Gas-to-shore project, a recipe for bankruptcy – US Financial Expert

Jan 01, 2021 News

Tom Sanzillo, Director of financial analysis at the Institute for Energy Economics and Financial Analysis (IEEFA)

Kaieteur News – Considering Guyana’s poor power generation capacity and infrastructural systems, almost all of the nation’s leaders have thrown their support behind ExxonMobil laying the ground work to bring gas to shore. But industry experts are of the firm conviction that such a venture could prove financially detrimental to Guyana, especially when one considers the nation’s weak capacity to negotiate fair deals for the country.
Making this point in particular was Tom Sanzillo, Director of financial analysis at the Institute for Energy Economics and Financial Analysis (IEEFA).
He was part of a panel that included international lawyer, Melinda Janki; Chatham House Associate Fellow, Dr. Valerie Marcel and former minister, Mr. David Patterson.
These industry stakeholders participated in the end-of-year discussion on Kaieteur Radio’s programme, Guyana’s Oil and You.
During the discussions on Guyana’s proclivity to bring gas to shore in a mere four years, Sanzillo said he can certainly appreciate the nation’s desires to respond to the rising demand for electricity as well as to find a solution to the issue of power outages and high electricity costs.
He stressed, however, that the manner in which Guyana went about negotiating a lopsided deal for oil provides no evidence that it can confidently do otherwise for bringing gas to shore.
The financial expert said, “…I have to be frank about this, the way the contracts were negotiated for this oil endeavour gives me no confidence that the country has any ability to negotiate the best price for a pipeline and other infrastructure to bring gas to shore…There is no evidence of that. In fact, one has evidence to the contrary.”
Sanzillo also pointed to the alarming fact that the citizenry is still to know whether there was a cost comparison between where renewable markets are and the proposed gas project for in Guyana.
In addition to this, he said that based on his observations of how Guyana’s leaders intend to pursue the gas to shore project spells out “a recipe for financial bankruptcy for Guyana.”
In this regard, Sanzillo recalled that the leaders have intentions of having ExxonMobil build a pipeline that would allow for the project to be brought to shore.
Guyana would not be paying for the gas but it would have to pay ExxonMobil the cost for transporting the resource.
By subjecting itself to such an arrangement, Sanzillo said that Guyana is in simple terms, taking the little oil money it would make and investing it in another fossil fuel project that would leave the country saddled with more debt.
He said that Guyana is not only accepting a lopsided deal with the Stabroek block but it is now moving to invest in a project that will handsomely support the interests of oil companies and their bankers. This he alluded is not just backward, but a dangerous precipice for Guyana to be hanging from.