Citgo Raises $$750,000 for Muscular Dystrophy Association

The Plasman family with MDA and Jim Cristman, CITGO Vice President of Refining, thank Diamond Sponsor Midwest Tankermen for their dedication to the golf outing and the MDA. Source: Citgo

(Citgo Petroleum Corporation, 31.Jul.2018) – The Muscular Dystrophy Association (MDA) depends on partnerships to fulfill their mission, and as their largest corporate sponsor, Citgo Petroleum Corporation hosts the annual MDA Driving for a Cure golf outing for employees and contractors from the Citgo Lemont Refinery.

This year, on June 26, 2018, more than 450 golfers raised a record-breaking $755,542 for the MDA. Held at the Cog Hill Golf and Country Club in Lemont, Illinois, the event included 18 holes of golf and a special dinner reception where an MDA family is traditionally asked to share their story and talk about the role the MDA plays in their fight against the effects of muscle-debilitating diseases.

“The Driving for a Cure Golf Outing is truly a special event because of the MDA family represented. They are what this is all about and it’s an honor and a privilege for Citgo to contribute to the cause for a cure through this fundraiser,” said Jim Cristman, Citgo Vice President, Refining.

One important and unique characteristic of the MDA is its policy requiring all locally-raised dollars be spent locally. As a result, life-saving research programs at Lurie Children’s Hospital, Northwestern University and the University of Illinois will benefit. One example of the impact of this policy is former MDA Goodwill Ambassador for Illinois Lizzie Chamberlain who annually kicks off the golf outing by singing the national anthem.

“This was the first year that Liz was not able to attend and sing at the outing because she is receiving a new treatment that the FDA recently approved for her form of muscular dystrophy. It was the MDA that helped fund the beginning stages of the research that brought this treatment to fruition,” said Amanda Konopka, MDA Director of Distinguished Events.

About the Citgo Lemont Refinery

For more than 90 years, Citgo Lemont Refinery has employed more than 750 Chicago area residents on a full-time and contract basis in support of the local economy. In addition to producing high quality fuels for a large portion of the network of more than 5,200 locally-owned Citgo stations across the country, Lemont Refinery employees also make a major positive impact on the community. Each year, more than 2,500 volunteer hours and thousands of dollars are given in support of community programs such as Muscular Dystrophy Association, United Way and a variety of environmental and preservation programs. Operations at the Lemont Refinery began in 1925 with a major expansion, doubling the facility, in 1933. Over the years, new units were added to meet the demand for a better quality of gas for automobiles, aviation fuel for WWII, and the production of asphalt. Petróleos de Venezuela,S.A., PDVSA, acquired 100% ownership of the refinery in 1997 and began operations as Citgo Lemont Refinery. For more information, visit www.citgorefining.com/Lemont

***

Mexico Oil Output to Trend Upwards in 2027

(Energy Analytics Institute, Aaron Simonsky, 31.Jul.2018) – Mexico’s oil production will cease to decline in 2025.

That’s according to details of a report published by S&P Global Platts Energy Analyst and Consultant Manager Javier Díaz during an energy forum.

Díaz announced details of projections for Mexican crude oil production until 2040 that showed national crude production stabilizing in 2025; starting to rise in 2027, and reaching 2 million barrels per day through 2035, according to the daily newspaper El Financiero.

Reaching these goals, said Díaz, will depend to a large extent that in the “new era” the following will occur in the energy sector: foreign investment will continue to flow into Mexico, and the tendency to reverse the fall in production and continue the liberalization of the markets will also continue to improve market efficiency.

“These are the focal points that we see that can make the energy market more effective for Mexico,” said Díaz during an interview.

When questioned about the profitability of the possibility that Mexico’s President-elect Andrés Manuel López Obrador would build two new refineries and modernize the existing infrastructure, Díaz said that in the first instance a technical and financial study should be done regarding the possibility to modernize the infrastructure taking into consideration the age and conditions of the refineries.

***

PetroTrin Refinery Importing Shortfall

(Energy Analytics Institute, Ian Silverman, 31.Jul.2018) – That’s according to reports in a local newspaper.

“The refinery at PetroTrin has a capacity of 140,000 barrels of oil per day (bopd); the company produces about 42,000 bopd – a shortfall of about 100,000 bopd, which must then be imported,” reported the daily newspaper Trinidad and Tobago Newsday.

***

Wheatley Falls: Latest Casualty of Energy Scandal

(Jamaica Gleaner, Edmond Campbell, 31.Jul.2018) – The ongoing scandal that began at the state-owned oil refinery Petrojam has claimed its latest casualty with the resignation yesterday of Andrew Wheatley as minister of science and technology. This follows several weeks of allegations of nepotism and cronyism that triggered investigations from several state watchdog agencies.

Responding to Wheatley’s departure, two powerful groups that had previously called for him to step aside as Cabinet minister yesterday welcomed his resignation. They declared that his departure should signal the beginning, and not the end, of the establishment of systems to reduce the recurrence of corruption at agencies under his watch.

“We regard his resignation as appropriate, but belated. It should have happened some time ago. It vindicates the tradition recently established and sustained by successive administrations to have ministers either resign or tender their resignations in a context such as we have in relation to Petrojam,” Professor Trevor Munroe, head of National Integrity Action (NIA), told The Gleaner.

President of the Private Sector Organisation of Jamaica (PSOJ), Howard Mitchell, also expressed the view that Wheatley’s resignation was welcomed, albeit too late.

Mitchell said that Wheatley’s resignation would now clear the way for a proper investigation to be conducted into the agencies under the energy portfolio.

“This is not the end; it is the beginning, and it should be used as an example of a point of departure for the wider society for us to understand that we cannot build a nation, we cannot have the development that we so badly need, and the growth, without all of us living by the rules, not only the public sector,” Mitchell asserted.

He noted that the PSOJ was not picking on any political party, noting that over the years, the rules have been broken by respective administrations.

The PSOJ boss contended that the country could not achieve economic growth in the midst of corruption, adding that they were inimical to each other. On June 28, the NIA had issued a statement indicating that the principle of individual ministerial responsibility, which is part of Jamaica’s Constitution, as well as code of conduct for ministers, required that Wheatley either tender his resignation or the prime minister ask him to resign.

The NIA said that had Wheatley not resigned, this would have ruptured the tradition of individual ministerial responsibility.

In a release yesterday the People’s National Party (PNP) said it also welcomes “the long overdue removal of Dr Andrew Wheatley from the Cabinet of Jamaica”. However, it has sounded a note of caution that his resignation would not be the end of the matter.

It says the criminal investigations by the Major Organised Crime and Anti-Corruption Agency, the Financial Investigations Division, the auditor general and Integrity Commission into the activities at Petrojam and National Energy Solutions Limited must be pursued to their final conclusions “and let the chips fall where they may”.

The PNP said that the prime minister has a duty to ensure that these agencies receive the necessary resources to complete their investigations and provide their reports in a timely manner to the people of Jamaica.

***

Granger Gov’t Overwhelmed by Enormity of Tasks

Granger gov’t overwhelmed by enormity of tasks in oil and gas sector

(Stabroek News, 31.Jul.2018) – Dear Editor, The discovery of oil by ExxonMobil in 2015 has put Guyana on a trajectory to receiving significant revenues. A recent Bloomberg article pointed out that of the 10 wells that ExxonMobil has drilled, 8 are commercially viable – with an estimated 4 billion barrels of oil in these areas; and, with an additional 19 more wells to be drilled this oil reserve estimation will increase exponentially. Exxon predicts that the first oil flow is expected in 2020. In preparation for oil wealth, the country needs to reorient itself to ensure that its citizens get maximum benefits. Experiences around the world have shown that the countries that fail to put the relevant systems in place can reap a curse instead of a blessing. Many economists such as Brahmbhatt and Canuto (2010) and Brahmbhatt, Canuto and Vostroknutova (2010) explain how certain conditions could lead to a curse, “Weak governance and corresponding poor economic policies underlie the misallocation and mismanagement of resources”. The Guyanese economy is no exception.

There is no doubt that the government is talking up the oil and gas sector. The talk has escalated to the point where there is “too much “gas” and very little substance. It is clear that the Granger government is overwhelmed by the enormity of the tasks in the sector. There is a lack of leadership, with confused and conflicting signals coming from various sections of government, and if this continues, it would undoubtedly undermine this nascent sector.

The government has failed to create the appropriate legislative framework. The flawed petroleum bill is languishing in a special select committee, and the other relevant legislation related to the growth and development of the sector has not been laid in the parliament. The department of oil and gas which would be the government’s lead agency for the industry is yet to be established. Legislation, policies and implementation plans on local content are still in its conceptualisation stage. Also, the IMF in its 2018 Article IV Consultation with Guyana on July 2018 warned that the “rules-based fiscal framework for managing oil wealth should be transparent and consistent with the resource fund deposit/withdrawal rules. “In the meanwhile, very few local companies have been able to realign themselves to benefit substantially from the business opportunities. With first oil expected in 2020, the government seems quite ill-prepared to inoculate itself again the “Dutch Disease” where volatility, risks of over-borrowing and overconsumption, and crowding out of local manufacturing can quickly spread in the economy. The Granger government’s incompetence is manifested in the oil and gas decision making, at best it is indecisive, and at its worst it is paralytic. And when it finally makes the decision it has an uncanny knack for amalgamating the worst options.

The Granger government needs to urgently get its act together, in the oil and gas sector. It should be guided by international best practices that would ensure that this country gets the maximum benefit from its natural resource wealth. All Guyanese would like to see policies in this sector,  that provide transparency and strengthened checks and balances for all phases of natural resource extraction and use (terms of contracts, monitoring of operations, collection and use of taxes). The establishment of a Sovereign Wealth Fund and the adoption of fiscal rules to ring-fence investments from proceeds of overtime depletion of natural resources are yet to be finalised. There is an urgent need for public sector capacity building in public investment management, monitoring and evaluation, budget processes, to transform natural wealth into produced capital and other forms of intangible wealth. If the Granger government fails to embrace these policies, it will have profound consequences for this and future generations.

Yours faithfully,

Frank Anthony MP

***

Pampa Energía Reports on Deferral of Edenor Dealings

(Pampa Energía S.A., 31.Jul.2018) – Pampa Energía S.A. announced its electricity distribution subsidiary Empresa Distribuidora y Comercializadora Norte (‘Edenor’) agreed with the Ministry of Energy to differ 50% of the Own Distribution Cost (‘CPD’) variation adjustment set forth under the Concession Agreement corresponding to the semester February-August 2018, to be charged in six consecutive monthly installments as from February 1, 2019, which does not imply either a negative economic impact for Edenor or any effect in the service’s quality parameters resulting from the Integral Tariff Review (‘RTI’) implemented on February 1, 2017.

Moreover, the Ministry of Energy agreed to carry out the necessary administrative actions towards the regularization of the pending obligations from the Transition Period, as well as to promote the settlement of pending issues related to the New Framework Agreement approved by Decree No. 1,972/2004 in regards to the consumption in shantytowns.

