Dec 16, 2019 News Comments Off on Guyana to compete with West Africa for crude buyers’ attention
By Kemol King
First Oil is days away, and the Energy Department is set to meet a set of traders to discuss the sale of Guyana’s Liza crude. It turns out traders will often be faced with the choice of Guyana or West Africa, principally Angola, for crude purchases, because of the similarities in quality between the oil produced by the two nations.
The competition between Guyana and Angola crude of similar quality seems to lend credence to the Atlantic Mirror Theory, taught to Kaieteur News in November last by Geologist, Dr. William Heins.
The theory posits that the distribution of natural resources on both sides of the South Atlantic is similar, because the land masses were once joined, millions of years ago. It encouraged explorers to seek out hydrocarbon wells on the Eastern end of South America because of discoveries in Africa, and is now creating excitement for explorers in West Africa. (See link – https:/ www.kaieteurnewsonline.com/2019/11/24/guyanas-oil-discoveries-bring-excitement-for-prospects-in-west-africa-geoscientist/).
Kaieteur News has compared the quality of the crude oil produced in Angolan projects and Guyana’s Liza crude, and the jury is out on who definitively will command traders’ attention. The lower the density (how light) and sulphur content (how sweet), the better quality the crude is adjudged to be; and the better the price. According to ExxonMobil’s assay, Guyana’s Liza crude carries 32.1 American Petroleum Institute (API) gravity and 0.51 percent sulphur content. Some Angolan projects produce lighter oil than Liza crude, while Guyana’s crude is sweeter. In other projects, the situation is the opposite, while a few give Angola a slight edge.
But the quality of the crude is not the only factor that determines the buyers’ preference and price.
Traders also consider the cost to transport the crude. Hence, the proximity of the produced crude to their refinery, and mode of transportation, are critical.
For many of those traders, the crude oil will be bound for refineries in Far East nations, like China, Japan, India and South Korea.
Some others may be bound for Western Europe, but Angola may benefit more from those traders, due to its close proximity to that continent. Kaieteur News understands that there is interest too from traders whose purchases are to be bound for the United States’ East Coast refineries.
The likelihood of those traders making purchases in higher quantities from Guyana will depend on future assay readings of Liza crude finding it to be quite low in sulphur content, since those refineries tend not to process sour crude.
Angola has been producing crude for nearly seven decades.
According to a statistical bulletin from the Organisation of Petroleum Exporting Countries (OPEC), of which the African nation is a member, it boasts over 8 billion barrels of proven crude oil reserves in addition to considerable proven natural gas reserves, and produces over 1.4 million barrels of crude oil per day.
Oil companies operating offshore Guyana have already discovered 6.6 million barrels of oil equivalent. When Liza-1 gets on board, the Liza Destiny will be producing 120,000 barrels of oil a day, at peak. When Liza-2 gets on board, the Liza Unity will be producing 220,000 barrels a day, at peak, taking Guyana to 340,000 barrels a day in just a few years. Payara, which has not yet been approved, would also see the Liza Prosperity producing 220,000 barrels, potentially taking Guyana’s oil production to 560,000 barrels of oil a day by 2023, according to ExxonMobil.
The company and its partners on the Stabroek Block sees itself potentially producing 750,000 barrels of oil a day by 2025, but has not yet provided an explanation about how it plans to get there.
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