Dear Editor;
Wasn’t Hatree Partners, founded by the Hess Corporation? Is the Hess Corporation a 30% stakeholder in the ExxonMobil project? Aren’t the foreign operators looking at the Guyanese oil as a source of raw oil to fill their own internal refining capacity gaps? So why should one of their related parties recommend otherwise vis-à-vis a new Guyanese oil refinery? This is the million-dollar question. Is this advice from Mr Hass genuine?
It is just absurd that a consultant would proclaim that the cost to construct such a facility would be some US$5 billion. Who advised the advisor that Guyana needs a 100,000 bpd refinery? Let the record show that Guyana needs a 30,000 bpd refinery similar to that of Suriname with its 20,000 bpd (barrel per day) refinery. The new technologies allow for modularly built refineries. There is always the possibility for expansion incrementally if the need arises. Such a refinery with the ancillary facilities is more likely to cost about US$2 billion (US$0.7 billion for the refinery and the rest for the ancillary services). So it was extremely discomforting to listen to the recommendations made by this consultant by way of the podcast on DemeraraWaves. Thanks to Dennis Chabrol; he should keep up the good work.
The way the deal is structured is that if the wells produce approximately 100,000 bpd, then ExxonMobil will discount the daily depreciation cost for the original investment and the daily cost of running the operations. Let us assume for discussion’s sake that at an average selling price of US$55 per barrel, that computes to 40,000 bpd in value. That would leave 60,000 bpd to be distributed between the investors and Guyana ‒ 50/50. In such a scenario, the contract entitles Guyana to 30,000 bpd. That is our only concern – what to do with the 30,000 barrels of oil every day. The other 70,000 is ExxonMobil’s business and none of Guyana’s business.
Thus this recommendation by Hartree Partners and Mr Pedro Hass should be surgically scrutinized on multiple grounds. It fails to appropriately consider the merits of the oil deal; it does not take into consideration Guyana’s vested political and economic interest and most importantly, it is a one-sided suggestion that clearly shows bias towards the foreign operators. Is the game rigged against Guyana?
I must acknowledge the excellent push back from Minister Trotman; he did his job. He did not roll over on the recommendations, he hit the nail on the head by saying the final decision will be political. This is not an exclusive economic decision, but one also grounded in national development and our need to industrialize. In this day and age when refineries are active for more than 90 years, then this investment is very suitable for the long term investors like the international pension plans.
Their only mandate is steady and long-term payback. Everyone will win if an oil refinery is built in Guyana: the workers, the local private sector, the international long-term investors and the government and people of Guyana.
Yours faithfully,
Sase Singh
