Exxonmobil adds 46th discovery at Stabroek

Oct. 26, 2023 : Carl Surran, SA News Editor

Exxon Mobil-led consortium announced a “significant discovery” of oil and gas at Lancetfish-2 appraisal well in the offshore Stabroek block. The strike is the fourth discovery this year offshore Guyana, lifting the total since 2015 to 46, for over 11B barrels of recoverable oil and gas. The discovery in the Liza production license area has an estimated 20 meters of petroliferous reservoir, along with ~81 meters of additional hydrocarbon-bearing sandstone,

In April the consortium, which includes Hess and Cnooc found 28 meters of oil-bearing sandstone at the Lancetfish-1 well.

Consolidation across the energy industry is now desirable and Chevron investors will reap benefits after their acquisition of Hess stock.

 

 

Hess lauds Guyana profits

Oct 26, 2023

 Reveals Liza Destiny suffered mechanical issues

US independent oil explorer, Hess Corporation which holds a 30 percent stake in the Stabroek Block reported profits of US$504 million, or US$1.64 per share, in the third quarter of 2023, a decline when compared with net income of US$515 million, or US$1.67 per share, in the third quarter of 2022.

On an adjusted basis, the corporation reported net income of US$583 million, or US$1.89 per share, in the third quarter of 2022. Hess said the decrease in adjusted after-tax results compared with the prior-year quarter reflects lower realized selling prices, partially offset by the net impact of higher production volumes, in the third quarter of 2023.

Operational highlights include net production of 395,000 barrels of oil equivalent per day (boepd) in the third quarter of 2023, compared with 351,000 boepd in the third quarter of 2022, primarily due to higher production in the Bakken (USA), Guyana, and Southeast Asia.

At the ExxonMobil –operated Stabroek Block, net production from the Liza Destiny and the Liza Unity vessels totaled 108,0002 bopd in the third quarter of 2023, compared with 98,0002 bopd in the prior-year quarter. In the third quarter of 2023, Hess sold nine cargos of crude oil from Guyana, compared with eight cargos in the prior-year quarter.

During the third quarter of 2023, the company revealed a mechanical issue on the Liza Destiny floating, production, storage and offloading (FPSO) vessel reduced production. The operator completed repairs in October that resolved the issue and production is currently in the range of 150,000 – 160,000 gross bopd.

Hess disclosed that the successful Lancetfish-2 appraisal well in the Stabroek Block encountered approximately 125 feet of net oil pay in appraisal reservoirs and approximately 65 feet of net oil pay in a new discovery interval. The well was drilled in 5,649 feet of water and is located approximately 4 miles southeast of the Lancetfish-1 discovery well.

On other Stabroek Block Projects, Hess reminded that the third development, Payara, with a production capacity of approximately 220,000 gross bopd, will start up in the fourth quarter.

The fourth development, Yellowtail, was sanctioned in April 2022 with a production capacity of approximately 250,000 gross bopd and first production expected in 2025.

The fifth development, Uaru, was sanctioned in April 2023 with a production capacity of approximately 250,000 gross bopd and first production expected in 2026.

The operator submitted the field development plan for the sixth development, Whiptail, to the Government of Guyana in October.

Due to the pending merger with Chevron Corporation, Hess did not host a conference call to review its third quarter 2023 results. Chevron announced that it will acquire all the outstanding shares at Hess Corporation for US$53 billion, or US$171 per share. Under the terms of the agreement set to take full effect in the first quarter of 2024, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. Taking this and other financial arrangements to follow, the full value of the transaction is US$60 billion.

Significantly, Chevron’s acquisition of Hess will give it exclusive control over a grand prize—30 percent of the working interest in Stabroek Block where over 11 billion barrels of oil resources have been unlocked. In that deepwater block of 6.6 million acres, operator ExxonMobil has 45 percent working interest while China National Offshore Oil Corporation (CNOOC) with 25 percent will doubtless attract an IOC buyer.

Since oil production commenced in December 2019 at the Stabroek Block’s Liza Phase One Project, Exxon successfully started another, the Liza Phase Two, in February 2022. Both projects are producing about 400,000 barrels of oil per day. Exxon and partners are targeting over 1.2 million barrels of oil by 2027, making Guyana’s Stabroek Block, one of the world’s fastest-ever oil development hotspots.

 

 

Women-led consortium wins oil blocks

Oct 27, 2023

A consortium led by four local women made history as the first women to secure two pivotal oil blocks in Guyana’s debut auction. The brainchild behind this pioneering achievement, Sispro Inc., is spearheaded by – Dr. Melissa Varswyk, Abbigale Loncke-Watson, Ayodele Dalgety Dean, and Dee George. They have been found eligible to be awarded a shallow water block S3 and a deepwater block titled D2.

Vice President, Bharrat Jagdeo announced the result of the auction launched last December which offered 14 blocks but only eight received bids. Following a review of bids, Cabinet approved companies to be awarded various blocks.

TotalEnergies EP Guyana B.V. in consortium with Qatar Energy International E&P LLC and Petronas E&P Overseas SDN BHD were approved for a shallow water block called S4. ExxonMobil Guyana Limited, Hess New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited were approved for shallow water block –S8.

Out of Nigeria, International Group Investment Inc was eligible for two shallow water concessions—S5 and S10. An American and Ghanaian partnership, Liberty Petroleum Corporation and Cybele Energy Limited, were approved for shallow water block—S7. Delcorp Incorporated, a Guyanese company, in collaboration with Watad Energy and Communications Ltd and Arabian Drilling Company were approved for deepwater block titled—D1.

Now that these companies have proven to be eligible for the blocks, Jagdeo said negotiations would be initiated to ensure companies have the wherewithal to carry out their respective exploration programmes. Such talks would also entail ensuring that the companies are capable of paying the respective signing bonuses for their blocks set at $10M for shallow concessions and $20M for those in deep water. Jagdeo said this has to be paid before the contracts are signed.

While an ExxonMobil consortium has been approved for a shallow water concession, Jagdeo said government anticipates that it may not be finalized given the company’s opposition to some of the terms in the new model Production Sharing Agreement (PSA).

Replicate Guyana model

October 26, 2023

United Nations Resident Representative Yesim Oruc says Guyana provides sustainable strategies for achieving global goals with a development model bolstered by a robust budgetary and planning framework, ensuring the proactive implementation of strategies and initiatives to meet global sustainability goals.

Eight years ago, member states at the United Nations adopted the Sustainable Development Goals (SDGs).

“Guyana has a development model which is very well pinned by a very strong budgetary and planning framework on the Global Goals [and] presents a lot of lessons learned for other countries. In Guyana, the presentation on its own achievements for the SDGs there are some good practices there that other countries could emulate from budgeting from planning.”

Nations have committed to addressing global challenges related to poverty, access to food and water, inequality, climate change, environmental degradation, peace, and justice.  These are part of 17 goals, which are all interconnected.

