…as Stabroek Block crude gets monthly re-evaluation
ExxonMobil officials recently told media operatives at a workshop that Guyana’s oil prices will be set based on the best international benchmarks from the North Sea basin—a prolific hydrocarbon province located in Northwestern Europe.
Eswaran Ramasamy—Global Director of Market Development of S&P Global Platts
It turns out, however, that the prices at which Guyana’s crude will actually be sold will be determined by ExxonMobil, based on the advice of a partner that was enshrined in the Production Sharing Agreement (PSA) since 2016.
S&P Global Platts was identified as the publication against which Guyana’s light sweet crude will be valued and priced.
Under the PSA, ExxonMobil will ultimately decide on the price.
According to Article 13.2 of the PSA which deals with Valuation of Crude Oil, it is the Contractor—ExxonMobil Guyana—which shall be responsible for determining the relevant prices.
Esso Exploration and Production Guyana Limited (EEPGL) also called ExxonMobil is the lead operator on the Stabroek Block has a 45 percent working interest.
Hess Guyana Exploration Ltd holds 30 percent interest and CNOOC Petroleum Guyana Limited has the remaining 25 percent interest.
The general international benchmark prices of a barrel of North Sea crude is calculated based on a competitive set of crudes extracted from fields in the North Sea.
Typically, oil in the West is compared against two major benchmarks, North Sea Brent and West Texas Intermediate (WTI).
The value of Guyana’s oil, however, according to the PSA, will be set by ExxonMobil Guyana, using the data supplied by S&P Global Platts.
Compounding the situation, it was stipulated that the value of a barrel of crude shall be considered as at the fair market value versus any technical benchmarks.
A source told this publication that as recent as this past week, government officials held private talks with the company’s Global Director of Market Development, Eswaran Ramasamy.
Government did not report on these meetings.
Additionally, the PSA stipulates that as soon as practicable, at the end of each month crude is sold, the price shall be re-evaluated.
This means that ExxonMobil and its partners would be deciding on a new value for the price of Guyana’s oil from the Stabroek Block each month. Moreover, the variation in prices to be done monthly will also be done separately by fields based on the quality.
It has already been determined by initial exploration and appraisal drilling that the quality of crude varies across Guyana’s Exclusive Economic Zone (EEZ).
One Operator, Tullow, which recently made two successful drills at the Jethro-1 and Joe-1 wells, had encountered commercial quantity of heavy oil versus the lighter sweet crude that had been found deeper in the Stabroek Block.
The Hammerhead discovery by ExxonMobil which is located south of the Liza Discoveries is also said to bear different quality oil.