Sunday, March 3, 2024

Government in no rush to establish oil refinery in Guyana


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GEORGETOWN – The Guyana government says it will take on board all advice before making any decision on the establishment of an oil refinery here. 

“We have to take on board all of the advice that is given and then at the appropriate time the minister (of Natural Resources) will bring a memorandum to Cabinet upon which we will cogitate and make a decision that is in the best interest of the people of Guyana,” Minister of State Joseph Harmon said.

Last month, Pedro Haas, Director of Advisory Services at Hartree Partners who was tasked with carrying out a feasibility study for an oil refinery in Guyana, revealed that the estimated cost to construct an oil refinery would be five billion US dollars.

The feasibility study found that it would be too costly for the government to invest in an oil refinery and Harmon noted that Cabinet is still to review the findings of the study.

The consultant, who was secured through the New Petroleum Producers Group by Chatham House, said that the final results of the study showed that Guyana would be “destroying over half the value of your investment the day you commission your refinery”. 

Trinidad and Tobago, the major oil producing country in the English-speaking Caribbean, has already indicated a willingness to allow Guyana to use its refinery facilities. But no decision has yet been taken by the David Granger government.

Meanwhile, Opposition Leader Bharrat Jagdeo has called on the government to make public the contract document with the US-based oil giant, ExxonMobil following the announcement by the Ministry of Natural Resources that Guyana will earn a guaranteed two per cent royalty on gross production from 2020.

Jagdeo said that the two per cent could very well be seen as an improvement over the one per cent reportedly negotiated by the Peoples Progressive Party Civic (PPP/C) back in 1999.

But he said the PPP/C is “just asking for non-partisan approach”.

“We have seen a number of statements by the Minister (of Natural Resources Raphael Trotman), and I have said in the past that I do not want to conduct the nation’s business on this industry in the public domain, I would prefer it would be treated the way we treat our border matter, we have a bi-partisan approach to the industry particularly because of what it means to Guyana in future . . . . He (Trotman) is talking up expectation about massive future wealth.”

Jagdeo said that a two per cent royalty at US$50 per barrel for oil on the world market would only return an estimated US$38 billion.

The Ministry of Natural Resources on Thursday announced that the government is preparing to issue a Production Licence to ExxonMobil “to move ahead in 2020; whilst placing emphasis on Guyanese employment and training, the procurement of goods and services in Guyana, infrastructural soundness and the protection of the environment.” 

“The Government and people of the Cooperative Republic of Guyana will receive a royalty of two per cent on gross earnings and benefit from 50 per cent of the profits from the sale of petroleum once production commences,” the statement added. (CMC)


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