Guyana ships US$75M worth of crude oil in largest payday yet

Indian Oil Corp (IOC), which had concluded a deal with Guyana to purchase one million barrels of crude oil from the Liza-1 Field, has officially lifted the oil from the Liza Destiny Floating Production, Storage and Offloading (FPSO) vessel.
This was confirmed by the Indian High Commission in Guyana, which also shared images of the crude being loaded from the Liza Destiny to the Greek tanker bound for India. According to the High Commission, the transaction represents an important step in diversifying India’s crude sourcing and enhancing cooperation between the two countries.
It was reported recently that India had purchased one million barrels of crude oil from Guyana and that the oil would set sail on a Greek tanker for India’s Paradip port. It was also reported that it would arrive around August 8.
IOC is a State-owned oil and gas company headquartered in Mumbai, India, and administered under the Ministry of Petroleum and Natural Gas. This shipment of oil is said to be a trial cargo. While this publication was unable to confirm exactly what price per unit this crude lift was sold at, the current price per barrel of oil using the West Texas Intermediate (WTI) benchmark is US$75 per barrel. This would therefore mean the lift is worth US$75 million.
While IOC is the first Indian State entity to buy oil from Guyana, it was preceded by HPCL-Mittal Energy Limited, a joint venture between State-run Hindustan Petroleum Corp and Indian steel tycoon LN Mittal.
Back in March, this joint venture bought one million barrels of oil from Guyana. In an interview with this publication, Indian High Commissioner to Guyana, Dr KJ Srinivasa had described India as an energy hungry nation.
“You know, we are an energy-hungry nation. We import about 86 per cent of crude… And obviously, your Liza oil – “light sweet crude” are the words used – seems to be well suited for our refinery. We are working on various options now,” he noted.
Dr Srinivasa further reminded that India had expressed interest to buy Guyana’s share of oil through a Government-to-Government arrangement, which he pointed out would cut out any handling or commission fee.
India used to import a significant portion of its oil from Iran and Venezuela. However, the sanctions imposed by the United States on these two nations has resulted in a massive reduction of those imports.
“We stopped receiving crude imports from Venezuela for last three, four months now. Every day, we used to get close to about 375,000 bpd from Venezuela,” the Indian High Commissioner had noted.
According to a Reuters article, the Organisation of the Petroleum Exporting Countries’ (OPEC) share in India’s oil imports fell to historic lows between April 2020 and January 2021 after the body took a decision to extend production cuts through April.
Guyana, with US oil giant ExxonMobil as the operator, began producing oil on December 20, 2019, in the Stabroek Block. Guyana’s oil revenues are being banked in the New York Federal Reserve Bank, where it is earning interest.
In March 2021, the Natural Resources Ministry had disclosed that to date, a total of 5,009,797 barrels of oil worth US$246.5 million have been lifted. This sum, added to the royalties the country receives, took the total in the NRF account to US$267.6 million. And if one considers earnings from the sixth lift in April and royalty payments, this amount is expected to have climbed to over US$300 million.
Guyana received its first payment of US$54.9 million for an oil lift dated February 19, 2020. The second lift on May 21, 2020, was valued at US$35 million; while the third lift, which occurred on August 9, 2020, was worth US$46 million.
The fourth lift of oil offshore Guyana occurred on December 9, 2020, and came in at US$49.4 million in value. And on February 5, 2021, some 997,420 barrels of oil were lifted from Liza Destiny. A sum of US$61 million was paid for that lift.