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

***

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.

***

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.

***

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.

***

Venezuela’s Inflation to Reach 1 Million Percent

(Bloomberg, Andrew Rosati, 23.Jul.2018) – Venezuela’s inflation will skyrocket to 1 million percent by the end of the year as the government continues to print money to cover a growing budget hole, the International Monetary Fund predicted on Monday.

The crisis is comparable to that of Germany in 1923 or Zimbabwe in the late 2000s, said Alejandro Werner, head of the IMF’s Western Hemisphere department. He forecast the economy to shrink 18 percent in 2018 — the third consecutive year of double-digit contractions — as oil production falls significantly.

“The collapse in economic activity, hyperinflation, and increasing deterioration in the provision of public goods as well as shortages of food at subsidized prices have resulted in large migration flows, which will lead to intensifying spillover effects on neighboring countries,” Werner wrote in a blog post.

Venezuela has been suffering a dramatic economic collapse since crude prices nosedived nearly four years ago and authorities have refused to enact economic adjustments. A number of price and exchange controls only added to the distortions.

While hundreds of thousands of Venezuelans flee hunger and surging prices, President Nicolas Maduro has maintained that the crisis is a result of an “economic war” waged by his political opponents at home and abroad. As the economy unraveled, authorities stopped regularly publishing economic indicators. Economists now rely on independent estimates provided by international organizations, banks and even Venezuela’s congress to track the country’s economic meltdown.

Bloomberg’s Cafe Con Leche Index, which tracks the price of a cup of coffee served at a bakery in eastern Caracas, estimates inflation topped 60,000 percent over the past year and is picking up speed now, posting an annualized rate of almost 300,000 percent in the past three months.

***

Guyana’s Oil Reserves Are Larger Than Expected

(OilPrice.com, Julianne Geiger, 23.Jul.2018) – Guyana’s recoverable offshore oil reserves are larger than expected—by almost a billion barrels, Hess Corp CEO John Hess said in a Monday press release.

Gross discovered recoverable resources for Hess’s Stabroek Block has been revised upward to 4 million barrels of oil equivalent—up from the previous estimate of 3.2 billion barrels.

“The Stabroek Block is a massive world class resource that keeps getting bigger and better,” CEO John Hess said. “Since the end of 2016, the estimate for recoverable resources on the block has quadrupled and we continue to see multi billion barrels of additional exploration potential on the block. We believe the investment opportunity in Guyana has the potential to be transformative for our company and create significant value for our shareholders for many years to come.”

Hess Corp was trading down on Monday, despite the news.

Guyana has been hailed as the world’s most up and coming oil hotspot, as Exxon, Tullow Oil, and Eco Atlantic made remarkable headway in recent years and months.

Exxon, for one, has had multiple finds in Guyana—also in the Stabroek block.

That Guyana—the small South American country sandwiched between troubled Venezuela and Suriname—has oil, and lots of it, is not new. The United States Geological Survey (USGS) estimated oil reserves in the Guyana-Suriname basin somewhere around 15 billion barrels.

The Stabroek block alone is poised to lift Guyana from the status of one of the poorest countries on the continent to untold riches. Nevertheless, its newfound oil wealth may prove to be a stumbling block for the nation who is used to having next-to-nothing to mismanage.

Earlier estimates pegged oil revenues for Guyana at $700 million per year by the late 2020s just from Exxon’s finds alone.

Hess reported earlier that it did not expect to generate a positive cash flow offshore Guyana until about 2022, according to Oil and Gas Investor.

***

Offshore Guyana Oil and Gas Potential is “Massive”

(UPI, Daniel J. Graeber, 23.Jul.2018) – The size of a reservoir off the coast of Guyana is “massive,” the CEO of Hess Corp. said Monday after a multi-million barrel revision to reserve estimates.

Hess and Exxon Mobil on Monday revised the estimate of recoverable reserves at the Stabroek block off the coast of Guyana from 3.2 billion barrels of oil equivalent to more than 4 billion barrels of oil equivalent.

“The Stabroek block is a massive world class resource that keeps getting bigger and better,” Hess Corp. CEO John Hess said in a statement. “Since the end of 2016, the estimate for recoverable resources on the block has quadrupled and we continue to see multi-billion barrels of additional exploration potential on the block.”

Hess said the revision followed the inclusion of data from new discoveries offshore Guyana and the completion of the fifth appraisal well at the Liza oil field. Dubbed Longtail, the latest discovery made near the giant Liza field could be producing about 500,000 barrels per day by late 2023.

The initial phase of development at Liza was sanctioned in June 2016 and called for the use of a floating production, storage and offloading vessel that will lead to an initial production rate of 120,000 barrels of oil per day.

Phase 2 calls for a second FPSO with a gross production capacity of 220,000 barrels per day and planning is already under way for a third phase of development offshore Guyana.

“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,” the statement from Hess read.

Hess in June sold off its joint venture interests in the Appalachian shale basin in eastern Ohio to Ascent Resources for $400 million, using the proceeds in part to fund operations offshore Guyana. The company estimates it would cost at least $3.2 billion to fully develop the broader offshore Liza field.

Consultant group Wood Mackenzie said offshore Guyana is a competitive prospect with a break-even price at about $35 per barrel. Brent, the global benchmark for the price of oil, was trading near $74 per barrel on Monday.

Hess reported a net loss of $106 million in the first quarter, compared with a loss of $324 million in the same period in 2017. The company attributed the improvement to higher crude oil prices and lower operating costs.

Hess releases its second quarter earnings report on Wednesday.

***

Glencore Lands PetroEcuador ‘Spot’ Deal

(Energy Analytics Institute, Ian Silverman, 14.Jul.2018) – Glencore Ltd won a recent EP PetroEcuador spot auction, which guarantees the Ecuadorian entity income of $279.3 million.

The Swiss company offered the best bid price with a positive differential of $ 1.08 per barrel, reported the daily newspaper El Universo.

EP Petroecuador invited 42 qualified companies to the public tender, and received eight offers from Enap, Eni Trading & Shiping, Glencore, Gunvor, Phillips 66, Repsol, Trafigura, and Unipec.

The sold crude oil will come in 11 shipments of 360,000 barrels each, and to be delivered during August-October of 2018.

***

YPFB to Drill $35 Mln MYC-X1 Study Well

(Energy Analytics Institute, Ian Silverman, 23.Jul.2018) – Bolivia’s state oil company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) plans to drill the Mayaya Centro (MYC-X1) stratigraphic investigative well in 2019 with an estimated investment of $35 million.

The well — to be drilled to an approximate depth of 5,500 meters — is planned for the Lliquimuni area located in northern La Paz, and forms part of the mandate of the Bolivian government to convert the western department of the country into a producing region, reported the daily newspaper La Razon.

Evaluation work north of La Paz could allow the region to become a new hydrocarbon region, producing natural gas, condensates, and petroleum, and allow the government to collect additional royalties, reported the daily, citing Bolivia’s Hydrocarbon Minister Luis Alberto Sánchez.

***

Uruguay Electric Grid Reaches Nearly All Citizens

(Energy Analytics Institute, Jared Yamin, 23.Jul.2018) – Uruguay is one of the countries in the Latin American region with one of the highest connection of residents to a national energy grid.

In this small Southern Cone country, the figures for houses without electricity have dropped to a minimum of 0.3%, reported the daily newspaper El Pais.

However, of this small figure there are families scattered throughout the country that under current conditions the electric grid will not reach them over the short term, reported the daily.

***

Venezuela Thermal Plants at 25-30% of Capacity

(Energy Analytics Institute, Piero Stewart, 23.Jul.2018) – Venezuela’s thermal generation plants in Caracas are only operating at 25% to 30% of capacity, and units 7, 8 and 9 of the Tacoa plant in Vargas state are halted due to damage.

The situation in other parts of this OPEC country, such as Zulia state, are more serious, reported the daily newspaper El Nacional, citing union official Reinaldo Díaz.

Plants in Zulia such as Ramón Laguna, Termozulia and Rafael Urdaneta are currently only generating 350 megawatts (MW) of their installed capacity of 2,000 MW.

Such insufficiency to satisfy demand in Maracaibo has forced city officials in this major petroleum region to implement daily rolling power outages of a minimum of 5 hours with some lasting more than 8 hours, according to local television reports of residents in the affected areas.

***

Atlantic Puts Focus on Process Safety

(Trinidad Guardian, 21.Jul.2018) – Atlantic CEO Dr Philip Mshelbila and Rob DiValerio, BP’s Vice President—Group Process Safety Central, 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 7th annual Process Safety Week, hosted by LNG production company Atlantic for its employees and service providers at its Point Fortin liquefaction facility.

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 Process Safety Week launch 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.”

Echoing the Atlantic CEO, keynote speaker Rob DiValerio additionally 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.

***

Ex-Venezuelan Energy Official Pleads Guilty

(AP, 20.Jul.2018) – A former official at a state-run electric company in Caracas, Venezuela, pleaded guilty on Monday to money laundering conspiracy relating to an alleged multibillion-dollar graft scheme in the Venezuelan oil industry.

Luis Carlos de Leon-Perez, a 42-year-old dual citizen of the United States and Venezuela, admitted his role in the scheme to bribe officials of Venezuela’s state-owned-and-controlled oil company, Petroleos de Venezuela, or PDVSA, the US Attorney’s Office in Houston announced. He also pleaded guilty to conspiracy to violate the US Foreign Corrupt Practices Act. He is scheduled to be sentenced on September 24.

De Leon admitted seeking bribes from owners of energy companies in the United States and elsewhere and directing some of the bribes to PDVSA officials.

In 2016, Venezuela’s opposition-led National Assembly said US$11 billion went missing at PDVSA in 2004-2014, when Rafael Ramirez was in charge of the company. In 2015, the US Treasury Department accused a bank in Andorra of laundering some US$2 billion stolen from PDVSA.

Ramirez was one of Venezuela’s most powerful officials until he resigned as Venezuela’s ambassador to the United Nations in December. He was not charged in the indictment and has denied any wrongdoing, dismissing the US probe into PDVSA as a politically motivated attempt to undermine President Nicolas Maduro’s government.

De Leon was arrested in Spain last October and extradited to the United States after a federal grand jury in Houston returned a 20-count indictment against him, Nervis Gerardo Villalobos Cardenas, 51; Cesar David Rincon Godoy, 51: Alejandro Isturiz Chiesa, 33; and Rafael Ernesto Reiter Munoz, 39.

Cesar Rincon has already pleaded guilty to money laundering conspiracy. Roberto Enrique Rincon Fernandez, 57, of The Woodlands, Texas; and Abraham Jose Shiera Bastidas, 55, of Coral Gables, Florida, have pleaded guilty to violating the Foreign Corrupt Practices Act and await sentencing. Prosecutors say they paid bribes in exchange for contracts to build electricity generators for PDVSA at a time Venezuela was suffering widespread power outages.

In all, 12 suspects have entered guilty pleas relating to the investigation, the Justice Department said.

Villalobos, Ramirez’s former deputy at PDVSA; Reiter, PDVSA’s former corporate security chief, and Isturiz all await trial on charges of money laundering and money laundering conspiracy.

Villalobos is also charged with conspiring to violate the Foreign Corrupt Practices Act. He and Reiter remain in Spain awaiting extradition, while Isturiz still has not been arrested.

***

JUTC Hopes to Burn $3b Fuel Bill with LNG

(Jamaica Gleaner, Avia Collinder, 20.Jul.2018) – The LNG gas station to be developed by New Energy Fortress will have the capacity to fuel 25 buses daily, or five times the number of buses designated for the pilot programme to be conducted with the Jamaica Urban Transit Company, JUTC.

New Fortress spokeswoman Verona Carter also said it’s estimated that the five JUTC buses would require 720 gallons of fuel daily.

“Phase one of the fuelling station – up to 25 buses – cost US$1.7 million,” said Carter. The station is to be established in Spanish Town, St Catherine.

JUTC is hunting savings on its fuel bill, which, according to preliminary figures, topped $2 billion in the past two years. JUTC is projecting an even bigger fuel expense this year, $3.7 billion, according to the Jamaica Public Bodies report.

“If the pilot is successful the intention is to add more buses, but at this time – before the start of the first phase – we are not in a position to say when the expansion will be and by how many buses,” said JUTC spokesman Cecil Thoms.

JUTC has 608 buses in its fleet, only 525 of which are operational.

The public bodies report forecasts a rise in the bus company’s annual revenue by less than five per cent to $5.32 billion at year ending March 2019. But its fuel bill is projected to rise by a much faster clip, 46 per cent, from $2.52 billion to $3.68 billion.

If the numbers hold, JUTC would end up spending 69 per cent of the bus fares it collects on its fuel bill alone. The fuel bill would also surpass the expected $3.33 billion of staff expenses, the latter of which has been one of the company’s main cost drivers.

The LNG pilot programme being financed by New Fortress is scheduled for early next year. Any decision by JUTC and the Government on whether to embrace LNG as fuel for buses would not impact the current fiscal period.

***

Petrobras says Entorno de Sapinhoá Block Viable

(Reuters, 20.Jul.2018) – Brazil’s state-controlled oil company Petróleo Brasileiro SA said that areas it operates adjacent to the Entorno de Sapinhoá block in the Santos basin are commercially viable, according to a securities filing on Friday.

Petrobras has a 45 percent stake in Sapinhoá, while Shell Plc has a 30 percent stake and Repsol Sinopec has a 25 percent stake. (Reporting by Carolina Mandl Editing by Chizu Nomiyama)

***

Sonnedix Buys 138MW Chilean Solar Power Project

(Power Technology, 20.Jul.2018) – Global independent solar power producer Sonnedix has acquired a 138MW Meseta de Los Andes project in Chile, as part of its move to expand its renewable portfolio.

Spread over an area of 250ha, the Meseta de Los Andes project is located 80km from Santiago, which is said to be the main energy consumption centre of the country.

Currently, the project is in the greenfield stage. It will be developed by Spanish construction company AR Energia and is expected to enter construction by early 2020.

“The acquisition includes ten ground-mounted operating solar PV plants located in the Marche, Molise and Apulia regions.”

With the new acquisition, Sonnedix has further strengthened its presence in the Chilean solar market, where it currently has more than 400MW capacity of utility-scale solar photovoltaic (PV) projects under development, construction or in operation.

The project’s renewable energy generation is set to contribute to supplying power purchase agreements (PPAs) already secured by Sonnedix.

Sonnedix CEO Andreas Mustad said: “Sonnedix is making a long-term commitment to supporting Chile’s renewable energy mix.

“It reflects the scale – and pace – of growth across our platform as we develop, build and operate assets across the world.”

For this transaction, Sonnedix was advised by Guerrero Olivos (legal) and Enertis (technical advice).

In April this year, Sonnedix expanded its footprint in the Italian solar market with the acquisition of 11MW portfolio from Terni Energia, which is engaged in the development of technical solutions, products and services for the energy sector.

The acquisition includes ten ground-mounted operating solar PV plants located in the Marche, Molise and Apulia regions.

***

The $20 Billion Question for Guyana

Guyana fishermen make their way home to the coastal community of Clonbrook at the end of another day at sea. Guyana is one of the poorest countries in South America, but massive offshore oil reserves may well transform it to one of the wealthiest in the next few years. CreditChristopher Gregory for The New York Times

(The New York Times, Clifford Krauss, 20.Jul.2018) – Guyana is a vast, watery wilderness with only three paved highways. There are a few dirt roads between villages that sit on stilts along rivers snaking through the rain forest. Children go to school in dugout canoes, and play naked in the muggy heat.

Hugging the coast are musty clapboard towns like Georgetown, the capital, which seems forgotten by time, honeycombed with canals first built by Dutch settlers and African slaves. The power grid is so unreliable that blackouts are a regular plague in the cities, while in much of the countryside there is no electricity at all.

Such is the unlikely setting for the world’s next big oil boom.

In the last three years, ExxonMobil has drilled eight gushing discovery wells offshore. With the potential to generate nearly $20 billion in oil revenue annually by the end of the next decade, roughly equivalent to the revenues of the much-larger Colombia, there could be enough bounty to lift the lives of almost every Guyanese.

If all goes well, one of the poorest countries in South America could become one of the wealthiest. Suddenly the talk of Georgetown is a proposed sovereign wealth fund to manage all the money, as if this were a Persian Gulf sheikhdom.

But there are obstacles. If history is any guide, countries that discover oil often waste their opportunity, as the resource blends seamlessly with corruption. Countries with weak political institutions like Guyana are especially vulnerable.

“You have an alignment of money and power in the hands of the state, so the party in power controls the resources,” said Floyd Haynes, a Guyanese-born finance professor who is a consultant to Business Ministry. “And the money is usually squandered, misapplied or downright stolen.’’

Senior government officials here have little experience regulating a big oil industry or negotiating with international companies. The civil service is corrupt, and the private sector is slow to innovate, businessmen and aides to senior officials acknowledge.

Still, there is cautious optimism. “We see this oil discovery as almost like providence,” said Raphael Trotman, the natural resources minister. “We’ve been given a second chance to get things right.”

The first chance was independence from Britain in 1966, and that chance was blown. A plague of ethnic tribal politics has produced a fragile state with an economy propelled by drug trafficking, money-laundering, and gold and diamond smuggling. A vast majority of college-educated youths emigrate to the United States or Canada, while those who stay behind experience high rates of H.I.V. infection, crime and suicide.

Can oil wealth help Guyana overcome its history, or will the windfall that will flood government coffers merely turn the page to a new tragic chapter?

“The challenges are enormous and shouldn’t be underestimated,” said Lars Mangal, president of Totaltec Oilfield Services, a Guyanese company seeking to train local workers in safety and basic oil operations. “We have to overcome nepotism, entitlements, corruption, cynicism and skepticism.”

The Guyanese government, under its agreement with Exxon, will receive roughly half the cash flow from oil production once the company’s costs are repaid. Economists say that will mean the country’s current gross domestic product of $3.6 billion will at least triple in five years.

But with exploration out of sight 120 miles offshore, and no refinery planned, the economic benefits for the population have been limited so far, making some cynical. Only about 600 Guyanese have found direct employment on the drill rigs, shore bases and offices, and that number may increase only to about 1,000, oil executives say.

“When we have big projects, we hire foreign companies who bring their own workers,” said Khemraj Dhaneshrie, a young chemist at the Leonora estate sugar mill.

Mr. Dhaneshrie is typically skeptical about his government’s ability to oversee foreign operations after Guyana’s long experience of opportunistic Chinese investment. He noted that the Chinese financed and built an enormous factory in 2009 to rescue the sugar industry, but it turned out to be a $181 million boondoggle.

“The Chinese cut down our forest, dug out our gold, and we never got a cent,” he said. “We could end up with the same experience with ExxonMobil.’’

In the Past, Wasted Opportunities

Colorful Hindi monuments tower over Guyana’s rice fields, a reminder of the cultural distance between the country and its Latin American neighbors. It is English speaking because of the legacy of British rule, and its two biggest ethnic groups are Afro-Guyanese and Indo-Guyanese — the descendants of slaves from Africa and of indentured servants brought from the Indian subcontinent in the 19th century.

Until now, the country had never produced oil, and traditionally it has traded its rice crop for fuel from Venezuela. Now it is attracting experienced Texas oilmen like Doug McGehee, Exxon’s Guyana operations manager.

Over the last 37 years working for ExxonMobil, Mr. McGehee has taken his black cowboy boots, silver belt buckle and Texas A&M class ring into the oil fields of Angola, Kazakhstan and Equatorial Guinea. In all those places, oil wealth has risen to the top, only to leave the poor behind. Last year, for example, a Paris criminal court convicted the vice president of Equatorial Guinea of money-laundering and embezzling more than $100 million.

But as Mr. McGehee monitored operations aboard the Noble Bob Douglas drill ship on a recent day, he insisted that Guyana could be different.

“The math is right here,” he said, noting that the country has a tiny population — below 800,000 — to share all the new wealth. Guyana’s government stands to take in more than $6 billion in royalties and taxes annually by the end of the 2020s, according to the Norwegian consultancy Rystad Energy.

“If the government manages the resource right, every Guyanese should benefit with better schools, better health facilities, better roads,” Mr. McGehee said.

That is no small “if.”

Guyanese need look no further than neighboring Venezuela to see a failed state where the world’s largest oil reserves have not prevented hunger, shortages of medicine and hyperinflation from producing widespread misery. Nearby Trinidad and Tobago offers another example of how countries dependent on oil can neglect traditional industries and then suffer severe economic shocks when crude and natural gas prices fall.

Scholars call the syndrome the “resource curse.”

Others warn of the “Dutch disease,” a phenomenon so labeled in the 1970s after a natural gas boom sapped the strength of manufacturing in the Netherlands. Nations that contract the disease from a sudden influx of mineral money typically suffer a surge of inflation, while labor from farming and other traditional professions is drawn to the higher-paying oil sector. Thus, wealth becomes more concentrated.

There are some examples of countries effectively using oil to reduce poverty. Malaysia, with large offshore oil production, has kept its economy diversified and growing. In the Middle East, Oman is a model for using oil and gas wealth to modernize its economy.

But dispiriting examples of wasted opportunity abound.

“We’re all concerned about the negatives,” Prime Minister Moses V. Nagamootoo said.

Dawn Chung Layne, who operates a sewing business out of her mother-in-law’s concrete house in Georgetown, is also anxious. She is attending workshops at the Center for Local Business Development, a program financed by Exxon, to learn ways she can benefit from the oil economy. She hopes to make curtains and linen for cafeterias on the oil ships, and uniforms for sports teams established by foreign companies and their families.

But she also sees risks in these new ventures. More affluent Guyanese may turn away from the sports uniforms she already makes to buy name brands like Nike and Adidas, she said, and she is concerned that food prices will rise.

“Check out the Trinidad economy,” she said. “They thought oil was the best thing since sliced bread, and they spent Sunday to Sunday. They stopped producing and imported everything with oil money. It could happen here.”

‘This Could Be Game Changing’

Before the recent breakthrough, various oil companies had drilled more than 40 wells off Guyana and neighboring Suriname since the 1960s. All were dry holes or otherwise not economically promising. But as oil prices rose a few years ago, Exxon and Royal Dutch Shell decided to take another look. (Shell eventually dropped out of the partnership.)

Exxon’s top geoscientist on the scene was Kerry Moreland, an Oklahoman whose family has been in oil for three generations. Ms. Moreland toyed with becoming a professional bowler and had interned as a tornado chaser for a Tulsa television station before going to work for Exxon and traveling the world in search of new fields. She pinpointed on the map where the first deepwater well, named Liza-1, should be drilled.

Recalling the day three years ago when she decided to duck out of some business meetings in Georgetown to visit the drilling platform, she said there was no more than a 20 percent chance that a meaningful amount of oil would burst out from three miles below the ocean bottom.

As luck would have it, just as her helicopter landed on the platform, the drill bit penetrated the oil reservoir. She went to the control room as the first data from the wells showed promising signs of hydrocarbons. When rock fragments came to the surface a few hours later, they were dripping with oil.

“At that moment, it was ‘Oh, my God, we’ve made a discovery,’” Ms. Moreland said. “You have to pinch yourself and ask, ‘Is this really happening?’ And it hit right then, this could be game changing for the country, one of the poorest countries in the Western Hemisphere. It was a dream come true for any geologist.’’

Exxon is known in the industry as a slow-moving, stodgy company, but Ms. Moreland’s enthusiasm caught fire through the executive wing in the Texas headquarters known as the God Pod. Within three months, the company sent two vessels to conduct the largest three-dimensional seismic test that Exxon had ever undertaken, over 6,500 square miles, in search of more oil.

There’s a lot at stake for Exxon in Guyana.

