Guyana is Leveling Itself Up to Its Regional Counterparts.
Should life give you lemons, you make lemonade it’s the classical approach to economic growth. Some growth theories, like the Classic one, infer that countries should explore their own resources even to the point of overutilization or exploitation. That is exactly what Guyana is doing hopefully with all the necessary caution. With its recent oil discoveries the South American country is growing at rapid speed. As its neighbor’s counterparts, Guyana could not be excluded from having its own oil refinery for its newly discovered and extracted crude. Despite the incentives, Guyana is taking its sweet time to choose the right companies and investments for its 30.000BPD crude refinery. The new rising force in crude oil production, has recently issued a call for proposals to construct its first-ever oil refinery capable of processing 30,000 barrels per day (bpd). The facility will be situated on public land near the Berbice river, and construction is slated to commence in the first half of 2023, concluding within a two-year timeframe. Interested parties must submit their proposals by mid-December. Notably, an Exxon Mobil-led consortium has achieved a remarkable increase in oil and gas output, reaching nearly 400,000 bpd this year, a significant accomplishment for a country that only commenced crude production in 2019. At present, all the produced oil is exported. President Irfaan Ali has emphasized the vast opportunities that the refinery will bring, benefiting transportation, logistics, construction, services, and the rental industry, ultimately improving the region's economy as the company will enjoy a 10-year tax holiday for the project. The government plans to secure the necessary crude supply from Guyana's share of oil production while it does not intend to possess any stake in the facility. Looking ahead, the Exxon-led consortium envisions a substantial increase in oil production, targeting 1.2 million bpd by 2027. To further attract new companies, Guyana has announced plans to hold an auction of oil and gas blocks in its remaining offshore areas. Guyana is leveling itself up to its regional counterparts by offering great incentives, analyzing proposals microscopically, and by not being in unreasonable urge to try to avoid future failure when it comes hiring the right company to take over the oil refining business in its country.
???????????According to Kaieteur News, DEPCO, a US-based company, is moving forward with its plan to construct four modular refineries in Guyana. The company's project summary and environmental authorization application are currently under review by regulators at the Environmental Protection Agency. With over four decades of experience in the oil and gas and nuclear power sectors, Cipriani, a US-registered Professional Engineer, is leading the project. DEPCO expects to have two of the refineries operational within two and a half years. The refining capacity of each refinery will be 60,000 bpd, resulting in a total output of 240,000 bpd. The company has signed a Commercial Contract with SERCOBE, the Spanish Association of Manufacturers of Capital Goods, for the four refineries. President Irfaan Ali's commitment to supplying the local refineries with crude from the Stabroek Block is seen as positive by DEPCO. They anticipate meeting the demand for refined products in the region, leading to cheaper fuel and boosting the manufacturing sector, downstream projects, road construction, and the agricultural sector. The project is expected to create approximately 3,000 direct jobs and an additional 7,000 jobs in peripheral commercial activities. DEPCO urges government agencies to expedite document processing and licensing to take advantage of the current global demand for refined products. Ultimately, DEPCO envisions the four refineries, coupled with the growing discoveries in the Stabroek Block, transforming Region Six into an economic powerhouse and establishing Guyana as a refining hub.???
???????????The Guyana government, as stated by Vice President Dr. Bharrat Jagdeo, has not yet made a definitive decision regarding the construction of an oil refinery in the country. Despite proposals from various US-based companies and the issuance of a Request for Proposals (RFP) in October, the government is still deliberating whether to proceed with the project, including decisions on potential partners and management. The refinery, with a proposed capacity of 30,000 barrels per day, was planned to be owned and operated by the private sector, with the government offering incentives such as land, a tax holiday, and a supply of feedstock from Guyana's share of profit oil. The project, intended to enhance Guyana's energy security, was initially slated to commence construction in Q1 2023. However, the decision-making process has faced delays. Despite the government's indecision, the significant interest and participation of multiple firms in the bidding process demonstrate a keen desire to develop oil refining capabilities in Guyana. The final determination on whether the refinery will be built is yet to be determined.
???????????Vice-President Dr. Bharrat Jagdeo clarified that the government's consideration of building a local oil refinery in Guyana is solely focused on achieving national energy security and not on becoming a major global or regional supplier of refined petroleum products. The government aims to establish a small refinery and does not intend to own it. The decision will be made based on the winning bidder of the Request for Proposal (RFP) process. Dr. Jagdeo emphasized that the government is not pursuing large-scale refineries due to their associated greenhouse gas emissions and the country's commitment to remaining a net-zero emissions nation. He stated that the proposed refinery will have a capacity of 30,000 barrels per day and would be located in the Berbice area near Crab Island. The government plans to provide land, tax concessions, and sell 30,000 barrels per day of crude to the selected bidder. The refinery would have the option to sell locally or export, ensuring a domestic supply of refined products for energy security purposes. Dr. Jagdeo highlighted the importance of avoiding future supply chain disruptions and ensuring energy stability. The government has received serious proposals for the project but has also encountered companies making unrealistic claims. The response to the RFP will be used to identify a capable partner based on specified criteria. The deadline for submitting proposals was December 13, 2022.
???????????Concluding, the Guyanese government is leveling itself up to its regional counterparts by offering great incentives, analyzing proposals microscopically, and by not being in unreasonable urge to try to avoid future failure when it comes hiring the right company to take over the oil refining business in its country. Since dealing with natural resources offers great environmental risks, the government seems to be taking its time to carefully analyze all the risks involved in order to make assertive decisions to lower different types of impacts that in the end might or could be irreversible.?
Written by Georgia Rodrigues 20/06/2023 14:59
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