Winston Watson, managing director of the Petrojam Refinery (left), acts as tour guide for Governor-General Kenneth Hall (centre) and wife Rheima Hall during a tour of the facility, Marcus Garvey Drive, Kingston, on Friday. - Norman Grindley/Deputy Chief Photographer

John Myers Jr., Business Reporter

The Jamaican oil refinery, Petrojam, has acquired properties that formerly housed Esso Standard Oil and Antilles Chemical for US$7 million ($470 million), saying the space would be used for the refinery's ongoing expansion.

This year, the refinery will pump $1.13 billion into the upgrading programme that began in 2005, but says it is still finalising financing.

The expansion is supposed to increase the refinery's processing capacity from 35,000 to 50,000 barrel per day and install a new cataclytic cracker, which will improve the efficiency of the plant and enhance its ability to refine heavier crudes.

The first phase of the upgrading work, which started in 2005, is expected to be completed next year.

Upgrade work

The two properties located beside the refinery at Marcus Garvey Drive, Kingston, were acquired last December, Petrojam managing director Winston Watson told Sunday Business on Friday

He said the designs for the upgrade work were currently being done and should be completed by February next year.

"In parallel with that, we are working with our financial advisers to raise the money."

But Watson also said a portion of the $43 billion earned from the sale of a 49 per cent stake in Petrojam to Venezuela's state-owned oil refinery, PDVSA, would be used to finance the refinery project.

Petrojam controls 80-85 per cent of Jamaica's petroleum market and is one of few state-owned entities that is profitable.

Last year, the refinery made $256 million in profits from revenues of $77.9 billion, slightly lower than the previous year. However, sales are expected to grow 2.1 per cent to just over $79 billion this year, and in turn, generate profits of an estimated $395 million.

In the meantime, Petrojam is seeking to grow its biofuel business through its subsidiary, Petrojam Ethanol. It will be increasing production of ethanol from the current 40 million gallons to 100 million gallons with the construction of a new plant.

john.myers@gleanerjm.com