AFC wants feasibility study on Guyana’s oil refinery

Aug 20, 2023 ExxonMobil, News, Oil & Gas

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Kaieteur News – As the world transitions to cleaner energy sources amid threats from climate change, the Alliance For Change (AFC) is calling on the Government of Guyana (GoG) to conduct a feasibility study for the nation’s maiden oil refinery.

The facility, once made operable would ensure a reliable source of fuel for the country, in keeping with President Irfaan Ali’s vision for an energy efficient nation. The industrial processing plant would treat and refine crude oil into products such as gasoline, diesel, kerosene and other useful fuels.

Even with its benefits, the project can have drastic impacts on the environment and even the country’s economy should it turn out to be a white elephant, largely owing to the global shift to renewables. To avoid a wasted investment, the political group has called for an independent feasibility study to be conducted for the project.

Shadow Minister of Natural Resources and Executive Member of the AFC, David Patterson during a party press conference on Friday said he supports the vision of an energy efficient economy, however any such major project should be rooted in a thorough study.

Patterson, in response to a question from Kaieteur News explained that the Ministry of Natural Resource and a Japanese Consultant conducted a study which concluded that a modular refinery would only be appropriate for Guyana, considering its supply-demand balance, by 2027 or 2040.

The report was completed by the Japan Cooperation Center Petroleum Chiyoda Corporation (JCCP) and is available on the Ministry of Natural Resources website. The document is dated February 2021. According to the study “Even keeping steady growth, the conventional size of refinery is too large for Guyana from the viewpoint of supply-demand balance. ‘Modular refinery’ explained hereunder, is appropriate for Guyana to support the domestic demand in 2027 and later to 2040.” It estimated that such a facility could cost US$150 million for a 20,000 to 30,000 barrel per day refinery.

Given the findings of that study, the AFC believes an analysis for the project’s viability is critical to its success. Patterson stressed, “The Japanese that did the Oil and Gas Master Plan for Guyana indicated the volumes that we use here daily will be challenging for an oil refinery and they broke it down to the question of logistics.”

He went on to point out that the vessels that transport the oil out of Guyana stores about 1.5 million barrels of oil, making it uneconomical to bring the vessel to shore. According to him, “Guyana cannot take off, even if we take our lifts, which is one in every five and we bring it to shore, we cannot store 1.5 million barrels, we can’t even land the barge and it is uneconomical for you to get a massive big tanker and then stop it to take out what we need in Guyana which is 30,000 barrels a day and obviously…what we will have to do is transship it.”

The Shadow Natural Resource Minister explained that Guyana may have to operate a special vessel to transport the daily required crude to the facility to be refined. This, he said, could attract an additional cost which must be considered in the daily operation expenses for the facility.

To this end, he noted, “So while it is a lovely idea and I am in support of self efficiency, it requires more study to make it feasible.”

On August 8, 2023 it was revealed that Guyana and the Dominican Republic took a significant step in energy cooperation by signing a Memorandum of Understanding (MoU) geared towards identifying competent public or private entities from both nations eager to construct an oil refinery in Guyana. This refinery is projected to have a refining capacity of a minimum of 50,000 barrels of crude oil daily.

Vice President Bharrat Jagdeo on Thursday during a press briefing at the Arthur Chung Conference Center (ACCC) however clarified that while Guyanese authorities are interested in building the nation’s first oil refinery, it is not in any hurry to bring a second on stream.

The official’s comment followed questions from Kaieteur News to explain the rationale for the State’s independent pursuit of a refinery with a capacity for 30,000 barrels of oil per day (bpd) while also agreeing recently to explore the possibility of establishing one here with the Dominican Republic.

With respect to the 30,000 bpd refinery, Jagdeo said there was a first round of evaluation and authorities are awaiting more information.

“But even as we do that, a number of countries are sending in proposals to us. At the end of the day, if it (a refinery in partnership with another country) goes forward, it has to be on conditions that are good for our country and they have to meet all the technical and financial requirements,” the Vice President said.

Simultaneously, he said the government has an interest in examining the costs of sending some of its crude abroad to be refined and have those products returned and stored as “strategic reserves.” In other words, the administration would create a holding place for oil products that can be tapped in instances of emergencies.

“So one of the reasons we wanted a refinery was to ensure national energy security and we are exploring what it would take to toll some of our crude and what fee we may have to pay for tolling the crude and then bringing back the refined products and storing them; like in the USA, they have strategic reserves,” the Vice President said.

With respect to queries about the government’s consideration of Trinidad and Tobago which has over 100 years in the oil refining industry, Jagdeo said there was some discussion about this at one stage but those did not materialize.

“…But if we are doing a refinery, it would be (have to be located) here because (having it elsewhere) defeats the purpose of your energy security…but if you can get a tolling fee, it can be refined anywhere in the world and you then store the refined products here,” the Vice President said.

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• AFC, barrels, energy, feasibility, refinery

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