In recent years, its stock price has slumped because of disappointing production and depleting reserves. The company invested heavily in Canadian oil sands and in natural gas when prices were high, bets that have not worked out as well as expected. While the company was forced to write off large assets in Canada, Western sanctions on Russia foiled its plans to drill in the Russian Arctic.

Darren Woods, the company’s chief executive, has a plan to reverse company fortunes, and Guyana is a big part of it.

Leading a consortium that includes Hess and the China National Offshore Oil Corporation, Exxon is making an effort here that is nothing if not ambitious. Within three years of its big first discovery, it has begun drilling the first of 17 wells that will start yielding oil in 2020, with a floating production, storage and offloading vessel able to handle 120,000 barrels a day. And that is just the first phase.

Another floating vessel, with a capacity of 220,000 barrels a day, is planned, and a third vessel is being considered. In all, 500,000 barrels a day could be produced by sometime in the next decade — the equivalent of Ecuador’s national output. (Repsol of Spain, Tullow Oil of Britain and other companies are exploring, too.)

“It’s a growth area for us,” said Mr. McGehee, the Exxon operations manager. “We keep finding oil.”

That produces nothing but excitement for the 60 Guyanese workers on the Noble Bob Douglas drill ship, who have typically seen their incomes soar.

Gorshum Inniss, a 25-year-old roustabout with an easy smile and flashing dark eyes, is working on a crane crew lifting casing pipe for new wells, doubling what he earned working on a tugboat. He said he now had enough money to visit his parents and younger brother in New York and planned to build a house for him and his daughter.

“I’m proud to be one of the pioneers in this big moment for Guyana,” he said. “I see Guyana as the new Middle East.”

An Endangered Beach?

Not far from the turbulent Venezuelan border, there is a quiet stretch of coastline, pounded by surf, known as Shell Beach because its sand is made of tiny crushed seashells that make it feel like sawdust. Several endangered species of turtles come to nest at night. Once hunted for food, they are jealously guarded from poachers by residents who make a living fishing and selling coconuts.

Audley James, a former turtle hunter who makes necklaces out of beads and coconut shells, remembers when Trinidadian environmental consultants representing Repsol came six years ago to give two days of spill-response training.

The Trinidadians taught the residents how to lay temporary floating barriers to protect the beach from an oil spill, and gave them training certificates that look like diplomas. But there has been no further training that might prepare them for what is now a much less theoretical hazard.

“Plenty of us don’t understand what is going on,” Mr. James said.

Environmentalists are worried that oil will forestall development of renewable energy and that the government and oil companies are not fully prepared to prevent a possible spill.

“It’s two years before first oil, and we don’t have a national oil spill contingency plan,” said Annette Arjoon-Martins, president of the Guyana Marine Conservation Society. “We have our hands in the mouth of a jaguar.”

Ms. Arjoon-Martins said the government’s agreement with Exxon did not specify in enough detail the company’s responsibilities in case of a spill. Government officials disagreed, saying the country’s laws would hold the company fully liable.

Exxon executives say the company is doing everything possible to minimize the dangers of a spill disaster. The company has skimmers and oil booms on hand to collect errant oil, and it has applied to the government to use chemical dispersants in an emergency to break up any spilled oil. They say Guyana is close enough to the Gulf of Mexico to bring in plenty of help in an emergency.

The company has agreed to map the coastal mangroves and study the area’s fish, bird and turtle migration routes to set priorities in case a cleanup is ever needed, executives said. And in another potential environmental benefit, the company is planning to build a natural-gas pipeline to shore that will replace the heavy fuel oil burned for the country’s power plants, lowering costs to consumers and businesses.

“We are committed to develop these resources in the most responsible way with a minimal impact on the environment,” said Rod Henson, Exxon’s Guyana manager. “We stand by our operations, and in the unlikely event of an incident, we will absolutely respond immediately and we will fully take care of our responsibilities.”

Local oil executives say one obstacle to overcome is a lackadaisical attitude toward safety among Guyanese workers, who frequently arrive at their construction and wharf jobs in flip-flops and sometimes use their hard hats as soup bowls. That is something Exxon and other companies are working to change with courses and other training that teach workers to be careful, not only for their own safety but also to safeguard the fragile marine environment.

At a recent daily meeting of the crew of the Noble Bob Douglas to review environmental and safety precautions, Mr. Inniss, the roustabout, was given a chance to make his own safety presentation. He told of a serious accident he had a couple of years ago working on his motorcycle when he neglectfully left the motor running while adjusting a chain. He lost three fingertips.

“Use your heads before you use your hands,” he told the room full of Guyanese and American workers. He got an ovation and smiled proudly.

‘I See a Lot of Red Flags’

To visit the most senior oil regulator in Georgetown, one needs to climb an exterior staircase of warped wood that could sorely use a fresh coat of paint.

At the top is the tiny office of Newell Dennison, the acting head of the Guyana Geology and Mines Commission, whose desk is stacked high with folders beside a single metal filing cabinet. His office is spare of decorations, aside from two bouquets of artificial tropical flowers.

Mr. Dennison has a computer by his desk, from which he could consult data gathered by Exxon drill ships, though he said he had yet to do so. “We’re in transition,” he explained. “It’s a challenge.’’

For all the international attention that Guyana’s oil bonanza is beginning to generate, Mr. Dennison and the Department of Natural Resources have a mere nine technically trained people responsible for regulating oil production, engineering and geological research.

“You would expect we would have a problem to have 100 percent monitoring with our lack of resources,” said Mr. Dennison, a middle-aged geologist with horn-rimmed glasses and a neatly trimmed goatee. “My commission cannot be all of a sudden everything people expect us to be.”

There are a few signs of progress.

Guyana’s president, David A. Granger, a retired military commander leading a fractious coalition, has tried to establish a legal framework for the coming bonanza. To bypass corrupt officials, Mr. Granger has announced his intention to form an energy department for policymaking, responsible to the president, and an independent petroleum commission to regulate the industry and grant exploration and production licenses.

Under pressure to break with past secretive deals with international companies, Mr. Granger published Guyana’s contract with Exxon on a government website in December, opening a vigorous public debate on its terms. He has promised to end closed-door bidding for drilling rights, and to open auctions for future development.

Many of the changes have been promoted by Jan Mangal, Mr. Granger’s personal petroleum adviser and brother of Lars Mangal, the businessman. Jan Mangal, a Guyanese-born former Chevron project manager, has advised the president to put a hold on new leasing until the petroleum commission can be established with new personnel and has called for an investigation of several oil-exploration concessions made by the previous government to small oil companies.

“I see a lot of red flags,” said Mr. Mangal, who shuttles between Guyana and his home in Houston. “We cannot allow the Guyanese industry to be built around this shabby foundation of corruption.”

There are other signs of trouble.

Foreign development bank advisers have told the government that legislation to create a sovereign wealth fund to invest the royalties and taxes coming to the government lacks sufficient regulatory controls to avert corruption. The legislation is now in limbo. Mr. Granger’s energy department has not gotten off the ground, and a bill to set up the petroleum commission is stuck in the National Assembly.

That leaves Mr. Dennison and his commission in charge of regulation. He said he and everyone in the government felt pressure to get things right.

“Of course I worry,” Mr. Dennison said.

Clifford Krauss is a national energy business correspondent based in Houston. He joined The Times in 1990 and has been the bureau chief in Buenos Aires and Toronto. He is author of “Inside Central America: Its People, Politics, and History.” @ckrausss

***

Why is NGC Still Litigating?

(Trinidad and Tobago Newsday, Richardson Dhalai, 19.Jul.2018) – Former attorney general Ramesh Lawrence Maharaj, SC, is questioning why the National Gas Company (NGC) is continuing legal action against SIS and Rainforest, after the Privy Council dismissed NGC’s appeal and ruled in favour of the two companies.

Addressing a media conference at his Irving Street, San Fernando law offices on Wednesday, Maharaj recalled that the contract to build the Beetham Water Recycling Plant was entered between NGC and SIS on March 10, 2014.

However, it was terminated in 2015 after NGC alleged that work done by SIS was overpriced and that SIS owed NGC $180 million. NGC subsequently obtained a Mareva Injunction against SIS, to freeze its assets and property up to the value of $180 million. A Mareva injunction is an order granted by the Court to freeze the assets of a person or entity named in a case.

Since then, the matter was heard in the local High Court and Court of Appeal and finally in the London-based Privy Council where the matter was dismissed. Maharaj said despite the Privy Council’s ruling, NGC is continuing with litigation by now applying to the High Court to, “correct their omissions and regularising their position so the matter may be resuscitated and resumed all over again.”

“This means its application for relief from sanctions can go from the High Court to the Court of Appeal and to the Privy Council again incurring substantial costs.” He said the NGC is now liable to pay both SIS and Rainforest damages which both companies incurred from December 2015 to July 16, 2018 as a result of the injunction brought against both of them.

The legal costs are very expensive when you are seeking redress at the level of the local Court of Appeal and the United Kingdom’s Privy Council. They (NGC) must say to the population whether they can justify using taxpayers’ money in such an expensive litigation when it could be avoided, he said.

***

PetroTrin Achieves $85.6 Mln Profit

(Trinidad Guardian, 19.Jul.2018) – Petrotrin chairman Wilfred Espinet said cost reduction initiatives undertaken by the interim executive team installed at the energy company resulted in a second quarter profit after tax of $85.6 million.

“The installation of a new executive team from the beginning of March and the implementation of the strategies developed together with experts’ advice produced noticeable results in reducing cost and cutting waste,” he said.

“The mandate given to the board, to make Petrotrin a sustainable profitable entity, through proper governance and management of a competitive business, is planned in three phases: Survive, Thrive and Grow.

For the past three months, the focus was on the first phase, “Survive”. Discretionary spending that was not adding tangible benefits to the operations was reduced and we concentrated on cutting waste.”

Espinet said results for the period ended June 30 followed a loss of $517.5 million for the quarter ended March 31.

Recently published results showed a decrease in the state owned company’s operating costs of $92.4 million when compared to the same quarter last year and a decrease of $41.9 million when compared to the quarter ending March 31.

In addition, Petrotrin earned $18 billion in revenue for the nine months ending June 30 —a 21.2 per cent increase with the corresponding period in 2017, which Espinet was due to higher oil prices.

He said in a statement accompanying the financial results: “Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) increased to $1,767.4 million, or 80 per cent more than the 2017 result for the comparable period. Despite the enhanced operating results, the Group incurred a loss before tax of $242.8 million which translated to a loss after tax of $500.7 million,” the chairman said.

Petrotrin’s asset base decreased to $31.6 billion compared with $37.4 billion for the corresponding period in 2017.

Espinet explained: “This was primarily because of the write down of our fixed asset balance for an impaired asset and the reclassification of previously capitalised borrowing cost on the ULSD project to expense.

Total debt to equity and current ratios as at June 30, 2018, were 3.49 and 0.52 respectively, compared to ratios of 1.07 and 0.41 as at June 30, 2017.

“Shareholder’s equity of $3.3 billion as at June 30, 2018, represented a decrease of 69.73 per cent when compared with the period ending June 30, 2017.”

The chairman said Petrotrin is embarking on the next phase of its restructuring programme, Thrive, where the focus will be on “designing the organization built for purpose around its operational units.”

He added: “As we embark on this phase, we will consult with all stakeholders to garner support for what is undoubtedly a monumental exercise that will have a profound impact on all the citizenry of Trinidad and Tobago.

“The board is encouraged by the level of support and extraordinary efforts from employees and is committed to finding a sustainable solution that is equitable to all stakeholders.”

***

Puerto Rico Power Co Names 3rd CEO

(AP, 19.Jul.2018) – Puerto Rico’s governor named a new CEO on Wednesday to lead the US territory’s power company, which has now seen three top executives in two weeks as it struggles with a lack of leadership, bankruptcy and the restoration of electricity to hundreds who remain in the dark since Hurricane Maria.

Electrical engineer Jose Ortiz, who once served as executive director of the island’s water and sewer company, takes over the Puerto Rico Electric Power Authority on July 23.

He replaces a CEO who lasted only one day in the position, and took over from another CEO who announced his resignation last week after nearly four months on the job.

Ortiz once served as president of the power company’s board, which saw five members resign last week following an outcry over the US$750,000 annual salary that a previous CEO would have earned amid an 11-year recession. Ortiz will be making US$250,000 annually and will receive no bonuses.

Ortiz said his priority is to rebuild Puerto Rico’s credibility to help attract foreign investment and reach a deal with creditors to resolve the agency’s US$9- billion public debt.

“One of the first things we have to do is pull the company out of bankruptcy,” he said.

He also said he will review multimillion-dollar federal contracts awarded to US companies who are helping restore and rebuild the island’s electrical grid after the Category 4 storm destroyed up to 75 per cent of transmission lines.

Ortiz promised that Puerto Ricans will see “substantial change” early next year at the power company and in their bills as the government prepares to privatise the generation of energy and award concessions for transmission and distribution.

“We cannot keep planning much further,” he said. “We all know what needs to be done.”

Governor Ricardo Rossello is among those who have been blamed for the ongoing turmoil at the power company. A day after the previous CEO was appointed last week, he issued a statement saying that the US$750,000 salary was not appropriate, given the island’s economic crisis, and said that any board member who disagreed should step down. Five of them did, including the CEO, who was previously part of the board.

Rossello defended his actions, saying energy “is the linchpin of our society.

“The transformation of the electrical system is critical to Puerto Rico’s development,” he said.

Ortiz takes over as crews try to restore power to about 650 customers who remain without electricity some 10 months after hurricanes Irma and Maria devastated the island in September.

***

Frontera Provides Notice of 2Q:18 Conference Call

(Frontera Energy Corporation, 19.Jul.2018) – Frontera Energy Corporation announces that its second quarter 2018 results will be released after market on Thursday, August 2, 2018 followed by a conference call and webcast for investors and analysts on Friday, August 3, 2018 at 8:00 a.m. (MDT), 9:00 a.m. (GMT-5) and 10:00 a.m. (EDT). Participants will include Gabriel de Alba, Chairman of the Board of Directors, Richard Herbert, Chief Executive Officer, David Dyck, Chief Financial Officer and select members of the senior management team.

A presentation will be available on the company’s website prior to the call, which can be accessed at www.fronteraenergy.ca.

Analysts and investors are invited to participate using the following dial-in numbers:

Participant Number (International/Local): (647) 427-7450
Participant Number (Toll free Colombia): 01-800-518-0661
Participant Number (Toll free North America): (888) 231-8191
Conference ID: 2755797

Webcast: www.fronteraenergy.ca

A replay of the conference call will be available until 10:59 p.m. (GMT-5) and 11:59 p.m. (EDT) Friday, August 17, 2018 and can be accessed using the following dial-in numbers:

Encore Toll Free Dial-in Number: 1-855-859-2056
Local Dial-in Number: (416)-849-0833
Encore ID: 2755797

***

Puerto Rico Power Grid Still Unstable

(AP, Michael Weissenstein and Danica Coto, 19.Jul.2018) – Ten months after Hurricane Maria destroyed Puerto Rico’s electric grid, the local agency responsible for rebuilding it is in chaos and more than $1 billion in federal funds meant to strengthen the rickety system has gone unspent, according to contractors and U.S. officials who are anxious to make progress before the next hurricane.

The Puerto Rico Electric Power Authority has seen two chief executive officers and four board members resign in less than a week in a messy fight over how much the bankrupt agency should pay its CEO. The agency’s fourth CEO since the hurricane lasted less than 24 hours on the job last week before resigning amid public outrage over his $750,000 salary.

Gov. Ricardo Rossello on Wednesday named the former head of Puerto Rico’s water and sewer agency as the fifth head of the electric company since Maria, at a salary of $250,000 a year. Jose Ortiz starts work Monday.

“In spite of missteps in the past, everybody will see that we have the right person at the right time,” Rossello said.

The turmoil has fueled delays in launching $1.4 billion worth of work that includes replacing creaky wooden power poles vulnerable to collapse in the next storm, the chief federal official in charge of rebuilding Puerto Rico said.

“There is no permanent work that’s been done,” said Mike Byrne, the Federal Emergency Management Agency’s assistant administrator for field operations. “What I’m worried about is the next level, the permanent work, the going in and building the grid the way I’ve been tasked to do by Congress.”

Advertisement

From shut-down medical equipment to the spread of waterborne diseases, the cascading effects of power grid failure likely led to hundreds of deaths in the aftermath of the Category 4 hurricane, although the exact number remains a subject of debate and ongoing investigation.

“The one reason why so many people died in the aftermath of the hurricane was the lack of energy,” opposition Sen. Eduardo Bhatia said. “And the lack of energy comes from how fragile the system was because of years of neglect.”

Several hundred Puerto Ricans remained without power Thursday in the longest-running blackout in U.S. history. The entire island remains vulnerable because much of the massive damage from the storm was resolved with temporary fixes likely to fail in the next hurricane.

These include thousands of weakened and damaged poles and power lines that were reused in the absence of new supplies. In some cases, lines were bolted to trees.

The Puerto Rico power authority notified three large mainland U.S. companies in March that they had been selected to carry out $1.4 billion worth of contracts that includes finishing emergency restoration work and beginning the long-term task of overhauling the power grid. Nearly four months later, the agency has not issued the final orders required to send the linemen into the field to do the permanent work, according to federal officials and some contractors. The power authority has not explained why, and a spokesman did not return repeated calls for comment.

***

Argentina Gas Auctions to Begin in August

(Reuters, 19.Jul.2018) – Argentina’s electricity generators will be able to begin bidding for their natural gas supply beginning in August, President Mauricio Macri said, as the country gradually moves away from controls on energy markets.

The change comes as rising output in the Vaca Muerta shale play moves the country closer to a gas surplus. An official said earlier this month that such auctions could account for as much as 70 percent of wholesale supply in March or April of 2019, as the government phases out the current fixed-contract system. (Reporting by Luc Cohen; Editing by Sandra Maler)

***

Mexican Group Unhappy About Delayed Auctions

(Reuters, Dave Graham and Ana Isabel Martinez, 19.Jul.2018) – A decision to delay Mexican oil auctions until after the next president takes office does not augur well for opening the country’s energy sector to private investment, the head of a major business association said on Thursday.

The government said on Wednesday it had postponed auctions scheduled for September and October until next February to give firms more time to consider the blocks on offer.

Last month, it said the auctions would be going ahead as planned.

Incoming President Andres Manuel Lopez Obrador, a leftist, has been a long-standing critic of opening up the oil and gas sector to private capital, and said before the election he would demand the auctions be halted.

Gustavo de Hoyos, president of employers’ confederation Coparmex, told Reuters that the only conclusion to draw so far was that the postponement was due to political considerations. He said that sent out a signal that was “not good.”

“We think it’s unfortunate that … political criteria imply an interruption in the rhythm of decisions in the energy sector,” he said in an interview. “Conceptually at least, there’s a clear aversion to this process of liberalization.”

The doubts expressed by de Hoyos are one of the first instances of a major business lobby questioning Lopez Obrador’s economic vision since his landslide victory on July 1.

Coparmex says it represents more than 36,000 business people accounting for about 30 percent of Mexico’s gross domestic product.

Its reservations could presage further pushback against Lopez Obrador after he takes office on Dec. 1 if doubts surface over his stewardship of Latin America’s No. 2 economy.

The president-elect clashed with prominent industry leaders during the campaign, but top business executives quickly pledged to work with him after his election win.

Lopez Obrador has said little about the oil auctions since his victory. Senior members of his campaign team did not respond to questions about whether the postponement was agreed between the incoming and outgoing administrations.

Current administration officials said it was up to Lopez Obrador’s team to say whether there had been a mutual agreement to delay the auctions. Outgoing President Enrique Pena Nieto says they will generate billions of dollars worth of investment.

Lopez Obrador has pledged to review contracts awarded under the oil and gas liberalization for evidence of corruption, and his designated chief of staff said before the vote the auctions would continue if the process was not tainted.

Reporting by Dave Graham and Ana Isabel Martinez; Editing by Peter Cooney

***

Lee: Thank UNC for BHP gas-fin

(Trinidad and Tobago Newsday, Sean Douglas, 19.Jul.2018) – BHP Billiton’s new gas-find 200 kilometres off the Mayaro coast is due to tax-breaks for exploration given by the former UNC government, Opposition spokesman on energy, David Lee, said in a statement on Thursday.

He attributed the find to the “innovation, tremendous development and effective management” in the energy sector under the Kamla Persad Bissessar led government.

Lee said in 2012, BHP had won the relevant block (known as TTDAA 5) in a competitive bid round process. “These deep water bid rounds have been described as the most successful in our nation’s history given the level of competition which saw 12 of the world’s top oil and gas companies compete against each other to search for hydrocarbons in Trinidad and Tobago’s deepwater.

He said before 2012 past administrations had failed to secure any deepwater exploration and discovery of stranded natural gas.

“But thanks to the marketing efforts and significant steps such as the reprocessing of seismic data by the last administration today our energy sector, our economy and citizens can benefit from these discoveries. “What made these explorations a reality, explorations which today are no doubt aiding the economy’s turn around due to increase natural-gas discovery, was the implementation of key fiscal incentives.”

Lee said the Goverment had criticised these incentives, yet these were the driving factor that enabled oil/gas companies to make the capital investment necessary to facilitate such projects. He urged people to recall that this turnaround was due to the People’s Partnership’s hard work, and not be fooled by the Government trying to take credit.

***

BHP Billiton Finds New Gas Offshore T&T

(Trinidad Express, Aleem Khan, 18.Jul.2018) – Australia’s BHP Billiton found new gas offshore Trinidad, the company confirmed in a statement yesterday.

“In Trinidad and Tobago, following the gas discovery at LeClerc, we commenced Phase 2 of our deepwater exploration drilling campaign to further assess the commercial potential of the Magellan play. The Victoria-1 exploration well was spud on June 12, 2018 and encountered gas.

Following completion of the Victoria-1 well, we expect the Deepwater Invictus to drill the Bongos prospect in Northern Trinidad and Tobago,” BHP Billiton said in a news release.

***

Advantage Lithium Arranges $12 Mln Private Placement

(Energy Analytics Institute, Jared Yamin, 18.Jul.2018) – Vancouver, British Columbia-based Advantage Lithium Corp. arranged a private placement of 15,585,000 common shares of Advantage Lithium at a price of $0.77 per Common Share for gross proceeds of $12,000,450.

“We are pleased to be adding prominent institutional investors to our shareholder registry and very encouraged to see Orocobre and other insiders supporting their pro-rata equity positions in Advantage,” said Advantage Lithium Corp. President, CEO & Director David Sidoo in an official company statement.

Subscribers have been identified to fill the placement. Proceeds from the placement will destined to cover general working capital and to fund continued development and exploration activities on its lithium properties in Argentina, the company announced in an official statement.

Common shares issued pursuant to the private placement will be subject to a four month hold period from the date of closing. The private placement remains subject to the approval of the TSXV.

Focused on developing its 75% owned Cauchari lithium project, located in Jujuy, Advantage Lithium Corp also owns 100% interest in three additional lithium exploration properties in Argentina: Antofalla, Incahuasi, and Guayatayoc.

Insiders

Advantage Lithium anticipates insiders of the corporation, including Orocobre Limited, will exercise participation rights in order to maintain their existing ownership interest in the company. In connection with the private placement, the insider also intends to arrange for the sale of up to 8,571,450 common shares, held by the insider prior to the closing of the private placement, through the facilities of the TSX Venture Exchange Inc., and to use 100% of the proceeds from the swap to participate in the private placement. The swap will allow Advantage Lithium to add key cornerstone institutional investors to the company’s register of shareholders, according to the statement.

