Before any gas-to-shore project is embarked upon, a detailed feasibility study is needed along with an analysis of whether renewable energy might not be a better option, according to former presidential advisor on petroleum Dr Jan Mangal.
In an interview with the Sunday Stabroek, Mangal also said if a decision is made to go ahead with the oil and gas project its management should be entrusted to a reputable international agency given the high costs and risks entailed.
Urging the government to tap into resources previously offered for a detailed feasibility study on bringing its gas resources to shore in Guyana, Mangal lamented that thus far a “mere desk study” was done under the APNU+AFC government which handpicked Clonbrook on the East Coast of Demerara.
He underscored the need for detailed analyses and said that all studies should be made public and feedback received before implementation. Mangal said that the PPP/C government needs not be afraid to start afresh, since “covering all ends” is needed and it helps taxpayers who would have to repay “significant sums”, totaling billions of dollars, on a project that could very well be “another Amaila” referring to the planned hydropower project which became mired in controversy and didn’t materialise.
“This is the kind of playbook for another Amaila and the public has to be very involved and vigilant,” Mangal told the Sunday Stabroek from his home in the United States.
With the PPP/C administration announcing that Wales on the West Bank Demerara had been selected for the landing of the project, Mangal said that government should show through sound justification that the location was not chosen just for political mileage.
He declared that it should not only be the government making decisions, but the populace need to also have input into the project as it is of great national importance and will be funded by taxpayers.
“My concern about choosing any particular site now is that we do not know whether it is the best site. We have not performed the necessary feasibility study comparing various locations along Guyana’s coastline. We do not know if Wales is the best site, in terms of ground elevation or in terms of proximity to a future industrial zone, deepwater port and route to Brazil. In addition to providing electricity to Guyanese, electricity from the gas-to-power project should be used to develop a large industrial/manufacturing zone which would create tens of thousands of jobs.
The deepwater port for exporting the products would need to be close by,” Mangal said.
“So there are numerous moving parts and it all has to be properly thought out and integrated, before choosing a specific site for the gas-to-power project, otherwise we could squander a unique opportunity. I mentioned ground elevation because the sea-level is rising due to climate change, and we should not waste US$500 million to US$1 billion of taxpayers’ money on building things which will be under water in 20 years. But as is typical in Guyana, ministers make decisions of national importance without the proper independent studies being performed. They always think they know best, but we know they do not, otherwise Guyana would not have been a failure over the last 50 years,” he added.
Make sure
“Guyanese need to be sure they want to do the gas-to-power project in the first place, versus spending the money on developing renewable energy projects instead. Both our governments have already given away US$55 billion of our money to ExxonMobil, so now we cannot let them waste … the few US$ billions we have to spend on projects. Guyanese people need to make sure their money is not wasted and stolen by procurement fraud, by construction fraud, etcetera. There are many ways for financial leakage on large infrastructure projects, and Guyanese need to set high standards and monitor their government’s handling of these projects,” he warned.
For these large infrastructure projects to succeed, he explained, they needed to be managed by large reputable firms with long track records—firms whose recommendations will not be influenced by local politics, but only driven by data. All processes, he added, especially all procurement processes, must be completely transparent and follow international best practices, he warned.
“If the decision on whether to do the gas-to-power project is not handled properly, and I mean decided by the people of Guyana, and if these projects are not executed with excellence, then we could quickly end up with a few more “Amailas” where costs escalate for no particular reason, and where there is a profound lack of consensus and trust. It is critical that all government projects adhere to the highest levels of transparency so it is clear to the Guyanese people what is happening, and so it is possible for the Guyanese people to hold their government accountable,” Mangal emphasised.
New variable
With the aggressive global march towards renewable energy, Mangal believes that there must be a comparative analysis of the costs of investments for both renewables and a gas-to-shore project.
“There is a new variable in the gas-to-power project and that is due to the climate change issue. Guyana is at a point where it can develop renewable energy or it can develop natural gas. Renewable energy would not contribute to global sea-level rise but natural gas would exacerbate climate change and would contribute to sea-level rise. Guyanese should not ignore this because the coast of Guyana, including Georgetown, is particularly vulnerable to rises in sea-level. So the government should facilitate this debate in Guyanese society, in a formal way, to make sure a majority of the people are happy with using natural gas versus using renewable energy.” he said.
The former Petroleum Advisor, whose salary was paid through a grant from the Inter-American Development Bank (IDB), said that the institution had offered support to Guyana for comprehensive studies to identify the best location for landing the gas-to-power pipeline, in addition to the other aspects such as the route to Brazil, a power plant, an industrial zone, and a deepwater port, among other things. He said he had also recommended a hydrographic study of the country’s coastline and major rivers, and he believed the British government may already have funded part of this work.
It is not clear what help was ultimately provided by the IDB with regard to the gas-to-power project after Mangal stopped advising then President David Granger in March 2018. Mangal stressed the need for all reports done on the project to be published by the government.
