells would be producing around 100,000 barrels a day. There are plans to drill about 16 wells. All sixteen wells would not be producing oil, since about eight wells would be used to pressure in water and gas in order to increase the efficiency of the wells. So we are looking in the long run at about 200,000 barrels a day. We hear Guyana will be getting 50% but I am not sure that is after expenses have been deducted.
In any event crude is sold at market price with a little option for negotiation so EXXON can even sell to a Guyanese refinery. The late President Burnham had a study done in 1978 as to whether an oil refinery here would be feasible. The report says it would be. But even today simple logics would inform us that it would be.
I am personally tired that Guyana has remained over the years an exporter of our natural resources. The absence of value added worries me as it limits job creation and has kept Guyana underdeveloped. The question arises what happens when such non-renewable resources are depleted. What then?
An oil refinery to refine 100,000 barrels would cost about 2 Billion USD. It would employ about 2,500 skilled and unskilled workers. It would have by products such as fertilisers which would help sustain and expand agriculture. It would give us bitumen for our roads and even lipstick for our women; natural Gas for GPL, which will increase our green foot print. It could possibly result in about 10,000 additional jobs.
Cheaper fertilisers would reduce the cost of agricultural produce and help GUYSUCO. Lower cost of bitumen would result in savings as we move to build our roads and this savings can fund increases in the pay packet of workers. And definitely we would see a positive balance of trade resulting in huge foreign exchange savings. I almost forgot fibre glass and sulphur-based medical products and sulphuric acid etc. So there is no way we should even consider giving away our crude oil.
The oil refinery usually utilises methyl tertiary-butyl ether (MTBE) which is used to oxygenate the gasoline so as to raise the octane level that is required for your car to run. MTBE is a carcinogen which is highly cancerous. Ethanol can be used instead of MTBE and this would serve to reduce our carbon foot print.
I have knowledge that a developer has been working on the construction of a refinery here in Guyana. The Name of the Project is Crab Island Refinery. The Developer has expended a lot of money, did a 300 page environmental report, has developed a business plan (125 pages) and has obtained a provisional environment permit. The land has been identified and all relevant surveys required by the Guyana Land and Surveys Commission has been done.
The final capacity would be 240,000 barrels a day. This would cost about 4 Billion USD but there can be a phased construction. The modules to cater for 100,000 barrels would take about 2 ½ years and cost about 2 Billion USD. A lot of money is being expended as he tries to raise the finances for the project, but as we know it takes a while to raise this kind of money.
Fip Motilall took 15 years but this gentleman is not a Fip. He is a professional engineer with a lot of experience in refineries, a Guyanese American who has remigrated to Guyana. He encountered some difficulties under the last regime. He is in negotiation with a few financial companies but because of the change of government and what happened to Amalia Falls they requested a letter of no objections from this government. This request was made over four months ago but apparently he has been getting the royal run around from Go Invest. The CEO of which seem to be lost at sea.
He indicated to me that he will be seeking audience with His Excellency the President as obviously support from the government would obviously give potential investors some increased confidence.
I am hoping that in the near future he would get the necessary support from my government. He has indicated that he has no objection to some form of partnership with the government. Even without such a partnership he is prepared to give the government an equity share in the company to be negotiated if the government agrees to sell to it its share of the crude once the project is successful. This could be around 5%. This by itself is a lot of money and of course this is in addition to the cost of the crude supplied. Bear in mind that this project commenced since 2006, way before Exxon sank any well. He has an agreement with a huge foreign company for the purchase of crude and the sale of all downstream products of the refinery.
Rajendra Bisessar
BSc Soc LLB

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