GEA''s energy progress has helped to address rising electricity demands and enhanced access to renewable energy supply across local communities. GEA supported the implementation of a massive electrification project to supply, deliver and distribute 30,000 Solar Home Energy Systems to Hinterland and riverine communities in Guyana.
June 23, 2022: Guyana is to develop eight utility-scale solar and battery storage projects in the South American country with investment financing worth around $83 million, the Inter-American Development Bank (IDB) announced on June 17.
The Guyana Energy Agency (GEA) said that notable milestones were achieved in 2023 from projects it undertook across all ten of Guyana''s a1dministrative.
The government of Guyana and the Inter–American Development Bank (IDB) have jointly launched a tender to deploy 33 MW/34 MWh of solar-plus-storage capacity. The Guyanese authorities said the
The Guyana Energy Agency (GEA) has recorded notable milestones from energy projects undertaken in 2023 as Guyana pursues important steps to decouple economic growth from using fossil fuels for electricity generation and harness its low-carbon resources.
By: Joel BhagwandinWITH oil production poised to reach over 1.3 million barrels per day by 2030, Guyana will be positioned among the top 15 oil producers in the world, accounting for about one per cent of global production.
By 2035, exploration and development costs should be fully recovered, which means that the Government''s take will increase from 14.5% currently, to, conservatively, 25%, resulting in a projected increase to peak at approximately US$8 Billion annually thereafter from the Stabroek Block, all other things being equal.
The global demand for fossil fuel remains buoyant amidst an increasingly focused global agenda on the energy transition goals by 2050. Global demand is expected to remain strong, especially since the U.S needs to rebuild its strategic reserves, which currently only represents less than one month''s daily consumption.The U.S strategic reserves is down to its lowest level in decades at 347 million/bbls (2023) down from a peak level of 727 million/bbls in July 2011. Other countries such as India and China are also building up strategic reserves as part of their energy security strategy.
Therefore, owing to ExxonMobil Guyana''s unprecedented success rate in the Guyana''s Stabroek Block, Guyana''s increasing global importance in the energy landscape is cemented.
In the first year of production, the Government''s annual earnings averaged US$300 Million, which moved to about US$1 Billion based in 2022 and 2023. With the addition of a third FPSO, annual projected earnings is estimated to reach US$2.1 Billion at an average price of US$70 per barrel in FY 2024, all other things being equal.
ExxonMobil Guyana and their co-ventures (CoVs) are aiming to have 10 FPSOs online by 2030, producing an estimated 1.3 million/bpd, given the proven reserves to date of over 11 billion barrels oil equivalent.
DISCUSSION AND ANALYSISAt this level of scaled production of 1.3 million/bbls by 2030, the Government''s annual earnings is an estimated US$4.7 Billion. By 2035, exploration and development costs should be fully recovered, which means that the Government''s take will increase from 14.5% currently, to, conservatively, 25%, resulting in a projected increase to peak at approximately US$8 Billion annually thereafter from the Stabroek Block.
THE GLOBAL OIL INDUSTRY CONTEXTThe top 10 countries that hold the largest proven oil reserves in the world account for 86.4% of the global proven reserves, while the rest of the world''s proven reserves account for 13.6. In 2022, the top 20 oil exporters accounted for 44% of global oil production, while the rest of the world accounted for 56%.
Saudi Arabia remained the largest oil producer in the world, accounting for 8% of global production. The second, third, fourth, and fifth largest producers are Russia, Iraq, the UAE, and Kuwait accounting for 5%, 4%, 3% and 2% of global production respectively.
The top 10 largest consumers of oil accounted for 62% of global consumption of which the United States is the largest, accounting for 20% of global consumption, followed by China and India accounting for 16% and 5% of global consumption respectively.Global oil production has increased from 78.5 million bbls/day in 1998 to 93.9 million bbls/day in 2022, reflecting an increase of 20% cumulatively over the last 24 years (1998-2022), or an average of 0.83% annually for that period.
The United States strategic oil reserves fell to record low levels in July 2023 since July 1983, an almost forty (40) years'' record low level to 347.5 million bbls, down from a high of 718.2 million bbls in July 2011. This level of decline is a direct result of the Russia-Ukraine crisis, which saw oil prices soaring to historical peak levels since 2008-2014.This prompted the U.S Government to dip into its reserves to stabilise oil prices in order to bring about some ease for the U.S consumers.
DRIVERS OF GLOBAL DEMAND, AND OUTLOOKThe global demand for fossil fuel remains strong amidst an increasingly focused global agenda on the energy transition goals by 2050. Global demand will continue to be strong, especially since the U.S needs to build up its strategic reserves, which currently only represents less than one month''s daily consumption.
Other countries such as India and China are also building up strategic reserves as part of their energy security strategy. With respect to the energy transition agenda, the world continues to lag behind on multiple fronts, such that it may ultimately render the 2050 goals unachievable. In this regard, there are a number of gaps to be bridged in order to reach net zero by 2050, as outlined hereunder.
