Barbados News Business

Guyana selects Barbados based company to sell first three million barrels of oil

The Guyana government Tuesday said the Barbados-based Shell Western Supply and Trading Limited has been selected as the company which will buy the country’s first three million barrels of oil as a result of the introductory phase of the Liza crude grade into the market.

In a statement, the Department of Energy (DoE) said the first phase of its announced two step crude marketing process is close to completion after it had also previously announced a two-phased approach to lifting and marketing of Guyana’s crude.

“The first phase being a direct sale process in December 2019 and the second an open market Request for Proposals (RFP) to be launched in early 2020 for a marketing agent to market Guyana’s crude entitlements from the Liza 1 field on a term basis. This was necessary to allow, amongst other things, for adequate preparation in structuring and completing the RFP for marketing in early 2020,” the DoE statement noted.

The DoE said that it remains committed to these timelines and is “pleased to announce the near completion of Phase 1 for a direct sale, conducted over the last week.

“The process produced Shell Western Supply and Trading Limited as the company which will buy Guyana’s first three (3) lifts, with regard the introductory phase of the Liza crude grade into the market,” the statement said.

It said given the accelerated timing of first oil and with Guyana’s first lift expected in February 2020, a short-term phase one process became necessary.

“After careful consideration and options evaluated, a select group of nine (9) listed international oil companies (IOCs) were invited to express interest for the lifting and subsequent placement of the first three cargoes of Guyana’s entitlement from the Liza development.

“The first lifting entitlement has been confirmed for February 2020 and the completion of the three (3) cargoes will be approximately by mid- 2020.  By the end of the third lift, the quality of the crude and any operational issues around production are expected to have stabilised.”

The DoE said that the companies participating in the phase one process included the three partners in the Stabroek field and that all other participating companies were also international oil companies (IOC) with integrated upstream, midstream and downstream value chains, global refining footprints and experience in the introduction of new crude grades from and into multiple geographies.

“The interested parties submitted their proposals in writing and were subjected to a face to face meeting with the DoE, in order to present the full scale of their capabilities. Companies were also required to lay out the details of their proposals. The face to face presentations, allowed for robust interrogation and lengthy clarifications and questions.

“This was an integral part of the selection process, especially in the context of the nascent nature of Guyana’s experience with this process of crude commercialism, given that the country is now only a few days-old new producer.”

The DoE said that the evaluation is now concluded and Shell Western Supply and Trading Limited, subject to contract completion, emerged as the successful buyer and that the “sale has been premised on a Dated Brent price basis which reflects the tradable, spot market value of crude oil”.

The DoE said that the decision to choose the Barbados-based company was based on a competitive pricing that limits the government’s exposure to market uncertainty; the size, scale and global reach of the Shell trading operations’ and the company’s high level of integration between Upstream, Trading and Downstream;

It said Shell’s strong foothold in the Latin American markets and the size and scale of their shipping and storage operations in the region, allowing for multiple options on the Liza crude commercialisation, also played a factor.

“As 2020, dawns full of goodness and promise, The Department of Energy looks forward to introducing Guyana’s Liza grade into the market in a stable, structured manner with the result of a good market value for Guyana’s crude,” the statement added.

CMC

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