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Gov’t extends deadline for proposals on second phase of Gas-to-Energy project
Preliminary Artist’s Impression of the natural gas facility to be constructed at Wales, West Bank Demerara (Gov’t extends deadline)
Kaieteur News- The Government of Guyana (GoG) has extended the timeline for companies to submit proposals to design, finance and operate Phase Two of the Gas-to-Energy (GTE) Project.
In an advertisement published in Sunday’s edition of Kaieteur News by the Office of the Prime Minister, it was explained that the new deadline for proposals is January 14, 2025 two months later than the initial November 14, 2024 timeline which was earlier issued.
Phase Two of the GTE project seeks to utilise 75 million cubic feet of gas per day (MMCFD), piped to shore by ExxonMobil Guyana Limited (EMGL). It should be noted that Phase One only utilizes 50 million standard cubic feet per day (MMSCFD), which amounts to 40% capacity of Exxon’s 250 kilometer 12-inch pipeline. Phase Two will make use of the remaining 60% capacity of the pipeline connected to the Liza Fields in the Stabroek Block to Wales, West Bank Demerara.
The selected bidder will be tasked with the design, construction, and operation of a 250 MW combined-cycle power plant, to deliver 2,100 gigawatt hours (GWH) of electricity per annum. This will be sold to the Guyana Power and Light Inc (GPL) via a Power Purchase Agreement (PPA). It was made explicit that investors will recover their investment through the sale of electricity via a 20-to-25-year term (negotiable) Power Purchase Agreement (PPA) “at a price per Kilowatt Hour (KWH)” and via the monetization of the NGLs. At the end of the PPA term, the entire facility will revert to the GOG at no cost. “Phase II GTE will enjoy the same fiscal incentives as Phase I,” the RFP stated. In addition to the power plant, the contractor will design, construct and operate a NGL facility to produce approximately 6,000 barrels per day of NGL products (propane, butane, and C5+gasolene), utilising 75 MMCFD of “rich gas.”
It was explained that the excess “lean gas,” estimated at 30 MMCFD will be transferred to the GoG at no cost, for utilisation in downstream industries, e.g. fertilizer production, to be located at Wales. The privately operated gas project will be located on no more than 100 acres of land, immediately adjacent to the existing 300 MW Integrated facility being developed by the GoG.
“The project will be owned and financed 100% by the private sector, under a project finance structure, which will design and construct the integrated facilities, to a standard and specification that meets and or exceeds that of Phase I of the GTE,” the Office of the Prime Minister indicated.
It was also noted, “Only firms (consortia) adjudged to be experienced in Engineering Procurement and Construction (EPC) and Financing of comparable facilities, will be evaluated. The GOG shall have the right to approve the EPC contract and appoint an independent supervision firm, to ensure that the project is built per the EPC contract and acceptable quality and specifications, pre-approved by the GOG.” Bidders will be provided with the existing Employers’ Requirements for Phase I of the GTE project, along with a template of the EPC contract for reference.
In the meantime, government expects responses to the RFP to include financial projections of revenue, expenses, and investments returns using a number of variables including the PPA price per KWH, broken down into the following three elements “(a) payment for the gas; (b) operating and maintenance cost; (c) financing/amortization of the capital costs. Indicate the breakeven price and estimated sale price for each year along with an assumed inflation rate.”
Meanwhile, subject to ensuring sufficient revenue to operate the facility and recover the investment at an agreed rate of return, the GOG has reserved the right to: (i) buy-out the project (the Guyanese SPV), any-time after the construction and commissioning, at an agreed formula, such that the investor obtains a return of investment and reasonable accrued return based on the stated cost of capital; (ii) transfer of the entire volume of NGL’s to GOG/GPGI, who will market and distribute with Phase 1 NGL’s, either at zero cost or other agreed value.
(Gov’t extends deadline for proposals on second phase of Gas-to-Energy project)
(Gov’t extends deadline)
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