Tullow Oil and the Vitol Group have issued a joint statement to dispel some incorrect media coverage relating to the value of the country’s new crude oil treasure, the Jubilee Field.
Though they admit that crude oil sales and contracts are private and confidential, and therefore it is not customary to disclose full details, they however as producers and marketers of the new crude want to address the points made.
Tullow Oil and the Vitol Group can confirm that the price achieved was well in excess of US$90 per barrel, with a small differential linked to the dated Brent crude price index. The first Jubilee cargo was shipped to Europe on MV Spike, a double-hulled tanker built in 2010.
They indicate that it takes a while for the market and, refiners in particular, to assess the fair value of any new crude oil since ultimately its value reflects the actual yield and quality of product that a refiner obtains as compared with its formal technical and paper yield.
“While we can’t disclose specific details of the actual price obtained for the first sale, as these details remain confidential, there was significant interest in buying the new Jubilee crude from at least four major international buyers.”
Daily prices linked to an index can move both up and down, as is the case with all crude grades worldwide. The use of the word “discount” when applied to an index price at the time of a sale merely indicates its relative value at that actual moment in time, and this is a complex but well-understood relationship in oil markets.
It is totally different and should not be confused with the use of the word “discount” as in “sold below its true and fair market value”. “We continue to see strong interest from refiners and traders for the new Jubilee crude, which will contribute to meeting the growing global demand for energy.”