(Jamaica Observer) Energy Minister Dr Andrew Wheatley returned from Caracas early Thursday morning happy and relieved that Jamaica and Venezuela had finally arrived at an agreement on the long-awaited upgrade of the Petrojam refinery in Kingston.
Dr Wheatley and his Venezuelan counterpart, Nelson Martinez, signed the agreement late Wed-nesday night in the Venezuelan capital, bringing into force a condition of the deal reached in 2008 when State-owned Petroleos de Venezuela (PDVSA) spent US$63.5 million to acquire a 49 per cent stake in Petrojam. The remaining 51 per cent is held by the Jamaican Government.
“We finally signed the deal after 10 years,” an upbeat Dr Wheatley told the Jamaica Observer shortly after his arrival home.
He said the upgrade will meet Jamaica’s requirement of “55,000 barrels per day when the facility is up and running”.
“First of all, we’ll be able to fully satisfy all our domestic demand and have additional supplies to export to other Caribbean countries,” Dr Wheatley said.
The upgrade, he added, will cost an estimated US$850 million to US$1 billion, “depending on the technology that is employed”. However, the Jamaican Government is hoping that the cost will not rise above the US$850 million.
Last September, Petrojam General Manager Winston Watson had told a meeting of the House of Representatives’ Economy and Production Committee that the issue of the planned upgrade and expansion of the outmoded refinery would have to be decided by the end of October 2016.
Asked by Opposition member Fitz Jackson what were Jamaica’s options if Venezuela failed to meet that deadline, Watson said the fact that PDV Caribe, a subsidiary of PDVSA, owns a 49 per cent share of the refinery, it must be an incentive for it to seek to maximise and improve its investment in Petrojam.
However, he said that if the Venezuelans had said no to the upgrade, then Petrojam “would have to go to the market and seek another investor”.
On Thursday the energy ministry said the upgrade will lead to enhancements to the plant including:
- a desulphurisation facility to reduce the sulphur content in diesel;
- a delayed coker to produce higher-quality products such as gasoline and jet fuel; and
- a vacuum tower to produce vacuum gas oil.
“The project will be executed by SINOHYDRO Corporation Limited, which will undertake financing, engineering, procurement and construction,” the ministry said in a news release.
“The next steps will involve the establishment of a task force comprised of five representatives from either country within the next month. The team will have responsibility for finalising contractual arrangements with SINOHYDRO for project execution,” the ministry added.
“This is an important milestone after a lengthy period of groundwork, and we will now be moving expeditiously to iron out the final arrangements to make this upgrade a reality; so now, the real work begins,” the release quoted Dr Wheatley.
Earlier Wheatley had told the Observer that a number of factors, including decreases in the price of oil on the international market, had, over the years, prevented the partners from going ahead with the upgrade. “But because it’s on the upward trend now, for our own energy security it is imperative that; we get the refinery up and running… we stressed that, the Venezuelans shared that opinion and supported us in that regard,” he said.
