A Guyana State-owned oil refinery could put the aspirational target of a green state in peril

Today’s column concludes my discussion of Decision Rule 2, which posits: there is no overall economic justification for a Guyana state-owned oil refinery (of approximately 100,000 barrels/day). An effective local content requirements (LCRs) regime for its coming petroleum sector does not support this either, despite the claim it is required in order to maximize downstream value added. Today’s column draws on my previous review of the World Bank’s study of 48 countries experiences in this field. Before addressing this directly, a couple of observations are warranted.

First, in last week’s recap of UNCTAD’s review of South Africa’s experiences, I had stressed in support of Decision Rule 2 that, the earlier naïve/trivial view of LCRs as simply the percentage share of local inputs in a domestic producer’s output, has evolved into the more dynamic economic notion of: “localization/indigenization of production, value added, and development potential of domestic firms, operating throughout the petroleum sector’s value chain”…..

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Decision Rule 3: Pending the on-going “desk study”, natural gas should remain Guyana’s preferred major downstream value added investment

Decision Rule 3 Last week’s column continued the exploration of Guyana’s natural gas prospects, both “associated with/and not associated with” its recent substantial petroleum finds.

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What Next: More on the Natural Gas Option!

Introduction Last week’s column had raised the conundrum: What next? Given that, I am advising against state investment in oil refining therefore, what other major options I am recommending for realizing the substantial potential of Guyana’s recent petroleum finds.

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What Next: If State-owned Oil Refinery is Not Economically Justified?

Introduction As matters presently stand, and in order to be precise as well as taking into account the discussion concerning a Guyana state-owned oil refinery has lasted for several weeks (since August 20, 2017) it is perhaps prudent that today’s column starts by summarizing my two recommendations.

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Local content requirements do not support wastage of public resources on an oil refinery

Introduction Today’s column, and the next, continues to evaluate the feasibility of a Guyana state-owned oil refinery, promoted by many as the leading edge of a local content requirements (LCRs) regime aimed at maximizing downstream domestic value-added in the coming petroleum sector.

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Queries in support of Decision Rule 2

Introduction In last week’s column I sought to recall, for the benefit of readers, several key observations and conclusions that were drawn from my earlier review of refinery economics in order to support Decision Rule 2.

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