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Exxon tightlipped on final cost for gas pipeline despite all contracts awarded
…says contractors may want final negotiations
A chart used in the feasibility study of the Wales Gas-to-Energy project that estimated the total upstream and pipeline cost to be US$478 million. Today, the cost of the pipeline alone is now estimated to be US$1B (Exxon tightlipped)
kaieteur News- As the pipeline for the Gas-to-Energy (GTE) project nears completion, the contractor, ExxonMobil Guyana Limited (EMGL) is reluctant to reveal the final cost of the structure, even though all contracts have been awarded already.
President of EMGL, Alistair Routledge recently told Kaieteur News, “I don’t have a final number,” when asked about the price tag on the pipeline. The 12-inch diameter pipeline will transport gas from the Liza fields in the Stabroek Block to the Wales Development site, West Bank Demerara. The GTE project also features a Natural Gas liquids (NGL) facility and a 300-megawatt power plant being pursued by the government.
At a press conference in October, Routledge told reporters that the pipeline was mechanically completed. He explained, “It’s been hydrotested, pressure test and we have been going through the dewatering exercise and then introducing nitrogen so we have a pipeline that is ready to introduce natural gas…”
He noted that Exxon’s responsibilities including the risers, pipeline through the deep-water, shallow water and onshore is on schedule for completion by this year end. To this end, he said, “So delighted to see that on course and on budget as well.”
Exxon’s Country Manager later told this publication that the company is confident that the project is on budget since all contracts have been awarded. He however noted, “there will always be some final negotiation on any sort of details that the contractors might want to confirm. We’re on that billion-dollar number.”
When pressed to say when the final price tag for the project would be revealed, he said, “It would be sometime next year when we wrap up all the contracts.” Head of the GTE Taskforce, Winston Brassington previously indicated that the pipeline is expected to cost US$1B. Back in 2018, the Inter-American Development Bank (IDB) had partnered with the State to conduct a feasibility study of the planned natural gas pipeline. Energy Narrative conducted the study in which Exxon said the pipeline would cost US$478 million.
Despite the huge increase in the cost of the project, the government remains confident that the price of electricity will be slashed by 50%. Vice President Bharrat Jagdeo had said, “We ran the simulation when we came up with between four to five cents per kilowatt hour (KWH) that would be the total cost of generation- we ran it at the new number so a higher figure than what was there in the period when (or) pre-inflation…so we are very confident that that will not change the cost (to generate electricity) per KWH- between four to five cents, which we will then sell at 15 cents per KWH. Now it is being sold between 30 to 35 cents per KWH.”
In arguing his case, he added that if the Government had used the “old figures” the cost to generate electricity could have been less than the estimated four to five cents. Not only that, but he said, “that gives us a lot of room there still because we are selling (electricity) at 30 (to) 35 (cents) now… and then as I said before, the sale of the liquids will then allow us to pay back for the infrastructure so effectively, the power comes in to us free basically.”
Publisher of this newspaper, Mr. Glenn Lall, believes the project will amount to a white elephant given the astronomical increase in cost. He reasoned, “No feasibility study, no Press Conference on this subject matter, price doubled and it is still feasible; Jagdeo plug that feasible out of thin air. That’s another white elephant that will hang Guyanese for the so-called cheap electricity.”
(Exxon tightlipped on final cost for gas pipeline despite all contracts awarded)
(Exxon tightlipped)
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