Gas-to-Energy: Project could pay for itself in 8 years with liquified natural gas (LNG) sales – VP

While the Gas-to-Energy (GtE) Project has a 20 year pay back period to amortise the project at US$55 million per year, Guyana could repay the project costs in just eight yearas through the sale of Liquified natural gas (LNG).
This point was made by Vice President Bharrat Jagdeo, during a recent press conference where he explained that in theory, if they sold the LNG at the Free On Board (FOB) price, they could generate US$106 million in revenue per year.
“So, the cost to the Guyanese tax payers for generating power, is zero. We’re getting the power practically for free. Because we’re paying back for the whole project from the sale of the LNG, that is the liquids we’re getting when we clean the gas to go to the power plant. If we utilise the retail price at which that gas, like the cooking gas is sold to people. And we multiply the retail price times the volume.”
“That’s over US$250 million. We can repay the whole project from that alone, if we sell it. Of course, we’re not going to sell it at the current price. But if we use the economics there. In eight years or so, we’ll be able to amortise the entire project without a cent coming from the treasury,” Jagdeo further explained.
According to the Vice President, the revenue this project can generate, in addition to the savings for consumers who will get cheaper, more reliable power, is phenomenal. He made it clear that the feasibility of the project is self-evident.
“This is a phenomenal project, because remember we’re getting the gas for free. And we’ve already said to people, just from the lowering of the cost of electricity, consumers will save $250 million. These numbers are shocking to me and I’m an economist. Then you see how feasible a project of this nature is,” Jagdeo added.
During a presentation at the Guyana Energy Conference (GEC) and Expo, GtE Project head Winston Brassington had explained that a sum of US$55 million would be paid to ExxonMobil annually to allow the oil major to recover the US$1 billion spent on the pipelines. He had stressed that Guyana is only paying for the pipeline infrastructure, not the gas.
The scope of Guyana’s GtE Project consists of the construction of 225 kilometres of pipeline from the Liza field in the Stabroek Block offshore Guyana, where Exxon and its partners are currently producing oil.
It features approximately 200 kilometres of a subsea pipeline offshore that would run from Liza Destiny and Liza Unity Floating, Production, Storage, And Offloading (FPSO) vessels in the Stabroek Block to the shore. Upon landing on the West Coast Demerara (WCD) shore, the pipeline would continue for approximately 25 kilometres to the LNG plant at Wales, West Bank Demerara (WBD).
In last year’s national budget, the project received a $43.3 billion allocation in addition to the $24.6 billion injected into the start-up of the transformational project. The Guyana Government has envisioned the startup of the GtE Project by 2025, thus realising its commitment to deliver cleaner, cheaper, and more reliable energy to the population.
There is also a planned phase two of the GtE Project. It was only in September 2024 that the Government invited interested companies to submit proposals for a second power plant and LNG facility at Wales, WBD, – the project site for the current GtE Project.
It is expected that of the 250 kilometres of 12-inch pipelines that will bring the gas onshore, only 40 per cent of the pipeline’s capacity will be used in Phase One to gas up the first power plant and LNG facility at Wales, bringing 50 million standard cubic feet per day (mmscfd) of dry gas onshore.
It was announced in April 2023 that Guyana had applied for the loan from the US EXIM Bank to finance the US$761 million GtE Project, which includes the construction of an Integrated Liquified natural gas (LNG) plant and a 300-megawatt (MW) combined cycle power plant at Wales, WBD, utilising natural gas from the country’s offshore operations in the Stabroek Block.
In September 2024, Finance Minister Dr Ashni Singh met with senior officials of the US EXIM Bank in Washington DC during which discussions were held on the loan. As part of its internal due diligence process, the US EXIM Bank hired two consultants to do the technical assessment of the project.
These works were done during site visits over the past year. In fact, back in June, President Dr Irfaan Ali had revealed that the feedback from those two assessments were positive. He said the teams found “no fatal flaws” from the technical and environmental due diligence work done here. (G3)