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Gov’t yet to review feasibility study on local oil refinery – Consultations ongoing

Jun 03, 2017 News

Following a feasibility study which shows that a local oil refinery may not be the right choice for Guyana, the government is yet to review the document.
This was according to the Minister of State Joseph Harmon, during the post-Cabinet press briefing yesterday at the Ministry of the Presidency.
The study was conducted, and was presented almost three weeks ago by Consultant Pedro Hass, the Director of Advisory Services of Hartree Partners of Mexico.
Hass via a power-point presentation at the Marian Academy explained that the study was done taking the scale, construction cost, timeline and other variables into consideration. The team also looked at nearby refineries.
He noted that Guyana currently consumes between 13,000 and 14,000 barrels of oil per day which is way below the 200,000 barrels of oil a standard size refinery can process.
Hypothetically, should a 100,000-barrel per day refinery be constructed just to cater for Guyana’s consumption, it will cost somewhere in the vicinity of US$5B with a negative rate of return on investment at between US$2B and US$3B.
This means that the output of the refinery will not compensate for the monies that will be spent to construct and operate the facility nor will the capital return.
Harmon said yesterday that the government is listening to advice and consultations are taking place.
“Experts will come and say this and experts will say that. Some foreign experts will say don’t do it and some local experts will tell you, yes let’s do it.”
Harmon said that it is therefore Government’s responsibility to take onboard all of the advice that is given and then at the appropriate time, the Minister of Natural Resource Raphael Trotman will bring a memorandum to Cabinet upon which, a decision “that is in the best interest of the people of Guyana” will be made.
Meanwhile, the findings of the feasibility study are not sitting too well with several sections of the private sector.
Many expressed disappointment and questions were raised over the methodology that was used in compiling the study.
Several members of the Private Sector have also expressed interest in conducting their own independent study to erect facilities of their own.
Hass had stated also that during the study, his team would have looked at several other possibilities instead of an oil refinery for Guyana.
One of the alternatives, he said, is for Guyanese to become “very skilled” at international trade and crude products; selling the crude at appropriate price and buying at an economic price.
Other alternatives include the swapping of crude oil for products and entering into a processing deal with other refineries.
Hass expounded on the latter. “So you give them your crude, they run it in their refinery and they return products to you.”
This arrangement, he said, is not unique but rather, “very common.”

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