***

Moody’s Upgrades Ecopetrol Rating

(Energy Analytics Institute, Piero Stewart, 18.Jul.2018) – The risk-rating agency Moody’s increased the baseline credit assessment (BCA) two notches, to ba1 from ba3 for Colombia’s state oil company.

The agency said the higher BCA was primarily due to Ecopetrol’s “solid metrics and progress in its strategy of growth and adding to reserves, with a reserves replacement index of 126% at the end of 2017,” reported Ecopetrol in an official statement, citing a Moody’s press release.

In the release, Moody’s highlighted Ecopetrol’s four areas of growth:

1. Implementation of improved recovery and infill projects,

2. Exploration,

3. Assessment of opportunities in non-conventional deposits, and

4. Inorganic growth leveraged on its strong cash position.

Moody’s also stressed “Ecopetrol’s solid liquidity and the management team’s commitment to protecting credit metrics.”

The agency maintained Ecopetrol’s rating at Baa3 with a stable outlook.

***

Ecuador Non-Oil Exports Up in 2018

(Energy Analytics Institute, Jared Yamin, 18.Jul.2018) – Non-petroleum exports from the South American country rose to $5,484 million from January to May of 2018 compared to $5,149 million in the same period in 2017.

Exports of bananas and plantains, aquaculture, fish, flowers, plants, cocoa, processed products and metal mechanics accounted for 80.8% of total shipments abroad during the most recent five-month period, according to Proecuador, which conducted an analysis based on figures from the Central Bank of Ecuador.

***

Ecuador Extracting Nearly 523 Mb/d

(Energy Analytics Institute, Piero Stewart, 18.Jul.2018) – The South America country is currently extracting nearly 523,000 barrels per day of crude oil, announced the daily newspaper El Universo.

Ecuador is seeking to urgently boost output after a June 2018 announcement by OPEC stipulating the increases.

***

ENAP to Spend $65.2 Mln in Ecuador

(Energy Analytics Institute, Jared Yamin, 18.Jul.2018) – ENAP announced it will increase investments in three fields it operates in Ecuador.

“The new agreement stipulates an additional investment of $65.2 million for the drilling of 10 wells, which will allow the development of approximately 10.3 million barrels of oil through 2034,” announced Ecuador’s Hydrocarbons Ministry in a statement.

In 2010, ENAP signed a service contract for the operation of three blocks in Ecuador. Actual production from the blocks is some 18,000 barrels per day of crude oil. Lastly, in 2018, the company plans investments of nearly $50 million, according to the statement.

***

LatAm’s Solar Park Turns Mexican Desert Green

(AFP, 18.Jul.2018) – Driving through the endless dunes and cacti of the Chihuahuan desert in northern Mexico, a shimmering blue field suddenly appears on the horizon — not a mirage, but the largest solar park in Latin America.

This silent stretch of sand in the state of Coahuila is the spot Italian energy giant Enel picked to build the Villanueva power plant: 2.3 million solar panels that sprawl across a sun-soaked area the size of 2,200 football fields.

When the plant reaches full capacity later this year, it will supply enough electricity to power 1.3 million homes.

It is the biggest solar project in the world outside China and India.

The panels are designed to turn in tandem with the sun, like a field of metallic sunflowers.

They are part of Mexico’s push to generate 35 per cent of its electricity from clean sources by 2024.

Mexico won plaudits from environmentalists in 2015 when it became the first emerging country to announce its emissions reduction targets for the United Nations climate accord, ambitiously vowing to halve them by 2050.

A key part of that push is a sweeping energy reform undertaken in 2013.

One of outgoing President Enrique Pena Nieto’s signature initiatives, it was initially criticised by President-elect Andres Manuel Lopez Obrador, who will take office on December 1.

But the anti-establishment leftist has warmed to the overhaul, and analysts now say it is likely here to stay.

The reform made global headlines for reopening Mexico’s oil sector to foreign companies after 76 years of State monopoly.

A lesser-known, but perhaps ultimately more important aspect was to allow private companies, to generate and supply electricity.

Under the new law, Mexico is now holding clean-energy auctions in which private companies bid to produce and sell electricity on an open market.

“We’re very happy with the business environment and opportunities that exist in Mexico,” said Enel’s global director for renewable energy, Antonio Cammisecra.

“Since the reform, we see better market conditions and potential for a company like ours.”

CUTTING COSTS

Projects like this are also benefiting from a sharp drop in prices for solar technology in recent years.

“Photovoltaic solar energy is the fastest-growing energy in the world — and that is driving technology innovators,” said Arturo Garcia, an energy specialist at international consulting firm Deloitte.

The energy reform and price plunge are together reshaping the solar market in Mexico.

“Before the reform it was an environmental issue,” said Victor Ramirez, executive director of the National Solar Energy Association.

“Today it’s not just about the environment, it’s about economics. If solar sources are cheaper, investment is going to gravitate there.”

The new opportunities are attracting international interest.

Besides the US$650-million Villanueva project, Enel has another solar park and is building two wind farms.

Last May it pledged an additional US$97 million in investment to expand its projects in Mexico.

Spain’s Iberdrola is building two solar parks, Dutch firm Alten is building another, and British-backed Atlas Renewable Energy recently acquired yet another.

“Mexico has world-class solar resources,” said Camilo Serrano, Atlas’s general manager for Mexico.

“The potential is absolutely proven, and investors’ appetite is obvious in the auctions.”

ELECTRIC

The auctions have so far raised an estimated US$8.6 billion in investment.

Mexican Energy Minister Pedro Joaquin Coldwell recently said they would lead to the construction of 40 solar parks and 25 wind projects.

Mexico, which had nine solar parks in 2015, aims to have 68 by 2021, he added.

Three auctions have been held so far. The production price offered by electricity suppliers has dropped from US$50 per megawatt-hour to US$20.

Thanks to the programme, Mexico is now on the top 10 list of countries with the most clean energy investment, according to the Government, – which predicts the price plunge will continue at the next auction, slated for November.

***

Venezuela Facing ‘Economic Collapse’, IMF Warns

(AFP, 18.Jul.2018) – Venezuela is in a state of “economic collapse” with hyperinflation not seen since the middle of the last century, the International Monetary Fund said Monday.

Despite higher oil prices that are benefiting most exporting nations, the IMF sees a worsening contraction of the economy, which in April already was forecast to decline 15 per cent, with inflation this year of 14,000 per cent.

“It’s very hard to exaggerate the extent of disruption in the Venezuelan economy,” IMF Chief Economist Maurice Obstfeld said.

Already the fund sees double-digit contraction in coming years and “we’ve increased our assessment about the degree of contraction”, he told reporters.

In addition, “we’re seeing a hyperinflation rivalled only by Zimbabwe and the great historical hyperinflation of the inter-war period”.

The IMF did not release a new forecast for Venezuela in the quarterly update to the World Economic Outlook, which provides a limited set of estimates.

Obstfeld noted the wave of migrants fleeing Venezuela was having an impact on neighbouring economies, even though there is no language barrier.

“Just as in other parts of the world there is a huge challenge to absorb these migrants,” he said.

OPEC data show Venezuelan oil production crashed to a new 30-year low of 1.5 million barrels a day in June.

The South American nation earns 96 per cent of its revenue through oil sales but a lack of foreign exchange has sparked economic paralysis that has left the country suffering serious shortages of food and medicine.

The government of socialist President Nicolas Maduro has told state oil company PDVSA to increase production in the country which sits atop the world’s largest reserves of crude.

***

Petrobras to Start Up 4 New Platforms in 4Q

(Reuters, 18.Jul.2018) – Brazil’s state-controlled oil company Petrobras will start pumping pre-salt oil from four new platforms between October and December, the company’s director for production and technology development Hugo Repsold said.

Speaking to reporters at an oil industry event, he said Petrobras could study building its own platforms after 2022 and predicted the company would head toward sustainable growth of oil production in the next few years.

The four new platforms in the Santos basin are the P-67 and P-69 in the Lula oil field, and the P-75 and P-76 in the Buzios fields. A fifth platform planned for this year, the P-68 in the Berbigão field, will start in 2019.

Repsold said Petrobras was well on the road to recovery and was starting up platforms that had been delayed in recent years and which will now ensure continued growth in output.

He said the drop in Petrobras oil production in June to 2.03 million barrels per day – 1.5 percent less than May – was due to maintenance work on some platforms.

A revised business plan that should be published in the third quarter, he said, will include having the company’s own platforms that would enter production from 2023 onwards.

***

Total Advances Renewable Projects in Brazil

(UPI, Daniel J. Graeber, 18.Jul.2018) – A renewable energy division of French supermajor Total said Wednesday it was moving forward with new solar power developments in Brazil.

Total in September paid about $275 million to acquire a 23 percent stake in renewable energy company Eren, naming the new entity Total Eren. The renewable energy division announced Wednesday it was financing and building a combined 140 megawatts of nominal power in Brazil, roughly enough power for at least 100,000 homes.

Of the three projects either in the finance or construction phase, a project dubbed BJL 11 is the company’s first ever in Brazil. With close to 78,000 panels, the French company said it could generate enough power for 23,000 homes.

The move into Brazilian renewables follows the formation of a strategic partnership between Total and Petróleo Brasileiro, known commonly as Petrobras. The 2016 partnership reinforced operations at oil fields off the Brazilian coast, thermal plants and infrastructure associated with liquefied natural gas.

Last week, Petrobras signed a memorandum of understanding to examine solar and wind energy segments in the Brazilian market with Total Eren.

“The recently announced agreement with Petrobras and Total, two major players in the energy sector, makes me very much enthusiastic about future growth prospects in renewables in the country,” Fabienne Demol, the global head of business development of Total Eren, said in a statement.

Petrobas has 104 MW of wind power and 1.1 MW of solar power already in its portfolio in the Brazilian market.

Brazil generates about three quarters of its electricity from renewable energy resources. According to the U.S. Commerce Department, it’s the best renewable energy market in Latin America.

***

Duque Names Maria Fernanda Suarez Energy Minister

(Reuters, 18.Jul.2018) – Colombia’s President-elect Ivan Duque on Wednesday named Maria Fernanda Suarez as mining and energy minister when he takes office in August, a role that will require her to bolster oil production to help weak economic growth and settle messy mining disputes.

Suarez, 44, is currently executive vice president at state oil company Ecopetrol. She served as director of public credit at the finance ministry and as vice president of investments for the Porvenir pension fund. She has also held senior positions at Citibank, ABN AMRO and Bank of America.

Suarez has a Masters degree in public policy from Georgetown University. She will replace German Arce.

“She has a brilliant resume in the public and private sectors,” Duque said in a statement.

As mines and energy minister, Suarez faces a difficult task as Colombia struggles to increase oil production to help increase revenue and bolster the weak economy after years of weak international oil prices.

“With her, we will promote greater diversification of national energy, efficiency and competitiveness in the sector, provide energy security for Colombia, and social and environmental responsibility in all energy mining production sectors,” Duque said.

At current rates of production, Colombia has less than six years worth of oil reserves, the energy ministry says, and urgent investment in exploration is needed to replace reserves.

Duque’s solution to dwindling oil reserves is to encourage investment in exploration, which he says could provide years more oil production, and give tax relief to the sector.

He has also pledged additional investment at state-run Ecopetrol’s refineries to allow exports of more higher-value derivatives.

Still, with the economy growing at an expected pace of just 2.7 percent this year and a budget deficit that needs to be reduced, funding such expenditure may be tough.

The Colombian Petroleum Association (ACP), says the industry needs to spend up to $7 billion a year just to keep output between 800,000 and 860,000 barrels per day.

Oil companies are already grappling with security concerns as well as local referendums – on whether to allow mining in certain areas – and environmental court rulings that have stymied major mining projects in Latin America’s fourth-largest economy.

A recent paper by the ACP, which represents private crude producers, warned that planned referendums put one-fifth of oil production at risk.

Private oil companies plan to invest up to $4.9 billion this year, ACP said, while Ecopetrol plans to spend up to $4 billion.

(Reporting by Helen Murphy Editing by Nick Zieminski)

***

Guyanese Tanker Workers Undergo Safety Training

(Stabroek News, 18.Jul.2018) – Approximately 35 Guyanese Pritchard-Gordon Tankers (PGT) workers were educated on safety practices as Shell partnered with the company to host a one-day workshop yesterday.

The workshop was hosted at the Pegasus Hotel, where the workers were taken through the rounds by PGT’s Nick Griffith.

“My main focus for this seminar is to improve safety on board of our ships; not that we have a poor safety record but there are always ways of improving safety on board and it has been proven that little incidents, little triggers can show that there’s underperformance and if we have a lot of small and minor incidents then it’s possible that they can result in larger accidents which we definitely want to avoid,” Griffith told Stabroek News.

He stressed that they have not had any serious incidents in a long time but there have been recurrences of minor ones.

According to the company’s website, PGT “specialises in ocean transportation of crude oil and refined petroleum products in environmentally sensitive areas, using purpose built, shallow draft, double hull tankers.”

Griffith said that he hopes that the workers will be even more equipped than they already are to take the necessary safety precautions when they are working and to ensure that they spread the word to the other workers for a more holistic improvement.

He explained that the main topic of yesterday’s seminar was mooring, which he said is a quite dangerous operation.

“You’re using a lot of ropes under pressure and strain and those ropes, if used incorrectly, can break and the rope will snap and it will whiplash and if that rope hits a person’s leg they could lose it. If it hits them around a vital organ they can ultimately die or fall over and bang their head and it has been seen in the past that mooring is a very dangerous operation,” he said.

***

Colombia Names New Mining Minister

Colombia new Mining Minister. Source: Mining Ministry.

(Energy Analytics Institute, Piero Stewart, 18.Jul.2018) – Colombia’s President elect Iván Duque named Ecopetrol Executive Vice President María Fernanda Suárez as the country’s new mining minister, according to reports in the daily newspaper La Republica.

***

U.S. Revokes Visa of Citgo CEO

Asdrubal Chavez Source: Bloomberg

(Bloomberg, Lucia Kassai and Fabiola Zerpa, 18.Jul.2018) – Being a blood relative of Hugo Chavez used to open doors. Now Asdrubal Chavez, cousin of the late Venezuelan socialist leader, is finding out it can close some as well.

In the most recent blow against Venezuela, the U.S. revoked the visa of Chavez, chief executive officer of Petroleos de Venezuela SA’s U.S. refining unit Citgo Petroleum Corp. and a former oil minister. He will be burdened with the task of commanding from outside the U.S. three refineries with a combined capacity to process 749,000 barrels of oil daily and an army of 3,500 employees.

Venezuela, home to the world’s largest oil reserves, has seen its production slide by more than one-third since late 2015, according to data compiled by Bloomberg. Its output may sink from 1.34 million barrels a day in June to just over 1 million, Torino Capital chief economist Francisco Rodriguez wrote in a note. U.S. sanctions have accelerated the decline, as have lawsuits by ConocoPhillips to claim assets as payment for an arbitration award.

The U.S. has sanctioned at least 48 Venezuelan nationals associated with economic mismanagement and corruption, including President Nicolas Maduro, and has provisionally revoked tens of thousands of visas in the aftermath of President Donald Trump’s travel ban. Still, kicking out a C-suite executive of the country is rare.

The revocation “does not change anything at Citgo in terms of its management and operations,” the company said in an emailed statement.

The State Department declined to comment on individual visa cases.

It’s unclear to where Chavez, who used to work from Citgo’s headquarters in Houston, will move. One of the possibilities would be for him to be based out of Aruba, where Citgo is seeking to refurbish a refinery and convert it into an oil upgrader that will transform extra-heavy Venezuelan oil into refinery-ready synthetic grades.

— With assistance by Nick Wadhams
***

YPF to Sell Bonds Ending 2-Mth Debt Drought

(Bloomberg, Pablo Rosendo Gonzalez, 18.Jul.2018) – Argentine’s state-controlled oil company YPF SA has asked banks to submit proposals for a bond sale in the second half of the year to fund an aggressive growth plan for its power unit.

YPF Energia Electrica SA will try to sell at least $500 million of bonds as it seeks to double its generation capacity by 2020, according to two people with direct knowledge of the plan, who asked not to be named as talks are private.

YPF declined to comment.

This is the latest step in the company’s plan to turn its power unit, which will be re-branded as YPF Luz in the coming days, into Argentina’s third-largest energy generator. In March, YPF sold a 24.99 percent stake in the business for $275 million to General Electric Co. Negotiations for a third partner — previously identified as Blackstone Group by people familiar — have so far failed to materialize.

YPF Chairman Miguel Angel Gutierrez said in June there were no active talks for another partner, though one could be brought in as YPF Luz grows, adding that a stock-market listing was also a possibility.

Business Plan

YPF Luz is looking to invest $2 billion in renewable and thermal projects through 2020. The company is currently the fifth-largest producer in Argentina, with 1,800 megawatts generation capability with 270 employees. The two largest generators are Central Puerto SA and Pampa Energia SA.

Once YPF Luz receives offers from banks, a debt sale may take place as soon as August, the people said. The company may seek to sell more than $500 million of bonds, two of the people said, adding that market conditions for Argentine companies right now make sales that large difficult.

“It’s good to be ready to issue, but going out right now doesn’t seem a good alternative for the company,” TPCG analyst Florencia Mayorga Torres said by phone. “I can imagine they will wait until at least the fourth quarter to sell, hoping the market sentiment regarding Argentina improves.”

Most Prolific

YPF is Argentina’s most prolific bond issuer, with 35 debt securities currently outstanding, according to data compiled by Bloomberg. Its most actively traded bond, $1.5 billion of 8.5 percent senior unsecured notes maturing in 2025, yields around 8.9 percent after spiking to a high of 9.74 percent last month. With $1.2 billion in dollar-denominated bonds and other financing due in 2018, YPF may also have to come to market with another bond offering soon.

If YPF’s bond sale takes place, it may put an end to a company-debt drought that started after Transportadora de Gas del Sur SA sold $500 million of seven-year bonds to yield 6.8 percent on April 26. The drought has been so severe that Argentina’s biggest company, Telecom Argentina SA, has postponed a $1 billion bond sale four times on market volatility.

The increase in borrowing costs has also been a result of the decision by Argentina, Latin America’s third-largest market, to go to the International Monetary Fund to request a $50 billion credit facility to insure debt repayment. On June 13, the lender of last resort summarized its view on Argentina’s repay ability saying “the federal debt is sustainable but not with a high probability.”

***

ENAP Names New General Manger

ENAP’s new General Manager Andrés Roccatagliata. Source: ENAP

(Energy Analytics Institute, Jared Yamin, 17.Jul.2018) – Chile’s state oil company ENAP names a new general manager.

The company selected Andrés Roccatagliata Orsini, who will assume the post on August 6, 2018, announced the company in an official statement on its website.

Roccatagliata is a commercial engineer by training and presently the Vice President of Ripley Bank in Chile and Peru.

***

Barbados: A $3 Billion Exercise

(Barbados Today, Marlon Madden, 17.Jul.2018) – It will require an estimated $3 billion worth of investment in a diverse set of renewable energy sources if Barbados is to achieve its goal of 100 per cent renewable energy usage by 2030.

At the same time, officials are predicting that the island could reap as much as $2.5 billion in economic benefits within ten years of becoming 100 per cent dependent on renewable energy sources.

Chief Project Analyst in the Ministry of Energy and Water Resources Brian Haynes said investment was critical if Barbados was serious about achieving its vision for the sector, adding that without diversity “we are not going to make the targets that we are hoping to make”.

“This diversity needs about 545 to about 550 megawatts of power dependent on the configuration that we advance. We are talking about capital investment of between BDS$2.4 to BDS$3 billion. This level of investment is large, but it is not insurmountable because we have a certain amount of liquidity here. We also need to be able to unlock that liquidity to get that investment happening,” Haynes told the opening of a high level round table meeting on the renewable energy industry at the 3W’s Pavilion at the University of the West Indies (UWI), Cave Hill Campus on Monday.

“With that investment the expectation is, and we are talking about ten years in the future and beyond, BDS$2 billion to BDS$2.5 billion [annually on average] in terms of economic profit. That takes into consideration not only what is done with the firms and businesses and households, but it also the indirect – so those persons who are working and investing [in the sector],” Haynes explained.

A 100 per cent renewable energy policy means that the country would move from its current 944 gigawatt hours (GWH) per year usage to between 2,000 and 2,400 GWH/year.

Data showed that between 2006 and 2015 Barbados was importing an estimated 11,654 barrels of oils per day to meet its needs.

The rate of solar photovoltaic electricity going to the national grid slowed considerably in 2017 to reach a mere 0.01 per cent, after a spike in 2013 when oil prices reached an all-time low of about US$30 a barrel.

Up to the end of 2017, only 3.8 per cent of electricity or 27 megawatts came from solar photovoltaic systems.

Haynes explained that a lack of implementation, a lack of adequate financing and human resources, low technical capacity and low pricing certainty had led to low investor confidence over the years, which had hampered the expansion of the renewable energy efforts.

He said in order to achieve the island’s energy goal a multipronged approach was necessary, which would tackle energy for cooling, lighting, transportation as well as energy efficiency.

“We cannot only look at the 900 plus gigawatt hours we are currently consuming, but we have to speak about what is happening on the road. The transportation sector accounts for between 37 and 40 per cent of our fuel consumption and we have to address that,” insisted Haynes.

Executive Director of the Barbados Renewable Energy Association (BREA) Meshia Clarke said she believed the recovery of the ailing Barbados economy depended heavily on the renewable energy sector.

She insisted that as Government embarked on its mission critical action plan to address Barbados’ balance of payment challenges, the renewable energy sector should be given priority.

“What is needed more urgently now than ever is the recognition that the country’s economic recovery must be aligned to an overall strategy [that addresses] economic growth and curtails our foreign debt,” said Clarke.

“Our position has been centred [on] the understanding that the renewable energy and energy efficiency sector present a pathway for the country to stimulate economic growth through the creation of new job opportunities, increased investment prospects and [an] overall reduction in the level of foreign exchange spend on purchase of oil,” she explained.

Acknowledging that Government’s policy objective regarding the sector will require significant levels of investment, Clarke said banking institutions and insurance companies have a significant role to play.

Monday’s meeting among private and public sector representatives, donor organizations and other stakeholders, and insurance and financial services sector officials, sought to among other things, identify a new coordinated and collaborative approach towards developing the sector.

***

Barbados to Establish New Renewable Energy Regime

(Barbados Today, Marlon Madden, 17.Jul.2018) – Within another month producers of electricity from renewable energy sources should have an idea of the new rate they will be paid for selling power to the Barbados Light & Power (BL&P) under the Renewable Energy Rider (RER) programme.

This promise has come from Minister of Energy and Water Resources Wilfred Abrahams, who said his Barbados Labour Party (BLP) administration was “embarking on several initiatives”, including a review of the Barbados Electric Light and Power Act and the National Energy Policy 2017 – 2037 in order to facilitate a more efficient licensing process.

Addressing a one-day high level roundtable meeting on the renewable energy industry at the 3W’s Pavilion at the University of the West Indies (UWI), Cave Hill Campus on Monday, Abrahams said a review of the framework was necessary if the country were to achieve its target of 100 per cent renewable energy usage by 2030.

“We cannot have a situation where there are still temporary rates for renewable energy. In this regard, I expect to, within the next month, take a paper to Cabinet to commence the process to have permanent rates for grid-tied renewable energy systems,” Abrahams said.

“With the permanent rates for all grid-tied renewable energy systems there will be a clear implementation plan for achieving our 2030 target. That is our promise. In this regard I have requested the technocrats, as a matter of urgency, to produce a revised national energy policy, which will clearly show the targets for 2030,” he said.

