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State-run oil refiner and bunker supply firm Petrojam Ltd is planning to raise around $2 billion to finance the expansion of its bunker-producing refinery, according to local media reports.

The company's financial advisers Ernst & Young, are expected to act on the company's behalf to raise the financing for the upgrade project, which is set to increase oil production at the facility to 56,000 barrels per day.

Construction work is due to commence by early 2010 with completion scheduled for 2011. However the expanded facility is not expected to be fully operational until 2014.

Petrojam's 36,000-barrel-per-day(BBL/d) Kingston refinery was built in 1963. Approximately 56 per cent of the refinery's output is currently dedicated to the production of heavy fuel oil, with the remaining 44 per cent being 'clean' products: LPG, turbo, gasolene and diesel fuels.

In the year ended March 2009, Petrojam made a net loss of $3.8 billion, according to data released by the finance ministry. The company earnt $119 billion in top-line revenue, but it also paid out $118 billion for crude and other production-related inputs.

As well as raising the refinery's daily production to keep up with market demand, the upgrade project will enable the facility to process heavier - and thus cheaper - crudes, which in turn will help to improve refining margins.

Phase one of the project will see the installation of a Visbreaker unit; a new vacuum tower; a new catalytic reforming unit; and, new desulphurisation facilities to reduce the sulphur content in diesel oil from 5,000 parts per million (ppm) to around 15ppm.

The modernisation plan is based on the findings of a pre-feasibility study carried out by Texas-based energy consulting firm Muse Stancil, which looked at a number of possible plant-upgrade options.