-project contractor announces
Gas-to-Energy (GtE) project contractor, LNDCH4, yesterday announced the arrival of two advanced gas turbines from Sweden, marking a key moment for this country’s huge GtE project which promises a 50 percent cut in energy bills.
A release from the company said that these gas turbines, which will be at the heart of the Combined Cycle Power Plant generating 300 Megawatts (MW) of electricity, are set to be installed at the project’s Gas-to-Energy site at Wales, West Bank Demerara.
Humberto Lopez, Country Manager for LNDCH4 Guyana, provided an overview, stating, “The arrival of these cutting-edge turbines marks a crucial milestone in realising Guyana’s energy ambitions. Once operational, they will not only expand the country’s power generation capacity but also provide an efficient and environmentally friendly energy source for decades to come.”
Lopez further emphasised in the release the strategic importance of the turbines, which will power the Combined Cycle Plant and Natural Gas Liquids (NGL) Plant, both currently under construction at the Gas-to-Energy site. These turbines will use the associated gas from offshore oil wells.
“As construction progresses, LNDCH4 Guyana remains committed to engaging local communities, creating job opportunities, and ensuring that this landmark project delivers tangible benefits to the people of Guyana,” the release stated.
The company and government have moved to arbitration as LNDCH4 seeks US$50 million it believes it is owed because of having to start the project late.
And as they head to arbitration with government adamant in giving the company only a three-month extension instead of the US$50 million it seeks and a longer delay, it also put LNDCH4 on notice that it will be charged stiff liquidated damages if it loses.
“There is a delay, now because the site was handed over late… we said what we believe is justified is a three-month extension to the contract. We offered that. The company doesn’t want that. They want more money… they want a bit more money and they want a longer extension. They’ve asked for a longer extension.” Vice President Bharrat Jagdeo had said last month
“We have an arbitration now taking place and if we win the arbitration, they would have only by April to deliver this project. They have given a schedule which shows [project delivery] later in the year – that is what Winston Brassington spoke of – but I did not want the public to think that we agreed to their schedule. We have only given an approval for three-month extension. So, if we win the arbitration and we stick with that schedule then there would be liquidated damages,” he added.
Jagdeo calculated the liquidated damages at US$11 million-plus monthly, explaining that from whenever the ruling date for an extension, if any, to the company, government will begin instituting the daily penalty.
Delay
When ExxonMobil’s Country President Alistair Routledge had been asked earlier this month about the delay and the cause, he said this. “So let me start where you did, on what we called early enabling works. So, it was very apparent for any of these projects, it’s a multi-year effort to implement these kinds of major infrastructure projects. And so, in the early days of working out who would execute which portions of work, it was agreed that ExxonMobil on behalf of Stabroek would execute what we call those early enabling works. So, clearing the 100 acres of site at Wales where the plant will be constructed, clearing the ground, beginning to bring in the sand in order to stabilise the ground for construction, building a heavy-haul road and materials offloading facility, and improving the access road on the West Bank. So, you can drive now all the way down from the river crossing. So, it was agreed that we would do that, in order that then, that would not have to be included in the scope of in this case that ultimately became LINDSAYCA/CH4,” he said.
“So, they did not have to start by doing that work, it was already started and being executed by us, by the time they were awarded the contract. So that initiative has actually saved a lot of time on the front end of the project by getting the early enabling works done by us, versus some of the early dates that were looked at. There were some delays of sand barges and other equipment, but those were pretty minimal. And the reality is, our view and the government’s view, is that didn’t actually impact the progress of LINDSAYCA/CH4 for their early stage of the project was an engineering design, procurement and those kinds of activities. So, it’s not unusual, mentioned earlier on with an arbitration case that these sorts of issues will be raised as a way to try and make a case. But in reality, our view is that it didn’t delay access to the site for LINDSAYCA/CH4,” he added.
When he was asked if his company was wrongfully blamed, Routledge responded, “No, I would say it is accurate to say that it wasn’t the same delivery date that was anticipated for the handover, but that there’s no material impact.”
Further, he posited, “I think that’s the important thing to recognise. We were all committed at the end of the day to ensuring that this project comes on stream as soon as possible, recognise the value it’s going to have to people in the country, reducing our power bills in half; I mean who wouldn’t like to see electricity bills reduced in half and to have an improved reliability of power generation. So, that’s what we are focused on, it’s ensuring that we get to that point as quickly as possible.”
Project Lead, Brassington, had also last month made a presentation to an American Chamber of Commerce Guyana event at the Marriott Hotel and disclosed that civil works had seen the project delayed but both parties had agreed the project will be completed by the second half of next year.
This newspaper reported from that presentation which was shared by the Department of Public Information.
Brassington noted that the project delays are due mainly to soil stabilisation works which took longer than anticipated. “The soil stabilisation has taken a lot longer. It has been a very technical process. So the civil schedule is what is driving, a very critical part, the other items are a little behind but not as much as the civil schedule.”
Some 1.65 million cubic metres (m3) of sand had to be brought in for soil stabilisation. In addition to the sand, he said that 160,000 m3 of loam and 25,000 m3 of crusher run had to be used for the stabilisation exercise, Brassington had disclosed.
“But all of this being said, the parties have agreed that sometime in the second half of next year, I don’t want to be precise right now because there are a number of moving parts, but we believe that this will be achieved,” he added.
Brassington in a subsequent press release stated, “The presentation made clear that the Integrated Power Plant/NGL plant project is late with the current projected completion being H2-2025. What was not discussed in the presentation is that certain disputes are before the DAAB (Dispute Avoidance/Adjudication Board) Tribunal.”
The release noted that under the GoG- Lindsayca/CH4 December 2022 contract, “delivery of the simple cycle/NGL facilities” was contractually scheduled for delivery on December 31, 2024. Due to a delay of three months, caused by Exxon sub-contractors, the GoG has accepted a schedule extension of 3 months in favour of the Contractor.”
Further, “The 3-month delay resulted from Exxon sub-contractor, GYSBI, being late in completion of site work for the 100-acre site by 3 months, and Exxon sub-contractor, GAICO, being late with respect to completion of the Material Offloading Facility (MOF) by 3 months. Flowing from the above, it is to be made clear, that the GoG holds Lindsayca/CH4 contractually responsible to deliver the project in “simple cycle” by April 2025.”
The statement informed that it is the government’s intent “to charge liquidated damages on any delay thereafter at a Liquidated Damages (LD) rate of $377,000/day per the contract. This amounts to US$11.3 million per month.”
