GEORGETOWN, Guyana – The Guyana government Tuesday said the Barbados-based Shell Western Supply and Trading Limited has been selected as the company which will buy the country’s first three million barrels of oil as a result of the introductory phase of the Liza crude grade into the market.
In a statement, the Department of Energy (DoE) said the first phase of its announced two step crude marketing process is close to completion after it had also previously announced a two-phased approach to lifting and marketing of Guyana’s crude.
“The first phase being a direct sale process in December 2019 and the second an open market Request for Proposals (RFP) to be launched in early 2020 for a marketing agent to market Guyana’s crude entitlements from the Liza 1 field on a term basis. This was necessary to allow, amongst other things, for adequate preparation in structuring and completing the RFP for marketing in early 2020,” the DoE statement noted.
The DoE said that it remains committed to these timelines and is “pleased to announce the near completion of Phase 1 for a direct sale, conducted over the last week.
“The process produced Shell Western Supply and Trading Limited as the company which will buy Guyana’s first three lifts, with regard the introductory phase of the Liza crude grade into the market,” the statement said.
It said given the accelerated timing of first oil and with Guyana’s first lift expected in February 2020, a short-term phase one process became necessary.
“After careful consideration and options evaluated, a select group of nine listed international oil companies (IOCs) were invited to express interest for the lifting and subsequent placement of the first three cargoes of Guyana’s entitlement from the Liza development.
“The first lifting entitlement has been confirmed for February 2020 and the completion of the three (3) cargoes will be approximately by mid-2020. By the end of the third lift, the quality of the crude and any operational issues around production are expected to have stabilised.”
The DoE said that the decision to choose the Barbados-based company was due to a competitive pricing that limits the government’s exposure to market uncertainty; the size, scale and global reach of the Shell trading operations’ and the company’s high level of integration between Upstream, Trading and Downstream;
It said Shell’s strong foothold in the Latin American markets and the size and scale of their shipping and storage operations in the region, allowing for multiple options on the Liza crude commercialisation, also played a factor.
“As 2020, dawns full of goodness and promise, The Department of Energy looks forward to introducing Guyana’s Liza grade into the market in a stable, structured manner with the result of a good market value for Guyana’s crude,” the statement added. (CMC)
