Page 10 - LatAmOil Week 08 2023

LatAmOil GUYANA LatAmOil

The government recognises the benefits derived growth in other sectors, such as gold-mining.
from the oil sector, and as such it is encouraging The country’s government is also trying to
the local subsidiary of the US super-major Exx- minimise inflation and keep it within the single
onMobil in its efforts to raise the country’s oil digits.
production to more than 1mn barrels per day To do so, Guyana is revising its borrowing
(bpd) by 2028. process. Singh explained that the government
Additionally, it is working with the other will be extremely selective when choosing lend-
companies that have gained the right to explore ers and said that financing would only be sought
other blocks and has offered additional undevel- for good and strategic investments.
oped offshore blocks to international oil compa- Georgetown will be using some of its own
nies (IOCs) in a competitive tender that opened funds to fund investment projects. The Guya-
last December. Furthermore, the country is nese government receives a portion of the pro-
looking eventually to begin natural gas exports, ceeds from oil exports and deposits them into
which have the potential to create another rev- the National Resource Fund (NRF), which is
enue stream. anticipated to receive $1.6bn in deposits this
Outside the burgeoning oil and gas indus- year. The fund’s balance is projected to rise to
try, Guyana is also looking to encourage drive $5.4bn by 2026. ™

Guyana’s government notes financial

advantages of GTE payment agreement

GUYANA’S government has indicated that equate to about 4,100 barrels per day, and since
it sees the agreement that it has struck with Guyana needs only about 700 bpd for domestic
Esso Exploration & Production Guyana Ltd use, there should be around 3,400 bpd available
(EEPGL), a subsidiary of the US super-major for sale, he explained.
ExxonMobil, on covering the costs of the gas-
to-energy (GTE) project as very advantageous. In these volumes, he remarked, Guyana
According to previous reports, the total cost would be able to sell the NGL for $100mn at the
of the project is expected to be nearly $1.8bn. average prices prevailing in 2021. Prices went up
EEPGL will use more than half of the total, or last year as a result of the Russia-Ukraine war, so
around $1bn, to construct a pipeline network this amount of NGL might be worth as much
that will bring associated gas from oilfields at as $150mn at average 2022 prices, he added. As
Stabroek, an offshore block it is developing with such, he said, future NGL sales should generate
the US independent Hess and China National more than enough revenue to service Guyana’s
Offshore Oil Corp. (CNOOC), to shore. debt to EEPGL.
Guyana’s government will use almost
$800,000mn to pay its contractors, with some SPS-2 is the second appraisal well drilled at Sapakara South (Image: APA)
$759.88mn going to the US-based CH4/Lind-
sayca consortium for engineering, procurement On the other hand, Brassington continued,
and construction (EPC) services and $23mn the country will also benefit financially from
to Engineers India Ltd (EIL) for supervision the new power station. The gas-fired TPP will
services. The EPC contract will cover services be able to generate about 311 MW of electric-
related to an integrated complex comprising a ity, which is close to three times the generat-
natural gas liquids (NGL) unit and a thermal ing capacity of 112 MW to which Guyana had
power plant (TPP). access in 2022, he said. At last year’s prices, he
According to Winston Brassington, the head noted, the cost of buying enough heavy fuel oil
of the Guyanese government’s GTE task force, to keep 112 MW of generating capacity working
Georgetown has agreed to repay EEPGL for its at full power amounts to about $400mn, which
investment in the offshore part of the project at makes the $55mn payment to EEPGL look like
the rate of $55mn per year. He stressed, though, a bargain.
that this deal was very favourable to Guyana. “By any comparison, this is an extremely
On the one hand, he said at International good deal,” he remarked. “We’re paying $55mn
Energy Conference 2023, Georgetown will eas- and getting a value proposition of probably
ily earn enough from future NGL sales to repay about 10 times that. Even if we were to use lower
EEPGL without any difficulty, as it is planning prices for the NGLs and for the fuel, we’re still
to commercialise its share of production from getting multiple returns from this. The transfor-
the NGL plant. CH4/Lindsayca estimates that mational impact that this can have on Guyana
the government’s share of the plant’s output will cannot be understated.”

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