Introduction
Last week’s column focused on reviewing the results of Pedro Haas’ feasibility study for a state-owned oil refinery, sponsored by the Ministry Natural Resources (MoNR). Its results drove me to pronounce on Decision Rule 2, which states: the feasibility study makes clear that there is no overall economic justification for proceeding with a state owned, controlled and operated oil refinery. And, specifically one based on a required production of 100,000 barrels/day, in order to be “competitive”. In this circumstance around 80 percent of the crude input would be producing refined products for export.
Rule 2 complements Rule 1, which had earlier posited: there can be no serious economic objection to either private investors (local and/or abroad) or external National Oil Companies (NOCs) building a local refinery, which they wholly own, control and operate, provided this does not require any out-of-the ordinary state support, including domestic market protection, price accommodation, or tax expenditures.