Strategy agreed by Dept of Energy could risk anywhere from US$5 to US$15+ per barrel

Dear Editor,

The Guyana Department of Energy (DE) still hasn’t explained how they decided on which companies to bid in a process for selling the first 3 crude oil cargoes to be lifted from the Liza field [https://www.stabroeknews.com/2019/12/ 15/news/guyana/dept-of-energy-defendsplan-for-sale-of-first-three-lifts-of-oil/]; as Guyana’s share.

In an effort to clarify doubts about the unannounced pre arrangements, the director of the department of energy Mark Bynoe, expressed that there were two phases already envisaged; a direct sale with the aim of setting national benchmarks for selling Guyana’s portion of its crude in the future, via “preselected companies” invited to bid, and a public request for proposals (RFP) for marketing services for Guyana’s crude.

Bynoe admits inexperience and acknowledged basing their decision on the recommendation from the “advisory team”, given the fact that the true yield from the Liza segregation is still unknown, hence pricing could be below the true market price.

This is a hard-to-digest explanation from Bynoe knowing that technology nowadays allows access to crude oil quality testing in near real-time, to even monitor online changes in crude oil quality from the wellhead to the process, and refinery facilities. This continuous monitoring can also provide needed information to the different elements of the supply chain, from operational to market producers, and from traders to refiners.

To properly characterize produced hydrocarbons, all that is needed are preserved-stabilized single-phase bottom hole or wellhead samples, plus one to two weeks’ time. Test results can include quantification of volatile hydrocarbons in the crude, quality monitoring of crude, evaluation of all individual molecules in the crude, accurate monitoring of reforming and alkylation precursors, easy identification of contamination of the crude with foreign elements. Results can include as well a simulated distillation which allows yield prediction of crude through C100 (Carbon chain p to 100th component).

This is by far a much safer way to secure maximum value to Guyana or to reduce exposure. Actually, the strategy agreed by DE could risk anywhere from $5 to $15+ per barrel of unrealized profits, which for a $50 barrel it could translate into losing up to 30% of the total value in each transaction.

So, what is the real reason behind; was it ignorance or was it purposely done?

Yours faithfully, Millan Arcia Einstein