In Guyana, particularly much focus has been placed on improving access to fresh and clean water, especially in vulnerable communities some of which are located in the hinterland.

Referencing recent statistics provided by the Ministry of Housing and Water here, Oruc praised the country for its delivery of clean water to these communities.

Prior to August 2020, the hinterland coverage was only 46 per cent of the population. It has already been increased to 75 per cent by the end of 2022 and is targeted to achieve 85 per cent by the end of 2023. Delivery of water and sanitation is one of many key targets of the UN.

Oruc further commended the Low Carbon Development Strategy (LCDs), a framework that delineates intentions for climate and energy security.

“When those plans are fully achieved, they will indeed present a great best practice and right now in terms of planning and budgetary practices…we do think there are very good practices that other countries of the region but also globally would be worthy of replication and learning more of.”

In recent months, Guyana has received significant recognition for its work in championing climate, energy and food security. The petrostate was recently appointed by the Commonwealth Secretariat to develop a framework on climate change and forest preservation. Guyana will participate in the UN Climate Change Conference/ Conference of the Parties of the UNFCCC, COP 28. and host a side event.

 

 

Chevron taps into lucrative Guyana oil resources with Hess deal

October 24, 2023

CEO commits to partnering with authorities to create shared prosperity, value for the nation and its people

IN a strategic move, Chevron Corporation, on Monday, agreed to buy outstanding shares of Hess Corporation in a landmark all-stock transaction valued at US$53 billion.
According to a statement from Chevron, the acquisition marks a significant upgrade and diversification of company’s portfolio and includes Hess’ holdings in the Stabroek Block in Guyana; this is considered as an asset of immense value characterised by industry-leading cash margins and low carbon intensity. This acquisition is set to position Chevron for substantial production growth in the coming decade.

Hess’ Bakken assets add another leading U.S. shale position to Chevron’s Denver-Julesburg (DJ) and Permian basin operations and further strengthen domestic energy security.

The combined company is expected to grow production and free cash flow faster and for longer than Chevron’s current five-year guidance. In addition, John Hess is expected to join Chevron’s Board of Directors.

Chevron Chairman and Chief Executive Officer (CEO), Mike Wirth, during the announcement, on Monday, said that Chevron intends “to continue partnering with the Government of Guyana to create shared prosperity and value for the country and its people.”
He added: “This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets.”

Wirth underscored the alignment in values and cultures between the two companies, emphasising their shared focus on safety, integrity, community contributions, and financial performance.

Chevron Chief Financial Officer, Pierre Breber, said that the addition of Hess is expected to further extend the company’s cash flow growth.
“With greater confidence in projected long-term cash generation, Chevron intends to return more cash to shareholders with higher dividend per share growth and higher share repurchases,” he said.

Hess said that the strategic combination brings together two strong companies to create a premier integrated energy company, which he is proud of.

“I believe our strategic combination creates a company that is stronger in every respect, with the leadership, asset portfolio and financial resources to lead us through the energy transition and deliver significant shareholder value for years to come,”

But what does this mean for Guyana? According to Chevron, the acquisition offers a strong strategic fit for the company, granting the company 30 percent ownership in the Stabroek Block, which represents more than 11 billion barrels of oil equivalent.

This move promises high cash margins, robust production growth, and potential exploration opportunities. The transaction is also anticipated to boost Chevron’s cash flow per share in 2025, driven by synergies and the start-up of a fourth floating production storage and offloading (FPSO) vessel in Guyana.

As a result, Chevron’s estimated five-year production and free cash flow growth rates will experience a positive upswing.

Enhanced shareholder returns are also on the horizon, with Chevron set to recommend an eight percent increase in its first-quarter dividend per share, raising it to US$1.63 in January.

After the deal’s completion, Chevron will further bolster shareholder value by increasing share repurchases by US$2.5 billion, reaching the upper end of its guidance range.  In terms of capital efficiency, the combined company will operate with a capital expenditures budget of US$19 billion to US$22 billion and is expected to generate US$10 to US$15 billion in before-tax proceeds through 2028 by selling assets.

 

 

Exxon, Hess relinquish offshore oil block after disappointing results.

Sep. 29, 2023: Carl Surran, SA News Editor

Exxon Mobil and partner Hess withdrew from the deepwater Kaieteur exploration block offshore after their first well in the block was declared non-commercial. Kaieteur contains around half the acreage of the Stabroek block, where the Exxon consortium found over 11B boe in place. Exxon and Hess transferred their stakes in Kaieteur, to original license holders Ratio Guyana and Cataleya Energy. The consortium of Exxon , Hess and Cnooc currently produces ~380K bbl/day through the Stabroek block, with plans for a production capacity of more than 1.2M boe/day by 2027.

 

 

First steel cut for ExxonMobil FPSO modules

Bomesc Offshore fabricating topside equipment

12 October 2023 By Xu ihe in Singapore

In the northern city of Tianjin PRC yard Bomesc Offshore Engineering cut first steel on the topside modules for the floating production, storage and offloading vessel for ExxonMobil’s Uaru field in the Stabroek block offshore .

Construction start means that the yard will deliver the modules in August 2025. Under a $153 million deal offered by Japanese floater specialist Modec in June, Bomesc is responsible for the detailed engineering, shop design, procurement and fabrication of modules for the Uaru FPSO.

 

 

SBM Offshore awarded FEED contracts for Whiptail

13 Oct 2023

SBM Offshore won contracts to perform Front End Engineering and Design (FEED) for a Floating Production, Storage and Offloading vessel (FPSO) for the Whiptail development project offshore Guyana.

Following FEED and subject to Guyana government approvals of the development plan, project sanction including final investment decision by ExxonMobil Guyana Limited, an affiliate of ExxonMobil Corporation, to release the second phase of work, SBM Offshore will construct and install the FPSO. The FEED contract award triggers the initial release of funds by ExxonMobil Guyana Limited to begin FEED activities and commits a Fast4Ward® hull for the execution of the Whiptail development project.

Under the contracts, FPSO ownership is expected to be transferred to the client at the end of the construction period and before start of operations in Guyana. Construction costs are expected to be partially funded by senior loans which will be repaid at the time of the FPSO transfer to the client.

SBM Offshore is expected to operate the FPSO through its integrated operations and maintenance model combining SBM Offshore and ExxonMobil’s expertise and experience, leveraging key learnings and the operational excellence of the units currently deployed in Guyana.

SBM Offshore will design and construct the FPSO using its industry-leading Fast4Ward® program using the Company’s seventh new build, Multi-Purpose Floater hull, combined with several standardized topsides modules. The FPSO will be designed to produce 250,000 barrels of oil per day, will have associated gas treatment capacity of 540 million cubic feet per day and water injection capacity of 300,000 barrels per day. The FPSO will be spread moored in water depth of about 1,630 meters and will be able to store around 2 million barrels of crude oil.

