With an API of 32.1 degrees and sulfur content of 0.510 percent, the crude now being produced at the Liza Phase 1 Development offshore Guyana could see interest from buyers on the US Gulf Coast and those in locations as far away as Europe and Asia.
“Buyers in the US Gulf Coast may be really interested in this medium grade as desirable for blending but we are also going to see buyers in Europe as well as in Asia,” Laura Huchzermeyer, S&P Global Platts Managing Editor of Americas Crude Markets stated on a recent podcast.
She said the declining exports of crude out of neighbouring Venezuela to the US Gulf Coast could provide an opportunity for Guyana to step in and be a provider of crude to the region. “That’s very desirable for Gulf Coast especially as we are seeing freight rates being extremely high so people are looking for more local, easier to get to crudes that you don’t have to pay as much to send across the world,” Huchzermeyer pointed out.
How will Liza Crude be priced on the market?
ExxonMobil Guyana Senior Director, Public and Government Affairs, Deedra Moe, told OilNOW in a recent interview that the Liza Crude will be sold at Brent market price. “Whatever the price of crude oil is that day – we trade off of the Brent crude oil price – and that’s exactly what it will be, either plus or minus what the typical Brent price is,” she said.
With production getting underway in Guyana just days ago on December 20, Huchzermeyer acknowledged that it is too early to say exactly what price the Liza crude will fetch.
“It’s interesting because usually as new crudes come out onto the market, we often hear that they get this new crude discount. So, whatever prices we may be seeing, or starting to see at the first production; those might even out or equalize out over time as more refineries take it and run it through their system and see how they like it,” the Platts Managing Editor pointed.
Who will buy Guyana’s first crude lifts?
Guyana’s Department of Energy (DE) said on Tuesday Shell Western Supply and Trading Limited will be the buyer of the government’s first three crude lifts. This follows a series of meetings with bidders—including ExxonMobil, Hess, CNOOC, and Total, among other companies.
The selection of Shell was based on criteria including competitive pricing that limits the government’s exposure to market uncertainty; the size, scale and global reach of the Shell trading operations; the company’s high level of integration between Upstream, Trading and Downstream; and Shell’s strong foothold in the Latin American markets and the size and scale of their shipping and storage operations in the region, which allows for multiple options on the Liza crude commercialization.
The DE said one of the determining factors was also Shell’s willingness to share critical refinery information with the government which it needs in order to understand Liza crude behavior.
