Latest update March 28th, 2024 12:59 AM
Dec 16, 2019 News
-Says it received blessings of Procurement Commission, International Advisors
The decision to engage a selected group of companies for face-to-face bidding on Guyana’s oil this week, is not only above board, but was taken following consultations with international advisors as well as the Public Procurement Commission.
The Department of Energy made this and other emphatic statements yesterday to the media fraternity.
The Department felt the need to provide this clarification after observing the responses of several local news items to a recent Bloomberg report.
Last week, the NY based media outlet informed Guyanese and the rest of the world that the Government of Guyana was taking an “unusual” approach for the sale of its share of the Stabroek Block oil.
Bloomberg reported that the government sent letters to refiners around the globe inviting them to bid for three million barrels of light-sweet oil.
But Bloomberg found out from its sources that the buyer must take the “unusual role” of handling “all operating and back office responsibilities” related to exporting the crude. On top of that, Bloomberg highlighted that the bids must be offered “face-to-face”. The news agency said that such a voyage is rare for traders, who do most of their business on instant-message platforms and by phone. Upon noting the Bloomberg article, local transparency advocates have said that the Department of Energy is taking Guyana on a dangerous adventure.
The Energy Department is contending however that its decisions on arrangements for the direct sale of the first three lifts of Guyana’s oil were not done hastily.
TWO PHASES
The Department explained that Guyana will be taking its first lift by February, as such; a direct sale of the first three lifts will be done in two phases.
In the first part, selected companies will make offers from which Guyana’s team will choose the most acceptable proposals. It is hoped that this process would help set national benchmarks for selling Guyana’s portion of its crude in the future.
The second phase involves a public request for proposals (RFP), for marketing services for Guyana’s crude.
The Department said, “The second phase of marketing Guyana’s portion of its crude is set to begin in January 2020. The public may recall, the Department of Energy had previously announced that in late 2019/early 2020 a full RFP would be issued, inviting companies to bid for the marketing of Guyana’s portion of oil on a longer-term basis. The Department will issue this RFP in January 2020. It could take about three months to finalisation.”
The Department further stated that this is in final stages of preparation and was employed upon serious consideration of advice given by an international team. While the names of the persons on this team were not provided, the Department said it consisted of a Crude Marketing Specialist, a Commercial Specialist and an external Legal Advisor, among others.
The Department in further defence of its actions, stressed the impending early date of the first lifts is what underscored the need for an introductory phase of the grade. It said that this was more advantageous to Guyana at this time.
UNKNOWN
The Department of Energy also argued that the full extent of the quality of crude is not yet known. It said this usually takes several lifts to determine the crude quality and the cost of refining it. While the testing of the first crude lifted is taking place, the Department said that the true economics or refined cost per barrel of the particular grade (in Guyana’s case, LIZA) is still being calculated.
Considering the foregoing, the Energy Department said it has been advised, by a Crude Marketing Specialist, that in order 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 it during this incubation and launching phase.
The Department is of the view that the approach it has taken allow for stabilisation and standardisation, which would therefore prevent the Liza Crude from being priced downwards due to uncertainty of the quality.
The Department concluded that Guyana will be represented at these first oil negotiations by a full team of international experts, inclusive of its Crude Marketing Specialist, its Commercial Specialist and Legal Advisor, among others.
THIS IDIOT TELLING GUYANA WE HAVE NO SAY IN THE 50% PROFIT SHARING AGREEMENT WE HAVE WITH EXXON.
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