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A unit of oil supermajor Shell has won a bidding to market the first three cargoes of oil that the industry’s newcomer Guyana will produce in coming weeks, the government of Guyana said days after the country started its first-ever crude oil production.
Guyana officially joined the ranks of oil producing nations, after ExxonMobil and its partners began oil production offshore the South American country at the end of last week.
ExxonMobil and its partner Hess Corporation launched oil production from the Liza field offshore Guyana ahead of schedule and less than five years after the first discovery of oil, the U.S. supermajor said in a statement.
The first cargo of oil from Guyana is set to be sold within several weeks, while production from Liza Phase 1 is expected to reach full capacity of 120,000 barrels of oil per day (bpd) in the coming months, Exxon said.
Shell Western Supply and Trading Limited will buy Guyana’s first three oil cargoes, the country’s Department of Energy said at the end of a bidding process in which nine listed international oil companies (IOCs) were invited to express interest in marketing those cargoes.
The first lifting is set to take place in February 2020 and the completion of the three cargoes is expected to occur by the middle of the year, Guyana said.
The sale of the country’s first cargoes was set on a Dated Brent price basis which reflects the tradable, spot market value of crude oil, Guyana said.
The country chose Shell to market its first-ever crude oil because of the competitive pricing that limits the government’s exposure to market uncertainty, the Department of Energy said. Shell’s other strengths which influenced the decision was the global reach of its trading operations; the high integration between upstream, trading, and downstream; and Shell’s strong presence in Latin American markets, which allow multiple options for marketing Guyana’s crude. Shell was also picked because it has recently marketed new grades and because it was ready to share critical refinery information with Guyana, which needs it to understand the refinery characteristics of the Liza crude.
“Shell looks forward to supporting the development of Guyana’s oil marketing as it establishes itself as a major new source of crudes for the market,” a spokesman for Shell said in a statement to Reuters.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.