Analysis and News

Transformation of Berbice imminent as work starts on Deep Water Port

BY GEOCAP's Contributor: Navendra Seoraj

The Berbice River, one of three major rivers in Guyana, will soon become a hub for trade and commerce, as CGX Energy Inc. has commenced civil works related to the construction of the Berbice Deep Water Port (BDWP).

Stretching 600 kilometres long and 2.3 kilometres wide, the Berbice River was identified in 2012 as the ideal location for the construction of CGX’s BDWP, which will directly service Guyana’s burgeoning oil and gas sector, and also catalyse advancement in the “Ancient County” and on a national level through increased trade and maritime activities.

Specifically, according to CGX, the BDWP intends to service growing offshore demand in the oil and gas sector and significantly shorten supply routes, simplify logistics, and reduce cost and operational risk.

The construction and operationalisation of this new port will be a shift from the company’s usual exploration activities offshore Guyana.

As it is now, CGX and its partners hold three licences in the Guyana-Suriname Basin, a frontier Basin in South America with a proven hydrocarbon system, and highly-prospective deep-water plays that can be drilled in shallow water.

Travel time from the BDWP to offshore fields is approximately 12 hours compared to approximately 2.5 days to regional ports currently used by operators. For this reason, the investors believe that the BDWP port will enable the provisioning of operators and vendors in territorial waters of both Guyana and Suriname.

Through its wholly-owned subsidiary, Grand Canal Industrial Estates Inc. ("GCIE"), CGX has been engaged in civil works related to the construction of the BDWP on 30 acres of land on the eastern bank of the Berbice River, adjacent to Crab Island.

In a recent update, CGX indicated that work is ongoing on the access road and connecting bridge, relocation of utilities and major construction of the site along the Berbice River.

“Construction of the wharf platform and access trestle are currently scheduled to begin in September 2021.” The facility is designed to have a wharf platform of 220m length and 30m width, accessed by a 50m trestle.

“An approved dredging programme is intended to ensure continual unencumbered access to supply and cargo vessels. Depth is targeted to be maintained at a 7m (23 ft) low-tide draft within the berth area and access channel that leads to the BDWP pier,” CGX related.

The company said too that it owns and operates a 16-acre laydown yard in Berbice, at Bramfield. This facility, located along the main Corentyne Highway, is fully permitted and operational as a logistics base and will also service the BDWP, which is located 3.2km from the Bramfield Logistics Yard.

The capital cost of the project is estimated at USD 70 million, with further plans to construct heavy lift and fabrication facilities being contemplated.

According to CGX, work is on schedule for the operationalisation of the offshore oil and gas support shore base by mid-2022 and for the operationalisation of containerised cargo, agricultural cargo and specialised cargo terminal by the end of 2023.

Co-Chairman of CGX, Gabriel de Alba, was quoted in a statement as saying: "We are pleased to continue to advance our activities in what we believe is one of the world's most important new oil and gas blocks in the last decade,” adding that “the CGX team has worked tirelessly to reach this point in coordination with all our stakeholders. We look forward to providing further details as soon as possible."

Professor Suresh Narine, Executive Co-Chairman of CGX, also said: "I am incredibly proud of our team as we reach such an important exploration milestone for our organisation. I am equally proud of the progress we have made in the development of the Berbice port, which reflects the focus we have on the broader opportunities for the people and businesses of Guyana."

Back in February 2020, while on the campaign trail, Dr. Irfaan Ali – now President of Guyana - said that the construction of a deep-water port and the bridging of the Corentyne River are two massive pieces of infrastructure that will transport, ignite and excite Berbice.

“You will see here the expansion of commerce because you will have container traffic, the town will become a logistics hub, you will have new businesses and opportunities in shipping, marketing, technical services, hotel, entertainment, logistics insurance, brokerage, finance services, warehousing,” President Ali had said.

From all indications, there are no doubts about the BDWP. The potential of the project was further validated by an independent market assessment study conducted by Maritime & Transport Business Solutions ("MTBS") of Rotterdam, The Netherlands.

According to the MTBS marketing report, the BDWP is expected to service the demands of one offshore well in 2022 following start-up; growing to 7-12 offshore wells in 2023.

The MTBS report also predicts revenue generation from 2022 related to offshore oil and gas services reaching approximately USD 37 million by 2025 and steadily increasing thereafter.

Further, the study found that by 2030 the port will handle over 835,000 tonnes of cargo, with 64 percent of this related to the export of rice. Approximately 30 to 50 percent of the rice grown in Guyana is produced in regions Five and Six and the BDWP will provide important support to this industry and service its expected growth.

To this end, it is expected that revenue generation from the cargo handling operations of the port will reach approximately USD 28 million by 2025, with steady growth predicted, reaching approximately USD 37 million by 2030.

The financial model predicts that the payback year for the project is 2025, with an above industry average net present value and internal rate of return values.

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