PW
World

 

PW
Español

 

PW
Guyana
Surinam


PW
Trinidad

& Tobago
Caribbean

 

Precios
Gráficos





Very usefull links





PW
Bookstore




News links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

 

 

India eyes Guyana's crude oil

Poten & Partners

India May Become Guyana's Most Important Oil Client

By Gerald Jansen/Kaieteur News

GEORGETOWN
Petroleumworld 05 24 2021

Nowadays one of the main buzz stories of the crude market has been focusing on Indian oil demand slumping as a consequence of the COVID-19 surge. As painful as India's travails might be, the past weeks also seem to be giving traction to a new partnership, one that perhaps, would aid the country in its quest of decreasing its massive oil imports bill.

Considering its geographic remoteness from India, Guyana could be seen as one of the least viable alternatives to supply crude. Below the surface, however, there are many reasons indicating that India's Guyana deal indeed would come to fruition. India needs new sources of supply, whilst the Guyanese Government needs a reliable and long-term partner for its own equity, having so far failed to find a marketer for its crude.

India has reached out to Guyana, lured by the opportunity of marketing the crude entitlement of the Guyanese Government. Liza started producing in January 2020 and the first 3 entitlement cargoes were allotted to Shell. When the Shell tender ran out, newly elected President, Irfaan Ali, has directly contacted other Stabroek stakeholders and then opted for Hess, committing 2 Suezmax cargoes in January-February 2021. Simultaneously, the new Guyanese authorities have launched a longer-term tender that would finally satisfy the new political elite unfortunately for Georgetown only the Russian oil firm, Lukoil, presented a qualified bid of the more than two dozen interested companies, so the Ali Administration has re-launched the process once again, saying that it would seek direct negotiations instead of the tendering process.

Thus, the prizes at stake are 5-6 Liza cargoes per year, of which at least two have already been taken and moved out. Of course, should an Indian company land the deal, it would most probably go beyond the year 2021. Moreover, once ExxonMobil launches the 2 nd  phase of Liza (assumed to take place in 2022-2023) the number of cargoes would almost triple. Interestingly, the above-mentioned Liza cargo going to India was purchased and eventually refined by private refiner Hindustan Petroleum Mittal Energy; however, the talks on India potentially becoming Guyana's marketer were conducted on a governmental level, implying that there might be a place for one of India's state-owned refiners in the suggested scheme. According to India's High Commissioner to Guyana, it would be the national NOC, the Indian Oil Corporation (IOC) that would be involved in the purchase scheme.

It is against this background that the Indian government has initiated negotiations with Georgetown.

To back its claim, India has bought its first-ever Guyanese cargo in March 2021 the Suezmax-sized cargo arrived on April 08. There have been no new India-bound purchases of Liza since. Thus, India's overall share in Guyanese exports remains rather slim most of cargoes have been split between Panama, the United States and China. As we will see below, Panama only acts a transshipment site and does not refine Guyanese crude, meaning that Liza's most likely market outlets are located on the US East Coast and in southern China.

When checking various data providers on the final destination of respective Liza cargoes, Panama would come up as the most frequent one (averaged 78kbpd so far this year). In reality, none of the Liza cargoes actually end up in Panama, most of them is getting transshipped for further deliveries in the Pacific region. Thus, both Panama-bound Liza cargoes of April 2021 have eventually ended up in California one in Benicia (San Francisco) and the other in Long Beach (Los Angeles). In March 2021, two nominally Panamanian cargoes went to California and the other landed in Quanzhou, China.

There are two main tenets in India's interest in Guyanese crude. The first economic stems from India's willingness to diversify its crude imports away from the Middle East. Despite its current COVID-triggered difficulties, India's appetite for crude will continue to increase in the upcoming years. India has been voicing its discontent with OPEC pricing and production policies and securing a new stream would come in very handy for Indian refiners. The second link between Guyana and India might be less evident however still deserves to be noted the Indo-Guyanese represent the largest ethnic group in Guyana, making up almost half of the population. As opposed to the previous President David Granger (who was Afro-Guyanese and sought no overtures vis-à-vis India), Guyana's new head of state Irfaan Ali is Indo-Guyanese and this cultural affinity seems to be drawing the two nations together.

Even if New Delhi and Georgetown manage to iron out all differences in the upcoming weeks and the Guyanese government is not hindered by political obstructionism, increasing the government's take to more than 1 cargo every two months would require substantially increasing overall output levels, at least to stabilize it. Liza production has been hindered by recurring problems with the Liza Destiny FPSO, as recently as this April ExxonMobil was forced to cut down on production rates because of a discharge silencer, an element of the recently reinstalled gas compressor. Unfazed by the upstream helter-skelter, the Guyanese-Indian negotiations are poised to continue, primarily in an effort to find a mutually acceptable pricing formula. How to gauge the progress on the Indo-Guyanese talks? The next Liza cargo that should go to Guyana's government is due this June check out where it goes.

By Gerald Jansen for Oilprice.com
______________

Story from Kaieteur News

Kaieteurnewsonline
.com 05 22 2021

Copyright© 1999-2021 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.

Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.

Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!

 

We invite all our readers to share with us
their views and comments about this article.

 

Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

19th

TOP

Contact: editor@petroleumworld.com,

Editor & Publisher:Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2021 Petroleumworld- All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2021, Petroleumworld   / Elio Ohep - All rights reserved

 

This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.