India in talks with Guyana for long-term crude oil supply contract – minister

RIO DE JANEIRO, BRAZIL – India, the world’s third-largest crude oil consumer and importer, has approached Guyana’s government about a possible long-term deal to buy the South American country’s oil, a Guyanese official said.

India has expressed interest in buying one of the 1 million-barrel cargoes Guyana’s government is entitled to in order to test the crude in its refineries, according to Guyana’s Natural Resources Minister Vickram Bharrat. If the crude is compatible, the parties could begin talks on a long-term arrangement

Bharrat said pricing was the “most important” factor for Guyana in any potential deal. “First and foremost is us getting the best price for our crude,” he told Reuters in a telephone interview.

Guyana has become the world’s newest energy hotspot after a consortium led by Exxon Mobil Corp began to produce light crude at the offshore Stabroek block in late 2019.

Read: The South American Guyana-Suriname Basin Could Be The Last Big Oil Boom

But with no domestic refining nor state oil company, Guyana has relied on private companies like Hess Corp and Royal Dutch Shell PLC to market its share on a spot basis. President Irfaan Ali’s government has relaunched a search for a long-term partner to market its share, but has not yet selected a firm.

Bharrat said the government planned to re-launch the search for a marketing firm “soon.” He said there was no guarantee the government’s next cargo – which he said is due in June but may be delayed due to mechanical issues that have reduced production levels – would go to India.

Long term oil export deals negotiated between governments have been common in some South American oil-exporting countries in recent decades. Venezuela and Ecuador, for example, have supplied large quantities of crude to China under such long-term deals.

Guyana and India have strong historical and cultural ties. A large portion of Guyana’s population of around 750,000 is of Indian descent, and Ali’s People’s Progressive Party – which won parliamentary elections last year – is traditionally associated with the Indo-Guyanese population.