Exxon had offered more gas than needed. Now, it's offering Guyana even more

Exxon had offered more gas than needed. Now, it’s offering Guyana even more

Jan 23, 2021 News

– Now, it’s offering Guyana even more

Kaieteur News – After it was revealed earlier this month that ExxonMobil offered the former government more gas than Guyana needs, the numbers have gone even higher. ExxonMobil country manager, Alistair Routledge said that ExxonMobil’s local subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), could deliver about 50 million cubic feet of gas per day – 20 million cubic feet higher than previously published numbers.
Routledge said “… we’ve identified and are certain that we can deliver the kind of volumes that are needed to support a gas-powered plant.”
There is so much gas among the 18 discoveries that Exxon estimates the gas to account for a fifth of the discoveries.
“We’ve reported recently,” Routledge said, “with the 18 discoveries to date, we’re approaching 9 billion oil equivalent barrels of resource in the country. Now of that, a little bit less than 20% probably now is what we think is gas.”
ExxonMobil’s current offer is significantly higher than previous numbers. Former Minister of Public Infrastructure, David Patterson had told Kaieteur News’ Senior Journalist, Kiana Wilburg that Exxon had offered to bring 30 million cubic feet of gas to shore per day to meet Guyana’s energy needs.
But even Patterson admitted that that was more than Guyana needs. The previous offer was made to the David Granger administration since 2018.
Patterson had registered his support for the project as a viable one because, he noted, Guyana’s electricity needs have been growing seven percent per annum since 2015, and it has struggled with power outages due to the poor state of the nation’s power grid and power generation capacity. He said it would be the first big petroleum project to have a direct impact on the lives of all Guyanese.
The government had, according to Patterson, sought to make clear to ExxonMobil that the government should be paying not for the gas itself but only for the transportation of the gas. He said that, as “Exxon was under tremendous pressure regarding the equity of the contract, it was amenable to the government’s suggestions.”
However, Patterson noted discussions about “take or pay” as Guyana would not be able to utilize all of the gas. This provision is one that has placed the country of Ghana in dire straits.
Finding itself in a similar situation several years ago, Ghana approved the Sankofa gas project in 2015 to reduce power costs, lower emissions and make electricity services more reliable. While those benefits were realized, Ghana now suffers in other ways.
The Institute of the Americas, an independent policy firm wrote of how Ghana signed a long-term take-or-pay Power Purchase Agreement (PPA) with suppliers, through which it would have to pay for 90 percent of the produced gas from the field, no matter the demand. In 2019, Ghana’s bill for unused gas was US$250M.
Realizing what had happened; the current administration had to start finding uses for all the extra gas and work on ensuring fairer agreements in the future.
International Lawyer, Melinda Janki has since challenged President Irfaan Ali to prove the economic soundness of the proposed gas-to-shore project by releasing the studies, which have been conducted.