The PPP/C government believes that a “nonsensical” inclusion for evaluation of tender documents set by the former APNU+AFC administration as part of the criteria for bidders wanting to market Guyana’s oil, led to 28 of 29 companies being recently deemed non-responsive.
Government is now mulling the removal of the criteria and inviting all companies which submitted proposals, to resubmit their documents. At a press conference on Tuesday, Vice President Bharrat Jagdeo said that the process of selecting a company will be completed by the time this country’s next 1 million barrel share comes around again, sometime in April.
Russian company, Lukoil Pan Americas LLC was the lone company which met the criteria set out. That company is a subsidiary of marketing and trading company LITASCO SA.
But government feels that the 28 other companies were short-changed because of an evaluation process that disqualified top traders.
“The criteria, we believe, that was set by the energy department, resulted in the evaluators having to disqualify 28 of the 29 basically so they only had one valid bidder. It is almost impossible [to have that],” Jagdeo said
“Eventually, the Tender Board [National Procurement Tender and Administrative Board] said no, and we said no. You cannot. Shell and all the others were disqualified although they sold all the shipments before. Shell, Hess, BP, all were disqualified because of the nonsensical document that was put out, really. It would not be a competitive process,” he argued.
In late September, twenty-nine companies responded to government’s retender for Request for Proposals (RFPs) to market Guyana’s share of oil from the Liza Destiny FPSO and this was reported in the October 1st 2020 edition of the Stabroek News. The submissions followed an announcement by the PPP/C government, after taking office in August that it had scrapped the shortlist of 19 companies, from the 34 that had participated in the first process under the APNU+AFC government back in April of 2020.
The tenders submitted in April came while the country was in the middle of a political crisis and awaiting results of the March 2nd General Elections.
Noted in the PPP/C’s announcement was that the new process would see the omission of a prequalification phase.
Jagdeo, who had made the announcement on behalf of the government, had explained that the decision was made to give companies that had not submitted a proposal, a chance to do so as some may have withheld their participation as the process had been launched by a caretaker government at the time.
When Minister of Natural Resources Vickram Bharrat was questioned about the new process and submissions received, he had said that it was demonstrative of the interest of companies in this country.
Bharrat had also said that in addition to the interest shown by the large number of companies, Georgetown has received propositions from other governments that want to purchase crude directly for their country’s use. He said that the process for securing a company to sell the crude to, as per the notice, will proceed as government explores options of selling directly to governments. “A few governments have indicated their interest in buying crude for their country and that is something at the policy level we may explore in the future,” he said.
Jagdeo echoed the position of state-to-state interests as he said that it would also be explored since getting the most revenue was what was important at this time.
“We are now discussing whether we just go and invite the same companies and change the so-called prequalification criteria; because if the criteria are set up in a way where you can disqualify a person for lack of technical capacity who is already selling your oil, then something is wrong with that,” he said.
“So either a simplified prequalification criterion, where you can say ‘all of these companies are capable of marketing’, then it’s just a matter of best price. In that context, we can look at people who want to buy the oil directly. For us, it is the best price for our oil because there are hundreds of companies who can take this oil and sell it,” he stressed.
Jagdeo did not go into detail as to which state or states expressed interest in oil here, but last year this country saw a visit from United Arab Emirates representatives to discuss business opportunities.
And with Hess Corp selected as the marketer of the last oil share and which sold the quantity via spot sale, Jagdeo explained how the decision was derived at to select the company.
“The last two shipments, what we would have had to do was to get three bids from Hess, Exxon and CNOOC. The bid that won was Hess. They gave the best terms. We don’t know about the shipment in February but all are selling at Brent preference. All are selling at the same price but the difference is in marketing commission etcetera,” he said.