In 2017-2018 the then APNU+AFC government hired a very small company called Energy Narrative to perform a desk study of the gas-to-power project, at a cost of about US$70,000, which the administration used as its basis and justification for the project.
But Mangal did not believe Energy Narrative should have been hired as he felt the firm did not have the appropriate experience or capability.
Following
Speaking in depth on the bringing of gas to shore and the decisions that led to the project to be first floated to the public, Mangal said that ExxonMobil had first proposed in July 2016 to flare all of the associated gas from the Liza-1 platform. But Mangal and another oil & gas consultant objected to ExxonMobil and a key government official, and the decision was changed from flaring to re-injection into the well.
Pointing to the 2016 Production Sharing Agreement (PSA) between the government and ExxonMobil and its partners, the former Petroleum Advisor reminded that it caters for the bringing of natural gas to shore for domestic use but many aspects still have to be negotiated as these are not spelt out in the deal.
Mangal said he did some unpaid work for President Granger in 2016, including the meetings in July 2016 mentioned above, before being hired in March 2017. “Granger requested I write to him on a number of issues in 2016, and I suspect he was deciding whether to hire me or not.”
In the summer of 2016, Trinidadian consultant Anthony Paul was hired with funds from the United Nations Development Programme (UNDP) to do a rapid assessment of the sector.
He would spend one week here in Guyana. Granger asked if Mangal would join Paul for that week in July 2016. This was unpaid work for Mangal, but his flights were covered by the government.
He said that he and Paul agreed on almost every area. According to Mangal, during their interviews of all stakeholders, he asked a government official what would happen to the associated gas from the offshore oil development.
“In our first interview on the Monday in July 2016, I asked the government official and he said they were going to flare the gas. I tried to convince him that we couldn’t flare. The next day we interviewed ExxonMobil and they said the same thing, they were planning the flare all the gas. I said that should not happen. At the end of the week in our close-out session with the same official, I asked him the same question about flaring, and he said they had changed their decision and would now re-inject the gas. This indicated to me that the Government of Guyana was not doing any work on its own and was only following what ExxonMobil told them to do,” Mangal asserted.
But he said that he underscored that all due diligence and research had to be put in before making the decision on where to land the pipeline. He was cautious of the coastline because of Guyana’s below-sea-level status and pressed for studies to be done to determine the best locations. Said
Mangal, “We needed expert analysis and studies of the coastline. You had [multinationals] supportive of studies. It was not just me. The IDB had people ready to support the government with different projects that needed to be done. But things seemed to come to a standstill by the time I was ready to leave because there was pushback from some ministers. I left in March of 2018.”
Further, he added, “The gas-to-power project was one of my focus items when advising President Granger from March 2017 to March 2018, and ExxonMobil created a project team in Houston for the offshore pipeline. ExxonMobil planned to take the Final Investment Decision (FID) in 2019 and start constructing the pipeline. The offshore pipeline was to be done by
ExxonMobil and the onshore power plant was to be done by the government.
But it was clear to me the government could not manage their part and were slowing down ExxonMobil by not doing the necessary studies, by choosing silly locations like Clonbrook and then everything seemed to come to a standstill after I left in 2018 since the gas-to-power project did not start construction in 2019. Even today in 2021 nothing is happening.”
Strange locations
People he did not name were pushing for Clonbrook and Mangal said that he was very concerned.
“They were saying that the site was meters above sea level and I don’t think there is anywhere on the coast five meters above sea level. We needed a comprehensive feasibility study of the whole coastline, and to verify elevations, instead of strange locations like Clonbrook being suggested. To this day, I don’t believe that a comprehensive study was done,” he stressed.
Reasoning that a comprehensive feasibility study would have identified a group of locations and would have ranked those according to a number of criteria, he warned of ensuring that there is no government influence.
“You have to look at sea-level rise and elevation of the ground; because the ground needs to be high. We do not want to build and in 30 years it is under water. The other criteria would be how the location links in with a deep water port, road to Brazil, accessibility, industrial zone, etcetera. And we need to guard against government officials influencing the location because they stand to benefit (via land ownership or in other ways)”, he said.
“The lands for the landing must be on state land also”, he said, as the country would want to safeguard “private land speculators making money out of this.” He added, “The land for expansion and all should be state lands. We have to use mechanisms so that people do not make a killing off of land deals because of ownership of said lands. We need reputable, trustworthy firms doing studies so that the public can buy into the project and so that Guyanese could be more trusting”.
If the studies determine that bringing the gas to shore is more feasible than investing the money in renewables, Mangal said that government should also have a hands-off approach of the actual management of the gas-to-power project.
“Governments in Guyana have proven that they cannot manage even small projects, and are likely to mismanage a huge gas-to-power project, or even worse. The government should hire a respected entity to manage the project, such as the IDB, World Bank, CDB (Caribbean Development Bank), etcetera…. to act as the overall project manager and to be in charge of the whole process, especially the tendering and procurement processes”, Mangal advised.
