PRIME Minister Hubert Minnis looks on as Oban Energies’ non-executive chairman, Peter Krieger, signs the heads of agreement. Krieger has since resigned from the company following public scrutiny. Photo: Yontalay Bowe/OPM Media Services.
By RASHAD ROLLE
Tribune Staff Reporter
rrolle@tribunemedia.net
AS the $5.5 billion Oban Energies project forges ahead, some business and oil industry insiders are unconvinced a viable market exists for an oil refinery in the Bahamas and want to see the feasibility study conducted for the project.
Concerns have so far centred on the project’s environmental impact and the people behind the company, not so much its economic viability.
The Tribune understands the Bahamas Oil Refining Company International Ltd, BORCO, explored the possibility of moving beyond its oil storage business into the oil refinery arena in the last several years but decided the market could not sustain it.
Developments like this are also being discussed in the region, with Sir Paul Collier, a prominent Oxford University professor of economics and public policy, telling reporters in Guyana in the last week an investment in an oil refinery would be an unwise investment for that country.
“The whole oil industry is going to tether out in 2040,” Sir Paul said, according to INews Guyana. “You might be left with a great lump of technology off your shores which has no use.”
The British professor, who was participating in a special high-level Cabinet caucus on the development of the oil and gas industry in Guyana, told reporters there the margin on returns for refining oil is “very small.”
The Oban Energies project should be completed by 2030, according to the heads of agreement signed with the government. Two hundred and fifty people are predicted to be directly employed upon completion. By year four, the project should encompass a 250,000 barrel per day oil refinery, a component estimated to cost up to $4 billion.
The findings of a feasibility study for the project have not been disclosed to the public.
One local industry insider, who spoke to The Tribune anonymously because he was not authorised to speak to the press, was dismissive this week over the environmental concerns that have persisted about the project, emphasising modern technology mitigates such problems. A greater worry, he said, is whether a market exists, especially its refinery component.
For an oil refinery to achieve sustained success in the Bahamas, Oban Energies must have already secured long-term contracts with credible customers, The Tribune was told.
“They must have seen something the rest of us haven’t seen,” the insider said. “I would ask them why they see this as a profitable project to take on when it doesn’t seem like that to other folks in the industry and I would be curious whether they have contracts with people in the business that require refined barrels of oil and which areas of the world they plan to target for their business.”
BORCO, which has over 26 million barrels of storage capacity, closed its oil refinery component years ago, though this was not done at the time out of concern for its economic viability.
On its website, Oban Energies offers a short assessment of the market potential for its project which seems to concentrate on the market for oil storage terminals.
It says: “Oban Energies will target the market demand for storage of petroleum/liquid product and distribution of petroleum products for refineries and major trading companies. The storage market is large––more than 500 million barrels in the US––and demand is growing as available storage capacity is declining. The market for storage of petroleum/liquid product and distribution products is large and growing, but is lacking sufficient capacity and state-of-the-art facilities with best-in-class location or management.”
Doubts
The last refinery in the United States with capacity exceeding 100,000 barrels per day to be built was established in 1977. Smaller refineries have been created since, but the global trend has been for already established refineries to expand their capacity to address market demands as opposed to new refineries springing up.
Yesterday Leslie Miller, former trade and industry minister in the first Christie administration, insisted no clear need for an oil refinery exists in the region.
“That proposed plan in Grand Bahama is not going to happen because the economics of it makes no sense,” Mr Miller said. “There’s no need for an oil refinery to be placed in Grand Bahama. If there was a need for a refinery on the eastern seaboard of the US, a consortium of well-known companies would have gotten together to put that project in place. When you talking about $5.5 billion, you’re talking about a plant that can refine 170,000 to 250,000 barrels a day of crude oil. When you think about the magnitude of that, the reason a consortium would be involved is they would get crude (oil) coming from the Middle East, from Russia, etc. Some basic questions were never asked about this project. To have the intention of creating a petrochemical institution, the first question you ask is, who are the players that will supply this complex with crude?”
Mr Miller added: “There has to be a need for this complex to be placed in Grand Bahama. Buckeye who bought out BORCO from the Petroleos de Venezuela SA, if there was a need for this refinery to be placed on the eastern seaboard of the US, you don’t think a company of the calibre of Buckeye, with the financial wherewithal and connections that it has would have been involved?”
In 2012, the Hovensa oil refinery in the US Virgin Islands closed after years of weak demand and high operating costs. Losses at the refinery totaled $1.3 billion in the three years before its closure, Hovensa said. The storage terminal remained open until 2015 before it also closed. The project has since been taken over by Limetree Bay Terminals LLC, a subsidiary of ArcLight Capital Partners. The oil storage terminal is expected to reopen, but the future of the oil refinery there remains uncertain.
