Guyana’s share from oil lifts likely to increase to 27M barrels next year

Flashback- The fuel hose leads from the Liza Destiny to the Cap Philippe for the transfer of Guyana’s first million barrels of crude

With three floating production, storage and offloading (FPSO) vessels now in operation, Guyana’s share from the crude oil lifts in the Stabroek Block is likely to increase to 27 million barrels by next year.

This was according to Natural Resources Minister Vickram Bharrat, during a recent press conference where he stated that Liza Unity FPSO, which services the Liza Phase Two project, will account for 11 lifts from Guyana’s share of crude.

“We expect, in a year, that the Liza Unity will give us a minimum of 11 lifts, all things go well. Because we can never know what can happen offshore. But we always hope for the best. We can get 11 lifts from Unity, once Prosperity reaches optimum production, hopefully soon, we can get another 11 lifts minimum from Prosperity as well.”

“Destiny, which is our smallest FPSO, that was awarded to a company called JE Trading. They actually submitted a very good proposal. The proposal is 70 cents premium on each barrel lifted from Destiny. However, Destiny is much smaller. And we expect a minimum of five lifts in a year. We can get six, all things go well,” Bharrat said.

According to Bharrat, two firms will be marketing Guyana’s crude for the next year. They are BB Energy and JE Trading, both British firms. He explained that the firms were selected from the Requests for Proposals (RFPs).

“We realised that we can now actually get a premium for our crude. That is no marketing fee, but you paying us an addition to what the Brent price was for the period. And we’ve achieved that, through the RFP that was publicly advertised,” Bharrat explained.

“And we would have had a number of companies, 25 companies as a matter of fact, submitting proposals. Of which we would have identified BB Energy out of the UK, to market our crude from the Prosperity and Unity FPSO. And they will be paying a premium of 26 cents per barrel. Now, that is not the price we will receive.”

Last year October, United Kingdom’s BP Oil International Limited won the one-year contract to market Guyana’s share of profit oil from the Liza Destiny and Liza Unity FPSOs. The new contractor would now have to market the country’s crude from three FPSOs.

Prior to BP Oil, Saudi Aramco was contracted in September 2021 to market Guyana’s share of profit oil from the ExxonMobil-led operations offshore. Guyana started producing oil in December 2019, and its crude lift was initially marketed by Shell Western, after which Hess International marketed the following oil share.

Between January and June 2023, Government earned US$705.2 million as revenue from its share of profit oil from two lifts that occurred in the final quarter of 2022, and seven of the eight lifts that occurred in the first six months of this year. Government also earned US$110.8 million in royalties from 2022’s last quarter and from production and sales in the first three months of this year.

According to the report, in July, US$73.8 million was received as a profit oil payment for the Government lift done in June. The cumulative balance, inclusive of interest income of US$35.6 million, at the end of June was US$1,723.5 million, after withdrawals of US$200 million each in the months of February and May.

It was noted, however, with the price of crude oil declining amid demand-side concerns and financial market disruptions that threaten a global slowdown in economic activity, the forecast for Natural Resource Fund (NRF) deposits has been marginally downgraded. Petroleum deposits for the year are now projected to total US$1,629.3 million, compared with US$1,631.7 million estimated at the beginning of the year.

Consequently, the Guyana Government is now projected to earn some US$1,410 million from the sale of Guyana’s share of profit oil, and US$219.3 million in royalties. It is anticipated that at the end of the year, the NRF closing balance will stand at approximately US$2 billion.

So far this year, Government has withdrawn, in four tranches, some $124.8 billion (US$600 million) from the NRF, which is being held in an account at the New York Federal Reserve Bank in the United States. In the second half of the year.