Guyana Opening Search for Oil Firm to Trade its Crude

OILMONSTER.COM- Guyana’s government next month plans to begin a search for an oil company or trading firm to market its share of the South American country’s crude, the director of the Department of Energy, Mark Bynoe, said in an interview.

The government is entitled to a portion of the light, sweet crude that a consortium led by Exxon Mobil Corp began producing last month after making 15 discoveries in recent years. The finds are set to transform the economy of Guyana, an impoverished country of fewer than 800,000 people.

With no refining capacity, Georgetown last year began selling its share of crude through open-market tenders, the first one awarded to Royal Dutch Shell Plc for loading the first three cargoes allocated to the government. After that, it will depend on a trading firm to sell its oil to export markets as the state builds up capacity to do so itself, Bynoe said.

“We don’t yet have the kind of back office support that is necessary,” he told Reuters on Wednesday afternoon in his office, lined with books on energy and development including historian Daniel Yergin’s “The Prize.”

“We’re moving to this simpler methodology to be able to ensure that as we build out, we are not losing value.”

Bynoe said the government next month expects to begin asking international oil companies (IOCs) and energy trading firms for proposals to operate as the agent.

But he said the selection would not necessarily be made before Guyana’s March 2 elections, given the length of the bidding and evaluation process after launching the search.

Irfaan Ali, who is challenging President David Granger, has pledged to review the terms of oil deals signed by the current administration. He has argued that the government was not transparent in choosing Shell to lift the first cargoes. Bynoe disputed that.

He said the government invited nine oil companies to present bids because crude from the Liza field was new to the market, and the government wanted to see how it performed in different refineries.

He declined to disclose the price included in Shell’s winning bid.

Latin American nations including Mexico and Ecuador have signed contracts with trading companies in recent years so the firms market a portion of their crude exports. Critics say that by doing so, the countries or their state-run firms can lose an opportunity to obtain better terms by dealing directly with refiners.

Courtesy: www.reuters.com