Govt. mum on gas-to-shore sales pact between Exxon

Jan 28, 2022 News

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Kaieteur News – The Shadow Oil and Gas Minister, David Patterson who tabled a motion on the US$900 million Gas-to-Shore Project says he is disappointed that the governing People’s Progressive Party (PPP) did not utilise the opportunity to dispel negative rumours of the project, but instead still leaves several burning questions unanswered, especially with regard to the sales agreement of the massive project.

In the wee hours of Tuesday morning, the motion tabled by Patterson seeking for the project to be put on hold, pending comprehensive studies was defeated, with 32 members voting against the request, 27 in favour and one abstention.
“The country should be disappointed that the Government did not use this opportunity to provide details to the several burning questions that remain unanswered – this was the perfect occasion to dispel all the rumours that the Gas-to-Shore project will be another white elephant project,” the Opposition MP told this newspaper in an invited comment.
He explained that, “If it (the Gas-to-Shore project) proceeds, it will be the single largest project in the history of Guyana, and it is now clear that the government MPs (Members of Parliaments) are also unclear as to the decisions behind this project”.
During his debate speech, Patterson reasoned that United States oil giant, ExxonMobil has confirmed that before construction commences, the company will be entering into a Gas Sales Agreement with the Government of Guyana, which means that the country will be paying ExxonMobil for its own gas, in addition to the cost of the pipeline.
However, the Government is yet to provide the nation with answers to several questions regarding this Gas Sales Agreement, the former Minister of Public Infrastructure pointed out.

For instance, Patterson asked whether the gas sales agreement has already been signed and if not, when. Furthermore, “Why are we paying for the associated gas? During discussions with Exxon, the Coalition administration insisted that we would not be paying for gas, only costs associated with the pipeline – why have the PPP reverted from this position” he enquired.
The Member of Parliament had also requested that the government say whether Guyana will be paying market price for its gas since history suggests that the price could vary considerably; in fact, it has even doubled in the past few years.
On the other hand, the MP asked if studies were conducted to determine the upper limit at which gas is viable as a new source of energy for Guyana and moreover, when the Gas Sales Agreement would be made public, and how would ExxonMobil be paid for the gas, among others. While these variables were left unanswered, several MPs took to the floor from the government’s side to speak of projects, which were supposedly mishandled according to Patterson. It was the Minister within the Ministry of Public Works, Deodat Indar who explained the reasoning behind the massive project being planted at Wales, West Bank Demerara.
He told the National Assembly that several things were taken into consideration including the road access to the site, the land cover suitability, site topography, site accessibility via water and several others. “You have a pipe that will bring in 120 million cubic feet of gas…the Wales location will make sure that there is area for expansion. There is no dense population around where it’s going in case of any unfortunate event that any lives will be in close proximity,” the Minister said while further making his case.
Meanwhile, the Minister of Natural Resources, Vickram Bharrat told the House that, “Our biggest problem in Guyana and our biggest hindrance to furthering our development and to develop our country at a fast rate, other than the APNU AFC, is the cost of power generation and also the reliability of it too.”
He explained to the National Assembly that the Gas to Energy Project is designed to solve that problem once and for all. According to him, “…we are saying to the Guyanese people that the gas to energy project will reduce the cost of electricity by over 50 percent and it is not only the reduction in electricity Mr. Speaker, it is the reliable power and added to that (is) cleaner power because the conversation on the environment and cutting emission has grown”.
GTS project details
Back in December last year, the government not only discarded the first set of proposals it received in September for the project, but also completely redesigned the scope of works, to now instead build an integrated gas fired power generation plant, in addition to a Natural Gas Liquids (NGL) factory. In fact, this year’s 2022 Budget also includes a $20.8 million allocation for the project.
The revised scope of works, according to a new publication by the Ministry of Natural Resources—requesting proposals from firms to be prequalified—said, the rationale “for the combination of the Power Plant and NGL facilities, is guided by the findings of EEGPL that there will be substantial savings from combining these two facilities.”
Government through the Ministry explained that as part of the gas to Energy project it has elected, “after extensive evaluation of technical and execution factors with EEPGL—ExxonMobil Guyana—to have the two facilities be “designed and constructed together.”
As such, the Ministry has since re-invited interested parties to be prequalified to engineer, procure and construct the two integrated facilities.
Under the revised scope of works, the government says it intends to build “combined cycle turbines, multiple fuel consumption (including rich and lean natural gas [per specification to be provided upon request], Natural gas liquids and diesel) Power Plant to generate up to 300MW of power with a net 250MW delivered into the Guyana Power and Light grid at a substation located on the East bank of Demerara.”
Additionally, the project will include 230 Kilo Volt (KV) substation and back up fuel capacity.
As it relates to the NGL Plant, this is expected, under the revised scope of works, to be able to process 60 million cubic feet of natural gas per day in the first phase and up to 250 million cubic feet of gas in the second phase. Additionally, the plant must be capable of conditioning the gas (dehydration and mercury removal) and removing heavier hydrocarbons (propane, butane, pentane plus) in liquid form. The project according to the Ministry will be located at Hermitage, identified as part of the Wales Development Zone with some 150 acres of land allocated for its purpose.

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