Comments
proudloudandfnm 6 years ago
I've been saying this all along.
I have a question. If a legit organisation actually wanted to build a refinery would they hire a boat salesman as VP of Operations?
This whole Oban deal stinks. Minnis is either on the take or he is the laziest PM we have ever had. Either way this is big enough that Minnis should do the right thing and step down. Let an actual leader take over. Maybe then something can actually happen in Freeport.
I also wonder if this Obam deal was meant to distract us from the hotel sales process? Seems that effort has died.
One year in and NOT ONE SINGLE THING ACCOMPLISHED IN G.B. NOT ONE SINGLE THING FOR THE ISLAND THAT GAVE EVERY SEAT TO THIS PARTY OF DO NOTHINGS...
I wouldn't vote for this FNM ever. Especially the Freeport 5. You have ALL let us down and you should all be ashamed of yourselves. You are all incredibly wrong for your silence while Freeport dies. Shame on every one of you...
athlete12 6 years ago
So the project will not be completed for 12 years.Once completed, the refinery will then take up to four years to reach full output. Then within 6 years the refinery will likely close because there is no demand as countries move to clean energy and there's no sure supplier of crude oil. So those 250 jobs will be gone in 10 years, acres of Bahamian land will be lost, environmental damage and our nation's second city will be worst off than when it started.
Am I missing something here?
How much money are the people making from this ?
Well_mudda_take_sic 6 years ago
Arrogant Minnis seems incapable of manning up to the fact that he made a colossal error in judgement when it comes to Oban. Instead, the dimwitted doc would rather saddle our country with yet another corrupt investor group and all of the environmental damage and reputational risk they would surely bring with them. Does Minnis have a conscience, or is he so overwhelmed that he must continue to behave like a deer at night caught in the headlights of an oncoming 18 wheeler Mac truck?!
TalRussell 6 years ago
Bothers hell out this Comrade why "Brave" and his three House MP's are taking such a casual approach in House to Oban... what is there I'm missing that I am not getting from my talk on the street sources.... the four House men's should be jumping all over Minnis and KP and Oban... there's hardly word being said in the over the constitutional seriousness presented over the prime minister's outright misleading the House on Oban... Why isn't it for a PM to mislead the House equal constitutionality telling a fat lie?...... So why hasn't the governor general not done summoned the PM up to Mount Fitzwilliam to be fired?
DDK 6 years ago
You and your fascination with "The Governor General"! The rest is interesting.........
DEDDIE 6 years ago
If the people from OBAN wants to invest that type of money into an oil refinery let them do so. If it is not feasible long term the money would have resulted in an economic boom for Freeport.
TalRussell 6 years ago
Ma Comrade Deddie, imagine if we passed on Oban and created the Magic Little City Kites............ you does hardly see anyone flying Kites these days. Motto: "Bahamalanders chooses the flying beautiful Kites over the blue skies Grand Bahamaland - not destroying our blue waters and sandy beaches with nasty sludge oils." Not a single Bahamalander has ever gotten Cancer from Kites.
cominghome 6 years ago
Why would a company say...hey let's build an oil refinery....mmmm...where ?....mmmm...let,s see...ah..the Bahamas looks like a nice place... Is this about building an oil refinery or more about getting a hold on that land ? No one in their right mind should even consider building such a potentially dangerous, foul smelling facility anywhere within the boundaries of this pristine and beautiful country, the profits of which, if any, will probably not benefit the average Bahamian. Eco tourism is growing and will only get bigger. If we decide to take advantage of what is arguably one of, if not the most beautiful country in the world, and take eco tourism really serious we will have no equal. I fail to understand a government that can give the green light to such a project. Who is running this country....IDIOTS ???
Porcupine 6 years ago
A greater worry.........You have to be f_ ing kidding me. Clearly there is a problem with sitting at your desk all day thinking about money and markets, while your arteries harden up such that you become dismissive about environmental concerns for the sake of our living world and humanities very future. Tribune, your industry insider has some serious cognitive issues if he thinks that technology has helped our earth since the industrial revolution. It has had the capability of leaving a better planet than we found it, but somehow, we humans have used this amazing technology in ways that have been wholly antithetical to any vague notion of sustainability or love of life. Your industry insider hasn't a clue.
