Much to Guyana’s fortune, it was able to sell one million barrels of oil from the Liza Phase One Project to Shell Western Supply and Trading Limited at Brent-linked US$55 a barrel. Confirming this with business intelligence and market data company, Argus Media Ltd. was Finance Minister, Winston Jordan.
Shell had picked up Guyana’s first three Liza cargoes in December in a restricted opening tender. Of note is the fact that Guyana has a total of five lifts for 2020. Thus far, the government has received US$55M for the first million barrels of oil sold and the money was deposited into the Natural Resource Fund where it will remain until a Parliament is in place to approve withdrawals.
Guyana was, in some regard, lucky to lock in the deal before the oil market deteriorated mere weeks ago as a result of the coronavirus and particularly the oil price war between Saudi Arabia and Russia. At the moment, Saudi is targeting key markets for Russia in hopes that it would get Russia to acquiesce to its proposal to cut back production so as to stimulate the demand curve.
In the meantime, Russia is flooding the markets with its cheap priced oil which has hurt the share price value of the Stabroek Block players as well as other companies offshore Guyana who are now forced to hold on to their oil for much longer. In fact, Hess Corporation has had to trim more than US$800M from its exploration and production budget so that it can survive the market crisis. Budget cuts are also forthcoming from ExxonMobil which has signaled interest in cutting back its drilling programme here.
Considering the hard times ahead due to the coronavirus and the implications of the oil price war, it does place into serious question Guyana’s prospects of selling the two million barrels of oil it is due to collect soon.