Building on the experience to date of FPSOs Liza Destiny, Liza Unity, Prosperity and ONE GUYANA, SBM Offshore continues to commit to local content development in Guyana by sourcing fabrication scope locally and integrating Guyanese engineers into the execution and operational teams.

Bruno Chabas, SBM Offshore’s Chief Executive Officer:   ‘We are proud to announce ExxonMobil Guyana has awarded the contracts for a fifth FPSO from SBM Offshore in Guyana. This project demonstrates once more the value that our industry-leading Fast4Ward® program brings to our clients and other stakeholders while delivering carbon efficient energy to the world.’

Source: SBM Offshore

 

 

 

ExxonMobil awards SBM contract including new FPSO

17 Oct 2023,  Riviera News

Dutch floating production storage and offloading (FPSO) vessel specialist SBM Offshore won a front-end engineering and design (FEED) contract to design, build and install its seventh newbuild FPSO at the Whiptail development project in Guyana

ExxonMobil’s Whiptail development is the US megamajor’s sixth offshore oil and gas project in Guyana and, pending government approval and ExxonMobil’s final investment decision (FID) on the project, would be SBM Offshore’s fifth FPSO for the development. The FPSO will be designed to produce 250,000 barrels of oil per day, will have associated gas treatment capacity of 15.3M m3 and water injection capacity of 300,000 barrels per day.

The FPSO will be spread moored in water depth of about 1,630 m and will be able to store around 2M barrels of crude oil.The FEED contract award triggers an initial release of funds by ExxonMobil Guyana to start SBM Offshore’s FEED activities and commits a hull for the execution of the Whiptail development project in Guyana. Under the contracts, the FPSO’s ownership is expected to be transferred to the client at the end of the construction period and before the start of operations in Guyana.

“SBM Offshore will design and construct the FPSO… using the Company’s seventh newbuild, multi-purpose floater hull, combined with several standardised topsides modules,” SBM Offshore said.

ExxonMobil has in place a 10-year operations and maintenance (O&M) agreement with SBM Offshore that covers O&M for four rigs: Liza Destiny, Liza Unity, Prosperity and One Guyana. SBM said the contracts added some US$3Bn to its revenue backlog, the first two FPSOs listed are in production, Prosperity is on site and expected to come online in late 2023 and FPSO One Guyana’s topsides fabrication is progressing as planned, with first oil expected at the end of 2025.

In May 2023, ExxonMobil green-lit an FID, at US$12.7Bn, for its fifth offshore energy development project in Guyana’s Starbroek block following government approval and another discovery at the Lancetfish-1 well.

The company aims to have six FPSOs online by the end of 2027, which would bring Guyana’s production capacity to more than 1.2M barrels of oil per day. ExxonMobil operates the Stabroek Block and China’s CNOOC and US-headquartered Hess Corp each have a stake in the block.

Developments in the Stabroek Block offshore Guyana totalled some 11Bn barrels of oil, to date. If Exxon’s Whiptail deepwater oil/gas project goes ahead, the FPSO would be connected to a network of subsea infrastructure that will require installation contracts. In early September, US-headquartered offshore engineering group Oceaneering International revealed contracts with ExxonMobil, in both Guyana and Angola, with a combined value of more than US$100M.

 

 

Exxon FID for sixth Guyana oil project by next year’s Q1

Oct. 17, 2023 : Carl Surran, SA News Editor

Exxon Mobil ) likely will make a final investment decision on its sixth oil project in Guyana by Q1 2024, , Alistair Routledge, head of the company’s operations in the country said .

Exxon and partners Hess and Cnooc proposed a $12.9B plan in August to develop the Whiptail offshore oil project, which was submitted to Guyana’s government on October 13

The floating production platform is planned to start operations in late 2027 and spring the Exxon-led consortium’s Guyana oil production over 1.2M bbl/day.

Exxon is set to start production of its third FPSO, at the Payara project, by year-end, which is expected to boost current output to ~600K bbl/day in early 2024.

 

 

 

ExxonMobil Guyana cost-recovery audits

October 18, 2023

full cooperation, transparency and resolution being pursued

Alistair Routledge, President of ExxonMobil Guyana Limited (EMGL), addressed concerns surrounding cost-recovery audits and stressed the company’s commitment to co-operation with local authorities to ensure transparency in their operations.

ExxonMobil is in the midst of two cost-recovery audits. The first audit covers expenses dating to the beginning of the Stabroek Block licence in 1999, extending to 2017, with an estimated value of 1.678 billion USD.

The second audit focuses on the 2018 to 2020 period, with costs totalling 7.2 billion USD.
At a press conference at the ExxonMobil Kingston, Georgetown headquarters, Routledge explained the company’s stance and actions in relation to the audit process.

Currently, Senior Petroleum Coordinator at the Ministry of Natural Resources, Bobby Gossai Jr., is facing “disciplinary measures” over the unauthorised engagement with ExxonMobil on the cost-recovery audit. This action comes in light of Gossai’s involvement in dealings related to the oil giant’s spending between 1999 and 2017, following an investigation into the US$214 million audit.

“We always cooperate with authorities on investigations where we may be required. I feel very sorry for Mr. Gossai… He was working diligently and in support of the process and, unfortunately, the right paperwork hadn’t gone to the right people. But I think he’s worked diligently with the best of intent,” Routledge said as he emphasised Exxon’s willingness to cooperate with the probe.

Routledge clarified that the first audit, which has gained significant attention, commenced in 2019, spanning a period of more than two decades. The audit process, initiated under the APNU+AFC administration, was stymied by a hiatus before the PPP/C government took over to oversee its later stages.

“When we talk about an audit process like this, it is very normal for us to be audited. We’re audited by our co-venturers who have just as much interest in the government and ensuring that all the costs that go into the cost recovery pool are appropriate and in line with the standard you would expect to have been properly accounted for with the right kind of documentation. Similarly, we have internal auditors, and we have external auditors. So at least four sets of eyes will be looking across these expenses for these.”

Regarding the initial audit, IHS Markit, auditing firm of the government , issued a draft report containing queries about an amount of approximately 214 million USD.

He pointed out these queries were not findings of irregularities but sought additional documentation and clarification. The oil giant worked diligently to provide further documentation.

“We believe that we provided the documentation to substantially reduce the queries that were out there from the initial draft audit.”

The Guyana Revenue Authority (GRA) is the authoritative body overseeing the audit, as pointed out by the government. Routledge said that GRA requested ExxonMobil to re-engage IHS Markit to review the documentation provided after the initial audit was halted. He anticipates that the remaining queries will be resolved, with only a minor de minimis amount possibly unverifiable due to the age of the records.

