The need for any country to build resilience against oil price volatility and global supply shocks is a recurring conversation. But when Russia invades Ukraine, and causes the biggest oil price jump in years, the urgency to convert this conversation into an actionable plan becomes especially pronounced for a country like Guyana, which was already dealing with rising commodity prices for multiple reasons before the war in eastern Europe even began.
Three analysts versed in different specialties agree that Guyana cannot wait around to implement the Gas-to-Energy project and other initiatives which can bring much needed relief to the new oil producing country.
Gas-to-Energy is the first major project, which in theory, would have a far-reaching positive impact on historically high energy costs which have inhibited development across Guyana.
Discussing this mega-project during an OilNOW webinar were Christopher Ram, an attorney, chartered accountant and transparency advocate; Arthur Deakin, a senior energy analyst focused on Latin America; and Joel Bhagwandin, a financial analyst actively engaged in public policy and economic development.
“In terms of energy security around the world, it is more important than ever to have this gas to shore plant come online as quickly, as safely as possible,” Deakin said of the project intended to cut the cost of power in Guyana by more than 50%.
“For too long, we have had the highest energy cost within, perhaps, this western hemisphere, and we’ve also had a reliability issue,” Bhagwandin said.
“There is no question that in the current environment,” added Ram, “any country should be looking at reducing its electricity generation costs as well as reducing its carbon footprint.”
The commentators agreed that the Gas-to-Energy project, once successfully implemented, would also have the effect of driving growth in the manufacturing sector, allowing Guyana to focus on building exports of value-added goods, as opposed to its raw natural resources.
Bhagwandin also expects significant benefit for Guyana in the forms of a lower fuel import bill and more disposable income in workers’ pockets.
However, Ram, who is a member of local advocacy group ‘Article 13’ said that though he supports tapping into the bounty of cheap energy to support Guyana’s development, there are still questions that need to be answered so the public can be assured of the viability of the project. He raised concerns about whether the estimated US$900 million price tag on the project, is a fair cost, which will be paid through cost oil. Ram also wants to make sure the project is legally sound.
Deakin, who is energy co-director at Americas Market Intelligence (AMI), said though he has not studied similar projects, the estimated cost seems fair considering the myriad benefits the project would bring once brought on stream. He too had questions related to the Gas-to-energy project, about the exact quantity of gas in the Stabroek block. He acknowledged estimates that natural gas is about 20% of total Stabroek block reserves but stressed the need for more forthcoming concrete figures.
Bhagwandin said that the project specifics have not yet been finalized. He urged transparency advocates to give policymakers the latitude to do their job, adding that when everything is finalized, he is sure that there will be ample opportunity for comprehensive evidence-based analyses for the benefit of the general public.
The most recent updates in this regard, were that studies were being conducted which will inform the finalization of certain project specifics. Construction is expected to begin later this year, with commissioning scheduled for late 2024.
The Government has made an agreement with ExxonMobil affiliate, Esso Exploration and Production Guyana Limited (EEPGL), to have 50 million cubic feet of gas piped per day to an onshore 250 MW power plant and natural gas liquids facility at Wales on the West Bank of Demerara. Government intends for power generated here to help meet domestic demand. The project will begin with associated gas from the Liza Phase One project, but there will also be tie-in points for the Liza Phase Two project, which achieved first oil in February.
Vice President Dr. Bharrat Jagdeo has said natural gas will be used as a transition fuel, as Guyana’s energy demand grows, and the country adds renewable energy projects to diversify its energy mix.
The webinar will premiere on Tuesday (March 29) evening at 7:00 PM on OilNOW TV and social media platforms.