India discussing potential long-term deal for Guyana’s crude

India, the world’s third-largest importer of oil, bought its first cargo of light sweet crude from Guyana in March 2021. According to the Government, India is now in talks with Guyana that can lead to a more long-term arrangement.
This was revealed by a report published by Reuters quoting Natural Resources Minister Vickram Bharrat as saying that India has approached the Government of Guyana about the possibility of a long-term agreement to buy crude, currently being produced from the Liza field offshore Guyana.

Calls to Bharrat’s local telephone number in Guyana went unanswered on Saturday. However, Reuters reported that Bharrat said that India is interested in buying one of the million-barrel oil lifts that Guyana is entitled to, with the intention of testing the crude in its refineries. According to Bharrat, if the crude is compatible, India could begin talks on this long-term agreement.
The Reuters report added that these talks would be on a Government-to-Government basis and that India is interested in Guyana’s crude as part of its efforts to diversify its crude source, which is currently dominated by Saudi Arabia.
According to the report, the crude would be processed by India’s State-owned refineries. Minister Bharrat, meanwhile, told Reuters that pricing for the crude will be the most important factor for Guyana in any potential agreement.
The Reuters report also referenced Bharrat saying that the Government planned to re-launch the search for a marketing firm “soon” that would market Guyana’s oil. This comes after one of ExxonMobil’s co-venturers in the Stabroek Block had to market Guyana’s fourth oil lift.

Last year, Guyana had received 29 bids from companies interested in marketing the country’s crude. Vice President Bharrat Jagdeo subsequently revealed that 28 of these companies were disqualified owing to “nonsensical” bid requirements, even though these companies have proven track records in marketing crude and are trading billions of barrels per day.
This resulted in the Government having to approach the Stabroek Block co-venturers – ExxonMobil, CNOOC/NEXEN and Hess, in order to bid for the contract to market Guyana’s fourth lift back in December. As a result, Hess marketed the fourth lift of one million barrels of oil.
Meanwhile, Minister Bharrat said there was no guarantee the Government’s next cargo – which he said is due in June but may be delayed due to mechanical issues that have reduced production levels – would go to India.
This publication had reported last month that one million barrels of oil from Guyana was bought by HPCL-Mittal Energy Ltd (HMEL), a joint venture between State-run Hindustan Petroleum Corp and Indian steel tycoon LN Mittal.
The report states that HMEL operates a 226,000 barrel per day Bathinda refinery in the northern state of Punjab. Reuters reported that the one-million-barrel cargo of Guyana’s Liza light sweet crude set sail from offshore Guyana on March 2 on the Marshall Islands-flagged tanker <<<Sea Garnet>>> bound for India’s Mundra port, where it was set to arrive around April 8. The cargo’s charterer is Trafigura, according to the Refinitiv Eikon data.
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.
To date, the country has received payments for five lifts of oil. The most recent payment was made earlier this month for a 997,420-barrel oil lift in February from Liza Destiny. That lift was valued at US$61 million, taking the total amount received at the time for Guyana’s share of oil to US$246.5 million. Inclusive of royalties, the total in the Natural Resource Fund account stood at US$267.6 million.
The Natural Resources Ministry reported that Guyana received its first payment of US$54.9 million for an oil lift dated February 19, 2020. Guyana’s second lift, on May 21, 2020, was valued at US$35 million. The third lift, which occurred on August 9, 2020, was valued at US$46 million, while the fourth lift occurred on December 9, 2020, and came in at US$49.4 million in value. (G3)