Premier McKeeva Bush announced Friday that he has signed a ministerial memorandum of understanding with two companies proposing to build an oil refinery in George Town.
Mr. Bush said he signed the agreement with Ventech Ltd, based in Houston, Texas, and local company Navitas Ltd, to develop and operate an “environmentally sensitive oil refinery” to provide cheaper petroleum products to Cayman.
The premier said this would lead to lower gas prices at the pumps and to smaller electricity bills.
Instead of shipping Middle Eastern oil into Cayman, crude oil would be purchased from Mexico and Colombia, he said.
“These companies have already commenced a full environmental impact assessment which will analyse all the potential issues related to the development,” he said.
A ministerial memorandum of this kind is not a binding agreement and means the issue has not been brought before Cabinet. Mr. Bush said signing the memorandum at this stage meant that more research would be done and the public could be made aware of the details of the project.
Mario Rankin, the major shareholder in Navitas, said the proposed oil refinery would be located on 13 acres of industrial land behind the Caribbean Utilities Company on Sparkys Lane in George Town, and that oil could be piped directly to CUC to power its generators.
He said the plants would not produce any pollution and would be free of emissions.
The refinery would have the capacity to process 6,000 barrels of crude oil a day, said Mr. Rankin, who added that since all of the crude by-products would be used, this would produce about 6,000 barrels of refined oil.
“We currently burn 3,400 barrels of refined petroleum products a day locally,” he said.
The companies would install at the site two crude oil topping plants capable of producing 6,000 barrels of refined oil a day. Initially, only one plant would operate. The operation would eventually expand to produce 12,000 barrels a day, Mr. Rankin said. The plants, built in Nigeria, are being housed in Ventech’s warehouse in Texas.
Import duty retained
After Mr. Bush’s announcement in the Legislative Assembly on Friday, he was asked by East End MLA Arden McLean if revenue from fuel import duty - 75 cents per gallon for gasoline and 85 cents per gallon for diesel - would decline because of the oil refinery project. The premier responded that import duty would continue to be imposed on the crude oil brought into Cayman and that the developers of the project had not asked for import duty exemptions.
Mr. Rankin said he believed the project would lead to more import duty revenue for the government as more oil than now would be imported once the project went ahead.
A new revenue stream would also be created when the companies export excess refined fuel, the premier said in his announcement.
Mr. Bush said the crude oil processing plant would include pipelines, storage tanks and transfer stations.
He said the project would “benefit every single citizen on the Cayman Islands” by immediately reducing the fuel surcharge on CUC monthly bills and eliminating the cost associated with transportation of fuel.
“By installing a refinery here on the Islands, we are in command of our destiny and can participate in setting the ultimate cost of refined products such as diesel [used by CUC], gasoline and LPG [liquid propane gas],” said Mr. Bush.
The government would collect revenues and royalties, which will be placed in a “sovereign fund” to be shared directly with the public through annual dividends or by funding green energy projects. The plant would produce aviation fuel, diesel, kerosene, liquid propane gas and unleaded gasoline.
Mr. Rankin said excess refined gasoline, diesel and liquid petroleum gas could be exported and sold to other countries in the region.
The crude oil would come by ship to Jackson Point, where it would be pumped through pipes owned by CUC that are currently used to carry the refined oil from the Jackson Point storage depot to the utility.
Mr. Rankin said initially, while CUC is still receiving refined fuel from the storage tanks on South Church Street in George Town, both crude and refined oil could be pumped through those pipes.
After crude oil is pumped, the pipe would be cleaned by a device known as a “pig”, which scrapes residue from the inner wall of the pipe, preparing it for the transfer of refined oil, he said.
