The project will involve the construction of a 120-mega watt cogeneration facility at the JPS' Hunts Bay plant, which will be run on petroleum coke (petcoke) produced by Petrojam. A by-product of petroleum crude, petcoke costs less than a quarter of the price paid for fuels such as coal, which is used in current generating technology.

Minister of Energy, Mining and Telecommunications, Clive Mullings, who was on a tour of Petrojam's Marcus Garvey refinery on Tuesday (Oct. 31), said that the Ministry has signed off on the deal, which is part of a larger upgrading and expansion project at the refinery.

According to Mr. Mullings the government welcomes the cogeneration partnership between JPS and Petrojam, which would generate cheaper electricity rates, as well as expand the production of asphalt, which the Petrojam already supplies.

"As it stands now, there is some distillate that we're not able to process, so we're losing out. In getting that petcoke, we can also get from that the kind of asphalt that can be used on the road surfaces and of course we can get cheaper energy," he said.

Managing Director of Petrojam, Winston Watson, said JPS has acquired the land for the plant and is anxious to get the project off the ground. He noted that several bankers have also expressed an interest in investing in the cogeneration unit from the point of view that it is being considered as a stand-alone project "right now".

In the meantime, the Petrojam expansion project, which came out of a 2005 agreement between the government of Jamaica and PDVSA, the Venezuelan state oil company, should be completed in about 2010. It is estimated to cost $512 million inclusive of the cost for the cogeneration plant.

The project is expected to push the company's production capacity from 35,000 barrels to 50,000 barrels per day. It will also improve efficiency once the plant's facilities are modified to accommodate increased production of "clean products" such as gas and diesel, and simultaneously reduce the proportion of capacity dedicated to heavier fuel oil.

"We will be able to make ultra-low sulphur diesel. We will be able to keep abreast of jet fuels specifications, continue to make asphalt and petcoke for JPS," said Refinery Production Manager, Telroy Morgan. He informed that the upgrading will also provide a facility that recovers wasted heat up to 430 degrees fahrenheit, thus maximizing efficiency, while the installation of a continuous catalytic converter "will increase run time instead of us shutting down every year" for maintenance.

SNC Lavalin, a large Canadian engineering firm, was contracted in January 2006 to conduct the front-end engineering design for the expansion project at a cost of $300 million (US$4.67 million).

Mr. Mullings said that the company is advanced in its work and "we're trying to get that completed. The next three and a half years we expect to have everything up and running."

Petrojam Limited, a wholly owned subsidiary of the Petroleum Corporation of Jamaica, operates Jamaica's only refinery, which manufactures products from crude oil such as unleaded gasoline in 87 and 90 octane, liquid petroleum gas, kerosene and turbo fuels, auto diesel, heavy fuel oil and asphalt.

Petrojam also operates a 125,000 barrel storage terminal for finished products in Montego Bay. The company's decision to move into new fuels such as petroleum coke is expected to increase earnings.