***

Venezuela the Clear Leader in Oil Reserves

(UPI, Daniel J. Graeber, 31.Jul.2018) – An annual review of energy trends from Italian energy company Eni found the United States is a “game changer,” though its Venezuela with the largest reserves.

In a report running nearly 90 pages, the Italian company’s 17th annual review found total oil reserves declined 0.2 percent last year in part because of declines in some members of the Organization of Petroleum Exporting Countries.

Total production last year was relatively unchanged from 2016, though the United States and Canada were among the largest producers outside of OPEC. Last year marked the start of an OPEC policy to balance the market with coordinated production control measures.

“On the supply side, the United States continues to be the main game-changer,” Eni’s CEO Claudio Descalzi stated in the report. “While world production remains nearly flat with respect to last year, the United States delivered one of the biggest increased in non-OPEC area production and confirms its leadership among producers.”

The four-week moving average for total U.S. production for the week ending July 20 was 10.95 million barrels per day, a 16.6 percent increase from the same period last year. That beats Saudi Arabia by about a half million barrels per day, based on the kingdom’s June average.

For total reserves, however, the United States was not in the top 10. Those honors went to Venezuela, Saudi Arabia and Canada, respectively. While the United States was the top producer last year, its total reserves represented about 10 percent of Venezuela’s 302 billion barrels of oil.

Venezuela is facing growing isolation following the May election victory for Venezuelan President Nicolas Maduro. The International Monetary Fund in an outlook on Latin America said the country’s economy is in a “profound” crisis and inflation is on pace to surge to 1 million percent by the end of the year.

Real gross domestic product for Venezuela is on pace to drop 18 percent this year, the third year in a row for a double-digit decline. For the rest of Latin America, the IMF said it expected GDP to grow by 1.6 percent this year and then accelerate to 2.6 percent in 2019.

For the United States, the economy expanded at 4 percent in the second quarter, one of its fastest rates in years, though much of that gain was supported by temporary factors.

For demand, Eni found relatively low crude oil prices in 2017 contributed to a 1.7 gain globally, beating the five-year average of 1.5 percent for the period ending in 2016.

***

Once Oil Wealthy, Maracaibo Struggles to Keep Lights On

(Reuters, Mayela Armas, 31.Jul.2018) – Across Maracaibo, the capital of Venezuela’s largest state, residents unplug refrigerators to guard against power surges. Many only buy food they will consume the same day. Others regularly sleep outside.

The rolling power blackouts in the state of Zulia pile more misery on Venezuelans living under a fifth year of an economic crisis that has sparked malnutrition, hyperinflation and mass emigration. OPEC member Venezuela’s once-thriving socialist economy has collapsed since the 2014 fall of oil prices.

“I never thought I would have to go through this,” said bakery worker Cindy Morales, 36, her eyes welling with tears. “I don’t have food, I don’t have power, I don’t have money.”

Electrical posts and power lines are seen at sunset during a blackout in Maracaibo, Venezuela July 26, 2018. Reuters/Marco Bello

Zulia, the historic heart of Venezuela’s energy industry that was for decades known for opulent oil wealth, has been plunged into darkness for several hours a day since March, sometimes leaving its 3.7 million residents with no electricity for up to 24 hours.

In the past, Zulians considered themselves living in a “Venezuelan Texas”, rich from oil and with an identity proudly distinct from the rest of the country. Oil workers could often be seen driving new cars and flew by private jet to the Dutch Caribbean territory of Curacao to gamble their earnings in casinos.

Once famous for its all-night parties, now Maracaibo is often a sea of darkness at night due to blackouts.

The six state-owned power stations throughout Zulia have plenty of oil to generate electricity but a lack of maintenance and spare parts causes frequent breakdowns, leaving the plants running at 20 percent capacity, said Angel Navas, the president of the national Federation of Electrical Workers.

Energy Minister Luis Motta said this month that power cuts of up to eight hours a day would be the norm in Zulia while authorities developed a “stabilization” plan. He did not provide additional details and the Information Ministry did not respond to a request for comment.

The Zulia state government did not respond to a request to comment.

Although Caracas has fared far better than Maracaibo, a major outage hit the capital city on Tuesday morning for around two hours due to a fault at a substation. The energy minister said “heavy rains” had been reported near the substation.

Venezuelans were forced to walk or cram into buses as much of the subway was shut. Long lines formed in front of banks and stores in the hopes power would flick back on. The fault also affected some phone lines and the main Maiquetia airport just outside the capital.

“This is terrible. I feel helpless because I want to go to work but I am in this queue instead,” said domestic worker Nassari Parra, 50, as she waited in a line of 20 people in front of a closed bank.

MARACAIBO “GHOST TOWN”

Retiree Judith Palmar, 56, took advantage of having power to cook one afternoon last week in Maracaibo.

When the lights do go out, Palmar wheels her paralyzed mother outside because the house becomes intolerably hot. One power cut damaged an air conditioning unit, which Palmar cannot afford to replace on her pension of about $1.50 a month due to inflation, estimated by the opposition-run Congress in June at 46,000 percent a year.

Outages are taking a toll on businesses in Zulia.

Zulia used to produce 70 percent of Venezuela’s milk and meat but without power to milk cows and keep meat from spoiling, the state’s production has fallen nearly in half, according to Venezuela’s National Federation of Ranchers.

Zulia’s proportion of Venezuela’s total oil production has also slipped over the past 10 years from 38 percent to 25 percent, figures from state oil company PDVSA show.

Maracaibo, Venezuela’s second largest city, seems like a “ghost town,” said Fergus Walshe, head of a local business organization. He said businesses had shortened their operating hours due to the lack of power.

“Before, business activity here was booming,” he said.

Small businesses are also affected. In an industrial park in Maracaibo’s outskirts, 80 percent of the 1,000 companies based there are affected by the power cuts, according to another business association in Zulia.

Sales at Americo Fernandez’ spare parts store are down 50 percent because card readers, which are crucial because even the cheapest goods require unwieldy piles of banknotes, cannot be used during power cuts.

“I have had to improvise to stay afloat. I connect the car battery to the store so that the card readers can work,” Fernandez said during a power outage at his home, surrounded by candles.

Reporting by Mayela Armas in Maracaibo, additional reporting by Andreina Aponte and Shaylim Castro in Caracas; Writing by Alexandra Ulmer; Editing by Lisa Shumaker and Alistair Bell

***

Shell Brazil Invests in FPSO Tanks Solution

(World Oil, 31.Jul.2018) – Aberdeen-based inspection technology and service provider for the oil and gas industry, Innospection, Shell Brazil and SENAI CIMATEC technology institute in Salvador, Brazil, have recently signed a partnership agreement to develop a robot-based technology for in-service inspection of cargo oil tanks of FPSOs.

This robot system called MCCR (MEC Combi Crawler Robot) will be deployed externally to the hull of Shell-operated and non-operated FPSOs worldwide. The robot will be able to clean marine fouling on ship hull, detect defect size and depth, among other features. This will allow for a potential increase in tank inspection efficiency, thus improving integrity and increasing safety for FPSOs. This solution is expected to allow for cost savings of 20% to 30% in tank inspections, when used in combination with other robotic inspection tools like aerial drones.

Shell Brasil Technology Manager Jose Ferrari said: “We are very excited with this promising partnership, which will lead to an optimized inspection process for our FPSOs, further contributing to streamlining the structural integrity management of our assets. We also look forward to having two important partners, Innospection and SENAI CIMATEC, who have previously worked for Shell in Brazil and abroad.”

Innospection, CEO, Andreas Boenisch said: “In several aspects this project has already achieved great milestones, from R&D collaboration between an Operator an Institute and a commercial technology company, to the high end robotic integration of various inspection technologies and surface cleaning into an almost autonomous subsea operating system, to a major cost saving aspect ofthe asset deployment and operation. We are excited to work with a great team on a great industry solution.”

SENAI CIMATEC Technology and Innovation Manager Daniel Motta adds that the project consolidates a partnership with Shell, started with the development of autonomous underwater vehicle (AUV) FlatFish. “We will be developing one more highly relevant project with Shell to boost its oil and gas exploration to even higher levels. It is a project that strengthens Brazil’s technology capabilities, thanks to a combination of resources from the Brazilian Oil and Gas Agency (ANP), Embrapii and our international partner Innospection.”

The project will cost approximately $9 million, from which $4.5 million will be funded by Shell Brasil through the ANP research levy on oil and gas revenues.

***

Peregrino Module Sails to Brazilian Platform

(Energy Voice, David McPhee, 31.Jul.2018) – Watch as Equinor’s Peregrino modules set sail en route to the platform in Brazil to begin Phase 2 of the project.

Watch: Equinor Peregrino modules sail to Brazilian platform

The modules for the drilling facility have already been delivered but will now undergo stacking and testing.

Equinor said today that the platform and corresponding drilling facility will see installation in late 2019.

The offshore structure is set to begin production in 2020 and will produce for 20 years.

***

Ecopetrol Announces Changes to Management Structure

(Ecopetrol, 31.Jul.2018) – Ecopetrol S.A. reports that at its session on July 27, 2018, Ecopetrol’s Board of Directors approved adjustments to the company’s management structure in addition to those announced last July 4, in response to the Ecopetrol Group’s needs relating to growth, competitiveness and transformation.

The Offices of the Corporate Vice President for Finance, the Corporate Vice President for Strategy and New Business, and the Vice Presidents for Digital Affairs, Human Talent and Transformation will report directly to the Office of the President. The Office of the Executive Vice President for Strategy and Finance has been eliminated under this new structure.

***

Power Outage Hits Most of Venezuela’s Capital

(AP, 31.Jul.2018) – Most of Venezuela’s capital is without power following a failure at an electrical plant. Energy Minister Luis Motta Dominguez said on Twitter that Tuesday’s outage has left 80 percent of Caracas without electricity, as well as parts of neighboring Miranda and Vargas states.

He offered no further details but said authorities were working to restore power.

Local news outlets report many Venezuelans are walking to work because the metro has been shut.

The outage comes a day after the power went off at a socialist party gathering as the deputy leader was live on television urging delegates to elect President Nicolas Maduro as leader of the country’s ruling political party.

Maduro later called the brief outage an act of “sabotage.”

***

Guyana’s ‘Astonishing’ Future

(Trinidad Express, David Renwick, 31.Jul.2018) – The US’s leading oil company, ExxonMobil, continues to make discovery after discovery in its Stabroek block offshore Guyana, the latest being Longtail 1 – its eighth so far. The company says this “creates the potential for additional resource development in the south east area of the block.”

Longtail 1 encountered approximately 256 feet of high-quality oil-bearing sandstone reservoir and was drilled safely to 8,057 feet, in water depth of 6,365 feet.

Read the full story online.

***

Guyana: Will its Oil Boom Benefit the People?

(Al Jazeera English, 30.Jul.2018) – Oil companies have identified massive offshore reserves in Guyana, one of South America’s poorest nations. New estimates last week report that more than 4 billion barrels of oil could be extracted from a region known as the Stabroek block, where ExxonMobil expects to start pumping crude from in 2020. The country is poised to become a major energy supplier, but not everyone is optimistic about the potential for oil revenue to benefit Guyanese citizens. So what can Guyana do to avoid becoming another poor, yet resource-rich nation?

