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Govt. must make agreement with Exxon on gas-to-energy project public – Jordan
– says VP Jagdeo must explain how electricity costs will cut in half without knowing final project costs
Kaieteur News – Following months of negotiations, Vice President, Bharrat Jagdeo has disclosed on several occasions that ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL), will be constructing a pipeline to transport 50 million cubic feet of gas per day, in its first phase, to shore from the Liza Phase One and Liza Phase Two Projects.
Former Finance Minister, Winston Jordan
The cost to build the pipeline would be handled by EEPGL; however, the country would repay the limited liability company through oil over a period of 20 years. In light of such stated positions, former Finance Minister, Winston Jordan said any finalized agreement between the PPP/C Government and EEPGL on the foregoing ought to be made public. “In terms of repayment, citizens need to know who determines when it starts and at what rate. We need to see if there are provisions that allow for the debt to be rapidly amortised when there are high prices for oil.
Also, one needs to know how the agreement will cater for instances when prices are low. We also need to know the interest rate we are stuck with. In short, whatever is agreed between these two parties, the documents should be in the public domain for scrutiny,” the economist reasoned.
Vice President, Dr. Bharrat Jagdeo
Jordon also said he finds it baffling that even with project costs yet to be finalized, the Vice President is certain that the gas-to-energy initiative will slash electricity costs in half. “We seem to be so smitten by the messaging of slashed energy costs that we are not challenging government for the evidence on this. How do we know the costs for power will drop by half when we do not know the final cost of the pipeline, much less any other aspect of the project?” the former Minister expressed, adding that there needs to be more transparency and accountability on decisions taken by government in the oil and gas sector.
Kaieteur News previously reported that the installation of the offshore and onshore pipelines is set to cost a whopping US$1.3B. This was noted in the Environmental Impact Assessment (EIA) that was prepared for the project by EEPGL. The company was keen to note that it has not yet made a Final Investment Decision (FID) on the project, and is continuing to evaluate cost considerations during the project development process. For the time being, it said the current project cost estimate is approximately $260 billion GYD ($1.3 billion USD). It warned, “A higher certainty cost estimate will be developed after receiving and negotiating all major contracts.”
Expounding further, EEPGL said the project will involve capturing associated gas produced from crude oil production operations on the Liza Phase 1 (Destiny) and Liza Phase 2 (Unity) Floating, Production, Storage, and Offloading (FPSO) vessels, transporting approximately 50 million standard cubic feet per day of rich gas via a subsea pipeline and then to an onshore pipeline to a natural gas liquids (NGL) processing plant (NGL Plant), treating the gas to remove NGLs (i.e., propane, butane, and pentanes+) for sale to third parties, and ultimately delivering dry gas meeting government specifications for use at the power plant.
Construction is expected to begin as soon as possible after the oil company receives all necessary authorizations with a target date of August 2022 for start of NGL Plant site preparation, and will take approximately three years. The combined offshore and onshore pipeline system is targeted to be ready to deliver rich gas by the end of 2024, and the NGL Plant is targeted to be operational by mid-2025.
The project has a planned life cycle of at least 25 years and is expected to employ up to 800 workers at peak during the construction stage, approximately 40 full-time equivalents workers during the operations stage, and approximately 50 workers during the decommissioning stage.
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