Guyana looking to get highest value for its share of oil – Trotman

Raphael Trotman, Minister of Natural Resources

When oil production begins in Guyana in 2020, the South American country will be looking to get the highest value for its share of oil says Minister of Natural Resources, Raphael Trotman.

In a recent interview with OilNOW, Mr. Trotman was asked if the Guyana government would be open to selling its oil to a local refinery if one is established by that time. Already, one business group has signaled its intention to move ahead with plans for a modular oil refinery that could be up and running in time for first oil.

“We’ll be open to anything…any model that is profitable. So, you would have to show us that if we sell our oil to you, it would not be at a price that is below the world market price,” he said.

He pointed however; that there may be room for negotiating a subsidized cost with a local refiner, but a careful cost-benefit analysis would have to be done before any such decision is made.

“Should I sell you a barrel of oil for $30 when I can get $50 if I sell it elsewhere? If you say to me; sell it to me for $30 and I will put all these other benefits into the community…then it may balance off,” Mr. Trotman stated.

Making such a decision, he said, is based purely on economics, both for the investor and the Guyana government.

A Guyanese businessman recently spoke with OilNOW, outlining a plan he has to set up a modular oil refinery in the mining town of Linden in Guyana. The facility, if realized, would have an initial capacity of 6,000 barrels per day.

“You might put a Modular Refinery in Linden, for example, and it provides 700 jobs, and so it justifies…the cost-benefit analysis says we can sell it (oil) at a lower price because we are getting some greater benefits; value-added, by doing so we are not against (selling at a subsidized price) but it’s not a simple decision that can be made, saying yes or no,” Mr. Trotman explained.

In May, a consultant hired by the Guyana government to examine the feasibility of setting up an oil refinery in the country said that such a venture would cost around US$5B. Since that time, Guyanese investors have been discussing other options, such as a public-private partnership or, in the case of a modular refinery, a less costly undertaking.