The government will have to take several factors into consideration before it makes any decision on the way forward in relation to setting up an oil refinery.
Minister of Natural Resources, Raphael Trotman said that the green economy and what will be done with the natural gas are some factors being considered before any decision on setting up an oil refinery is made.
Oil & Gas refinery
The Minister shared these comments on Wednesday after the presentation the presentation of a study on the feasibility of setting up an oil refinery.
Minister Trotman pointed out that utilising the natural gas to supply Guyana’s energy needs would change the amount of fossil fuel required. Currently, the country utilises some 15,000 barrels per day in fuel.
Additionally, Minister Trotman said the government would not oppose any private investor who wants to proceed with establishing an oil refinery.
“We have no difficulty with any private investor or private interest wishing to get into the business of refining. What we have to ask ourselves is whether the crude will come from the Liza development well, and if it does, will it be expected to come at a subsidised cost,” Minister Trotman said.
The government will also have to take into consideration other externalities to ensure that both the private sector and the public at large benefit from any investment in a refinery, the Minister added.
The consultant oil expert, Pedro Haas, who was hired to carry out the feasibility of an oil refinery, pointed out that the private sector can undertake the investment of setting up a refinery, but cautioned that if it has to be subsidised.
On Wednesday, Haas revealed that establishing an oil refinery in Guyana could cost the government as much as US$5B, and such a refinery would be a massive and risky investment.
“The key issue is then to ensure that the oil price at which the commodity is transferred to the private sector investment is made at international opportunity value,” Haas, who is the Director of Advisory Services with Hatree Partners, warned.
If the private sector is willing to pay the opportunity value, the international price for crude oil it should be done at their own risk, Hass added.