“We’re very clear on what the international standards are for us in the oil and gas business. We follow those standards, we booked appropriately. We have a lot of checks and balances in place to ensure appropriately. We believe that we provided the documentation to substantially reduce the queries that were out there from the initial draft audit and that it was that sort of amount. We did not have any formal agreement from the ministry. And indeed, as the ministry, the Minister or the Vice President, made it clear that there is the expectation that the GRA is the ultimate authority.”

Routledge clarified that while he explained the audit process to the Opposition, he had indicated that no final agreement was reached or authorised by either the ministry or the GRA. ExxonMobil continues to cooperate with the GRA and relevant authorities to resolve any remaining queries, finalize the audit process and ensure transparency in their operations within Guyana’s burgeoning oil and gas sector.

Minister of Natural Resources, Vickram Bharrat, recently said that since the inception of the audit, the government’s position has been to consistently emphasise that it is the GRA which plays the pivotal role in determining the final outcome of the audit in question, in line with the Production Sharing Agreement (PSA).

The role of the Ministry of Natural Resources in the process was to oversee the audit, as stipulated in the PSA and facilitate information exchange among all relevant parties, including the GRA. However, based on advice from Gossai, that initial claim of US$214,911,994 was reduced to US$3,414,853.68. In response to this dramatic shift, Minister Bharrat formally sought clarification from the GRA, in a letter dated November 28, 2022, seeking a “No Objection” to confirm this revised figure.

In July 2023, Minister Bharrat said that Gossai, in a meeting with himself and Vice-President Bharrat Jagdeo, reported that the initial sum was further adjusted, first to US$11,497,140 and eventually down to US$3,414,853.68.

Minister Bharrat, considering his previous correspondence with the GRA and the agency’s critical role in the audit process, said that he assumed that this reduction had been achieved in consultation and collaboration with the GRA.

“I subsequently learnt that the GRA did not agree with the position, and the initial claim of US$214,911,994 remains the same. After examining all the facts, it is clear Gossai acted without the requisite authorisation to engage EEPGL [Esso Exploration and Production Guyana Limited] and provided inadequate advice, and as such, I have asked the Permanent Secretary to take the necessary disciplinary measures,” the Minster said in his letter.

In light of the foregoing developments, Minister Bharrat reiterated that the government stance remains unwavering, affirming that the GRA is the sole entity authorised to make the final determination on the matter. The government will establish new protocols and systems to prevent similar lapses in the future, emphasising full disclosure and transparency in dealings with stakeholders in the sector.

In auditing Exxon’s expenses from 1999 to 2017, IHS Markit flagged a US$214M sum of questionable spending. This figure received a no-objection from GRA, and an indication to close the US$1.6B audit of Exxon’s expenses. However, following this no-objection, it was revealed that a staff member of the Ministry of Natural Resource’s Petroleum Unit engaged ExxonMobil’s local subsidiary, formerly known as EEPGL, in reducing the US$214 million to US$3 million.

 

 

25 compete for crude marketing contract

Oct 18, 2023

IOC ExxonMobil, HESS, Chevron and SOC CNOOC, and Saudi Aramco are among 25 companies who bid to market oil from the Liza Destiny, Liza Unity and Payara Prosperity Floating Production Storage and Offloading (FPSO) vessels.

The Ministry of Natural Resources project opened at the National Procurement and Tender Administration Board (NPTAB) office. At the reading of bids, it was revealed that the firms bid in lots. These were Lot 1 – Liza Destiny FPSO Vessel, Lot 2 – Liza Unity FPSO Vessel and Lot 3 – Payara Prosperity FPSO Vessel. Lot 4 – entails any two lots combined and Lot 5 – entails Lots1, 2 & 3 combined.

The companies who submitted bids for the Provision of Marketing Services for the Cooperative Republic of Guyana’s Oil Entitlement and their bids are:

1. Repsol Trading, S.A (Spain); bid for all 5 of the lots
2. BP Oil International Limited (United Kingdom); bid for all 5 lots
3. Equinor ASA (Norway); bid for lot 5 ( a combination of Lots 1, 2&3)
4. PetroChina International (America) Inc.; bid for all 5 lots
5. Mercuria Energy Trading SA (Switzerland); did not indicate which lot they bid for
6. ENI Trading & Shipping Inc. (Italy); – bid for Lot 1
7. Aramco Trading Company (Saudi Arabia); bid for lots 1, 2 and 3
8. Petraco Oil Company Limited (Italy); bid for all 5 lots
9. Aramco Trading Limited (Saudi Arabia); bid for all 5 lots
10. HESS International Sales LLC (USA); bid for lot 5 ( combination of lots 1, 2, and 3)
11. Exxon Mobil (USA); bid for Lot 5 (combination of lots 1, 2&3)
12. Gunvor SA (Switzerland); bid for all 5 lots
13. Trafigura PTE Limited (Singapore); bid all 5 lots
14. Vitol SA (Switzerland); bid for all 5 lots
15. Glencore Energy UK Limited; bid for all 5 lots
16. CNOOC Trading (Singapore)PTE Limited; bid for all 5 lots
17. Chevron products company (a division of Chevron USA Inc.); bid for lot 5 and lot 2
18. ADNOC Trading Limited (Abu Dhabi); –bid for Lot 4 and Lot 5
19. (Totsa)Total Energies Trading SA (Switzerland), -bid for all 5 lots
20. Shell Western Supply & Trading Limited (Bahamas); bid for all 5 lots
21. BB Commodities Limited now operating as BB Energy Trading Limited; bid for all 5 lots
22. JE Energy Limited; bid for lot 1
23. Unipec America Inc.; bid for all 5 lots
24. SOCAR Trading SA (Geneva); bid for all 5 lots
25. Cathay Petroleum International Limited (Singapore). bid for all 5 lots

The Ministry aims to competitively market and maximize the value of the state’s crude oil entitlement from developments in the Stabroek Block while fostering a competitive market for the Liza, Unity Gold, and Payara Gold Blends. In the past, Guyana entrusted the marketing of crude oil to BP International Limited, a subsidiary of British Petroleum following initial discoveries of substantial oil reserves in the Stabroek Block.The decision to seek a new company for oil marketing is part of Guyana’s strategy to continuously optimize its oil sector.

 

 

New oil contracts

Oct 19, 2023

Head of ExxonMobil Guyana Limited, Alistair Routledge told media that the Ministry of Natural Resources, in its current state, is not capable of fulfilling many new duties prescribed in the new Model Production Sharing Agreements (PSAs) for deepwater and shallow water blocks, .

Asked about the new fiscal regime for oil blocks which includes a 10 percent royalty, profit sharing at 50 percent; corporation tax of 10 percent, and a property tax of 0.75 percent, Routledge said he has no issue with the government’s imposition of new fiscal terms for oil blocks.

In fact, it is expected that following the discovery of 11 billion barrels of oil equivalent resources in the Stabroek Block, the basin is now more attractive and the government would seek to take advantage of this with better terms for future award of oil blocks.

