Gov’t used APNU+AFC studies to clear gas-to-shore project

-Jagdeo says numbers were good

The PPP/C government yesterday said that it used five pre-existing studies done under the APNU+AFC administration to determine that the gas-to-shore project was financially viable and would cut energy costs by at least half.

At a press engagement he facilitated yesterday at the Arthur Chung Conference Centre, Vice President Bharrat Jagdeo was bullish on the investment for the project and assured that the approximate US$810-900M project will produce power at around US 7 cents per KWH compared to US 14 cents that the Guyana Power and Light is producing at.

The government has come under increasing pressure to justify the decision in favour of the project and to locate it at Wales, West Bank Demerara.

Projected capital expenditure (CAPEX) estimates that the offshore pipes and riser will cost between US$570M to US$630M. The onshore pipeline is currently pegged to come in at between US$80M to $100M, while the Natural Gas Plant is expected to cost about US$120M. Infrastructure for the project would be US$40-50M; bringing the total to between US$810M—

$900M

“The numbers on this project, a stand-alone project are so good it is a dream set situation,” he said.

The Wales location, Jagdeo said too, was chosen because the very studies determined its suitability against flooding and the high population density of other sites identified, in addition to its expansion potential.

“We examined the numbers of Crab Island versus Wales and Wales came out much more feasible, in terms of all the costs. The Crab Island area too is very low so the development costs would have been very high. One of the good things about Wales is that it is less prone to flooding… etcetera,” Jagdeo told the media forum.

“When that was settled, we had this issue about the price of gas. We expect the gas to come in not as a market price, not as the price that is part of the agreement (the 2016 Production Sharing Agreement with ExxonMobil and partners). The agreement sets out a pricing structure that it would have. The price reflected here, the three and a half [US cents], reflects both the price for the pipeline and the gas. In there is a lower than market price for the gas but the negotiations (with ExxonMobil) have not been completed and we are hoping to push that and close …to zero at least for the first big power plant,” he added.

At yesterday’s meeting, editors, publishers and reporters from the country’s major media houses were present and Jagdeo pointed out that he arranged it so that an “a lot of misconceptions” could be cleared up.

He was attended by a number of persons involved in the project including Head of the Gas to Shore Task Force Winston Brassington, Senior Petroleum Coordinator Bobby Gossai, British Consultant and gas-to- shore veteran Simon Shaw, Head of the Petroleum Division of the GGMC Chris Lynch,

Ministry of Natural Resources Geologist Martin Pertab, Chief Planning Officer of the CH&PA Jermaine Stuart and persons from government’s oil and gas legal team.

Brassington made a PowerPoint presentation which he said included data from the five preexisting studies. His presentation is now on the Ministry of Natural Resources’ website.

Since 2016

Giving a summary, he related that the project had been underway since 2016 and that in August 2020 when the PPP/C came to power, no major decisions had yet been made. The PPP/C, he said, “immediately engaged Exxon and started negotiations in October 2020.”

By the end of last year, a number of key decisions were arrived at and publicly communicated, according to government. These included, “Location of the termination of the gas to shore at Wales (determined to be the most economical solution). The selection of the location was critical to start the detailed studies such as the

ESIA (Environmental and Social Impact Assessment) and the Geophysical and Geotechnical Studies (G&G) at a specific location versus 20 locations. Increase in the minimum commitment of gas from 30 MCFD (Million Cubic Feet per Day) to 50 MCFD. (This moved the net potential power from 150 MW to 250MW). Agreement on a timetable to achieve the project by 2024, with approximately