Exactly two years ago, the Fair Trading Commission (FTC) set a temporary rate for the power being sold to the national grid under the RER programme at $0.416/kWh for solar photovoltaic and $0.315/kWh for wind “until such time as a permanent rate may be established”.

At the time, the FTC said the decision was taken to increase the capacity limit to 500 kW from 150 kW.

Abrahams did not go into detail about other likely changes to the legislation, but insisted that any change would bring about greater clarity and make way for more timely decisions.

He said focus would also be placed on energy efficiency and energy storage, acknowledging that while Government had control over policies all stakeholders were required to work closely together to help bring about the requisite change for the sector.

Abrahams insisted that the inclusion of local investors was critical to the restructuring process of the sector, pointing out that Government would be pursing a policy that would ensure that “all Barbadians are treated as investors”.

Businessman and renewable energy investor Ralph Bizzy Williams immediately welcomed the decision of a permanent tariff for power sold to the BL&P, saying while he did not know what the permanent rate would be, he was certain the industry would “take off” once the decision was made.

He also agreed that Barbadians should have majority ownership of the renewable energy sector here.

“As far as I am concerned the sun that shines on Barbados belongs to Bajans and we should be harvesting it, not foreigners. I love foreigners, I welcome anybody here, but for goodness sakes we are in the sun belt of the world and this is our moment,” said Williams, who pointed to his company’s green energy bond was gobbled up once introduced several months ago.

He also agreed that Barbados would save millions in oil imports through the expansion of the sector, as it would no longer be “subjected to the varying prices of oil” over which it had no control.

***

Petrobras Output in Campos Drops

(Reuters, Marta Nogueira, 17.Jul.2018) – Oil production by Brazilian state-led Petroleo Brasileiro SA in the Campos basin fell 1.4 percent in June over the previous month to 1.042 million barrels a day, its lowest level since 2001, as mature fields decline, according to company data.

Output has dropped 15.8 percent in 12 months due to the ageing of fields off-shore from Rio de Janeiro and Espirito Santo that account for almost half of the crude pumped by Petrobras. The decline has offset rising output from new platforms in the pre-salt region of the Santos basin.

Petrobras has looked at creative ways to handle mature fields by either selling them or entering partnerships to boost recovery efforts.

On June 14 it concluded the sale of a 25 percent stake worth $2.9 billion in the Roncador field to Equinor.

The partnership with the Norwegian company formerly known as Statoil will include measures to slow the decline of production in Roncador and raise the recovery factor.

In a move by private equity firms to gain a foothold in Brazil, Warburg Pincus and EIG Global Energy have placed bids for shallow water mature oilfields being sold by Petrobras, industry sources told Reuters last month.

The clusters located in the Campos basin off the coast of Rio de Janeiro state are likely to fetch proposals of around $1 billion in total, which would help boost a wider effort by Petrobras to sell assets and reduce debt. (Reporting by Marta Nogueira Editing by Leslie Adler)

***

Cano Limon Pipeline Restarts After 180 Days

(Reuters, 17.Jul.2018) – Pumping through the Colombia’sCano Limon-Covenas oil pipeline restarted after a 180-day stoppage due to repeated attacks by Marxist ELN rebels, military and industry sources said on Tuesday.

The 485-mile (780-km) pipeline has been attacked 58 times this year by the National Liberation Army (ELN), the country’s largest active guerrilla group, according to military sources.

Apart from bombing damage, 41 illegal valves used to steal crude were found on the pipeline, said state-owned Ecopetrol SA, which owns the pipeline via its subsidiary Cenit.

Although this is one of the most extensive paralyses since the pipeline opened in the mid-1980s, activity in the Cano Limon field, operated by Occidental Petroleum Corp and located in the northern Arauca province, has not been affected.

Crude from the field had been transported using a smaller pipeline, which is still at risk of attack, sources said.

Ecopetrol which produces around 60 percent of Colombia’s 866,000 barrels a day of oil.

The ELN, considered a terrorist group by the United States and European Union, has about 1,500 combatants and opposes multinational companies, claiming they seize natural resources without benefiting Colombians.

Outgoing President Juan Manuel Santos and the ELN launched peace negotiations in 2017 but the talks, which shifted from Ecuador to Cuba in May, have been fraught. The guerrillas stepped up their attacks after the end of a bilateral ceasefire in January.

President-elect Ivan Duque, who was voted in last month, has said he will halt the talks unless the ELN declares a unilateral ceasefire and concentrates its forces into a single area.

Cano Limon has been bombed more than 1,400 times during its 32-year history. The attacks have kept it offline for the equivalent of 11 years and spilled about 2 million barrels of crude.

Writing by Helen Murphy

***

Colombia’s Cano Limon Pipeline Restarts

(Seeking Alpha, Carl Surran, 17.Jul.2018) – Colombia’s Cano Limon-Covenas pipeline has resumed pumping oil after a 180-day stoppage due to repeated attacks by Marxist ELN rebels, according to loval military and industry sources.

Apart from bombing damage, 41 illegal valves used to steal crude were found on the pipeline, says Ecopetrol (NYSE:EC), which owns the pipeline.

While this was one of the most extensive stoppages ever for the 485-mile pipeline, activity in the Cano Limon field, operated by Occidental Petroleum (NYSE:OXY), reportedly has not been affected, as crude from the field had been transported using a smaller pipeline, which is still at risk of attack.

***

Venezuela Claims It Plans To Raise Oil Production

(OilPrice.com, Tsvetana Paraskova, 17.Jul.2018) – Venezuela’s Oil Minister Manuel Quevedo has discussed plans with state-held oil company PDVSA to raise the country’s crude oil production in the second half of the year.

While Venezuela and its struggling oil firm claim that they are revising their production planning in order to increase the country’s oil production capacity and make this year a year of “consolidation and stabilization”, basically no one else thinks or claims that Venezuela could soon be able to reverse its steep production decline which sees it losing more than 40,000 bpd of crude oil production every month for several months now.

According to OPEC’s secondary sources in the latest Monthly Oil Market Report, Venezuela’s crude oil production dropped in June by 47,500 bpd from May, to average 1.340 million bpd last month. This compares with an average of 2.154 million bpd in 2016, and an average of 1.911 million bpd in 2017. Venezuela, for its part, has been self-reporting to OPEC much higher production figures, with the June production reported at 1.531 million bpd.

Amid plummeting crude oil production, PDVSA is said to have failed to honor its supply obligations in early June, and has started to refine imported crude oil.

The plunging oil production is nearing the psychological threshold of just 1 million bpd as early as this year, analysts and industry experts say, and don’t see how production can be restored after years of underinvestment and mismanagement.

On top of the lack of investment and an exodus of oil workers who don’t see the point of working for salaries that become worthless overnight due to the 13,860-percent hyperinflation, ConocoPhillips is looking to and is already seizing PDVSA assets in the Caribbean in a bid to enforce a court ruling that awarded the U.S. firm US$2 billion in compensation for the forced nationalization of company assets in Venezuela.

***

Why Is Venezuela Still Sending Subsidized Oil To Cuba?

(OilPrice.com, Haley Zaremba, 17.Jul.2018) – In the past, oil has accounted for 96 percent of Venezuela’s exports and over 40 percent of government revenues. Now, as the nation’s economy continues to crumble amid sanctions, political strife, and low oil prices, the Venezuela’s all-important oil production is plummeting. In fact, last month’s production was the lowest in 30 years at 1.5 million barrels a day. In desperation, the struggling administration has even begun to shut down production proactively as their terminal storage meets maximum capacity and the government faces major bottlenecks at storage facilities and ports.

As oil production and exports drop, the Venezuelan government has even less money to buy essentials like food, medicines, and other basic goods–a well-established crisis growing worse all the time. The International Monetary Fund (IMF) has said that the brutal economic crisis underway in Venezuela is one of the worst in modern history. The nation’s once powerful economy has plummeted 45 percent in the last five years, and the IMF projects that it will shrink 15 percent in 2018 alone. Out-of-control inflation rates will reach 13,800 percent.

However, in the middle of the chaos — a collapsing regime, widespread hunger, medical shortages — there is one holdover from the socialist platform that autocratic President Nicolas Maduro has refused to lapse on. Despite the crisis on his own soil, Maduro continues to grant generous oil subsidies to Cuba.

The small island nation, not without its own economic issues, has been dependent on cheap Venezuelan oil since the 1990s. After the fall of the Soviet Union, comrade Cuba was in economic shambles. It was at this point that they turned to Venezuela reduced-rate crude oil, in exchange for sending skilled laborers across the Caribbean.

Now, as Venezuela sinks deeper and deeper into an extreme economic depression, few could have predicted that they would still be making good on that decade-old agreement with Cuba–even the Cubans themselves have been scrambling for new sources of cheap crude. Last year Venezuela even cut off exports to Cuba for eight months, but then once again began sending shipments of light oil to Cuba and Curacao in March 2017 at a great cost to their own refineries, which are running at just a small fraction of their capacity thanks to lack of maintenance and drained funds.

Despite all this, amazingly, there was a reported shipment of 500,000 barrels of Venezuelan crude shipped to northwestern Cuba last week, sparking an uproar back at home. Venezuela continues to supply Cuba with around 55,00 barrels of oil per day, costing the nation around $1.2 billion per year, an unthinkable generosity when 9 million Venezuelans are reporting that they can only afford to eat once a day. This money could be channeled into turning around Venezuela’s own crisis, to curb inflation and import desperately needed medicines that can no longer be found on empty Venezuelan shelves.

There is a new, albeit small, ray of hope, however, for Venezuela’s ailing economy. On July 1st Mexico overwhelmingly elected a leftist president for the first time in decades. Andres Manuel Lopez Obrador, known locally as AMLO, pledged on the campaign trail to bring Mexico’s foreign policy back to a standard of non-intervention. This would mean walking back current neoliberal Mexican President Enrique Peña-Nieto’s efforts to build a regional alliance against Maduro and put pressure on him to ease up on his increasingly despotic tendencies.

Despite public outcry against Maduro’s continued financial support of Cuba as his own people without food and desperately needed medicines, the reality is that Cuba is one of Venezuela’s last remaining allies. Even if Mexico is no longer actively working against Maduro’s regime, they won’t be supporting it the way that Cuba has and continues to do. The sad truth is that Maduro has and likely will continue to put politics over people, and cheap oil will continue to flow out of the pockets of Venezuela and into the ports of Havana, which sit ready and waiting.

***

Ex-Venezuelan Energy Official Pleads Guilty

(AP, 16.Jul.2018) – A former official at a state-run electric company in Caracas, Venezuela, pleaded guilty to money laundering conspiracy relating to an alleged multibillion-dollar graft scheme in the Venezuelan oil industry.

Luis Carlos de Leon-Perez, a 42-year-old dual citizen of the United States and Venezuela, admitted his role in the scheme to bribe officials of Venezuela’s state-owned-and-controlled oil company, Petroleos de Venezuela, or PDVSA, the U.S. Attorney’s Office in Houston announced. He also pleaded guilty to conspiracy to violate the U.S. Foreign Corrupt Practices Act. He is scheduled to be sentenced Sept. 24.

De Leon admitted seeking bribes from owners of energy companies in the United States and elsewhere and directing some of the bribes to PDVSA officials.

In 2016, Venezuela’s opposition-led National Assembly said $11 billion went missing at PDVSA in 2004-2014, when Rafael Ramirez was in charge of the company. In 2015, the U.S. Treasury Department accused a bank in Andorra of laundering some $2 billion stolen from PDVSA.

Ramirez was one of Venezuela’s most powerful officials until he resigned as Venezuela’s ambassador to the United Nations in December. He was not charged in the indictment and has denied any wrongdoing, dismissing the U.S. probe into PDVSA as a politically motivated attempt to undermine President Nicolas Maduro’s socialist government.

De Leon was arrested in Spain last October and extradited to the United States after a federal grand jury in Houston returned a 20-count indictment against him, Nervis Gerardo Villalobos Cardenas, 51; Cesar David Rincon Godoy, 51: Alejandro Isturiz Chiesa, 33; and Rafael Ernesto Reiter Munoz, 39.

Cesar Rincon has already pleaded guilty to money laundering conspiracy. Roberto Enrique Rincon Fernandez, 57, of The Woodlands, Texas; and Abraham Jose Shiera Bastidas, 55, of Coral Gables, Florida, have pleaded guilty to violating the Foreign Corrupt Practices Act and await sentencing. Prosecutors say they paid bribes in exchange for contracts to build electricity generators for PDVSA at a time Venezuela was suffering widespread power outages.

In all, 12 suspects have entered guilty pleas relating to the investigation, the Justice Department said.

Villalobos, Ramirez’s former deputy at PDVSA; Reiter, PDVSA’s former corporate security chief, and Isturiz all await trial on charges of money laundering and money laundering conspiracy. Villalobos also is charged with conspiring to violate the Foreign Corrupt Practices Act. He and Reiter remain in Spain awaiting extradition, while Isturiz still has not been arrested.

***

Plateau Energy Peru Unit Finds Lithium Resources

(Reuters, 16.Jul.2018) – Canadian miner Plateau Energy Metals Inc’s Peru unit Macusani Yellowcake S.A.C. said on Monday it has found 2.5 million tonnes of high-grade lithium resources and 124 million pounds of uranium resources in its Falchani hard rock deposit in the region Puno.

Ulises Solis, general manager of the unit, told a news conference that it was unclear how much of the lithium resources would eventually end up being classified as economically viable reserves.

Solis said a feasibility study would reveal that next year, and that a proposed $800 million, underground lithium-uranium mine could be built within a year to start production in 2020.

The announcement is the latest in a flurry of plans to expand or build new lithium mines amid forecasts for massive demand from the electric vehicle industry, which uses lithium in car batteries.

Plateau has drilled 3,000 meters or about 15 percent of the surface of its exploratory concessions in Puno, which are located at an altitude of about 4,500 meters in the Andes, Macusani said in a statement.

It plans to drill another 10,000 meters by early next year, Laurence Stefan, Plateau’s chief operating officer, said at the press conference.

Plateau headquarters did not immediately respond to a request for comment.

The company is working with the government to develop clear rules for mining radioactive materials that are still lacking in Peru, Solis said. (Reporting By Marco Aquino)

***

NGC loses SIS challenge in Privy Council

(Trinidad and Tobago Newsday, 16.Jul.2018) – State-owned National Gas Company has lost an appeal in its multi-million claim against Super Industrial Services (SIS) and another company as the Privy Council today dismissed an appeal in which it challenged a decision to strike out its lawsuit on the ground that it failed to meet strict timelines for civil cases set in the Civil Proceedings Rules (CPR).

In February last year, the Court of Appeal, in a majority ruling, agreed with SIS’ contention that the judge was not actively managing the case when NGC failed to adhere to the rules in its prosecution of its claim against SIS and RFRL to set a case management conference after the lawsuit was filed in December 2015, as required by the rules.

In its lawsuit, NGC sought an order to prevent the dissipation assets in the contract dispute over the controversial Beetham Water Treatment Plant.

NGC had also btained a freezing order up to $180 million against SIS’ assets and an injunction restraining RFRL from dealing with certain assets. The freezing order was granted pursuant to arbitration proceedings which are still ongoing.

The dispute between the parties started in 2015 after delays in the US$162,055,318.77 project, which was due to be completed on October 21, 2016.

The contract was eventually terminated on November 24, 2016, after SIS reportedly informed NGC it was unable to continue with the work.

***

New Fortress Invests $400 Mln in Pilot Project

(Jamaica Observer, 15.Jul.2018) – New Fortress Energy announced on Friday a new partnership with Jamaica Urban Transit Company (JUTC) for the introduction of the first natural gas-powered buses in Jamaica, which will significantly reduce emissions, pollution, maintenance and fuel costs.

As part of the partnership with the Government of Jamaica, New Fortress Energy will fund the pilot project for the conversion of five buses operated by JUTC to run on clean-burning liquefied natural gas (LNG) by early 2019.

The pilot programme, which consists of five new LNG-powered buses and a fuelling station in Kingston, is estimated to cost close to $400 million.

The new buses will reduce emissions and pollution and are expected to operate more efficiently, furthering the Government’s efforts to achieve energy diversification for sustainable economic growth and better protect the environment.

“We’re delighted to partner with the Government of Jamaica to introduce clean, reliable and affordable natural gas to the public transportation sector,” said Wes Edens, founder and chairman of New Fortress Energy.

“This partnership will be a catalyst for the transportation industry to reduce harmful emissions and pollution by using cleaner fuels. Jamaica continues to set an example with transformative energy investments that help grow the economy and protect the environment.”

Meanwhile, Minister of Transport and Mining Bobby Montague said, “We look forward to the conclusion of this pilot, using LNG-powered buses. We are very encouraged and excited about this groundbreaking initiative that will greatly enhance our environment. The Government is committed to support, create and enable the implementation of this pilot project. We anxiously await the results, so that a proper technical review can be done and chart a new pathway.”

He further noted that New Fortress Energy is funding five new buses so that the results of the pilot programme are not skewed by other factors.

The buses will be deployed across the system, and the ministry, along with JUTC stakeholders will be looking at the results to assess the success and viability.

In agreeing with the Minister, Paul Abrahams, managing director for JUTC, said; “This is indeed a significant milestone for our transport system and importantly, for our environment. We are very excited about it and look forward to the results post-pilot.”

Known as one of the safest, non-polluting and non-toxic fuels, LNG is an odorless fuel that offers significant energy efficiencies and emission reductions over alternative fossil fuel sources. It is cooled to a liquid form at -260°F and stored at atmospheric pressure, making it safe to handle and transport across the world.

The introduction of LNG as a clean and safe alternative fuel source in Jamaica is expected to lower energy costs and reduce environmental impact.

***

US to Become World’s Top Oil Producer

(AP, 15.Jul.2018) – The United States has nosed ahead of Saudi Arabia and is on pace to surpass Russia to become the world’s biggest oil producer for the first time in more than four decades.

The latest forecast from the US Energy Information Administration predicts that US output will grow next year to 11.8 million barrels a day.

“If the forecast holds, that would make the US the world’s leading producer of crude,” says Linda Capuano, who heads the agency, a part of the US Energy Department.

Saudi Arabia and Russia could upend that forecast by boosting their own production. In the face of rising global oil prices, members of the Organization of the Petroleum Exporting Countries cartel and a few non-members, including Russia, agreed last month to ease production caps that had contributed to the run-up in prices.

President Donald Trump has urged the Saudis to pump more oil to contain rising prices. He tweeted on June 30 that King Salman agreed to boost production “maybe up to 2,000,000 barrels”. The White House later clarified that the king said his country has a reserve of 2 million barrels a day that could be tapped “if and when necessary”.

The idea that the US could ever again become the world’s top oil producer once seemed preposterous.

“A decade ago, the only question was how fast US production would go down,” said Daniel Yergin, author of several books about the oil industry, including a history, The Prize. The rebound of US output “has made a huge difference. If this had not happened, we would have had a severe shortage of world oil,” he said.

The United States led the world in oil production for much of the 20th century, but the Soviet Union surpassed America in 1974, and Saudi Arabia did the same in 1976, according to Energy Department figures.

By the end of the 1970s, the USSR was producing one-third more oil than the US; by the end of the 1980s, Soviet output was nearly double that of the US.

The last decade or so has seen a revolution in American energy production, however, led by techniques including hydraulic fracturing, or fracking, and horizontal drilling.

Those innovations – and the break-up of the Soviet Union – helped the US narrow the gap. Last year, Russia produced more than 10.3 million barrels a day, Saudi Arabia pumped just under 10 million, and the US came in under 9.4 million barrels a day, according to US government figures.

The US has been pumping more than 10 million barrels a day on average since February and probably pumped about 10.9 million barrels a day in June, up from 10.8 million in May, the energy agency said Tuesday in its latest short-term outlook.

According to the Energy Department, the US edged ahead of Saudi Arabia in February and stayed there in March; both trailed Russia.

Capuano’s agency forecast that US crude output will average 10.8 million barrels a day for all of 2018 and 11.8 million barrels a day in 2019. The current US record for a full year is 9.6 million barrels a day in 1970.

The trend of rising US output prompted Fatih Birol, executive director of the International Energy Agency, to predict this spring that the US would leapfrog Russia and become the world’s largest producer by next year – if not sooner.

One potential obstacle for US drillers is a bottleneck of pipeline capacity to ship oil from the Permian Basin of Texas and New Mexico to ports and refineries.

“They are growing the production, but they can’t get it out of the area fast enough because of pipeline constraints,” said Jim Rittersbusch, a consultant to oil traders.

Some analysts believe that Permian production could decline, or at least grow more slowly, in 2019 or 2020 as energy companies move from their best acreage to more marginal areas.

***

Venezuela’s Maduro Introduces Petro in Turkey

(Energy Analytics Institute, Piero Stewart, 14.Jul.2018) – Venezuela’s President Nicolás Maduro introduced ‘el petro’ during a presentation in Turkey.

Maduro reiterated that the Petro crypto-currency is based or backed by an entire block located in Hugo Chavez Orinoco Heavy Oil Belt, or the Faja, which contains more than five billion barrels of certified oil reserves, reported PDVSA in an official statement.

Its value is equivalent to the price of an oil barrel, he said.

Maduro added that Venezuela offered numerous opportunities to investors and invited businessmen to jointly work on oil, gas and mining projects in the South American country.

“I place it at your disposal to strengthen relations and accelerate investments between Venezuela and Turkey,” he added during meetings with representatives from Turkish private and public companies.
***

Venezuela, Turkey Discuss Oil Supply

(Energy Analytics Institute, Piero Stewart, 14.Jul.2018) – Venezuela’s President Nicolás Maduro announced the two countries could soon sign a new oil agreement.

“A new agreement thereon shall be signed pretty soon,” reported PDVSA in an official statement, citing Maduro.

No specifics were provided in the statement.

***

Machado Says Venezuela “Show Can’t Go On”

(Energy Analytics Institute, Piero Stewart, 13.Jul.2018) – Opposition leader María Corina Machado said the “show can’t go on” during a video broadcast from Punto Fijo.

The leader’s video in reaction to a recent oil spill at PDVSA that the state oil company blamed on workers.

“A criminal regime that transformed PDVSA from one of the companies with the best industrial safety indices into one of the most dangerous in the world, now pretends to blame the workers for this new spill,” wrote Machado in an official Twitter post. “It’s monstrous. My support for oil workers. Resist!,” she added.

***

Ecuador Court Upholds $9 Bln Chevron Ruling

Oil site in Ecuador. Source: AP

(AP, 13.Jul.2018) – Ecuador’s highest court has upheld a US$9.5 billion judgment against oil giant Chevron for decades of rainforest damage.

Plaintiffs celebrated the constitutional court’s decision announced Tuesday night, saying it should pave the way for indigenous tribes to receive compensation for oil spills that contaminated groundwater and soil in their Amazon home.

“There’s no doubt now that we’ve won this long legal battle,” said Pablo Fajardo, the plaintiffs’ lawyer.

But the ruling is largely symbolic, as Chevron no longer operates in the South American country. That means Ecuador’s government will have to pursue assets owned by the San Ramon, California-based company in foreign courts, where it so far has had little luck.

Chevron had long argued that a 1998 agreement Texaco signed with Ecuador after a US$40-million clean-up absolves it of liability. Chevron bought Texaco in 2001.

Last week, an appeals court in Argentina rejected an attempt by Ecuador to collect on its award, echoing earlier rulings by courts in Canada, Gibraltar and Brazil.

In 2014, a US court of appeals in New York also denied Ecuador’s request, arguing that the original judgment was obtained through bribery, coercion and fraud.

Chevron said in a statement that the high court’s decision “is consistent with the pattern of denial of justice, fraud and corruption against Chevron in Ecuador”.

