Gas-to-Energy project to start-up one year later than promised

Oct 15, 2023 ExxonMobil, Oil & Gas

Kaieteur News – A recent public request for proposals (RFP) related to the Amaila Falls Hydropower Project disclosed what appears to be a delay in the planned commissioning of the Gas-to-Energy project.

Initially promised to deliver power to the nation by 2024, the project’s start-up, according to the RFP, is now scheduled for 2025. This one-year postponement implies that Guyanese will have to wait longer for the People’s Progressive Party Civic (PPP/C) promise of a reduction in power costs to be delivered. This comes as the country is facing numerous blackouts and power supply instability.

The Gas-to-Energy project, expected to add 300 megawatts (MW) of gas power generation to Guyana’s grid, is facing several uncertain challenges that may be preventing its full-throttle development. ExxonMobil is responsible for the installation of the pipeline to transport gas from its offshore operations to the power plant at Wales.

Although the pipeline installation activities have commenced, as indicated by Guyana’s Maritime Administration Department (MARAD), ExxonMobil has yet to make a final investment decision (FID) on the project. The company’s Country President, Alistair Routledge, indicated that despite the lack of an official FID, the development works are advancing essentially as planned. He has said that the decision would be forthcoming, but it was initially expected in 2022.

The implications of this delayed decision on the project’s timelines and the lack of a public explanation from ExxonMobil on this matter add a layer of uncertainty to the success of the Gas-to-Energy project.

On the government’s end, financing appears to be a significant hurdle, as well. The administration is tasked with several projects including overhauling the transmission system and the establishment of an integrated gas processing facility at Wales, encompassing a power plant and a natural gas liquids (NGL) facility.

A substantial portion of the funding for this endeavor is anticipated to come from a loan of over US$600M from the United States Ex-Im Bank, as revealed by Vice President, Dr. Bharrat Jagdeo, earlier this year. While the loan awaits approval, Jagdeo has cited bridge financing as a temporary solution to sustain the project. He has said that discussions with officials from the United States Ex-Im Bank were promising and that the bridge financing could cover retroactive expenditure once the loan materializes.

Meanwhile, early development works on the integrated gas processing facility at Wales are being directly funded with a US$100M withdrawal from Guyana’s consolidated fund.

The unfolding of the Gas-to-Energy project comes at a critical juncture when Guyana grapples with escalating instability in power generation and supply, amid a backdrop of rapid economic growth and climbing temperatures.

The Guyana Power and Light Inc. (GPL), far from being in favour with the Guyanese public, finds it challenging to meet the increasing demand for power. The Gas-to-Energy project is expected to leverage natural gas from the Stabroek block.

With the total cost of the project, including the pipeline and the gas processing facility at Wales, estimated between US$1.8 billion and US$2 billion, Guyana is taking on a lot of financial risk, and the Guyanese people now face a longer wait for the promise of a more reliable and cost-effective power supply.

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Amaila Falls Hydropower Project, gas-to-energy, Guyanese, megawatts, reduction

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