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7/24/2019 LatAmOil Week 24
1/19
Issue 568 16June2015 Week 24
Sea change on subsalt Opponents and allies o Brazils ruling party have united to champion a bill
that aims to end Petrobras subsalt obligations.
Hotter water Venezuela and Guyana have locked horns afer ExxonMobils recent offshoreoil discovery in waters long contested by the two countries.
Everything must go BPZ Energy plans to sell its Peruvian assets as part o its process o filing or
Chapter 11 bankruptcy protection.
Competition call Chevron has said more competition is needed to put Argentinas biggest shale
play, Vaca Muerta, into mass production.
7/24/2019 LatAmOil Week 24
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COMMENTARY 3
Brazils subsalt policy may be reversed 3
Venezuela, Guyana lock horns over
contested waters 4
PIPELINES & TRANSPORT 6
Amerisur signs deal for Ecuador-
Colombia pipeline 6
INVESTMENT 6
Argentine province to launch block
tender in July 6
Brazils woes may be
golden opportunity 7
BPZ to sell Peruvian assets 7
Investors show muted interest in
PDVSA asset 8
PERFORMANCE 9
Skanska exits LatAm following losses,
corruption scandals 9
POLICY 9
Argentina helps gas utilities in bid to
lift output 9
Brazil local content rule maintained for
next auction 10
PROJECTS & COMPANIES 11
Chevron calls for more Vaca Muerta
competition 11
YPF makes Vaca Muerta
gas discovery 11
Brazil announces new subsalt giant 12
NEWS IN BRIEF 12
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LatAmOil 16 June 2015, Week 24 page 3
Have a question or comment? Contact the editorRyan Stevenson ([email protected])
Copyright 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Is Brazil about to attempt a 180-degree
turn in its subsalt policy? Yes, if its
senate has its way. The country is
currently wallowing in a profound
political and economic crisis and the oil
sector is a central element to both.
The fallout of the Car Wash corruption
scandal in Petrobras has undermined
President Dilma Rousseffspolitical
standing. Hundreds of thousands of
Brazilians have taken to the streets to
protest against the corruption of her
ruling Workers Party. Her coalition
allies, sensing her and her partys
weakness, have turned on her.She now increasingly appears a
hostage of Congress, while her party
comes across as a dissident within its
own government.
This political frailty is exacerbated by
the presidents mishandling of the
economy, which is experiencing a
deepening recession. Her many economic
mistakes make it difficult to single one
out as key to ending the boom presided
over by her predecessor, Luiz Inacio Lula
da Silva. But, again, oil is a centralelement.
On the back foot
Losses stemming from graft at Petrobras,
the burden of Rousseffs ruinous fuel
subsidy policy on the company and the
current chaos in the oil services sector
owing to the corruption investigations
have all forced the industry to retrench.
Petrobras is slashing investment as it
downsizes in order to rebuild its financial
health and corporate reputation, while its
suppliers face years of legal tangles as a
result of their participation in the plot
with politicians to shake the major down
for billions.
But, ironically, this conjunction of
crises has also created an opportunity for
the oil sector. With Rousseff weakened,
and the Brazilian energy industry in a
mess at a time of global downsizing, her
opponents are moving to repeal one of
her signature achievementsor, as it is
increasingly viewed, failures of
judgement.
Brazils Congress is moving to reshape
the oil legislation that Rousseff designed
to govern the development of the subsalt
reserves. The legislation, which demands
that Petrobras be operator of all subsaltblocks with a minimum 30% stake, was
imposed in 2009 by Rousseff over the
objections of Petrobras itself and the oil
industry.
The new production-sharing agreement
(PSA) legislation is now blamed for
slowing down the development of the
subsalt reserves, as offering up blocks
would force Petrobras to participate in
each one and increase the financial and
operational burden on the indebted
company.
By reserving the lions share of the
subsalt for Petrobras Rousseff has
managed to diminish the attraction of
Brazils so-called passport to the
future, with minimal interest in the
Libra fieldthe first and to date only
auction held under the new legislation
that attracted but one bid at the minimum
price set by the regulator.
It is this legislation that is now being
targeted by a bill making its way through
Congress.
Shifting allegianceWhen the legislation was passed
Congress was the lapdog of former
president Lula. But sensing the current
presidents weakness it has rebelled and
its leadership now openly works against
her on numerous fronts, even when it is
nominally allied to her government.
This is best illustrated by the role of
Senate President Renan Calheiros. A
close associate of Lula, he was an
important ally of Rousseff during her
first term, but has now all but formallybroken with her. He is helping shepherd
a bill through the upper chamber that was
written by opposition leader Jose Serra.
Serras central aim is to remove the
obligation for Petrobras to participate in
every future subsalt block.
Obliging Petrobras to be present in
every new subsalt well with a
participation of 30% is an absurd demand
in the context of the current crisis, he
said when promoting the bill.
COMMENTARY
Brazils subsalt policy
may be reversedWith both the president and ruling party weakened by the countrys ongoing corruption
scandals, a bipartisan group is looking to overhaul contentious subsalt policy
y Tom Hennigan
The senate is preparing to vote on a bill aimed at ending Petrobras subsalt obligationsPetrobras is heavily in debt and does not have the resources to operate every subsalt blockThe bill is likely to succeed given its support by the ruling Workers Partys allies and opponents
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LatAmOil 16 June 2015, Week 24 page 4
Have a question or comment? Contact the editorRyan Stevenson ([email protected])
Copyright 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
It was already inappropriate before
the crisis. Now, taking away the
obligation does not signify that Petrobras
will not participate; it will participate
when it has resources, when it seems a
good business, when it is possible.
Renans backing means the proposal is
a serious one with a real chance of
changing the law.
This change would be welcomed by
the oil industry, which has lobbied hard
but fruitlessly against the new legislation
and would also likely be welcomed by
many in Petrobras, many of whom had
argued privately against the legislation
but were shouted down by Rousseff.
Serras bill should be voted on this
week in the full senate, where it has beenfast-tracked by Renan in his attempt to
embarrass Rousseff. As well as the
opposition, among those backing the
proposal are the members of Renans
own PMDB party, the main coalition
partner of Rousseffs Workers Party.
As the largest party in Congress, the
PMDBs support leaves the bill with a
strong chance of being passed. The
Workers Partys leader in the senate,
Humberto Costa, has promised to resist
the new bill but admits that unless there
is a largeand so far non-existent
social mobilisation against it the
legislation will pass.
But even within the Workers Party
there is backing for Serras repeal
movement.
Dissention in the ranks
Notably, Senator Delcidio Amaral has
come out in support of the proposal. As a
former Petrobras executive he is
considered one of the Workers Partys
experts on energy. With the president so
politically weakened she has been unable
to impose party discipline in support ofone of her signature policies. Even her
recently appointed energy minister,
Eduardo Braga, has come out in favour
of changing the legislation.
Not even in Petrobras is there
consensus in relation to being exclusive
operator and I thinkbut this is a
personal opinion as a senator, not as
leader of the governmentit is
fundamental that we debate this
question, said Amaral last week.
