There are many countries that have oil refineries and do not have crude

May 26, 2019 Letters

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Dear Editor

In an article in the Kaieteur News dated May 14 and captioned, “Even with 5.5 barrels, oil refinery not feasible …” Kiana Wilburg said “about three years ago, the APNU+AFC administration hired Mr. Pedro Hass, … to conduct a study on the feasibility of an oil refinery here.” His report categorically stated that this was not practical”.
According to Minister Trotman, Mr. Hass was hired to determine whether it was feasible for the government to invest in an oil refinery and this is what he had to pronounce on. The gentleman proceeded to advise that it would not even be feasible for the private sector. Who asked him to advise the private sector?

The article continued saying that at that time the reserve was estimated to be some 120,000 barrels of oil per day but is now pegged to be over 5.5B. He suggests that because of these numbers “many may want to rethink the “potential of having an oil refinery” but he maintains a refinery is just not economical in Guyana case.
I beg his pardon. I have not met a single Guyanese or chatted with any Guyanese on social media who believes that we should not have a refinery in Guyana so there are no “want to rethink”
My question is, “what has a refinery in Guyana to do with how many barrels of reserve we have?”. The answer is, absolutely nothing!

There are many countries that have oil refineries and do not have crude or do not have enough. So, to me feasibility has nothing to do with whether one has crude or not. From information I have received we have an Australian consultant who advises that we should export our crude.

Well Australia imports about 75% of the crude that it refines. Maybe Australia has an interest in buying our crude.

The issue for the investor is whether he can recover his investment and whether he can make a profit. Mr. Hass uses, in my opinion, a bloated figure of 5 Billion USD for a 120,000 barrel refinery. A 60,000 BPD would cost around 700,000 USD. With added complexity built in to produce more byproducts and reducing the waste we are looking at about one point two billion USD. The second 60,000 would cost less.
These countries transport crude over great distances so the transportation cost has to be factored in. Would it be positive for us here if we were to be able to purchase crude from our local wells as the transportation cost would be less?
I am also questioning the time frame he suggested for the construction of the oil refinery. Would it be stick built with qualified labour or would be assembled with modules built offsite? To use his house analogy. It might take three months to build a residential house but the same house using prefab modules can be built in a few days.

We also know that he included the administrative requirements. Now if the present government were to facilitate, I am sure the administrative aspects can be expedited.

If this government is tired of Guyana being a primary producing country and is serious about value added, then it would and should become proactive in assisting private sector efforts to transform this economy.

Mr. Hass suggests that more efficient engines, hybrid and electric cars in the US would liberate more fuel for export. I am wondering if the same would be happening in other countries. I would like Mr. Hass under the circumstances of reduced consumption of fuel he predicts to say what would happen to all the crude.

He also suggests that the refinery in Guyana would have to compete with the very efficient refineries in the US.

Well do we have Caricom as an available market especially since the transportation cost of crude and refined product would be in our favour.

In addition, we would have cheaper fuel in Guyana because of the low transportation cost. This would definitely be a boost for the business sector.

Now why would we want to send all of our crude to be refined elsewhere. We do not value add upon our gold, our bauxite, diamond, sugar, rice and now the expert is saying no to value added oil. So, we would continue to be a backward primary producing third world countries.

These experts and consultants are patriots to their country. Hence proposals in the interest of their country. So, this gentleman suggests we allow the US refineries to refine our oil via joint venture. He suggests we buy stocks in refining companies. So why not buy in to a local company to make the refinery achievable Why not joint venture with a local company. The construction alone would employ thousands. Then the transportation of sand the logging and transportation of piles would add even more jobs.
The local refinery would accomplish the diversification of our economy and it would make so many products cheaper and this includes fuel which is vital to manufacturing and of course our electricity bills would be much less.
Down stream companies, fertiliser which would enhance agriculture. Farmers and Guysuco would benefit. Bitumen for our roads. Fibreglass and Sulphur based medical products and sulphuric acid etc. and even Lipstick for our females; natural Gas for GPL. All of these would create additional Jobs.

In addition, as I wrote in a previous article, 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. Guysuco can produce the ethanol that the refinery would need. It’s a “Win Win” situation.
Let me say this categorically and unequivocally that none of the potential investors in a refinery has ever suggested that they be sold crude at subsidized prices. However, let them look at the level of subsidies the rich countries pay out. It is my opinion that the government, because of the spin off good to the economy should make some effort to improve the playing field for local investors.
Government needs to listen to its own people. And I am positive we have a lot of Guyanese experts in the Diaspora. Use them.

Rajendra Bisessar

BSc Sociology LLB

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