In just a few short years, Guyana has become a factor to reckon with in global oil. The country is on track to hit the 1-million-bpd mark before this decade is over. It would only make sense that it would seek to capitalize on its gas reserves as well—but it’s facing challenges.
Guyana has become notorious for its vast offshore oil reserves, but there is natural gas there, too. For now, this is being injected back into the wells operated by Exxon, Hess, and CNOOC, to maintain pressure. Yet the authorities in Georgetown have plans—and these plans feature LNG.
Earlier this year, the government of Guyana launched a tender for companies interested in developing its gas reserves. It would have been easier to bet on the Exxon-led consortium again, but the authorities in Georgetown have made it clear they would like some diversification. The tender, however, ended in a somewhat odd way. Of the 17 companies that submitted proposals, Guyana’s government picked one called Fulcrum LNG—set up by a former Exxon executive just a year earlier. Now, doubts are emerging that the company is solid enough to help Guyana develop its gas reserves.
The founder of Fulcrum, Jesus Bronchalo appears to be the only person associated with the company, according to Reuters. The company’s website only has one press release; on the news of Fulcrum’s selection by Guyana as partner to Exxon to develop natural gas resources. And it was competing with much larger LNG developers with much longer track records, Reuters noted in its report on the selection back in June.
According to the Guyanese government, Fulcrum’s was “the most comprehensive and technically sound proposal.” The idea is simple enough: send the associated gas from the Liza 1 and Liza 2 fields to the shore, process it, and use it for power generation and LNG exports. The capacity of the project was set at up to 50 million cu ft daily. Interestingly, nothing has been finalized yet, Reuters reports.
“No project has been awarded to anyone. We’re in an exploratory phase,” Guyana’s vice-president told the publication in October. The walkback on the initial enthusiasm appears to have coincided with criticism of the government’s pick by opposition politicians. Fulcrum LNG “lacks requisite experience and a demonstrated ability to raise the type of multi-billion-dollar finances required,” an economist and adviser to a Guyanese opposition party, the People’s National Congress, told Reuters.
Indeed, there is very little information about the company besides the fact its founder and CEO spent 20 years at Exxon before striking out on his own—after spending the three years between 2020 and 2023 in Guyana as regional executive. The company’s website has a lot of information about expertise in the oil and gas industry but with no details about specific projects.
According to skeptics who spoke to Reuters, the problem with such small companies is that they lack the means to find the financing necessary for projects of the scale that the Guyanese government wants to develop. According to the government, Fulcrum plans to get funding from the U.S. Export-Import Bank, private equity firms, and “an environmental partner.” The company has not divulged any details on the identity of these firms, only saying it would partner with Baker Hughes and McDermott on the construction work.
It is a somewhat strange situation, for sure, and it may mean that Guyana takes longer than desired to tap its natural gas reserves, which could reduce energy costs for its population and propel it to the global LNG scene in the future. Exxon is already working on the first part of the plan: it is building a gas pipeline to the shore for a 500-MW power plant that should be operational by the end of next year—but it is running behind schedule. It seems repeating its oil success with gas may be a bit of a challenge for Guyana.
Source: By Irina Slav from Oilprice.com