Guyana to pay US$55M annual amortized cost for gas-to-energy pipelines – Brassington

…says Guyana will save, earn 10 times that amount from project

A sum of US$55 million per annum will be paid to ExxonMobil in amortization costs for the pipelines to be installed in the Gas-to Energy project, which will allow Guyana to, in turn, save and earn ten times that amount.
This revelation was made by Gas-to-Energy project head Winston Brassington in a presentation during the Guyana Energy Conference and Expo. He explained that the $55 million to be paid to ExxonMobil annually would allow the oil major to recover the US$1 billion spent on the pipelines.
“We’re looking to pay Exxon an annual fixed payment of (US)$55 million for the supply of 50 million cubic feet of gas per day over a 20-year period from the time the project comes online. This payment is intended to allow Exxon or their co-vees to recover the expected (US)$1 billion investment over time.
“So, we’re paying for the amortization of the pipeline infrastructure. We’re not paying for the gas per day, the gas is considered free. So, this $1 billion being spent covers everything that Exxon will spend on the pipeline,” Brassington said.
Brassington noted that electricity sales from the project would pay for the amortization of the pipeline construction. He noted that, in turn, Guyana is guaranteed 50 million cubic feet of gas per day. He stressed that Guyana is only paying for the pipeline infrastructure, not the gas.
“By any comparison, this is an extremely good deal. We’re paying $55 million and getting a value proposition of probably about ten times that. Even if we were to use lower prices for the NGL and the fuel, we’d still get multiple returns from this. And of course, the transformational impact this can have on Guyana cannot be understated.”

Brassington provided figures on how much money the gas-to-energy project would save Guyana. Additionally, the equivalent value that Guyana would benefit from the Natural Gas Liquids project is approximately US$150 million. Not to mention the fact that, by 2026, the Guyana Power and Light (GPL) would need double the current installed capacity as demand for power grows.
“If we take a look at how much output we will get from this powerplant using gas, were we to pay for the price of fuel for that volume of power, it would cost us close to $400 million. So that would be the equivalent value, using HFO (heavy fuel oil).
“If you look at what we’re getting, the equivalent value based on (2022) prices of the volume of NGL and the level of power would equate to something in the range of $500 million. And we’re paying $55 million per annum to Exxon for that gas,” Brassington further said.
In budget 2023, the Gas-to-Energy project received a $43.3 billion allocation. 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 NGL Plant and the 300-megawatt (MW) Combined Cycle Power Plant at Wales, WBD.
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.
The scope of Guyana’s gas-to-energy 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 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 will terminate at Hermitage, part of the Wales Development Zone (WDZ) which will house the gas-to-shore project. (G3)