HOUSTON/GEORGETOWN (Reuters) – Guyana has selected a little-known U.S. startup to design and develop a project to monetize its vast untapped natural gas resources that could cost up to $30 billion. There are growing doubts about this. Year-old Fulcrum LNG faces financing hurdles that could derail its options. The South American country may eventually end up relying on an ExxonMobil-led consortium to control all production in the new energy hotspot. So far, the top U.S. oil producers have focused on oil.
Guyana has ordered Exxon to either convert its approximately 16 trillion cubic feet of gas reserves into valuable export products such as liquefied natural gas (LNG) or abandon the area where the gas was discovered to be developed by other countries. I’m asking you to make a plan.
When Fulcrum was selected in June, founder and former Exxon executive Jesús Broncharo said on LinkedIn that he was “delighted and honored” to have been selected to “design, finance, build and operate the necessary gas infrastructure.” “I think so,” he said.
Since then, Fulcrum has not identified a financial backer, raising questions about its ability to conduct business, and government officials now say Fulcrum’s selection is tentative. There is. Guyana’s Vice President Bharat Jagdeo told Reuters last month that “no project has been awarded to anyone. We are in the exploratory stage.” This is a change from the Ministry of Finance’s explanation that the deal was awarded as one of this year’s economic achievements. Announcing the award, Guyana’s President said an agreement that may or may not include Exxon is expected next year.
On the other hand, the opposition People’s Congress Party is skeptical about the award.
Fulcrum LNG “lacks the experience and proven ability to raise the billions of dollars needed,” said economist and PNC advisor Elson Law.
Utilizing Fulcrum
Guyana received the “most comprehensive and technically sound offer” from among 17 bidders, including China’s third-largest oil company CNOOC, US gas pipeline giant Energy Transfer and US fourth-largest LNG. Fulcrum LNG, which is registered in Nevada, was selected to provide the following. Exporter Venture Global LNG.
Ira Joseph, an LNG market expert and senior fellow at Columbia University’s Center on Global Energy Policy, said it would be “very difficult” for startups to finance multibillion-dollar infrastructure projects. . “Why doesn’t Exxon build an LNG plant themselves? It’s very difficult to raise that kind of money to make a project a success. We’re going to have to bring it in,” Joseph said. Fulcrum’s proposal includes a partnership with U.S. oil services company Baker Hughes and construction contractor McDermott, as well as financing from the U.S. Export-Import Bank and participation from private equity firms and environmental groups. partners, the government said.
The Export-Import Bank of the United States and McDermott did not respond to requests for comment, and Baker Hughes referred questions to Fulcrum. Broncharo, Fulcrum’s CEO, secretary, treasurer, director and president, and its technical director, the only person affiliated with the company, did not respond to requests for information.
Fulcrum’s website does not specify previous projects, but claims “extensive experience in creating new opportunities to access and capture global LNG markets.”
Guyanese authorities now say they chose Fulcrum without first determining whether it could raise the financing to develop its vast gas reserves. The technical committee that selected Fulcrum was confident it could raise funding for the project, Jagdeo told Reuters. “They have expressed their ability to raise funds.”
Natural Resources Minister Vikram Bharat said Bronchallo’s expertise, having spent 20 years assisting in contract negotiations at Exxon in Guyana and Asia, swayed the selection. “The government doesn’t have the expertise or the capacity, especially when it comes to gas. We hope Fulcrum has the capacity and the experience,” he said in an October interview.
Cooperation or conflict?
Exxon’s consortium with Hess and CNOOC has discovered more than 11 billion barrels of oil on Guyana’s Caribbean coast since 2015 and produced 500 million barrels of crude oil from its Stabroek field since 2019, knocking the small country into overdrive. and turned it into a globally important oil producing country.
So far, Exxon’s only planned use for the gas is in small gas-power projects.
The project to develop its own gas was conceived as a way for Guyana to generate a new source of income apart from oil, which is completely exported. The gas will help develop the country’s manufacturing and food sectors and make it a regional energy powerhouse.
Last year, the country earned $1.6 billion in royalties and fees, compared with $6.33 billion in profits that went to the consortium. Exxon’s Guyana country manager Alistair Routledge told Reuters the company would make decisions on the use of new discoveries, mainly gas, by mid-2025.
Guyana’s vice president said Fulcrum “may have better data and knowledge than the government to push Exxon in that direction.”
Jagdeo said Guyana would like to work with Fulcrum and Exxon, but would move forward with or without it. But he said Guyana could take back some of the offshore land if Exxon does not act on its discoveries or auction off the land to other companies willing to develop gas.
Meanwhile, the oil majors believe only they can decide how to use that gas, a person familiar with the company’s position said, citing the agreement with Guyana.
Minister Bharat said, “Exxon has expressed interest in gas development, but as negotiations continue we will see what their commitment is in terms of gas.”
(Reporting by Curtis Williams in Houston; Editing by Margherita Choi)
