Final Investment Decision or not, Exxon delivering gas pipeline - Project Manager

Final Investment Decision or not, Exxon delivering gas pipeline – Project Manager

Apr 06, 2024 ExxonMobil, News, Oil & Gas

Kaieteur News – Although ExxonMobil is yet to make a Final Investment Decision (FID) on the disputed pipeline to transport gas from the Liza Fields in the Stabroek Block to the Wales Development Site, the company said it will be delivering the project to Guyana.

EMGL Gas-to-Energy Project Manager, Friedrich Krispin

The pipeline is a component of the Gas-to-Energy (GTE) project that is expected to cost the nation US$2B. Even though the gas project is the single largest financial investment in the history of the country, a feasibility study was never conducted to determine whether it will be beneficial to the nation.

ExxonMobil’s GTE Project Manager, Friedrich Krispin during a recent interview with Kaieteur News said the company is confident it will deliver the project.

He explained, “The company is completely confident that we will deliver this project, we will deliver it on time, we will deliver it safely and we will operate it for the future of Guyana. Whether we have declared Final Investment Decision or not, I’m not even sure, it really doesn’t matter to me. I’m here, my team is here, we are building it and we are doing it for Guyana.”

The 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.

Former head of the Environmental Protection Agency (EPA), Dr. Vincent Adams previously told Kaieteur News that such a key step should have already been completed for the massive project. He believes the lack of an FID and failure by government to secure funding from the US-EXIM Bank for the project questions the feasibility of the facility.

Despite calls for a thorough independent study to be completed to determine the project’s viability, government is adamant that this is not necessary.

The former EPA boss reasoned, “If this here has been touted as being so economical and lucrative, why wouldn’t an investor quickly jump on it? It goes back to what type of business plan or models the investors are seeing. Are they uncomfortable with what they are seeing?”

He was keen to note that the cost of the project has now more than doubled from its initial estimate of about US$500 million, but government is still convinced that the cost of electricity will be slashed by 50 percent. Dr. Adams said, “It could mean that it doesn’t look that lucrative to the investors with the cost and returns.”

The EPA approved Exxon’s application for the gas pipeline since November 25, 2022. The 225 kilometers offshore and onshore pipeline is expected to completed by the end of this year.

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decision, Exxon, gas, GTE, investment, Krispin

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