Expert Chatham House says the onshore gas project must be affordable
– Insists that it cannot be considered the “end of everything”
By Kiana Wilburg
Associate Fellow Chatham House, Dr. Valerie Marcel.
Kaieteur News – In its bid to pursue a gas-to-shore project, the Government of Guyana must first make the initiative affordable says Chatham House Associate Fellow, Dr. Valerie Marcel. During an exclusive interview with other industry stakeholders on Kaieteur Radio’s program Guyana’s Oil and You, Dr. Marcel made it clear from the outset that Guyana did not expect to find as much gas as it did in the Stabroek Block, so there is a common interest among ExxonMobil and its partners together with the government to bring the gas ashore. The industry expert emphasized, however, that the big question that must be answered is about affordability of bringing the significant resource ashore and whether Guyana can have all relevant mechanisms in place to ensure the project efficient.
In addition to this, Dr. Marcel says there will still be flaws in a gas-fired project because it would not meet the energy requirements of the country as a whole, especially the needs of people living in remote areas. In view of this, he said Guyana needs to look at the role of renewable projects in the national energy matrix.
In her last thoughts, a Chatham House Fellow also said that the project had merit in principle but at the same time, admitted that she made such a statement without reading or considering the feasibility or economics studies of bringing a project from the type on board the ship.
Former Public Infrastructure Minister David Patterson agreed with the view expressed by Dr. Marcel. His reasoning for supporting such a project was based on the fact that Guyana has poor power generation capacity and infrastructure and therefore needs to find a response to the increasing demand for energy every seven years. cant. Patterson also noted that the previous government had commissioned several studies that examined the feasibility and feasibility of the project. It is important to note, however, that none of these studies considered by Kaieteur News proves that the onshore gas project is the most viable option for Guyana based on comparative analysis and made against the costs of renewable projects. None of the commissioned studies also show that Guyana and its future generations would not bear the burden of repaying unreasonable loans taken to finance the project.
Even as Patterson lent support to Guyana to get a gas-fired project on the basis of the studies his regime would have commissioned, he insisted that the country needed a holistic debate on all available alternatives to meet the country’s energy needs.
ENVIRONMENTAL AND ECONOMIC Disaster
Apart from the views offered by Patterson and Dr. Marcel, two other guests on the program were quite forthright that Guyana should stay as far as possible from the project. In fact, International Solicitor Melinda Janki noted that the authorities of the day were actually embarking on a “moon project” that amounts to courting huge debt.
According to a 2018 feasibility study assigned to the former APNU + AFC administration, US $ 304M whopping is needed in order for ExxonMobil and its partners to bring natural gas from the Stabroek block to Guyana’s shores. The feasibility study, compiled by Energy Narrative, a US market analysis firm, indicates that ExxonMobil out of the US $ 304M would be responsible for US $ 165M, which will be used for pipeline construction costs. The rest of US $ 139M for building the onshore infrastructure will have to be financed by loans taken out by the Government of Guyana. Also, Guyana would still have to pay for the transportation of the gas but that price is currently under negotiation between the PPP / C and ExxonMobil.
In addition to her concerns about the rise in debt, Janki had expressed that the nation was due to see an Environmental Impact Assessment (EIA) on the project before considering implementation. Given that the law requires EIAs to be made for projects of this nature, Janki considers the gas clean-up initiative in its current state, to be illegal.
The lawyer also argued that Guyanese has not yet seen a current economic analysis showing that this project is economically sound for Guyana in the long run rather than pursuing renewable energy now. Taking into account the above factors, Janki said the onshore gas project was a foolish proposition.
Tom Sanzillo, Director of financial analysis at the Institute of Energy Economics and Financial Analysis (IEEFA), was quick to agree with Janki as he said Guyana has no evidence to show it can deliver a sound financial arrangement. In fact, Sanzillo said the tapped oil deal for the Stabroek Block deal is testament to Guyana’s inability to negotiate the best prices for the pipeline and other infrastructure for the onshore gas project.
The financial expert said Guyana should stay clear of the project otherwise it risks jumping off the edge of a most dangerous hallway.