John 6 years ago
The United States will be reducing production of the gas powered vehicle by 30 percent next year and countries like China and India plan to fully eliminate (new) gas powered vehicles by 2020 (two years). So when this facility becomes fully operational the number of gas powered vehicles in the world will be reduced by 50 percent. The electric vehicles also do not require much of the other products this refinery will be producing so it appears the plant will be obsolete before it is completed or, at least, fully operational.
gbgal 6 years ago
Far better to look at an LG project or a solar/wind farm to produce alternative sources. In addition, perhaps revisiting fish farming and/ or vegetable/herbs hydroponics could be worth the effort.
bobneville 6 years ago
you poor sick people,your main masomeyhing most can't understandbbn lose ,your free meal ticket gone at least for the next 16 years an you dont know what to do, so you ask for the head of the pm who really dont have anything to do with this whole thing,his job is to try to convince you jokers that oban is the best thing that happen to the bahamas since freeport,and look at how you'all screwed that up .so the lady felt like she can still salvage some of that fiaco with another bigger project one you people cannot understand,some say it cannot be good or real because no one has offered bribes or deal to the boys,dont hold your breath,this is a brand new day for the bahamas,no deals no bribes,no nothing.so get off your lazy behinds,go to school to qualify yourselves,and get ready for the most prosperous era since rum running,An dont worry about crown land they are all being taken away and given to people that will use it to help all the people.
Sickened 6 years ago
Did we at least work out a deal where we can buy gas from them at a reduced rate or will we still need to import their gas after they have exported it elsewhere (kind of like our supermarket crawfish)?
TalRussell 6 years ago
Ma Comrade Sickened, does you realize if you shipped out all the Bahamalanders who transported themselves and family into Freeport the place could be officially declared extinct of Freeport born Bahamalanders.... in fact not more than 7.88% of the entire population bloodlines can be traced back 1960's native Freeporters... that may just be the problem... not enough Freeport culture to go around? The first family arrive in Freeport was the Gray Russell family from Hope Town Abaco, followed by the Robert Darville and Don Roberts out Nassau.... all who just happen be white or lick da brush anyways.... before blacks were allowed under Freeport's apartheid to reside in magic city..... why else would they tolerate private company as the quasi government over them?
TigerB 6 years ago
I see some of our thinking is already into the years 2030 and beyond, but i remind all of you that the first block has not been laid yet. The Lord may come before this can get started. Why can't you all relax and let the game come too us, especially those who are not residents of this island . I have noticed that Our News has been reporting about OBAN now everyday for a while. Its bias reporting. It seems that the only stories they report are the negative aspects of Oban. They have yet to report or interview persons on the positive side. I will tell you that more persons are for this project than those against it. And just a word of caution Mr. Comrade, the majority of persons staying in Freeport would wish to stay here. No one really desires to live in Nassau. That why we hope investment like Oban would come here. I always say that recession is only for those who can't pay their bills... It is still quiet, clean and car free with garbage being collected 2 times a week like clock work. We like it that way, just allow investments to come, that is all we ask
bobneville 6 years ago
my goodness you negro's are mean to the brother,at least now he knows how donald trump feels.ease up guys this is why strangers dont respect you'all if you treat your own like this what will you do to me,besides this is a private bussiness,they are not asking you or your goverment for anything ,they are offering you a better life ,no the land is already theres,and this is your problem,you think the queens land is yours now you tell me when did a hand full of brothers aquired the bahamas, did you fought for it, did you buy it,oh yea god gave it to yenna,the crown of england own the land and everything on the land under over,in the seas and under the sea,if you found gold in the ground in your back yard,this goverment will take it away from you and give it to the queen,fyi,besides who will you sell it to,you need license to sell gold borax treasure etc,and guess who you get it from ,your right you get it from the queens man,now where are you going to tell him you got it from leave minnis alone and please 'BE CAREFUL'.LOVE YA
ThisIsOurs 6 years ago
You're wrong, This Is Ours, it's all ours and how anyone uses it is of interest to all of us. That's why every landowner needs a permit, permission to do what they want with their land. They're asking us to use our land and risk contamination of our waters. Our leaders should have considered the risk and negotiated a balanced reward. My goodness, they've agreed to limit their liability in event of an environmental disaster to 4 million dollars. even the most incompetent person would see the pitfalls of that versus 40 jobs two years from now.
birdiestrachan 6 years ago
This is a very bad deal. Even the 20% foreign workers will have tax exemptions They will be the ones who will earn the larger salaries ...Oban will pay no taxes at all. and they also have a real estate company where they will be building houses. The land they will lease is beautiful Beach property
If the people of Pinders point complained. about BORCO Why.do even worse in the East. And even as roc wit doc does not know any better. What about the rest of his cabinet??. Are they no better could they not see it was a foolish agreement. But then again they all called Moultrie's WRONG RIGHT. The peoples time for sure. good for GB FNM Country.
