Gas-to-Shore project to commence by year end

Jul 01, 2022 News

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…as President touts profitability without final price tag

By Gary Eleazar

Kaieteur News – The Government of Guyana has concluded its latest round of negotiations with ExxonMobil Guyana and its Stabroek Block partners on the Gas-to-Shore Energy Project, and according to Head of State, President Ali, the final agreement will see the project coming in much less than had been previously envisioned.

While not giving a final price tag, since that will be determined through the final bidding process, President Ali has concluded that the project will cost the nation over the course of its life between four and five US cents per kilowatt hour. The President is adamant that this figure, down from the previous seven US cents per kilo watt hour, includes the full repayment of the 12” pipeline that would be providing some 50 million standard cubic feet of Natural Gas daily to the onshore project.

President Ali was at the time outlining the course forward in relation to the development of the project at a special briefing held at State House yesterday. The activity saw in attendance senior executives from each of the oil partners, Esso Exploration and Production Guyana Limited, Hess Guyana Exploration and CNOOC. Additionally, there was representation from members of the Diplomatic Corps, Vice President Bharrat Jagdeo, Prime Minister mark Phillips and key Cabinet Members. Others present included Chief Executive Officer of the Guyana Office for Investment (Go-Invest), Dr. Peter Ramsaroop and a number of business principals.

Mental Transformation

President Ali in addressing the issue of a final price tag for the project, intimated that while there have been a number of figures being floated, a final cost for the project could not be had as yet since that would be determined through the final bidding process. According to the President, with the negotiations now concluded and with deadline for Request for proposals ending in September, it is expected that contracts would be signed for the project in the last quarter of the year.
He did disclose that in the coming days, the administration would be looking to secure a Project Manager through a public tender process. Speaking to the benefits to be had from the project, the President said the initiative includes the natural gas liquids plant and a 300 mega watt (MW) electricity project. To this end, he was adamant that the initiative could not be viewed as an isolated project but must be situated in the overall development transformation of the country that includes Energy Security. “To fit the gas to shore project narrowly in just a singular project would be doing an injustice to the overall development plan and agenda of the country.”

He was adamant that the project was linked to each of the other developmental pillars, namely infrastructure transformation, the greater embrace of technology, improved services such as health and education, energy, food security as well as economic transformation and diversification.
Additionally, the President said, he was looking to add “mental transformation” since the new developmental agenda of the country is being pursued on a larger scale, a scale that requires a new mindset. With some 220,000 households on the national grid being supplied by the Guyana Power and Light Company Inc., President Ali noted that the company generates some $40B in revenues annually.

Savings

According to the President, with electricity bills slashed in half, it would mean that $20B would immediately be saved through the initiative, which would mean an additional $20B in disposable income in the pockets of Guyanese. Additionally, President Ali said with the new power plant in place, it would also mean an additional US$11M in monthly savings as a result of the savings to be had from purchasing less fuel for electricity generation.
As it relates to the other proposed facility, namely the NGL plant, President Ali noted that the industry generates some $10.1B in revenue.

As such, he noted that with the NGL plant being able to supply some 3,500 barrels daily, it would surpass the local demands which requires about just over 780 barrels.
With this in mind, the President said that not only would there be a $7B saving but with cooking gas presently retailing at $4,500 per 20 lbs cylinder, the President said with the NGL plant up and running, the administration would be able to provide its citizenry with cheaper cooking gas.
He did rule out the provision of free cooking gas to the public, since according to President Ali that would not be sustainable.

Prefacing his pronouncements on the project and the administration’s desire to move ahead with the project, the president was adamant that there had been enough time given to the citizenry to question the merits of the project. According to the President, the matter had been fully ventilated and all questions answered. It should be noted that there has been no formal briefing by the President or the Vice President on to fully question the project as intimated by Ali.

Prosperous Road

He said, “…for this industry to be successful, for Guyana to be successful, it requires partnership” including with developmental partners and importantly the people of the country.
“If we as a country are to be successful, you have to have strong and bold decision making and I want to assure the Guyanese and our developmental partners that we are prepared to make those strong, decisive, bold decisions always in the interest of the people of Guyana and to their greater prosperity.”
To this end, he said, “we welcome critical analysis of all decisions; even the Vice President himself leading in this process has opened up every single process to whatever question there might be in the public domain.”
He continued saying, as far as I am aware, every single question has been provided with an answer because there is absolutely nothing to hide in this process or project, it is above board, it is transparent, it is open.”
President Ali was adamant the project has undergone “every single test of scrutiny but the time has come that we must move forward, having regards for all the questions in the equation, we have to move forward now and that is why we are here today to outline that process through which this project will move forward in bring the desired benefits to the people of this country and advancing the prosperity of the people of this country.”
According to President Ali, the administration has consistently preached of a prosperous road ahead and that “prosperity can only be derailed by our own action.”
To this end, he quipped, “there is a lot of commentary sometimes that draws analysis on different society but I assure you in each of those analysis, the level of distraction that those societies had to undergo to arrive at where they are, was significantly less than we have here in Guyana.”

Feasibility Studies

He said, “…it is very good that we have a very active society but that activism must not ever lead to the detriment of good initiative and good projects.”
President Ali has since concluded in pushing ahead with the project, that it has been tested through public scrutiny, “it fulfilled the test of transparency, it fulfilled the environmental tests.”
On the matter of the project’s feasibility, the President was adamant “this project did not happen by accident.” To this end, he noted, there is a list of feasibility studies that we can reference. To this end, he highlighted that in 2017, there was the GPL System Expansion Study, the Desk Study of the Options cost economics impacts and key considerations of utilizing and transporting natural gas for offshore Guyana for the generation of electricity, the feasibility study for Guyana’s natural gas offshore pipeline, NGL separation and LPG production plant and related electricity infrastructure, Inter-American Development Bank studies, the Ministry of Natural Resources studies, others funded by Mitsubishi out of Japan and a gas to power feasibility assessment in Guyana.
According to President Ali, “there are detailed studies and work that went into where we are today, this is not guess work, this is work that is based on the best possible existing information and data.”

 

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