It added that Chevron “will continue to work through international courts to expose and hold accountable those responsible for the judicial fraud and extortion against Chevron in Ecuador”.

In an added twist, the American lawyer, who for years represented Ecuador in the matter, was barred on Tuesday from practising law in New York state.

The New York state appeals court found Steven Donziger guilty of professional misconduct, saying that in his appeal of the 2014 ruling, he did not challenge the judge’s findings of bribery, witness tampering, and the ghostwriting of a court opinion.

The findings “constitute uncontroverted evidence of serious professional misconduct which immediately threatens the public interest,” the appeals court said in announcing its suspension of Donzinger.

Donzinger did not immediately respond to an emailed request for comment.

***

Pemex, Energy Offices to be Moved

(Natural Gas Intelligence, Ronald Buchanan, 13.Jul.2018) – Mexico President-Elect Andres Manuel Lopez Obrador aims to decentralize the government in a sweeping plan to ease the congestion of population, buildings, vehicles and pollution in the “megalopolis” of Mexico City, a strategy likely to impact the country’s energy sector from top to bottom.

The government agencies set to be relocated to the provinces include state-owned Petroleos Mexicanos (Pemex); state power utility Comision Federal de Electricidad (CFE); energy ministry the Secretaría de Energía (Sener), as well as the energy regulators, the Comision Nacional de Hidrocarburos (CNH) and the Comision Reguladora de Energia (CRE).

Under the plan, Pemex headquarters would be moved from its 51-story Mexico City tower to Ciudad del Carmen on the southeastern Gulf Coast, a base of support that supplies operations in the Sound of Campeche, where most oil and gas is produced.

Sener, CNH and CRE are slated to be moved to Villahermosa, capital of Tabasco, the state where Lopez Obrador was born.

The age of the internet should ease the transition. These days, almost all government business is conducted online.

Since the 2013-14 energy reform, sessions of the CNH and CRE have been broadcast live by Internet, and the rules of both regulators insist in keeping a distance from representatives of the companies involved in auctions.

In order to ensure transparency and avoid any hint of corruption, CNH and CRE commissioners have to provide reports to their superiors of meetings with representatives of companies, rather as diplomats of the Western and Soviet blocks did whenever they met each other at cocktail parties during the Cold War.

The Federal District of Mexico City and its surrounding conurbation currently houses a population of close to 20 million.

Public transportation is far from adequate and roads are often gridlocked. Working hours in Mexico are the longest in the Organization for Economic Co-operation and Development, aka OECD. Many people spend four hours a day — two each way — between their homes and their workplaces.

Speaking in a video produced by his Morena party, Lopez Obrador said that the decentralization plan should help improve the quality of life in the capital as well as providing more equal opportunities for the nation’s regions.

“There are islands of rapid growth in the country, but they are surrounded by areas that have been abandoned,” he said.

Yet another reason, he added, was the susceptibility of the capital to earthquakes. About 10,000 people died in the 1985 earthquake. Since then, stricter building regulations and the use of more sophisticated technology have improved safety standards. Even so, two severe tremors last September caused at least 465 deaths, and 180,000 homes were destroyed in the capital and in southern Mexico.

The plan to decentralize is to be executed steadily, in a process that is likely to take almost all of the six years of the upcoming administration and with a minimum of disruption, according to Monterrey-based businessman Alfonso Romo, who Lopez Obrador has named to be his chief of staff.

Under the plan, five key ministries would remain in Mexico City: Gobernacion, the Interior ministry; the Finance and Foreign ministries; the ministries of Defense (Army and Air Force), and the Navy.

López Obrador has said on several occasions that, as president, he will live and work in the National Palace in the historic center of Mexico City, where critics claim his presence will make even worse the gridlock that often besets the area.

For decades, Mexican presidents have worked and lived in the relatively leafy surroundings of Los Pinos, the Mexican equivalent of the White House.

The Pemex tower, in a nondescript but central barrio of Mexico City, is now one of several tall buildings that dot the Mexico City skyline. But when it was built in the early 1980s it was by far the nation’s largest building and a symbol of Mexico’s huge oil boom that ended in an equally spectacular financial crash and the nationalization of the Mexican banks.

The corporate offices of the CFE are in a much more elegant part of central Mexico City than where the Pemex tower is located. The Energy Ministry is currently housed in the south of the capital, near the Plaza de Toros, the largest bullring in the world.

***

Guyana’s Doors Open for Caricom Investors

(CMC, 13.Jul.2018) – President David Granger has extended an invitation to Caricom member states to invest in the oil sector and other sectors of Guyana.

Speaking on the sidelines of the 39th Meeting of the Conference of Heads of Government of the Caribbean Community (Caricom) here recently, Granger said, “The vision that I have for the Caribbean Community is that all parts of the Caribbean must see this new resource as parts of the community, and they should be willing to share their expertise with us and they should be willing to invest in it. I would like to affirm that the doors of investment, the doors of infrastructure, the doors of information technology, the doors of innovation will be open to our colleagues in the Caribbean.”

The president also placed on record his Government’s willingness to collaborate with stakeholders in Trinidad and Tobago’s oil and gas industry as Guyana becomes a major oil producer with first oil expected in 2020.

“As you know, Guyana is still putting in place the legislative framework, the regulatory framework; we are looking to recruit skilled persons in that sector. It is still too soon to tell. I look forward to working with the Caribbean. Trinidad has a long-established oil and gas industry and I would feel that our Caribbean colleagues would be able to participate in everything that Guyana does — agriculture, timber, gold, diamond mining,” President Granger disclosed.

Following eight major oil finds, ExxonMobil is set to begin production in early 2020.

***

Ecuador’s ITT Output Around 60 Mb/d

(Energy Analytics Institute, Piero Stewart, 13.Jul.2018) – Oil production from the Ishpingo, Tambococha and Tiputini or ITT field is around 60,000 barrels per day.

With additional work activities, production from ITT is expected to reach up to 70,000 b/d, reported the daily newspaper El Universo, citing PetroAmazonas EP Manager Álex Galárraga. The official didn’t say when production is expected to approach these levels.

Galárraga added that the state company continues to work with the respective to obtaining the environmental license for Ishpingo, which isn’t likely to be obtained until September of 2018, he explained.

***

CNH Says Mexico Must Reduce Oil Dependence

(Energy Analytics Institute, Ian Silverman, 13.Jul.2018) – Mexico must reduce its dependence on the United States in regards energy issues.

The country can achieve this goal by increasing its refining capacity, reported the daily newspaper La Jornada, citing National Hydrocarbons Commission (CNH by its Spanish acronym) President Juan Carlos Zepeda. The official added that the next administration has a good possibility to fulfill the objective of assisting Mexico gain greater energy autonomy.

Zepada agreed that construction of a new refinery to assist reduce gasoline imports – which currently represent 75% of demand in Mexico and come entirely from the U.S. – would assist Mexico in terms of gaining energy autonomy.

The official also said strategies should be sought to stop importing 85% of the natural gas used by Mexico, and which at the moment also comes in great part from the U.S.

***

Cos. Form Advisory Board for LatAm Gas Conference

(Latin America & Caribbean Gas Conference & Exhibition, 12.Jul.2018) – Influential organisations in the global natural gas industry have united to form an Advisory Board to the Latin America & Caribbean Gas Conference & Exhibition (LGC), taking place in October 2018.

Latin America & Caribbean Gas Conference & Exhibition (LGC) (PRNewsfoto/LGC)

The ‘Advisory Board for Gas Development in Latin America and the Caribbean’ was formed with the intention of leading, advising and promoting the development of the natural gas industry throughout the continent. The Board will have the direct support of the International Gas Union (IGU) – the organization that represents the world gas sector since 1931 and organises the annual World Gas Conference.

The Board will manage the objectives of different working groups assembled in the lead up to the Mexico conference, formed to identify opportunities for the development of the gas sector at regional and national level. The chosen high-level executives were selected based on their commitment to growth in the region and experience of the entire gas value chain.

Members to date include Michel Houcard, President & CEO, TOTAL Americas, Nelson Luiz Costa Silva, Executive Director of Strategy and Management Systems, PETROBRAS, Evandro Correa Nacul, Executive Director for LAC, REPSOL, Sergio Aranda, Managing Director, Naturgy, Marcos Browne, Executive Vice-President of Gas & energy, YPF, Andrew Hepburn, Gas Policy & Regulatory Affairs, Shell, Jean-Marc Leroy, External Relations Senior Vice President, ENGIE, Luis Bertran, Secretary General, IGU, Izeusse Braga, Executive Secretary, ARPEL and Simon Gosling, Managing Director, EnergyNet.

“We welcome the IGU’s commitment to fostering greater dialogue in the region on developing gas markets, policy and integration.” Andrew Hepburn, Gas Policy & Regulatory Affairs, Shell

The first Meeting of the Advisory Board took place during the World Gas Conference in Washington DC in June, where members discussed the strategic plan for the development of the 2018 LGC conference in Mexico. Members are able to directly contribute to strategies to strengthen the development of natural gas in the region, as well as speaking, presenting and networking at the October conference in Mexico.

The Latin America & Caribbean Gas Conference & Exhibition (LGC) will take place from 9-11 October 2018 in Mexico City in partnership with IGU and ARPEL. The event is designed to give a coherent voice for Gas in Latin America and the Caribbean across the entire gas value chain.

The conference will be produced and organized by EnergyNet, (part of the

Blackstone Group portfolio).

For more information about this meeting:

Meeting dates: 9-11 October 2018

Venue: Hilton Reforma, Mexico City

Website: www.lgc-expo.com

Contact: Laida Iparraguirre  – Marketing Manager

Email: Laida.Iparraguirre@energynet.co.uk

Telephone: +44 (0)20 7384 7707

SOURCE Latin America & Caribbean Gas Conference & Exhibition (LGC)

Related Links

http://www.lgc-expo.com

***

Indigenous Groups Await Chevron Payments

(Energy Analytics Institute, Ian Silverman, 12.Jul.2018) – Indigenous groups in Ecuador that were affected by activities of San Roman, California-based Chevron in the country continue to await payment from the oil giant.

Ermel Chávez, from the Amazon Defense Front, recently spoke about the issue during a press conference in Ecuador.

***

FDI in LAC Region Falls for Third Straight Year

(Energy Analytics Institute, Ian Silverman, 12.Jul.2018) – Foreign Direct Investment (FDI) in Latin America and the Caribbean fell for a third straight year in 2017, reported the Economic Commission for Latin America and the Caribbean or CEPAL by its Spanish acronym.

The details were revealed in CEPAL’s annual report titled “FDI in Latin America and the Caribbean 2018.”

***

Bolivia, Argentina to Meet Over Gas Volumes

(Energy Analytics Institute, Ian Silverman, 12.Jul.2018) – The Bolivian government is still analyzing Argentina’s request to increase natural gas export volumes during the winter season and reduce them in summer.

Meetings between officials from Bolivia and Argentina are expected in coming weeks to discuss the proposals, reported the daily newspaper La Razón, citing Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) President Óscar Barriga.

***

ANCAP and ALUR Combined $160 Mln Credits

(Energy Analytics Institute, Ian Silverman, 12.Jul.2018) – Two resolutions from the Uruguayan government late last month will authorize Ancap and ALUR to access credits for up to $160 million.

In 2018, Uruguay’s state oil company Ancap plans to overcome its $136 million financial indebtedness by renewing it for an amount of up to $90 million, reported the daily newspaper El Pais.

Additionally, Ancap solicited three loans with banking institutions for up to $70 million for its subsidiary Alcoholes del Uruguay (ALUR) with the purpose of canceling loans due for the same amount, reported the daily.

***

Eni Hat-trick at Mackenzie’s Annual Awards

(Wood Mackenzie, 12.Jul.2018) – Italian major Eni won its third consecutive Most-Admired Explorer title, an accolade awarded in conjunction with Wood Mackenzie’s industry-leading annual Exploration Survey.

Eni’s chief exploration officer, Luca Bertelli, accepted the award – which Eni has won for three years in a row – at the inaugural Wood Mackenzie Exploration Awards ceremony, held in conjunction with the subsurface and consultancy business’ annual Exploration Summit on 20 June, 2018.

Dr Andrew Latham, Vice President, Global Exploration Research, at Wood Mackenzie, said: “For the past 10 years, Wood Mackenzie has named the industry’s Most-Admired Explorer after collating the results of our industry-leading annual exploration survey. The survey canvasses views across the sector, marrying Wood Mackenzie’s understanding of the sector with industry opinion.

“We ask respondents to name the explorer they most admire. The award typically recognises big discoveries, ideally as operator and in new frontiers. With this year’s award, Italy’s Eni seals a hat-trick, having won in 2016 and 2017.”

Wood Mackenzie’s Exploration Awards build on our Exploration Survey. This year we broadened our approach, naming the outstanding companies in the sector, recognising the challenges and successes of the past year, and celebrating their success at a gala dinner.

Four other awards were announced at the event:

— Discovery of the Year (2017)

— New Venturer of the Year

— Best Explorer of Unconventional Plays

— Best E&P Explorer

Wood Mackenzie also honoured Bobby Ryan, who recently retired from Chevron, with a Lifetime Achievement Award for his contribution to global exploration.

While 2017 was a good year for exciting new discoveries, Talos Energy’s Zama find, offshore Mexico, stood out, earning them Discovery of the Year. Talos’ partners are Premier Oil and Sierra Oil & Gas. Zama is a big find in a new play and looks set to be a company-maker. It is also one of the first foreign-operated discoveries in Mexico since international oil companies returned to the country after an absence of over 70 years. This award was made based on our survey of exploration industry opinion, which saw more than 200 senior business leaders and experts vote for the discovery they consider to be the most exciting of the year.

The New Venturer of the Year award reflects the need for explorers to continually renew their portfolio. Wood Mackenzie has long argued that the capture of good acreage is the key differentiator in exploration performance. This award was based on Wood Mackenzie’s survey results and our analysis of licensing and farm-in deals over the year. Both our research and wider industry opinion reached the same conclusion. Our winner is ExxonMobil, a company prepared to place big bets on high-impact opportunities in both proven, emerging and frontier plays.

With the phenomenal growth of US shale plays, onshore exploration has become a key area of interest.  For the Best Explorer of Unconventional Plays award, we looked at company efforts at opening and extending unconventional plays.  When we compare our research with our survey results, where we asked which unconventionals explorer was most admired, EOG Resources was the clear winner.  EOG has grown its output to over 650,000 barrels of oil equivalent per day, due in large part to its exploration and development of US unconventional resources.

The Best E&P Explorer award reflects the tremendous contribution the smaller and mid-sized companies make to the sector. The award is again based on a mix of our research and our survey. Once more, both industry and Wood Mackenzie’s analysis reached the same conclusion. Our winner, Kosmos Energy, achieved the largest net resources found last year of any company and received the most votes in our survey.

Bobby Ryan, who recently announced his retirement from Chevron after a long and distinguished career at the helm of its global exploration business, received a Lifetime Achievement Award. Mr Ryan led Chevron’s global exploration business following its merger with Texaco in October 2000.

Dr Latham told guests at the gala dinner: “The list of discoveries made during his long tenure is impressive. Among the operated finds made during his watch were Wheatstone in Australia, Usan in Nigeria, Tahiti in the Gulf of Mexico and Rosebank in the UK.

“The Gulf of Mexico proved a particularly rich seam with St Malo, Big Foot, Jack, Blind Faith and Chevron’s latest discovery, Ballymore. Wood Mackenzie estimates that the total gross oil and gas reserves in discoveries made on Bobby’s watch is close to 30 billion barrels.”

He added: “We are pretty sure that his subsequent tenure lasting over 17 years sets the record for length of service at any major. Bobby is a worthy recipient of the award.”

***

No End In Sight For Venezuela’s Oil Crisis

(OilPrice.com, Nick Cunningham, 12.Jul.2018) – Venezuela’s oil production plunged by another 47,500 barrels per day (bpd) in June, compared to a month earlier. An exodus of workers and field shut downs were reported for the month, pointing to a grim near-term future that could see total production dip below 1 million barrels per day (mb/d) by the end of the year.

According to OPEC’s secondary sources, Venezuela’s output fell to 1.34 mb/d in June, which, aside from a brief interruption of output due to a strike in 2002-2003, puts production at its lowest point in nearly seven decades.

The problems plaguing Venezuela’s oil industry are well-publicized, but the situation continued to deteriorate in June. Two officials from state-owned PDVSA told Argus that workers are fleeing operations. “More production wells are being shut down, the skilled oilfield labor force declined in all upstream divisions by at least a combined 1,000 workers in June, and scheduled maintenance continues to be postponed,” a PDVSA official from the western division said.

A separate official from the eastern division told Argus that production continued to fall in the first 11 days of July as more rigs were scrapped and more wells were shut down. PDVSA is “dying operationally,” the official said.

You wouldn’t know that if you went by government statistics, however. While OPEC’s secondary sources estimated average output at 1.34 mb/d in June, the Venezuelan government reported production figures at 1.531 mb/d, flat from May levels. Those figures defy belief and are not credible, but PDVSA’s leader, Manuel Quevedo, is “cooking the official data sent to OPEC to hide the truth about [PDVSA] from president Maduro and from the public,” an official from the energy ministry told Argus.

Venezuela’s production is now down nearly 800,000 bpd from a year ago, and falling.

“Output from Venezuela’s ageing conventional oil fields is in rapid decline and upgraders operated by foreign joint-venture partners in the vast Orinoco heavy oil belt are malfunctioning and running below capacity,” the IEA said in its latest Oil Market Report. “At the end of June, PDVSA and Chevron restarted the 210 kb/d Petropiar upgrader after almost a month-long closure.”

“In total, upgrading projects in Venezuela can turn roughly 600 kb/d to 700 kb/d of extra-heavy Orinoco crude into export grades. Recently they have been largely out of action due to bottlenecks at loading facilities.”

China has decided to invest $250 million to help slow the decline underway in Venezuela, but it isn’t at all clear that that amount of money will have a significant impact. After all, China has poured $50 billion in loans into Venezuela over the past decade, and the trajectory of Venezuelan oil production has only gone in one direction.

There is also the possibility that the June figures might look a bit better than should be the case because PDVSA drained inventories. Reuters reports that Venezuela’s crude exports to the U.S. recovered a bit in June, compared to May, but that PDVSA drew down on stocks in Curacao and Aruba ahead of ConocoPhillips’ seizure of the facilities. As Conoco presses its case against PDVSA, Venezuela has largely lost control of its facilities on those Caribbean islands.

There is no shortage of reasons to believe the situation will continue on a downward spiral. Oil wells are being shut down and the worker exodus will put an even deeper strain on operations. More than $9 billion in bond payments fall due this year, and it is hard to imagine the government and PDVSA marshalling the resources to meet those payments. Inflation is set to top some 13,000 percent this year, a mind-boggling figure, while GDP could shrink by a further 15 percent. By the end of the year, GDP will have contracted by nearly 50 percent since 2013.

The lack of payment to PDVSA’s joint venture partners threatens to accelerate production losses. The rig count fell to just 26 in June, according to Argus, down from 70 in the first quarter of 2016.

Venezuela has been losing around 50,000 bpd each month so far this year, which means it could lose another 300,000 bpd before the end of 2018. The losses are tightening the oil market, and Saudi Arabia is now forced to ramp up production – and cut into its spare capacity – to make up for the declines.

****

TDI Operating One Rig in Mexico

(Energy Analytics Institute, Jared Yamin, 12.Jul.2018) – Trinidad Drilling Ltd. announced its international joint venture (TDI) currently has two rigs operating, one in Bahrain and one in Mexico.

Trinidad Drilling Ltd. – which provides contract drilling and related services in Mexico – revealed the details in an official statement, but provide details about the Mexican rig.

***

Mexico’s Gov’t to Focus on Boosting Fuel Output

(Reuters, 12.Jul.2018) – Mexico’s next energy agenda will prioritize increasing gasoline and diesel production and later decide on possible changes to the industry reform championed by the outgoing government, according to a top aide to President-elect Andres Manuel Lopez Obrador.

Rocio Nahle, tapped by Lopez Obrador to be energy minister, told local outlet Aristegui Noticias on Wednesday that the country’s next government will address the “energy imbalance” in which Mexico produces less fuel at home and turns to imports to meet national demand.

Lopez Obrador won a landslide victory in the July 1 election and will take office in December.

“We will be assessing if any legislative changes (to the oil opening) are necessary,” said Nahle, adding that the transition team would not immediately propose changes to the existing laws.

The comments by Nahle, who also won a Senate seat in the election, are in line with Lopez Obrador’s pledge last weekend to end Mexico’s massive fuel imports over the first three years of his term.

So far this year, Mexico has imported an average of about 590,000 barrels per day (bpd) of gasoline and another 232,000 bpd of diesel, almost all of it from the United States, as gasoline output at the country’s six refineries owned and operated by state-run Pemex has halved since 2013, the first year of outgoing President Enrique Pena Nieto’s term.

Domestic gasoline output barely meets a quarter of national demand from the country’s legions of motorists.

During the election campaign, Lopez Obrador was sharply critical of the Pena Nieto’s policy to allow foreign and private oil companies to operate fields on their own for the first time in decades, ending Pemex’s monopoly.

The overhaul was designed to reverse a decade-long oil output slide and has already resulted in competitive auctions that have awarded more than 100 exploration and production contracts, deals Lopez Obrador has repeatedly promised to review for signs of corruption.

Nahle said the next government will also begin construction of at least one new oil refinery, which she expects to be operating by the halfway point of Lopez Obrador’s six-year term.

So far this year, Pemex’s existing refineries are producing an average of 220,000 bpd of gasoline and about 125,000 bpd of diesel, according to company data.

***

AMLO Seeks to End Mexico’s Energy Dependence

(TeleSur, 11.Jul.2018) – Mexico’s national energy demand has become highly dependent on the United States.

Mexico’s next energy minister under president-elect Andres Manuel Lopez Obrador has said that the new administration’s energy agenda will be to increase domestic gas and diesel production and reduce dependency on foreign imports.

Rocio Nahle, appointed by AMLO for the energy ministry, said in an interview with a local paper that AMLO’s government will address the “energy imbalance” that makes it dependent on foreign imports to meet national demand.

AMLO has previously made pledges along this line during and after the election, saying that ending the massive fuel imports would be a priority for his first three years.

Mexico has imported an average of 590,000 barrels per day of gasoline and 232,000 per day of diesel, almost all of which comes from the United States. While the United States profits on gas sales to its neighbor, Mexico’s domestic production has decreased by half since the first year of outgoing President Enrique Peña Nieto’s term.

Today, gasoline output by Mexican state oil company Pemex meets less than a quarter of national demand, putting Mexico’s energy system in a situation of deep dependence on the United States.

During the election campaign, Lopez Obrador was sharply critical of the Pena Nieto’s policy to allow foreign and private oil companies to operate fields on their own for the first time in decades, ending Pemex’s monopoly.

Nahle said the next government will also begin construction of at least one new oil refinery, which she expects to be operating by the halfway point of Lopez Obrador’s six-year term.

AMLO also outlined several legislative priorities on Wednesday, particularly ending presidential legal immunity, and slashing the presidential salary.

The incoming administration would also put forward a law to remove obstacles to holding public consultations, as well as create a mechanism for recalling the president, he said.

Lopez Obrador said during the campaign he could hold public consultations on issues ranging from the government’s opening of the energy sector, the construction of Mexico City’s new airport, gay marriage and even his performance as president.

***

Argentina Affirms Liberalization Of Fuels Market

(Institute of the Americas, Jeremy Martin, 11.Jul.2018) – Directly answering a question during an interview in a local media program about the issue of fuels market and pricing, newly-installed Energy Minister Javier Iguacel said: “There is no restriction. There is a free market.” The statement, on its face, does not appear to be overly dramatic, but it is quite important when considered against the backdrop of the last several weeks in Argentina.