On this episode of The Stream, we speak with:

— Christopher Ram

Lawyer and newspaper columnist

chrisram.net

— Jan Mangal

Former petroleum advisor, President David A. Granger

linkedin.com

— Lisa Sachs @CCSI_Columbia

Director, Columbia Center on Sustainable Investment

ccsi.columbia.edu

— Imran Khan @imrankhangy

Press Secretary, Prime Minister Moses Nagamootoo

dpi.gov.gy

***

US Charges Point to Rampant Corruption at PDVSA

US Charges Point to Rampant Corruption at Venezuela State Oil Company

(InSight Crime, 30.Jul.2018) – US authorities are charging a network of Venezuelan elites and international financial actors with laundering over a billion dollars stolen from the state-owned oil company, illustrating once again how corruption has ransacked the South American country, and why it can be considered a mafia state.

Businessmen who have been given the moniker “boliburgués” along with several Venezuelan officials allegedly embezzled more than $1.2 billion from Venezuela’s state-owned oil company Petróleos de Venezuela S.A. (PdVSA) between 2014 and 2015, and later attempted to launder the funds through US and European banks, according to a July 23 criminal complaint filed in a federal court in Florida.

The PdVSA officials and businesspeople involved allegedly exploited Venezuela’s foreign currency exchange system to increase the value of company funds obtained from the oil company through bribery and fraud. Because of differences between the actual exchange rate and a government-set rate, connected individuals in Venezuela could steal huge amounts of money from the PdVSA.

“Essentially, in two transactions, [a] person could buy 100 million U.S. Dollars for 10 million U.S. Dollars,” the complaint states.

This is all possible thanks to the inconsistencies and complexities of Venezuela’s currency exchange system.

After allegedly obtaining $1.2 billion from PdVSA, the defendants laundered the money through a series of sophisticated schemes, including the purchase of real estate in Florida, fake bonds and false investment funds, in order to pay kickbacks to Venezuelan officials and elites.

Most of the defendants named in the complaint remain at large, and a number of them are presumably in Venezuela where there is little chance the government will cooperate with the US prosecution. However, the US Justice Department announced in a statement that two arrests had been made in connection with the case.

One was Matthias Krull, a Panama-based German national living in Venezuela who worked for a Swiss bank managing the accounts of Venezuelan elites. He allegedly conspired to launder part of the money embezzled from PdVSA, and was arrested in Miami on July 24.

Gustavo Adolfo Hernández Frieri, a Colombian national and naturalized US citizen who allegedly laundered part of the embezzled funds with false mutual fund investments, was arrested in Italy on July 25.

Venezuelan elite Francisco Convit Guruceaga, former legal counsel for Venezuela’s mining ministry Carmelo Urdaneta Aqui, Venezuelan “professional money launderer” José Vicente Amparan Croquer, former PdVSA finance director Abraham Eduardo Ortega, Portuguese banker Hugo Andre Ramalho Gois and Uruguayan banker Marcelo Federico Gutierrez Acosta y Lara have also been charged in the case.

In the criminal complaint, US authorities also describe several unnamed conspirators who are part of a Venezuelan elite class known as the “bolichicos” or “boliburgués”, a name Venezuelans have given to the social class that has rapidly grown rich due to its political ties or the business it does with the Chavista government.

The list also includes a television network owner who could be Raúl Gorrín of Globovisión according to the Miami Herald, and the stepsons of an important Venezuelan official, who according to the same source could be President Nicolás Maduro himself and the children of his wife Cilia Flores. Members of the boliburgués have been implicated in a wide range of other corruption schemes throughout government institutions.

InSight Crime Analysis

The billion-dollar scheme to embezzle funds from Venezuela’s state-owned oil company and launder them through a sophisticated series of false investments abroad is the latest example of the pervasive corruption that has pillaged not only PdVSA, but much of the Venezuelan government’s coffers in recent years.

“It happens because this economic model was created precisely so that organized crime would have control of Venezuela,” Venezuelan lawyer and organized crime expert Alejandro Rebolledo told InSight Crime.

In Rebolledo’s opinion, the economic model led to certain people having the control to give authorization for the currency to leave the coffers of the PdVSA and the nation in general, justified by alleged purchases and payments to suppliers. This explains the sudden “enrichment” of the Boliburgueses to the tune of $600 million or more.

Interestingly, the PdVSA negotiations that led to the US investigations into alleged money laundering began on December 23, 2014, just seven days before President Nicolás Maduro appointed former Treasurer of the Nation Carlos Erick Malpica Flores as vice president of finance for PdVSA. Malpica is also first lady Cilia Flores’ nephew. The Bolichicos’ transactions with the oil company continued into 2015, when Malpica ran the office where the transactions were made.

But the recently revealed money laundering case is not the first time PdVSA officials have been accused of involvement in billion-dollar kickback schemes. In 2015, US federal prosecutors brought a case against two US businessmen who allegedly paid bribes to PdVSA officials in exchange for help winning contracts from the oil company. That case was expanded in 2017 when prosecutors charged several former Venezuelan government officials with soliciting tens of millions of dollars in bribe payments in exchange for prioritizing payments from the failing oil company to certain contractors.

Moreover, PdVSA is not the only government institution in Venezuela subject to rampant corruption. As InSight Crime revealed in a recent investigation, virtually any potential avenue for graft is being exploited while the government of President Nicolás Maduro turns a blind eye to secure the loyalty of those around him. Cases include members of the armed forces, members of the first family and possibly even the president, who according to the Miami Herald may have participated in the PdVSA money laundering operation, although he is not mentioned by name in the US investigation report.

Rebolledo, author of the book How Money Is Laundered in Venezuela (“Así se lava el dinero en Venezuela”), told InSight Crime that “these money laundering operations are only possible if someone in an important position of power allows them to happen. That is what leads to a network like the one identified by US authorities being formed.”

***

Mexico’s Next President Promises Pemex Investment

(Bloomberg, Amy Stillman, 30.Jul.2018) – Mexico’s incoming president named a new chief executive officer for Pemex and promised government investment of 75 billion pesos ($4 billion) in the oil sector, in a bid to revive the state-owned oil company.

Andres Manuel Lopez Obrador tapped longtime political ally Octavio Romero Oropeza, who has no oil background, as the next CEO of Petroleos Mexicanos. Romero will take over when the new government comes in this December. The announcement came at an event in which the president-elect promised to boost crude output as part of a 175-billion-peso rescue plan for the industry. He said 49 billion pesos will be spent on refinery upgrades.

Romero, 59, was a government official during Lopez Obrador’s five-year term as the mayor of Mexico City from 2000 to 2005. He also shares the same birthplace as the leftist leader, the oil hub of Tabasco. Lopez Obrador has said he wants to to revitalize oil ghost towns there and build a new refinery near the port of Dos Bocas at a cost of 160 billion pesos.

For a career politician with a degree in agronomy, turning around the beleaguered oil company won’t be easy.

“It’s a political appointment for an entity whose debt represents about 14% of gross domestic product,” John Padilla, managing director of energy consultant IPD Latin America LLC, said in a phone interview. “Whether that’s going to give markets a lot of confidence at this stage, at a point when Pemex is in such a debilitated state, remains to be seen.”

Romero, who replaces Carlos Trevino, will inherit a mountain of debt — more than $100 billion — and oil production that is in free-fall. Pemex pumped 1.866 MMbbl of crude a day during the second quarter, its 13th consecutive decline compared to the same period in previous years. And even as oil prices rise, the company on Friday reported a 163-billion-peso loss, the worst quarterly result since 2016.

The company expects to average 1.9 MMbpd in the third quarter of the year and 1.95 MMbbl in the fourth quarter, Luis Ramos, deputy director of exploration and production at Pemex, said on a conference call with investors. Pemex’s proven and probable reserves have dropped by more than half since 2012, as older fields become depleted and the company fails to develop ones.

Refinery upgrades

Pemex’s refining business is in such poor condition, with aging units struggling to process less expensive heavier crudes, that it loses money if it raises output. The problem has created a reverse incentive to refine less and import more. The plants, which processed 22% less crude than last year at 704,000 bpd, operated at 43% of capacity between April and June, company data show.

Lopez Obrador, who won a landslide victory in national elections on July 1, has promised to change that. He said he will prioritize raising refinery output to full capacity in two years, and build the new refinery in Tabasco.

He also named Manuel Bartlett as head of the Federal Electricity Commission, Rocio Nahle to the post of energy minister and Alberto Montoya as deputy energy minister.

Under Lopez Obrador’s predecessor, international oil companies had recently been allowed to re-enter Mexico’s production areas after being banned for more than 70 years. The new president could suspend oil auctions and review contracts already awarded for signs of corruption. The National Hydrocarbons Commission said last week that an auction to develop seven onshore areas in partnership with Pemex will now be held on February 14, from October 31 previously. A competitive bid for over 40 onshore areas will take place the same day after being pushed back from September 27.

The company is also seeking to raise an additional $3 billion to $3.5 billion in debt before the end of the year “if market conditions are favorable,” Pemex CFO David Ruelas said on a conference call with investors. Pemex’s total debt was 2.07 trillion pesos as of June 30 an increase from 1.95 trillion pesos three months earlier.

***

Review Guyana Oil Spill Plans Before Signing Contracts

(Kaieteur News, 30.Jul.2018) — Before any contract is signed with an oil operator, the government should require that it presents and obtains approval for contingency plans in the case of emergency.
According to the Natural Resource Governance Institute (NRGI), these contingencies should include the availability of equipment and expertise to manage accidents, such as oil spills. The Institute said that this should be accompanied by the means to monitor a project throughout its life cycle to ensure that all parties follow the plan and to identify future, unexpected impacts of the project.

As it is impossible to predict all the potential costs, NRGI said that requiring developers to have systems in place to monitor and manage environmental and social impacts on an ongoing basis is just as important as the assessments conducted in project planning.

The Institute opined that the government is responsible for setting and enforcing environmental standards (preferably in compliance with international standards such as the Equator Principles), while the extractive company is usually in the best position to mitigate environmental damage. The international organization said that companies may have only weak incentives to consider the environmental consequences of operations, unless the government makes it a condition of awarding the concession, with penalties attached. As such, NRGI said that the government should ensure that either it or the company sets aside funds for remediation, as the company may leave or sell to another party when projects become unprofitable, which may be long before the official project period ends. It said, too, that independent contractors, acquired on a competitive basis, can be hired to undertake environmental operations such as reclamation.
Further to this, NRGI said, “The security arrangements around projects can give rise to human rights concerns when private or state security forces use excessive force. Operations should include strong safeguards and legal recourse mechanisms in cases of human rights violations.”

NRGI said, “Finally, the government should separately and explicitly identify and factor into the decision-making process the social impact of extraction on vulnerable or marginalized groups of resource extraction since these groups are often omitted from broader community impact consideration.”

***

Petrofac Introduces Partner In Mexico

(Petrofac Limited, 30.Jul.2018) — Petrofac Limited signed an agreement to sell 49% of the Company’s operations in Mexico(1)(2), including Santuario, Magallanes and Arenque, to Perenco (Oil & Gas) International Limited (“Perenco”). The transaction is subject to approval by the Federal Competition Commission of Mexico (COFECE), which is expected in Q4 2018.

