GYSBI project was vetoed at IDB level due to fossil fuel concerns – US Embassy

…says policy decision made to cut int’l financing for carbon-based projects

Back in October 2021, the United States had used its seat on the Inter-American Development Bank (IDB) to veto a proposal from Guyana Shore Based Incorporated (GYSBI) seeking an approximately US$130 million loan to fund its expansion plans to service the oil and gas industry.

A ship at the GYSBI port

Of recent, the issue has been gathering traction again, and Guyana Times had requested a comment, through the US Embassy in Guyana, on the reason for the project being vetoed. According to the Embassy, the decision to veto the GYSBI proposal is rooted in an existing US policy of prioritising support for renewable energy projects, as opposed to fossil fuel-based ones.
“At the multilateral development banks (MDBs), the United States is committed to supporting developing countries to achieve a clean and sustainable future that is consistent with their development goals and the Paris Agreement’s long-term goals,” this publication was informed.
The Embassy in its response pointed out that back in January 2021, US President Joe Biden issued an Executive Order requiring the US Government to identify steps through which it could accelerate cutting off international financing for carbon-based, fossil-fuel energy projects. According to the Embassy, the US is also focused on pairing this with advancing clean, renewable energy.
“Our MDB fossil fuel guidance, posted publicly in June 2021, responded to President Biden’s Executive Order and the United States proactively shared that guidance with all MDBs,” the US Embassy said.
“Through our MDB fossil fuel guidance, the United States is seeking to incentivise the MDBs to support projects that help countries make their economies cleaner and less dependent on fossil fuels.”
According to the Embassy, the US has been joined by many other like-minded countries, including the IDB shareholders, in pursuing that goal. They made it clear that MDB financing for oil-based energy projects, including financing for infrastructure to support the oil sector, will continue to be opposed.
“We will use this guidance to evaluate US positions on MDB-financed projects, including the IDB Invest Guyana Shore Base project, if IDB Invest management decides to bring the project back to the Board for a vote,” the Embassy noted.
GYSBI was formed in 2016, when Guyana’s oil and gas sector was still in a nascent phase, by a consortium of companies including Muneshwers Limited, Pacific Rim Constructors, LED Offshore, and TOTALTEC Oilfield Services.
Since that time, it has served as a trans-shipment point for supplies and equipment for ExxonMobil’s local subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), which is exploring and producing oil offshore Guyana. Among the services it has provided are waste management, fuel bunkering, pipe storage, warehousing and potable water storage.
The US$130 million loan GYSBI had been seeking from the IDB had included US$70 million to refinance various existing loans, expand its port and shore-based facilities by constructing additional berths and increasing the size of the shore base logistics support area.
The company was also going to construct and develop an infill project to offload heavy cargo, construct a waste management facility, install rooftop solar photovoltaic (PV) panels and expand its warehouse capacity.
According to an IDB document seen by this publication and issued last year, the project had been pre-classified in Category B, owing to the likelihood that it would possibly impact the environment. These potential impacts had included soil and water contamination, generation of solid waste and waste water, and the storage of dangerous substances including fuel and lubricants.
However, the document also noted that these impacts were deemed of medium and medium to high intensity, which could “easily be managed from the project’s perspective”. Importantly, the project had also received approval from the Environmental Protection Agency (EPA). (G3)