TigerB 6 years ago
So are we saying Clifton Pier is a bad deal? You see the condition that is in? a real oil refinery problem wrapped up in a power plant. Its just needs to be maintained, that all the other two refineries do, they maintain them. There has not been a drop of oil spilled from OBAN, not yet. I just passed BORCO yesterday buying my potato bread from Pinder's point for my fry fish tomorrow, not one odor there. I was no more the 10 feet on the road from the plant. Companies are careful because there will be law suits and plenty money to be paid for clean ups. You people need to get a grip...
ThisIsOurs 6 years ago
In 2017 I believe it was, the residents of Pinders Point reported hearing a loud explosion. Shortly thereafter workers in hazmat suits were seen doing what was believed to be a cleanup exercise. Noone, not the company not the government has ever explained what happened. Companies are "careful" not to expose themselves to legal risk even when there is something to be exposed
VDSheep 6 years ago
Instead of perpetrating political ploys – any government ought to legislate all Grand Bahama a Freeport Island. Bring in industries – from A to Z ‘ Make Grand Bahama the Hong Kong of the West! Make all of Grand Bahama a Freeport Island - with proper legislation to govern it.
TheMadHatter 6 years ago
BobNeville is right. Bahamians in general are taught that they are no longer slaves under the Queen. They are taught in school that she is only a "figurehead". LOL. Yet every month they pay rent to their "landlord".
LOL. Keep paying ya landlord and believin ya free. Good joke. Keep havin slave babies to grow up and work for the master. Majority rule what? What they rule?
Why does the Crown still have our land? But watch July 10th all kinda jackass will be out celebrating "independence."
Well_mudda_take_sic 6 years ago
The fact that posters to this website, like "bobneville" and "The MadHatter", must resort to playing the tired old lame race card game in support of Oban, tells us the project is only good for its foreign promoters with nothing but downside costs for Bahamians and our country.
SP 6 years ago
After silently watching this Oban fiasco from the beginning, there are still more questions than answers. Quite a bit of this deal doesn't pass the smell test!
Has PM Minnis allowed himself to also be compromised to the detriment of our country and people? Examine the following link and make your own decision.
http://www.brasschecktv.com/videos/co...">http://www.brasschecktv.com/videos/co...
Could this explain why PM Minnis has totally ignored the obvious by not focusing on tapping into our natural resources to rescue the Bahamas in our time of greatest need?
Are the Bahamas doomed as long as any compilation of PLP or FNM governs the country?
Should "we the people" demand a fresh mandate and force PM Minnis to call an election so we can try the DNA or others not compromised by decades of systemic corruption?
ThisIsOurs 6 years ago
The thing is, the details this Cambridge Analytica whistleblower (who also revealed how CA misused Facebook data to target ads to support Trumps election win) gives are nothing we didn't always suspect. HE SAYS THEY WOULD /TARGET/ ISLANDS WITH POOR CONTROLS, low civil society nvolvement, POLITICIANS THEY COULD ESSENTIALLY MANIPULATE, support their election campaigns in hopes that once these dumb greedy self serving politicians were elected, CA would be able to make money through contracts. And if the lax enough laws weren't in place they could always get them passed after the win.This is what we've always suspected. It's just the first time "the foreigner" has admitted what they do to our dumb greedy clueless leaders, who believe they're winning, meanwhile the foreigner is laughing at how little they understand about how much their country and resources are actually worth. I still say this Oban deal has nothing to do with building an oil refinery, I don't know what they're up to but Kreiger was interested in commercial land for residential development NOW. The oil refinery is sometime in the fuzzy future
ThisIsOurs 6 years ago
Remember the BOLD move that was reported after a meeting with Donald Trump? You really have to wonder. Two days in the job and you believe your brilliance resulted in someone offering you "a deal". They see you coming 10 miles away.
I don't believe the DNA will be any different. What is happening now is that persons with the lowest moral and ethical compasses are aligning themselves with whichever party they believe will win. These persons go into politics specifically to exploit these under the table contracts. Some of the candidates supported by the DNA are qualitatively no different from those we've always suffered. Watch and see, in the next five years the same recycled politicians will align themselves with the DNA...might even see Wells cross the floor again. Certainly puts a new light on the never explained LOI affair
Socrates 6 years ago
when you think about how we cant keep the power on consistently or keep traffic lights working, it frightens the hell out of me to wonder how we will respond if a leak or explosion occurs at this proposed place. seems we really need to decide if we really want to possibly put the GB tourism industry, water supply and environment at risk for what will be at the end of the day, if ever, an insignificant amount of jobs..
sealice 5 years, 3 months ago
https://www.msn.com/en-xl/australasia...">https://www.msn.com/en-xl/australasia...
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