Will Jamaica refinery join other shuttered plants?
A large number of refineries in the Caribbean and Central America have shut down and production is increasingly dominated by US Gulf Coast refineries, according to a strategic review commissioned by Jamaica’s government to assess state refiner Petrojam.
In its study for the cabinet-appointed Petrojam Review Committee (PRC), Gaffney Cline and Associates (GCA) highlights that the majority of Caribbean refineries were shuttered because they were unable to compete with imports.
GCA also points to the high cost of operating small capacity refineries and the lack of cheaper fuel, such as natural gas availability in the US.
John Auers, executive VP at engineering consultants Turner, Mason & Company, told BNamericas previously that the US Gulf Coast refining industry dominates the world due to competitive advantages such as size, complexity, efficiency, feedstock supply and natural gas cost.
Other market concerns include a forecast steep decline of heavy fuel oil use as the island’s generation park converts to LNG and renewable energy, and stricter marine fuel specifications.
“Based on the foregoing, the PRC concluded that the existence of local refinery operations is not essential to ensuring Jamaica’s energy security. However, the terminal because of its storage capacity and ability to receive petroleum product cargos and to supply distributors via its terminal racks, is deemed to be critical to ensuring energy security for the nation,” according to the document.
The PRC has recommended that the government engage an advisor, such as IFC, to assist in the transfer of the refinery’s management to the private sector, and if there is no interest, that the plant be shut down.
The strategic review, available here, will now be tabled in parliament for debate.
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