British firm wins contract to market Guyana’s oil

Nov 25, 2022 News

– To help country expand trading capacity

Kaieteur News – BP International Limited, a subsidiary of British Petroleum, has won the contract to market Guyana’s share of profit oil from the Liza Destiny and Liza Unity Floating, Production, Storage and Offloading (FPSO) vessels. That contract will last for one year.

The Liza Unity FPSO

The firm beat 13 other firms to win the contract. Those firms and their respective bids are listed in the chart attached to this news item.

According to tender documents, BP International will be responsible for providing all functions of marketing, assessing regional and global demand centres, selecting customers and making appropriate transportation arrangements, providing support and guidance to the client in all operating and back-office responsibilities of managing these crude sales. It will also be expected to facilitate timely and cost efficient crude oil operations; and support the client in the continued introduction of the grade to multiple geographies and refinery systems.

In addition to the foregoing, the Ministry of Natural Resources said BP will also be required to provide benchmark performance comparisons of prices paid for the client’s crude while working closely with the client in understanding the behaviour and yields of the Liza blend and how these affect pricing differentials.

The successful bidder would also have to support the client with market information requests related to the demand, supply, pricing and trade in the oil market and crude oil trading capacity as well as buttressing the client in understanding and advocating for any operational considerations that may affect the pricing of crude.

Kaieteur News previously reported that Aramco Trading Limited (ATL), the London-based trading subsidiary for the State controlled Saudi Aramco, had inked a one year contract with the Ministry to market Guyana’s crude entitlement from the Liza Phase One Project. That contract came to an end last month.

ATL was among 15 bidders in the Brent-linked tender for Guyana’s light sweet Liza grade, and “was identified as the lowest compliant evaluated bidder at the price of $0.025/bl,” the Ministry had said.

The other bidders were, Bibi Energy Trading, Shell Western Supply and Trading, Chevron, Petraco Oil, China National Offshore Oil Corporation, Natural Gas Company of Trinidad and Tobago, and Heritage Petroleum, Hess, Vitol, Mercuria Trading, Total Energies, Litasco and Trafigura. Proposed commissions ranged from US$0.02/bl to US$0.26/bl.

As for the Liza Unity crude, Government has been doing its own marketing. At least two cargoes were already sold but little is known about the buyers and how they were selected.

Importantly, sales agreements for the country’s share of profit oil have not been made public. The International Secretariat for the Extractive Industries Transparency Initiative (EITI) has since called for Guyana to do better on this front.

It has also pointed out that the country is yet to declare consistently, information pertaining to the volumes of oil collected in accordance with the profit-sharing split in the Stabroek Block Production Sharing Agreement (PSA), alongside the identity of the buyer for each oil cargo.

Furthermore, the EITI had flagged Guyana for not publishing descriptions of the process for selecting the buying companies, the technical and financial criteria used to make the selection, and any material deviations from the applicable legal and regulatory framework governing the selection of buying companies.

The contract also comes weeks after Guyana signed a partnership pact with a UK Trade Mission as well as an announcement of visa free travel to the United Kingdom.