Dear Editor,
The controversial two percent royalty on our crude oil production seems to be written in stone and no change to this particular aspect of the contract is on the immediate horizon.
That is the nature of rapacious corporations and it serves no purpose in lamenting the fact. We need to work around it and maybe the best way forward will be to create industrial linkages that will add value to the natural gas and crude oil produced by the wells.
There is already a process in train to pipe the natural gas to shore for energy production. It is envisaged to produce over 200 MW of power which will allow for affordable and reliable domestic electricity as well as power for the creation of light industries. This project should be treated with a high degree of priority.
With regards to the crude oil, we should explore the feasibility of a small 40,000 barrels per day (bbls/day) refinery to be located in the vicinity of the planned deep water harbour.
Our average daily consumption of refined distillates (gasoline, diesel, kerosene and aviation jet fuel) is around 30,000 bbls/day, so a 40,000 bbls/day refinery will satisfy our needs as well as allow parcels for export in the Caribbean.
The latest crude oil volume in the Stabroek Block is estimated at around 8 billion barrels. Refining 1 billion barrels or one-eighth of that amount by the 40,000 bbls/day plant will give an Industrial life span of approximately 70 years. This will be more than adequate to give a healthy return on investment.
The construction of this refinery will probably take 4- 5 years which will give the oil market opportune time to recover and in the meantime the construction phase will create a lot of job opportunities for our local engineers, welders, fabricators and fitters.
The by-products of the refinery also can initiate spinoff industries such as a Liquefied Petroleum Gas plant (cooking gas), base oil for a lubricating plant, bitumen for road work and sulphur for either sulphuric acid production or for making matches.
Shipping in the wet trades will be increased since you will need oil tankers to transport crude oil from Exxon platform to the refinery and refined products from the refinery to its customers locally and within the region. This will present the opportunity for charterers, brokers, Insurers and owners of tankers to participate in the trade.
It may be prudent since we have such good relations with Suriname to study their experience in having a 20,000 bbls/day refinery (Staatsolie) which will act as a guide as we endeavour to add value to our petroleum find.
Yours faithfully,
Reggie Bhagwandin
