Financial feasibility of gas-to-shore a “no-brainer” – VP Bharrat Jagdeo

Mar 21, 2021 News

By Shikema Dey

Vice President, Dr. Bharrat Jagdeo

Kaieteur News – Financial Feasibility studies are considered crucial elements when one is considering entering into a large-scale business venture. A feasibility study examines how much start-up capital is needed, sources of capital returns on investment, and other financial considerations, while also examining how much cash is required, where it will come from, how it will be spent and potential obstacles that may impede its operations.

Yet for Guyana’s intended gas-to-shore project, no such study is being conducted, as according to the Vice President (VP) and local oil boss, Dr. Bharrat Jagdeo, that element is a “no-brainer.”

The VP made these comments and more on his most recent appearance on a virtual discussion on oil and gas contracts alongside Professors Paul Tennassee and Floyd Haynes on Globespan 24×7 on Wednesday evening. There, Dr. Jagdeo was asked to respond to concerns that the project may not be a good fit for Guyana.

“The financial aspect is a no-brainer. Any sensible person with a modicum of sense, a tiny brain, even a residual brain, would understand that,” he said.

Backing up his statements, Dr. Jagdeo, explained that, “If you are generating power at $12 or $13 per kilowatt hour with the current price of fossil fuel…if you can supply power at $7 or $8 per kilowatt hour, a mad man would make the decision to do so and that is what this opportunity offers…to cut the cost of generation by 50% from its current level.”

“What else do you need,” he asked, adding, “if you can get power at half the price at which you are generating? That would allow us to cut the cost that you sell it at so it is a no-brainer. You just have to think it through for a couple of minutes.”

Dr. Jagdeo mentioned as well that ExxonMobil had completed a Technical Feasibility Study back in 2016; further cementing Government’s position that the project is financially feasible. Such a study assesses the details of how you intend to deliver a product or service to customers, as the gas-to-shore project would utilize associated gas from ExxonMobil’s Liza Phase One project, which has been in operation since December 2019.

Presently, ExxonMobil is the process of selecting suitable firms to conduct four studies before moving to the construction phase of the project. Those are an Environmental Impact Assessment (EIA), a Lidar study, along with Geotechnical and Geophysical studies. The results of those studies are expected to inform the design of the pipeline.

Government has already identified the former Wales Estate as the location for the onshore infrastructure with a crude estimation for the cost of the project standing between US$500-800 million depending on the design, pipeline size and surveys.