….US$759.8M power & NGL plants to be funded by State funds, loan
By Jarryl Bryan
As part of the Dr Irfaan Ali-led People’s Progressive Party/Civic (PPP/C) Administration’s energy policy, the multi-billion-dollar model Gas-to-Shore Project has received a whopping $43.3 billion from Budget 2023.
Model of the power plant component of the Gas-to-Shore Project
This was announced by Finance Minister Dr Ashni Singh, during his reading of the budget. This allocation is in addition to the $24.6 billion injected into the start-up of the transformational project, which includes the construction of an integrated Natural Gas Liquid (NGL) plant and the 300-megawatt (MW) combined cycle power plant at Wales, West Bank Demerara (WBD).
“To advance the construction of this [project] and its association fee facilities, Budget 2023 includes an allocation of $43.3 billion… This project will directly cut [carbon] emissions by 70 per cent as well as trigger a series of major economic development initiatives in Guyana as energy costs will be significantly reduced,” Dr Singh announced.
The NGL and 300 MW power plant components of the Gas-to-Shore Project, are meanwhile expected to cost US$759.8 million and will be financed through sources that include budgets and loan financing.
This is detailed in written answers submitted to the National Assembly by Prime Minister Brigadier (retired) Mark Phillips, who has responsibility for the energy sector. He was responding to questions raised by A Partnership for National Unity (APNU) Member of Parliament Volda Lawrence.
In her questions for written replies, Lawrence asked for details on the cost of the Gas-to-Shore pipeline. Phillips explained in his response that the pipeline, supporting works and supervision for the pipeline, will cost US$1 billion. This is being funded entirely by ExxonMobil, through its cost oil.
Then there is the Engineering Procurement and Construction (EPC) cost for the power plant and the NGL plant. The EPC contract, which was awarded to US companies CH4 and Lindsayca late last year, will cost US$759.8 million. Supervision of this component of the project, will cost US$23 million. According to the Prime Minister, Government will be funding these components of the projects by use of State funds and loans.
“The Government is sourcing the funding of the EPC costs from the proceeds of the National Budget over a multi-year period from 2022 to 2025. An early estimate was included in the 2022 capital budget, this figure will be revised in the 2023 budget in line with the above sum. The Government expects to fund a portion of the EPC contract from loan financing to be pursued in 2023,” the PM explained.
Meanwhile, the PM was also asked if the Government would be held liable should Exxon be unable to repay their loan for the pipeline. The PM assured that no contingency liability is likely and that the Government will make annual payments to Exxon subsidiary Esso Exploration and Production Guyana Limited (EEPGL).
“When the project is completed, Government will make an annual payment to EEPGL co-venturers over a 20-year period to recover the cost of their investment in the pipeline used to deliver a minimum of 50 million cubic feet of gas per day to Wales.”
“The total cost of electricity exiting the power plant which includes the payment to EEPGL co-venturers, operating costs of the power plant/NGL plant and recovery of capital costs, shall be less than US 5 cents per kWh,” the Prime Minister also said.
With a timetable to deliver rich gas by the end of 2024 and the Natural Gas Liquid (NGL) plant to be online by 2025, works are progressing on getting the Gas-to-Shore Project off the ground. When it comes to the construction of a combined cycle power plant, a net total of 250 MW is expected to be delivered into the Guyana Power and Light Grid at a sub-station located on the East Bank of the Demerara River.
The scope of the Gas-to-Shore Project also 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 will 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 shore, the pipeline would continue for approximately 25 kilometres to the NGL plant at Wales, West Bank Demerara.
The pipeline would be 12 inches wide, and is expected to transport per day some 50 million standard cubic feet (mscfpd) of dry gas to the NGL plant, but it has the capacity to push as much as 120 mscfpd.
The pipeline’s route onshore would follow the same path as the fibre optic cables, and terminate at Hermitage, part of the WDZ which will house the gas-to-shore project.
