Dear Editor,
Guyana’s Draft Gas Monetization Strategy offers a good general overview of the sector, with valuable background information. However, most of what has been presented can be placed in an appendix of a proposed strategy. The strategy must be actionable, with enough specifics to garner support for an informed investment and budgetary commitment. The draft strategy as it stands today creates more questions than answers.
Some initial suggestions on the draft strategy are as follows:
1. Needs an Executive Summary
2. Although demand scenarios for natural gas are provided, what it means for Guyana when considering other factors, such as the examples provided, must be part of what informs the strategy: –
• full energy portfolio mix being pursued
• trade agreements with suppliers of value-added products from the sector
• value-added products’ supply-and-demand scenarios
• the environmental strategy being pursued by Guyana and the Guyana Shield.
• installed and planned capacity for the areas of interest in the value-added sectors
3. A cost-benefit analysis is also needed, with a deeper discussion and presentation around:
• Natural gas extraction costs (the paper suggests that it may not be economically feasible). The financial analysis needs to be completed
• Make vs buy analysis on value-added products
• Projected financial scenarios.
4. A clear outline of the recommendations should also be fully fleshed out, and the draft strategy rereleased for review and analysis.
5. The natural gas comparison to renewables is missing the future scenarios that include technological improvements and performance projections.
Based on the construction timelines provided, a three-to-five-year minimum time horizon should be considered.
6. Although pricing information is provided, the “where to play question?” is not clearly answered, nor is the analysis complete with margin information. A deeper review of the value-added components of the sector is needed. As stated in the paper (taken from Poten and Partners, Trinidad and Tobago’s Natural Gas Master Plan 2015), “Understanding the gas utilization options available and the relative value that each will generate for all parties is at the heart of solving this problem”.
Time should be taken to further analyze each value-added option, in order to make informed recommendation for a monetization strategy of Guyana’s gas.
Overall, the draft is a good introduction to start a discussion on where to focus our efforts in the sector. It has answered the question, “Will the sector be needed in the near future, and is it an area that we should take a closer look into?”
Best regards,
Jamil Changlee
