Understanding Energy: Guyana finalises gas-to-shore project agreement

EARLIER this week, the government finalised the long-awaited agreement for the gas-to-shore project, a major priority for the Dr. Irfaan Ali administration for the past two years. The government has touted this project as a win for the country and the people that will lower costs for Guyanese, make local companies more competitive and reduce pollution.
While outlining the details and benefits of the gas-to-shore project at a press conference, President Ali called the project “transformational” and highlighted the key messages for Guyanese:
1. As a joint project between ExxonMobil and the government, the plan is to focus on efficiency, transparency and delivering the project on time.
2. Pre-qualification was a public process, with nine companies short-listed. The pre-qualified firms were issued with a request for proposals and the deadline for submission is September 2022.
3. This weekend an advertisement will be launched to select an independent and unbiased project management firm to supervise and overview the contract.
4. All environmental tests have been passed, including public scrutiny, which is a transparent comment process.
5. The estimated cost of the electricity produced should be approximately 4.5 cents per kilowatt, one fourth of what Guyanese pay now. That includes paying for the pipeline, the power plant, gas processing facilities, and operational costs.

“Let me be very clear, this was no walk in the park…but don’t doubt our own capability and the technical capabilities that we brought to this [project]. The partners went to the table looking to derive the best possible output for all the stakeholders,” President Ali said.
This project will bring approximately 120 million cubic feet per day of natural gas from the Stabroek Block onshore to be processed and used in a multitude of ways that will benefit burgeoning sectors and communities.
According to analysts at JB Associates, between savings on fuel imports, the reduction in energy cost, and savings for the manufacturing sector, Guyanese households and the government could save upwards of US$3 billion in the first five years of the project coming online.
Additionally, ExxonMobil is set to recover the costs of the pipeline over decades of oil production rather than having the government borrow on international markets or spend taxpayer money that could be better spent investing in the local economy and people.
As President Ali noted, the electricity costs are predicted to fall by more than 50 per cent with additional gas left over for industrial uses and other sectors. Bringing the plant online will be a crucial part of meeting the rapidly growing demand for electricity as Guyana’s economy develops. Demand in Guyana is expected to triple in the next five years as the economy continues its fast-paced growth.
Gas will provide a vital bridge while longer-term plans for hydropower and solar come to fruition and remain a key source of clean reliable power for decades. On the environmental side, numerous studies have been conducted to ensure transparency in the process and that pollution risks are mitigated.
It allows for a deeper importance by the government to be placed on reducing emissions and smog. The use of natural gas cuts planet-warming CO2 emissions by more than 50 per cent and reduces lung-damaging particulate emissions by more than 98 per cent.
As the government pushes to diversify the economy with the capital from the energy sector, it will make Guyana more competitive across the board, in both the region and globally. Growth in energy intensive industries such as agriculture and manufacturing is now possible with the gas-to-shore project, especially considering power costs are one of the biggest handicaps for Guyana’s economy.
Beyond economics, gas-to-power is a critical step towards a more independent and stronger Guyana, helping to end the reliance on imported fuel oil, making companies more competitive, and fostering new industries that could finally produce more products here at home. ExxonMobil and the government expect procurement to be concluded by the end of this year, paving a path for the electric grid and the economy to look very different in just a few years.

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