Govt. must carefully examine contractors’ capabilities before awarding Gas-to-Energy project – Int’l contractor

Feb 27, 2022 News

---

…says risks of explosions can be avoided this way

By Davina Bagot

Kaieteur News – The Government of Guyana recently enacted its flagship Local Content Policy, specifically geared at ensuring local citizens and companies benefit significantly from the oil and gas sector; however, an international contractor who participated in the recently concluded Energy Conference and Expo has warned of the grave risks Guyana can face, if the right contract is not selected.

Vice President of Hyundai Engineering and Construction (E&C), Ms. Mun Jeong Choi in an exclusive interview with this newspaper during the International Energy Conference and Expo, held between February 15 and 18 this year, said such huge projects also include risks of astronomical value.
Hyundai E&C, as the name suggests forms part of the Hyundai Motor Group, based in Korea. The company has vast experience in massive construction projects such as bridges, buildings and even natural gas plants. In fact, Hyundai E&C first advanced into a foreign country in 1965 and has since completed more than 850 projects in 62 countries worldwide.
Besides completing highways, railways and subways in countries such as Thailand, Saudi Arabia and Kuwait, among others, the company also boasts of being one of the very few in the world with expertise in constructing gas processing, oil refinery, petrochemical plants and industrial plants.
In response to a question posed by this newspaper, regarding the environmental and other risks of the Gas-to-Energy Plant, the Vice President of the company said, “The government or the company should carefully select the right EPC (Engineering, procuring and construction) contractor. For oil and gas plants, selecting the right EPC contractor is the most important factor.”
According to her, “There are not a lot of companies internationally who can do these huge complex oil and gas projects but we are one of them… there are liability clauses carefully made in the contract so EPC contractors have the full responsibility of turning over the plant to international standards that are very safe and if we do turn over the plant carefully under the international standards, then there is no issue, like the explosions are very rare.”
Her advice to Guyana comes at a time when not only the Local Content Act has been recently enacted, but also at a time when criticisms have been mounting against the government for awarding contracts to inexperienced contractors, in blatant disregard for Guyana’s Procurement Laws.
The Procurement Act of 2003 clearly states that suppliers and contractors seeking Government projects must substantiate their past performance with the necessary documents for consideration. However, a ‘fly-by-night’ company, St8ment Investment Inc. was granted a whopping $346 million contract to build a new Primary School at Bamia in Region 10, with no public records indicating any construction experience. The contract was signed in November last year.
CHAPTER 73:05 of the Procurement Act 2003 declares that each supplier or contractor that wishes to participate in procurement proceedings must qualify by meeting the criteria as the procuring entity considers appropriate. These include, “That its past performance substantiated by documentary evidence would commend it for serious consideration for the award of the contract”.
When it comes to the much touted gas-to-energy project, pegged at over US$1.3 billion, government has already allocated some $520M in total, towards the gas fired power plant in this year’s Budget.
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.
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.

---

---