Even if the senate passes Serras bill
the legislation would face a vote in the
lower house, though this has proved even
more rebellious in recent months.
Should it pass there Rousseff would
need to use her veto to defend a policy
that only she still seems to believe in.
And given the current weakness of her
position it is possible that even that could
be voted down by Congress.
Thus Brazils oil industry and the
multinationals who felt the legislation
was designed to restrict them to a
secondary role in the subsaltcould yet
see the current mess in the sector play
out to their advantage if Congress votesto relieve Petrobras of its onerous
obligations in the subsalt.
It would be a classic example of
turning a crisis into an opportunity for
everyone, except Rousseff, who faces
another humiliating defeat to add to the
collection she has been accumulating
since her somewhat pyrrhic victory in
October 2014s presidential election.
A century-old territorial dispute between
Venezuela and neighbouring Guyana
seems set to escalate following
ExxonMobils offshore discovery of oil
in the contested Essequibo region.
Venezuelan President Nicolas Maduro
poured oil onto the flames in May when
he issued a decree extending his
countrys claim over the disputed waters
to include the region where the super-
major had made its discovery. He also
warned the company to stop its activities.
Venezuelan Foreign Minister Delcy
Rodriguez later echoed Maduros
warnings in a televised interview, saying
that the newly elected Guyanese
government was seeking to provoke her
country, supported by the imperial
power of an American transnational
ExxonMobil.
Rodriguez said the 1966 Geneva
Agreement, which was signed by both
countries and the UK, prohibited any
economic activities in contested
territories.
The territorial dispute itself dates back
to 1899, when an arbitration panel
awarded the Essequibo region to British
Guiana, which gained its independence
in 1966. Essequibo makes up three-fifths
of Guyana and is still claimed by
Venezuela, which includes it as a zone
in reclamation on its maps.
COMMENTARY
Venezuela, Guyana lock hornsover contested watersThe discovery of oil in waters claimed by both countries has upped the ante of their
dispute
y Peter Wilson
ExxonMobil has found oil offshore in the contested Essequibo regionGeorgetown has awarded exploration rights to the area despite Caracas objections
Venezuelan sabre rattling will likely have little effect beyond scoring political points at home
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LatAmOil 16 June 2015, Week 24 page 5
Have a question or comment? Contact the editorRyan Stevenson ([email protected])
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All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Rodriguez added that until there was
an accord there can be no unilateral use
of these waters.
Hot water
Guyana, which imports most of its
petroleum products from Venezuela
under the Petrocaribe initiative, has
called on United Nations Secretary
General Ban Ki-Moon to mediate in the
dispute.
ExxonMobil has given few details
concerning its oil discovery in the
offshore Stabroek tract, but Venezuela
has twice warned the company
previously not to explore in the region.
Both times Georgetown strenuously
objected, claiming that Caracas wasinterfering in its sovereign affairs.
ExxonMobil began exploratory drilling
in March in a US$200 million project.
Tensions have been on the rise since
2012, when Guyana began granting
offshore exploration rights to various oil
companies, including Anadarko
Petroleum and ExxonMobil.
In 2013, Venezuelas navy seized an
exploration vessel in the disputed waters
that was carrying out a seismic study for
Anadarko Petroleum. The company hasrights to the Roraima tract, which is west
of Stabroek. More than a dozen
companies have been granted rights,
including Chinese companies that are
partners with Venezuelas state-owned
PDVSA.
While Venezuela has periodically
questioned the Essequibo award,
claiming that the judges
were bribed, Caracas had
sought to normalise ties
during the late Hugo
Chavezs presidency.
Venezuelas state airline
began weekly flights to its
neighbour and trade
increased. Guyana also
joined Venezuelas
Petrocaribe initiative, and
presently receives about
8,000 barrels per day of
fuel.
Petrocaribe was formed
in 2005 to cushion
Caribbean and Central
American countries from soaring energy
prices, while giving them the option to
pay for gasoline and other products with
goods and services. The initiative allows
members to defer payments for up to two
years, and provides long-term financing
of up to 25 years. Participating countries
can access subsidised financing when oil
prices are above US$40 per barrel.
Guyana had been partially paying for its
cargoes in rice.
Many of Petrocaribes members,
several of which also belong to the
Caricom pact, have publicly supported
Guyana in its dispute. These supporters
include a traditional ally of Venezuela,
Cuba.
What next
NewsBasebelieves that Maduro will fan
the flames of the conflict with his smaller
neighbour while falling short of any
military action.
The dispute allows Maduro to play the
nationalism card, diverting public
attention from Venezuelasgrowing
economic woes that have eroded support
for the president and his United Socialist
Party of Venezuela (PSUV). Inflation is
raging and the Central Bank has notreleased any figures for six months, with
analysts saying the inflation rate is likely
to end the year at more than 150%.
Food and medicine shortages continue:
the countrys medical association now
estimates shortages affect 70% of all the
countrys medicines.
Crime is soaring as economic activity
contracts; GDP is expected to fall by up
to 7% this year.
Given that congressional elections
must be held before the end of the year,
the Essequibo conflict carries potential
political gains for Maduro. But there are
pitfalls to this strategy.
By seeming to bully its much smaller
and poorer neighbour, Venezuela is
likely to lose goodwill and support from
Central American and Caribbean
countries. With the members of
Petrocaribe in its pocket, Venezuela has a
near majority in the Organization of
American States (OAS).
If the conflict worsens, Venezuela
could lose important votes, especially if
the OAS moves to investigate humanrights violations in the South American
country over the detention of political
prisoners. So far, Venezuela has been
able to deflect those objections, but a
prolonged dispute with Guyana could
draw unwelcome attention.
Maduro also has limited room to
manoeuvre.
Any sign of weakness on the issue
could hurt his standing with the military,
whose support he relies on to stay in
power. An attempt to compromise wouldalso play into the hands of the opposition
as elections near.
As such,NewsBaseexpects Maduro to
continue to exploit the issue for political
gain, pledging to defend Venezuelas
claims only to make more of a diplomatic
effort further down the road.
What also seems likely is that
Georgetown will try to
develop the zones
hydrocarbon reserves,
counting on the support of
its Caribbean neighbours
to stay the threat of
military action from
Caracas.
The Essequibo conflict
has festered for nearly 50
years and there is little
reason to believe it will
be resolved anytime soon,
especially given
Maduros weak political
standing.
COMMENTARY
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LatAmOil 16 June 2015, Week 24 page 6
Have a question or comment? Contact the editorRyan Stevenson ([email protected])
Copyright 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
South America-focused Amerisur
Resources has signed a pipeline deal with
Ecuadors Petroamazonas for the
construction of the Ecuador-Colombia oil
pipeline.
The company said it expected the
interconnector to become operational in
the fourth quarter of this year.
The deal also permits London-listed
Amerisur to use the pipeline from the
Ecuadorian border to the point of
connection with the Amazonas pipeline
network (RODA), the firm said.
Petroamazonas, which operates
RODA, has a minimum transport volume
commitment of 5,000 barrels per day of
oil through the new interconnector.
