GEORGETOWN: Indian company buys 1st million barrels of Guyanese crude from Hess

GEORGETOWN: The world’s third largest
importer of oil, India, has bought its first cargo of light sweet crude from
Guyana.

International news agency Reuters
on Wednesday reported from a source that the cargo was bought by HPCL-Mittal
Energy Ltd (HMEL), a joint venture between State-run Hindustan Petroleum Corp
and Indian steel tycoon LN Mittal.
The report states that HMEL operates a 226,000 barrel per day Bathinda refinery
in the northern state of Punjab.
Reuters reported that the one-million-barrel cargo of Guyana’s Liza light sweet
crude set sail from offshore Guyana on March 2 on the Marshall Islands-flagged
tanker Sea Garnet bound for India’s Mundra port, where it is set to arrive
around April 8. The cargo’s charterer is Trafigura, according to the Refinitiv
Eikon data.
Natural Resources Minister Vickram Bharrat told Reuters this month that while
he did not know the identity of the cargo’s ultimate buyer, the crude onboard
the Sea Garnet had been originally allocated to New York-based Hess Corp, one
of the companies producing crude in Guyana along with ExxonMobil Corp, and
delivered to Trafigura.

Commercial transaction
In fact, Indian High Commissioner to Guyana, Dr KJ Srinivasa told Guyana Times
that this was a commercial transaction between the companies involved, and as
such, they were not privy to the details.
However, he believes that the cargo was Hess’ quota that was bought by HMEL
from Trafigura. Reuters reported that Trafigura “declined to comment on
commercial matters” and Hess “did not immediately reply to a request for
comment”.
According to Dr Srinivasa, given the cargo size and the HMEL refinery’s
capacity, “this will be enough for them only for four days”.
Further, when asked whether there would be another purchase of oil from Guyana,
the Indian diplomat said: “These commercial transactions are always evolving…
We can’t comment from High Commission which transactions are happening right
now.”
Nevertheless, High Commissioner Srinivasa explained that this oil buy was part
of India’s call to all its refiners – both State-run and private.
“The Government of India has asked the refiners to speed up the diversification
of imports which will cut our dependence mainly from the Middle East and
through all the OPEC+ [Organisation of Petroleum Exporting Countries-Plus]
countries. So, basically, we’re trying to diversify and we’re trying to
rekindle our partnership with other countries,” he noted.
The Indian diplomat disclosed only recently his Government struck a big deal
with Mexico for a short-term oil contract to help offset its existing
high-priced long-term contracts. This is in addition to an existing “six
million-tonne” contract with Mexico.
In fact, it was reported earlier this month that apart from Mexico, India was
also in talks with Guyana for a short-term oil contract.
“You know, we are an energy-hungry nation. We import about 86 per cent of
crude… And obviously, your Liza oil – “light sweet crude” are the words used –
seems to be well suited for our refinery. We are working on various options
now,” he noted.
Dr Srinivasa further reminded that India had expressed interest to buy Guyana’s
share of oil through a Government-to-Government arrangement, which he pointed
out would cut out any handling or commission fee. However, these talks are
still ongoing.
India used to import a significant portion of its oil from Iran and Venezuela.
However, the sanctions imposed by the United States on these two nations has
resulted in a massive reduction of those imports.
“We stopped receiving crude imports from Venezuela for last three, four months
now. Every day, we used to get close to about 375,000 bpd from Venezuela,” he
noted.
According to the Reuters article, the OPEC’s share in India’s oil imports fell
to historic lows between April 2020 and January 2021 after the body took a
decision recently to extend production cuts through April.
Guyana, with US oil giant ExxonMobil as the operator, began producing oil on
December 20, 2019 in the Stabroek Block. Guyana’s oil revenues are being banked
in the New York Federal Reserve Bank, where it is earning interest.
To date, the country has received payments for five lifts of oil. The most
recent payment was made earlier this month for a 997, 420-barrel oil lift in
February from Liza Destiny. That lift was valued at US$61 million, taking the
total amount received to date for Guyana’s share of oil to US$246.5 million.
Inclusive of royalties, the total in the Natural Resource Fund account now
stands at US$267.6 million.
The Natural Resources Ministry reported that Guyana received its first payment
of US$54.9 million for an oil lift dated February 19, 2020. Guyana’s second
lift, on May 21, 2020, was valued at US$35 million. The third lift, which
occurred on August 9, 2020, was valued at US$46 million, while the fourth lift
occurred on December 9, 2020 and came in at US$49.4 million in value.