GEORGETOWN, Guyana, CMC – The Guyana government Monday defended the planned gas-to-energy project dismissing criticisms about the cost and reports that Guyana must pay for the supply of natural gas for energy plants.
“We explained, many times, about the gas-to-energy project, that we are going to own 100 percent of it. The gas will be processed by the power plant and the NGL (Natural Gas Liquids) facility. The government and people of Guyana will own it,”’ Vice President Bharrat Jagdeo said.
The project has come under criticism from the parliamentary opposition and certain sections of the media amidst reports that the cost associated with the project, as well as an agreement for the pipeline between Guyana and the US oil and energy giant, ExxonMobil, will result in Guyana repaying the oil company for 20 years for its share of the channel.
Opposition Member of Parliament David Patterson said the arrangement contradicts discussions the oil company had with the former David Granger administration and a commitment made by President Irfaan Ali.
In June last year, Ali said the gas produced offshore Guyana would come at no cost to the Guyanese people. Still, the President of ExxonMobil Guyana, Alistair Routledge, said the company would be selling 50 million cubic feet of natural gas per day to the government to recover the cost of the pipeline.
In condemning the agreement, Patterson said that the last government had made it clear that Guyana would not be paying for its natural gas.
“During the embryonic discussion with Exxon on the possibility of bringing gas to shore for power generation, the Coalition administration informed the company in no uncertain terms, that any agreement which would entail Guyana having to pay for the natural gas would not be acceptable,” Patterson said in a statement.
“At that time, our reasons were: (a) that the associated gas was indigenous (ah, we own) and (b) linking the price of our natural gas to the international market would not provide the level of energy security required for the country, since external events (such as the current Ukraine war) could adversely influence the international price of natural gas, which would result in Guyana paying a premium price for its gas,” he added.
At least one newspaper here, in an article headlined “‘Exxon’s boss contradicts Jagdeo on the free gas claim,” detailed the comments made by Routledge, indicating that Exxon would be ‘selling’ gas to the Guyana government.
But Jagdeo insisted that Exxon’s involvement in the project is not for free but assured that the country’s coffers would not be burdened to pay ExxonMobil for its share of the pipeline.
“So how are we going to pay for this? When we sell the liquids, remember we take the gas, extract the cooking gas, and everything else. At the current price, we will get enough money to pay back our share of the pipeline, and we will even be able to pay for the power plant and the NGL facility. So what happens effectively is that we are financing this whole project from the sale of liquid which we are getting for free,” Jagdeo said.
Jagdeo said that finalized plans for the gas-to-energy project went through a rigorous process to be approved, with all steps of that process being disclosed to the public by both himself and President Ali.
“We said we’re developing this jointly with Exxon. We are financing it out of cost oil. So, we have our share of paying back because it’s not free. They are putting in some money, and we have to put in some money.
“So, we decided that over 20 years say, the pipeline is one billion dollars. We don’t know the exact cost as yet. It could be lower. But we’ll put that notion out there, one billion dollars,“ Jagdeo posited.
Said, adding that while Exxon will be covering 52 percent of the power plant and NGL facility, that still leaves 48 percent of the cost to be covered by the government.
He said through discussions with Exxon, an agreement was made for the government to repay the remaining 48 percent value to amortize the project over 20 years.
“So, it’s not like we’re paying for the gas. We’re just, as a convenience, taking the figure to amortize. That’s why (Routledge) said there is no profit. But it’s reflected almost like a gas payment. But we’re paying zero for the gas. We’re paying to amortize the pipeline. That’s it. It’s easier, commercially, for us to do that, to reflect it commercially,” Jagdeo added.
The government says through the operation of an NGL facility, Guyana will be able to produce large quantities of ethane, propane, butane, isobutane, and natural gasoline.
It said the sale of these to industrial and residential consumers, including fuel, cooking gas, feedstock for the petrochemical industry, and the production of motor gasoline by refineries, will generate revenue that will be allotted towards amortizing the gas-to-energy project.
“We are financing this project by selling our liquids, which we’re getting for free. So, we’re practically getting electricity—not just gas—electricity for free. And then we’re selling it at half the current price for 15 cents per kilowatt hour. Publicly, we’ve said this, but they want to complicate it. They want to complicate it because they want to kill it. That’s what APNU (A Partnership for National Unity) is all about because they’re worried that it will have a big political impact,” Jagdeo said.
He also urged Guyanese to reject naysayers who claim that gas will make Guyana ‘impotent’ and that the gas-to-energy project will explode.
“We can’t be bothered about them. It’s not arrogance. It’s just that we are fed up with people who try to destroy the future well-being of this country. And many of them have lived their lives. They don’t think about the young people that live their lives. And we are not going to tolerate that. That is not what the PPP, and the Irfaan Ali government, are about. We are going to fight them every single day,” Jagdeo assured.
The construction of the pipeline is expected to cost over US$1.3 billion. The estimated cost of the entire project is approximately US$2.2 billion, up from the initial US $900 million.
In December last year, the Guyana government signed a US$759 million contract for the integrated NGL plant and the 300-megawatt (MW) combined-cycle gas turbine (CCGT) power plant to be constructed at Wales, West Bank Demerara.
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