ExxonMobil Guyana says it is open to examining the viability of selling petroleum to buyers in the South American country, outside of its obligation to supply same if government’s share is insufficient for domestic use.
Under Article 17 of the Petroleum Agreement with Guyana, the company is obligated to supply oil and gas for domestic use – not for export – if the total government entitlement volumes are insufficient. With current domestic consumption being at low levels, the activation of this clause, at least in the near term, may not be necessary.
“This could come into play later. It is unlikely to come into play in the near term, as the domestic need is relatively low,” stated Country Manager, Rod Henson, speaking at a media briefing in Georgetown on Thursday.
However, the company said outside of this obligation it would be open to selling to competitive buyers on the domestic market. Such sales, ExxonMobil said, will benefit the people of Guyana as the same are subject to the payment of Royalty and applicable taxes. “…as you can imagine, the contractors; we are open to selling crude to any competitive buyer without this clause,” Mr. Henson said.
A group of investors has signaled their intent to set up a modular refinery in the mining town of Linden in Guyana with an initial capacity of 6,000 barrels per day. The capacity of this type of modular refinery system ranges from 500 to 20,000 barrels per day, capable of producing Naphtha, Gasoline, Kerosine, Diesel 2, Heavy Fuel Oil 6 and Asphalt. Prime Energy, the company spearheading the venture, will be looking to initially produce Gasoline, Diesel and Asphalt.
Guyana’s Minister of Natural Resources, Raphael Trotman, told OilNOW in a recent interview that government is open to selling its share of petroleum to local buyers. “We’ll be open to anything…any model that is profitable. So, you would have to show us that if we sell our oil to you, it would not be at a price that is below the world market price,” he had said.
While Prime Energy will initially be looking to embark on small-scale refining for the domestic market, it is open to ramping up production for exports which may require the need to buy higher volumes of crude than what Guyana’s 50 percent share is expected to be. In this case, buying from the operator would be a viable option.