Private Sector to work with Govt to realise local oil refinery – PSC Chair

The content originally appeared on: INews Guyana
Chairman of the Private Sector Commission, Komal Singh

Chairman of the Private Sector Commission (PSC), Komal Singh, has stated that the business community wants to see the development of an oil refinery here in Guyana and will be working with the government to ensure this is realized.

“The private sector is also very interested to see the development of an oil refinery in Guyana. Currently, government utilizes in excess of $800 million annually for the importation of fuel. That by itself, when you look at that number, is enormous money that we need to find as foreign exchange to pay for importing the fuel. We’re going to work very closely with the government, as the private sector, to see if we have this realized as soon as possible for the development of Guyana,” Singh said while speaking at the PSC’s 31st Anniversary Gala and Awards Ceremony last week.

The Government had put out a Request for Proposals (RFP) last year for the establishment of a 30,000-barrel per day oil refinery in Region Six (East Berbice-Corentyne). Back in August, it was reported that four out of the 11 companies that had submitted proposals last year have been shortlisted.

In October, President Dr Irfaan Ali had stated that they are looking to finalise this project by the end of this year.

“…We are working on the 30,000 refinery – the proposals came in, because we are hoping that before the end of this year, we must finalise the refinery project to be done right here in Region Six that would add and create even more opportunities for Region Six,” the Head of State had posited.

Meanwhile, Guyana has been receiving multiple proposals from several other governments that are interested in setting up oil refineries here.

But Vice President Dr Bharrat Jagdeo has made it clear that the country has the capacity to build only one oil refinery.During a press conference in August, Jagdeo disclosed that a first-round evaluation was held and Government was waiting for additional information from the four shortlisted companies. But even as they do this, a number of other countries are still sending oil refinery proposals.

“At the end of the day, if it goes forward it has to be on conditions that are good for our country and they have to meet all the financial and technical requirements. We don’t have the capacity for two refineries. There shall be if that project goes forward, one refinery,” the VP had stated.

Simultaneously, however, the Guyana Government is also looking at a strategic reserve option. Jagdeo explained that the main reason for the refinery here was to ensure national energy security.

On this note, the Vice President disclosed that the Government is also exploring the feasibility of tolling some of Guyana’s light sweet crude and bringing back the refined products to store here. He noted that from the initial numbers, this can not only guarantee national energy security but also allow for a significantly cheaper cost of energy.

“If we are doing a refinery, it will be here because it defeats the purpose of your energy security and you have the refining done in Trinidad. But if [it] can get a tolling fee, it could be refined anywhere in the world [providing it’s cost competitive] and you then store the refined products here. Then that’s a different concept… If you’re doing the refinery, it has to be done here because what if there is a disruption in global supplies or regional supplies for an extended period and the refinery is in Trinidad, that doesn’t help us,” VP Jagdeo stressed.

Trinidad and Tobago had offered to let Guyana use its oil refinery – a prospect that was shut down by the Guyanese Government.

Back in October, Government had released the draft National Gas Monetization Strategy to the public for their feedback and Jagdeo said earlier this month that the comments received are being incorporated into the final document. This strategy will guide the government’s path towards utilising its gas resources and put the relevant regulations in place to facilitate this.

Only back in August, Guyana and Dominican Republic (DR) signed several agreements including one for the joint establishment of an oil refinery in Guyana.

In 2022, a Request for Proposals was issued for companies to express their interest in constructing a 30,000 barrels per day (bpd) refinery. Specifically, companies were asked to submit bids for the design, finance, and construction of the oil refinery, which will be located at the mouth of the Berbice River.

According to the RFP that was issued, construction on the refinery was expected to begin in 2023, with the project expected to be completed within two years. The refinery was to be located near the Berbice River.

The plan for the refinery’s construction ties into the Government’s vision of promoting value-added production and securing energy security both for Guyana and the Caribbean. It is also an integral part of the Government’s developmental plan for Region Six.

An oil refinery is an industrial plant that transforms crude oil into various usable petroleum products, such as diesel, gasoline, lubricants and heating oils like kerosene.Refineries serve as the second stage in the crude oil production process, following the extraction of crude oil from the earth.

Once the refinery at Berbice becomes operational, Guyana will be able to sell crude oil components to various industries for a broad range of purposes, including fuels for transportation, heating, paving roads, and generating electricity and raw materials for chemical manufacturing.

This would attract global investments due to soaring fuel prices worldwide, the increased cost of heating as time goes by, and a lack of adequate refining capacity to process crude into gasoline and diesel.

Neighbouring states including Trinidad and Tobago, Aruba, The Netherlands Antilles, Cuba, Jamaica, British Virgin Islands, Curaçao, Barbados and Suriname all possess oil refineries as well.