As Guyana seeks to harness its substantial natural gas reserves, doubts are growing regarding its choice of the relatively unknown U.S. startup, Fulcrum LNG. This company has been tasked with developing projects that could potentially unlock up to $30 billion in untapped resources. However, financing challenges and a lack of experience have raised concerns about whether Fulcrum can deliver on its ambitious mandate.

Concerns Over Financing and Experience

Fulcrum LNG, which was established just a year ago, faces significant hurdles in securing the necessary funding to execute its plans. Despite the initial excitement from founder Jesus Bronchalo, who expressed his delight at being selected to lead this initiative, the company has yet to identify any financial backers. This has led Guyanese officials to reconsider the solidity of their decision, describing the selection as tentative rather than a definitive award. Vice President Bharrat Jagdeo emphasized that "no project has been awarded to anyone," indicating that they are still in an exploratory phase rather than moving forward with a concrete plan.

 

The skepticism surrounding Fulcrum's capabilities is echoed by opposition parties within Guyana. Elson Low, an economist and advisor to the People's National Congress party, voiced concerns about Fulcrum's lack of experience and its ability to secure the multi-billion dollar financing needed for such a large-scale project. This sentiment reflects broader worries about whether a startup can effectively manage a project of this magnitude, especially when competing against established industry giants like Exxon Mobil.

Exxon's Dominance and Potential Involvement

Exxon Mobil currently holds a dominant position in Guyana’s energy sector, controlling all production in what has become a significant oil hotspot since 2015. The company has already discovered over 11 billion barrels of oil off the Caribbean coast and is producing substantial quantities from its Stabroek block. However, despite these achievements, Exxon's plans for utilizing the vast gas reserves remain limited, focusing primarily on a small gas-to-power project.

 

Guyana’s government is pressuring Exxon to develop a comprehensive plan for converting its estimated 16 trillion cubic feet of gas reserves into valuable exports like liquefied natural gas (LNG). If Exxon fails to act on these discoveries or relinquish areas where gas has been found, Guyana may consider reclaiming some offshore land for other developers. The government is keen on diversifying its energy sector and creating new revenue streams beyond oil exports.

The Selection Process and Future Prospects

Fulcrum LNG was chosen from a competitive field of 17 bidders based on what Guyanese officials described as "the most comprehensive and technically sound proposal." This included notable competitors such as CNOOC, Energy Transfer, and Venture Global LNG. However, experts caution that it will be challenging for a startup like Fulcrum to raise the necessary funds for such an extensive infrastructure project without partnering with larger, more established firms.

 

Ira Joseph, an expert in LNG markets from Columbia University, highlighted the difficulties startups face in securing financing for multi-billion dollar projects. He suggested that if Guyana truly wants to develop its gas resources effectively, it may need to collaborate with major players like TotalEnergies or Shell instead of relying solely on Fulcrum.

 

Guyanese officials have indicated their hope that Fulcrum will work alongside Exxon to maximize the potential of their gas reserves. However, there remains uncertainty about how committed Exxon is to developing this sector further. Minister Vickram Bharrat noted that while Exxon has expressed interest in gas development, concrete actions will determine their level of commitment.

 

As discussions continue between Guyana and Exxon regarding future developments, the outcome remains uncertain. The government is prepared to move forward with or without Fulcrum's involvement if necessary. Ultimately, how Guyana navigates these challenges will significantly impact its ability to leverage its natural gas resources for economic growth.

 

In conclusion, while Guyana's ambitions are clear, the path forward is fraught with complexities that will require careful navigation and potentially new partnerships in order to realize the full potential of its vast natural gas reserves.