The Generation Gap. In recent years, backed by subsidy schemes, tax credits, and a falling levelized cost of energy, the installation of renewable energy capacity has expanded tremendously. Globally, 1,282 gigawatts (GW) of renewable power capacity was added to the energy system between 2016 and 2021, and the International Energy Agency (IEA) projects that an additional 2,400 GW of renewable capacity will be installed in 2022 and 2027. However, if the world is to reach net zero by 2050, capacity will have to grow to more than 27,000 GW―an eightfold increase from 2021 levels.
The Grid Gap. Over the past decade, the world has invested an average of $300 billion per year. According to the IEA, annual investments will need to rise to the range of US$560 billion to US$780 billion in the 2030s.
The Storage Gap. Renewable energy tends to be intermittent (the sun doesn''t always shine, and the wind doesn''t always blow, while the demand for electricity is relatively constant and predictable). Hence, to have an orderly transition to a decarbonised grid, a significant amount of electricity storage capacity will be required, in the form of batteries or pumped hydropower schemes. Significant investments in grid-scale battery storage have been made.
In 2022, globally, 16 GW of grid-skill battery storage was added. According to the IEA, to get on track with the net-zero targets, which would require a 143-fold increase by 2050, annual additions must pick up significantly to an average of more than 80 GW per year over the 2022 to 2030 period.
The total funding gap needs to almost triple. To keep on track with net-zero emissions by 2050 goals, the IEA estimates that annual investment in clean energy will have to rise substantially from the projected 2023 level of US$1.8 trillion to US$4.6 trillion in 2030. With this in mind, bridging the energy transition gap is likely to remain a challenging task in meeting those targets to narrow the gap. Therefore, the global demand for fossil-fuel will continue to be strong for at least for the next 3 decades or another century.
The global demand for fossil fuel remains buoyant amidst an increasingly focused global agenda on the energy transition goals by 2050. Global demand is expected to remain strong, especially since the U.S needs to rebuild its strategic reserves, which currently only represents less than one month''s daily consumption.
The U.S strategic reserves is down to its lowest level in decades at 347 million/bbls (2023) down from a peak level of 727 million/bbls in July 2011. Other countries such as India and China are also building up strategic reserves as part of their energy security strategy.
Over the medium-term, Guyana is projected to experience sustained double-digit growth over the next decade with continued oil production and exploration, averaging about 28% annual GDP growth. Concurrently, the Government is pursuing an ambitious economic diversification, and transformative development agenda that was developed three decades ago.
The Government of Guyana and the Inter-American Development Bank (IDB) signed an agreement for financing of up to US$83.3 million from the Norwegian Agency for Development Cooperation to improve the diversification of the country''s energy matrix.
This will be achieved by promoting the use of climate-resilient, renewable energy sources in the generation of electricity, helping to avoid deforestation and confront climate change.
The non-reimbursable funds will see investments in eight utility-scale, photovoltaic solar projects totaling 33MWp (Megawatt peak) with associated 34MWh energy storage systems distributed across three areas in the country under the Guyana Utility Scale Solar Photovoltaic Programme (GUYSOL). Specifically, it will invest in 10MWp in Berbice, 8MWp project in Essequibo and 15MWp plant connected to the Linden system.
Prime Minister, Brigadier (Ret’d) Mark Phillips in his remarks said the project will benefit some 265,000 customers on the Demerara-Berbice Interconnected System, Linden Electrical System and the Essequibo System.
This transformative programme the Prime Minister said, will support the digitalisation of Essequibo and Linden electrical systems, moving them from manual systems towards real-time, automated monitoring and control, improving efficiency, reliability, and stability.
The Guyana Power and Light Inc. (GPL) and the Linden Electricity Company Inc. (LECI) will also benefit from the use of solar photovoltaic technology that will displace significant amounts of fossil fuels and reduce generation costs. It also has a training component which involves women.
"I will consider it a people centred transition to greater use of renewable energy and of course, it is in keeping with the Low Carbon Development Strategy 2030 agenda," the prime minister said.
Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh said the allocation of $83.3 million emerged from the Guyana REDD+ Investment Fund (GRIF) established under the original Low Carbon Development Strategy (LCDS) 2009.
"This project is not financed by loan, it is not financed by Grant, it is financed by monies that have been earned by the people of Guyana as revenue paid to our country for the global climate services," Dr. Singh explained.
The amount, the minister noted, was intended originally as government contribution to the Amaila Falls Hydropower project which was discontinued by the previous coalition administration. However, under the PPP/C Government the use of the funding was refocused, in its pursuit of the cause of advancing the country''s clean and renewable energy under the new LCDS 2030 agenda.
Meanwhile, IDB Manager of the Infrastructure and Energy Sector, Ariel Yepez-Garcia highlighted that even as Guyana''s economy continues to boom with the advent of the oil and gas industry, it is important to recognise the country''s commitments to climate change.
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