‘Too risky, Govt. has no plans to financially back gas monetization project’ – Jagdeo

Jun 30, 2024 News

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Kaieteur News – Despite the Government of Guyana (GoG) vigorously pursuing the monetization of the country’s untapped gas resources, Vice President Bharrat Jagdeo, has clarified that the government currently has no plan to provide financial backing for the initiative.

“This is a risky project because it’s a multi-billion-dollar project,” Jagdeo told reporters at his last press conference.

Vice President Jagdeo underscored global market uncertainties and potential shifts in U.S. energy policies as other reasons for the cautious approach.

He said, “We are not sure about future demand for gas although many people believe that it will be replaced, it will still be needed long into the future since it will be a transitional fuel, and therefore the demand will still be high.”

Notwithstanding the uncertainty Jagdeo said, “We want to monetize this, so that we [can] add to the revenue stream that comes from the production of oil, another stream of revenue that comes from the utilization of our gas reserves.”

While the government has repeatedly expressed plans to monetize the gas, ExxonMobil Guyana Limited (EMGL) the operator of the Stabroek Block had focused its intentions on developing the oil resources while re-injecting and flaring the gas.

According to Jagdeo, Exxon’s initial position has since changed and gas monetization has now become a priority to the company.

“Exxon has now come back and said to us, we are taking this seriously, we are doing all the studies we want to work with the government in keeping with your national objective of monetizing the gas,” he added.

With Exxon onboard, the government in January invited proposals seeking private sector pitches for the design, financing, construction, and operation of gas infrastructure to support current and future upstream developments in Guyana.

A U.S.-based firm, Fulcrum LNG proposal which includes partnerships with leading companies like McDermott and Baker Hughes, emerged as the preferred choice after a rigorous evaluation process. Recently, President Irfaan Ali disclosed that Fulcrum LNG was selected to collaborate with ExxonMobil and the government in a tripartite agreement to monetize the gas resources.

“So now this company has to sit with ExxonMobil and the government of Guyana, first of all, to examine whether this project is feasible and then the configuration of the project,” Jagdeo said. Yet, the government remains hopeful that the project will actualize to gain another stream of revenues.

Notably, the Vice President stated that at this stage, the government does not have any intention to participate financially. He added, “Because that means putting aside large sums of money into the venture which we don’t have and secondly, it’s a risky undertaking,”

Moreover, when asked about potential financiers for the project, Jagdeo said that Fulcrum has financing options from entities such as the US Exim Bank and private equity firms were among those considered. Regarding the scenario where Fulcrum proceeds without Exxon’s involvement, Jagdeo expressed a preference for collaboration with Exxon due to their capabilities.

Furthermore, Jagdeo acknowledged concerns of conflict of interests, given that the Head of Fulcrum, Jesus Bronchalo, is a former executive of Exxon. He stated that there is no conflict of interest on the part of the government. However, he noted that if there is any as it relates to Exxon, “that is a different matter.”

For his part, President Ali had previously outlined the urgency of monetizing Guyana’s gas resources to diversify revenue streams. Plans include the potential export of electricity and the marketing of by-products from natural gas, positioning Guyana as a regional energy hub.

Presently, the GoG is pursuing a US$2B Gas-to-Energy (GTE) project. This is the country’s first natural gas project. It is expected to generate 300 megawatts of power and an additional 3,400 barrels of by-products daily.

Project Head, Winston Brassington previously said the startup of this facility will provide the country with some 4,100 barrels of by-products daily – such as cooking gas and fuel for cigarettes – among others.

Guyana, however, utilises approximately 700 barrels per day of these products, which means the country will have to seek markets for 3,400 barrels of by-products each day or 1,241,000 barrels on an annual basis.

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• Bharrat Jagdeo, monetization, project, resources, Vice President

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