Gas-to-Energy project to be delayed by one year as Govt. and Exxon yet to make final investment decision

Nov 26, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – One year after the Environmental Protection Agency (EPA) granted American oil giant, ExxonMobil a Permit for the pipeline component of the Gas-to-Energy (GTE) project, the company is yet to announce a Final Investment Decision (FID) for the massive development.

Blackbridge Research and Consultancy explained that a FID is a crucial stage in mega energy projects as it’s the final stage to decide whether to go ahead with the project or not. In other terms, it is the final stage to determine if the investment in the project would be beneficial or not.

Before investing such an enormous amount in the project, the company or group of companies assesses all possible outcomes, including the capital required to execute the project successfully. Likewise, it’s the phase for the investors to calculate the project’s financial viability and put their money into it.

After assessing those factors, project owners or investors agree to either go ahead with the funding or back out. If the budget is sanctioned and investors decide to move forward with the project, it is known as FID.

A portion of the onshore pipeline on the West Coast of Demerara laid by ExxonMobil Guyana Limited

The EPA on November 25, 2022 gave Exxon its blessings to commence the pipeline works, pegged between US$900 million and US$1.3 billion.

The GTE project entails three components, a 12-inch pipeline that will transport the gas from the Liza One and Liza Two fields in the Stabroek Block, as well as a Natural Gas Liquids (NGL) facility that will treat and separate the resource; a portion will then be utilized to generate some 300 megawatts (MW) of cleaner electricity.

The project is geared towards generating cheaper electricity for Guyana, but this remains questionable in the absence of a feasibility study.

Not only has Exxon and its shareholders not decided on a FID as yet but government is also yet to receive funding from the United States Export Import (US-EXIM) Bank for the NGL and power plant aspects of the initiative.

Government has since inked contracts for the NGL and power plants to the tune of US$759 million. Other costs to support the project include land acquisitions by the state for the pipeline and transmission and distribution costs.

Two Guyanese women had taken the EPA to Court in March this year, arguing that Exxon failed to prove it owned the lands through which the pipeline will pass. The Court later ruled that the regulator acted ‘contrary to the law’ and ‘improper’, by granting a Permit to EMGL – formerly Esso Exploration and Production Guyana Limited- project. Be that as it may, the High Court determined that the Permit will not be quashed.

The women have since filed an appeal of the Judge’s ruling.

Project delayed

Already, the GTE project has missed its initial deadline. The project was initially intended to startup in December 2024; however, 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. According to the RFP, the project is now scheduled for 2025.

decision, delayed, gas-to-energy, investment, project

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