Under the terms of the agreement, Perenco will pay an initial cash consideration of US$200 million, with US$30 million payable upon signing and US$170 million payable upon completion. The total consideration comprises a fixed amount and contingent consideration depending upon a number of future milestones, including future field development and migration terms of Petrofac’s Magallanes and Arenque Production Enhancement Contracts. This final amount is subject to adjustment based on achievement of the milestones above and will be capped at US$274 million. Petrofac currently estimates that an impairment charge of approximately US$100 million will be recognised on completion against its 100% equity interest in its Mexican subsidiaries(3). Proceeds from the sale will be used to reduce gross debt.

Petrofac’s Group Chief Executive, Ayman Asfari said: “We are delighted to welcome an experienced partner in Perenco to our Mexican operations. They bring strong technical capability that will complement our existing brownfield operations experience to strengthen our offering. We look forward to working with them and the other stakeholders to further develop our mature field interests in Mexico. Today’s agreement also marks further progress in delivering on our strategy to reduce capital intensity.”

Perenco’s CEO, Benoit de la Fouchardiere, said: “Following a previous successful collaboration with Petrofac we have been delighted to explore further opportunities to work together. Mexico is a land of opportunities, a new play, a new country and an exciting new challenge for Perenco. Partnering with Petrofac in Mexico will give us a fantastic opportunity to reach our goals in a timely manner and, by our results, demonstrate to the State company Pemex that we can also be a partner of choice for the future.

“Perenco remains proud of its independence which allows us to work differently and make our own success. However, by being pragmatic and opportunistic we are always looking to learn from others and try to improve ourselves thereby targeting a win-win relationship with Petrofac. Congratulations to the Perenco and Petrofac teams for having achieved our joint venture agreement, and I am looking forward to seeing immediate results from this promising new Mexican partnership.”

NOTES

1) This transaction will be effected by the sale of 49% of Petrofac Netherlands Holding B.V., which holds the Santuario Production Sharing Contract, the Magallanes Production Enhancement Contract (a tariff-per-barrel-based service contract) and the Arenque Production Enhancement Contract.

2) The gross assets being disposed of (49% of the consolidated Petrofac Netherlands Holding B.V. group) had a carrying amount of US$357 million at 31 December 2017. The net assets being disposed of (49% of the consolidated Petrofac Netherlands Holding B.V. group) had a carrying amount of US$293 million at 31 December 2017. Petrofac Netherlands Holding B.V. group made a business performance net loss of US$29 million for the year ended 31 December 2017 (49% share equals approximately US$14 million).

3) This is subject to change and the actual charge will take into account, inter alia, the net assets at the date of completion, as well as management’s assessment of the fair value of contingent consideration, which includes future Production Enhancement Contract migration terms.

***

#LatAmNRG

Hold It Right There, Petrotrin!

Source: Jamaica Observer

(The Sterling Report, Yanique Leiba-Ebanks, 29.Jul.2018) – Petroleum Company of Trinidad and Tobago Ltd (affectionately known as Petrotrin) is the state-owned oil company in Trinidad and Tobago. Its crude oilfields are located across the south-western peninsula of Trinidad, off the east coast of Trinidad, and in Point Fortin. The country’s economy primarily emphasises oil and petrochemicals, with oil contributing 40 per cent of GDP.

This is what contributed to Trinidad’s enormous wealth as measured by its Net International Reserves which stand at 9.4 months of imports (Dec. 2017) vs. 19.8 weeks for Jamaica (June 2018).

This also led to the country having “A” rated debt as compared to single “B” for Jamaica.

All this changed when oil prices started to decline and their debt was downgraded to BBB+ which is still investment grade, but after further deterioration of the economy, S&P moved its outlook to negative in April.

WHY DO WE CARE ABOUT PETROTRIN?

Petrotrin issued a US$850-million bond that matures in August 2019. While the company has issued other bonds, this was the most attractive to investors. The bond is/was one of the most popular bonds in the market.

The reasons were simple: firstly, everyone in Jamaica was familiar with Trinidad, secondly, the bond has a very short maturity — it matures in 2019, and thirdly, the coupon rate is fixed at 9.75 per cent.

In many ways it was a no-brainer, and given the importance of oil to Trinidad, it was assumed that it was implicitly guaranteed by the Government.

SO WHAT WENT WRONG?

Investors became jittery when the financials showed that the company recorded a massive loss of TT$2.2 billion in 2017. According to a Moody’s report, the cash flow (as at September 2017) was woefully inadequate for repaying the debt maturing in 2019.

The updated figure shown in the financials as at June 2018 shows approximately US$200 million of cash against total debt of US$1.728 billion and a current ratio that is much less than one.

Furthermore, it was announced that Petrotrin was going to split operations and reorganise in February 2018. This was against the backdrop of a deteriorating economy in Trinidad where real GDP growth contracted by 6.0 per cent in 2016 and 2.6 per cent in 2017.

Real GDP growth (Annual percent change) 2014 2015 2016 2017 2018

Trinidad and Tobago -0.3% 1.5% -6.0% -2.6% 0.2%

Source:IMF

LATEST DEVELOPMENTS

  • Petrotrin has recorded an after-tax profit of TT$85.6 million for the quarter ended June 30, 2018. This compared to a loss of TT$517.5 million in the previous quarter.
  • Petrotrin was given the green light to terminate contract with A&V Oil amidst a scandal where the company paid $100 million to A&V Drilling, for oil which was not supplied. In addition, findings showed that the reservoir was incapable of producing the volumes in question.
  • IMF stated that oil output is improving due to exploration and refinery upgrades by Petrotrin. It added that Trinidad & Tobago’s growth may be flat or somewhat negative this year but the economy “may be starting to turn a corner as a result of a projected recovery” in the energy sector.
  • Local and global banks are already in talks with Petrotrin about restructuring the bonds and general liability management.

As a result investors are concerned about the refinancing options available to Petrotrin, especially in light of a recent announcement that the Government will not be guaranteeing any new debt and low cash flows. However, as listed under the latest developments, talks are underway regarding the restructuring of the bonds.

In addition, Petrotrin is a significant contributor to Trinidad and Tobago’s GDP and as such, it would be financial suicide to let it fail, but if you hold this bond, keep a track of the developments and act accordingly.

Yanique Leiba-Ebanks, CFA, FRM is the AVP, Pensions & Portfolio Investments at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at www.sterling.com.jm Feedback: If you wish to have Sterling address your investment questions in upcoming articles, e-mail us at: info@sterlingasset.net.jm

***

Trafigura Seeks to End Ricardo Eliçabe Conflict

(Energy Analytics Institute, Ian Silverman, 28.Jul.2018) – Negotiations continue to advance to overcome a labor related conflict at the Ricardo Eliçabe refinery in Bahía Blanca.

The refinery, acquired last May by the Dutch group Trafigura, has been paralyzed for almost two months, reported the daily newspaper Clarin.

The labor conflict stems from a decision by Trafigura in early June of 2018 to no longer acquire crude for processing. The decision affects an estimated 200 workers.

Recently, in a move to prevent layoffs, the union of Petroleum, Gas and Biofuels Workers has started to accept offers related to voluntary departures and retirements.

“If we can confirm the list of workers who would leave the refinery and it’s accepted by the company, we would close the conflict,” reported the daily, citing union official Fabio Pierdominici.

***

Sproule To Publish Bolivian Reserve Report

(Energy Analytics Institute, Ian Silverman, 28.Jul.2018) – Sproule International Limited, the foreign consortium that will quantify and certify Bolivia’s hydrocarbon reserves, plans to publish its reserve report in late August 2018.

The consortium, which was awarded the project earlier this year for $750,000, had originally planned to publish the report in May, but has revised the date to late August, reported the daily newspaper La Razón, citing Yacimientos Petrolíferos Fiscales Bolivianos President Óscar Barriga.

***

Chuquisaca Signs Multi Billion Oil Deal

(Energy Analytics Institute, Ian Silverman, 28.Jul.2018) – The agreement, signed between the Bolivian government and authorities from the department of Chuquisaca provides for initiation of work in more than 8 areas.

Announcement of the planned investments came after meetings between the government, and authorities and representatives from different sectors of this southern region. The signed agreement pretends to “leave behind moments of conflict of past months,” reported the daily newspaper El Diario.

Per the agreement, the department of Chuquisaca will benefit from investments to be destined for exploration and promotion of the hydrocarbon sector.

Between 2018-2021, an amount of $1.290 billion will be destined to several hydrocarbon deposits in the region. The remaining investment will come from an agreement reached last month in Moscow with Gazprom, during an official visit by Bolivia’s President Evo Morales, and in which the Russian company announced plans to allocate 1.224 billion euros to a hydrocarbon field in Chuquisaca.

Recent Conflict

In May, the department of Chuquisaca was virtually paralyzed for two weeks as main avenues and roads that connect the capital with the rest of the country — including access to its airport — were blocked.

The conflict stemmed from a decision by the government that said an important natural gas deposit was located in the Santa Cruz region instead of Chuquisaca, as originally thought.

***

Colombia Must Boost Investments 55% to Maintain Output

Oil field in Colombia. Source: Ecopetrol

(Energy Analytics Institute, Piero Stewart, 27.Jul.2018) – The South American country needs to boost investments from an projected $4.5 billion in 2018 to a level of $7 billion over the next four years in order to maintain oil production and also increase proven reserves.

The investments are needed in order for Colombia’s oil sector to continue to play a leading role in terms of national finance contributions, reported the daily newspaper El Tiempo.

Additionally, conditions must be met to produce a sustained upturn in investment in exploration and production activities, which will assist the country maintain its current production level of some 860,000 barrels per day, reported the daily, citing Colombian Petroleum Association (ACP) President Francisco José Lloreda.

The increased investments will also allow Colombia to increase its proven crude oil reserves — which amounted to 1.782 billion barrels in 2017 — by an additional 2 billion barrels, and sustain revenues to guarantee macroeconomic stability and meet the goals of the Medium-Term Fiscal Framework.

Lloreda estimates that between 2018 and 2022 that the hydrocarbon sector could generate around 100 trillion pesos in tax revenues for the country through contractual economic rights, dividends and royalties, which would leverage initiatives to continue generating progress and improve the quality of life of Colombians.

***

10MW LNG Power Plant for The Nest

(Jamaica Gleaner, Steven Jackson, 27.Jul.2018) – A tripartite deal is in the works for the development of a power plant at CB Group’s expansive property and future home called The Nest, that is meant to supply all the poultry company’s energy needs.

The disclosures so far indicate that Jamaica Public Service Company Limited, JPS, will develop and own the 10MW power plant that will be fuelled by liquefied natural gas (LNG), while New Fortress Energy will develop the LNG infrastructure and supply gas for the plant.

The energy project is referenced in a newly released environmental study on the proposed development of The Nest at Hill Run, St Catherine, which was published on planning authority NEPA’s website.

CB’s Corporate Affairs Manager, Dr Keith Amiel, said the power plant would make The Nest self-sufficient. CB and most of its satellite and subsidiary operations are expected to move into The Nest in 18 months.

