At his press conference on July 18, President Ali once again reiterated his interest in the country having an oil refinery. This is a discourse that has taken place over several years. On July 18, when he addressed it again he did so in the context of the cost of living challenges that have emerged.
The President said that although Guyana produces crude oil, it imports all of its refined petroleum products and is therefore exposed to international price fluctuations.
“We produce crude oil, but we import all refined oil—our gas and everything. So we import back all the price differentials,” he said.
The President argued that Guyana needed a refinery to provide security of supply and some protection against external price shocks.
“We cannot have crude oil and don’t have security of supply,” he said. “Security brings with it stability and then gives us some shield against shocks that are currently existing.”
The President said there was private sector interest in building a refinery and expressed hope that an investment would materialise. He suggested that the facility could be linked to a national oil company, although he said such a company would not necessarily be an investor.
The President added that the country also needed to examine whether it should maintain reserves sufficient for 30, 90 or 120 days.
“If our storage remains where it is, then it’s not matching the development aspirations of our country,” he said.
He argued that refinery and storage infrastructure could allow Guyana to become an important supplier of refined products to the Caribbean, including to the Dominican Republic.
According to the President, this could create a regional trading system while allowing Guyana to build its own emergency stock and derive greater economic benefits from its petroleum resources.
These points presented by the President do not provide sufficient basis for a refinery here. The economics of a refinery in Guyana have already been explored in detail and given the size of our economy it has been magisterially deemed not feasible. When the President speaks of investor interest no doubt he is referring to any number of PPP middlemen and their cohorts waiting to swoop in to carve out sweetheart deals and leave the country saddled with a badly run refinery project. The gas to energy project has laid down sufficient markers for Guyanese to be concerned about any locally-led effort at a refinery.
In the remaining four years of his final term, President Ali should be focused on how the state of Guyana and its people will reduce their consumption of carbon fuels to the extent that the question of the refinery would no longer pertinent. It requires common sense solutions to the runaway importation of petroleum-fuelled vehicles and not the absurdity that was once witnessed here where a well- known solar project advertised for a diesel vehicle instead of a solar powered one or an electric vehicle.
Even so, since the President is concerned about prices and availability of fuel in a crisis he should give thought to the creation of a strategic petroleum reserve of crude oil which could then be supplied to some nearby refinery for distillation into refined products. In addition with the appropriate additives there could be storage of some refined products for up to six months which would surely be enough time to iron out any kinks in supply.
It is unclear how Washington’s opaque deal with Caracas for access to Venezuela’s oil reserves will impact on anything but it would be in Guyana’s interest to work with friendly neighbours such as Brazil and Trinidad to to secure sufficient supplies of refined fuels at a reasonable price to tide the country through any crisis period. Leave the refineries with their environmental risks to others in the Caribbean and further afield.
Discussion