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One of the world’s growing hotspots for crude oil exploration has refused to sell discounted crude oil to India, Guyana’s Vice President Bharrat Jagdeo said this week.
Guyana’s crude oil production has increased three-fold from a year ago, with the government of Guyana holding the rights to about 12.5% of the country’s vast oil riches. BP has a one-year contract to market those government-controlled barrels.
India has lobbied Guyana for two years—well before Guyana’s oil boom took off, but the two have been unable to come to an agreement, Jagdeo said, adding that any crude oil sales from Guyana to India would “have to be on commercial terms, not a discounted terms.”
India said it is interested in sourcing discounted crude oil to make up for the increased costs for shipping the crude oil to India.
“Guyana crude is costly for us because of high freight. Instead of paying a high freight for their oil, we will prefer to buy oil from the Middle East and east and west Africa,” a person familiar with the Indian traders thinking said, according to Reuters. “Without concessions their crude doesn’t make commercial sense for us.”
Despite Guyana’s unwillingness to offer India crude oil on the cheap, the oil-rich nation is eager to invite India to the auction table for its first competitive oil auction, which is scheduled to be held later this summer. In that auction, 14 offshore blocks will go up for bid. India has not said whether or not it will participate.
Jagdeo confirmed, however, that although an oil deal has not been reached, it will continue to discuss with India other areas of cooperation, including in agriculture and health.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.