The Petrojam Refinery expansion will be a US$550 million to US$600 million (J$39 billion to J$43 billion) project, says Managing Director, Winston Watson, updating initial cost projections.

Previously, the project cost was projected at US$500 million.

Much of the financing is through debt, including loan funds from the Venezuelans.

Watson says the partners in the refinery, Petrojam and PDVSA, which is finalising a deal for a 49 per cent stake, will also pump in equity to the value of about 20-30 per cent of the expansion cost, he told the Financial Gleaner this week, on a scale to be determined.

"The actual equity investment that will be provided by the equity partners will depend on the financing plan developed and agreed in conjunction with the financial advisors to the project," he said.

Expectations are the share will be proportional to the equity stake held by the two partners.

The refinery project is in its early development stages - or the Front End Engineering Design (FEED) phase - which typically determines on a preliminary basis the investment to be made by the owner or investor in the construction of a plant and basic engineering requirements.

finalised by 2008

Watson said this phase is about 50 per cent done and should be finalised by the third quarter of 2008.

At that time, the team will move to the procurement and construction phase. Watson anticipates that the project will be wrapped up in four years, by the end of 2011.

"We are, therefore, about 30 per cent of the way overall, at present," Watson told the Financial Gleaner.

Petrojam has, to date, acquired lands to facilitate the expansion from 35,000 barrels per day refining capacity to 50,000 bpd.

Work is also underway to expand the marine docking area, and upgrade the laboratory facilities.

So far, Pertrojam has got US$6 million of PetroCaribe funds in loan financing, though its request was for US$26 million.

"The Ministry of Finance did not turn down the full amount requested, rather they advised that we should apply for the remainder as the need arises, which we have recently done," said Watson.

"We are currently awaiting their approval of the additional amounts requested."

business@gleanerjm.com

TAKEN FROM THE FINANCIAL GLEANER, FRIDAY, NOVEMBER 2, 2007