Guyana could save US$160M annually in energy from gas-to-shore project – VP Jagdeo
…says notional price of US$800M for pipeline likely to be slashed
The Government expects Guyana to save as much as US$160 million a year in power costs, when the gas-to-shore project, which will be feeding gas from the Liza Field offshore Guyana, comes on stream.
During a recent interview, Vice President Bharrat Jagdeo noted that crude oil is currently around US$75 per barrel, while the cost of generating power is US 14 cents per kilowatt. On the other hand, Guyana sells power at US 30 cents per kilowatt.
“The cost of generating power is 14 US cents per kilowatt/hour, we are selling power at about 30 US cents per kilowatt/hour. Now, with the pipeline coming in, they put a notional figure between 800 to 900 million for the pipeline,” Jagdeo said.
“But we believe when we go to tender, the price will come down significantly, but you have to build the project on the outer limits, the outer numbers. But when you go to tender, we believe it will drop by a couple of hundred million dollars.”
The gas-to-shore project is a game-changing initiative that will see gas from the Liza Field offshore Guyana being pumped onshore to generate power. The main objective of the initiative is to transport sufficient gas from the Stabroek Block’s petroleum operations to supply some 200-250 megawatts of energy to the national grid, leading to a significant reduction in electricity costs.
President Dr Irfaan Ali had previously said the landing of the gas-to-shore pipeline in Region Three would lead to “big industrial development taking place there that is linked to not only power generation and a power plant.” He also said the investment on the Demerara River’s shoreside would create massive opportunities and a trickle-down effect.
Soon after the Government issued permit licences to Exxon for the Payara Development Project last year, Jagdeo had announced that the Government would turn its attention to negotiating the gas-to-energy project.
He had pointed out that Guyana is generating at nearly 17 to 20 cents per kilowatt/hour. As such, he noted that the project could cut the cost of electricity in the country by more than half. To this end, he had announced that a team has been set up to start negotiations on the gas-to-energy project, with the Government eyeing 2023 to bring the project to fruition.
And indeed, a Gas-to-Shore Project Advisory Committee headed by former National Industrial and Commercial Investments Limited (NICIL) Head Winston Brassington was set up soon afterwards to look at various locations for the gas-to-shore project.
A number of factors including geotechnical, geophysical and environmental were examined before Vice President Jagdeo announced recently that the Government had settled on Wales to land the pipelines for the project.
Meanwhile, Prime Minister Mark Phillips, who has responsibility for the energy sector, has previously said that the Government is looking to produce 200 megawatts of power from the gas-to-shore project by 2024.
Exxon has said that around 30 to 35 million cubic feet of natural gas would be required for the gas-to-shore project. Recently-released data from Norwegian research company Rystad Energy had indicated that less than 20 per cent of the 1.8 billion Barrels of Oil Equivalent (BOE) discovered last year was gas.