In-depth review to be conducted on gas supply agreement submitted by ExxonMobil

Artist’s impression of the gas-to-shore project

An in-depth review will be conducted on the gas supply agreement from oil giant ExxonMobil for the gas-to-shore project, with the Government going out to tender for a consultant to conduct the review and provide legal and commercial advisory services.

In a recently published Request for Proposals (RFP), the Natural Resources Ministry invited companies to submit proposals for providing advisory services to the Government for the gas-to-shore project.

One of these services is to do an in-depth review of the gas supply agreement submitted by ExxonMobil subsidiary Esso Exploration and Production Guyana Limited (EEPGL), the operator in the Stabroek Block where the gas will be supplied from.

According to the RFP, the consultant will be expected to – considering the existing legal and contractual framework and best practices, as well as the Guyana context – “conduct an in-depth review of the submitted gas supply agreement submitted by the Stabroek contractor (as prepared in accordance with AIEN standards) and provide detailed legal opinion, comments and advice to the Ministry of Natural Resources and the Gas to Energy Task Force, with the primary objective of executing an agreement that provides the best project outcome for the country.”

A gas supply agreement governs how much gas Exxon will be providing to the Government of Guyana, for use in the gas-to-shore project. So far, it is agreed that the project will bring approximately 120 million cubic feet per day of natural gas onshore. The project will include a gas processing plant, a Natural Liquid Gas (NGL) facility and a combined cycle power plant.

Meanwhile, Government also wants the consultant to provide legal and commercial advisory services. This includes providing advice on ways to strengthen the legal and commercial framework, as well as providing support to the Government in its negotiations with Exxon.

The consultant will also be tasked with “evaluating the associated financial models, economic analyses and cost estimates and reports to ensure consistency with the heads of agreement executed on June 30, 2022 and to ensure financial optimisation of gas profiles as it relates to determination of daily gas value and take or pay obligations.”

With a timetable to deliver rich gas by the end of 2024 and the NGL plant to be online by 2025, works are progressing on getting the project off the ground. As such, during the first half of this year, Exxon was expected to source the materials and pipelines, so that they are available for when construction starts later this year.

The scope of the US$900 million gas-to-shore project consists of the construction of 225 kilometres of pipeline from the Liza field in the Stabroek Block offshore Guyana, where Exxon and its partners are currently producing oil. It features approximately 220 kilometres of a subsea pipeline offshore that will run from the Liza Destiny and Liza Unity floating, production, storage and offloading (FPSO) vessels in the Stabroek Block to the shore. Upon landing on the West Coast Demerara shore, the pipeline would continue for approximately 25 kilometres to the NGL plant at Wales, West Bank Demerara.

The pipeline would be 12 inches wide, and is expected to transport per day some 50 million standard cubic feet (mscfpd) of dry gas to the NGL plant, but it has the capacity to push as much as 120 mscfpd.

The pipeline’s route onshore would follow the same path as the fibre-optic cables, and will terminate at Hermitage, part of the Wales Development Zone (WDZ) which will house the gas-to-shore project.

The Guyana Government has invited interested parties to make investments in the WDZ, which would be heavily industrialised, and for which approximately 150 acres of land have been allocated. Those lands were previously used by the Wales Sugar Estate.

The other component of the project is the construction of a combined cycle power plant that would generate up to 300 megawatts (MW) of power, with a net 250MW delivered into the Guyana Power and Light grid at a sub-station located on the East Bank of the Demerara River.