Last week we brought out the important point that it makes business sense for Guyana to build its own oil refinery in a public-private arrangement. At an oil price of US per barrel, Guyana can be a partial beneficiary in the profit of US.62 per barrel. This deal becomes very bankable when one considers that all of the associated processing and distribution cost are fully paid for by the consumer at the pump.
But what really does an oil refinery do for Guyana? It adds energy to the process of industrialisation. I have been advised that our contractual share of the oil will be about 20,000 barrels/day (bpd) from the Liza deposit. That is enough oil to drive a new refining industry in Guyana that will satisfy more than 85 per cent of the local appetite for petroleum products, with the excess production exported. Because of this one decision, the minimum net cash inflow of foreign currency that will be made available to Guyana for alternative developmental needs will be around US0 million per year.
All of the indicators point to a modular 30,000 bpd oil refinery with a capital investment of some US>Last week we brought out the important point that it makes business sense for Guyana to build its own oil refinery in a public-private arrangement. At an oil price of US$52 per barrel, Guyana can be a partial beneficiary in the profit of US$5.62 per barrel. This deal becomes very bankable when one considers that all of the associated processing and distribution cost are fully paid for by the consumer at the pump.
But what really does an oil refinery do for Guyana? It adds energy to the process of industrialisation. I have been advised that our contractual share of the oil will be about 20,000 barrels/day (bpd) from the Liza deposit. That is enough oil to drive a new refining industry in Guyana that will satisfy more than 85 per cent of the local appetite for petroleum products, with the excess production exported. Because of this one decision, the minimum net cash inflow of foreign currency that will be made available to Guyana for alternative developmental needs will be around US$470 million per year.
All of the indicators point to a modular 30,000 bpd oil refinery with a capital investment of some US$0.7 billion. In a well-structured public-private partnership, the refining pure profit adds up to some US$7.8 billion over a 20-year period, which can easily reward all the investors for their risks. When the full investment cost of the refinery is deducted (50/50 joint venture), the Treasury will easily rake in new streams of revenue. Plus I have not even started to talk about all the new jobs and other spin-off business opportunities associated with this investment.
As a point aside, why would Suriname doubled its oil refining capacity to 15,000 bpd in 2016? The advantages far outweigh the disadvantages and thus I am quite surprised that the Granger Administration has not to date incubated any new discussions with investors on the Crab Island Refinery Project. Selling our crude to EXXON or to Petrotrin to be refined in Trinidad will be one of the dumbest decisions every. All we will be doing is shipping away billions from Guyana in new job prospects, scuttling a chance to further industrialise the nation, destroying new private business opportunities and most importantly, ruining instances to create new public wealth.
In reference to other private business opportunities, let us consider that this investment can kick off a whole new petrochemical industry, which can easily create over 1500 new well-paying jobs. Singapore has no exploitable oil reserves, but yet they have a booming petrochemical industry. Today, that country is a leader in the production of synthetic fibres, plastics, solvents, and paints. It is all about an attitude of mind. At independence in a shaky economic situation, the Singaporean leaders centrally planned for rapid industrialisation. Their plan was always to use other people’s raw materials to create new jobs and wealth. The outcome was an absolute economic success. Today the earning per citizen in Singapore is 11 times more when compared to Guyana. Juxtapose that with 1960 when both of these countries had almost the same GDP per capita and one would realise again it is all about an attitude of mind.
Some may say that the colonial masters kept Guyana back. But history will illustrate that the colonial masters also tried the same game with the Singaporeans. What is materially different was the reaction to the colonial masters. Our leaders at independence proposed a totally bogus idea called ‘cooperative republicanism’; that saw themselves as victims of the cold war and walked around with a mentality that reflected a sense of entitlement and deserving of repatriation. The Lee Kwan Yew Team broke down all barriers to ensure that they contribute to the unleashing of the full potential of their people irrespective of their social status. They walked around clear in their head that no one owes them anything. Again, it is an attitude of mind!
When any Government of Guyana steer investors toward completing big ideas like an oil refinery, only then do they have the moral, ethical and evidential authority to grant themselves a GRADE “A”.<.7 billion. In a well-structured public-private partnership, the refining pure profit adds up to some US.8 billion over a 20-year period, which can easily reward all the investors for their risks. When the full investment cost of the refinery is deducted (50/50 joint venture), the Treasury will easily rake in new streams of revenue. Plus I have not even started to talk about all the new jobs and other spin-off business opportunities associated with this investment.
As a point aside, why would Suriname doubled its oil refining capacity to 15,000 bpd in 2016? The advantages far outweigh the disadvantages and thus I am quite surprised that the Granger Administration has not to date incubated any new discussions with investors on the Crab Island Refinery Project. Selling our crude to EXXON or to Petrotrin to be refined in Trinidad will be one of the dumbest decisions every. All we will be doing is shipping away billions from Guyana in new job prospects, scuttling a chance to further industrialise the nation, destroying new private business opportunities and most importantly, ruining instances to create new public wealth.
In reference to other private business opportunities, let us consider that this investment can kick off a whole new petrochemical industry, which can easily create over 1500 new well-paying jobs. Singapore has no exploitable oil reserves, but yet they have a booming petrochemical industry. Today, that country is a leader in the production of synthetic fibres, plastics, solvents, and paints. It is all about an attitude of mind. At independence in a shaky economic situation, the Singaporean leaders centrally planned for rapid industrialisation. Their plan was always to use other people’s raw materials to create new jobs and wealth. The outcome was an absolute economic success. Today the earning per citizen in Singapore is 11 times more when compared to Guyana. Juxtapose that with 1960 when both of these countries had almost the same GDP per capita and one would realise again it is all about an attitude of mind.
Some may say that the colonial masters kept Guyana back. But history will illustrate that the colonial masters also tried the same game with the Singaporeans. What is materially different was the reaction to the colonial masters. Our leaders at independence proposed a totally bogus idea called ‘cooperative republicanism’; that saw themselves as victims of the cold war and walked around with a mentality that reflected a sense of entitlement and deserving of repatriation. The Lee Kwan Yew Team broke down all barriers to ensure that they contribute to the unleashing of the full potential of their people irrespective of their social status. They walked around clear in their head that no one owes them anything. Again, it is an attitude of mind!
When any Government of Guyana steer investors toward completing big ideas like an oil refinery, only then do they have the moral, ethical and evidential authority to grant themselves a GRADE “A”.
