Make all oil sale decisions transparent-IMF

From 2015 to now, the International Monetary Fund (IMF) has played a key advisory role to the Government, particularly on oil related matters.

The crucial development partner has impressed upon the government, the need to carefully monitor every aspect of the process to sell Guyana’s oil as significant revenue is at stake. The IMF even stressed that the sale of the Stabroek Block oil will require significant decisions to be made based on technical experience and expertise.

But in all its dealings, the Fund categorically stated that all decisions and activities regarding the sale of Guyana’s oil must be “transparent” and “undertaken in the public’s interest.” Its advice in this regard was outlined in a special report prepared mere months ago.

In that document seen by this newspaper, the IMF’s Fiscal Affairs Department said that since the sale of crude could bring significant revenue, establishing an optimal selling price is key. It noted however that this requires professional expertise, careful understanding of the process, and oversight.

Expounding further, the Fund’s Department said that crude oil sales are made through a network of buyers who are known to the trader. The trader then reaches out to potential buyers whom they have identified and are familiar with.

The Fund was keen to note that the government must be vigilant and monitor as well as control the selection of buyers, terms of sale, and the transfer of revenues to ensure that those decisions and activities are transparent.

Earlier this week, the Energy Department came in for much criticism after the nation learnt from an international news report that it would be meeting with several refiners to sell three million barrels of Guyana’s oil.

When challenged to say why the Department was not forthcoming about this weeks ago, Energy Department Head, Dr. Mark Bynoe, said that there was no intention to bring this to the media’s attention so early.
He said that the nation would have been informed at the conclusion of the deals. Dr. Bynoe said that doing otherwise could harm the government’s negotiating position.

Dr. Bynoe said that the face-to-face bidding with companies which includes the likes of ExxonMobil, Hess Corporation, CNOOC/NEXEN, British Petroleum, Chevron, Shell, Total, and ENI for the first three lifts of Guyana’s crude, will help to set national benchmarks.

He told the media that the companies were selected on the basis that they have a global refining footprint and integrated oil value chain as well as being in a position to support all operating procedures for the three cargoes.

He said, too, that given Guyana’s inexperience, coupled with the impending early dates for Guyana to take its share, which is February 2020, this introductory phase with selected companies was the best option.
Dr. Bynoe said, “We are seeking to protect the value of the resource by going this route. The true economics is still to be determined and stabilization will come after several lifts.

“Guyana also needs to develop a quality and quantity standard. All of these are considerations which guided the decision that was taken. We are committed to doing this in a transparent and accountable manner.”