then increase after three months
By Kemol King
A trader who is interested in the light, sweet crude to be sold from the Stabroek Block has given a glimpse of where the oil price will be for the first few months, telling the London-based publication, Reuters, that they expect the Liza project’s oil to be traded at US$4-$6 per barrel over Brent crude prices during the first three months.
North Sea Brent (or just Brent crude) is an international benchmark based on a competitive set of crudes extracted from fields in the North Sea. The Liza oil will be priced against that benchmark, due to the fact that it is similar in quality.
Brent crude is sought after due to its low density and relatively low sulphuric content. It is extracted offshore and is therefore easier to transport than crudes traded against the benchmark, West Texas Intermediate, for which the onshore locations make transportation more costly.
Reuters reported that ExxonMobil’s assay tested the Liza oil at 32 API (American Petroleum Institute) degrees of density and 0.5 percent of sulphur content.
“Interested buyers are exploring options to co-load Liza crude with other South American crudes bound for Asia, mainly Brazilian grades,” Florence Tan and Marianna Parraga wrote for Reuters.
While it is difficult to project the price of Brent in late December, or even later months, the price is currently hovering around $64 per barrel, according to Bloomberg. First Oil in early December would have placed the price between $68 and $70 per barrel.
But that’s not all. The price will go up after three months.
During a press conference at National Communications Network (NCN) studio, Director of the Energy Department, Dr. Mark Bynoe explained that Exxon would take the first shipment because of its capacity to refine the first set of oil which often comes up with a lot of impurities.
Dr. Bynoe had said that by using its refineries, Exxon Mobil would be able to preserve the integrity of Guyana’s oil going forward.
ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) is the lead operator on the Stabroek Block. It has a 45 percent working interest, while Hess Guyana Exploration Ltd has 30 percent interest and CNOOC Petroleum Guyana Limited has 25 percent interest.
Hess, according to Reuters, could offer the oil for spot sales, and CNOOC, which has not yet scheduled exports, would ship it to China, whose refiners like using similar medium sweet grades, the publication’s source said.
Guyana’s first shipment will be uplifted until late February or March, Dr. Bynoe had revealed.
“First buyers would test it, and then prices could go up a little,” Reuters quoted the trader as saying.
According to Guyana’s Production Sharing Agreement (PSA) with Exxon and its partners, S&P Global Platts will conduct analyses and hand over data to Exxon, who will in turn, determine a price to present to the Minister responsible for the sector.