Guyana's Pick Of US Startup Faces Hurdles To Tap Vast Gas Reserves

Wedoany.com Report-Nov 27,   Guyana's dreams of developing its vast natural gas resources are stuck on the drawing board five months after it picked a little-known U.S. startup, Fulcrum LNG, to develop an export project that could cost up to $30 billion.

Guyana has one of the fastest-growing economies in the world, thanks to the rapid rise in oil production at lucrative offshore fields developed by Exxon Mobil. But the South American country lacks the infrastructure to use the gas produced at those fields, which is reinjected to maintain pressure.

The country's leadership said it wanted to expand its partnerships beyond the consortium led by Exxon that produces all the oil in the new energy hotspot.

Fulcrum LNG was founded a year ago by former Exxon executive Jesus Bronchalo. 

It was an unusual choice to pull off LNG and infrastructure projects that will require significant expertise and financial clout, industry experts and Guyana advisers said.

Fulcrum LNG "lacks requisite experience and a demonstrated ability to raise the type of multi-billion-dollar finances required," said Elson Low, an economist and adviser to the opposition People's National Congress party.

Bronchalo did not respond to Reuters requests for comment. He is Fulcrum's CEO, secretary, treasurer, director and president. The only other person associated with the company, the technical director, also did not respond to requests for information.

Government officials have begun to describe the selection of Fulcrum for the contract as tentative.

"No project has been awarded to anyone. We're in an exploratory phase," Guyana's Vice President Bharrat Jagdeo told Reuters last month.

That is a shift in the language used by the ministry of finance when it cited the award of the contract as among its economic achievements this year. Guyana's president, who announced the award, said an agreement, that may or may not include Exxon, was expected next year.

When Fulcrum was selected, Bronchalo said on LinkedIn he was delighted and honored to be selected "to design, finance, construct and operate the required gas infrastructure."

The company plans to pair up with U.S. oil services firm Baker Hughes and construction contractor McDermott. Fulcrum's proposal would include financing from the U.S. Export-Import Bank and the participation of private equity firms and an environmental partner, the government said.

Fulcrum has yet to make public any details on those investors.

The U.S. Export-Import Bank and McDermott did not reply to requests for comment, and Baker Hughes referred questions to Fulcrum.

It would be "very difficult" for a startup to raise the financing for a multi-billion-dollar infrastructure project, said Ira Joseph, an LNG market expert and senior researcher at Columbia University's Center on Global Energy Policy.

The project was designed to help the country add to its energy revenue. Last year,Guyana's take from oil royalties and fees was $1.6 billion, compared with $6.33 billion in profit that went to the Exxon-led consortium.