Crude Lifting Agreement being finalised
─ lays out a strict policy
DPI, Guyana, Wednesday, November 6, 2019
With first oil expected in a matter of weeks, the Crude Lifting Agreement has “advanced significantly and is being finalised.”
This was disclosed by the Director of the Department of Energy, Dr. Mark Bynoe during a press briefing on Wednesday. The Energy Director stated that the document is expected to be completed in the new week with the Government of Guyana along with the Stabroek Block coventurers as the signatories on the document
Director of the Department of Energy, Dr. Mark Bynoe.
“It is an industry-standard document or template that is being used based on the association of International Petroleum Negotiators Crude Lifting Agreement. It is being applied and customised to take the Guyanese context into consideration,” he stated.
Dr. Bynoe explained that “the CLA sets up a mechanism for allocating the schedule of crude cargo liftings based upon volume entitlements which are calculated taking into account the cost recovery rules of the petroleum agreement.” This, he said, lays out a strict policy for the agreement noting that possible delays could cause value lost and risk shutting production on the floating, storage, production and offloading vessel. It was highlighted that the department has been collaborating with its sister agencies to ensure effective and efficient operations.
During the media briefing, it was also stated that US oil giant, ExxonMobil will take the first shipment of oil once production commences.
“My understanding is the first lift often comes with a fair amount of impurities. Impurities in your crude can affect the price that you get for that crude, which would not only impact that batch, but it could impact subsequent batches.”
Dr. Bynoe explained the US oil giant will be taking the first lift of oil, which comprises one million barrels.
He noted that the company not only provides drilling and offloading expertise but they also have refineries. As such, “it would make sense for ExxonMobil to take that first lift, which it will then process within its refineries so that the quality of the crude or the integrity of the crude can be preserved going forward.”
Dr. Bynoe stated the government is projected to market their share of crude though an agent. Guyana’s share of crude will be sold Free on Board (FOB) and in million-barrel cargos with liftings every 8 to 10 days.