Govt mulls direct crude sales, instead of using crude marketer – Min Bharrat

– says process would be transparent

While a decision has not been made yet, the Government is mulling whether to directly sell Guyana’s crude, rather than contracting the crude marketing firms it has been using to sell the country’s share of oil from the Stabroek Block.
In a recent interview with Guyana Times, Minister of Natural Resources Vickram Bharrat spoke of the Government’s future approach to selling its share of crude oil while pointing out the benefits of ditching crude marketers and selling the oil directly, including increased savings for the Government.
“We have not taken a decision as to that. It makes practical sense for us to sell our crude. Our crude is sweet crude and in high demand all around the world. Presently we’re paying a marketing fee to market our crude from the Liza Destiny. Every lift, the Government of Guyana would have to pay, as it is now, US$25,000 to market our crude.”

“If we can sell our crude and save that cost, then it makes perfect sense to sell it. It makes perfect sense to sell it to the person who would, of course, pay the Brent price, the market price. And who is in a position, financially and otherwise, to carry out the lift successfully,” Bharrat said.
According to the Minister, the Government selling Guyana’s oil directly could take the spot of either on the spot sales, which has been done in the past or through a contractual arrangement. He emphasised, however, that a decision has not been taken yet, noting that it would be an open and transparent process.
Guyana officially completed its final oil lift for 2021 in November, with a little over one million barrels of oil being lifted from the Liza Destiny Floating Production Storage and Offloading (FPSO) vessel and sold by Saudi Aramco. Prior to Saudi Aramco, Guyana had used the crude marketing services of Hess.
It had been announced recently by Minister Bharrat during the examination of the budget estimates that at least 90 crude lifts are expected for this year. This, the Minister had said at the time, is owing to the start-up of the Liza Unity FPSO.
The Liza Phase 2 began producing oil earlier this month. In fact, this will bring Guyana’s oil production capacity to 340,000 barrels per day (bpd) following the commencement of production at the Liza Phase 2 project.
It was explained at the time that production at the Liza Unity FPSO vessel is expected to reach its target of 220,000 barrels of oil later this year, as operations continue to be brought safely online.
ExxonMobil has said it anticipates at least six projects offshore Guyana will be online by 2027. This includes the Payara and the Yellowtail developments, while Exxon also seeks approval for the Uaru development.
In fact, $88 million was approved in Budget 2022 for a consultancy firm to review the Field Development Plan for Uaru, which if approved will be of Exxon’s fifth oil development in the Stabroek Block.
In January 2020, ExxonMobil announced that Uaru-1 was the 16th discovery in the Stabroek Block. The well encountered approximately 94 feet (29 metres) of high-quality oil-bearing sandstone reservoir and was drilled in 6342 feet (1933 metres) of water.
In April 2021, Uaru-2 was announced by the oil giant. Drilling at Uaru-2 encountered approximately 120 feet (36.7 metres) of high-quality oil-bearing reservoirs including newly identified intervals below the original Uaru-1 discovery. The well was drilled in 5659 feet (1725 metres) of water and is located approximately 6.8 miles (11 kilometres) south of the Uaru-1 well.
The Stabroek Block is 6.6 million acres (26,800 square kilometres). ExxonMobil affiliate, Esso Exploration and Production Guyana Limited (EEGPL) is operator and holds 45 per cent interest in the Stabroek Block. Hess Guyana Exploration Limited. holds 30 per cent interest and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds 25 per cent interest.
The Stabroek Block’s recoverable resource base is currently estimated at more than 10 billion oil-equivalent barrels and has the potential to support up to 10 projects.