Royal Dutch Shell obtained the rights to market Guyana’s first shipments of crude oil, the government said Tuesday, days after oil production started and launched the impoverished South American nation into the ranks of world suppliers.
An Exxon Mobil-led coalition, which includes Hess Corp and China’s CNOOC, started producing crude from the Liza well on Friday. The businesses have discovered over six billion barrels of recoverable oil and gasoline in a large offshore block.
Guyana has no history of the oil sector, nor any domestic refining capability, so it announced an auction last week to sell three shiploads from the share the government is entitled to under the deal. It plans to search for a partner for an extended-term agreement to market the government’s share of crude early next year.
The Shell agreement represents an important first test for Liza crude, a lightweight, sweet grade that would pose new competition for U.S. shale. However, the grade’s price and refining qualities are unknown, and the sale will offer valuable data for Guyana and those interested in long-term supply contracts.
The federal government’s first shipload is expected to be lifted in February. Exxon, which runs the project and holds a 45% stake in the enterprise, will straight elevate the first cargoes, while Hess, which holds a 30% stake, will lift a shipload later in the month.
Guyana’s Department of Energy mentioned Shell Western Supply and Trading had been selected from a group of nine listed international oil firms that submitted proposals because its “competitive pricing” would protect the government from volatility.
It added that Shell demonstrated “willingness to share critical refinery information” to assist it in understanding traits of Liza’s crude, a brand new grade.