Todays news is a very significant
step forward as we progress the
interconnector pipeline and we are
delighted with the support shown in both
Ecuador and Colombia towards the
project, said Amerisurschairman, Giles
Clarke. Civil works within the Victor
Hugo Ruales central processing station
will begin in the next few days and we
are confident that the pipeline will be in
operation in Q4 2015.
Amerisur currently has interests in four
projects in Colombia: Platanillo, Fenix,
Put-12 and Put-30.
The 14,341-hectare (143-square km)
Platanillo block is located in the
Putumayo Basin, in southern Colombia.
Amerisur has successfully drilled 12
wells there since 2012.
In 2014, the Cardiff-headquartered
company built a new pipeline to connect
production from the Platanillo field in
Colombia to Ecuador, easing production
capacity constraints.
The new 10-km pipeline links the
Platanillo field to the Victor Hugo field.
As a result it connects the existing
Cuyabeno gathering system to the Trans-
Andean pipeline, which delivers oil to
the Pacific coast. Amerisur then exports
the crude from the port of Esmeraldas.
As well as Colombia, Amerisur has
assets in the San Pedro permit in
Paraguay. The San Pedro permit covers
around 800,000 hectares (8,000 square
km) in the northwest of the Parana Basin,
in the east of Paraguay near the border
with Brazil.
Amerisur is the largest of around 10
independent explorers that have been
working in Paraguay in the last few
years.
Paraguay is attempting to
commercialise large shale resources in
the Chaco-Parana Basin, an area which
has been explored in the last 50 years but
without any commercial discoveries.
More than 40 wells were drilled in the
last half century.
ArgentinasSalta Province will launch an
international tender for the Desecho
Chico and Chirete Norte blocks in July.
Both are expected to hold conventional
prospects.
Argentinas state-run YPF and Beijing-
based independent operator Petro AP
have already submitted expressions of
interest to provincial authorities.
Although bidding officially opens in
July, YPF is already on the list of
participants for the Desecho Chico
tender.
The state company submitted
documents expressing its interest in the
block on March 2. According to local
rules this gives the firm a head start in
the process.
If its Desecho Chico bid is successful,
it will mark the first time YPF has
operated a site in the province since the
company was privatised in 1991.
YPFs interest in secondary oil-
producing provinces follows the launch
of an ambitious five-year exploration
plan in the wake of its renationalisation
in 2012.
The plan has prioritised reserves
growth and exploring less-developed
hydrocarbon areas by drilling 250 wells
between 2012 and 2016.
Saltas gas production fell 55%
between 2009 and 2014, moving the
province from second to fourth place in
terms of national production.
Petro AP submitted documents in May
expressing its desire to invest in Chirete
Norte, which is located on the border
between Salta and Formosa Provinces.
Chirete Norte was part of a larger
block awarded to Brazils state-run
Petrobras in 2006, before it was
subsequently broken up in 2013. In
March 2014, Petro AP and Formosa
Province-owned REFSA agreed on the
joint development of the Selva Maria
block. Petro AP is also already present in
Jujuy and Mendoza Provinces.
PIPELINES & TRANSPORT
Amerisur signs deal for
Ecuador-Colombia pipeline
INVESTMENT
Argentine province to launchblock tender in July
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LatAmOil 16 June 2015, Week 24 page 7
Have a question or comment? Contact the editorRyan Stevenson ([email protected])
Copyright 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Brazil represents a once-in-a-
generationinvestment opportunity,
according to partner and co-head of
Norton Rose Fulbrights Brazil practice,
Andrew Hayes.
Speaking at the firms Energy
Academy event, Hayes said the countrys
economic problems and corruption
scandal meant it was paradoxically an
ideal time to invest.
Brazils state-run Petrobras has been
embroiled in an investigation that has
reached all levels of the company, after a
kickback scandal was uncovered.
Company executives had been taking
bribes from construction firms, allowing
them to inflate contracts. The list of those
being investigated includes executives in
the company and presidents of some of
the countrys biggest engineering and
construction firms.
According to the majors financial
results, released in April, the total cost of
the corruption has reached US$2 billion.In a recent report by the World Economic
Forum, Brazil was in 135th place out of
144 countries when it came to the proper
use of public funds.
At the same time, Brazilian President
Dilma Rousseff has presided over a
major economic downturn. Brazil, as are
many other countries, is suffering from
the impact of lower oil prices and the end
of the commodities boom. Government
intervention made inflation, which is
now at almost 8%, worse.
The countrys GDP is anticipated to
shrink this year, while unemployment
and interest rates are up. As for currency
the real has lost 40% of its value so far
this year. The country is even at risk of
losing its investment-grade credit rating.
According to Hayes, right now the
government is desperate to attract foreign
direct investment (FDI) and it may be a
good time for investors to take a look at
Brazil, for several reasons.
First, according to Hayes, Rousseff,
who was president of Petrobras for most
of the time covered by the scandal but
managed to avoid impeachment, is now
no more than a figurehead. This means
that the countrys opposition PMDB
party is setting the agenda, making things
more market-friendly.
Secondly, the corruption scandal has
meant Brazilian access to capital hasdisappeared. Hayes said a number of
companies were going into insolvency
and were selling off all sorts of assets.
The executive said: I have it from
insiders that you can approach Petrobras
for any field and if itsa good enough
offer they will sell.
There are also a lot of opportunities to
be had in infrastructure: the countrys
spending in this sector has been sliding
since the 1970s. But Rousseff is now
preparing a package of concessions for
private investors to build railways, roads,
ports and airports.
Looking to the future, Hayes believes
that Petrobras will continue to be a
market giant despite the scandal. He said:
Ultimately it will be larger producer
than ExxonMobil, I have no doubt. It will
be at the very least among the top 3 in
the world.
The executive added that the
companys reserves base was enormous,
saying that geoscientists estimated 50
structures of 5 billion barrels each, and
concluded that for cost, the only place
better is the Persian Gulf.
Hayes predicted that the government
would remain the companys largest
shareholder. He said the new CEO,
Aldemir Bendine, appointed since the
scandal, saw great potential in
exploration and production and wanted tounbundle the companys downstream
assets. The company currently owns
power plants, which Hayes said would
take a great deal of work before they
could stand alone.
Hayes believes that the company will
have to allow more investment in the
upstream, as it does not have enough
manpower to manage by itself.
Peru-focused BPZ Energy has announced
the sale of its Peruvian assets as part of
its process of filing for Chapter 11
bankruptcy protection. The decision to
sell is pending approval by the US
bankruptcy court overseeing the
companys Chapter 11 case, BPZ said.
The firm, which filed for bankruptcy
protection earlier this month, is going to
attempt to sell all its assets in one single
transaction, it added.
Houston-based BPZ cited plunging
international oil prices as the reason for
seeking bankruptcy protection.
BPZ has licence contracts covering 1.9
million net acres (7,700 square km) in
four blocks in the northwest of Peru.
Operations at those blocks range from
early stage exploration to production.
In addition, the firm has a 51%
working interest in Block Z-1 with its
joint venture partner Toronto-based
Pacific Rubiales Energy, which holds the
remaining 49%.
