US EXIM Bank loan: Govt has contingency options to fund Gas-to-Energy project – Jagdeo

…after US halts approval of new LNG projects

The Guyana Government has already considered other options to fund the completion of the Gas-to-Energy project should the US EXIM Bank loan be denied, amid the Biden Administration’s temporary pause on pending Liquefied Natural Gas (LNG) projects.
Maintaining that the project will be completed, Vice President Dr Bharrat Jagdeo said on Thursday that Government would always have options to see the project to fruition. Currently, there are two: the first, a contingent line of credit or second, financing through the National Budget.
The US recently halted the approval of new licenses to export liquefied natural gas, owing to scrutiny on how such could impact climate change and security, among other issues but would hamper new projects in the pipeline worth billions of dollars.
On the contrary, Guyana is currently seeking a $134 billion loan from the United States Export-Import (EXIM) Bank to fund the gas-to-shore project.
As Jagdeo entertained clarifications on Government’s contingency plans, he outlined during his weekly press briefing, “We anticipate that the funding will be available and as I said before, it would be retroactive funding. However, without disclosing sources, we have already been talking about a contingent line of credit that could easily supplant that and secondly, from the budget. We have already been financing beyond the first US$100 million that we put into the project from budgetary sources. We have been making payments to the company from the budget. So, those are potential sources.”
The Vice President also highlighted the fact that Guyana’s gas to energy project is different in the sense that it is not for exportation, but rather, for the country’s utilisation. This is coupled with the country’s strong environmental credentials which should pose no issue for the loan approval.
“It is not for export. It is to supplant our supply, which is a bunker C diesel supply which is very polluting. The mere fact that we’re investing in the power plant that would use gas now, we can cut our emissions from the same output by more than 45 percent. It would make a big difference here. Secondly, we’re a country that is already carbon negative and we will remain so in the future. The circumstances are very different.”
Back in April last year, it was announced that Guyana had applied for a US$646 million loan from the US Exim Bank to finance its model gas-to-energy project, which includes the construction of an Integrated Natural Gas Liquid (NGL) plant and a 300-megawatt (MW) combined cycle power plant at Wales, West Bank Demerara (WBD), utilising natural gas from the country’s offshore operations.
This loan application for the gas-to-energy initiative comes on the heels of Guyana and the US EXIM Bank signing a US$2 billion Memorandum of Understanding (MoU) in July 2022 to finance infrastructure, energy, telecommunications, water treatment and sanitation, and agricultural projects here.
The multi-billion-dollar transformational project will see gas being piped from the Liza Field in the Stabroek Block to onshore at Wales via 225 kilometres of pipeline that will be procured, installed, and operated by US oil major ExxonMobil to the tune of US$1 billion.
ExxonMobil as the operator along with its co-venturers is currently engaged in exploration and production activities in the oil-rich Stabroek Block offshore Guyana. Based on studies conducted, the US oil giant would be able to produce up to 50 million cubic feet of gas per day for this initiative without impacting oil production activities offshore.
In Budget 2023, the Government allocated a whopping $43.3 billion for the gas-to-energy project. This allocation was in addition to the $24.6 billion injected into the start-up of the transformational project.
In Budget 2024, a whopping $80 billion is budgeted to advance this project and its associated infrastructure, including transmission and distribution upgrades to offtake the power. (G12)