Government on Thursday announced that a feasibility study will be conducted to determine if it should establish an oil refinery here.
“Cabinet has granted approval to the Ministry of Natural Resources to retain a consultant to provide a high-level feasibility assessment to the government on whether investing in an oil refinery is a viable economic option,” Min-ister of Natural Re-sources Raphael Trotman on Thursday told a post-Cabinet press conference.
Trotman disclosed that a consultant has already been selected in Director of Advisory Services of the United States-headquartered Hartree Partners Limited, Pedro Haas.
Haas’ services were secured though the new petroleum producers group which was established by Chatham House, a UK-based independent policy institute, that has been assisting Guyana in preparing for oil and gas production.
The consultancy work will last for four weeks, from the date of engagement.
Trotman said that the decision was made to have a feasibility study due to the great interest expressed by persons, both local and overseas and he stressed that should the study be positive, government will research and consult further before a concrete decision is made.
“His Excellency, the president and the Ministry of Business has received multiple applications for the establishment of and or in some instances, several oil refineries in Guyana and we believe that we should not rely on our own judgement, or lack thereof, on these issues. We therefore sought through the auspices of the Chatham House group, the [identification] of a suitable [consultant] to do a test review in the first instance for government. If it is that the study tells us that this is feasible, then I believe that we will delve further. It is looking, of course, at demand, availability, prices, the economic landscape … looking ahead, that would of course determine some of the decisions for government,” he added.
The government will face questions over the basis of its decisions on the oil and gas industry. While Trotman mentioned Chatham House as assisting in relation to identifying Hartree, that process would be seen as less transparent and fair than an open invitation for consultants as is done with important projects. Hartree was previously connected to Hess Corporation, which has a 30% stake in the ExxonMobil-led consortium, which discovered the huge offshore oil deposit at Liza-1. Hartree’s former connection to Hess could raise concerns about conflict of interest.
Other decisions of the government on oil and gas will also come under scrutiny. In early September 2016, the Ministry had announced its intention to set up an onshore oil and gas logistics and supplies facility, with the aim of optimising opportunities in the area of petroleum exploration and production.
In December last year, Trotman pointed out that that interviews with a number of local and international interested parties were held at the end of October and early November, 2016 and announced that Cabinet had since given its ‘no objection’ to the establishment of an onshore industrial site in the area of Crab Island, Berbice.
The onshore industrial site will be forged through the joint efforts of the ministries of Natural Resources, Public Infrastructure and Business. Construction is expected to commence this year and the investments from the private sector and government’s infrastructural work and support will be equivalent to US$500,000,000, which will lead to the creation of approximately 600 direct jobs.
‘Competencies’
Questions have already been raised about the process that led the government to decide on Crab Island, considering the intricacies of the development of the offshore wells and the long-term forecasting that would have had to have been employed. Asked about this on Thursday, Trotman promised to release the detailed criteria for the selection of the site but shared an insight into government’s decision. “We looked for local content, we looked for competencies in the industry, we looked for experience, we looked for ability to invest and by that I mean financial means. We are in the first instance identifying a location because of its comparative advantages, the draught that is needed relative to the Demerara and Essequibo rivers,” the minister said.
“We are looking at proximity to the offshore facility Exxon will be having, 123 miles off the coast of Guyana, and we are looking as well at the location of industry, in terms of employment generating and aiding the economy of Berbice, in particular. We are looking at availability of some skills. We know, for example, that the training school in Port Mourant produces a high degree of skilled persons in a technical capacity. So there are a number of considerations that went into the decision to put this in Berbice,” he further added.
The minister had said too that much emphasis will be placed on capacity building this year as well as the creation of a Petroleum Commission and the establishment of a Petroleum Department within his ministry.
Last Sunday, an advertisement was placed in Stabroek News inviting applications for nine positions within the Petroleum Department, with yesterday given as the application deadline.
Trotman was asked about the department and the short timeframe given for response but said that he believed that it was adequate time.
“It was in this year’s budget, which was passed at the end of December that we got approval for hiring for petroleum division. We set about issuing, as fast we could, advertisements to hire 14 persons in the first instance. We believe that the time afforded is sufficient. Why? Because prior to the advertisements and prior to the approval received, we have a sizable stack of applications that have come in for Guyanese and foreigners. That stack has been growing larger.
“We did feel that notwithstanding a heap of applications that we should still go with a public advertisement so that persons who have not indicated an interest could do so. We have received countless applications since. Some are being emailed some are being brought in. We are quite pleased that for the 14 positions we are seeking that there is an excellent response,” Trotman stated.
He said that the vacancies are posted on the ministry’s website and applications are welcome from here and abroad but persons who applied before the public notification of vacancies would have to reapply, in the interest of transparency.
Asked if the short timeframe was also because persons were pre-selected and the job advertisement was just window dressing, he dismissed the claims.
“I have not even been going through the applications; [they] go to the PS [Permanent Secretary] and not the minister I have just been advised that many applications [were received]. And, as it pertains to the Petroleum Commission, the minister also gave an update. We are in the process of bringing legislation to the National Assembly for our regulatory agency where there will a director or commissioner of petroleum who will function in a semi-autonomous environment… so the regulatory agency will be coming in a few weeks,” he noted.
He said that since the regulatory agency will be semi-autonomous, its head will not have to report to a Permanent Secretary as in the case of the director of the department within the ministry.
