India is buying up some Guyana crude displaced by oversupply in Europe, according to analysts on an S&P Global Commodity Insights oil markets podcast published October 30.
Europe, usually the largest buyer of Guyanese crude, has become saturated with sweet barrels, tightening competition and depressing differentials. The glut coincides with a sharp rise in Guyana’s output following the start-up of ExxonMobil’s Yellowtail project in August. The project reached its full capacity of about 250,000 barrels per day (b/d) in November, lifting total production from the Stabroek Block to 900,000 b/d.
With more barrels entering the Atlantic Basin and Europe unable to absorb the additional supply, some barrels will head east. “Europe is simply oversupplied right now,” S&P Global reporter Jada Johnson said, noting that recent loading programs show Unity Gold, Liza, and Golden Arrowhead cargoes moving to India instead of Europe.
India has not traditionally been a major buyer of Guyanese crude because of the long voyage and high freight costs. New Delhi has also sought a long-term supply deal with Georgetown, but Guyanese officials have repeatedly staved off the proposal, saying they prefer selling their oil on the open competitive market to maximize value and avoid discounted bilateral deals.
Even so, India is purchasing opportunistically as more Atlantic Basin sweet crude is displaced by the European surplus. Analysts said the trend is reinforced by U.S. pressure on Asian buyers to diversify away from Russian barrels, creating openings for suppliers like Guyana and Brazil.
Jeff Mower, head of Americas oil news at S&P Global, said falling price differentials for Guyanese crude grades underline the incentive to seek alternative markets. India is emerging as “a good place” for the rerouted barrels, he added, alongside growing U.S. flows into the region.
While India is unlikely to become a consistent long-term buyer without structural agreements, traders say periodic demand from refiners could continue as global supply expands and Europe remains saturated.
Exxon is the operator of the prolific Stabroek Block where all of Guyana’s crude is currently being produced. The U.S. oil major has a 45% stake in the block with co-venturers Hess (recently acquired by Chevron) holding 30% and CNOOC holding the remaining 25%.
