Guyana should be marketing its oil

I read BP will market Guyana’s oil over the next year. BP has had a strong presence in neighbouring Trinidad over the last several decades. Why is BP selling our crude? Can’t we not sell directly to potential buyers?

As I understand, Guyana’s oil is sold at the market price on the international market. There is a demand for Guyana’s sweet or light crude which is easier to distill (refined) and which produces less byproducts than thick crude, making it very attractive. Modern technology may have simplified distillation or refining crude in contemporary times. An important question is whether Guyana is paying a commission to third parties to act as agent in marketing our crude. If so, then we lose out on some revenues (however small) given that other countries and oil companies offered to purchase our oil directly at the prevailing international market price.

A small amount of revenues mean a lot for a poor country like Guyana. No commission would be involved in selling directly to the buyer if indeed we have buyers. Guyana media reported some time ago that India offered to purchase all of Guyana’s share of crude at prevailing international market price. The High Commission also made that information known. India had also offered to purchase the crude at an agreed negotiated fixed price regardless of market price.

The offer was turned down. Saudi Arabia with which Guyana did not enjoy close relations in comparison with India, was given the contract to market Guyana crude. It is not know which country purchased Guyana’s crude. Several countries enter into agreements to sell crude at a fixed price irrespective of market prices. Guaranteed direct sale of oil at fixed price gives some stability to the market price and guarantees the sale of the raw material for the seller. However, if the market price of oil were to dip below the agreed price, Guyana benefits and if the market price is higher then, India benefits; that is the nature of business. The oil price recently dipped but has been going up and down. As countries move away from fossil fuel, the oil price will sink.

Isn’t it better for Guyana to sell oil directly to a buyer that is offering guaranteed purchase — whether at international market price or fixed price?