Govt to reopen bidding process for selling Guyana’s oil share

…higher prices expected

The new People’s Progressive Party/Civic (PPP/C) Government will be reopening the tender process for Guyana’s oil lift in order to give all companies a fair chance of competing for the contract.

This is according to Vice President Bharrat Jagdeo, who recently disclosed at a press conference that the new administration has put a hold on the evaluation of the bids that were already received.
Guyana only began producing oil in December last year, lifting its first million barrels of profit oil in February with oil tanker Cap Philippe transporting it from the Liza Destiny Floating Production, Storage and Offloading (FPSO) vessel.
The oil tanker was chartered by Shell Western Supply and Trading Limited, which had secured the bid to buy the Guyana’s first three oil lifts, with each cargo being approximately one million barrels of crude.

Days after the lift in February, Guyana’s Energy Department had invited companies to submit Expressions of Interest (EoI) to bid to be the marketing agent for the country’s crude.
However, at the time Guyana was already in political crisis with a de facto government in place. The previous APNU/AFC regime had lost a No-Confidence Motion to the then PPP/C Opposition in the National Assembly and was in a caretaker mode until the hosting of General and Regional Elections, which were held on March 2, 2020.
But the 2020 polls were marred by a series of litigation and delayed tactics by the coalition, which refused to give up office despite a national recount showing that the PPP/C had won the elections by more than 15,000 votes. This fiasco lasted for five months before the new government was finally sworn-in earlier this month.
Against this background, Jagdeo explained that during the tendering process there were companies that opted not to deal with an illegitimate government and wanted to await the final outcome of the prolonged electoral process. As such, he noted that all the companies should be given a fair chance to bid for the contract as Guyana’s marketing agent for its share of oil.
“It would be unfair to people, the companies that acted decently and did not put in a bid because they recognised the threat to democracy and you had an illegal government. They may now be excluded from the process because if we’re moving ahead to evaluate the bids that were received in the period when the Government was illegal.”
The Vice President added, “So we’ve made it clear that we will reopen the tender for that contract, so all those companies that didn’t get a chance to bid [previously] can submit their bids…”
At one point in time, it was reported that some 34 companies including major oil companies and commodity traders had expressed an interest in snagging the contract. However, these were subsequently shortlisted to 19 companies.
The Department of Energy (DoE) had disclosed that an Evaluation Committee was established to examined the details of each EoI before making the shortlist. The next stage was for the 19 companies to receive the Request for Proposal (RFP) after which one of the companies would have been selected as Guyana’s marketing agent.
The scope of works for the firm that Government is looking to hire includes the successful marketing of Government’s share of crude oil entitlement.
The Energy Department had said it envisions a minimum production rate of five lifts per year that would represent the Guyana Government’s entitlement.
The successful firm is also expected to provide support to the Energy Department, in “all operating and back-office responsibilities of managing these crude sales and each individual lift”.
In addition to marketing and managing the affairs of crude sales, the successful company is also required to lend support in the first year of introduction of the grade of oil in multiple geographies and refineries worldwide. Guyana is said to have a low-sulphur, sweet light crude.
Moreover, it is further expected that the company will also be responsible for conducting training sessions for its personnel in “matters relating to crude oil supply and trading fundamentals, and more specifically, those relevant to the Liza grade pricing”.
It was previously reported that Guyana is expected to earn an estimated US$300 million this year from the sale of its share of oil from the Liza Destiny FPSO.
Back in June, the Finance Ministry had disclosed that it received US$35 million for the second lift of one million barrels of oil in the Stabroek Block by Shell Western Supply and Trading Limited.
The payment for the first lift was made in March to the tune of US$55 million for the million barrels of oil sold. Those money were deposited in the Natural Resources Fund held in the New York Federal Reserve Bank.
Jagdeo confirmed on Friday that the total in the NRF is US$94 million. Since the Fund is governed by an Act of Law, any spending from the special account requires prior approval from Parliament.