INVESTMENT
Brazils woes may
be golden opportunity
BPZ to sellPeruvian assets
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Copyright 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
The companies are currently
undertaking development drilling at the
Corvina and Albacora fields in Block Z-
1. Along with Block Z-1, BPZ has 100%
working interests in three onshore blocks
Blocks XIX, XXII and XXIIIwhich
cover a total area of 1.6 million acres
(6,500 square km).
The company also has a non-operating
net profits interest in a producing
property in the southwest of Ecuador.
BPZs assets have a total value of
US$364 million and it has debt
amounting to US$275 million, the
company said in its Chapter 11 filing.
In November 2014, BPZ awarded T-
Rex Engineering and Construction a
contract to build two drilling platformsfor the Delfin and Piedra Redonda
prospects in Block Z-1. The platforms
are anticipated to be installed by the
middle of 2015.
A number of foreign firms have
retreated from Peru in recent years, citing
difficulties with indigenous communities
and the slow pace of projects.
In December 2014, Norways Interoil
transferred all its local operations to
Perus United Oilfields, following a
dispute with state-run Petroperu over the
operatorship of Blocks III and IV.
Canadas Talisman Energy and
Brazils state-run Petrobras have also
wrapped up operations in Peru in the last
few years.
Perus oil production has been steadily
declining since the 1980s, and the
government has spoken often of its needto return exploration to previous
levels.
In the face of weak oil prices and
repeated delays at the Petrocarabobo
heavy oil joint venture, Venezuelas
state-owned PDVSA has temporarily
shelved plans to sell an 11% stake
previously owned by Malaysias
Petronas.
PDVSA absorbed Petronas share in
2013 when the Malaysian company
abandoned the project, saying the
decision was part of a global asset
review. Industry officials said the
decision was a result of constant
disagreements with PDVSA over
taxes and the slow pace of the project.PDVSA now holds a 71% stake in the
project.
Petronas was one of several
minority partners in the
Petrocarabobo project, which has
been forecast to produce up to
200,000 barrels per day of light crude.
The project, which has a projected
lifespan of 25 years, will take extra
heavy crude oil, which has the
viscosity of tar, and process it into a
lighter blend via an upgrading facility.
The venture, formed in 2010, includes
Spains Repsol with 11%, IndiasOil and
Natural Gas Corp. (ONGC) with 11%,
Oil India Ltd (OIL) with 3.5% and Indian
Oil Corp. (IOC) with 3.5%.
PDVSA had hoped that Indian
independent Reliance Industries Ltd
(RIL) might take Petronas share, but this
is reportedly no longer expected.
Petronas had intended to send oil from
the project to a new refinery complex in
southern Malaysia.
Petrocarabobo has already started
initial production, but the lack of an
upgrader, which carries a price tag of
US$5.3 billion, means that much of the
projects oil will likely stay in the
ground.
When created, PDVSA forecast that
Petrocarabobo would produce upwards
of 480,000 bpd by 2018. But the
company is now predicting
400,000 bpd of production by
2019.
But even those projections aretoo optimistic for some. Repsol
told shareholders in 2014 that
production of 400,000 bpd would
only be reached in 2021. That
forecast may be pushed back
further still.
PDVSAs decision may be a
wise one: shares in Petrocarabobo
will likely increase in value as oil
prices recover. Until prices do rise,
interest is likely to be remained
muted.
INVESTMENT
Investors show mutedinterest in PDVSA asset
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Swedish infrastructure and oil services
company Skanska will wind down its
Latin America operations and exit the
region following disappointing financial
results and ongoing corruption
investigations in Brazil.
Skanskas costs in the region in 2014
exceeded its revenues by almost US$100
million, according to figures from its
most recent financial reporting. In
addition, senior Skanska staffers told
Argentine local press that the companys
stock had suffered as a result of
investigations into the companys
connection to corruption scandals
involving its Brazilian partners.
Citing an unnamed Swedish source,
local media said Corporacion America-
owned construction firm Helport and
Argentine industrial giant Panedile were
interested in Skanskas assets.
Argentinas biggest conventional oil
producer, Pan American Energy, is also
reportedly keen.
Skanska has good contracts, though
theyre yearlyrenewals and the oil
industry is lowering costs. But the
forecasts are positive, said one source
close to negotiations.
In April, Pan American signed a
US$137 million three-year extension
with Skanska for work related to Cerro
Dragon, Argentinas largestoil-
producing site.
The contract was a continuation of
current obligations rather than a new
undertaking, explained Skanska
representatives. This is in line with the
companys regional divestment position
over the long term.
Skanska reported a loss of around
US$61 million in its Latin American
operations in the second quarter of 2014,
the last time it released a detailed
statement for the region. Skanskas
remaining Latin American operations
have since been incorporated into the
companys central accounting.
Corruption allegations have also
bruised the companys reputation.
During the first quarter, there were
allegations regarding potential ethical
breaches in our Czech and Latin
American operations. I would once again
like to emphasise that we take any such
suspicions very seriously, said
Skanskas CEO, Johan Karlstrom.
This environment in South America,
with a lot of corruption, is of course very
difficult to work in, thepresident of
Skanska Latin America, Johan
Henriksson, told Swedish press.
Representatives of two of Skanskas
Brazilian business partners, including
construction firm Camargo Correa,
admitted to police investigations to
having bribed state-run Petrobras to
secure refinery and pipeline contracts in
Brazil.
Skanska is now internally auditing its
own dealings with local companies, said
Henriksson.
After years of keeping a lid on natural
gas rates, Argentina is allowing
distributors and transporters to raise them
in a latest effort to kindle investment in
exploration and production.
Last week, the Energy Secretariat
offered funds to distributors to shore up
their finances and allowed transporters to
increase rates for the second time in 14
years.
It made available 2.59 billion pesos
(US$286.47 million) to distributors,
saying they could use the funds to get up
to date in their payments to producers.
This is expected to reduce concerns of
a slowdown in exploration and
production, given that distributors owe
an estimated 1.5 billion pesos
(US$165.91 million) to producers.
The secretariat said the distributors
would be able to receive funds monthly
over 10 months, retroactive from March
1.
Metrogas, the countrys biggest gas
distributor, said it was considering
signing up for the funds, saying they
would help it cover spending and
investments while the rates it charges
consumers were renegotiated with the
government.
The negotiations are set to conclude by
the end of this year.
If Metrogas, which is 100% by state-
run YPF, and any other distributors
accept the funds, they must pledge not to
run up debts with producers again, the
secretariat said.
This is the governments latest effort to
address flagging gas production, which
has dropped to 115 million cubic metres
per day this year from a record 143 mcm
per day in 2004.
PERFORMANCE
Skanska exits LatAm following
losses, corruption scandals
POLICY
Argentina helps gas utilitiesin bid to lift output
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The drop has forced the country to halt
most gas exports and turn to Bolivia and
the global market for supplies, which
now meet about 20% of its 126 mcm per
day demand.
The government wants to return the
country to the energy self-sufficiency of
the late 1990s and early 2000s by
developing huge unconventional
resources in plays such as Vaca Muerta,
and distributor debts have been weighing
on investments in this area.
YPF is the countrys biggest producer,
with a 30% share, followed closely by
Frances Total and then BP-backed Pan
American Energy and Argentinas
Tecpetrol.