Exxon finds difficulty with the time periods governing relinquishment of oil blocks. He reasoned that short timelines can make the effective hunt for oil prospects difficult. In fact, Routledge said the time periods are “unusually short” by industry standards.

The model PSA that will govern shallow water blocks, states that the exploration period shall not exceed five years. Within the first three years of the licence, companies will have to conduct a work programme approved by government. Upon fulfilling those responsibilities, the company will have the option to renew its licence to complete the remaining two years of exploration. The consequence of this renewal is that the company would have to return 50 percent of the block to the State.

The model PSA for deepwater blocks states that an exploration licence will last for 10 years. After the first three years of working on the block, the oil company would have completed the first phase of the licence and would have to renew it, should it wish to enter the second phase lasting for another three years. The consequence of that renewal is that the company would have to return 50 percent of the block to the State. Upon completing the second phase, if the company wishes to advance to the third stage of the licence lasting for two years, it may do so only after relinquishing another 50 percent of the existing block. If it wishes to apply to use the remaining two years on the licence then it would have to relinquish another 50 percent of the block.

Routledge questioned the reasonableness of these timeframes, claiming that it could be difficult for companies to execute contracts to acquire data on the respective blocks, process it and make decisions about the next phase which includes drilling. “So there are extremely short periods, and unusually short for our industry so we think that that is challenging.” The Country Manager said that his company provided feedback on the PSA to government, indicating in no uncertain terms that, “we would not sign it as it was.”

Apart from concerns about the stringent timelines companies will have to work with to explore the oil blocks, Routledge said there are concerns about the capability of the ministry in fulfilling its duties in a number of new areas. “I think there were others who commented that the minister has an awful lot of control in the new PSAs. There are a lot of approvals required under the new PSAs and quite honestly, to date, I don’t think the ministry is set up to process, review and exercise those, even if they were the right authority to do that. So the balance between the approvals required and the amount of oversight versus the expectation on the operator to go ahead and execute the work is in our mind is out of balance.” Routledge confirmed that his company has yet to hear a response from the government on whether its bid is acceptable or not. “And that process, as you have learnt from the government, is still underway.”

Vice President, Bharrat Jagdeo said the bids received for eight of the 14 oil blocks that featured in the country’s maiden auction are still being reviewed. Following that round of evaluation, the Natural Resources Ministry said the most responsive companies would be asked to make formal applications for the blocks. Those applications would then be gazetted. ExxonMobil Guyana Limited currently leads a consortium in the Stabroek Block offshore where five projects worth over US$40B have been sanctioned by the Government. The company is currently negotiating a regulatory process to have a sixth project approved which would take the country’s output beyond 1.2 million barrels of oil per day by 2027.

 

 

 

2022 Bid Round

October 11, 2023

The Ministry of Natural Resources addressed aspects of the Guyana 2022 Bid Round to provide clarity and released l key points to correct any misconceptions:

The notice for tender regarding the 2022 Bid Round was issued in accordance with the recently repealed Petroleum Exploration and Production Act of 1986. This notice was published in the Official Gazette on December 9, 2022. It invited interested parties to participate competitively in the bidding round, with access to a virtual data room for which a fee was required. Crucially, this notice included the coordinates of the area where interested parties could submit their tenders.

The Petroleum Activities Act, known as Act 17 of 2023 (PAA 2023), officially came into effect on September 1, 2023. This legislation extended the 2022 Bid Round. Updated guidelines for the bid round were issued through a notice dated September 11, 2023. At the conclusion of the bid round, after evaluation of bids, the most substantially responsive bidder(s) for a specific block will be invited to apply for the grant of a petroleum exploration licence. This process is in line with the established legal framework under the PAA 2023.

The Ministry of Natural Resources will ensure that these applications are gazetted in accordance with the provisions of the PAA 2023. The Ministry underscored its full compliance with all relevant laws of Guyana pertaining to the Bid Round, emphasising its commitment to transparency and adherence to legal regulations.

Guyana continues to attract significant attention and investment interest in its oil and gas sector, with the country positioned as a key player in the energy industry.

 

 

Arbitration likely if Guyana, ExxonMobil cannot settle claim

October 21, 20230

The Government could seek arbitration to recover the US$214.4 million cost oil claim for expenses incurred during the period 1999 to 2017 by megamajor, ExxonMobil.

In 2019, British firm IHS Markit conducted an audit of ExxonMobil’s cost oil expenses between 1999 and 2017 from operations in Guyana and queried US$214.4 million as questionable costs. Following months of its own review, the Guyana Revenue Authority (GRA) – the technical body advising the Government on the audited oil expenses – supported the US$214.4 million disputed sum.

Vice President Bharrat Jagdeo said Government will not be restricted to advice by its two auditors – IHS Markit and GRA – and therefore, would not enter into any negotiations with Exxon to reduce this claim.

“I don’t believe there is scope at this stage for that especially given the magnitude of reduction that Exxon is talking about, moving from US$214 to US$3 million. So, if you’re saying that we’ll settle at US$3 million that would effectively leave Government with half of that or so. Those figures are not palatable at all so we would have to maybe go to arbitration on this matter.”

Based on the 2016 oil contract between ExxonMobil and the last regime, Guyana will incur cost of the company’s legal fees should the matter go to arbitration.

Asked whether Government checked the numbers to ascertain what that arbitration bill could rise to. the Vice President indicated that they have not done so. Government may have to consider bringing in a third party – outside of what is contemplated in the 2016 Production Sharing Agreement (PSA) and agreed by all sides – to possibly take over the arbitration process on Guyana’s behalf.

“I think you need an independent third party to deal with this. If you settle on any figure with Exxon [even at] US$200 million, you’d have somebody saying ‘Oh, we give in to Exxon’ and if we settle at US$3 million, it’s worse. And therefore, you need a third party that would deal with all of these issues… a third party that everyone has faith in – the whole country. Maybe that is a route that could be explored. But right now, I think we should not engage in negotiations [with Exxon to settle the claims.”

This cost oil claim is now controversial after reports that Senior Petroleum Coordinator at the Natural Resources Ministry, Gopnauth Gossai, had engaged Exxon and reduced the figure to US$11 million and then subsequently to US$3 million.

The Government has confirmed that it will use GRA’s figure and declared that the tax body is the only technical agency in charge of the State’s auditing of the cost oil expenses. The Ministry announced a probe into the unauthorised negotiation and necessary disciplinary measures will be taken.

ExxonMobil Guyana Limited (EMGL) President Alistair Routledge advised that GRA reached out to them to request additional information on the cost oil claim. Routledge said that the audit was ongoing as they continued to seek a reduction of the US$214.4 million.

GRA subsequently said that it is sticking to IHS Markit’s US$214.4 million, notwithstanding them reaching out to Exxon to seek clarity from the auditor on the findings. Following its review of the audit on the cost oil claims, GRA had supported the US$214 million in cost oil claims flagged by the British firm and on August 8, written to the Natural Resources Ministry indicating no objection to this sum, effectively closing the matter.

