Consultant to be sought soon to sell Guyana’s share of crude – Energy Dept

…says GRA, GNBS to play lead roles in measuring oil

With first oil only months away, the Energy Department will very soon be putting out tenders in search of a firm to market its share of crude oil on the world market, as per Guyana’s agreement with ExxonMobil.

This is according to Director of the Energy Department Dr Mark Bynoe, who hosted a press conference at the Ministry of the Presidency on Monday. According to the Director, Guyana’s crude will be sold according to a Free On Board (FOB) arrangement, with crude liftings every eight to 10 days.
“Government will be selling its own share of crude and a tender will be issued during Q3 (third quarter) or Q4 (fourth quarter) of 2019 for a fee-based marketing service to market the Government’s share of crude oil,” Bynoe explained.
He further explained that a crude lifting agreement is being finalised between the Government and the operators in the Stabroek Block. Bynoe was confident that the document, when completed, would be in line with international standards.
“This is a document which is used throughout the industry worldwide and sets up a mechanism for allocating the schedule of crude cargo liftings based upon volume entitlements which are calculated taking into account the cost recovery rules of the petroleum agreement,” he said.

Oversight
When it comes to measuring Guyana’s share of the crude, the Director noted that the Guyana National Bureau of Standards (GNBS) would have a key role in this. He noted that even now, the bureau is going through capacity building, though he acknowledged the need for third party assistance in the short term.
“You would recognise that GNBS has the mandate in terms of measurements and ensuring that the said equipment is calibrated. We have been working with them and ensuring that their capacities are being built. It may be necessary going forward that in the short term, some amount of third party assistance is provided,” Bynoe said.
“One needs to contextualise that the pace at which the sector has evolved has been phenomenal. And while we recognise that this is a new sector to us, it’s important that we receive the requisite support as capacities are built out”.
He stressed, however, that the GNBS would not be the only agency working on this, but rather the Guyana Revenue Authority (GRA) would also play a key role. He noted that the revenue agency would be responsible for the customs-related side of crude lifting, while immigration would play a crucial role in overseeing those coming into Guyana’s waters.
Following its 10th discovery of oil in the Stabroek Block, ExxonMobil had estimated the recoverable resource in the block to be 5 billion oil-equivalent barrels. With oil at US$50 a barrel, that equates to well over US$200 billion.
Exxon has since revised this figure upwards after three more discoveries, the last one being at the Yellowtail-1 well in April. More drilling is also scheduled for this year and it was only days ago that its first Floating Production, Storage and Offloading (FPSO) bound for Guyana, the Liza Destiny, was commissioned.
ExxonMobil has also said there is potential for at least five FPSO vessels on the Stabroek Block, producing more than 750,000 barrels of oil per day by 2025.
Start-up of the Liza Phase 1 development is on track to begin by the first quarter of 2020, and this well is expected to produce up to 120,000 barrels of oil per day utilising the Liza Destiny FPSO, which is expected to arrive in the country in the third quarter.
Liza Phase 2 is expected to start up by mid-2022. A final investment decision is expected soon, subject to Government and regulatory approvals. Upon approval, the project plans to use the Liza Unity FPSO to produce up to 220,000 barrels per day.
ExxonMobil affiliate, Esso Exploration and Production Guyana Limited, is operator of, and holds 45 per cent interest in the Stabroek Block. Hess Guyana Exploration Ltd holds 30 per cent interest, and CNOOC Petroleum Guyana Limited— a wholly-owned subsidiary of CNOOC Limited— holds 25 per cent interest.