The secretariat added that it had
allowed the two main transporters,
Transportadora de Gas del Norte and
Transportadora de Gas del Sur, to raise
their rates by 44% and 69% respectively.
The transporters said this would push up
consumer gas rates by about 3%.
Argentina froze gas and other utility
rates after a 2001-02 economic crisis,
with the aim of limiting inflation. While
the low rates helped fuel an economic
recovery, they soon brought shortages as
companies scaled back spending on
declining profits.
In another bid to encourage drilling,
the government has raised wellhead rates
to US$7.50 per million British thermal
units (US$207.45 per 1,000 cubic
metres) for supplies from new
developments, up from US$2.50 per
mmBtu (US$69.15 per 1,000 cubic
metres) for output from older wells.
Despite heavy pressure from oil
companies, Brazils energy regulator has
maintained the onerous local content
requirement for companies bidding for
new exploration blocks in October.
The oil sector had been lobbying for a
change from the government, arguing
that the inability of Brazils industry to
deliver infrastructure on time and its
competitiveness on price demanded a
change in light of the plunge in the oil
price.
But in publishing details
of the 13th auction round in
non-subsalt assets ANL, the
energy regulator, maintained
the content requirement
despite growing sounds from
within the government that
changes could be made in
light of changes in the
sector.The regulator indicated to
the industry that because the
blocks on offer later this
year lie chiefly in shallow
waters or onshore, the local
content requirement would
not be as onerous as if they
were in deep waters.
Brazilian President Dilma
Rousseff is believed to have
argued that oil companies
are taking advantage of the
corruption scandal in Petrobras and the
drop in the oil price to argue for a rule
change they have always opposed and
which her government believes is crucial
to the revival of Brazil shipbuilding and
oil services industries.
In May, her new energy minister,
Eduardo Braga, said he was going to
perfect the local content requirement in
a clear signal to the sector that authorities
were ready to relax the requirements but
he was later slapped down by the
president, who said the policy was here
to stay.
The industry has warned that the
policy, coupled with the global
retrenchment in investment, will
diminish interest in the 13th round,
which the government hopes will be part
of its policy of stimulating investment in
order to counter the deep recession the
economy is suffering.
The previous two auction rounds
including the first of a subsalt asset under
new oil legislationwere both
quiet affairs blamed in part on
the diminishing attraction of
Brazil owing to onerous
government interference.
If anything, rather than
preparing to relax the local
content requirement, Brazils
government looks to be
hardening its enforcement of thepolicy.
The regulator has issued 15
fines this year to companies for
failing to comply with the
requirement, compared with just
two during the same period last
year.
Recent Royal Dutch Shell
acquisition BG Group alone
was fined US$275 million, the
same value as all the fines
imposed in 2014.
POLICY
Brazil local content rulemaintained for next auction
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An early entrant in Vaca Muerta,
Chevron said last week that more
competition was needed to put
Argentinas biggest shale play into mass
production.
Argentina already has skilled labour
along with pipelines, hydrocarbon
treatment plants and other infrastructure
in place, what is needed now is more
companies to ramp up drilling in the
play, said Chevrons general manager of
business development for exploration
and production in Africa and Latin
America, Carlos Aguilera.
Argentina has an opportunity not to
be wasted, Argentine daily LM
Neuquen quoted Aguilera as saying at an
industry event in Houston.
Argentina hasa great advantage that
other countries do not have, both in the
quality of human resources and in the
infrastructure for energy distribution, he
said at the event organised by the
American Chamber of Commerce inArgentina, the Argentine Oil and Gas
Institute and the University of Rio de la
Plata Foundation.
We are committed to the country, but
we need more companies to join,
Aguilera added. Competition is vital as
a factor for generating a true shale
revolution that will accelerate the
development of the play.
Chevron, in partnership with
Argentinasstate-run YPF, was the first
company to begin factory mode
production in the Vaca Muerta play.
In the first quarter of this year, the two
were producing 42,000 barrels per day of
oil equivalent, mostly of the light crude
in demand at the countrysrefineries. It
is the first shale oil to be produced
outside North America.
Other companies such as ExxonMobil,
Total and Royal Dutch Shell entered the
market later and are still working toward
their first production pilots.
To attract more companies and speed
up drilling, Aguilera said: [The]
economic, social and legal conditions
must be created to ensure the
sustainability of the business over the
long term.
Argentinas government has started to
adapt and has increased wellhead prices,
offered fiscal and financial incentives for
increasing production and exports as well
as for importing rigs and other
equipment.
But one major hurdle that remains is
companiesability to send profits out of
the country, which is still difficult.
Currency stability is also needed, so too a
reduction in the countrys 30% inflation
rate, which boosts labour and input costs.
There also needs to be more credit at
lower interest rates, which requires
Argentina to settle fully a US$100 billion
default that has locked the country out offinancial markets.
By most estimates, US$5-12 billion
per year must be invested to develop
Vaca Muerta and the countrys other
unconventional resources.
Argentinas state-run energy company
YPF said last week it had hit gas in Vaca
Muerta, as it continues to develop the
countrys biggest shale play.
The company found the resources on
La Ribera, a block in the southwestern
Neuquen Basin.
The first tests showed that the La
Ribera x-1 well was highly productive,
with initial output flowing at a 43,000
cubic metres per day, YPF said.
The company is investing a large
chunk of its US$7 billion in annual
investment to bring Vaca Muerta to
production, part of a wider plan to
rebuild output after it slid by 6% per year
in 2002-12. With the drilling on La
Ribera, YPF said it had found the
resources in a thickness of 258 metres
that it expected to be productive.
Another advantage of the find is that
La Ribera is located next to Loma
Campana, where the company is already
producing shale oil and gas with
Chevron, the first factory mode
development in the play. (See previous
story)
This discovery increases the
expectation of the wealth and
productivity of the Vaca Muerta
formation in areas close to those
currently in mass development, YPF
said.
PROJECTS & COMPANIES
Chevron calls for more
Vaca Muerta competition
YPF makes Vaca Muerta
gas discovery
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
YPF and Chevron are producing about
42,000 barrels per day of oil equivalent
from Loma Campana, mostly light crude.
La Ribera also is 25 km from Anelo, a
town that is becoming a hub for the shale
industry in Neuquen, and is also 90 km
from the provincial capital, also called
Neuquen.
This means there are ample services
and labour available, as well as
infrastructure from pipelines to treatment
plants.
YPF has said it plans to build an oil
treatment plant in Anelo.
YPF aims to increase its hydrocarbon
production by 5% this year by
developing shale resources as well as
tight formations and by wringing more
from maturing conventional reserves.
Its exploration efforts for
unconventionaland conventional
resources are paying off, with two
discoveries made so far this year. The
first was of an estimated 40 million
barrels of conventional oil on Los
Caldenes, another block in the Neuquen
Basin.
Brazils energy regulator believes it has
found a giant new subsalt field that has
similar characteristics to the Lula field,
which has 5-8 billion barrels of estimatedreserves.