“Anything remaining would be sold back to power the grid,” Amiel said on Wednesday.

The financing of the project was not disclosed, but the EIA for The Nest makes clear that JPS and New Fortress would have to develop their own environmental study for the power project – suggesting that the bulk of the investment may be coming from those two entities.

New Fortress, which has developed and is developing LNG supply infrastructure for several corporate entities, including JPS, typically fully finances and owns the gas infrastructure for such projects.

“US-based NFE will deliver LNG to the JPS 10MW distributed generation facility, located at the CB Hill Run facility, in order to provide the fuel required to operate electric power-generation units,” said the EIA report for The Nest. “NFE will provide all the infrastructure required to complete the LNG system and the distribution of natural gas project successfully, including storage tanks and regas/processing system.”

The project will include two storage tanks of more than 18,000 gallons in size, but the exact specifications are to be determined. The facility would be designed to store gas for five days, but will accept daily deliveries of 19,000 gallons trucked from New Fortress’ Montego Bay facility.

“They estimate 17.8 truck deliveries per week,” the report noted.

The Financial Gleaner awaits JPS’ promised response on its plans to develop the power plant.

CB’s poultry-processing plant at The Nest is an energy-intensive operation designed to process roughly 100,000 birds per nine-hour shift.

Development of The Nest 100, which spans acres at Hill Run, will proceed in phases over seven years. CB Group is investing $15 billion in the facility.

***

Petrobras Targets China with New Crude Oil

(Reuters, Florence Tan and Alexandra Alper, 27.Jul.2018) – Brazil’s state-controlled energy company Petrobras plans to push more crude oil to top importer China by marketing a new medium-sweet grade that could be shipped from October, two sources with knowledge of the matter said.

Petrobras expects to start pumping pre-salt oil from new platforms in the fourth quarter that would add to output from Latin America’s biggest producer and lift its exports.

The new supply could enlarge Brazil’s market share in China as buyers there cut oil imports from the United States following Beijing’s announcement it would impose tariffs on U.S. crude in retaliation against similar moves by Washington.

“Petrobras’ oil export curve is increasing and China is currently the company’s main market,” a Petrobras spokesman said in an e-mail.

“With (Chinese) refineries’ growing interest in buying oil directly from producers … Petrobras will grow its presence with these refiners.”

Petrobras started production in April at its wholly-owned Buzios pre-salt field in the Santos basin from platform P-74, located about 200 km off the Rio de Janeiro coast in water depths of 2,000 metres, according to the company’s website.

Two more platforms, P-75 and P-76, are to come online in the fourth quarter. Total Buzios output is expected to grow to 750,000 bpd by 2021, once an additional four platforms come online, the company said.

Buzios crude has API gravity of 28.4 degrees and contains about 0.31 percent sulphur, similar in quality to Brazil’s Lula crude, one of the most popular oils in China, the company said.

The new supply could help lift Petrobras’ crude oil exports, which dropped 53.8 percent in June from a year ago to 696,000 barrels per day (2.86 million tonnes) as the company hiked its refinery output.

Petrobras’ overall production in June stood at 2.03 million bpd, down 1.5 percent from May.

Brazil’s oil liquids output, including biofuels, is expected to rise by 200,000 bpd to 3.5 million bpd in 2019, after holding steady in 2018, according to consultancy Energy Aspects.

CHINA RISING

China’s demand for low-sulphur crude, such as oil from Angola and Brazil, jumped over the past two years after its independent refiners, also known as teapots, were allowed to import crude.

That has moved Brazil up two notches since 2017 to fifth on China’s supplier list, with 657,000 bpd in the first quarter this year, according to data from China customs.

The teapots’ oil imports from Brazil more than doubled in the first half of 2018 to 350,000 bpd compared with the same period a year ago, according to Beijing consultancy SIA Energy.

More than half of Brazil’s shipments to China went through ports in Shandong province, home to most of China’s independent refiners, according to Thomson Reuters Eikon data.

Petrobras also supplied the first crude cargo to Chinese chemical producer Hengli Group for the start-up of its new refinery in northeast China in the fourth quarter of this year. New Brazilian crude Mero was also delivered to Shandong in June.

Petrobras has expanded its trading team in Singapore to step up marketing efforts in China, the two sources familiar with the matter said. The company has appointed a business development person from within the company and hired a crude trader from a Chinese refiner who will join in September, the sources said.

“In order to improve market share in China, and considering the entry of the teapots in the international market, Petrobras considers that it is necessary to have a professional fluent in Mandarin for the specific development of this market,” the company said, without confirming the new hire.

Asia’s largest refiner Sinopec bought a third of China’s Brazilian oil imports in the first half of 2018, up 13 percent from a year ago, SIA Energy analyst Seng Yick Tee said.

“Sinopec and independents have the appetite for additional crude imports from Brazil, and the potential tariffs on U.S. crude is one of the reasons,” Tee said.

Trade flow data on Eikon, however, shows Brazilian exports to Shandong look set to drop in the third quarter – before the additional Buzios platforms start up – as poor margins and tighter credit have forced teapots to cut runs.

The tough environment is expected to push independents to seek more competitive oil supplies, Tee said.

Other sellers of Brazilian crude include Royal Dutch Shell and Equinor. State-owned China National Petroleum Corp (CNPC) and CNOOC Ltd also have equity stakes in Brazilian oilfields.

***

Pemex Reports 2Q:18 Sales Rose 36%

(Pemex, 27.Jul.2018) – The company recorded operating yields of 120 billion pesos

During the first quarter of 2018, it achieved an EBITDA of 288 billion pesos and an EBITDA margin 35

Today, Petróleos Mexicanos announced its financial and operating results for the second quarter of 2018, which show a total increase in sales of 36 per cent, compared to the same quarter of the previous year.

Concerning exploration and production activities during the second quarter of 2018, Pemex achieved success in the Manik-101A well, which is part of the Chalabil Project, located in shallow waters off the coast of Tabasco. This discovery is expected to contribute 1,300 barrels of crude oil and 1.3 million cubic feet of gas per day. As of the closing of the second quarter, the company has 37 drills, which translates into a 37 per cent increase compared to the second quarter of the previous year. Crude oil production averaged 1,866 thousand barrels a day during this quarter.

On the 7th of May, through Pemex Exploración y Producción (Pemex Exploration and Production), Pemex signed the four deep-water contracts that were awarded in Round 2.4 (2 as part of a consortium and 2 individually); later, on the 27th of June, the company signed an additional 7 shallow-water contracts awarded in Round 3.1 (6 in a consortium and one individually).

It is important to point out that during this quarter, the efficiency of natural gas use increased from 95.9 to 96.7 %, compared with the same quarter of the previous year. This marks a reduction in gas flares, which is aligned with Pemex’s commitment towards environmental sustainability.

Regarding Transformación Industrial (Pemex Industrial Transformation), on the 3rd of May, Pemex signed a marketing contract for diesel and gasoline with one of its largest clients, who holds over 200 service stations throughout central Mexico. As of the month of June 2018, Pemex has undersigned 172 new marketing contracts with its gasoline and diesel clients, including independent service stations and large commercial corporations, which number over 2,200 service stations throughout the country. Petróleos Mexicanos reaffirms the trust and commitment it has placed in its commercial partners and continues to assure the supply of Pemex brand fuel in these service stations.

In connection with the adherence to its Occupational Health and Safety and Environmental Protection Program (initials in Spanish, SSPA), the accident frequency index fell to 0.33 injuries per million man-hours during the second quarter, so the company achieved the goal of zero accidents during this period. On the other hand, the Pemex severity index was reduced by 11 workdays lost per million man-hours, i.e., the days of work lost because of occupational accidents were reduced by 10 days compared to the second quarter of 2017.  Furthermore, sulfur oxide emissions were 20% lower than during the second quarter of the previous year.

As a result from these operations, Pemex achieved total sales for 254 billion pesos in the second quarter of 2018, a figure 36% higher than the result obtained during the same quarter of the previous year. Operating yields were 120 billion pesos, a growth almost 37% greater than the second quarter of 2017.  Operation, management, distribution and sales costs remained stable and aligned with the current austerity and expenditure policies.

Considering the depreciation of the peso against the dollar during the second quarter of 2018, the currency exchange losses and net financial costs increased, the impact of which was largely limited to accounting and did not carry any large cash operations, and led to a negative net result of 163 billion pesos. This result may be reversed if the appreciation of the peso against the dollar that was observed in July remains over the following months.

During the first quarter of 2018, Pemex maintained an adequate capacity for the generation of cash flow with an EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of 288 billion pesos, 14% greater than the EBITDA obtained during the first semester of 2017.  The  EBITDA of the first semester of 2018 is 35%.

Pemex continues implementing its Business Plan for 2017-2021, continually seeking to improve its competitiveness and value generation.

***

Venezuela Inflation to Hit 1 Mln Percent. Thanks, Socialism.

Oil pumpjacks are seen in Venezuela in May. (Isaac Urrutia/Reuters)

(Washington Post, Megan McArdle, 27.Jul.2018) – According to the International Monetary Fund, by the end of the year, the annual inflation rate in Venezuela will reach 1 million percent.

A number like that is hard to grasp. Simply put, a candy bar that cost $1 today would cost $10,000 at the end of a year. Anyone in that position would understandably rush to spend the money right now, on anything that might possibly hold its value. Everyone else would too. The entire economy becomes a giant game of monetary “hot potato.” Saving or planning becomes a sucker’s game.

Venezuela is not exactly a struggling undeveloped country; it has the world’s largest proven oil reserves. How the heck did this happen?

There are two answers, one technical and one political.

The technical answer is that hyperinflations occur because the government wants to spend much more money than it is collecting in taxes — so much more that no one is willing to lend it the money to cover the deficit. Instead, the government uses the central bank to finance the deficit. That puts more money in the economy, but since it’s chasing the same number of goods and services, prices rise to soak up all the extra cash. Unless the government manages to close its budget deficit, it must print even more money to buy the same amount of stuff . . .

Rinse and repeat a few times, and the inflation rate starts running into many zeros. The end generally arrives in one of two unpleasant ways: The government decides to stop the madness and implement a strenuous reform program, or the currency becomes so utterly devalued that churning out more of it is pointless. By the end of its hyperinflation, Zimbabwe was printing bank notes that ran into the trillions.

But it’s not a secret that this is where hyperinflation ends. Why did Venezuela embark on the road to destruction? And why does the government stay on it while the citizenry slowly starves?

In a word, socialism. After his election as president in 1998, Hugo Chávez pursued an increasingly aggressive socialist agenda, one that continued under his 2013 successor, Nicolás Maduro. Chávez nationalized foreign oil fields, along with other significant portions of the economy, and diverted investment funds from PDVSA, the state-owned oil company, into vastly expanded social spending.

Unfortunately, Venezuela’s heavy, sour crude oil was unusually hard to get out of the ground. Continual investment was needed to keep it flowing. So was the expertise of the banished foreign owners and the PDVSA engineers Chávez had purged for opposing this scheme. Production plunged; the only thing that kept Venezuela from disaster was a decade-long oil boom that offset falling production with rising prices.

