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Guyana’s light, sweet oil will be priced against North Sea benchmark
Over six billion barrels of oil equivalent have been discovered in the Stabroek Block offshore Guyana. This oil will be priced against an oil price benchmark that is based on oil from the North Sea basin, a prolific hydrocarbon province located in Northwestern Europe.
Map of discoveries made on Stabroek Bloc, offshore Guyana (Hess Corporation)
This is so because the oil found on the Stabroek Block is characteristically similar to North Sea Crude.
This was stated during a workshop recently hosted by ExxonMobil and the Guyana Press Association (GPA), to train local media operatives on reporting on the Petroleum sector.
Esso Exploration and Production Guyana Limited (EEPGL) is the lead operator. It has a 45 percent working interest, while Hess Guyana Exploration Ltd has 30 percent interest and CNOOC Petroleum Guyana Limited has 25 percent interest.
The price of a barrel of North Sea crude is calculated based on a competitive set of crudes extracted from fields in the North Sea.
Typically, oil in the West is compared against two major benchmarks, North Sea Brent and West Texas Intermediate. These are needed by producers and traders because crude oil has differing quality and availability.
West Texas Intermediate comes from onshore US oilfields.
Both of the benchmarks are based on light and sweet oil, meaning that they have low density and relatively low sulphur content.
While West Texas Intermediate is slightly lighter and sweeter than North Sea Brent, an advantage to the latter is that it is extracted offshore and is therefore easier to transport, while West Texas Intermediate’s onshore location makes transportation more costly.
North Sea Brent’s location therefore makes it easier for its producers to meet rising demand.
North Sea Brent is the leading global price benchmark for Atlantic Basin oils, and its price is higher than West Texas Intermediate. It should be noted that oil prices are affected by many variables, such as political uncertainty. The difference between Brent and West Texas Intermediate could widen or shrink due with those variables.
Other benchmarks used by other jurisdictions include Dubai Crude, OPEC Reference Basket used by the Organisation of Petroleum Exporting Countries (OPEC), and Nigerian Forcados.
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