GRA Commissioner General Godfrey Statia explained that GRA’s request for additional documents from the oil major should not be taken to mean the matter is being reopened.

“The Authority wishes to categorically re-iterate that it stands by its advice to the Ministry of Natural Resources and the Government of Guyana that the Cost Bank Adjustment of US$214.4M as reported in the “Audit Report Recommendation Final” by IHS Markit is the accepted final figure. Further the Authority unequivocally states that its correspondence to IHS Markit seeking clarity to the said “Audit Report Recommendation Final” and copied to EMGL should in “no way or form” be construed as a change in the Authority’s position that the Cost Bank Adjustment of US$214.4M be adjusted, nor to re-open the process as intimated by the CEO of EMGL.”

If both sides are unable to reach an agreement on the final cost oil figure, the matter is then expected to go to arbitration. Routledge had expressed a preference for the figure to be settled on before it reaches the arbitration stage.

“It’s a technical process. It’s not a political or management process. It’s a technical process to ensure the right costs are put in the right place and are substantiated by the right documentation. And that’s what we’re pursuing… To ensure the right people who are authorised to review them and sign off on them. It would be a last resort, in my mind the process would have broken down, if we had to go to arbitration.”

 

 

Media and Ministry

Oct 04, 2023

In petrostate Trinidad & Tobago, a ubiquitous Energy Minister regularly meets media as a globe-trotting Prime Minister is absent on regional priorities. A partisan president migrated from a senate which presided over the crash of a pioneering petroleum industry amid massive financial and employment losses. Failure of state enterprises to supply utilities and maintain infrastructure and escalating criminality endangers personal security as business is stymied.

In stark contrast in Guyana, the Minister of Natural Resources has not addressed media since he was sworn in on August 6, 2020, As the media raised critical questions about key matters on day-to-day management of the multi-billion dollar petroleum sector, Vice President, Dr. Bharrat Jagdeo emphasised his task is providing the public with an understanding of government’s policy in the sector. Implementation of policies and the intricacies of the sector fall under the minister’s management.

With Guyana heralded as the fastest-growing economy by the International Monetary Fund (IMF), thanks to its burgeoning petroleum industry, the political opposition advocates for transparency and accountability as the sector’s guiding principles.

An updated ministry website can be more helpful than a press conference led by Minister Vickram Bharrat to foster understanding and trust among the populace and stakeholders and shed light on –

Relinquishment Clauses & Contract Administration: Questions loom regarding oil firms’ compliance with relinquishment clauses in exploration contracts. Stakeholders contend that there’s a pressing need for clarity on how the ministry intends to manage the relinquishment of oil block portions, ensuring optimal national benefit.

Update on Local Content Act: Having been in effect since 2021, a comprehensive report outlining its achievements, influence, and forward-looking insights is yet to be presented to Guyana’s Parliament. Although some procurement numbers have been presented by the Ministry, a detailed analysis remains conspicuously absent.

Insight on Petroleum Activities Act: The recent act’s passing and the upcoming auction of 14 oil blocks – with offers on eight already – necessitates a clear outline of the government’s strategic direction on capacity building, especially considering the nation’s current skill gap in the oil industry.

Introduction to the Petroleum Unit: The conspicuous absence of a formal introduction to such a pivotal entity raises eyebrows. Stakeholders question the government’s commitment to transparency and wonder who is steering this multi-billion-dollar ship.

Revamping the Petroleum Management Programme Website: Guyana’s soaring economic trajectory seems mismatched with the current subpar state of the website, marked by production data that lags two months behind current timelines, glaring omissions on discoveries and drilling programmes, and a lackluster user experience.

 

 

British Envoy promotes investment in Guyana

| October 4, 2023

A major transformation in Guyana offers abundant opportunities for local and foreign investors, according to British High Commissioner Jane Miller as she reviewed the business relationship between Guyana and the United Kingdom (UK). She emphasized that foreign countries can easily access investments in Guyana, because of rapid economic growth.

“It’s a super exciting time to be in Guyana, it’s the fastest-growing economy in the world and in terms of encouraging people to come here, the statistics speak for themselves. So, Guyana is selling itself with its economic growth.”

She encourages businesses from Britain to invest in various sectors in Guyana.

In the last year, two trade missions visited the country and at least 50 per cent of them either established businesses or partnered with local companies, because of opportunities that they witnessed while exploring.

“It’s a good time to invest here because of the massive opportunities that exist…you just have to explore the country to see whether it be the infrastructure that’s happening, the new roads, new bridges, and of course agriculture and eco-tourism.”

Miller noted that the most important thing that Guyana has been doing is carefully using the resources that are generated from the oil and gas sector to build a country that will remain sustainable in the future. As she credits Guyana for utilising every opportunity from other foreign countries, Miller noted that her country has supported this growth through academia.

This helped to equip Guyanese who went abroad to attend the many prestigious universities to upgrade their knowledge and enhance their skills, aiding in the diversification of careers in the country.

[ECO is pleased to support regional education of University of Guyana, NESC, UTT and UWI with publications, rock collections and equipment.]

 

 

Gas-to-Energy Project

Oct 05, 2023

With years of investments in expansion and upgrades, the Guyana Power and Light (GPL) is plagued by blackouts, evidence of its inability to provide reliable power generation. Since the discovery of vast hydrocarbon deposits in the deep waters of Stabroek Block, two regimes proposed that the gas resources could be harnessed for electricity to eradicate power interruptions.

During 2015 to 2020, the former government consulted regional and international experts, devising a blueprint for a gas-to-energy project that could produce 188MW of power plus 2,200 barrels of Liquefied Natural Gas (LNG) daily for a price tag of under US$600 million which was never implemented.

The PPP/C took office in August 2020, and promised to deliver a gas-to-energy project at approximately US$1.7B. before the 2025 General and Regional Election.  The government collaborates with ExxonMobil, the operator of oil-rich Stabroek Block, constructing a massive offshore pipeline structure,  pegged to cost around US$1.3B, to bring gas from the Stabroek Block’s Liza field onshore and feed into a Natural Gas Plant and a 300MW Power Plant, in the Wales Development Zone in Region Three.

The gas-to-energy project is expected to cost approximately US$1.7B, excluding funds to rejuvenate GPL, the designated vessel for channeling an amplified power surge to coastal dwellers.

Stakeholders over the past three years are concerned about the venture, the largest such undertaking in the country’s history. Many fear that the blueprint for this project is cloaked in mystery and feasibility concerns and the project could end in bankruptcy. Echoing the citizenry is the Institute for Energy Economics and Financial Analysis (IEEFA). The US based think tank which focuses on energy markets believes citizens are right to be concerned about this project.