Then came the 2008 financial crisis that crushed global demand for oil, followed by the onrush of U.S. shale oil, driving prices down further. And no one would loan money to Venezuela that couldn’t be repaid in oil. Meanwhile, unwilling to admit that socialism had failed, Venezuela made a fateful turn to the central bank.

Now, one could say that this is not an indictment of socialism so much as the particular Venezuelan implementation of it. But it’s striking how the precarious economics of socialism, including hyperinflations, are tied to petroleum. Many of the notable hyperinflations in history were tied to the collapse of the Soviet Union. And the story of the Soviet collapse is also a story about oil.

Central planning had wrecked the Soviets’ grain production by the 1960s, and collectivized industry didn’t produce anything that the rest of the world wanted to buy, leaving the Soviets unable to obtain hard currency to import grain. Oil sales propped up the Soviets until the mid-1980s , when prices crashed as new sources of oil came online (sound familiar?). The Soviet leadership was forced to liberalize to rescue the economy. The U.S.S.R.’s collapse soon followed.

Socialism, in other words, often seems to end up curiously synonymous with “petrostate.” The new breed of socialists cites Norway as a model, but saying “we should be like Norway” is equivalent to saying “we should be a very small country on top of a very large oil field.”

Without brute commodity extraction, you need capitalist markets to generate a surplus to distribute, which is why Denmark’s and Sweden’s economies have more in common with the U.S. system than with the platform of the Democratic Socialists of America. And as both Venezuela and the Soviet Union show, even oil may not be enough to save socialism from itself.

***

Venezuela Gasoline Price Likely to Rise

(Energy Analytics Institute, Piero Stewart, 27.Jul.2018) – The price of gasoline in Venezuela is likely to increase.

For some services such as gasoline, there will be a relative increase in price, reported the daily newspaper El National, citing Ecoanalítica Director Asdrúbal Oliveros.

“It’s as if they were decreeing an unannounced increase in many of the services, and that has a significant impact not only on daily life, but also on inflation that will be generated,” said Oliveros.

Venezuela has long subsidized the price of the country’s gasoline and diesel, which has allowing its citizens to enjoy the world’s cheapest fuel prices. In 1989, increases in foodstuffs and fuel prices provoked nationwide protests, which eventually led to rise of the late President Hugo Chavez.

“The increase in gasoline will push up demand for cash since a rise in gasoline prices will force citizens to seek out more paper money,” he warned.

***

Hiking Gasoline Won’t Fix Venezuela’s Fiscal Problem

(Energy Analytics Institute, Piero Stewart, 27.Jul.2018) – Hiking the price of gasoline in Venezuela won’t fix the OPEC country’s fiscal problem.

That’s according to recent statements from an opposition leader.

“Although the price of fuel has to be raised, it will not be enough to solve the [country’s] fiscal problem,” reported the daily newspaper El Nacional, citing deputy and economist Angel Alvarado.

Venezuela needs worldwide financial assistance, including help from the International Monetary Fund (IMF), said Alvarado.

“That’s why the National Assembly Constituent, which is illegal, must be dissolved to recognize the National Assembly and call for free elections,” he affirmed.

***

Falling Oil Output Squeezes Maduro Government

(Energy Analytics Institute, Piero Stewart, 27.Jul.2018) – The continued decline in Venezuela’s oil production acts to squeeze the government of President Nicolas Maduro, says an Ecoanalitica executive.

“The fall in oil production puts more restriction on the government,” said Ecoanalitica Director Asdrubal Oliveros during an interview with Shirley Varnagy on her program ‘Shirley Radio.’

Venezuela, the country with the world’s largest oil reserves, continues to suffer self-inflicted economic, financial and humanitarian crises. Production of the country’s primary export, crude oil, fell to 1.340 million barrels per day in June 2018 compared to 1.911 million barrels per day in 2017, according to OPEC’s most recent Monthly Oil Market Report and based on secondary sources.

***

SPS Expects Urdaneta Field Output Increase

Southern Procurement Services (SPS) President Manuel Chinchilla (pictured right). Source: SPS

(Energy Analytics Institute, Piero Stewart, 26.Jul.2018) – Southern Procurement Services (SPS) expects production from the Urdaneta Field in Zulia state to increase to 19,000 barrels per day (b/d) from 12,000 barrels per day in 45 days due to the purchase of Russian and Ukrainian equipment.

“We will reach 19 thousand barrels per day thanks to the system of artificial lift by electrosumergible pumping”, announced SPS in an official statement on its website, citing company President Manuel Chinchilla. The tasks will also involve the repair and installation of pipelines, he added.

SPS has intervened in 30 wells in an effort to boost oil production, and recent studies reveal productive per well potential of 400 to 530 barrels per day, according to the company.

“We estimate to close the year above 35 thousand barrels of crude oil per day,” concluded Chinchilla.

***

Advantage Lithium Closes Financing

(Energy Analytics Institute, Ian Silverman, 26.Jul.2018) – Advantage Lithium Corp. closes private placement.

In the process, the company issued 15,585,956 common shares for aggregate gross proceeds to Advantage Lithium of C$12,001,186.

Pursuant to an agency agreement, Advantage Lithium will pay a cash commission of 6% on a portion of the gross proceeds from the private placement to Jett Capital Advisors, LLC.

Additionally, Advantage Lithium announced that Orocobre Limited and an insider of the corporation have exercised participation rights to maintain pro rata ownership. Insiders have participated in this financing purchasing 15,176,956 shares for $11,686,256.

“We are pleased with the successful completion of this financing and the continued support from Orocobre and other existing shareholders,” reported Advantage Lithium in an official statement, citing its CEO & Director David Sidoo. “We have underpinned our shareholder base with the addition of a high-quality institutional investor. Advantage is now in a very strong cash position.”

***

Petrotrin Board, Union Disagree to Agree

(Trinidad and Tobago Newsday, Carla Bridglal, 26.Jul.2018) – The board of Petrotrin has outlined a plan to reorganise and restructure the state oil company in a bid to make it more competitive and become a viable asset to the people of Trinidad and Tobago. The unions, including the most vocal majority Oilfield Workers’ Trade Union (OWTU) agree that this is the best strategy to move the company into a sustainable future. Yet nearly four months after the board started the restructuring process, and three months after both parties signed a memorandum of agreement that this is the path they must take, together, the process has reached a stalemate. It’s a strange stasis — both parties agree on the fundamental challenges and solutions, but neither is willing to concede to the other in an effort to get the ball rolling on a mutually beneficial outcome.

Petrotrin's board and union disagree to agree

The union believes the board is reneging on its promise to meet with them. The board insists that the union has not adequately put forward a plan to discuss. The union insists it wants the company divided into four subsets, each with a division head to oversee operations — land exploration, marine exploration, refining and marketing, and the hospital. The board has already split the company into two — upstream (exploration and production) and downstream (refining and marketing). And as far as they are concerned, the union is squabbling over superficial nomenclature. The union, for its part, believes the board lacks the proper expertise to run an oil company.

The board still appears to be going ahead with its 18-month turnaround plan, but if it is to make any material changes to things like staffing, for example, it will need union buy-in.

And while it doesn’t seem like the Board and the union have made any inroads recently, at least for a formal meeting, there was a clash of the titans of sorts, when chairman of Petrotrin, Wilfred Espinet, and OWTU president general Ancel Roget agreed to sit on a panel moderated by journalist and director of the Lloyd Best Institute, Sunity Maharaj last Wednesday, in front of a packed auditorium, filled mostly with a boisterous union crowd, at the Government Campus Plaza Auditorium in Port of Spain.

“Let me make it abundantly clear what they (the unions) are trying to do is make noise of things that are not really important. The important thing is to make the company viable. It has to be competitive and to do that it has to focus on operations as a clear part of the strategy,” Espinet said.

It’s the Board’s mandate to restructure the company so it can become profitable and sustainable, he said. Petrotrin needs to operate like an international company, and think beyond TT oil, he said. Oil is a commodity and to be able to keep operating, the company needs to be able to sell that oil.

The refinery at Petrotrin has a capacity of 140,000 barrels of oil per day (bopd); the company produces about 42,000 bopd — a shortfall of about 100,000 bopd, which must then be imported.

The OWTU agrees. In fact, one of Roget’s major points was that the company needed to be more efficient in hiring skilled personnel to operate and manage the company’s exploration and production activities. There are some sectors, like human resources that are overstaffed, he said, while several technical sections, like marine have several vacancies; the refinery alone has over 100 vacancies for operators, he said. If wages are a significant part of the company’s expenses, it’s only because the shortage of experienced staff meant people had to pull double and even triple shifts.

“We have an overburdened top management structure; the structure we have proposed does not carry all of that ‘fat’ of management because it is not necessary. What is necessary is a management that is focused and accountable,” Roget said.

Time is of the essence, he said, especially if the company is to take advantage of rising commodity prices, and the OWTU wants to begin a process that will move the company forward, with competent management void of politics.

Both men stubbornly stuck to their message, and sometimes tiresome rhetoric. Espinet reiterated the mandate of the Board to go ahead with the reorder regardless, and Roget made veiled threats of “taking a particular course of action to force them to do what they need to do.”

Yet despite the similarities of their arguments, both parties still can’t seem to agree, much to the bemusement of observers like the third panelist, energy consultant Anthony Paul.

“It’s remarkable to me how much convergence I’m hearing and yet we are focusing on the divergence,” Paul said. So while the OWTU and the Board could both agree that governance structures and efficiency in production need to be improved, the one thing that seems to be missing from the equation is a shift in culture. “We know the challenges of getting the right people and competencies; putting in place systems of governance and management for operations. There may be disagreement with numbers and those are easy to fix. But there’s an elephant in the room that is not being addressed yet and I’ll put it out there. It’s about culture. An organisation needs a culture to guide the way they behave and their ethics,” he said, adding that both parties needed to listen to and learn from each other. Petrotrin was facing a precipice, he said, and neither party would fare well if the company went over and for that not to happen, things need to change.

***

Atlantic Empowers Employees for Process Safety

(Trinidad and Tobago Newsday, Carla Bridglal, 26.Jul.2018) – Atlantic CEO Dr Philip Mshelbila and BP’s vice president Group Process Safety Central Rob DiValerio have highlighted the central role of employees in the systems that protect natural gas plants from leaks and other failures.

The two headlined the recently concluded seventh annual Process Safety Week, hosted by LNG production company, Atlantic, for its employees and service providers at its Point Fortin liquefaction facility.

Atlantic CEO Dr. Philip Mshelbila addresses employees at Atlantic’s 7th annual Process Safety Week. Source: Trinidad and Tobago Newsday

Process Safety is a framework used by LNG facilities and process plant operations to manage the systems that prevent leaks, spills, equipment malfunction, extreme temperatures, corrosion and metal fatigue, which all have the potential to cause hazardous incidents. In the industry, incidents related to these systems are described as process safety incidents.

At the launch of the event Dr Mshelbila and DiValerio shared some of their personal experiences in managing the tragic outcomes of Process Safety incidents in Nigeria and USA respectively.

