By Bibi Khatoon
The companies selected to bid for the first three million barrels of oil Guyana will be entitled to include the operator ExxonMobil and its partners and other international oil companies with vast experience in the sector.
Exxon’s partners are China National Offshore Oil Corporation (CNOOC) and Hess Corporation. Others invited to bid are British Petroleum, the American company Chevron, French company Total and the Italian oil company Eni.
This disclosure was made on Monday by Director of the Department of Energy Dr Mark Bynoe at a press conference held at the Department’s new office, Brickdam and United Nations Place, Georgetown.
“The operators will take it into their refining system before introducing it into the open market…the idea is for us to work towards even making the Liza crude a benchmark crude. To do that, you don’t carry an impure produce or a product that has substantial impurities to the market so that is why we have taken this considered approach to ensure that in the first instance, we are protecting the value of the Guyanese crude,” Dr Bynoe said.
He also noted that the company that wins the bid will be footing the bill to transport the crude.
The Energy Department on Sunday confirmed international reports that it is pursuing direct sale for the first three lifts of Guyana’s portion of first oil from the Liza 1 project.
The bidders were invited to make submissions this week.
On Monday, Dr Bynoe said the Public Procurement Commission and other key state agencies, such as the Guyana Revenue Authority, were consulted to ensure that the Department is not breaking the laws of Guyana.
He noted that since this is not the procurement of goods or services, “it does not require going through a procurement process.”
“It is like any other sale whether you’re selling sugar on the open market or such. When we go to the RFP (public Request For Proposals), then that will have to go through the full procurement process.”
The RFP will be issued in January 2020 and will initiate the process of procuring a marketing firm to sell the Crude in the open market later and for the longer term.
The Department of Energy has contracted Crude Marketing Specialist, Virginia Markouizue, of the United Kingdom-based RPS Group.
Markouizue told Monday’s press conference that after the initial three direct sales of Guyana’s crude, the Department of Energy will move to a Request for Proposal (RFP) state to recruit a marketer on a one-year contract for the sale of Guyana’s portion of the crude; the contract can then be renewed depending on the performance of the marketer.
Asked why the RFP could not be used in the first phase of the sale, she explained that “the markets, the international markets, the traders, the international oil companies, are all looking at us, trying to see how we’re going to perform in the first few months, how the grade is going to perform during the first few months of its initialisation into the market.
“So the RFP would not have served us because the RFP, it would have been at a point where we don’t know the real fair market value of our crude.”
She explained that other strategies were looked at but the direct sale was proven to be the best option.
Given the importance of this direct sale agreement to the long-term price for Guyana’s oil, the concern of being short-changed was raised.
“There will be a process where the determination of the fair value of the crude will happen,” Markouizue noted.
ExxonMobil and its partners have discovered more than six billion barrels of recoverable oil and gas resources offshore Guyana.
Production is set to commence this month with the setting up of the Floating Production, Storage and Offloading (FPSO) vessel in its final stage. The planned period for exporting of crude is January and February.
The Department of Energy has also hired a Commercial Specialist and extended the contract for its Advisor, Mathew Wilks. It is looking to conclude the contract for its Natural Gas Specialist by the end of the year.
It was also revealed that work is ongoing with the Guyana National Bureau of Standards (GNBS) to improve its capacity to contribute to the effective management of the sector.