The evaluation is based on seismic
studies and no well has yet targeted the
prospect, which lies off the coast of Sao
Paulo in the Santos Basin. No official
announcement about the prospect
which has no name as yethas been
made by authorities but according to the
Estado de S.Paulo newspaper the
regulator wanted to include the block in
the 13th bid round in October.
That plan was vetoed by the federalgovernment, which restricted the round
to non-subsalt assets. Bidding for a giant
new subsalt field could risk further
burdening financially troubled Petrobras,
which by law would have to bid for the
block as operator with a minimum 30%stake.
Quoting government sources the paper
said officials described the prospect as of
great dimensions, though there is no
firm estimate of the volume the find
might contain. The government is
reportedly keeping the prospect back
waiting for a more opportune moment to
auction it off.
The paper said the prospect, despite
being under the salt layer, lies outside the
region that Brazils oil legislation decreesas governed by the production-sharing
model. That could mean it is up to the
government to decide how to develop the
prospect when it decides the time is right.
The regulators push to include it in
this years auction round could indicatethat officials believe the block may be
able to be developed under the old
concessionary regime. The government
has also reserved the right to award
blocks in their entirety to Petrobras if it
feels that is in the national interest.
Brazil has become increasingly
worried that the fall in oil prices
threatens the financial attractiveness of
its subsalt fields, which are costly to
develop. This has led to the decision to
restrict the offer of large subsalt blocksafter the Libra auction in 2013 attracted
one bid offering the minimum price.
COMPANIES
Total plans US$980minvestment in Bolivia
Frances Total plans to invest close toUS$980 million in the second phase of
exploration at the Incahuasi block in
Santa Cruz, Bolivia, UCOM news
service reported. Bolivias Minister of
Hydrocarbons and Mines Luis Alberto
Sanchez Fernandez made the
announcement after meeting in Belgium
with Totals executive director, Patrick
Pouyanne.
Sanchez Fernandez said that the second
phase will allow the company to expand
the blocks production, which is due to
start next year at 6.5 mcm per day. Total
is investing US$1.2 billion in the first
phase of the project.
UCOM, Ju ne 11, 2015
Petrobras close tosuspending work ontwo platformsPetrobras is close to suspending a
contract for the construction of two
production platforms in Rio Grande, a
coastal town in southern Brazil, the
towns mayor said. QGI, the consortium
formed by local engineering firms
Queiroz Galvao and Iesa Oleo e Gas,
holds the contract to build the P-75 and
P-77 production platforms for Petrobras
in the local shipyard. Rio Grande Mayor
Alexandre Lindenmeyer, who was in
meetings with Petrobras and the
consortium, said the contract may fall
apart over a roughly 10% increase in its
value, estimated at US$1.6 billion, that
QGI is attempting to convince Petrobras
to pay due to contract modifications it
requested.
If confirmed, the contract cancellation
would slow Petrobras future growth in
oil production and affect its revenues.
The platforms are intended to begin
production in 2016 and 2017 from pre-
salt deposits in the Buzios field in the
Santos basin. Jobs could be at stake as
well if the contract falls through, at a
time when Brazils economy is most
likely entering its worst recession in over
a decade.
PROJECTS & COMPANIES
Brazil announces new subsalt giant
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Lindenmeyer said Petrobras did not agree
with the consortiums estimated increase
in the value of the contract and would
likely take a decision on it when the two
sides are due to meet.
REUTERS, Jun e 8, 2015
Gazprom has sightson BrazilRussias Gazprom is considering
investments in oil and natural gas in
Brazil and may bid for exploration rights
in the countrys 13th-Round concession
auction in October, director for Brazil
and Latin America Shakarbek Osmonov
said. Gazprom, the worlds largest
natural gas producer, is also consideringoffers for stakes in fields and exploration
areas being put up for sale by Brazils
state-run oil company Petrobras,
Osmonov said on the sidelines of an
event in Rio de Janeiro.
Petrobras is trying to sell US$13.7 billion
of assets to boost cash for investment and
to pay debt.
REUTERS, Jun e 8, 2015
Petrobras did notbenefit fromcorruptionTwo Brazilian prosecutors probing a
scandal at Petrobras that rocked the
nations political establishment say it
would be hard to consider the company a
perpetrator in the multibillion-dollar
kickback scheme. Carlos Lima and
Deltan Dallagnol lead a group of nine
federal prosecutors in South Brazil who,
with five police officials and a judge, are
investigating a network of contractors
who allegedly paid bribes to winbusiness from the state-run energy
company.
While shareholders and bondholders may
have good reason to complain about
faulty internal controls at Petrobras,
especially after the scandal helped knock
billions off the stock price, the
prosecutors said the company itself is
nevertheless a victim.
I totally understand that stockholders
look at Petrobras and say, You could
have done more to avoid all this, Lima
said. The company has responsibility
for the acts, of course, of its agents and
employees. I dont doubt that. In
retrospect, you see red flags everywhere
but it is easier to say so after its
happened, he said.
Lima and Dallagnol argued that the bribe
money was taken from the company in
the form of overcharges on contracts, and
Rio de Janeiro-based Petrobras did not
benefit in any way.
BLOOMB ERG, June 10, 2015
Ecopetrol strategyfocuses onefficiency,
profitabilityEcopetrol has defined a new strategy to
2030 that prioritises profitability and
generating value, said head of the board
of directors Gonzalo Restrepo. The
strategy is focused on producing efficient
barrels and exploration that will make it
possible to incorporate 1.7 billion barrels
of proven reserves by 2020 and therefore
guarantee the sustainability of the
company, he said. All of this will be
accompanied by an aggressive efficient,
austerity and cost reduction plan, withstructural saves close to US$1 billion per
year between 2015 and 2020, added
Restrepo.
Ecopetrol will concentrate on basins with
high potential, both in Colombia and
abroad, he added. Key for this are
offshore areas in our country and the
Gulf of Mexico, he said. In Mexico,
Ecopetrol was prequalified in the so-
called Round 1 and is analysing different
options, according to Restrepo. The
biggest challenge facing the oil industry
is efficiency, being profitable with prices
close or below US$60 per barrel for
Brent, he noted.
DINERO, Jun e 10, 2015
Ecopetrol to reviewlogistics afterattacks spikeEcopetrol CEO Juan Carlos Echeverry
said that the company will review its
logistics to combat a spike in attacks on
oil infrastructure. The company has been
victim to 20 infrastructure attacks so far
this year, with 16 of those taking place
since May 27.
Echeverry said the company will review
its road transportation and consider re-
routing tankers to avoid commonly
targeted areas. The company is to spend
10 billion pesos from its 2015 budget on
environmental damage caused by an
attack on June 8, which saw Vetra
Exploration drivers forced to spill
thousands of gallons of oil.
REUTERS, Ju ne 10, 2015
Latest Colombianattack targets BPBP was the latest company to fall victim
to an attack by Colombian guerrillas,
who have been intensely targeting oil and
energy infrastructure since May 27. The
attack took place in Piamonte, where two
company wells were targeted with
explosives. BP is awaiting permission
from the national army to begin repair
work. Local government secretary
Amarildo Correa said the attack caused
serious environmental damage, but the
location of the wells makes it difficult to
assess the extent of the damage.The Colombian police force is now
offering 50 million pesos for information
about the recent attacks, to prevent future
assaults.
