The Guyana Oil and Gas Association (GOGA) believes the greatest benefit from a country’s natural resources lies in the ability to add value, and this must be carefully considered in the case of oil production, set to begin in 2020.
The findings of a consultant hired by the Guyana government to examine the feasibility of a refinery being built in the country continues to engage the attention of stakeholders. Hartree Partners Director of Advisory Services, Pedro Haas, in his study, determined that a 100,000-bpd refinery would cost as much as US$5B. With no indication of a positive return on this investment, he concluded it was not feasible. He presented his findings to the public on May 17 in Guyana’s capital, Georgetown.
Chief Executive Officer of GOGA, Bobby Gossai Jr. told OilNOW on Monday while a refinery of any capacity would be a costly venture, several other factors must be taken into consideration, in the context of Guyana. “That study does not necessarily reflect the nature of Guyana and Guyana’s oil discovery currently,” he said, adding that the study merely looked, in abstract, at what the possibilities of a refinery would be.
“You have to focus on the nature of Guyana, economic variables and the make-up of Guyana in terms of its economic facets. In the consideration of an oil refinery, you cannot just focus on it in an isolated manner,” he said.
The economic sectors of Guyana and the long-term benefits of such as facility, and what it is set up to do, are among some of the factors that must be taken into consideration, he pointed out. Sustainability of the refinery over the period of oil production, and beyond, would also have to be closely examined.
“The main factor that you have to consider when you develop an oil refinery, is the development of your petrochemical industry, Mr. Gossai stated.
Several types of products can be produced from crude oil in the refining process. These include; fuel gas, liquefied petroleum gas (LPG), petrol/gasoline, jet fuel/kerosene, diesel, fuel oils, bitumen and Sulphur. The marketing, distribution and sale of these refined products generate additional revenue and create spin-off industries.
Proponents of an oil refinery being built in Guyana believe the economic benefits and job creation from these downstream activities must be factored into any model to determine the feasibility of investing in the facility.
“A lot of us in Guyana would want a refinery because we know that for any new resource that you find, the greatest benefit that you can have for your country, is the value-added benefits of that resource,” the GOGA CEO said.
Meanwhile, Chairman of the newly formed Guyana Oil and Gas Energy Chamber (GOGEC),
Manniram Prashad, told OilNOW in an interview directly following Mr. Haas’ presentation that it was too early to make a comprehensive assessment of the findings. More information on the model used by the consultant would have to be made available for a full review, he said.
“He (Mr. Haas) was making an assumption of 100,000 barrels per day. Guyana uses 15,000 barrels per day. There was a question of mini refineries, such as the one in Suriname. So, we don’t have all those facts here,” Mr. Prashad indicated.
The Guyana government has since indicated that it is still open to examining other options and will soon be meeting with persons who have submitted proposals to establish a refinery in the South American country.