US Export Credit Agency Finalizes $527MM Energy Loan for Guyana

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US Export Credit Agency Finalizes $527MM Energy Loan for Guyana

The board of the Export-Import Bank of the United States (EXIM) has approved about $527 million in financing for an Exxon Mobil Corp.-supported gas-to-power project in Guyana that the export credit agency said would double the South American country’s installed generation capacity. The loan to the Guyanese Finance Ministry will aid the construction of a […]

The loan to the Guyanese Finance Ministry will aid the construction of a natural gas separation plant and a 300-megawatt combined-cycle gas turbine power plant, as well as support services related to the gas pipeline near the capital Georgetown.

“This project will allow Guyana to transition to more reliable and cleaner energy for consumers and businesses by using natural gas-powered turbines to generate electricity”, EXIM said in an online statement. “Without this gas-to-energy project, Guyana will continue to import fuel oil, one of the highest polluting fossil fuels, and be unable to decommission hundreds of less efficient local generators”.

The project will avoid over 460,000 tons of carbon dioxide a year, the equivalent of consuming over one million barrels of oil, according to EXIM.

EXIM president and chair Reta Jo Lewis said, “I am especially proud to continue to support Bank priorities and charter mandates along with projects that align with the administration’s economic, energy, and national security priorities”.

EXIM added, “The financing will support a U.S. joint venture involving Lindsayca, a Texas-based company, and CH4 Systems, a Puerto Rican small business, and services provided by ExxonMobil”.

“The financing will also support more than one dozen U.S. companies”, it said, adding the project will provide about 1,500 jobs across 11 U.S. states and territories.

The loan is also an implementation of EXIM’s China and Transformational Exports Program, a mandate for the agency to aid U.S. exporters facing competition from Chinese counterparts, EXIM said.

According to the Institute for Energy Economics and Financial Analysis (IEEFA), the Guyanese project would only contribute to grid overbuild at the expense of the project being bailed out due to debt.

“ExxonMobil would gain the most from the Gas to Energy Project, through profits from pipeline construction, lending money to Guyana, and selling natural gas”, the Lakewood, Ohio-based think tank said in an analysis published October 4, 2023.

“Instead of spending billions for an overbuilt, fossil fuel-reliant grid that will leave Guyana in debt for years, IEEFA found that Guyana could use its oil profits for a reliable, low-cost rooftop solar solution that would save billions while providing low-carbon electricity to the entire country”, IEEFA added.

Guyana’s Department of Public Information (DPI) said in a separate statement about the loan approval that an independent technical and environmental feasibility study had been conducted and a review by the U.S. Congress passed before the loan approval.

On criticisms that the loan supports a fossil fuel project, Guyanese Vice President Bharrat Jagdeo, in comments relayed in the DPI statement, pointed to EXIM’s statement that the project will result in emission reduction.

“In addition, the government will be saving approximately $100 million annually on fuel costs, while electricity costs will be slashed by 50 percent, leading to an annual saving of $250 million”, the DPI statement added.

Jagdeo said, “It has an impact on both balance of payment of the country and also in the pockets of Guyanese companies and individuals”. Jadeo noted the EXIM loan would cover only 25 percent of the project.

The DPI said, “Approximately $2 billion is required to construct the major facility, with the government expending its own resources to finance the rest of the project, including through a partnership with ExxonMobil”.

Rigzone sent comment requests to ExxonMobil, EXIM and Guyana’s Finance Ministry and DPI about the concerns raised by IEEFA.

To contact the author, email [email protected]

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