LA FM, Jun e 10, 2015
Ecopetrol sharesrallyShares in Colombias state oil company
Ecopetrol rallied 2.6% last week,
although they are still down 12.88% on
the previous month. The companys
shares have dropped 63% in the last year,
from highs of US$38.96 to the current
price of US$14.21. The lowest price so
far was seen on March 10 this year, when
shares fell to US$13.29.
The company announced in April that it
will issue a quarterly dividend of
US$1.03 on June 30, a dividend yield of
28.72%.
AMERICAN TRADE JOURNAL,
Ju ne 14, 2015
NEWS IN BRIEF
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Pemex to openlogistics to privatescompanies
Mexicos state oil company Pemex plansto gradually shift its logistics, storage and
transport businesses to the private sector,
Excelsior newspaper reported. There are
companies focused on the value chain,
from oil companies to service station
operators, contractors and port
operators, said director general of the
companys international division, PMI
Internacional, and corporate director of
alliances and new businesses Jose
Manuel Carrera Panizzo.
He said these businesses requireresources that Pemex would rather funnel
into oil exploration and production. Until
now, Pemex has brought on private
companies as partners in upstream
projects, but gradually they will be given
room to operate on their own, he said.
EXCELSIOR, Jun e 8, 2015
Sabre delaysParaguay drillingSabre Internacional de Energia, an oil
company controlled by Brazils GrupoGeoradar, and its Paraguayan unit
Bohemia, said they have pushed back
drilling plans in Paraguay, Ultima Hora
newspaper reported. The companies had
planned to drill in the first half of this
year, but now will do so toward the end
of the year, said company representative
Carlos Ruffinelli.
He said the company has yet to find the
best location for the first well, but added
that work is focused in the departments
of Alto Parana and Canindeyu followingseismic studies. Investment in the
exploration is expected to run at US$60
million, he said.
ULTIMA HORA, Jun e 8, 2015
Kosmos Energyincreases borrowingcapacityKosmos Energy, a Texas-based company
that operates in Ghana and Suriname, has
announced amendments to its credit
facility, including the increase of
borrowing capacity to US$400 million
from US$300 million and the extension
of the maturity date on debt. The
company now has debt facilities of
US$1.9 billion. As of June 1, 2015, only
US$300 million of this has been drawn.
The companys CFO Thomas Chambers
said the amendment enhances the
companys already strong liquidity
position and that Kosmos has the
financial strength and flexibility to
continue growing profitably through the
cycle.
KOSMOS ENERGY, Jun e 9, 2015
Shares in RangeResources downShares in Trinidad-focused Range
Resources have fallen 3.4% in the past
week, and have seen a total loss in value
of 13.6% in the past month. The
company shares have fallen over 40% in
the past year, but still have a consensus
rating of buy as they continue to
outperform the index. Shares in the
company closed at US$52.84 on June 12,
down from highs US$89.03 but up from
the one year low of US$42.88 on March
13 this year.
The company recently received US$7.9million from a share sale to Sibo.
NEWS WA TCH INTERNATIONAL,
Ju ne 14, 2015
VenezuelareconsideringPetrojam saleAccording to a source, Venezuela is
reconsidering the sale of its minority
stake in the Kingston-based Petrojam
refinery, due to a proposed expansion.The countrys state oil company PDVSA
currently owns a 49% stake in the
refinery and said last year that it was
looking for a buyer, when oil prices were
low.
Jamaica, who owns the rest of the stake,
is currently looking at bids to finance an
expansion of the refinery. Both bids
under consideration are from China,
according to reports.
JAMAICA GLEANER, June 10,
2015
Pacific Rubialesamends creditfacilities
Canadian major Pacific Rubiales hasgained 100% support from creditors to
amend credit facilities and pursue a
takeover offer by Alfa and Harbour
Energy. The company said the
amendments were an important step in
proceeding with the offer, as they satisfy
the debt conditions attached to the
agreement. They added that the
overwhelming support of creditors
shows that the transaction is in the best
interest of shareholders.
Shareholders of the company alreadygave more than 90% approval for similar
amendments to senior notes.
PACIFIC RUBIALES, June 11,
2015
Pacific Rubialesnegotiates offerAs the company opens voting for a
takeover offer by Alfa and Habour
Energy, more information has been
provided about the offer, including that
the company successfully negotiated theprice from C$5 to C$6.50. Pacific
Rubiales has opened voting on their
website on the offer, which needs two-
thirds of shareholder consent to pass.
In a section on the website entitled why
now?, the company also mentioned the
challenges the company would face
financing its entry into Mexico
independently and the capital markets
risk facing the company in terms of
obtaining debt and financing.
PACIFIC RUBIALES, June 15,
2015
Sparrows Groupappoints AmericasdirectorThe US-based Sparrows Group has
appointed Steve Bertone as director of its
operations in the Americas. The
executive joins the company, which
provides products and services to the
offshore oil and gas industry, after 33
years at McDermott International.
NEWS IN BRIEF
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Bertone will be in charge of the groups
operations in the US, Brazil, Mexico and
the Caribbean. Bertone says: The
Americas is a region that presents a
wealth of exciting opportunities for a
well-respected business like Sparrows
Group. The company has been operating
here for many years and the specialist
knowledge and excellent reputation for
quality and value will provide a good
foundation for further growth.
FTSE GLOBA L MARK ETS, June
15, 2015
OIL
Wintershall saysArgentina shaleneeds long-terminvestmentTo develop Argentinas huge shale oil
potential, the country must provide stable
business conditions to encourage long-
term investment, said new chief
executive of Germanys Wintershall
Mario Mehren. He also called for easier
conditions, such as a stable exchange
rate, to pay for equipment and rigs under
dollar contracts. Wintershall has investedUS$400 million over the past two years
in drilling in Vaca Muerta, the countrys
largest shale play.
Mehren said the government has started
to make conditions better, including by
raising natural gas prices. A next step is
to allow companies to send profits out of
the country, now not totally possible.
Other challenges are to improve roads,
make more trucks available and cut costs.
LM NEUQUEN, Jun e 10, 2015
Bolivian indigenouspeople protest oilexploration in parksIndigenous communities in Bolivia said
they will resist the governments plans to
allow oil drilling in national parks and
reserves, EFE newswire reported. The
government has opened these regions for
exploration, in a bid to build oil and gas
production as a main source of jobs and
tax revenue. President of the
Confederation of Indigenous
Communities of Bolivia Adolfo Chavez
said the protest could extend beyond the
countrys borders, with a demonstration
proposed at a global climate change
conference in Paris at the end of the year.
We consider ourselves guardians of
nature, of our own home, Chavez said.
EFE, Jun e 10, 2015
Bolivian presidentslightly more upbeaton oil pricesBolivian President Evo Morales forecasts
that oil prices will hit US$70 per barrel
before the end of the year and natural gas
prices will begin to increase. Morales
said that from the outset he was not toofearful of the fall in crude oil prices as
the country had already weathered
problems in 2008 due to crisis in the US.