“One of the biggest dangers to process safety is complacency due to familiarity,” Dr Mshelbila said. “We cannot rely on luck to be our barrier. We have to live Process Safety if we are going to manage it as the way in which we operate. It cannot be something we switch on and off. Our key objective is that we perform at our best and recognise the accountability and responsibility for process safety that comes with each of our roles. Every person has to participate – teamwork is the only way to succeed.”

DiValerio highlighted the importance of barrier management, the practice of continuously evaluating and enhancing the systems that protect natural gas plants from leaks.

“Incidents should not be seen as an interruption but as an opportunity to learn,” DiValerio said. “The key factor in ensuring Process Safety performance is simply identifying the barriers used to mitigate the routes of loss of containment (of hazardous materials) and understanding how robust they are.”

Established in 2012, Atlantic’s Process Safety Week features lectures, presentations and booth displays, all aimed at deepening employee and service provider knowledge of process safety at Atlantic and in the wider industry. This year’s theme was Enhancing Process Safety Performance. Over three days, 27 sessions were held, featuring presenters representing Atlantic, Shell, BP, NGC, Worley Parsons, Massy Wood Group and Lloyd’s Register. Sessions were also held for night shift personnel, as part of Atlantic’s commitment to expose all employees to industry best practices in Process Safety.

***

Pemex to Carry Out Maintenance On El Señor del Mar

(Pemex, 26.Jul.2018) – The works will not affect the production goals established by Pemex for the current year

Starting this Saturday, July 28th and until the 4th of August, Petróleos Mexicanos, through Pemex Exploración y Producción (Pemex Exploration and Production), will perform scheduled maintenance work on the tanker vessel Yúum K’ak’náab, better known as El Señor del Mar (The Lord of the Sea), which is anchored in the Campeche Sound.

Work on El Señor del Mar will be performed according to the safety and environmental protection protocols that govern the State-Owned Productive Company. Due to its technical characteristics, maintenance is performed on this vessel every year, specifically for its safety and processing systems, which guarantees its continued operation and reliability, and also ensures keeping all certifications current, which meet the highest quality and safety standards.

This scheduled shutdown will reduce daily production by approximately 95,000 barrels of crude oil and 28 million cubic feet of gas in the Ku-Maloob-Zaap field. However, this temporary reduction has been taken into consideration from the beginning and will therefore not have a damaging effect on the annual production goal established by Petróleos Mexicanos.

The FPSO (Floating Production Storage and Offloading), as this kind of oil production vessel is known, are enormous ships used for the production, storage, and discharge of hydrocarbons, where the crude oil and the gas from production wells are separated. El Señor del Mar is currently operating in the Ku-Maloob-Zaap Field, as it has since mid- 2007.

The storage capacity of El Señor del Mar could fill the Plaza Mexico (Mexico’s Bull-fighting Ring) four times, and its length is comparable to four football fields. The hull of the vessel is twenty-five feet higher than the Pyramid of Kukulcán in Chichén Itzá, and has an electricity production plant that produces 48 MW, which is enough energy to power 40,000 homes.

***

Pemex Aims to Reduce CO2 Emissions by 25% by 2021

(Pemex, 26.Jul.2018) – Environmental protection and sustainability, the governing principles of the State-Owned Productive Company’s work

The CEO of Petróleos Mexicanos, Carlos Treviño, inaugurated the 7th Environmental Conferences this morning

For Petróleos Mexicanos, environmental protection and sustainable development are high-priority values. Therefore, the State-Owned Productive Company expects to reduce its carbon dioxide (CO2) emissions into the atmosphere by 25 per cent, as well as to increase water recycling by 60 per cent by 2021, compared with 2016 levels.

This morning, Pemex CEO Carlos Alberto Treviño Medina, presided over the grand opening of the 7th Environmental Conferences, and during his speech he expressed the company’s commitment towards minimizing the environmental impact of its activities, which stems from a respectful approach towards the environment and efficient use of natural resources.

During the event, which was held in the 18 de Marzo Auditorium of the Pemex Management Center, Treviño Medina stated that sustainability is a factor that characterizes Petróleos Mexicanos. “We must continue to apply the best international practices and remain on the leading edge of the international oil industry, while meeting the objectives of the United Nations’ Sustainable Development Program,” he said.

The 7th Environmental Conferences will be held over two days, and it is in this forum that the Petróleos Mexicanos Sustainability Report for 2017 was disclosed by Pemex’s corporate director of Planning, Coordination and Performance, Rodulfo Figueroa Alonso. The report details the actions carried out by the company in environmental matters.

This year, the 7th Environmental Conferences have Sustainable Development Objectives at their core. These are part of an initiative of the United Nations Program, which consists of 17 global targets to eradicate poverty, protect the planet and ensure prosperity for all, as part of a sustainable development plan.

During the event, the deputy secretary for Environmental Protection Management for the Ministry for the Environment and Natural Resources (initials in Spanish, SEMARNAT), Martha Garcíarivas Palmeros, reiterated that Mexico signed the Paris Accord, which establishes the goal of reducing Greenhouse gas emissions by 22 per cent in 2030.

The official congratulated Pemex for its participation in the National Air Quality Strategy, through which various actions to protect the environment have already been set in motion.

On the other hand, the deputy secretary of Planning and Energy Transition for the Ministry of Energy (acronym in Spanish, Sener), Leonardo Beltrán Rodríguez, stated that the Pemex Business Plan for 2017-2021 clearly establishes a clear commitment in environmental matters, which exemplifies the company’s position regarding sustainability.

During his participation in this event, the General Secretary of the Mexican Oil Workers’ Union, Carlos Romero Deschamps, expressed the oil workers’ commitment towards performing their work responsibly and in an environmentally friendly manner.

Several awards were presented to Petróleos Mexicanos in different areas for successfully applying environmental practices.

***

EIA Beta Interactive Data Analysis

(Energy Analytics Institute, Ian Silverman, 26.Jul.2018) – Beta data from the EIA provide users with an interactive way to analyze multiple petroleum data.

According to the most recent beta crude oil reserve data provided by the US-based Energy Information Administration, two countries in the Latin American region make the list and rank among the top 15 countries worldwide in terms of these reserves. To no surprise, Venezuela tops the list and Brazil ranks 15th, according to the data.

In terms of natural gas reserves, again Venezuela tops the list among the top 15 countries worldwide, but this time the South American country ranks 8th, according to the data.

***

Bolivia To Start Work on Transmission Line to Argentina

(Energy Analytics Institute, Ian Silverman, 26.Jul.2018) – In two or three weeks, Bolivia expects to start work on an electrical transmission line that will allow it to export energy to Argentina.

The lines could be finished in 2019 and allow the small land-locked country to export between 80 and 120 megawatts of energy to Argentina, reported the daily newspaper La Razón.

Bolivia expects to have capacity to export 1,000 MW in about four years later or around 2023-2024.

***

YLB Expects Lithium Certification in December

(Energy Analytics Institute, Ian Silverman, 26.Jul.2018) – Bolivia announced the international certification for the country’s lithium reserves in Salar de Uyuni will be delivered in December of 2018.

The certification work is being carried out by a US company, reported the daily newspaper El Diario, citing Yacimientos de Lito Bolivianos or YLB Manager Juan Carlos Montenegro.

“We are in the process of certifying our reserves. With certainty by the end of this year we’ll confirm that the Salar de Uyuni is the largest lithium reservoir in the world,” announced Montenegro.

***

BPTT Eyes Nine Potential New Developments Over 10 Years

(BPTT, 25.Jul.2018) – BP Trinidad and Tobago’s long-term plan could potentially see the company investing as much as $8 billion dollars in T&T, in 9 new developments in the next 10 years.

This was announced by Claire Fitzpatrick, new BPTT president at a media event held at BPTT’s corporate offices on Wednesday July 25. She added that bringing the plans to fruition however will require T&T to remain competitive within the BP Global portfolio in order to achieve final successful decisions on investments.

Noting that there remain decades of demand for gas and that this makes BPTT increasingly important to BP, Fitzpatrick did not shy away from the fact that the company was not immune to change. “Our industry is in rapid change globally and to remain competitive and successful in this environment means that we must change and continue to evolve to keep our operations here attractive to further investment. Fitzpatrick explained that the purpose of the media showcase was to share the many innovative plans in train to continue to find and recover energy resources more safely and efficiently. Staff at the event highlighted ways that the company was using modern technology to boost safety and improve efficiency and in some of these cases BP’s Trinidad operations were piloting these new technologies on behalf of the Group.

Fitzpatrick pointed out that while technology may bring more certainty to hydrocarbon resources below the surface, above the surface there is still important work to be concluded with Government and industry stakeholders to keep Trinidad competitive in a rapidly changing world, “Empowering skilled local staff with technology works best when above the ground factors also reflect the dynamism of a new, competitive industry and world.”

Some of that certainty will come post the completion of negotiations with the Government and Atlantic shareholders on Atlantic Train 1. Though the current negotiations with the Government on Train 1 are ongoing, Fitzpatrick shared that the Government and BPTT are dedicated to ensuring that country and company benefit from BPTT’s operations.

Fitzpatrick also confirmed that Angelin, BPTT’s, 15th offshore platform will soon arrive in Trinidad and pre-installation checks will be conducted off the West coast before installation in the coming weeks. First gas from Angelin is planned for the first quarter of 2019.

“We look forward to the safe start-up of Angelin in the coming months and this continues to build on our track record of project start-ups following TROC and Juniper in 2017,” said Fitzpatrick. She thanked staff, stakeholders and local contractors for their support in building BPTT’s track record of success. “It is an honour for me to lead BP Trinidad and Tobago. We have a history of safe operations and success at BPTT and we plan to continue to build on this legacy.”

***

Machado Says PDVSA Converted into ‘Junk’

(Energy Analytics Institute, Piero Stewart, 25.Jul.2018) – PDVSA has been converted into ‘junk or scraps’ by the administration of the current Venezuelan president.

That’s according to statements from Venezuelan opposition leader Maria Corina Machado. Her statements were made during a meeting with local media and posted to her twitter account in multiple posts.

***

Petroleum Geology of Mexico and the Northern Caribbean

(The Geological Society, 25.Jul.2018) – The Gulf of Mexico is a world class prolific hydrocarbon system. As a result of recent energy reform the Mexican sector of this basin has been open to international companies for the first time through a series of competitive licence rounds. The first phase of drilling on these newly awarded permits has resulted in the discovery of giant hydrocarbon accumulations in the Mexican offshore sector. Geologically, the offshore and onshore basins of Mexico offer a diverse range of play types with multiple source / reservoir pairs and are characterised by complex tectonic evolution with associated halokinesis and shale tectonics.

More widely within the Northern Caribbean region, exploration activities are ongoing in several countries targeting both proven and frontier petroleum systems. Some of these play elements are potential extensions of the proven systems in Mexico. While geologically complex, these areas have the potential to emerge as major hydrocarbon basins.

This regional conference aims to bring together both academic and industry geoscientists to discuss the current state of understanding of the geology and petroleum systems in these geologically complex, but prolific hydrocarbon basins.

