UK firm gets contract for gas-to-energy project without EPA permit

Aug 03, 2022 News

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Kaieteur News – Although an environmental permit for the planned pipeline to transport gas from the Liza One and Two fields in the Stabroek Block, offshore Guyana is yet to be approved by the Environmental Protection Agency (EPA), the company conducting the venture – Esso Exploration and Production Guyana Limited (EEPGL), the local subsidiary of US oil company, ExxonMobil – has moved to award yet another contract.

On Monday, while the country was celebrating Emancipation, the oil company gave out another contract, this time to Technip FMC, a United-Kingdom based firm that provides expertise for subsea and surface projects. According to reports, the company received a “significant” contract to provide engineering, procurement, construction and installation of subsea risers and pipelines for the Wales Gas-to-Energy venture. Though a cost was not attached, it must be noted that a significant contract for Technip FMC is one within the range of $75 million and $250 million. The full contract award will not be included in inbound orders until the project receives a final investment decision and government approvals.

President of Technip FMC Subsea division, Jonathan Landes was quoted as saying, “The Gas-to-Energy Project is another example of how we are helping to deliver the energy that the world needs, and we are thrilled to be supporting another project in Guyana. We remain proud of our dedicated Guyanese employees and are committed to the continued development and expansion of local capabilities.”

Executive Director of the EPA, Kemraj Parsram on Tuesday confirmed that no permit has been granted for Exxon to pursue the project just yet. He was unable to offer further comments on the matter as he was engaged in a meeting at the time.

It was only last week that Exxon entered into an agreement with two other companies to aid in the laying of the 190 kilometre pipeline.  Subsea 7 and Van Oord were contracted to assist in the project management, engineering, and installation of the natural gas pipeline, with an associated shallow water portion and onshore approach making landfall to the west of the Demerara River, along the coast of Guyana.  Subsea 7, according to its website, specialises in subsea engineering, construction and services mainly for the offshore energy industry. The company is registered in Luxembourg with its headquarters in London. Meanwhile, Royal Van Oord is a Dutch maritime contracting company that specialises in dredging, land reclamation and constructing man-made islands.

The Environmental Protection Act Section 21(1) states that: “No person shall – (a) construct, alter, extend or replace any plant, structure, equipment, apparatus, mechanism, or thing that may discharge or from which may be discharged a contaminant into any part of the natural environment except under and in accordance with a construction permit issued by the Agency…”

This therefore means that EEPGL is required to seek an environmental permit from the EPA before it rolls out any developmental project that can affect the environment. EEPGL’s gas-to-power project seeks to link the Liza Phases One and Two floating production, storage, and offloading (FPSO) vessels, the Liza Destiny and Unity, in the Stabroek Block onshore Guyana, to supply gas to the country.

It must be noted that since the project was conceived, the government has not hosted a single engagement with the public to clarify matters relating to the cost and overall viability of the venture. Instead, a briefing was held by President Irfaan Ali when the deal was finalised, to tell the public that the project is likely to commence by year end. The invitation to the event made it clear that the Head of State would not be fielding any questions from the media.

EEPGL has revealed that a minimum of 50 million standard cubic feet of gas per day (mmscfd) will be transported through the pipeline by 2024 and that the pipeline would have a maximum capacity of 130 mmscfd.

An Environmental Impact Assessment (EIA) has been submitted to the EPA by ExxonMobil for the pipeline component of the US-billion dollar venture. The residents of Crane and the Canal Polders on the West Bank of Demerara, who are opposed to the EIA, have called for the study to be redone as they were not consulted.

The Environmental Assessment Board (EAB), which is tasked with reviewing these complaints and appeals, have not yet made a decision on whether the EIA is acceptable as it is or if a new study would be necessary. In the meantime, the oil giant has been speedily preparing for the operation, while the regulatory bodies remain silent on the award of the various contracts without requisite approvals.

Only on Sunday, founding member of the civil society body, Article 13, Dr. Yog Mahadeo observed that Guyanese will be funding the costs associated with the pipeline, yet citizens are not privy to information regarding the award of these contracts.

Mahadeo, a stern transparency activist argued that the oil company has not only chosen a firm to conduct the works without the knowledge of Guyanese citizens, but has also done so without first attaining the approval required by the EPA.

He pointed out that the 2016 Production Sharing Agreement (PSA) allows for the cost of production and cost of disposal of the gas to be deducted from Guyana’s oil, meaning that the US$1.3 billion project will actually be funded by Guyana; yet the citizens are completely unaware as to whether the project was tendered or given to a hand-picked contractor.

The activist told Kaieteur News that while he believes the project can bring significant savings to Guyana in terms of its fuel import bill, he is concerned about Guyanese not having a say on the company being selected to lay the pipeline on behalf of ExxonMobil.

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