In addition to the change at the top of the energy ministry, the government’s negotiations with the IMF, and a major transport strike at the end of June, the Macri administration had felt immense pressure to revise if not reverse several areas of its economic reform agenda that many economists and pundits argued were exacerbating the country’s inflation woes.

Nowhere was this more important than in the energy sector and the issues of tariff adjustments and the liberalization of the fuels market that went into effect at the end of 2017 but were thrown into some disarray when former Minister Aranguren signed a so-called stability pact with several fuel retailers to temporarily freeze fuel prices in an effort to alleviate inflationary pressure.

Indeed, the change of Aranguren for Iguacel was almost certainly a response to political and public relations pressure, but also in favor of new leadership that would again drive forward with Macri’s liberalization plans and objectives. This point was affirmed when, during the same interview, Minister Iguacel spoke very assuredly on how he intended to manage the fuel market challenge: “a policy of total interventionism, where two or three people set prices in a small room has generated many distortions.”

Minister Iguacel has also begun to reorganize key staff and officials in the Ministry of Energy, replacing in many instances holdovers from Aranguren’s tenure particularly those viewed as close to the former minister and part of some of the decisions in his final months with regards to market interventions.
The most notable change to-date has been Minister Iguacel’s bringing aboard Mario Dell’Acqua, the president of Aerolineas Argentinas, the state-run airline. Dell’Acqua will take over as the president of the government-run and ministry of energy-directed Integración Energética Argentina SA (IEASA). In simplistic terms, IEASA is the agglomeration of state energy enterprises that had been assembled under the previous Kirchner governments and nominally under the banner and state firm ENARSA. Dell’Acqua’s role at IEASA will be crucial in unwinding several state-owned energy assets, investments in transmission company Transener and managing bidding for new electric generation capacity, particularly for Buenos Aires.

Nor did Iguacel miss an opportunity to criticize the energy policies, manipulation and intervention in the sector by Macri’s predecessor forcefully noting, for what could be argued was the umpteenth time, that many of the market issues and challenges faced by Argentina were wrought by decisions, lack of decisions or worse, corruption, from the previous administrations.

But beyond those critiques, the more recent developments surrounding the lack of competition, or true liberalization of the market, has also reared its ugly head with regards to supply. In recent weeks certain retailers and fuel stations have been without supply and blame has been aimed at oil companies, the government’s policies, and the market. But it is precisely the latter, or insufficient development of the market that the Macri administration has long argued is the reason for any supply challenges for oil and gas and fuels in Argentina.

Meanwhile, the president of Argentina’s Confederation of Hydrocarbons Trade Entities, or CECHA, Carlos Gold took more direct aim and placed the supply and pricing challenges at the feet of local oil companies who, he argued, have distorted the market by placing a quota on fuel delivery and when the quota is exceeded there is a price differential.

Since taking over the reorganized Ministry of Energy last month, Minister Iguacel has begun to patiently assemble his vision for managing the energy ministry and by extension the energy policy outlook for Argentina under President Macri. The latest statements and very clear indications with regards to the debate swirling around the fuels market underscore that the Macri government remains committed to its energy reform agenda. Moreover, the pressure from inflation, demands and criticisms from friends and foes to perhaps slow down the reform process will not cause a reversal at this point.

***

The Caracas Metro: Still Standing For Now

(Energy Analytics Institute, Piero Stewart, 11.Jul.2018) – The subway system serving the Venezuelan capital is on the verge of collapse due to lackluster maintenance amid ongoing economic, political and humanitarian crises.

Daily occurrences now include but are not limited to: armed robberies, shootings, petty thefts, fights, and of course power outages. It wasn’t always this way. We’re not pointing figures, but we beg to ask the question: who’s to blame?

***

PDVSA Gas Replaces Section of Gas Pipeline

Workers repairing a section of the natural gas pipeline. Source: PDVSA

(Energy Analytics Institute, Piero Stewart, 11.Jul.2018) – PDVSA Gas announced completion of work on the Cariaco-Margarita Wharf section of the Northeast G / J Gas José Francisco Bermúdez pipeline.

Work on the section entailed removing and replacing a 48 meter long section of the 16-inch diameter pipeline that transports natural gas from Sucre state to Nueva Esparta state, announced PDVSA in an official statement.

***

Ecuador, Venezuela Output Down, OPEC Reports

(Energy Analytics Institute, Ian Silverman, 11.Jul.2018) – The Organization of Petroleum Exporting Countries published its July 2018 edition of its Monthly Oil Market Report (MOMR).

Crude oil production from Ecuador and Venezuela — the lone countries from Latin America to be members of OPEC — fell this month (see charts).

***

 

 

 

PetroCaribe Fund to Flow into Government Coffers

(Jamaica Gleaner, 11.Jul.2018) – In a matter of months, the US$1.6 billion, or more than J$208 billion, now in the PetroCaribe Development Fund (PDF) is to flow to the Consolidated Fund and could be administered as the Minister of Finance sees fit.

The transition is expected to happen by the end of the fiscal year, or by the time PDF Chief Executive Officer Dr Wesley Hughes leaves, that office when his contract expires next February.

Hughes told the Financial Gleaner that since about February this year, the finance ministry has had “preliminary discussions” with the PDF about the planned change in the structure of the fund that at its zenith managed more than US$3 billion in assets.

The talks, he said, mulled what form “integration” could take but arrived at no definitive conclusion. The PDF CEO pointed to the finance ministry as the source for any further questions about precisely how the fund, set up in law to service Jamaica’s debt to Venezuela and provide development funding, would operate as part of the Government’s central operations.

The finance ministry is yet to comment. Finance Minister Nigel Clarke is currently overseas engaging financial markets in a non-deal roadshow.

The PDF gets broad policy directions from the finance minister, but is largely an independent and self-financing entity, whose profits not only serviced Jamaica’s oil debt to Venezuela, but invested, mainly via loans, in development projects. It has pumped more than $335 billion into the economy through project financing, equity investments, and social and economic development grants.

“The expectation is that the fund will become more integrated in the Ministry of Finance. It will continue to operate the elements of managing the loans that are in place and long-term debt repayment commitments to Venezuela,” Hughes said. He, however, declined to speculate on the model by which these aims might be achieved.

In the April 2018 Article IV Consultation report on Jamaica, the International Monetary Fund (IMF) listed the integration of the PDF into Government’s central operations as an outstanding item still to be undertaken by the Jamaican Government.

The IMF report gave a March 2019 date for the completion of the action, which, it said, was an undertaking by the Government dating back to the second standby agreement review in September 2017. Hughes said there was no discussion of this commitment with the PDF at that time.

The change in status of the PDF from a public body corporate to being administered as part of central government is part of a raft of policy measures mandated under the current IMF agreement. The measures include the merger of several government organisations, divestment of some public bodies, and stepped-up initiatives to reduce the size of the public sector and wage bill.

The end of the PDF, as it was established by law under a 2006 amendment to the Petroleum Act, is expected to require legislation in Parliament and, possibly, concurrence from Venezuela, given that the PetroCaribe agreement for the concessionary import of oil remains in force, despite the scaling down of shipments and Jamaica’s massive reduction of its oil debt to Caracas. That debt is now at around US$120 million following the cash repayment of some US$1.5 billion three years ago, in a hugely discounted debt buy-back.

Hughes said closure of the fund was viewed as a possible strategic risk by its management in annual planning and financial projections.

As former chairman of the fund when he served as financial secretary in the finance ministry between 2009 and 2012, Hughes said the PDF was deliberately structured to complement the IMF staff monitoring arrangement that was in force in 2006, as well as to safeguard its mandate as political administrations change.

The insulation measures include the financial secretary’s chairmanship of the board and ex-officio membership on the board, accorded to senior public sector officials, including the Cabinet secretary, the head of the Planning Institute of Jamaica, and permanent secretaries of several ministries, such as the Office of the Prime Minister and the ministry with responsibility for energy. About three members are appointed by the finance minister.

Hughes considers the structure, including its direct reporting to Parliament, as adhering to global best practice.

“It’s not that we are not subject to political directives (but) for the most part these directives have been consistent with the Constitution, rules and regulations. After all, we are a public body; we are subject to Cabinet decisions,” he said.

“Cabinet is the highest decision-making body in the country. If they take a decision, our job is not to question it, but to find out how best and effective we can be in implementing that decision. If you don’t have that approach, anarchy is the outcome,” he added.

He also believes that the structure “has worked”, saying “we have found ourselves with sufficient room to do what we have to do to fulfil our mandates”.

***

Mexican Refineries a Must for “Energy Security”

(Energy Analytics Institute, Jared Yamin, 10.Jul.2018) – Given Mexico’s dependence on imported fuel, construction of two new refineries in the country “isn’t a business issue, it’s for energy security,” said researcher and hydrocarbons analyst Fluvio Ruiz Alarcón.

Just as recently as May 2018, Mexico imported 520,000 barrels per day of gasoline, which represented 65% national consumption during that month, reported the daily newspaper El Financiero, citing the analyst who referred to figures from state oil company Pemex.

In terms of whether it was better to reconfigure Mexico’s six existing refining complexes instead of building new ones, Ruiz Alarcón explained: “reconfiguration is basically building a refinery; just look at how long it took the projects that we’ve already done. They took years, ” added the adviser to the team of Mexico’s President Elect Andrés Manuel López Obrador (AMLO).

Ruiz said the first parts of the new president’s National Project consist of recovering the Bicentenario Refinery, a failed project of the Presidency of Felipe Calderón’s that was planned for construction in Tula, Hidalgo. The estimated construction cost of the refinery could range between $10 to $12 billion, depending on the type and size of the of refinery, he said.

***

Stock to Watch: ExxonMobil in Guyana

(OilPrice.com, Meredith Taylor, 10.Jul.2018) – American energy dominance is on the rise.

In March 2018, the U.S. beat its all-time record and pumped more than 10.4 million barrels per day (bpd). Energy stocks are way up on strong forecasts of future demand. Mentioned in today’s commentary includes: Exxon-Mobil Corp. (NYSE:XOM), Chevron Corp. (NYSE:CVX), Pioneer Natural Resources (NYSE:PXD), Marathon Oil (NYSE:MRO), PDC Energy, Inc (NASDAQ:PDCE).

A tight market is looming, regardless of OPEC’s plans to pump more: outages are expected in multiple areas, offering up opportunities for American energy producers to swoop in. The last few years have seen the U.S. emerge as an energy powerhouse. And this is just the beginning.

Here is the best stock with (Guyana exposure) to watch in the space:

Exxon-Mobil Corp.

The biggest of the American super-majors is going back to its roots. Exxon-Mobil, an industry giant with a market cap of $351.8 billion, has its hands in upstream, midstream and downstream. It’s truly international, with operations and investments all over the world.

But increasingly, it’s looking to the U.S. to cover its bottom-line. Both NGL and crude production from Exxon’s U.S. properties have increased since 2013. In January, the company announced it would invest $35 billion in the U.S., in response to the generous tax cuts it received.

As other supermajors diversify and turn towards renewables and natural gas, Exxon is determined to remain a crude player-even if that has caused it to lose its market lead over Shell, narrowing the gap between the two firms to a mere $55 billion, according to Bloomberg. And even as it looks to the U.S., particularly the Permian Basin where it holds 6 billion barrels of oil equivalent (BOE), Exxon’s international posture has grown more sturdy-it’s adding to an already-impressive find off the coast of Guyana.

Exxon stock has risen steadily since the doldrums of February 2018, and the news from Guyana (as well as positive news from the OPEC conference in Vienna) should send it even higher. It always pays to bet on the biggest players. And they don’t come any bigger than this.

***

Pemex Alerts Against Criminal Group

(Pemex, 10.Jul.2018) – The State-Owned Productive Company filed a criminal report before the Office of the Attorney General to initiate the investigation of this suspected criminal activity.

On June 29th, Petróleos Mexicanos filed a criminal claim before the Office of the Attorney General (initials in Spanish: PGR), upon detecting that a group of individuals is seeking to defraud the public by pretending to be part of the company’s senior management and claiming that they are authorized to sell all kinds of hydrocarbon products at preferential prices.

The operation of this group has the following traits:

1) Someone gets in touch with the victim (fuel marketers), whom they promise to sell hydrocarbons to, at a lower-than-market price.

2) If the person being contacted shows any interest, the caller lies and claims to introduce them to high-ranking Pemex officials for a negotiation and, if possible, sign a contract.

3) They arrange a meeting outside Pemex’s offices with false “officials” who supposedly belong to the company. During these meetings, the victim is shown counterfeit documentation, and they even sign false contracts to mislead them further.

4) They offer the delivery of tanker trucks with fuel or some other product and indicate that the payment is to be made to a bank account supposedly belonging to an “authorized third party” appointed by Pemex.

5) Of course, within a few days of receiving the corresponding payment, the victim loses all contact with those individuals, and therefore the fraud is complete.

The general public is called upon not to let yourselves be misled or participating in this kind of schemes, which only defraud persons and companies.

Petróleos Mexicanos informs that the only available process for the purchase of petroleum-based products directly from the company is through the commercial areas of Pemex Transformación Industrial (Pemex Industrial Transformation, Pemex TRI). The process involves prior undersigning of a marketing contract, which must be filled in and completed online using the Pemex TRI portal.

Our commercial advisors or account executives do not charge any amount to formalize these contracts or for any other procedure or operation.​

Pemex reaffirms its commitment to a lawful operation and asks the public to report any irregularities in the contract formalization process or other services provided by the company by calling the toll-free number: 01 800-Pemex00 or by sending an email to: contacto.combustibles@pemex.com

***

Costa Rica to Use Plastics for Roads

(Energy Analytics Institute, Ian Silverman, 10.Jul.2018) – A small Central American country will be considered a pioneer in the region with use of a type of “eco-friendly asphalt” that gives a new life to plastics.

This week the Costa Rican government announced the country would begin to pave streets with a mixture of asphalt and crushed plastics thanks to a development by the National Laboratory of Materials and Structural Models, the University of Costa Rica and several recycling organizations, reported the daily newspaper LaRed21.

The “green asphalt” is already used in other countries such as England, India and Canada, but Costa Rica will be the first from the Latin American region to implement the process.

***

EP PetroEcuador, Politécnica Nacional Sign Deal

(Energy Analytics Institute, Ian Silverman, 10.Jul.2018) – EP PetroEcuador and the Escuela Politécnica Nacional (EPN by its Spanish acronym) signed an Inter-institutional Technical Cooperation Agreement that relates to the early detection of seismic or volcanic phenomena that may affect the transport, storage, refining and commercialization of hydrocarbons of the state oil company, EP PetroEcuador announced in an official statement on its website.

***

UDLA Students Visit Soil Treatment Center

(Energy Analytics Institute, Ian Silverman, 10.Jul.2018) – Nearly 27 engineering students studying Environmental Engineering and Biotechnology Engineering at Ecuador’s Americas University (Universidad de las Américas or UDLA by its Spanish acronym) visited the El Salado Soil Treatment Center, located in the province of Napo.

The students visited the site with the objective to gain knowledge of remediation processes utilized in the area by PetroEcuador, announced the state oil company in an official statement on its website.

The visit today was a way to understand how in reality the soil is treated from an environment point of view, reported EP PetroEcuador, citing engineering student Solange Figueroa.

***

BP Opens 6 Petrol Stations in Campeche

(Energy Analytics Institute, Jared Yamin, 10.Jul.2018) – British Petroleum extended its operations in the country this week.

Today, we have arrived to Campeche, a state with an increase in tourist activity, reported the daily, citing BP Fuels Mexico General Director Alvaro Granada.

The British company initiated activities in Campeche with inauguration of an initial six of 10 planned petrol stations for this year in the state, reported the daily newspaper La Jornada.

In less than a year and a half, BP has emerged as the foreign company with the largest presence in Mexico. The company already covers an estimated 50% of the national territory, and operates nearly 300 petrol stations where it receives more than 500,000 customers daily.

“BP has come to offer a network of service stations that exceed the expectations of consumers in Campeche,” added Granada.

The inauguration of these first six petrol stations in Campeche and plans to open four more this year in the state form part of the company’s business plan to reach a network of 1,500 petrol stations by 2021.

***

Pemex Alerts on Fraud Via Identity Theft

(Energy Analytics Institute, Jared Yamin, 10.Jul.2018) – Pemex filed a complaint with the Attorney General’s Office demanding the entity investigate the alleged crimes.

In its complaint, Mexico’s state oil company Petróleos Mexicanos warned that a criminal group had been seizing the identities of officials in order to carry out the fraud.

“In early June it was detected that a group of individuals sought to defraud the public by pretending to be executives of the company, saying they were authorized to sell all types of hydrocarbons at preferential prices,” Pemex said in a statement.

***

Trinidad Seeks Assistance In Leak Cleanup

(LoopTT, 9.Jul.2018) – Cleanup operations continue following a leak at the Couva Marine 2 Well.

Personnel with the Energy Ministry and Petrotrin’s Incident Command team have been monitoring the leaking wellhead and assessing the nature and impact of the hydrocarbon emissions.

The leak, which was initially reported last Wednesday, is a combination of gas and light oil.

The incident command team met on Sunday to manage the impacts of the incident and to safely bring the matter to a safe conclusion.

The focus of the Incident Command Team over the past few days has been on analysing available data on the wells in the area and the development of strategies to bring the well under control. In doing so, the safety of personnel has been the number one priority.

A number of possible scenarios, including the drilling of a relief well, have been developed and proposed solutions are being evaluated.

The primary considerations in evaluating the various strategies have been the health and safety of personnel and to mitigate further negative impact on the environment.

In this regard, assistance has been sought from the multinational energy companies operating here, as well as foreign entities with which Petrotrin is affiliated, who have experience with the management of oil spills and well control incidents.

As of Sunday, an orange substance, which appears to be emulsified oil, appeared on Carrat Shed and Coffee beaches.

Containment booms with skimmers are being deployed in the area of the leaking well and cleanup crews were mobilised to effect remedial work in any affected areas.

Visits were made to the Carrat Shed and Coffee beaches to determine potential impact.

The Director of Maritime Services has issued an advisory to marine craft operators that “extreme caution is advised and requesting that they maintain a distance of 5 nautical miles”.

This advisory will remain in effect until the situation is resolved. Both Petrotrin and the Coast Guard will maintain patrols in the area and aerial and marine surveillance exercises will continue.

The Ministry urges fisherfolk and other marine craft operators to observe the maritime advisory and to stay clear of the area to avoid injury and also to allow those involved in containment and control activities to do so without impediment.

The Ministry assures that all necessary measures are being taken to ensure that a solution is obtained to repair the leak, and will continue to provide updates as further information becomes available.

***

Echo Says Completes Drilling CSo-2001(d) Well

(Echo Energy plc, 9.Jul.2018) – Echo Energy plc successfully completed drilling of the CSo-2001(d) well in which a notable gas column has been interpreted from the wireline logging suite.

The CSo-2001(d) well, located in the Fracción D licence operated by Compañia General de Combustibles S.A. (CGC), reached a total depth of 1511m in the Upper Jurassic Tobifera formation across which extensive gas and light hydrocarbon shows were recorded.

The well encountered over 60m of gas shows through the Upper Tobífera with gas peaks of over 168,000ppm and a full distribution of C1 to C5 hydrocarbons, measured with reference to background gas levels of less than 2,500ppm outside of the zone of interest.

Preliminary wireline log evaluation has now been completed from which the initial interpretations indicate around 30m of potential net pay within the section between 1272m and 1304m. This is towards the upper end of the range used in both contingent and prospective resource estimations and the interpretations are indicative of a gas with a high condensate gas ratio (wet gas).

The CSo-2001(d) well is targeting 19.0 bcf (gross best case) contingent resources assigned to the prospect in addition to a further 18.7 bcf (gross best case) of prospective resources in the recent Competent Person’s Report (CPR) produced by Gaffney Cline & Associates.

A final production casing is now being run prior to completion and testing which will now take place within the testing programme with the Quintana 01 rig, mobilising to the joint operations area during the week commencing 8 July 2018, as previously advised.

The CSo-2001(d) well is the last well in the current joint drilling campaign, and the Petreven H-205 rig will now demobilise to other areas where CGC have sole drilling operations ongoing.

The company will update shareholders with progress on both the testing and workover activities as the programme advances.

Fiona MacAulay, Chief Executive Officer of Echo, commented: “I am delighted that the our fourth well in the current drilling campaign has again successfully interpreted a notable gas column in the Tobifera. With the Quintana 01 completion and testing rig mobilising to the area this week we will be able to test this interval within the forthcoming testing sequence, enabling an early decision to be made on monetisation options in Fracción D. We are now looking forward to commencement of testing on the ELM 1004 well which will be the first well to be tested in this programme.”

***

Trinidad Seeks Help As Oil Well Ruptures

(Prensa Latina, 9.Jul.2018) – A fuel leak in the Couva platform, in the Gulf of Paria, Trinidad and Tobago, continues today after four days of being initiated, before which the government requests international assistance.

Since last Thursday, the well has been pouring hydrocarbons in this area, shared with Venezuela, which represents a major environmental risk for the region, local sources reported.

Initially the country requested help from the Petrotrin state refinery to close the well, however, the company does not have the technology required for such action.

For this reason, the government decided to ask for international help to put an end to this spill that, according to official sources, could be caused by a recent earthquake that exploded the head of the well, which began to pour from the surface of the seabed at about 12 meters deep.

Meanwhile, Secretary of Fishermen and Friends of the Sea, Gary Aboud, has called on mariners to steer clear of the site as it is volatile and highly flammable.

It is believed that the oil spill was triggered by a recent earthquake that caused the head of the well to pop, spewing the emissions, up from the surface of the seabed, about 40 feet below.

***

Frontera Ends Pacific Midstream Sale Agreement

(Frontera Energy Corporation, 9.Jul.2018) – Frontera Energy Corporation announced that, effective July 6, 2018, it has terminated its agreement to purchase 36.36% of Pacific Midstream Limited (PML).

Frontera elected to terminate its share sale agreement with the International Finance Corporation (IFC) and related funds to purchase the IFC’s 36.36% stake in PML, which had an acquisition price of $225 million. As a result of the termination, the company will be required to pay the IFC a $5 million break fee.

With the termination of the Share Sale Agreement, Frontera will continue to be a 63.64% shareholder in PML, with the IFC holding the remaining 36.36% interest. PML currently holds interests in Oleoducto Bicentenario de Colombia S.A.S (43% ownership) and Oleoducto de los Llanos Orientales S.A (35% ownership).

Frontera does not expect this transaction to have any impact on previously disclosed 2018 guidance metrics.

***

Frontera’s Intent to Implement Course Issuer Bid

(Frontera Energy Corporation, 9.Jul.2018) – Frontera Energy Corporation intends to implement a normal course issuer bid (NCIB) for its common shares.

The NCIB will be made in accordance with the policies of the Toronto Stock Exchange (TSX) and the commencement of purchases under the NCIB is subject to approval of the TSX.

Under the NCIB, Frontera intends to purchase, during a 12 month period, up to 3,543,270 Common Shares, representing approximately 3.5% of the Company’s 100,011,664 issued and outstanding Common Shares as at July 9, 2018.

