TT makes formal request to refine Guyana’s oil – Trotman

Dec 30, 2017 News

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By Kiana Wilburg

Natural Resources Minister, Raphael Trotman, revealed yesterday that Trinidad and Tobago has formally submitted its request to refine Guyana’s petroleum.

He made this announcement during a briefing at the Ministry of the Presidency.

Trotman noted that the Cabinet subcommittee on oil is still determining where Guyana would be taking its oil.

He said, “We are examining several proposals for small modular refineries. It has also been announced that Trinidad and Tobago in particular has made a formal request to refine Guyana’s petroleum. Guyana also has the option to get the operator, ExxonMobil, to sell the oil on Guyana’s behalf and we collect the proceeds.”

The Minister continued, “The decision has not been taken but the Cabinet subcommittee is looking at the pros and cons of both options. If we refine the oil here we provide jobs.

“If we refine in Trinidad, we have the ability to provide to other Caribbean sisters and perhaps take up the slack from PetroCaribe and influence of others.”

Trotman added, “If we send our oil to the Gulf of Mexico, we can receive the proceeds…So there are a number of political and economic implications and we’re considering them.”

TT PERSPECTIVE

One of TT’s formidable energy leaders, Mr. Ashley John, is warning the Guyanese authorities to seriously consider getting into downstream activities.

John has been the President of the Point Lisas Industrial Port Development Corporation Ltd. (PLIPDECO) for the past eight years. PLIPDECO is the manager for one of Trinidad’s leading ports which is a hub for downstream activities and makes a 30 percent contribution to the Caribbean island’s Gross Domestic Product (GDP).

The PLIPDECO President told Kaieteur News that the emphasis for many countries that have got involved in the oil and gas sector has been “to go after the quick bucks”.

He said that Guyana should not fall sweet on the quick money that will come.

“The investors would come in and promise the moon and stars. The country could fall into the trap of failing to look at what the long term vision should be and what the long term benefits to the country is.

“I would suggest that the government really surround itself with very good advisors who are knowledgeable in the industry, be it local or international and work with them on developing a long term strategic plan for the energy sector.”

John said that this long term plan would take into account, what information is available from companies of the likes of USA oil giant, ExxonMobil. From that, he opined that they would be able to determine what the short term or the medium term opportunities should be.

On that basis, the experienced businessman of the downstream sector said that the country can then be able to layout a proper road map which would therefore focus usage of the raw materials and resources of the country so as to ensure sustainable development for Guyana.

John also noted that there are many other downstream activities that one can get involved in when it comes to oil and gas. He noted however that regardless of the direction the country heads in, be it the production of methanol or ammonia, a number of factors must be considered.

“The thing about it, ideally, is that the country should look as much as possible at getting into downstream type operations because at the end of the day, the further downstream you go, the higher the margins you would stand to make for each molecule of oil extracted.”

“If I extracted the gas and I just sold it, the mark up you make on that is marginal. But if you use raw materials to manufacture different things like methanol, ammonia or plastics, you are able to put a much greater mark up on those things. But they require more input.

“It is not just a matter of saying I am going to get into it…There has to be a critical mass in terms of how much of this raw material you are actually producing to facilitate implementation of a major downstream sector.”

“If you are only producing five hundred million cubic feet of gas per day, that in itself would not warrant or give you the ability to establish a major downstream and energy sector and put in place a large company of the likes of what is going on with Trinidad and Tobago because one plant or two plants can utilise your entire production…”

With this in mind, he said that Guyana’s authorities would have to determine based on what is available, if it wants to establish a major plant. He noted that while he advocates for it, Guyana must decide the best way to go based on analysing all the available data before plunging head first into downstream activities.

GUYANA’S DESIRE

The government has already indicated a desire to head into the downstream sector based on findings of associated natural gas by ExxonMobil in the Liza offshore well in 2015.

As such, the Government commenced and continues preliminary discussions with ExxonMobil on bringing gas to shore for the purpose of meeting the country’s domestic power and energy demands in the medium term.

It was only recently that technical officers attached to various Government bodies as well as ExxonMobil were engaged in another round of discussions for two days at the Marriott Hotel.

Minister of State, Joseph Harmon, noted that the working group comprised technical officers from the Ministries of Finance, Natural Resources, Infrastructure, and Business.

There were also representatives from the Guyana Office for Investment (Go-Invest), the Guyana Power and Light, the Guyana Energy Agency (GEA) and of course, ExxonMobil’s power generation analysts and commercial specialists.

Harmon emphasised, “No decisions have been taken at the Governmental level nor have negotiations ensued regarding the development of this project. Discussions were on the commercial use of natural gas as a transitional fuel for Guyana’s economy.”

The Cabinet Secretary said that this could involve landing a pipeline to bring gas onshore, the possibility of a power generation facility as well as the design and mapping of an industrial park creating the nexus for other industrial facilities and community development.

The Minister said, “No site has been selected for this potential industrial concept and government officers will continue to engage and exercise due diligence in the evaluation and assessment of possible site locations fit for these purposes. Discussions also highlighted the complementary role of natural gas to other renewable sources of energy such as hydro and solar bearing in mind Guyana’s international obligations to becoming a green state economy.”

He added, “Natural gas is a cleaner burning source of energy and therefore provides an alternative option to Guyana’s historical reliance of fuel.”

Minister Harmon said that presentations were conducted on local and international power generation experiences particularly as it relates to commercial structures and approaches to power investment.

The Minister said that moving forward; the group is expected to review all information in alignment with national priorities and objectives. He said that the group will continue to engage ministers and the relevant entities so as to conduct further works on the areas presented and develop a further understanding of gas exportation from a regulatory financial and policy perspective.

The Cabinet Secretary said that the Government is encouraged by the potential to bring natural gas to shore and remains committed to cleaner energy.

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