Caribbean Struggles to Regain Oil Refining Glory
01.11.2024 By Tank Terminals - NEWS

January 10, 2024 [Argus]- Growing oil producer Guyana is talking with five potential investors interested in building and operating the country’s first refinery, vice-president Bharrat Jagdeo said last week.


The government issued a tender in October for the 30,000 b/d facility, but has not said when it will decide which bidder will design, construct and operate the refinery.

Guyana “is exploring all options to ensure that its refinery will be economically viable, sustainable, and will bring added benefits to the country,” Jagdeo said.

A Guyana plant would counter a trend in the Caribbean basin that was once dominated by large plants with cumulative capacity of over 1.6mn b/d that process mainly imported feedstock.

But the region’s refining capacity has been reduced to approximately 160,000 b/d inthe past 35 years as refineries have been shuttered.

Closed refineries include the 650,000 b/d St Croix plant in the US Virgin Islands, Curacao’s 335,000 b/d Isla, Aruba’s 235,000 b/d San Nicolas facility and the 165,000 b/d Guaracara plant in Trinidad and Tobago.

US Virgin Islands domestic start-up Port Hamilton is locked in legal arguments with US federal environmental agency EPA that ordered a halt in 2022 to preparatory work to reopen St Croix.

China’s GZE, Germany’s Klesch, Dutch contractor Corc and US-Brazilian consortium CPR are among companies that unsuccessfully vied to reopen Isla, which was shuttered in 2019 when Venezuela’s state oil company PdV declined to renew its expired long-term lease.

Trinidad shut Guaracara in 2018 because it became uneconomic. Despite approaches from a domestic labor union-owned company and California-based electrical contractor Quanten, the government has been unable to offload the facility.

Negotiations for Quanten to purchase San Nicolas also failed after state-owned oil company RdA cancelled an agreement in June 2022.

Problems that afflicted PdV have also set back expansion plans in regional refineries in which it had in interest.

The Dominican Republic took complete ownership of the 34,000 b/d Haina refinery in August 2021 with the purchase of PdV’s 49pc stake, saying it was “disappointed” by PdV’s delay in implementing its commitment to expand Haina’s capacity to 60,000 b/d.

Jamaica’s government also took PdV’s 49pc stake in the 35,000 b/d Kingston facility, contending that the Venezuelan firm had reneged on an agreement to expand the capacity to 50,000 b/d.

Cuba’s state oil company Cupet took over PdV’s 49pc stake in the 65,000 b/d Cienfuegos refinery in 2017, after the collapse of an agreement to lift capacity to 150,000 b/d.

Russian oil firm Rosneft is yet to deliver on a later project to expand Cienfuegos and upgrade the island’s Soviet-era Nico Lopez refinery in Havana and the Hermanos Diaz in Santiago.

Guyana is projecting crude output of 1.2mn b/d by 2027. Its rapidly expanding production raised hopes of available feedstock to lift refinery capacity in the region.

The Dominican Republic said in August that it reached an agreement with Guyana to jointly develop a 50,000 b/d plant on Guyana’s north coast.

But Guyana has no immediate plans to build a second facility, Jagdeo said a week later. “We do not have the capacity for two refineries now.”

Trinidad’s Guaracara facility could be reopened to process Guyana’s crude, Trinidad energy minister Stuart Young said. But Guyana will not accept that offer, according to natural resources minister Vickram Bharrat.

“Everything points to a successful refinery project in Guyana,” a Trinidadian industry official told Argus last week. “But there’s little hope of a reopening or expansion of any refinery in the region. And I would not be surprised if some existing capacity were to be shut down.”


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