Guyana exploring feasibility of oil refinery; T&T former Energy Minister virtually rules out refining at Petrotrin

Pedro Haas (photo from IAmericas)

Guyana has decided to begin examining the feasibility of establishing an oil refinery, as several local and foreign companies continue to express an interest in setting up such a facility here in response to increasing oil finds offshore.

Minister of Natural Resources, Raphael Trotman said consultant, Pedro Haas has been hired through the New Producers Group of the Royal Institute of International Affairs ‘Chatham House’ to help government determine whether an oil refinery should be built in Guyana. Haas is Director of Advisory Services at Hartree Partners LP,  a global merchant commodities firm specializing in energy and its associated industries.  The firm focuses on identifying value in the production, refinement, transportation and consumption of trade-able commodities and anticipating opportunities in the supply chain where they may be under or over-valued.

“We believe that we should not rely on our own judgment or knowledge or lack thereof on these issues,” he said.  Trotman said government has budgeted GYD$10 million for the study including a desk review initially. “If it is that the study tells us this is feasible, then I believe we will get further,” Trotman told a post-cabinet news conference.

The consultant would be examining demand, availability, prices, and a forecast of the economic landscape.

The Minister said government has received applications from Guyanese solely and companies associated with Guyanese companies. The applications have been made to the President, Ministry of Natural Resources and the Minister of Business. “We believe that the time afforded is sufficient because prior to the advertisements and prior to the approval received we have a sizable stack of applications that have come in from Guyanese and foreigners and that stack has been growing larger.

On the matter of refining the more than 2 billion barrels of oil that have been discovered in separate reservoirs 123 miles offshore Guyana, Trinidad Tobago’s former Minister of Energy, Kevin Ramnarine has said virtually ruled out the feasibility of ExxonMobil refining Guyana’s oil  at Trinidad’s state-oil refinery, Petrotrin, when commercial extraction begins in 2020/2021. He explained that Petrotrin’s refinery is configured to refine heavy to medium crude, but Guyana’s reserves have been defined as light, sweet crude.

“It is possible that some of it could be used as a diluent to dilute some of the heavier  crude in Trindad but I don’t think the refinery diet in Trinidad is what you all (Guyana). There could be scope for configuring the refinery to refine light crude but upgrading the refinery to do that will require money and Petrotrin is strapped for cash so I think the immediate best bet would be to refine that crude in the US (United States) which is what I think is what Exxon is going to do in the beginning,”  Ramnarine told Demerara Waves Online News.

Meanwhile, the Minister of Natural Resources said the three-day advertisement period whose deadline is January 20, 2017 for a Petroleum Directorate of the Ministry of Natural Resources is transparent. He said a “stack” of existing applicants would have to re-apply the various positions.

We did, however, feel that notwithstanding a heap of applications that we should still go with a public advertisement so that the process is transparent and other persons who may not have already indicated an interest could also be given an opportunity to do so,” he said, adding that there has been an excellent response to the advertisement for 14 positions.

Government has already set aside US$500 million to build an onshore oil and gas facility at Crab Island,  at the mouth of the Berbice River. The facility , which will largely support ExxonMobil’s offshore oil exploration and production operations, will include heliports, supplies, maintenance and transportation.

Authorities hope to generate at least 600 jobs mainly from the Berbice area where many residents are trained in a wide variety of skills at the Guyana Sugar Corporation’s Port Mourant Training School. The Minister of Natural Resources said the depth of the Berbice River is greater than those at the Essequibo and Demerara Rivers.