Bharrat Jagdeo, the Vice President of Guyana, has said that his country has refused to sell crude oil to India at a discount, insisting that any sale needs to be at a commercial rate.
Guyana is an up-and-coming player in the global oil market, with it having tripled its oil production in the last year alone. Further production projects are already in the pipeline, and a further 14 offshore blocks are set to go up for auction later this year.
While ExxonMobil, the maker of the Mobil SHC range of gear oil, and its partners are currently responsible for all oil production in Guyana, about 12.5% of the produced oil goes to the Guyanese Government, which is then marketed by BP under a one-year contract.
India reportedly wants a discount to compensate for the higher cost of transporting crude from South America, compared to closer producers like Saudi Arabia. Reuters quotes a source familiar with the thinking of traders in India as saying:
“Guyana crude is costly for us because of high freight. Instead of paying a high freight for their oil, we will prefer to buy oil from the Middle East and east and west Africa. Without concessions their crude doesn’t make commercial sense for us.”
Despite not reaching a deal on oil, Jagdeo said that his country would continue to cooperate with India in other areas like health and agriculture. Indian firms are also free to participate in the upcoming competitive auction for 14 offshore blocks.