Latest update March 28th, 2024 12:59 AM
Apr 04, 2022 News
Kaieteur News – All cost incurred by the contractor, American oil giant, ExxonMobil Corporation (EMC) subsidiary for the US$1.3B gas-to-shore project is recoverable – whereas, all cost incurred by Guyana is at the country’s sole risk and is non-recoverable. This is according to the 2016 Production Sharing Agreement (PSA) for the Stabroek Block that Guyana signed onto.
The gas-to-shore project was first touted as a US$900M project inclusive of a gas pipeline, a gas fired power plant and related processing facilities. However, Budget 2022 has confirmed this to be untrue and has in fact now confirmed a new price tag in excess of US$1.3B.
Guyana Government has committed to provide some US$520M in total, towards the gas fired power plant. In fact, Minister with responsibility for Finance within the Office of the President, Dr. Ashni Singh, during his Budget 2022 presentation, confirmed that government had already allocated in excess of US$20M towards the project. A perusal of the project profile for the capital allocation that falls under the Office of the Prime Minister, points out that the government has in fact pegged the total cost for the power plant and other facilities at some US$520M, of which US$20M has been allocated for use this year.
It was reported that with ExxonMobil spending in excess of US$800M to conduct surveys and other ancillary works for the project, including the laying of the pipeline, and the Government allocating US$520M – the total cost of the project is now pegged in excess of $1.3B.
However, a perusal of the PSA, article 12, revealed that any money spent by the oil company in the production, use and/or disposal of the associated gas of an oil field and the cost incurred by the contractor to carry out any feasibility study on the utilization of the excess associated gas, “Shall be charged to the development cost of the oil field and shall be recoverable contract cost.”
Whereas, in contrast, “All cost incurred by the Government of Guyana for the infrastructure and handling of the excess associated gas which are not included in an approved development plan shall be at the sole risk and expense of the government and will not affect the amount of cost oil and profit oil due to the contractor.”
Additionally, the Finance Minister had stated that the project encompasses the establishment of a power plant to generate 300MW of power as well as a Natural Gas Liquids (NGL) plant that will cover domestic demand.
The project also entails the construction of a 225 km 12 pipeline to transport the guaranteed minimum of 50 mmscfd of natural gas from offshore Guyana to the Wales Development Zone.
According to Dr. Singh, “ongoing geotechnical and geophysical works for both offshore and onshore operations are advancing with portions already completed.”
He had noted too that an Environmental and Social Impact Assessment is expected to be completed by early second quarter of 2022 and the construction is expected to start in the third quarter of 2022 and will be completed by the fourth quarter of 2024, he said.
Moreover, Co-Director of Energy at Americas Market Intelligence (AMI), Arthur Deakin, last Tuesday night during a panel discussion on the project was keen to note that while there is need for the project to come on stream, clarity is needed on the gas generation capacity of the Guyana’s largest oil reserve, the Stabroek Block.
“There are estimates, you know, 20% of it is supposed to be associated gas, but I think we need more concrete figures to know exactly what is realistic in terms of the generation capacity,” he added.
Deakin pointed out that it has been said that the power plant will produce 250 megawatts, but what is not known is how much of the gas that can be piped out from the Liza 1 well to shore. As a result, he emphasised the importance of greater clarity on the issue, which he stated must be addressed.
THIS IDIOT TELLING GUYANA WE HAVE NO SAY IN THE 50% PROFIT SHARING AGREEMENT WE HAVE WITH EXXON.
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