Tom Sanzillo, IEEFA director of financial analysis, previously sounded the alarm on the potential fiscal calamity this project might unleash. To shed light on the monumental risks of this initiative, IEEFA collaborated with energy consultant Cathy Kunkel. Their joint findings suggest that the venture may result in an over-saturated grid, churning out electricity that far exceeds the genuine demands of the populace. In the ensuing weeks,

When IEEFA examined GPL’s expansion plans for 2022 and 2023, it concluded that the state-owned company does not know how to properly estimate the country’s energy demand, or even how to meet same in a practical and affordable manner. They discovered that GPL has a history of overestimating energy demand.

IEEFA officials referenced GPL’s 2023 Development and Expansion Programme. That document forecasts that sales in the Demerara-Berbice Insolated System (DBIS) will grow at an annual rate of 16.4% from 2022 through 2027 and an annual rate of 9.4% from 2027 to 2032. This reflects an overall average annual rate of 12.9%. IEEFA’s report states that this results in a more than tripling of sales from 2022 through 2032.

Although this would represent unprecedented growth, the report states that this sales forecast in the 2023 Development and Expansion Programme represents a reduction over the forecast presented in the 2022 Development and Expansion Programme. IEEFA noted that the 2022 Programme’s forecast resulted in a nearly seven-fold increase in sales for the DBIS grid over the same period, between 2022 and 2032, resulting in projected sales in 2032 that were 2.65 times higher than projected in the 2023 programme. This forecast was published in November 2021, and the government issued the request for qualifications for the construction of the 300MW gas plant and NGL facility the following month.

IEEFA officials highlighted government steps towards the building the plant based on GPL’s 2022 Development and Expansion report of future electricity demand that was significantly reduced the subsequent year. Despite GPL publishing a 2023 forecast that cut projected sales for 2032 by more than half, the report said the Government did not revise its plans for the gas-to-energy project. IEEFA noted that in 2020, an independent consultant to the Guyana Government provided 20-year load forecasts of 3% per year and 5% per year, far lower than the recent forecasts provided by GPL.

IEEFA reported that this is not the first time GPL has been found overestimating energy demand. “Even before ExxonMobil’s major discovery of offshore oil in Guyana, GPL had a history of overestimating future electricity demand. Figure 4 (attached to this story) shows previous GPL forecasts of electricity demand versus actual demand.”

In addition to the gas plant, GPL is planning new power generation projects in the DBIS system, including 85 MW of new oil-fired generation in 2023, 25 MW of utility-scale solar projects in 2024 and 2026, and the 165MW Amalia Falls hydropower project around 2030. GPL current generation capacity in the DBIS system is approximately 191 MW.

Adding in proposed new capacity, including the proposed 300MW gas plant, the report finds that Guyana would be saddled with an oversupply of power that it must pay for. The new natural gas plant is highly unlikely to operate at full capacity in its initial years of operation, if ever.

Because no details have been released on the financial agreement between ExxonMobil and the Government for the delivery of natural gas to the plant, IEEFA’s report states that it is also unknown what contractual risk the government is assuming if it does not use all of the 50 million standard cubic feet of gas per day (MMcf/d) that Exxon is building the pipeline to deliver. IEEFA officials urge greater clarity on this critical grey-area

 

 

BACKGROUND ON GAS PROJECT

The PPP/C plan for a gas-to-energy project entails partnering with ExxonMobil Guyana Limited to construct a massive 218 km offshore pipeline structure to bring gas from the Stabroek Block’s Liza field onshore and feed into two facilities, a Natural Gas Plant and a 300MW Power Plant,  at the Wales Development Zone.

The 12 inch pipeline being constructed by Exxon will have the capacity to transport 50 million cubic feet per day (50 MMcf/d) from the offshore Liza field, and will be able to deliver a minimum volume of no less than 10 MMcf/d. The Government and US consortium, LINDSAYCA/CH4 on December 13, 2022 signed the contract for the construction of the integrated Natural Gas Liquids Plant and the 300-megawatt (MW) combined-cycle gas turbine (CCGT) power plant at Wales, West Coast Demerara (WCD), Region Three. The historical signing of the contract for the US$759 million project took place at the Office of the President.

In January 2023, President Irfaan Ali witnessed the signing of a contract between the Guyana Power and Gas Inc. and Engineers India Limited (EIL) for the provision of Consultancy Services for the Wales Natural Gas Liquids (NGL) facility as well as the 300 megawatt (MW) power plant. That contract, pegged at US$22,143,190 is for the Consultant to assist the Government through the Gas to Energy Task Force in the design review, construction, supervision and general project management of the development of the integrated plants, and contract administration throughout the project implementation process and thereafter during the defects liability period. Government said project generation costs, taking account of payment for the pipeline, operations and maintenance, and capital cost recovery will total less than five US cents per kilowatt-hour.

 

 

 

Electricity tax for large firms on GPL grid

September 30, 2023

Vice President Dr. Bharrat Jagdeo said the government will soon be implementing a policy to tax companies that consume large amounts of electricity, particularly during peak hours. Large electricity consumers, who were self-generating, are now reconnecting to the national grid since the government has been subsidising electricity costs, causing the over-peaking of electricity consumption.The situation is compounded by the current high temperatures which led to higher use of air conditioning units and fans.

As a result, “Our demand now in a single night is 180 megawatts and we only have 174 megawatts of installed capacity, so you have, of necessity, to take some people off the grid.”

The former administration did not make the required investments in the energy sector and scrapping the 165-megawatt Amaila Falls hydropower plant led to an increase in power cuts. The government will be investing in additional generation capacity of some 30 megawatts of power, expected before the end of the year. Dr. Jagdeo made reference to the 300-megawatt Wales gas-to-energy project to come on stream next year, which is expected to significantly improve electricity supply as well as reduce costs.

Gas-to-Energy contracts should be made public

Oct 08, 2023

The proposed Gas-to-Energy project which will use natural gas from the ExxonMobil-operated Stabroek Block to supply 300MW of power via the Guyana Power and Light (GPL) grid systems will not only increase the country’s debt but lead to an oversupply of power. This critical perspective was outlined in a report published by the Institute for Energy Economics and Financial Analysis (IEEFA) .

The report warns that the increased levels of debt contracted by the Guyana Power and Light (GPL) will likely result in the Government bailing out the utility company. Instead of spending billions for an overbuilt, fossil fuel-reliant grid that will leave Guyana in debt for years, Guyana could use its oil profits for a reliable, low-cost rooftop solar solution that would save billions while providing low-carbon electricity to the entire country.

“The alternative—substantial investment in solar energy—will help Guyana meet its climate goals. An investment in rooftop solar panels for residents and businesses will provide a direct benefit to individual Guyanese households in the form of solar panels and low electricity costs,” said Cathy Kunkel, IEEFA consultant and co-author of the report. “It will employ local people and help small contracting businesses grow.”

