Govt to launch RFP today for development of gas resources

The content originally appeared on: INews Guyana
A model of Guyana’s Gas-to-Energy Project

The Guyana Government is expected to invite companies to submit their proposals on how best the country can develop and monetise its natural gas resources.

This was revealed by President Dr Irfaan Ali on Saturday evening at the commissioning of GAICO’s Marine Facility at Nimes, West Bank Demerara.

According to the Head of State, the Request For Proposals (RFP) will be launched today with the aim of fast-tracking the development of the country’s natural gas resources, which are estimated at over 17 trillion cubic feet of gas.

“We’re going out with an RFP tomorrow to have proposals coming into our country to look at how we’re going to utilize our gas to stimulate wealth and create opportunities in positioning Guyana as an important capital in the energy security matrix of the region… So, tomorrow we’ll launch that,” President Ali has said.

Back in October, Government had released the draft National Gas Monetization Strategy to the public for their feedback. The aim was to simultaneously work on finalising the strategy while getting comments from the public, thus saving on time.

Last week, the President said Government was in process of integrating the comments received into the final strategy in preparation for this week’s RPF launch.

Government has already made it clear that its goal is to find the best option going forward to monetize its gas resources.

The monetisation of Guyana’s gas reserves has been described by Vice President Dr Bharrat Jagdeo as the next wave of economic opportunity for Guyana. He had pointed out that now is the time for Guyana to move swiftly in developing this resource, which has a small window as the world transitions from fossil fuel.

“This is the appropriate time to develop the gas resources, given what is happening globally. There may still be a window, given this enhanced global demand and the recognition that gas will have to be a transitional fuel…So, giving that, we have to move swiftly on this matter,” Jagdeo had stated during a press conference last November.

Consequently, he disclosed that Government would have to engage ExxonMobil, which, along with its partners Hess Corporation and CNOOC Limited, is producing oil in the Stabroek Block offshore Guyana, where at least two commercial gas fields have been found.

According to Jagdeo, Government is not pleased with the pace at which the development of gas is moving, and is looking at another partner.

“Moving swiftly means getting ExxonMobil at the table [and] getting maybe another partner who will trying to develop this industry and who wants to push it faster than Exxon. We’re not pleased with the pace at which they want to approach the development of the gas assets. I think they’re more interested in oil, and so my personal assessment is that they’re not treating our desire to monetize the gas assets with the same sense of urgency as they are with moving the projects to produce more oil,” he had stated.

According to the Vice President, after the finalisation of the gas strategy, Government would likely nudge the gas development process along, and bringing in another partner would help to underwrite some of the expenses and the risks associated with monetizing the gas.

“[We will] go out to RFP to see other partners who might be willing to work with us and Exxon to monetize the gas. It has to be tripartite because we own 50 per cent of the gas and Exxon owns 50 per cent. But if you don’t have a development [plan], then you can’t get any of the gas out…” he said.

“We know how much gas we have out there. We know where they are. It’s now getting a partner to move on it, make sure we capitalise on this window of opportunity, and then we will go through an internal process of seeing, with of course the partners, what yields the maximum value-added to the country’s benefit. It is liquified natural gas; is it an onshore facility, which we have one coming onstream; is it just having a vessel out there liquifying the gas and shipping it directly; is the using it for fertilizer; should we use the gas to generate a lot of power and try to supply Brazil? Should we use it to generate power and process bauxite? That’s what we’re hoping this strategy will do: bring up all the potential ideas that we can use it for,” VP Jagdeo had posited.

In the Stabroek Block offshore Guyana, some 17 trillion cubic feet of gas have been found, with the Pluma and Haimara wells being proven gas fields.

Government is planning to pipeline the natural gas onshore for its Gas-to-Energy (GtE) project at Wales, West Bank Demerara, where an Integrated Natural Gas Liquid (NGL) plant and a 300-megawatt power plant will be built.

With Guyana seeking to develop the infrastructure to transport and store gas, a pertinent question will be capital costs. According to the Draft Gas Strategy, the Government will be seeking to attract private funding for the gas infrastructure.

It was pointed out that gas transmission pipelines usually require Government investment in the early stages. When it comes to domestic gas and power projects, the strategy pointed out that initial Government investment is particularly done in countries with minimal existing gas infrastructure.

The strategy notes, however, that once the sector is more developed and private companies have the capacity, the Government’s direct participation in these projects may be reduced, and the projects themselves privatised.

“Infrastructure investments such as gas transmission pipelines and gas distribution systems typically require initial Government investment, particularly in countries with minimal existing infrastructure. When the sector and regulations are more developed, private companies can build and operate whole integrated systems, at which point the Government’s participation may be reduced to regulation and the collection of taxes and fees. As projects for which Government has provided the initial investment near the point of becoming economically self-sustaining, there is then the opportunity for the Government to divest the project through privatization,” the document states.

One benefit of this, according to the strategy, is for the State to avoid the risks and debts, as well as diversify the investment in the sector. It was noted that private investment is necessary, considering Stabroek Block operators ExxonMobil and its partners, as they produce oil from the floating, production, storage and offloading (FPSO) vessels.