In connection with its NCIB, Frontera also intends to enter into an automatic share purchase plan with a designated broker to facilitate the purchase of Common Shares under the NCIB at times when Frontera would ordinarily not be permitted to purchase its Common Shares due to regulatory restrictions or self-imposed blackout periods. Frontera self-imposes regular blackouts during the period commencing 15 days prior to the end of each fiscal quarter (and 30 days prior to the end of each fiscal year) and ending at the opening of trading on the first business day following public release of its financial results for such periods. Pursuant to the Plan, before entering a blackout period, Frontera may, but is not required to, instruct the designated broker to make purchases under the NCIB based on parameters established by Frontera. Such purchases will be determined by the designated broker based on Frontera’s parameters in accordance with the rules of the TSX, applicable securities laws and the terms of the Plan.

Frontera believes that, from time to time, the market price of its Common Shares may not fully reflect the underlying value of its business and future prospects and financial position. In such circumstances, Frontera may purchase for cancellation outstanding Common Shares, thereby benefitting all shareholders by increasing the underlying value of the remaining Common Shares.

The average daily trading volume of Frontera’s Common Shares was 56,920 Common Shares over the period between January 1, 2018 and June 30, 2018. Consequently, under TSX rules, Frontera would be allowed under its NCIB to purchase daily, through the facilities of the TSX or alternative trading systems, if eligible, a maximum of 14,230 Common Shares representing 25 per cent of the average daily trading volume, as calculated per the TSX rules. In addition, Frontera would be able to make, once per week, a block purchase of Common Shares not directly or indirectly owned by insiders of Frontera, in accordance with TSX rules.

***

Renaissance Approved to Develop Chiapas Blocks

(Renaissance Oil Corp. 9.Jul.2018) – Renaissance Oil Corp. received final authorizations from the relevant Mexican authorities to proceed with the development program on the company’s three 100% held producing properties in the state of Chiapas.

This development program, designed to significantly enhance production along with the exploration of new formations, comprises:

  1. Major work-overs on three existing wells, one at Malva and two at Topén;
  2. Drilling up to four Cretaceous wells, two at Malva, one Mundo Nuevo and one at Topén; and
  3. Extensive coring in new zones of interest across the Chiapas Blocks.

Major work-overs are scheduled to commence in August 2018, announced Renaissance in an official statement. The wells are tied into the existing pipeline infrastructure, allowing for immediate increases in production from the average of 1,643 boe/d for the month of May 2018.

The first of the four new wells is scheduled to spud in Q4, 2018. All three of the Chiapas Blocks have infrastructure in place with significant excess capacity to Pemex facilities, allowing for cost effective tie-ins and short cycle time to first production.

***

Renaissance Says Pitepec Block Details Attractive

(Renaissance Oil Corp. 9.Jul.2018) – Renaissance Oil Corp. recently signed a Right of First Refusal (ROFR), for the Pitepec block, adjacent to the north of the Amatitlán block in the Tampico Misantla Basin.

“As a result of our comprehensive analysis, the Pitepec block displays all of the attributes of a premier unconventional tight oil play,” said Renaissance Chief Geochemist Dan Jarvie in a company statement.

The Pitepec property, spanning over 248 km2 (61,300 acres), is currently producing 1,487 barrels per day (b/d) of light oil from the shallow Chicontepec formation and, importantly, much like the Amatitlán block, is in the main Upper Jurassic shale fairway, announced Renaissance in an official statement. While the more shallow Chicontepec formation has been the predominant producing zone for the Pitepec block to date, Renaissance’s log and core analysis from previous wells testing the unconventional Upper Jurassic shale formations indicate these deeper source rocks are high potential reservoirs for commercial development. The ROFR expires on May 31, 2019.

“The Upper Jurassic shales are organically rich with thermal maturity measurements indicative of greater than 40-degree API light oil. The high carbonate content (averaging over 50%) is indicative of a brittle rock fabric that readily fractures and releases retained oil,” said Jarvie.

***

ENAP Says Clean Energy is Chile’s Future

(Energy Analytics Institute, Ian Silverman, 9.Jul.2018) – Chile’s state oil company ENAP says it’s developing a wind park in Magallanes in an official Twitter post. No further details were revealed.

However, the benefits of the wind park include:

— It’s renewable,

— No greenhouse gases emitted, and

— Permits sustainable development.

***

Jusepín Oil Spill Demonstrates PDVSA Safety Failures

(Maritime Herald, 9.Jul.2018) – The oil spill that occurred this Friday, July 6 in two tanks of the secondary recovery plant of the Jusepín Operational Complex of Pdvsa, demonstrates the safety failures of the Venezuelan state industry.

This is what the biologist, Alejandro Álvarez Iragorry, considers that what happened for the second time in this Pdvsa facility, located in the northwest area of Maturín, is another sign that “PDVSA seems to be operating at the operational minimums “.

Neither the company itself, the Ministry of Petroleum or the Government of Monagas report, 72 hours after the fact, the amount of oil that fell to the Guarapiche River, but also speak of the fact with different terms.

For PDVSA, ” oily waters to the river ” fell ; According to the minister, they were ” oil fluids ” and the regional executive defined it as ” a spill of oil “, which led the authorities to suspend for an indefinite period the pumping of water to 80% of the population of Maturin, since seven of the 10 parishes in the capital of Monaco are supplied by the Guarapiche River .

Álvarez Iragorry, who is also a doctor in Ecology and coordinator of the Clima 21 Coalition, points out that the lack of information is a norm, not only in this accident but in others that have occurred since the one that occurred on February 4, 2012, also in the Operational Complex of Jusepín, considered one of the most serious in the Venezuelan oil industry.

“I am very concerned because, from the safety point of view, there is a greater chance of a major accident. Since the spill that occurred in the Guarapiche River six years ago, there have been about four more spills, that although they were not originated by PDVSA, some of them like Trinidad and Tobago, when entering Venezuelan marine waters are their responsibility and not they have responded as it should be, “the expert mentions.

For the biologist, without accurate information, you can not alert or recommend the citizens with enough details to take the forecasts as to what happens in these types of cases.

In addition, the contingency plans of PDVSA in each of the spill cases have questioned the capacity to respond. Several photos are remembered of how in 2012, those who were manually blocking the passage of oil in the Guarapiche River did not have uniforms or safety equipment.

Álvarez Iragorry emphasizes this to emphasize that if you add the lack of information, “when everything becomes opaque, you have no idea what is happening.”

Damage and environmental impact

Although it is early to evaluate the environmental impact in the Guarapiche River, which already suffered the effects of the first spill in 2012 when it is estimated that for 21 hours 100 thousand barrels of oil were poured into its bed, a new spill of course that causes a immediate damage in the flow.

The first is the one that affects citizens who are left without water supply indefinitely. The biologist believes that the Maturineses are the ones who must demand an answer from the rulers and authorities. “A healthy river will give healthy water if it is not healthy it will not give healthy water”.

The damage it causes in the river is also direct because it affects the vegetation, the soil and the species that inhabit one of the longest rivers that Monagas has and that crosses the municipalities Cedeño, Maturín and Bolívar.

The Guarapiche has mangroves that were severely contaminated six years ago. The amount of oil that fell in its waters was so great that it travelled 75 kilometres until reaching the French, Cuatro Bocas and Colorad pipes, which are the connection of the Guarapiche with the San Juan River and from there to the Caribbean Sea.

Just to take into account an effect of what happened six years ago, the journalist David González in a work published by the newspaper El Nacional made a tour of the river and this was part of what he said:

The tour lasts almost two hours after which the visitor will feel that he accessed a disaster area. At the foot of the mangroves a black strip protruding half a meter from the water: it looks like a large skirting board at the base of a very long plant wall. As the tide drops, more stems and more roots are exposed and you can see how deep the oil adhered. A fact can illustrate that only a part of the mangroves is visible: if a rod of two and a half meters is put into the water, the riverbed will not be touched yet. A similar landscape can be observed while navigating an approximate distance of 20 kilometres through the pipes adjacent to the San Juan River.

After the spill, this July 6 little is what is known, because as happened in 2012 the secrecy of Pdvsa remains.

For Álvarez Iragorry, the authorities speak of up to three terms to define the spill, which accounts for the lack of seriousness with which things are carried out, which could try to minimize the impact of those events.

“In case of being some type of residual hydrocarbon, here, in this case, we do not have information about it, it is an even more toxic material. In any case, there is an impact because it does not matter if it is any other waste or water contaminated with hydrocarbon because there is an impact, “he said.

Source: Efecto Cocuyo

***

Role of Peru’s Hydrocarbon Industry on Development

(Energy Analytics Institute, Ian Silverman, 9.Jul.2018) – PeruPetro will host a conference titled “Role of the Petroleum and Gas Industry for Peru’s Economic Development.”

Details follow:

When: 7 July 2018

Where: Talara, Peru

Venue: Javier Pérez de Cuellar Auditorium (2nd floor of Municipal Library)

Contact: PeruPetro

***

Haiti Backtracks on Fuel Increase

(Energy Analytics Institute, Ian Silverman, 9.Jul.2018) – The Haitian government reversed a controversial fuel hike announced over the weekend due to violent protest in the capital and other parts of the country.

The fuel hike was implemented as part of IMF stipulated sanctions, reported the daily newspaper Listin Diario.

The Miami Herald reported that “the announced fuel hikes, which took effect at midnight Friday before being temporarily suspended, called for a 38 percent increase for gas, 47 percent for diesel and 51 percent for kerosene.”

***

IEnova to Spend $150 Mln on Mexican Terminal

(San Diego Union Tribune, Rob Nikolewski, 9.Jul.2018) – Continuing its aggressive corporate strategy, IEnova – the Mexican subsidiary of San Diego-based Sempra Energy – added another asset to its energy portfolio Monday by announcing it will spend $150 million to build and operate a liquid fuels marine terminal in the northwest state of Sinaloa.

The federal port authority in the town of Topolobampo, located on the Gulf of California, awarded a 20-year contract to IEnova to construct the terminal that in its first phase will have a storage capacity of 1 million barrels of fuel, mainly gasoline and diesel.

IEnova officials said the company has “achieved significant commercial progress with potential customers” to have the terminal fully contracted and said additional phases of the project could expand to include storage of other products such as petrochemicals.

“IEnova’s success in developing new energy infrastructure is contributing to Mexico’s economic growth, creating jobs and diversifying energy supply while benefiting millions of Mexican energy consumers,” said Joseph Householder, Sempra’s chief operating officer, in a statement.

Monday’s announcement comes just three months after IEnova announced a $130 million investment in a liquid fuels terminal near Ensenada, Mexico, to serve customers in the northern border state of Baja, California. The company signed a long-term contract with the local unit of Chevron as part of the deal.

IEnova has invested about $7.6 billion in energy projects in Mexico, ranging from wind farms to solar power plants to natural gas pipelines and facilities, capitalizing on the country’s energy reform measures that are aimed at attracting private investors to help upgrade Mexico’s energy infrastructure.

Just 7 percent of the country’s households have access to natural gas and the Mexican government wants 35 percent of its power generation to come from renewable sources by 2024.

“We are in the right place, at the right time, with the right team and with the right parent company,” said IEnova CEO Carlos Ruiz Sacristán at an analysts conference in New York City last month.

Meanwhile, a group of activist investors with 4.9 percent stake in Sempra wants to add or replace at least six members of Sempra’s board and has called for the parent company to sell or spin off some of its subsidiaries, including IEnova.

Headed by Elliott Management and Bluescape Resources, the group says assets like IEnova may be valuable but believes a dramatic streamlining of Sempra can add up to $16 billion in shareholder value.

On June 28, Sempra CEO Jeff Martin announced the company will sell all of its solar and wind holdings in the U.S., as well as gas storage facilities in the Deep South, but did not mention making any changes in regards to IEnova or other subsidiaries.

***

ExxonMobil says Not Funding Political Party in Guyana

(Stabroek News, Marcelle Thomas, 8.Jul.2018) – Facing questions from a parliamentary committee, ExxonMobil yesterday denied that it was funding any political party or political initiatives in Guyana.

A meeting between the Parliamentary Sectoral Committee on Natural Resources and the US oil giant became testy when allegations of possible funding of political initiatives were put to the company by opposition members.

In the Parliament Chamber, ExxonMobil quickly shot down suggestions that it was funding any initiative of the A Partnership for National Unity and Alliance for Change (APNU+AFC) coalition, saying that the company was not politically aligned.

Opposition members of the committee also raised questions about ExxonMobil’s funding of international environmental body, Conservation International (CI), stating that this was a clear conflict of interest for the latter.

Last evening, in response to questions from Stabroek News, Conservation International rejected the assertions by the parliamentary committee members, stating that notwithstanding the funding, the organisation will remain objective and impartial.

“As a science-based organization with over two decades of conservation success in Guyana, Conservation International is in a unique position to help Guyana achieve its green development goals. We carefully deliberated and determined that this effort will achieve its goals while also maintaining our independence and objectivity,” Global representative Salma Balramy said in response to the questions from this newspaper.

“We’ve worked with Guyana’s government and people in over 50 communities to help protect nearly three million acres of indigenous lands while improving livelihoods. As long-time partners of Guyana’s commitment to its people and ecosystems, Conservation International is confident this is a necessary step at this critical time in Guyana’s development,” she added.

Government representative on the committee Ronald Bulkan also rebuffed the line of questioning by the opposition MPs, lamenting that it was “a shame” that the meeting had descended to allegations against the company and CI, and members did not use the opportunity to grill the company on how Guyana’s citizenry were benefiting from its presence and works here.

“Sorry ma’am, I have to stop you. ExxonMobil is not involved with politics in Guyana. We don’t choose sides, we’re apolitical. We’re not funding any political party, any political side, any political initiatives, none, just full stop,” ExxonMobil’s Country Director Rod Henson said as he interrupted People’s Progressive Party/Civic (PPP/C) member Pauline Sukhai during her questioning about political funding here by the company.

ExxonMobil, according to a letter dispatched to it by the committee, was to “provide an update” on the “company’s operations and answer questions of concern to members.”

But while Henson had replied saying that he “welcomed the opportunity…to provide an update on EEPGL’s (ExxonMobil’s subsidiary) operations,” he explained yesterday that the communication was bungled as he believed that he would only be updating on the local content aspect of EEPGL’s operations and thus only came prepared to deal with that subject.

Nonetheless, he said that he would answer questions outside of his prepared subject as best as he could but provided no answers on who initiated the controversial US$18 million signing bonus between EEPGL and the government or what were short and long-term cost projections of work by his company.

Present at yesterday’s meeting were committee Chairman Odinga Lumumba and fellow opposition PPP/C MPs Neil Kumar, Pauline Sukhai and Yvonne Pearson. For the government side, Audwin Rutherford, Jermaine Figueira and Bulkan were present. The Committee was informed that Minister of Finance Winston Jordan was out of the country and Minister of State Joseph Harmon was meeting with residents in the flooded areas of Region Nine.

Tempering expectations

Henson made a presentation on general operations of the company, with a focus on local content, where he echoed earlier positions of tempering expectations that the footprint for many direct related oil and gas jobs would be met. He said again that there is only room for a few hundred direct jobs.

Highlights and highpoints were given as Henson also declared that for the first quarter of this year the company paid out US$21 million for products and services from which 227 Guyanese companies benefitted.

Then came the question and answer segment of the hearing, which focused heavily on local content and the grant given to CI.

Sukhai said that she was concerned about word in the public that the company was helping to fund government’s Green State Development Strategy (GSDS) though its partnership with CI.

Earlier this week, the philanthropic arm of ExxonMobil, the ExxonMobil Foundation, announced US$10 million ($2 billion) in funding for CI and the University of Guyana to train Guyanese for sustainable job openings and to expand community-supported conservation.

A statement from the Foundation had said that the investment is also aimed at supporting Guyana’s Green State Development Plan, the country’s 15-year development plan that, among other things, intends to diversify Guyana’s economy and balance economic growth with sustainable management and conservation of the country’s ecosystems.

This was pounced upon by Sukhai.

“The Green State Development Strategy is not in its totality or comprehensively documented and consulted upon as yet. In fact, that strategy has not even reached the Parliament for its debate or for its approval or to be laid as government’s main focal point strategy. There is a line of thought out in the public that ExxonMobil is actually funding a political initiative that is not yet established and approved by the National Assembly and that is, as I mentioned before, the Green State Development Strategy,” Sukhai said before she was quickly stopped by Henson from going further.

“I would like to say that there are concerns out there, which is speaking to the fact –two lines of thought and two lines of criticism-and that is CI is an international NGO and CI is considered to be an international watchdog on environment, nature and all the things that go with conservation, preservation of our environment and so on. Don’t you think that CI being a grantee of ten million US dollars is actually in a conflict of interest because they should be monitoring?” she nevertheless pressed.

She said that that while Henson may want to stop her questions, answers were needed as, “we have to stop the concern in the public domain, because that is what is circulating and that’s why I chose to raise it here with you, so you can have a chance to clarify.”

A seemingly shocked and perturbed Henson replied, “I can’t control every individual’s thoughts and opinions, but I appreciate your opportunity to allow me to say that’s complete hogwash.”

Henson would later be asked by the Chairman to withdraw the “hogwash” remark and he did but he stressed that he still wanted to dissuade any views that his company was political.

Further probing came from Chairman Lumumba, who wanted to know if when ExxonMobil signed the agreement with CI, whether “there was government input or government approval” and why the company does not see its funding as a conflict given CI’s watchdog role here.

“This is our ExxonMobil initiative. This was not directed by the government. This is a good thing. ExxonMobil partners with this organisation around the world. It is not just Conservation International, this is an excellent partnership with the University of Guyana,” Henson said.

“Chair, I think Conservation International would disagree with you and I disagree with you, respectfully. I don’t think this impedes Conservation International’s role in anyway in the country. We made the government aware but again this is an ExxonMobil initiative, something we chose to do,” he added.

Sugar

Questions were also posited by Sukhai and Kumar on if ExxonMobil had a role in the recent announcement that 100 sugar workers were getting skills training though a programme with the Ministry of Natural Resources.

“Is Exxon funding any of that training?” Sukhai asked, to which Henson replied, “No, we are not funding that.”

Questions were asked about the 227 companies which ExxonMobil said benefited in the first quarter and the Chairman asked for the list and services provided to be made available to the Committee so that it could be analysed to determine if the country was getting value for money. He pointed out also that since the list was publicly released there had been many criticisms and questions linger on if the list met the definition of what local content should be.

A puzzled Henson said that he had given the list to government and questioned if the bipartisan committee was not part of government.  “Aren’t you the government?” Henson asked, to which Lumumba replied “No, we are the opposition.” The ExxonMobil head said that he was prepared to go over the list with the committee if it desired.

Kumar also spoke of sugar workers being “on the breadline” and of “closed sugar estates” and wanted to also know if the company was helping government with legislation crafting as it pertained to local content. Henson said that the Guyana was a sovereign country and the company had no role in how its government spends money and could not be a part of law crafting.

Bulkan zoomed in on the opposition’s posture and told the Chairman that it was regrettable that the meeting yesterday seemed to stray from the focus of ExxonMobil’s operations.

“I would like to take strong objection to the [statement that the] government in one instance has placed persons on the breadline and that the government has closed sugar estates. I think we are in danger of being sidetracked from the purpose of this meeting,” Bulkan said.

“We have also heard, and I think it is it is regrettable, that the GSDS, as initiated by this administration, is political. It is not a political initiative, it is a government initiative and I think it is unfair for us to come and say here that it is not fully developed and to suggest that the activities of the company’s  funding to CI, to suggest it has an impact on the GSDS. I think it is unhelpful…,” he added.

Following the meeting, Henson told reporters that it was his error about the meeting’s overall focus as he came only to deal with local content. He said he welcomed the opportunity to talk and would take up another invite if extended.

***

Quevedo Prays for Higher Venezuelan Output

(Energy Analytics Institute, Piero Stewart, 8.Jul.2018) – Venezuela’s Oil Minister General Manuel Quevedo prayed to God in search of divine assistance to boost Venezuela’s oil production.

The prayer was made by Quevedo during his participation in a special mass held at the headquarters of PDVSA and Venezuela’s Oil Ministry in the company of workers from both entities, reported PetroGui@, citing an official statement from the Oil Ministry.

“The recovery of PDVSA is also the recovery of the whole country,” said Priest Pablo Urquiaga of the Church of the Resurrection of the Lord in Caricuao, during the ceremony in La Campiña.

***

Could Guyana’s Oil Fortunes Curse Country?

(Energy Analytics Institute, Pietro D. Pitts, 8.Jul.2018) – Recent success in Guyana’s oil sector could be a wolf in sheep’s clothing.

Guyana doesn’t yet produce oil but in coming years its oil output is expected to surpass that of Peru and Trinidad and Tobago and could approach that of Ecuador, one of two lone OPEC producing countries in South America.

Having the world’s largest oil reserves, the first LNG export terminal in the Americas, or large gas reserves doesn’t mean all a country’s political, economic and social problems will be solved. Just ask Venezuela, Trinidad and Tobago, and Bolivia, respectively. Case studies of these three countries have shown that not just countries in Africa, such as Nigeria, are vulnerable to the Dutch Disease even in the 21st Century.

A look just at Guyana’s poor Corruption Perceptions Index ranking from Transparency International, much lower than the average for the Americas indicates the government is failing in efforts to tackle corruption.

It is hardly likely that Guyana’s faith will change by 2020 when the oil starts flowing and revenues start to climb. What will happen then is almost predictable unless a miracle happens between now and then.

***

Ecopetrol to Operate Dina Gas Plant

(Energy Analytics Institute, Piero Stewart, 8.Jul.2018) – The gas plant has treatment capacity of 10 million cubic feet per day (MMcf/d) of natural gas.

Ecopetrol initiated direct operation of Dina gas treatment plant (PTGD by its Spanish acronym), located in Huila, which since April 2010 has been operated by Masa Storkdesde.

The latter company was responsible for its construction, operation and maintenance, announced Ecopetrol in an official company statement.

***

Chile to Export Gas to Argentina

(Energy Analytics Institute, Ian Silverman, 8.Jul.2018) – Chile signed an agreement to export natural gas to Argentina over the next three years.

The agreement allows Chile to export a maximum 3 million cubic meters per day (MMcm/d) of natural gas to Argentina during the austral winter, state oil company ENAP announced in an official statement on its website.

The framework contract, which replicates other similar agreements in recent years, was signed between ENAP and the Argentine state company IEASA.

“The start of a third consecutive shipment of natural gas to Argentina represents a great step forward towards energy integration between both countries,” said ENAP General Manager Marcelo Tokman.

***

Melbana Says UK Investors Eyeing Cuba

(Melbana Energy Limited, 2.Jul.2018) – Melbana Energy Limited announced a potential dual listing on the UK’s Alternative Investment Market (AIM) is being actively considered, as it is clear there is strong UK investor interest in Cuba as an investment destination.

The company is considering any number of corporate business development initiatives, after recent marketing initiatives in the UK.

A General Meeting (GM) will shortly be scheduled to, amongst other things, provide the necessary constititutional changes required to enable an AIM listing should the Melbana Board determine to do so in the future. These proposed changes to the constitution are preparatory only and will provide flexibility but have no effect unless the Board determines to proceed with an AIM listing.

To facilitate our business development activities Melbana has engaged McDaniel & Associate Consultants, an independent expert with substantial Cuban experience, to assess the prospective resources available in Block 9 with their assessment report expected to be available in the third quarter.

***

ET Energy Launches 31.6 MWp Projects in Chile

(Energy Analytics Institute, Ian Silverman, 7.Jul.2018) – ET Energy commenced construction of two solar projects in Chile.

“For us, the development and construction of these two projects demonstrate again our ability to develop and deliver high quality, investment grade solar assets in Latin America. With our global expertise in project development, financing, EPC and O&M, we continue to strive to deliver high quality assets to our clients,” reported ET Energy in an official statement, citing President and CEO Dennis She.

