FID on Guyana gas project will follow revision of Liza license – Exxon

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OilNOW
OilNOW
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ExxonMobil is gearing up to commence construction on the Gas-to-Energy pipeline and associated infrastructure for the Gas-to-Energy project in Guyana as soon as all regulatory hurdles are cleared.

President of ExxonMobil Guyana, Alistair Routledge said the company submitted revisions to the Liza field development plan to the Ministry of Natural Resources, to provide for gas export from the project. The revisions are to incorporate the addition of a natural gas pipeline. The government is also expected to update the Liza production license.

“Once we’ve got through that step, we’ll be able to make all the final commitments – final investment decision around all the investments that are needed,” Routledge said. “But in the meantime, in order to protect the 2024 startup of the Gas-to-Energy project, we have been progressing early works in Region Three. Some of you may have seen bridge improvements, roads, laydown areas, bringing a lot of sand into to begin the preparation of the land…”

He made these comments during a media conference on Thursday.

Journalists were particularly interested in understanding the financial arrangement surrounding the project and how Exxon will benefit.

Routledge said the company’s motivation is the benefit of the project to the country. It is expected to give the government the fiscal space to cut power costs by 50%, lower Guyana’s emissions significantly, and drastically improve the business environment.

“We want what we’re doing here to have a sustainable positive impact, and we do see the gas-to-energy project as a critical part of that. It will secure energy… [There] will no longer be the same requirement to import fuel oil to the current power plants, and it will be lower emissions so lower cost, less dependence on external energy sources and markets,” Routledge said.

ExxonMobil is expected to invest just under US$1 billion toward the pipeline and associated infrastructure that it is responsible for building, down from a previous estimate of US$1.3 billion. The official said there will be a price on the transportation of the gas, which will allow Exxon to recover its investment into the project. The payments are expected to come from a special purpose company established by the government.

“There’s no profit element in there at all. It’s purely just to pay for that infrastructure,” Routledge explained. OilNOW understands that the gas supply agreement has not yet been finalised. Government is banking on utilising profits from the commercialisation of the natural gas liquids (NGL) to repay Exxon and its partners.

The government is responsible for constructing a 300 MW natural gas power plant and an NGL facility, which will receive 50 million cubic feet of gas per day from the pipeline. It plans to source some of the revenues for this construction from the US EXIM Bank.

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