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US$900M Gas-to-Shore project to now cost in excess of US$1.3B
– Govt. pledges US$520M for Power Plant – Budget 2022
Kaieteur News – Although the gas-to-shore project was first touted as a US$900M project inclusive of a gas pipeline, a gas fired power plant and related processing facilities, Budget 2022 has confirmed this to be untrue and has in fact now confirmed a new price tag in excess of US$1.3B.
This is since the Guyana Government has committed to provide some $520M in total, towards the gas fired power plant.
Minister with responsibility for Finance within the Office of the President, Dr. Ashni Singh, in his Budget 2022 presentation on Wednesday confirmed that government has already allocated in excess of US$20M towards the project.
A perusal of the project profile for the capital allocation that falls under the Office of the Prime Minister, points out that the government has in fact pegged the total cost for the power plant and other facilities at some US$520M, of which US$20M has been allocated for use this year.
With ExxonMobil spending in excess of US$800M to conduct surveys and other ancillary works for the project, including the laying of the pipeline, it would mean that the total cost of the project is now pegged in excess of $1.3B.
Former Minister with responsibility for the project under the ousted coalition administration David Patterson, had last year condemned the mounting project costs as ‘money for the boys.’
Last November, Vice President Bharrat Jagdeo hinted at an increased total cost of the project.
According to the Vice President at the time, when factoring in prevailing global conditions, the prices for key commodities needed for the project have increased. He specifically pointed to the fact that the price of steel, for example, has been escalating on the world market.
Conceding, “…it’s a bad time to bid anything,” Dr. Jagdeo was adamant, however, “we can’t slow down the development” and that “we have to proceed,” with the Gas-to-Shore initiative.
Dr. Singh during his Budget presentation on Wednesday said, “the current estimate of the gas reserve is 16 trillion cubic feet (Tcf) with projections from Liza 1 and 2 likely at 50 million standard cubic feet per day (mmscfd), and Payara will bring an additional 20 mmscfd. This augurs extremely well for the Gas-to-Energy Project.”
He told Members of Parliament (MP), “following a public expression of interest in September 2021, Government issued an advertisement for the prequalification of firms interested in the transformational Gas-to-Energy project, recognising the potential of natural gas as a transition fuel.”
The project, he said, will allow the country to phase out the use of expensive and carbon-intensive heavy fuel oil and is targeted to reduce costs substantially below the current levels. According to Dr. Singh, the project encompasses the establishment of a power plant to generate 300MW of power as well as a Natural Gas Liquids (NGL) plant that will cover domestic demand. The project also entails the construction of a 225 km 12” pipeline to transport the guaranteed minimum of 50 mmscfd of natural gas from offshore Guyana to the Wales Development Zone.
According to Dr. Singh, “ongoing geotechnical and geophysical works for both offshore and onshore operations are advancing with portions already completed.”
He said that an Environmental and Social Impact Assessment is expected to be completed by early second quarter of 2022.
To this end, he said, it is expected that the firm selected would be able to engineer, procure and construct the Power Plant and NGL Plant along with related facilities.
Construction is expected to start in the third quarter of 2022 and will be completed by the fourth quarter of 2024, he said.
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