With the oil price at an all-time high and set to go even higher, Richard Rambarran, a lecturer of economics at the University of Guyana, Tuesday urged Guyana to consider establishing a modular refinery to meet at least its domestic consumption.
“That would insulate our small, consuming population from the negative impact of such a shock and bring overall net benefit to Guyana,” Rambarran said in a Facebook post. “Guyana can benefit from increased revenue from higher international prices and the consuming population can have general insulation from international developments.”
A refinery would allow Guyana to produce its own fuel, and the economist sees this as helpful if global oil prices will indeed go over US$200 per barrel – the highest in history.
He said, “Oil can be supplied to the population at cost of production + a percentage to cater for the administrative cost of refining and delivery.”
A small statutory percentage of the Natural Resource Fund, Rambarran suggested, should be used to smooth out price volatility so that Guyana is not impeded by what he called an increasingly polarized game globally, referring to the political rivalries of the global North.
“Energy Security needs to be a major development pillar moving forward in Guyana,” Rambarran, who is Executive Director at the Georgetown Chamber of Commerce and Industry, said.
He also suggested that government float micro bonds to allow Guyanese to invest savings into the National Oil Company (NOC) as direct stakeholders.
Vice President Dr. Bharrat Jagdeo said during the International Energy Conference in February that the Government is considering establishing an NOC and stopped short of announcing that government would give preference in oil block awards to companies that helped the State to make this work.
Rambarran’s comments follow an announcement from the state utility, Guyana Power & Light Inc., on the previous day, that the high oil price has put it in an unsustainable situation, quickly wolfing down the budget it has set aside for heavy fuel oil purchases.
Guyana is already advancing plans with ExxonMobil to pipe gas to shore for power generation, and this would serve to insulate the country’s electricity sector from volatility in the price of natural gas.
But the Government did not intend to build a refinery for oil as late as last year, when journalists posed the question to President Dr. Mohamed Irfaan Ali. He however noted receiving proposals to build refineries from the private sector and said government would support a private refinery.