Guyana yesterday invited expressions of interest to market its share of oil from the Stabroek Block offshore operations for 12 months.
The Department of Energy (DoE) advertised in Stabroek News for Expressions of Interest for the provision of marketing services for its share of crude and made it clear that it would not entertain face-to-face meetings with any of the bidders.
“…. Firms may request clarification up to Seven (7) days before the EOI submission date Thursday, March 12, 2020. Response to all request for clarifications will be posted on the following website: www.motp.gov.gy, by March 7, 2020 at 09:00hrs. No face-to-face meeting will be permitted or entertained by the Department of Energy,” the advertisement also states.
Last year, the DoE had been flayed for engaging in hurried face-to-face meetings with potential buyers of Guyana’s first oil shipment.
In July of last year, DoE Director Dr Mark Bynoe had said that it would go to tender, either during the then current quarter or the next, for “a fee-based marketing service” to market its share of crude oil from expected oil production.
However, on December 13th 2019, financial news service Bloomberg reported that government had sent correspondence to refiners around the globe inviting them to bid for three million barrels of Liza Blend crude, which this country began exporting this year.
There was no prior announcement of the planned bidding, and in the wake of the report, the DoE rushed to explain the nature, and details of its plans, with Bynoe saying that its intention was to conclude the process before going public in order to protect government’s negotiating position.
Government’s argument did not fare well with the public and it faced scathing criticisms over the move, which many associated with similar secrecy to its signing of the 2016 renegotiation of the Production Sharing Agreement it has with ExxonMobil and partners for the Stabroek Block.
“The decision was made after multiple rounds of consultations internally. There are some things we will speak to at the beginning, during, post and some we won’t be able to speak on at all… What we were aiming to do was to come to you when the matter was concluded not during because what it can do is weaken the government’s negotiating position. It doesn’t help for us to be conducting commercial business through the media,” Bynoe had contended as he defended the decision taken.
“So it was never the intent for Guyana to be shielding what is happening here. I was hoping that we can have a wrap-up here where we can say to you this is what was done,” he added.
Shell Western Supply and Trading Limited, a subsidiary of international energy company Shell, operating out of St. Michael, Barbados got the contract and Guyana would have already received its first lift.
However, it is still unclear what price was paid and how and when the money for those sales would be transferred to the state.
‘Scope’
And as it prepares to select a crude marketer, the DoE gave a background to why it was seeking the needed services, as it explained the contract period of 12 calendar months and gave a detailed scope of services.
“December 20, 2019 marked a historic milestone for Guyana, as ExxonMobil and its partners produced the first commercial crude from the Liza field, located approximately 120 miles offshore the coast of Guyana in the Stabroek Block. The output from the first phase is expected to reach a capacity of up to 120,000 gross barrels of oil per day (bdp), utilizing the Liza Destiny Floating Production Storage and Offloading (FPSO) Vessel. The Stabroek Block is expected to produce up to 750,000 bpd by 2025,” the DoE explained as the background.
“Most oil producing countries receive a large portion of their revenue from selling the state’s share of oil production. Usually, at the centre of these transactions, is the national oil company (NOC) with a responsibility to sell this oil, and in the absence of a NOC in Guyana, this responsibility must be managed by the Department of Energy (DoE), to sell the oil to International Markets, pursuant to the Petroleum Sharing Agreement dated June 27, 2016,” it added.
Marketers bidding for the contract will have to meet stringent criteria as laid out in the scope of services and mandatory documents and experience.
“To market successfully the Government’s Crude Oil Entitlement, with a Minimum Production Rate of five (5) Lifts per annum, Specifications as per below: (i) Crude: Liza Blend Crude Oil, … (ii) Delivery: Liza Destiny FPSO, (iii) Cargo size: 1,000,000 bbls at 60F, (iv) Percent Tolerance: +/- 5% Buyer’s Option subject to Terminal Acceptance (v) Total Quantity: as determined by Petroleum Sharing Agreement dated June 27, 2016. To provide support to DE in all operating and back office responsibilities of managing these crude sales and each individual lift,” the terms state.
‘Support’
The successful marketer is expected to also support the DoE in the first year of introduction of the grade in multiple geographies and refinery systems and must work closely with the agency in understanding the behaviour and yields of the Liza Blend and how these affect pricing differentials while advocating for any operational considerations that may affect the pricing of the crude.
Noted too is that the company will have to conduct training sessions for DoE personnel, in matters relating to Crude oil Supply and Trading fundamentals, and more specifically, those relevant to the Liza grade pricing.
For the DoE, the marketer must use all reasonable efforts to provide relevant information, documentation and or training in a timely manner for its personnel.
The company itself has to demonstrate that not only is it reputable but its directors have not been convicted of any crime or fraud.
It is why the DoE says that the marketing firm must demonstrate, in its submission, that it has at least 5 years’ experience in Crude Oil marketing and trading, holds a valid Certificate of Incorporation, provide certified true copies of Memorandum and Articles of Association of the company and/or similar statutory documents and produce a company profile showing the company’s capabilities.
All bidders are also expected to provide on their company’s letterhead, contact details of the company including the name of authorized contact person(s), official address, email and telephone number (s), and details of the bidder’s volume of Crude oil trading and marketing Volumes by geography over the last 5 years and the company’s annual Turnover. The latter has to be shown either by submitting its Audited Balance Sheet with Profit and Loss Accounts or a Certificate issued by a practicing Chartered /Cost Accountant( with Membership Number and Firm Registration Number). The Company’s Tax Clearance Certificate for the last three 5 years must also be submitted along with details of previous experience in introducing a new Grade in the market, statement of Business Integrity Code of Conduct and the company’s HSE Policy and records over the last 5 years.
The DoE wants the company to also make provisions to allow it to verify all claims made in submission, and also, to verify that the bidder’s organization is not in receivership, nor the subject of any form of insolvency of bankruptcy proceedings or the subject of any form of winding up petition or proceedings.
A written statement confirming that the Bidder does not have any Director who has been convicted in any country for a criminal offence relating to fraud or any financial impropriety or criminal misrepresentation or falsification of facts relating to any matter must accompany the tender documents.
And if the bidder has a pending matter, the DoE says that a written statement giving details of any Pending Litigation the bidder may or may not have has to be attached to the documents.
All bidders must know that their failure to provide any of the listed documents or information with requisite proof(s) may result in the EOI not being considered for the shortlist or pre-qualification.
Firms will be evaluated in accordance with set out procedures in their submission of a Technical Expression of Interest (EOI) and Evaluation of EOI and creation of a Shortlist.
Since the process is tiered, only shortlisted companies will be invited to submit Full Technical and Commercial Proposals.
Bids must be in two hard copies, in a sealed envelope clearly marked: Provision of Marketing Services for the Cooperative Republic of Guyana’s Oil Entitlement from the Lisa Destiny FPSO Vessel – Ref. No. 2020-SV-ICB01. Also, an electronic non-editable copy to be included on a thumb drive as the DoE says that in case of any discrepancy between the hard and the electronic copies, the hard copy will prevail.
The EOI’s must be addressed to : The Chairman, National Procurement and Tender Administration Board, Ministry of Finance Compound, Main & Urquhart streets, Kingston, Georgetown, Guyana and delivered to the said address before 3pm on March 12th 2020.