The committee now invite submissions of abstracts along the following themes

  • Regional Plate Tectonic Evolution
  • Basins of Mexico and the Northern Caribbean
  • Onshore Basins and the Laramide and Chiapas

Fold Belt effects

  • Petroleum Systems
  • Exploration & Production History
  • Neogene Clastic Depositional Systems
  • Carbonate Depositional Systems
  • Salt Tectonics
  • Controls on hydrocarbon habitat – seal capacity
  • Relevant GOM Analogues
Call for Abstracts:

Please submit talk or poster abstract to sarah.woodcock@geolsoc.org.uk by 30 November 2018.

For further information please contact:

Sarah Woodcock, The Geological Society, Burlington House, Piccadilly, London W1J 0BG.

Tel: +44 (0) 20 7434 9944

Event: Petroleum Geology of Mexico and the Northern Caribbean

Date: 14-16 May 2019

Venue: The Geological Society, Burlington House, Piccadilly

City: London

***

ExxonMobil Raises Stabroek Block to More Than 4 Bln Bbls

(ExxonMobil, 23.Jul.2018 ) – ExxonMobil has increased its estimate of the discovered recoverable resources for the Stabroek Block offshore Guyana to more than 4 billion oil-equivalent barrels and has advanced its evaluation to support a third phase of development and consideration of two additional phases.

The increase follows completion of testing at the Liza-5 appraisal well, a discovery at Ranger, incorporation of the eighth discovery, Longtail, into the Turbot area evaluation and completion of the Pacora discovery evaluation. The previous recoverable resource estimate was 3.2 billion oil-equivalent barrels.

“Outstanding resource quality across these opportunities combined with industry-leading project execution capabilities will provide great value to resource owners, partners and our shareholders,” said Neil Chapman, senior vice president, Exxon Mobil Corporation.

“Continued success in Guyana and progress in other upstream growth projects in the U.S. Permian Basin, Mozambique, Papua New Guinea and Brazil are giving us additional confidence in achieving our long-term earnings growth plans that we outlined in March.”

Guyana’s first development, Liza Phase 1, will use a floating production, storage and offloading (FPSO) vessel to produce 120,000 barrels of oil per day, starting by early 2020. Liza Phase 2, which is targeted for sanctioning by the end of this year, will use an FPSO vessel designed to produce up to 220,000 barrels of oil per day and is expected to be producing by mid-2022.

The Liza-5 well successfully tested the northern portion of the Liza field and, along with the giant Payara field, will support a third phase of development in Guyana. The Payara development will target sanctioning in 2019 and will use an FPSO vessel designed to produce approximately 180,000 barrels of oil per day, as early as 2023.

The Longtail well established the Turbot-Longtail area as a potential development hub for recovery of more than 500 million oil-equivalent barrels. Additional prospects to be drilled in this area could increase this estimate.

The collective discoveries on the Stabroek Block to date have established the potential for up to five FPSOs producing over 750,000 barrels per day by 2025. There is potential for additional production from significant undrilled targets and plans for rapid exploration and appraisal drilling, including at the Ranger discovery.

The Stabroek Block is 6.6 million acres (26,800 square kilometers). ExxonMobil affiliate, Esso Exploration and Production Guyana Limited, is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.

***

Pemex Continues Defense Against Claims by Oro Negro

(Pemex, 24.Jul.2018) – The spread published last night by the company Oro Negro seeks to compensate for a series of strategic mistakes made by that company

In connection with the spread that was published on July 19 in the American newspaper The New York Times and signed by Juan P. Morillo, legal representative of Oro Negro, as well as by the American and European shareholders of the company, which contains accusations related to the lawsuit against Petróleos Mexicanos, Pemex states the following:

— Oro Negro affirms that it has recordings, allegedly of former senior management of the company who admit to intentionally harming Oro Negro because it refused to pay kickbacks. Therefore, Petróleos Mexicanos prompts Oro Negro to make the recordings available to the authorities for the necessary  assessment of their authenticity and relevance. In this regard, it would also be important to see a public explanation as to why this information was not published and reported sooner, as there have been many instances where such evidence would have been extremely relevant to the case.

— Oro Negro affirms that it was “destroyed” by the Mexican government, not only for its refusal to pay kickbacks, but also because of a conspiracy orchestrated by certain bond holders interested in causing the company’s bankruptcy so as to take over the oil production platforms. The facts bely this version, as in 2016 and 2017, Pemex proposed Oro Negro the same terms it offered to many other oil production platform suppliers. However, the other companies accepted the terms proposed by Pemex, while Oro Negro decided not to continue the relationship. In summary, Pemex denies having acted with any kind of discrimination towards Oro Negro.

— Pemex will continue defending itself from the unfounded claims filed against the company and the Mexican government, mainly because it sought to renegotiate its standing contracts with Oro Negro and other oil production platform companies in good faith and within the prescriptions of the applicable law after the deceleration of the oil market. Unlike all other suppliers, Oro Negro made the unilateral decision to reject Pemex’s terms and decided to initiate the process of bankruptcy instead.

— Like any other company in the oil sector, Pemex depends on a large number of national and international companies for the supply of oil services and has a long history of successfully working with nationally and internationally renowned companies.

We regret that Oro Negro was incapable of meeting the reasonable expectation of its clients, investors, creditors and employees, but this is no reason to allow the company to perniciously involve Pemex in its existing corporate problems.

Pemex firmly believes that Oro Negro is currently deploying an international media strategy to compensate for a series of strategic mistakes it has committed, as well as to make up for the deficiencies of its legal case against Pemex.

Petróleos Mexicanos hereby states that it will defend itself in Mexican and international courts, confident that the result of the legal process will be a ruling in its favor.

***

Colombia Could Create New Oil Bid System

Orlando Velandia, head of Colombia’s National Hydrocarbons Agency (ANH), speaks to Reuters in Bogota, Colombia July 23, 2018. REUTERS/Carlos Julio Martinez

(Reuters, Luis Jaime Acosta, 24.Jul.2018) – Colombia is preparing changes to its bidding process for oil areas in an effort to increase investment and find new reserves, the head of the oil regulator said, after repeated cancellations of its latest oil round.

The changes, including contracts adjusted to international crude price fluctuations and the chance for companies to propose exploration on land not yet on offer, will help attract spending and nearly double reserves to at least 10 years of consumption, Orlando Velandia of the National Hydrocarbons Agency (ANH) said.

“We’re looking to improve conditions for the country, to achieve competitiveness and motivate companies to make proposals about areas,” Velandia said in an interview on Monday.

The ANH in April postponed the deadline to receive offers for 15 onshore areas at its Sinu-San Jacinto auction until the second half of the year. It was the sixth time the round was delayed.

Colombia is the third Latin American country hosting oil auctions this year, after Mexico and Brazil. Its bidding round comes after a four-year pause when low oil prices stopped many Latin American countries from offering acreage.

Colombia has been awarding blocks to the highest bidder every two to three years, but bidding in the new system will privilege the first company that requests access to additional areas, Velandia said, likely improving the offers of other bidders.

“Once we evaluate the areas and they’re added to the map, companies can make offers in a continual competitive process,” Velandia said. Companies would no longer be required to outline planned investments or compensate the government if spending falls short, he added.

Colombia could offer at least 20 onshore and offshore Caribbean blocks with the changes, Velandia said.

Companies having problems with social protests or delays in environmental licensing could be offered alternative areas, he said.

Protests, along with pipeline bombings, are a major headache. State-run Ecopetrol lost some $100 million earlier this year because of blockades.

The country has 1.78 billion barrels of reserves, equivalent to about 5.7 years of consumption. Colombia produces about 860,000 barrels per day (bpd) of crude, half for export.

The proposed changes must be approved by the ANH’s directive counsel, which includes the ministers of energy and finance.

Changes not approved before Aug. 7 will go to the government of President-elect Ivan Duque, who has promised tax cuts, investment in Ecopetrol’s refineries and a crackdown on attacks by rebel groups.

Reporting by Luis Jaime Acosta; Writing by Julia Symmes Cobb; Editing by Helen Murphy and Richard Chang

***

Former Cerro Negro Workers Still Seek Payment

(Energy Analytics Institute, Piero Stewart, 23.Jul.2018) – It has been 11 years and the 7,000 direct and indirect Venezuelan workers of US oil company Exxon Mobil still haven’t received their social benefits or other liquidations.

Those payment were assumed by the government of late Venezuelan President Hugo Chávez when his administration nationalized Exxon Mobil’s Cerro Negro heavy oil project located in the Hugh Chavez Orinoco Heavy Oil Belt, also known as the Faja.

“Several coworkers have died during this long time waiting while others have left the country, but we continue to demand our rights,” reported the daily newspaper El Nacional, citing Luis Vega, spokesman for those affected. In 2007, labor liabilities reached $5.2 billion, a figure that has increased due to accumulated interest, he said.

Many of the workers are from the Venezuelan states of Monagas, Sucre, Anzoátegui, Bolívar, Guárico and Delta Amacuro, said Vega.

About a month ago, Venezuela’s President Nicolás Maduro instructed PDVSA President Manuel Quevedo to solve the problem.

“PDVSA recognizes the debt, but doesn’t want to pay us alleging that [former PDVSA President] Rafael Ramírez stole the money,” added Vega.

***

Oil, Electric Sectors to Join Venezuelan Strike

(Energy Analytics Institute, Piero Stewart, 23.Jul.2018) – Representatives from trade unions from the oil, electricity, food, education and health sectors announced plans to join a national strike called by opposition political parties, businessmen, unions, churches and other sectors of society in Venezuela.

“The governments of Hugo Chávez and Nicolás Maduro did not build or repair anything. [Instead], with their disastrous politics and corruption, they destroyed the infrastructure and the productive apparatus,” reported the daily newspaper El Nacional, citing oil union official Iván Freites. “They placed the country in the deep crisis that the workers and the population in general are experiencing.”

The current minimum wage of 100,000 bolivars per day isn’t enough to even buy a piece of bread or an egg, said Freites, who represents the Federation of Venezuelan Petroleum Workers or FUTPV by its Spanish acronym.

***

Union Official Demands Release of PDVSA Workers

Iván Freites (center) speaks during press conference in Venezuela. Source: El Nacional

(Energy Analytics Institute, Piero Stewart, 23.Jul.2018) – The four workers are being held in detention due to accusations they caused a petroleum spill in the Guarapiche River in Monagas state.

Their arrest is “the straw that broke the camel’s back,” reported the daily newspaper El Nacional, citing oil union official Iván Freites.

The oil spill, besides causing ecological damage, has left an estimated 70% of the population in Maturín without water, the official said.

***

Trinidad’s 21st Century Gas Production

(Energy Analytics Institute, Jared Yamin, 23.Jul.2018) – It’s said a picture paints a thousand words. This one paints 8.9 billion.

From 1908 to 2017, Trinidad and Tobago (T&T) has produced 8.9 billion barrels of oil equivalent (boe), announced Strategic Advisor Kevin Ramnarine in a post on LinkedIn. “Most of that production (58.6%) is natural gas. Of all the natural gas ever produced by T&T, 71% has been produced in the first 17 years of the 21st century,” wrote Ramnarine, the former Energy Minister of Trinidad and Tobago.

***