The report notes that Guyana is poised to embark on the path of rapidly overbuilding the electricity generation system that serves about two-thirds of its population. By significantly overbuilding fossil fuel generation, IEEFA believes GPL will crowd out the possibility of renewable energy.

“The Gas-to-Energy plan will cause the Guyanese government and its utility company to go into debt for something that is unnecessary. In the end, future oil profits will be squandered,” said Tom Sanzillo, IEEFA director of financial analysis.

“There are long-term decisions that are being made here that will increase taxpayer costs and benefit foreign corporate and financial interests. An aggressive rooftop solar programme would take profit oil and provide households with something they can see and touch, reduce monthly utility bills and put people to work in every community in Guyana.”

While the report offers troubling insights on the dangers of the gas-to-energy project, its authors have been keen to note that their analysis has been limited by the lack of public information and transparency, both on GPL’s electrical system and on the financing arrangements in place for the project. For citizens who are interested in demanding greater clarity from the Government on this project, they have offered a list of questions that could help increase transparency and accountability for the project. Those questions are as follow:

1. What are the terms of the pipeline agreement between ExxonMobil and the government of Guyana?
2. What is the estimated capital cost of the project?
3. Are the annual payments from the government of Guyana subject to adjustment for inflation or other factors?
4. Which party bears the risk of delays or cost overruns in construction?
5. Is there a transparent accounting for ExxonMobil’s profits as a builder of the pipeline and lender to Guyana for the money to build it?
6. How is Guyana’s decision to build the Gas-to-Energy plant related to ExxonMobil’s attempts to solve its flaring problem?
7. Is there an agreement between ExxonMobil and the government of Guyana that all of the natural gas supplied for this project will be free?
8. If not, what is the basis for the government’s assertion that it will be able to obtain 50 million cubic feet of free natural gas per day for the duration of the project?
9. What are the financial consequences, if any, to the government of Guyana if not all 50 MMcf/d of natural gas is used?
   10.What are the anticipated terms of the US Ex-Im bank deal?
10. What alternative financing is the government of Guyana considering if the U.S. Ex-Im loan is not approved?
11. Has GPL quantified the level of investment needed to reduce losses to less than 10%?
12. How much will the government of Guyana have to spend to reduce rates by half?

In addition , citizens should demand that all contracts related to the gas-to-energy project should be made public.

BACKGROUND

The plan for a gas-to-energy project entails partnering with ExxonMobil Guyana Limited to construct a massive 218 km offshore pipeline structure that would bring gas from the Stabroek Block’s Liza field onshore and feed into two facilities, a Natural Gas Plant and a 300MW Power Plant, both to be situated at the Wales Development Zone.

The 12-inch pipeline being constructed by Exxon will have the capacity to transport 50 million cubic feet per day (MMcf/d) from the offshore Liza field, and will be able to deliver a minimum volume of no less than 10 MMcf/d.

The Government and US consortium, LINDSAYCA/CH4 on December 13, 2022 signed the contract for the construction of the integrated Natural Gas Liquids Plant and the 300-megawatt (MW) combined-cycle gas turbine (CCGT) power plant at Wales, West Coast Demerara (WCD), Region Three. The historical signing of the contract for the US$759 million project took place at the Office of the President.

In January 2023, President Irfaan Ali witnessed the signing of a contract between the Guyana Power and Gas Inc. and Engineers India Limited (EIL) for the provision of Consultancy Services for the Wales Natural Gas Liquids (NGL) facility as well as the 300-megawatt (MW) power plant.

That contract is pegged at US$22,143,190 is for the Consultant to assist the Government through the Gas to Energy Task Force in the design review, construction, supervision and general project management of the development of the integrated plants, and contract administration throughout the project implementation process and thereafter during the defects liability period. Government has said project generation costs, taking account of payment for the pipeline, operations and maintenance, and capital cost recovery will total less than five US cents per kilowatt-hour.

 

 

Gas-to-Energy to end blackouts

October 8, 2023

Daily protracted power outages have been linked to a deficit in electricity generation, and the consequences of these blackouts and rate at which they occur is testimony to the importance of the Gas-to-Energy Project for Guyana.

Over recent weeks, Guyanese have been experiencing a significant increase in power outages and load shedding across the country. Citizens endured prolonged daily blackouts along the East and West Coast of Demerara, the East and West Bank of Demerara, Georgetown and Bartica.

The public outcry on social media about the negative impacts of the blackouts prompted Government officials, President of Guyana, Dr. Mohamed Irfaan Ali, and Vice President, Dr. Bharrat Jagdeo, to assure citizens that there is a plan in place —including the Gas-to-Energy project, which will add a capacity of 300 megawatts to the system and meet the grid’s demand.

In a live broadcast, the President raised key points relating to the contributing factors of the frequent outages. A marked increase in demand for power and electricity over the past three years, which cannot be satisfied by the electricity supplier, the Guyana Power and Light Incorporated (GPL).

Dating back to 2020, the President revealed that prior to the introduction of subsidies on the cost of electricity, the company was comfortably generating 120 megawatts (MW) of electricity to meet the demand of 115(MW).

However, with the introduction of subsidised electricity, a number of large companies that were off GPL’s grid, producing their own power, decided to return as it was more cost-effective for them. As a result, there was a major disruption in the generation-to-demand ratio. At present, the country has a generating capacity of 174 MW while the demand has increased to 185MW.

As a short-term solution, the President implored commercial users with their own generation capacity to stay off the grid and self-generate during peak hours between 13:00hrs and 15:00hrs and then 18:00hrs to 22:00hrs daily. Government will be imposing a ‘punitive tax’ on companies who remain on the grid during peak hours. However, the ripple effect of this measure could mean that these companies may incur additional production or operational costs which may lead to a rise in cost for their goods and services.

Taking these factors into consideration, the Gas-to-Energy project now sits on the pedestal of vast importance since it is clear that it is the long-term solution. The project is moving apace to come online in 2024 and promises to be a major change for Guyana’s power generation capabilities, with the country moving from a heavy fuel plant to a natural gas fuel plant. On this basis, the project will decrease emissions and the impact on air quality, and reduce wholesale power costs by as much as 50 per cent.

A sum of GY $43.3 billion was approved by the National Assembly to commence transmission and distribution works. In August, an additional GY$5 billion was approved to be used mainly for the engineering, procurement and construction (EPC) contract.

The Maritime Administration Department (MARAD) announced that, on October 1, pipe laying activities were scheduled to commence from the West Coast of Demerara to offshore, within Guyana’s Exclusive Economic Zone.

While individuals and bodies have urged a halt for the Gas-to-Energy project on their whims that the project has negative implications, it is clear that this project will be both transformative and a breakthrough for Guyana. The project will help households and businesses enormously by cutting the present high costs of electricity and it will play an integral role in reducing the plague of blackouts .