Guyana’s flagship gas-to-energy project, aimed at leveraging the nation’s natural gas resources to slash electricity costs, will face a six-months set back, according to a recent Reuters report.
The article stated that the power plant which would slash Guyana’s energy costs is experiencing construction delays and threatens to curtail revenue for Guyana this year by about US$1 billion.
Officials have indicated to Reuters that the first phase of the 300-megawatt (MW) power plant is behind schedule and is now expected to achieve full operation only by the fourth quarter of 2025.
ExxonMobil Guyana Limited (EMGL), the key player overseeing all oil and gas operations in Guyana, is constructing a 140-mile (225-km) gas pipeline from the Liza Phase One and Two Projects in the offshore Stabroek block to facilitate the onshore project, which includes the power plant, a gas processing facility, and transmission lines.
The US$1 billion pipeline will be ready by year-end as promised to Guyana by Exxon Guyana’s country manager, Alistair Routledge. Reuters however said Exxon faces idle time as the onshore construction, for which the Guyana Government is handling, lags behind schedule.
When the gas-fired power plant is ready is “a question of timing,” said Routledge. “It’s hard to have all the facilities ready at the same time,”he added. As soon as the onshore facilities are ready, “the whole thing will start up and all those benefits will flow to the country,” he said.
The delay also poses challenges for the Government of Guyana which manages the onshore activities of the project.
Reueters reported that while it is not uncommon for major projects to run behind schedule, Guyana’s government faces a presidential and parliamentary election next year and had promised to deliver tangible benefits to the nation’s 750,000 residents.
Guyana Standard reported yesterday that the gas pipeline completion necessitates pausing production at two oil production vessels in the third quarter, to connect them to the undersea pipeline.
If the tie-in lasts four weeks, Exxon and its consortium partners Hess and China’s CNOOC would have to halt up to 12 million barrels of oil output from two platforms that produce 400,000 per day (bpd) at peak levels. Based on Guyana’s recent sale at US$85 per barrel, that could mean over US$1 billion in deferred oil revenue.
The Stabroek Block is Guyana’s first commercial oil and gas discovery, production from three projects in the block is about 645,000 barrels barrels per day.
Exxon has reassured that the production halt would not be a significant concern giving that it will be weeks not months.
Moreover, Guyanese officials have also urged Exxon and its partners to expedite gas resource development to maximize benefits for the nation.
