Guyana searching for new marketer for crude lifts

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…bidding to be opened early next month

Guyana is on the hunt for a new crude marketer, with a new Invitation for Bids (IFBs) being issued for companies who will vie for the chance to market the oil currently being produced offshore Guyana and stored in the Liza Destiny Floating Production Storage Offloading (FPSO) vessel.

According to the IFBs issued by the Natural Resources Ministry, interested firms were invited to submit their bids by August 3, 2021, to the National Procurement and Tender Administration Board (NPTAB).

“The objective of the assignment is to competently maximise the value of the Government’s crude oil entitlement from Liza Destiny FPSO in the Stabroek Block and create a competitive market for the Liza blend,” the IFBs said.

Bidders were also told that their bids would be valid 120 days of the date of bid opening. According to the notice from the Ministry’s Permanent Secretary, bids will be opened on August 3 at NPTAB.

It had been announced last year that Guyana received 29 bids from companies interested in marketing the country’s crude. Earlier this year at a press conference, Vice President Bharrat Jagdeo had revealed that 28 of these companies were disqualified due to “nonsensical” bid requirements, even though these companies have proven track records in marketing crude and are trading billions of barrels per day.

This resulted in the Government having to approach the Stabroek Block co-venturers, ExxonMobil, CNOOC/NEXEN and Hess, in order to bid for the contract to market Guyana’s fourth lift back in December. As a result, Hess had marketed the fourth lift of one million barrels of oil.

Moving forward, Jagdeo had noted that they were examining options to procure a crude marketer and whether it was feasible to go back to the drawing board with the very same companies who were previously disqualified on technicalities. The assessment, he said, is likely to be completed by the time Guyana becomes due for its next shipment of crude.

“We are now discussing whether we just go and invite the same companies and change the so-called prequalification criteria. Because if the criteria are set up in a way where you can disqualify a person for lack of technical capacity, who is already selling your oil. Something is wrong with that.”

“So, either a simplified prequalification criterion, where you can say all of these companies are capable of marketing and then it’s just a matter of best price. In that context we can look at people who want to buy the oil directly. For us, it is the best price for our oil. That is what we’re looking at. Because there are hundreds of companies who can take this oil and sell it,” Jagdeo had said.

Oil

Guyana, with US oil giant ExxonMobil as the operator, began producing oil on December 20, 2019, in the Stabroek Block. Guyana’s oil revenues are being banked in the New York Federal Reserve Bank, where it is earning interest.

In March 2021, the Natural Resources Ministry had disclosed that to date, a total of 5,009,797 barrels of oil worth US$246.5 million have been lifted. This sum, added to the royalties the country receives, took the total in the NRF account to US$267.6 million. And if one considers earnings from the sixth lift in April and royalty payments, this amount is expected to have climbed to over US$300 million.

Guyana received its first payment of US$54.9 million for an oil lift dated February 19, 2020. The second lift on May 21, 2020, was valued at US$35 million; while the third lift, which occurred on August 9, 2020, was worth US$46 million.

The fourth lift of oil offshore Guyana occurred on December 9, 2020, and came in at US$49.4 million in value. And on February 5, 2021, some 997,420 barrels of oil were lifted from Liza Destiny. A sum of US$61 million was paid for that lift.

Already, ExxonMobil has established an ambitious oil exploration plan for 2021 offshore Guyana. Over the past few months, Exxon has been drilling simultaneous deep-water wells in both the Stabroek and Canje Blocks.

In March 2021, ExxonMobil secured a sixth drillship, the Noble Sam Croft, for exploration and evaluation drilling activities offshore Guyana. A fourth project, Yellowtail, has been identified within the block with an anticipated start-up in late 2025 pending Government approvals and project sanctioning.

This project will develop the Yellowtail and Redtail fields, which are located about 19 miles (30 kilometres) southeast of the Liza developments. With the Liza Phase 2 and Payara developments on track for their scheduled completion and the Liza Phase 1 development averaging 120,000 barrels of oil per day (bpd), Guyana’s oil production is likely to exceed 500,000 bpd by 2024. (First published in the Guyana Times)