Govt. seeks investors to build, own country’s first oil refinery by 2025

– successful bidder to get 30 acres of land at Berbice River; enjoy 10-year tax holiday

Kaieteur News – The government of Guyana through the Ministry of Natural Resources on Friday issued a Request for Proposals (RFP) from interested companies to design, finance, construct and own the nation’s first refinery.

The proposed facility will be designed to process 30,000 barrels of oil per day (b/d) and be located on land provided by the government at the mouth of the Berbice River in the vicinity of “Crab Island.”

Government’s RFP said it expects construction to start by the first quarter of 2023 with project completion no later than two years after start date.

Importantly, government said it will provide several incentives to the successful company. Along with the estimated 30 acres of land to be provided, government said it will also offer generous fiscal incentives for the project including a 10-year tax holiday, supply of feedstock (oil) from the Guyana Government’s share of profit oil at market prices; and access to the domestic market for sale of refined products (if desired).

Interested companies will be required to provide several pieces of evidence as part of the due diligence process. The requirements as outlined by the ministry are as follows:

1. Evidence to show the developer’s capability and credibility to execute such a project. Submissions should include – (a) detailed track record of similar projects completed showing role played in design, financing, and construction, date of project start, date of completion, capacity (b/d), and total budget (b) evidence of financial ability, including the last three years of audited Financial Statements, and (c) details/evidence of financing for this project from its own resources or third-party resources.
2. Clearly written agreements among the parties listed above including a breakdown of proposed shareholding with lead investors/shareholders, and if a consortium, evidence of a legally binding consortium agreement for this project.

• Site plan for land required (estimated at 30 acres) showing planned utilisation and layout of facilities, including storage, and connections to sea or river to allow loading/offloading of crude and finished products. Plan should also show connections to existing road infrastructure for movement of tankers and other vehicles, to and from site.

1. Summarised and detailed project schedule including clear descriptions of all key infrastructure works that will be undertaken by the project. Timetable should include key milestones for (a) Financial Close and (b) Commercial Operations and Commissioning.
2. Outline of project costs (lump sum) detailing all capital costs (broken down into sufficient detail), financing costs, supervision costs, development costs, and all other costs to date of commissioning/commercial operations. Project costs should allocate breakdown mix of foreign and local costs against (a) materials (b) labour (c) equipment (d) services (e ) other.
3. Project structure diagram. Parties should confirm if a Special Purpose Company (SPC) will be created in Guyana and all key contracts and contract parties for the project. All permits, licences, and permissions, required by law should be stated including timeframe for start and completion of these processes.

• Business Plan, including financing projections (income statement, cash flow, balance sheet), over a 20-year period from start of operations, and a summary market study showing planned distribution of the refined products. Business Plan should clearly show the separation of fixed costs and variable costs and detail allocation of expected margin per barrel of refined product: (a) in-bound logistics from FPSO, (b) operating costs (c) outbound logistics, and (d) capital cost recovery.
• List of draft legal agreements required to conclude an agreement including sample drafts or summary of key terms.

1. Proposed capital structure for financing including related details, such as weighted average cost of capital (WACC), debt/equity mix, cost of equity, cost of debt, and financial flows over the life of the project.
2. Details of proposed local content, including sub-contractors, % of project costs that will be locally sourced, and supporting details of same.

All interested persons are expected to register with the Ministry of Natural Resources.

Further information can be obtained by email at [email protected].

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