Bolivias economy continued to expand
despite the situation. In early May,
Energy and Hydrocarbons Minister Luis
Sanchez was even more optimistic,
forecasting oil would reach US$80 per
barrel by the end of this year and
US$100 per barrel in 2016.
LA RAZON, Jun e 10, 2015
Colombia oil outputabove 1m bpd in MayColombia produced 1.025 million bpd of
crude in May, the countrys Mines and
Energy Ministry announced. The figure
is above the government target of 1
million bpd and the same quantity as in
April. Production is up 70,000 barrels on
May last year.
Natural gas production was up 4.1% in
May on April, with an average of 1.05
bcf per day produced. This was a drop of3% on last May, when 1.084 bcf per day
were produced. State-run Ecopetrol and
private company Pacific Rubiales are the
two biggest producers of oil in the
country.
REUTERS, Ju ne 9, 2015
Oil prices drive upColombian pesoThe Colombian peso had its biggest
gains in almost eight weeks thanks to
higher oil prices. The country, which
relies heavily on oil as a source of
revenue, has seen its currency weaken
about 39% over the last 12 months as oil
prices have fallen.
The jump in price was due to higher
seasonal demand in developed
economies, along with the expectation
that US shale production will decrease in
the near future. Other Latin American
currencies did not see such sharp gains,
but the MSCI Latin American stock
index was up 1.2%, making a second
straight day of gains.
REUTERS, Ju ne 9, 2015
Colombian oil spill atragedySeveral thousand barrels of crude oil
have spilled into a river in southwest
Colombia after insurgents bombed a
pipeline, state-run oil company Ecopetrol
said, describing the damage as an
environmental tragedy, according to
Reuters. The bomb attack occurred June
8, but was not previously disclosed. It
was one of spate of attacls targeting oil
installations this month and will affect
several thousand families, Ecopetrols
CEO Juan Carlos Echeverry said.
As many as 4,000 barrels of spilled oilhave contaminated rivers used for fishing
and fresh water supplies. Its a social
and environmental tragedy, Echeverry
said, describing the spill as senseless.
The financial cost to Ecopetrol will be
minimal compared with the harm done to
the environment and affected
communities, he said.
Echeverry said there have been 20 rebel
attacks against Ecopetrols infrastructure
this year, affecting an estimated 84,000
people.REUTERS, Ju ne 10, 2015
Pemex finds oil inthe GulfMexicos state oil company Pemex made
its first discoveries of hydrocarbons since
a reform of the energy sector in 2014,
CNNExpansion newspaper reported.
Pemex CEO Emilio Lozoya said four
new fields were found in shallow waters
in an area known as the Litoral de
Tabasco.
NEWS IN BRIEF
mailto:[email protected]:[email protected]7/24/2019 LatAmOil Week 24
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LatAmOil 16 June 2015, Week 24 page 16
Have a question or comment? Contact the editorRyan Stevenson ([email protected])
Copyright 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
He said the company wants to put the
area into production within 16 months,
adding that it is similar in geography to
Cantarell, one of the countrys biggest oil
fields. Daily production could reach
200,000 bpd and 170 mcf, he said.
CNNEXPANSION, June 11, 2015
Mexicos new oildiscovery seen inright spotThe discovery of four oil fields in
Mexico has raised cheers from analysts,
El Financiero newspaper reported.
Director of the energy consultancy
GMEC Gonzalo Monroy said that
infrastructure is already in place near thediscoveries, meaning that it may take less
time than expected to put them into
production. Pemex said this week that the
fields are in shallow waters in an area
known as the Litoral de Tabasco, and
could take 16 months to put them into
production. Output is expected to reach
200,000 bpd of crude and 170 mcf of
gas. What is more, the discovery should
encourage bidding in an upcoming
licensing round, Round One, for 14
shallow water blocks. The timing is
impeccable, said oil analyst at Marcos y
Asociados Luis Miguel Labardini.
EL FINANCIERO, Ju ne 11, 15
Venezuelan oilcloses on US$56.58per barrelVenezuelan crude ended the week on
drop on last weeks price of US$56.73
per barrel. The countrys ministry of Oil
and Mining put the fluctuations in price
down to the fluctuations of the dollar,
the wide availability of supply in major
consuming nations and the expectations
of a seasonal increase in demand for
petrol in the US.
Oil makes up more than 95% of
Venezuelas exports. Oil prices are more
than 50% lower than last year.
Venezuelan oil production was at 2.44
million bpd in April.
EL UNIVERSAL, Jun e 12, 2015
GAS
Bolivian gas exportprices plungeBolivia is selling gas to its two export
markets, Argentina and Brazil, at
between US$5 and US$6 per mBtu,
down from US$9-10 per mBtu in 2014,
El Dia newspaper reported. Oil analyst
Bernardo Prado said the reason for the
decline is the drop in global oil prices, on
which a portion of the export price is
pegged.
This will cut the countrys gas export
revenue by up to 40%, even though gas
deliveries are on the rise.
EL DIA, Ju ne 12, 2015
PDVSA to haltColombia gasimportsVenezuelas state oil company PDVSA
announced that it would not renew a gas
contract with Colombia, opting instead to
tap into local production. Colombia and
Venezuela have had an agreement since
2007, when a pipeline between the two
countries was inaugurated.
The original plan was for Colombia to
export gas to Venezuela for four to seven
years before reversing the flow. Almost
eight years have passed and Venezuela
seemed to rule out a continuing
arrangement when it criticised
Colombias management of the pipeline,
saying supply in the past months has
been completely irregular, with frequent
problems that have even at times turned
off supplies altogether.
REUTERS, Ju ne 11, 2015
SERVICES
Spectrum andSchlumberger startsurvey offshoreMexicoSpectrum has announced that their vessel
has arrived in Mexico and started the
acquisition of their Mexican Gulf of
Mexico 2-D campaign, in collaboration
with Schlumberger. The first phase of the
acquisition programme, named Mexico
Campeche-Yucatan 2-D Regional
comprises 12,200 km of regional linesfrom the full 44,000 km programme.
The programme will cover areas from the
Campeche Escarpment, including ties to
Round 1 blocks, the Yucatan shelf and
deepwater areas. The survey will also tie
with Spectrums BigWave programme in
the US Eastern Gulf of Mexico. Fast
Track products will be available starting
in July with final products available in
November.
SPECTRUM, Ju ne 11, 2015
NEWS IN BRIEF
mailto:[email protected]:[email protected]7/24/2019 LatAmOil Week 24
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Argentina ShaleSpecial Investment Report350 April 2015
Risk and reward Argentinas unconventional potential could make it a rewarding target for
investors, but the countrys poor economy and political climate are clear risks.
First-mover advantage Chevron, Petronas and Sinopec have formed partnerships with state-run YPF to develop the Vaca Muerta shale, but more investment is needed.
Independents day Andes Energia is the leading independent in Argentine shale and its
experience offers key lessons to potential investors.
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Tehran regarding Irans nuclear programme pending,
NewsBase has released its Iran Investment Special Report.
Topics covered in the report include:
Iran InvestmentSpecial Report
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