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RPT-India in talks with Guyana for long-term crude supply -minister

Mon, 26th Apr 2021 00:00

(Repeats Saturday's story to additional subscribers)

By Neil Marks and Nidhi Verma

GEORGETOWN/NEW DELHI, April 24 (Reuters) - India, the
world's third-largest crude 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.

India's oil demand has risen by 25% in the last seven years,
more than any other country, and officials there have pledged to
use the country's position as a leading purchaser as a "weapon"
in an effort to keep prices low.

New Delhi is already exercising its growing clout in the
crude market. It viscerally opposed a decision by the
Organization of the Petroleum Exporting Countries and its
allies, known as OPEC+, to extend production cuts that have
lifted the price of oil, and is seeking to diversify its
purchases away from top producer Saudi Arabia.

State refiners plan to buy 36% less oil from Saudi Arabia in
May than normal, sources told Reuters, and the country is now
attempting to swap out Saudi supply with new origins like
Guyana.

Private Indian refiner HPCL-Mittal Energy Ltd
purchased India's first-ever cargo from Guyana this month, but
the talks have taken place on a government-to-government basis.

"India is interested in taking Guyana's share of its crude,
based on mutual agreements, as part of its crude source
diversification across the world," said one source with
knowledge of the talks, who spoke on the condition of anonymity.

The two parties are still negotiating pricing, said the
person, adding that the crude would be processed by state-owned
refineries in India.

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.

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.
(Reporting by Neil Marks in Georgetown and Nidhi Verma in New
Delhi
Additional reporting and writing by Luc Cohen in Caracas
Editing by Marianna Parraga and Marguerita Choy)

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