With the Guyana Government seeking a $134 billion loan from the United States Export-Import (EXIM) Bank to fund the gas-to-shore project, Vice President Bharrat Jagdeo said that even if there is a delay in accessing the loan, this would not affect the timeline for the delivery of the facility.
Back in April this year, it was announced that Guyana had applied for a US$646 million loan from the US Exim Bank to finance its model gas-to-energy project, which includes the construction of an Integrated Natural Gas Liquid (NGL) plant and a 300-megawatt (MW) combined cycle power plant at Wales, West Bank Demerara (WBD), utilising natural gas from the country’s offshore operations.
While the US EXIM Bank is yet to approve the loan, the Guyana Government is confident that this will eventually happen.
“President [Dr Irfaan] Ali met with the President of US EXIM Bank [Reta Jo Lewis] and had really good discussions. It’s moving forward; it’s moving apace,” Jagdeo assured reporters during a press conference on Friday.
According to the Vice President, however, even if there is a delay with the processing of the loan, it would not affect the 2024 year-end timeline for the gas project. In fact, he explained that there is a retroactive way of financing the project.
“…Because it’s a timing issue of when [the money from the US Exim Bank] comes out – and it will happen – and if there is need for, we can have bridge financing until that loan comes onstream and from what I gather, the loan can fund retroactive expenditure. So, if you have bridge financing then you can go back and clear it easily once the loan comes on stream,” Jagdeo stated.
This loan application for the gas-to-energy initiative comes on the heels of Guyana and the US EXIM Bank signing a US$2 billion Memorandum of Understanding (MoU) in July 2022 to finance infrastructure, energy, telecommunications, water treatment and sanitation, and agricultural projects here.
The multi-billion-dollar transformational project will see gas being piped from the Liza Field in the Stabroek Block to onshore at Wales via 225 kilometres of pipeline that will be procured, installed, and operated by US oil major ExxonMobil to the tune of US$1 billion.
ExxonMobil as the operator along with its co-venturers is currently engaged in exploration and production activities in the oil-rich Stabroek Block offshore Guyana. Based on studies conducted, the US oil giant would be able to produce up to 50 million cubic feet of gas per day for this initiative without impacting oil production activities offshore.
In Budget 2023, the Government allocated a whopping $43.3 billion for the gas-to-energy project. This allocation was in addition to the $24.6 billion injected into the start-up of the transformational project. The NGL and 300MW power plant components of the gas-to-shore project, are expected to cost US$759.8 million and will be financed through sources that include budgets and loan financing.
Already, in the first half of this year, a total of $9.6 billion was spent to develop the gas-to-energy project, that is, just over 22 per cent of the 2023 budgeted sum being spent.
This is according to the Finance Ministry’s 2023 Mid-Year Report, which included updates on Guyana’s progress for the year when it comes to energy, including the progress that is being made on installing forms of renewable energy, such as solar in the hinterland.
The report provides more details on what the money for the gas-to-energy project was spent on, including the preparation of the site that will house the Integrated NGL plant and the 300-megawatt (MW) combined cycle power plant at Wales.
“With respect to the gas-to-energy project in the Wales Development Zone, $9.6 billion was expended in the first half of the year of the $43.3 billion budgeted. These included outlays related to the development of the material offloading facility, the heavy haul road and preparatory works at the 100-acre site to prepare for the power plant and the integrated natural gas facilities,” the report states.
Meanwhile, back in August, the Government also went before the National Assembly to request an additional $5 billion in supplementary funding for the gas-to-energy project, which will go towards the necessary infrastructure to support the project.
Specifically, it had been explained by Finance Minister, Dr Ashni Singh, that the money for the project would be used for upgrading the electrical distribution network necessary to integrate energy from the power plants in the project.
