Following the release of the draft National Gas Monetisation Strategy last week, there were criticisms of the document lacking some details but Vice President Bharrat Jagdeo has explained that the released document is merely a discussion paper and Government will simultaneously work on the final strategy using the public feedback submitted.
Speaking on the draft national gas strategy during his press conference last Thursday, Jagdeo pointed out that this approach to simultaneously finalise documents while receiving feedback will save time.
“It’s more of a discussion paper because we already started getting feedback on where the gaps are and everything else, and we appreciate that. That is why we put it out early because due to an internal rework, it would take a while… That internal rework has to happen but we can benefit from the public view too as we do the internal rework. So, both can be done simultaneously,” he noted.
The Vice President further urged the public especially the commentators who usually have much to say about this topic to ensure they provide their feedback.
“So, I want you to see this as a blank canvas now… and all the people who have views on these matters now is your time to share these views with the Government of Guyana before we finalise this document. So, if you don’t, we have enough gas there and we shouldn’t pursue it, tell us so. If believe that there should be a lot of concessions to develop these then say so now but justify it, of course,” he stressed.
In addition to the public, the Government is also expecting feedback on the national gas strategy from ExxonMobil, and bilateral partners such as Qatar from whom Guyana is receiving assistance in crafting its own strategy.
According to Jagdeo, “Now, people can share their view on the paper or generally on a strategy for the country …and then we will look at everything together.”
He outlined that the main goal of the Guyana Government in developing this national strategy is to ensure that the country’s gas resources are monetised.
“So, we would have to work through all the challenges like how we could convert associated gas, probably look at Pluma separately [or] maybe partnerships, what would be the best way of using the gas – LNG, ammonia. All of these things are explored in the document but it’s a discussion paper more than a finished strategy from the Government which it puts in the public domain. We’d probably have to get all the comments in and then incorporate them and then maybe do a short consultation again before we finalise,” the VP stated.
The deadline for the submission of comments from the public is November 14, 2023.
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.
The Government is planning to use the natural gas onshore for its model gas-to-energy project at Wales, West Coast Demerara, where an Integrated Natural Gas Liquid (NGL) plant and a 300-megawatt combined cycle 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 in countries with minimal existing gas infrastructure.
The strategy notes, however, that once the sector is more developed and private companies have the capacity, then 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 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 privatisation,” the document states.
One benefit of this, according to the strategy, is for the State to avoid the risks and debts, as well as diversifying 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.
“GoG will seek to attract private funding for the timely and cost-effective development of its gas infrastructure to avoid the large upfront capital required to develop such projects and eliminate the risk associated with the debt infrastructure given uncertainty related to the revenue streams required for repayment.”
“Additionally, by diversifying the participants in the gas value chain and securing private investment, the GoG will avoid significant capital charges into the cost bank through the current PSC structure, which will significantly accelerate revenues to the GoG given the current upstream plans and FPSO deployment by the Stabroek Consortium,” the strategy states.
The strategy meanwhile noted that generally, power generation and electricity distribution projects are initiated by the Government. It noted, however, that some power generation projects, such as Independent Power Producers (IPPs), are done with private participation.