Guyana greenlights $51.2 billion to move forward with its mega gas-to-energy project

Guyana’s Office of the Prime Minister has put its stamp of approval on planned budgetary allocations of $141.45 billion, which is anticipated to lend a helping hand in finishing important projects. As a result, this amount encapsulates a $51.2 billion investment to bolster the country’s flagship gas-to-energy (GtE) project. 

This sum makes up the lion’s share of a larger budget slice of $88 billion, which is envisioned to enhance power generation across Guyana. To this end, $18 billion is planned to be used to support the Guyana Power and Light (GPL) company. Mark Anthony Phillips, the country’s Prime Minister, has confirmed that $36.2 billion is earmarked for the construction of a natural gas power plant and a natural gas liquid plant.

Aside from this, over $1 billion is set aside to obtain project consultancy services, while $18 billion will be allocated to handle fuel price volatility to enable citizens to pay the same electricity rates they have had since 2020, despite price shocks. In a bid to boost renewable energy deployment, investment has been confirmed for small hydropower projects.

Guyana’s gas-to-energy project, which is getting a $51.2 billion boost, is designed to advance the infrastructure build-out required to allow for natural gas to be transported from an oilfield in the waters of the Stabroek block to an integrated natural gas liquid (NGL) plant and a 300 MW combined cycle power plant at Wales on the West Bank of Demerara.

Currently, the country’s government remains keen on finishing all the required work as soon as possible to bring the gas-to-energy project online promptly, as this development will double electricity generation capacity, curb costs, cut imports, and increase export revenues, bringing across-the-board benefits to people, industrial sectors, and the economy. This country on South America’s North Atlantic coast has become a hydrocarbon exploration hotspot since the first oil discovery was made in 2015.

The Guyanese government decided to prioritize the development of natural gas resources to come to grips with price shocks and cut electricity costs in half by bringing Guyana’s first gas-to-shore project online, paving the way for further economic growth and fortifying the country’s energy security when geopolitical tensions, tariffs, and trade wars continue to plague the world. Dr. Mohamed Irfaan Ali, Guyana’s President, said last year that the country’s government was evaluating the feasibility of a second major gas initiative to complement the ongoing one at Wales, Essequibo Islands-West Demerara.

The Natural Resources Ministry discussed with ExxonMobil and its Stabroek block partners, Hess Corporation and CNOOC, the best way forward to tap into and monetize Guyana’s total reserves of associated gas. An ExxonMobil-led consortium is in charge of constructing a 12-inch-diameter pipeline network and footing the bill of around $1 billion, connecting the pipeline to the Liza Phase 1 and 2 projects in Guyana’s ultra-deep waters.

The pipeline is expected to offtake 130 million standard cubic feet of gas per day if the local and regional demand matrix calls for it. The country’s government is tasked with constructing onshore facilities valued at approximately $759 million, which consist of a 300 MW natural gas power plant and an NGL plant. Following the decision in July 2022 to move forward with the project, ExxonMobil hired Subsea7 and Van Oord to install an offshore pipeline. 

Shortly after TechnipFMC was selected to construct and install subsea risers and pipelines, the government tapped CH4 Lindsayca to build a 300 MW combined cycle and NGL plant. After the Environmental Protection Agency (EPA) gave the green light for the pipeline and NGL plant, ExxonMobil tasked SICIM and GAICO to install an onshore pipeline. Once June 2023 rolled in, the offshore pipe-laying began, and the government opted for Kalpataru Project to establish transmission lines and substations.

Following a six-month setback, the total cost estimate rose from $1.7 billion to about $1.9 billion, with the first gas bumped from 2024 to 2025. The Guyanese government applied to the U.S. Exim Bank for a loan, amounting to $660 million. ExxonMobil Guyana Limited (EMGL), as the operator of the Stabroek block, kept going forward with the construction of the 225-km gas pipeline to facilitate the onshore project’s power plant, gas processing facility, and transmission lines.

In line with the firm’s expectations for the end of the offshore pipeline segment, TechnipFMC completed the in-field operations for the gas-to-energy project last year. This project will put in place gas infrastructure, including pipelines to connect and monetize upstream gas, to transport up to 50 million standard cubic feet per day of natural gas from the U.S. energy heavyweight’s Liza Phase 1 and 2 offshore projects via pipeline to onshore gas processing facilities.

After the Dispute Avoidance and Adjudication Board (DAAB) was engaged in September 2024 to take care of a dispute between Guyana’s government and its contractor, Lindsayca/CH4, a ruling regarding the gas-to-energy 300 MW integrated plant was issued at the end of January 2025.

The government and its contractor now have 28 days to initiate arbitration proceedings as the next step to settle the dispute. Since ExxonMobil handled some work on behalf of the government, the U.S. energy giant is expected to be among the companies that will have a say in the Guyanese government’s decision.

ExxonMobil’s first FPSO at the Liza field in the Stabroek block, Liza Destiny, started production in December 2019 as part of the Liza Phase 1 development. The second one, Liza Unity, began production in February 2022, as part of the Liza Phase 2 development. Since then, the oil major has either brought on stream or made progress on several other projects, including Payara, Yellowtail, Uaru, and Whiptail, as its sixth project offshore Guyana.

The U.S. player is set on developing Hammerhead as its seventh oil project, which is anticipated to be approved by the government this year. Upon completion, it will add up to 180,000 barrels per day (bpd) by 2029, raising the country’s overall production capacity bar to nearly 1.5 million bpd.

With over 11 billion barrels of oil equivalent at its disposal, ExxonMobil has hinted at the possibility of putting up to ten FPSOs in operation, while its existing plan includes six units by 2027-end, with a gross production capacity of more than 1.2 million barrels of oil per day.

Since one of the U.S. energy heavyweight’s partners, Hess, is in the process of merging with Chevron, the other U.S. oil major may enter the Stabroek block partnership before the end of 2025 if the ongoing arbitration proceedings end favorably.