Energy Dept. debunks misinformation
DPI, Guyana, Sunday, December 15, 2019
The Department of Energy (DoE)has debunked misinformation about the upcoming short-term arrangements for the direct sale of the first three lifts of Guyana’s portion of first oil from the Liza 1 programme.
In a media release on Sunday, the DoE stated that two stages of the process are envisaged. The short-term first phase is set to commence this week with a focus on setting “national benchmarks” for selling the country’s share of its crude in the future. “Selected companies are invited to bid to buy Guyana’s product in the very short term.
“These companies are required to make offers from which Guyana’s team will choose the most acceptable proposals,” the press release explained.
It noted that the process is a direct sale and not the procurement of any marketing services.
The second phase involves the Public Request for Proposals (RFP). This is for marketing services for Guyana’s crude and is currently in the final stages of preparation.
“This strategy was employed upon serious consideration of advice given by an international team external to the D0E.”
The team consisted of a Crude Marketing Specialist, a Commercial Specialist and an external Legal Adviser, among others.
According to the release “the logic is that given Guyana’s inexperience and the impending early date of the first lifts, an introduction phase of the grade was more advantageous to Guyana at this time. ”
Key considerations around this decision included:
- The full extent of the quality of crude is not yet known. It usually takes several lifts to determine the crude only quality and the cost of refining it. Guyana is embarking on its very first new crude introduction into the market of the Liza grade. The quality of the crude and its yield have not yet been tested within a refinery system. This interim arrangement is put in place just for this period.
- While the testing of the first crude lifted is taking place, the true economics or refined cost per barrel of the particular grade (in our case LIZA) is still being calculated. For a limited time only the DE has been advised, by the Crude Marketing Specialist, to take Guyana through this limited short term phase, a few high-quality IOCs with a global refining footprint and integrated oil value chains would be best given an opportunity to support the DE during this incubation and launching phase.
- Guyana’s main incentive in taking this approach is to establish a norm in terms of quality standard and quantity availability to prevent any possible down-pricing. What the DE is seeking to accomplish with the short-term approach is to allow for stabilization and standardization to prevent our Liza Crude from being priced downwards due to uncertainty of the quality.
The DoE assures that it continues to execute its mandate in a manner that is in keeping with the national interest.