Guyana gov’t banking on earnings from sale of NGLs to repay Exxon for Gas-to-Energy project

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Kemol King
Kemol King is a journalist with six years of experience in Guyana's media landscape. He covers the oil & gas sector and its impact on the country's development.

Guyana will owe ExxonMobil and its co-venturers US$1 billion for the cost of the pipeline and associated infrastructure that it has been charged with developing for the Gas-to-Energy project. And according to Vice President Dr. Bharrat Jagdeo, this project will be more than enough to repay the debt it will incur.

The government plans to commercialise the natural gas liquids (NGLs). According to Head of Guyana’s Gas-to-Energy Task Force, Winston Brassington, the government has been guaranteed 63 million barrels of liquids per annum, by the Engineering, Procurement and Construction (EPC) contractor, CH4-Lindsayca – equivalent to 4,100 barrels per annum.

He said the country uses 700 barrels per day (bpd) for domestic consumption, which leaves about 3,400 bpd for commercialisation. Brassington said if one were to apply the average import price per gallon of NGLs in 2021, the output from this project would be valued approximately US$100 million. He said the equivalent value based on the extraordinary 2022 prices due to Russia’s war in Ukraine would take the value closer to US$150 million.

Brassington told attendees at the International Energy Conference 2023 that the government will have to pay the Stabroek Block co-venturers US$55 million per annum to repay its investment in the project. With these numbers, the earnings from the sale of the NGLs can service the debt with a comfortable profit remaining.

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Meanwhile, Brassington said that Guyana will receive 311 megawatts (MW) of power from the lean gas, which will deliver 2,600 gigawatt-hours (GWh). This is nearly three times the 112 MW average Guyana got in 2022. Based on 2022 prices, Brassington said if Guyana Power and Light (GPL) were to pay for the heavy fuel oil (HFL) volume required to sustain this amount of power, it would cost close to US$400 million.

“By any comparison, this is an extremely good deal,” Brassington said. “We’re paying US$55 million and getting a value proposition of probably about 10 times that. Even if we were to use lower prices for the NGLs and for the fuel, we’re still getting multiple returns from this. The transformational impact that this can have on Guyana cannot be understated.”

In addition to the US$1 billion to be invested by Exxon, the government will secure US$759 million to build a power plant and NGL plant in an integrated facility. It plans to fund a portion of this directly, and another portion using loan finance from the United States Export-Import (EXIM) Bank.

Construction will commence this year, for delivery and commissioning in the final quarter of 2024.

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