Latest update December 18th, 2024 4:53 AM
Opposition goes to Parliament for true cost, terms and conditions for gas-to-energy project
Kaieteur News – Former Health Minister and Opposition Member of Parliament, Volda Lawrence has tabled several questions in the National Assembly to ascertain the financing arrangements in place for multi-million dollar gas-to-energy project being pursued by the People’s Progressive Party Civic (PPP/C) Government in collaboration with ExxonMobil.
Opposition MP, Volda Lawrence
In the questions posed to Prime Minister, Brigadier (retired) Mark Phillips, Lawrence asked for the nation to be told the cost of the gas-to-shore pipeline project, and where or whom the government is sourcing the financing from.
Lawrence also asked for details on the associated terms and conditions. The former minister called on Phillips to state if there would be a contingent liability on the Government of Guyana if Exxon is unable to repay the loan it would use to cover the cost of the pipeline that would transport the gas from the Liza One and Two Projects to onshore facilities at Wales.
At a press conference held in April last year at the Arthur Chung Convention Centre (ACCC), several government officials told reporters, editors and publishers that the gas-to-energy (GTE) project would cost roughly US$900M.
Specifically, Winston Brassington, Head of the GTE task force had explained the estimate to be as follows: US$570 –US$630M for the offshore pipeline and “riser”; US$80 – $100M for the onshore pipeline; US$120M for the gas plant and between US$40 – US$50M for infrastructure.
Revelations by Esso Exploration and Production Guyana Limited (EEPGL)—a subsidiary of ExxonMobil Corporation—subsequently exposed that the project estimate would be much higher than the independent media were originally told. In its Environmental Impact Assessment (EIA), EEPGL explained that it is responsible for building out a 135-mile pipeline that would connect to the Liza Unity and Liza Destiny vessels in the Stabroek Block.
That pipeline would transport 50 million cubic feet of gas per day to facilities built on the west bank of the Demerara River. Upon arrival, a Natural Gas Liquid (NGL) plant will create dry gas—used mostly to power a 300MW power plant—as well as other useful liquids such as ethane and propane. Those two plants are to be constructed by the government.
EEPGL was keen to note in its EIA that the conservative estimate for building the pipeline was US$1.3B. Kaieteur News previously reported that Guyana would be using a portion of its oil to pay back Exxon for this investment.
On several occasions, Vice President Bharrat Jagdeo said the cost for the gas-powered plant and the Natural Gas Liquids facility would only be known after the State goes to tender. Last week, the government finally inked a US$759M Engineering, Procurement, and Construction (EPC) contract for the 300 megawatts (MW) combined cycle power plant and Natural Gas Liquids (NGL) facility.
This agreement was sealed with a US-based partnership CH4/Lindsayca.
With ExxonMobil’s modest estimate of US$1.3B and the US$759M contract recently signed, it therefore means that the project is expected to cost more than US$2B, a significant jump from the previous estimate proffered by Brassington last year.
Despite such an astronomical increase, Vice President, Dr. Bharrat Jagdeo insists that the promise of a 50 percent slash in electricity costs is still doable. He said this was catered for “in simulations” that were done by government specialists.
Another new detail that recently came to light is the fact that government will be approaching the US Exim Bank for a loan to cover the costs associated with the US$759M contract. This was revealed by Jagdeo in December 2022.
He said too that government is hopeful that when products such as cooking gas are made by the NGL facilities, it would be sold, and a portion of the profits would go to repaying investors their US$759M.
This newspaper also reported that Engineers India Limited will supervise the Engineering, Procurement, and Construction (EPC) of the onshore plant facility. It is expected to hire another firm to operate the project.
Government has said it remains hopeful to bring the project on stream in 2024. Two years after its operationalization, Jagdeo said consumers would enjoy reduced electricity rates.
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