Both projects are part of a larger portfolio of ten projects totaling 31.6 MWp, which are developed by ET Energy under Chile’s Program for Distributed Energy (PMGD). A major attraction of PMGD projects is that they suffer from fewer development and distribution challenges than large-scale projects.

These two projects are located in the 6th Region of Chile south of Santiago. Each project is 3.168 MWp, provided by 9,600 polycrystalline panels mounted on single-axis trackers. Construction is expected to be finished within 4 months. Four additional projects of similar characteristics will initiate construction in the coming weeks. These projects will create jobs during construction, and inject clean, renewable energy into the national grid, providing electricity to consumers in the area.

Latin America is potentially the next booming solar market; forecasts are for over 40GW of solar energy installations by 2021, of which Chile will be significant drivers, according to ET Energy.

***

Echo Announces Mobilization of Well Testing

(Echo Energy plc, 6.Jul.2018) – Echo Energy plc announces mobilisation of the Quintana 01 testing / completion rig to the Fracción C, Fracción D and LLC assets (onshore Argentina and operated by Compañia General de Combustibles S.A. (CGC) in joint venture with Echo) is scheduled to commence during the week commencing 8 July 2018.

Mobilisation is anticipated to take approximately 5 days and the rig will be moving firstly to the ELM-1004 well, which was suspended for testing in May 2018. Testing of ELM-1004 is anticipated to take 2-3 weeks, following which the rig will move on to test the remaining three wells in the current four well exploration programme.

The company is yet to determine the order in which the remaining three wells will be tested as the test design for the recent EMS-1001 well, which will include the running of cased hole logs prior to testing, is currently being prepared in conjunction with external experts to optimise the data evaluation. As a result, the position of the EMS-1001 well test within the overall testing programme is yet to be determined and is dependent on finalisation of that design.

Additionally, and whilst the rig is on contract, the company and CGC are considering the completion of a number of additional well interventions and workovers both in Estancia La Maggie (within Fracción C) and Fracción D to either restore or increase well productivity from existing wells.

The company will update shareholders with progress on both the testing and workover activities as the programme advances.

***

Pemex Divests Participation in PMV

(Pemex, 6.Jul.2018) – Petróleos Mexicanos divested its participation in Petroquímica Mexicana de Vinilo through an agreement with Mexichem.

As part of Pemex’s strategy of maximizing value by focusing its resources on strategic assets, the company announced divestment of its participation in Petroquímica Mexicana de Vinilo S.A. de C.V. (PMV, Mexican Vinyl Petrochemicals), which represents 44.09% of the representative shares of this company’s capital stock.

In September 2013, Pemex and Mexichem became partners to integrate the salt-chlorine-soda ash-ethylene-vinyl monochloride value chain through the corporation PMV, in which Pemex maintained a strong participation through its affiliated company PPQ Cadena Productiva SL.

The interruption of the salt-chlorine-soda ash-ethylene-vinyl monochloride production chain results from the decision made by the PMV Board of Directors to not rebuild the Chlorates III plant within the Pajaritos Petrochemical Complex in the State of Veracruz following the accident that occurred on April 20, 2016. This turns the salt-chlorine-soda ash production chain into PMV’s main activity, which in turn motivates Mexichem into regaining full control of the salt-chlorine-soda ash production process.

The operation adds up to an approximate amount of 3 billion 436 million pesos, which includes the purchase of the share participation held in PMV by PPQ Cadena Productiva SL and the reinstatement of the assets of the Pajaritos Petrochemical Complex to Petróleos Mexicanos, which is a value that ranks within appraisals of similar companies and transactions of this kind in the petrochemical sector.

On the other hand, it is to be noted that the above amount will be adjusted as of the closing date, at which time the rights and obligations of each partner will be recognized. This is also common practice in transactions of this kind.

This transaction has already been signed off by the corresponding corporate areas of both Pemex and Mexichem and it already includes the reinstatement of the assets of the Pajaritos Petrochemical Complex, which were originally signed over to the partnership, to Petróleos Mexicanos.

***

Ecopetrol to Prepay Loan of COP$ 1.4 Tln

(Energy Analytics Institute, Piero Stewart, 6.Jul.2018) – Colombia’s state oil company Ecopetrol will prepay the entire syndicated loan it entered into in 2013 with local banks.

The loan was scheduled to be amortized up to 2025, announced Ecopetrol in an official statement.

As stipulated in the loan agreement, Ecopetrol can at any time pay off all the principal voluntarily, with no penalty whatsoever, subject to at least 30 calendar days’ advance notice to the lenders. Pursuant thereto, the prepayment will be made August 6, 2018 in the total amount of COP$1,430,333,333,333, which includes principal and interest.

***

Guyana Pre-2020 Investment Boom

(Energy Analytics Institute, Piero Stewart, 6.Jul.2018) – Oil production will begin in 2020, and the boom in investment beforehand will continue to drive activity, writes Caribbean Economist Marla Dukharan in her “Caribbean Monthly Economic Report.”

Guyana, located in the northeastern region of South America, is readying for an oil boom to come soon from commercialization of recent oil discoveries. Exxon Mobil and partners have to date found recoverable resources estimated at more than 3.2 billion oil-equivalent barrels on the Stabroek Block offshore Guyana. Three of ExxonMobil’s developments will produce more than 500,000 barrels per day, and initial oil flows are slated for 2020.

The economist also said Guyana’s reserves, which amounted to $507 million in April 2018, where down $77 million or 13% compared to December 2017.

“The IMF revised its growth estimate for 2017 down to 2.1% from 3.5%. Growth is then expected to ramp up to 3.5% in 2018, 3.7% in 2019, and with the impact of oil production, 27.8% by 2023. Nope this is not a typo,” wrote Dukharan in her July report.

***

Mexichem to Buy Petroquimica Mexicana de Vinilo Stake

(Reuters, 6.Jul.2018) – Mexican chemicals and plastic pipe maker Mexichem agreed to buy state oil firm Pemex’s stake in chemical manufacturer Petroquimica Mexicana de Vinilo.

Mexichem said it would pay roughly $178.7 million for Pemex’s 44.09 percent stake in the company, while Pemex separately said that the sale would help it consolidate its finances. (Reporting by Daina Beth Solomon)

***

Ecopetrol Finds New Oil in Cundinamarca

(Energy Analytics Institute, Piero Stewart, 5.Jul.2018) – A find at the Búfalo-1 well confirmed the presence of oil in the Valle Medio del Magdalena, located near the town of Guaduas, Department of Cundinamarca.

The well is the first discovery in the VMM32 Exploration Contract and is located very close to Ecopetrol’s transport infrastructure, which could facilitate its commercial production stage, the company announced in an official statement

The finding recorded a depth of 1,153 meters, in the Middle Magdalena Valley basin, where the presence of dry gas and light crudes was evident in the Grupo Honda.

Ecopetrol holds a 51% interest in the Bufalo-1 well and is the operator. Its partner, CPVEN E&P Corp, holds the remaining 49% interest.

***

China Gives New Life to Venezuela Despite US’ Ire

(Sputnik News, 5.Jul.2018) – China is lending its helping hand to Venezuela to stabilize the country’s oil sector, analysts told Sputnik, adding that Beijing’s economic activities in Latin America are apparently getting on Washington’s nerves.

China is about to breathe new life into Venezuela’s collapsing oil sector regardless of Washington’s displeasure: On July 4, 2018, Bloomberg reported that the China Development Bank is going to invest more than $250 million in the country’s crude production.

Liu Qian, analyst at the China Institute of Strategic Energy Studies, hailed Beijing’s move, stressing that Venezuela has long been one of China’s largest oil suppliers: “China’s direct investment of $250 million in Venezuelan national oil company [Petróleos de Venezuela, S.A.] will positively affect the stabilization of oil production in Venezuela and ensure delivery of crude oil to China,” he told Sputnik China.

However, according to Liu, Venezuelan economic difficulties could hardly be resolved by a one-time financial injection: “China does not exclude the provision of loans or other types of assistance to stabilize and boost oil production [in Venezuela] within the framework of a ‘loan-for-oil’ model of energy cooperation,” he highlighted.

The Chinese analyst underscored that the ongoing economic crisis in the Latin American country and the subsequent slump in oil production had affected the global energy market. Hence, the revival of the country’s energy industry might stabilize crude output, bring more oil to the market and thus prevent global oil supply shortages, he suggested.

China’s Economic Expansion in US’ ‘Backyard’

Washington is keeping a wary eye on China’s activities in Latin America, which the US has long seen as its “backyard,” with Venezuela being the White House’s major irritant.

“As usual, the US reacts very painfully to the fact that China is conducting nothing short of economic expansion in Latin America,” Vladimir Sudarev, professor at Moscow State Institute of International Relations (MGIMO) and expert on Latin America opined. “They throw a scare into Latin American countries saying that while their cooperation with China is profitable today, the day after tomorrow they will be completely dependent on China.”

However, neither Latin American states, nor China are falling for Washington’s gloomy prognoses, the Russian academic remarked.

While the US is taking measures to isolate Venezuela, China is not following suit, boosting its ties with the Caribbean country. In December 2017, Beijing invited Venezuelan Foreign Minister Jorge Arreas on an official visit. Furthermore, Finance Minister Simon Zerpa, who has recently held a meeting with officials from the China Development Bank and China National Petroleum Corporation, was subjected to US sanctions.

US President Donald Trump has repeatedly made tough statements against the Venezuelan government. He even went so far as to discuss a potential invasion of the Latin American country and the removal of President Nicholas Maduro with his aides.

Commenting on the Chinese initiative, Sudarev cast doubt on the assumption that China was seeking to support the Maduro government through the massive investment in the country’s oil sector.

“They have been investing [in Venezuela] for a long time, and, of course, in a certain sense they are interested in supporting a bankrupt Venezuelan state [oil] company so that it could regularly supply crude to China. They are being guided by pragmatic interests and not [the desire] to support the government of Nicholas Maduro,” he opined.

Sudarev envisioned that it will take time for Petróleos de Venezuela, S.A. (PDVSA) to regain its footing. According to the academic, it is unlikely that the company will manage to immediately absorb the Chinese multi-million loan and begin production at the levels it did 10 years ago. Moreover, he did not rule out that China’s investments in the Venezuelan oil sector could result in financial losses.

According to the International Energy Agency, in June 2018, Venezuelan oil production fell to 1.36 million barrels per day. For comparison’s sake, in 2013 the country’s output amounted to 2.9 million barrels a day. Now Maduro is promising to increase the daily crude output by 1 million barrels, while his critics are predicting a drop in production to 1 million barrel per day.

It is expected that the oil loan and another financial agreements will be officially inked by Beijing and Caracas in the coming weeks.

The views and opinions expressed by the contributors do not necessarily reflect those of Sputnik.

***

PetroAmazonas EP Producing Close to 405 Mb/d

(Energy Analytics Institute, Ian Silverman, 5.Jul.2018) – Ecuador’s PetroAmazonas EP actual production is close to 405,000 barrels per day (b/d).

The company’s average cost was $17.08 per barrel in May 2018, reported the entity in an official statement on its website.

***

PetroVictoria Producing 10,000 b/d

(Energy Analytics Institute, Ian Silverman, 5.Jul.2018) – The heavy oil project is currently producing 10,000 barrels per day, according to PDVSA.

PetroVictoria, is a joint venture comprised of Venezuela’s PDVSA and Russia’s Rosneft to develop heavy oil reserves in Venezuela as part of the Carabobo-2/4 project.

In May 2013, Rosneft and Venezuelan Corporacion Venezolana del Petroleo (CVP), a subsidiary of Caracas-based PDVSA, signed an agreement to establish the PetroVictoria joint venture. PDVSA holds a 60% interest in the venture, while Rosneft holds the remaining 40%

***

PDVSA Installs Two Heavy Oil Desalters

Heavy oil desalters. Source: PDVSA

(Energy Analytics Institute, Ian Silverman, 5.Jul.2018) – The land transfer of two from Bolívar to Anzoátegui states, for oil crude desalination has successfully been completed.

The main function of both desalination plants is the subtraction of water and salt contained in heavy oil crude.

The two mega-structures were constructed with local Venezuelan talent in VHICOA workshops, a joint venture of the subsidiary PDVSA Industrial, with aim to boost productive capabilities, announced Petróleos de Venezuela, S.A. in an official statement.

The two identical containers, weighing 149 tons and spanning 25 meters long and 6.5 meters high, where built in a period of time of 11 months. The containers aim to guarantee processing of 52,000 barrels per day (b/d) of crude oil, in addition to the current production of the Petromonagas Operational Center (COPEM), presently estimated at 130,000 b/d, according to PDVSA.

Both desalters were certified by inspectors from the American Society of the Mechanical Engineers (ASME). Inspectors from Colombia, Mexico, Brazil and the USA certified the work on the structures, which have 22 millimeters thick steel sheet joints with a capability to withstand very high pressures and temperatures.

The VHICOA teams will be an important part of the PetroMonagas (PDVSA/Rosneft) Early Production Facility Center. The project, with has a registered process report of 65 percent, is located in the Carabobo Division of the Hugo Chávez Orinoco Oil Belt, also known as the Faja, and includes the participation of oil field service giant Schlumberger.

The oil crude processing modular center will be added to COPEM, once Schlumberger, the main contractor, ends the Engineering, Procurement and Construction (EPC), in February 2019. PDVSA aims to leverage early production from PetroVictoria, a joint venture comprised of PDVSA and Rosneft, which is currently producing 10,000 b/d.

***

First T&T Jack Up Delivers Gas

Jack up. Source: Trinidad and Tobago Newsday.

(Trinidad and Tobago Newsday, Sasha Harrinanan, 4.Jul.2018) – Well Services Rig 110, owned by local drilling contractor Well Services Petroleum Co Ltd (Well Services), is the first local jack up rig to be used for a natural gas campaign in TT waters.

Well Services announced yesterday it had drilled and completed a three well campaign for the Iguana field in Block 1(a) – offshore Trinidad’s west coast. Block 1(a) is owned and operated by DeNovo Energy Ltd (DeNovo). This was TT’s first ever west coast natural gas development campaign.

DeNovo ­­­founder and CEO Joel Pemberton said, “This milestone moves us closer to the delivery of first gas from the Iguana field later this year. Gas produced by DeNovo will be sold to NGC.”

Pemberton said Well Services and Rig 110 were chosen because of their proven ability to deliver safely, and their known aptitude for collaborating to overcome operational challenges.

“Together, DeNovo and Well Services delivered this campaign with many first-time achievements, which showcases the power and resilience of both our teams. As a Trinbagonian, I am proud to see local companies operating at global standards, collaborating on competitive solutions, and delivering in the best interest of TT,” Pemberton shared.

Rig 110 delivered drilling and completions activities with zero lost time incidents, in line with DeNovo’s fast-track development plan for the Iguana field. Rig 110 was also the first rig to install a platform subsea structure in the region, securely setting the Iguana Conductor Supported Platform, driving seven conductors, and completing its first flow back well testing and flaring.

Well Services’ operations manager Neil McCartney praised his team for working quickly and clinically to ensure all drilling targets were reached, “despite numerous technical challenges due to the complicated subsurface structure of the field.”

***

Atlas to Invest $114.4 Mln in Uruguay

(Energy Analytics Institute, Ian Silverman, 4.Jul.2018) – U.S. company Atlas Renewable Energy plans investments of $114.4 million in Uruguay.

Atlas announced closing of long-term financing for its two solar plants: Del Litoral and El Naranjal, both located in Salto, reported the daily newspaper El Pais.

The two projects have 238,720 solar panel modules, installed capacity of 75.8 megawatts of power (MWp), and produce 144.3 giga-watt hour (GWh) per year, the daily reported.

***

Ecuador Cos Invest $400 Mln in Certificates

(Energy Analytics Institute, Jared Yamin, 4.Jul.2018) – The two electric companies from the South American country will invest a total of $400 million in Treasury Certificates.

The companies, the Electricity Corporation of Ecuador (Celec by its Spanish acronym) and the National Electricity Corporation (Cnel by its Spanish acronym), will invest $300 million and $100 million, respectively, reported the daily newspaper El Universo.

***

Ecuador Looks to Avoid Issuing More Debt

(Energy Analytics Institute, Jared Yamin, 4.Jul.2018) – The South America country will explore other financial options to cover its deficit of some $9.5 billion.

“We don’t believe it’s the best time for Ecuador to issue bonds,” reported the daily newspaper El Universo, citing announcements made by Ecuador’s Finance Minister Richard Martinez during a press conference in Quito.

***

Bolivia’s Hydroelectric Potential 38,000 MW, CAF Says

(Energy Analytics Institute, Jared Yamin, 4.Jul.2018) – This figure is according to the most recent study results, and excludes protected areas.

The figure climbs to a bit over 60,000 megawatts if protected areas are included, reported the daily newspaper La Razón, citing Antonio Pinheiro, CAF Development Bank Corporate Vice President of Infrastructure.

***

ENDE to Investigate High Electricity Rates

(Energy Analytics Institute, Jared Yamin, 4.Jul.2018) – Citizens in the city of Trinidad, located in department of Beni, continue to protests elevated electricity rates.

As a result, the Beni Electricity Distributor (ENDE DELBENI S.A.M.), a subsidiary of the National Electricity Company (ENDE), plans to investigate complaints circulating of customers being charged electricity rates up to 300% higher in the city.

“There is a special situation here. People are complaining about their high invoices, and the task at hand now is to try to verify, inspect, and investigate what is happening,” reported the daily La Razón, citing company official Humberto Villegas.

***

Petrobras, CNPC to Finish Rio Refinery

(Efe, 4.Jul.2018) – Brazilian state oil company Petrobras and China’s state-owned China National Petroleum Corporation signed a letter of intent to conclude construction of a refinery in Rio de Janeiro, the South American company said.

Work on the refinery, known as the Rio de Janeiro Petrochemical Complex (Comperj), has been stalled since 2015 due to the sprawling Car Wash probe, initially focused on a massive bribes-for-inflated contracts scandal centered on Petrobras

***

China to Invest $250 mln to Boost Venezuela’s Oil Sector

(Bloomberg, 4.Jul.2018) – Venezuela’s distressed oil sector may get some much needed financing from China, Finance Minister Simon Zerpa said after meetings with officials from China Development Bank and China National Petroleum Corporation.

China Development Bank will invest more than US$250 million to boost Venezuela oil production in the Orinoco Belt, Zerpa, who is currently in Beijing for bilateral talks, said in a ministry statement.

“We’ve received the authorisation for a direct investment of more than US$250 million from China Development Bank to increase PDVSA production, and we’re already putting together financing for a special loan that China’s government is granting Venezuela for US$5 billion for direct investments in production,” Zerpa said.

The two countries will sign an additional three or four financing deals in the coming weeks, he said.

Venezuela’s oil output averaged 2.9 million barrels a day in 2013, when President Nicolas Maduro was first elected.

In June, output dropped to around 1.36 million barrels per day, according to International Energy Agency data.

State oil company PDVSA has been struggling to send oil shipments to China after a legal order granted to ConocoPhillips froze its assets in Caribbean ports and terminals.

Maduro has vowed to boost production by 1 million additional barrels, while critics say output will plummet to 1 million barrels a day by the end of this year.

Venezuela and China officials will continue meetings on Wednesday, the ministry said in its statement. Zerpa, who has served in the post since October, was sanctioned by the US Treasury Department before his appointment.

***

Venezuela’s Declining Crude Exports Squeeze India’s Refiners

(Reuters, Marianna Parraga, 3.Jul.2018) – Venezuela’s crude shipments to India, its third largest export market, fell 21 percent in the first half of the year, according to internal documents from state-run PDVSA, adding to supply troubles for Indian refiners as they are increasingly pressed to diversify oil imports.

Venezuela’s production decline to a 30-year low and export woes stemming from mismanagement, lack of investment and payment delays are affecting almost all of the OPEC-nation’s customers.

But the impact on India is notable and comes as its refiners are now preparing for a “drastic reduction to zero” of oil imports from U.S.-sanctioned Iran.

Last week, PDVSA officials met with executives from India’s Reliance Industries and Russia’s Rosneft, which owns a majority stake in India-based Nayara Energy, to discuss trade issues, the state-run company said.

The talks focused on how to remedy export delays, according to a person familiar with the matter.

Venezuela sent almost 280,000 barrels per day (bpd) of heavy crude to India in the first half of the year, a 21 percent drop versus the 355,500 bpd shipped in the same period of 2017, according to PDVSA trade documents.

The decline is the second steepest after the United States, which has suffered a drop of about 30 percent in crude imports from Venezuela this year, the documents seen by Reuters show.

If crude supplies from Iran and Venezuela, two of India’s top five oil suppliers, cannot be secured in coming months, some of the nation’s refiners would have to rely almost entirely on sourcing the heavy barrels they need from Iraq, according to analysts.

“Indian refiners are very worried about supply from Iran, but also from Venezuela,” said Robert Campbell from consultancy Energy Aspects.

Saudi Arabia is expected to boost supply to India in the short term, but those barrels would not match the quality of the missing Venezuelan crude, he added. “The lack of heavy barrels is not a problem only in the Atlantic Basin but in Asia as well,” he added.

PDVSA and Nayara did not reply to requests for comment. India’s Reliance declined to comment.

India is the world’s fourth largest refiner after the United States, China and Russia. While Chinese and Russian firms resell a large portion of the Venezuelan crude and fuel they receive to monetize oil-for-loan agreements, Indian refiners need the barrels they get through crude supply contracts with PDVSA.

FEWER BARRELS FOR EVERYBODY

Venezuela’s crude output is declining faster than expected amid insufficient investment, attempts to seize its overseas assets over payment disputes and skilled workers leaving its oil industry due to low salaries and an extended corruption probe within PDVSA.

The country’s oil production averaged 1.58 million bpd in the first five months of 2018, according to figures reported to OPEC, its lowest annual level since 1985. The fall, which is putting pressure on global supply and contributing to growing oil prices, has also taken a toll on exports.

PDVSA last month requested customers not send tankers to its main port of Jose to alleviate congestion. But vessels have continued arriving mainly for Chinese, Indian and U.S. clients, according to Thomson Reuters vessel tracking data.

The tanker bottleneck has worsened since May, when ConocoPhillips started legal actions to seize PDVSA’s assets to satisfy a $2-billion arbitration award, blocking the state-run firm from using its Caribbean terminals.

In June, PDVSA shipped to India 268,300 bpd after servicing some vessels that had waited for up to a month to load. The Venezuelan firm plans to deliver some 240,000 bpd in July, according to Reuters and PDVSA data.

The unstable crude supply from Venezuela to India in recent months has mainly benefited Iraq, India’s largest crude source, and United Arab Emirates, which in May replaced Venezuela as India’s fourth biggest crude supplier.

Reporting by Marianna Parraga in Houston, additional reporting by Promit Mukherjee in Mumbai; Editing by Tom Brown and Marguerita Choy

***

Oil Price Weighs on Barbados’ Inflation

(Trinidad Express, Aleem Khan, 4.Jul.2019) – High oil prices on their own appear to be good neither for Trinidad and Tobago nor Barbados, according to statements by an International Monetary Fund (IMF) senior economist, and Petroleum Company of Trinidad and Tobago Limited (Petrotrin) Chairman Wilfred Espinet, over the last week.

On June 27, for the second time, Espinet pointed out that Petrotrin is a net consumer of foreign exchange as it pays more for the crude oil than it earns from selling crude products. Espinet first raised the issue in Couva on May 4 while addressing an agglomeration of chambers of commerce.

Subscription required by Trinidad Express to read complete article.

***

T&T’s Energy Issues

(Trinidad Express, David Renwick, 3.Jul.2018) – You don’t have to look very far to determine the issues facing the Trinidad and Tobago energy industry at the moment. Top of the list would be restoring crude oil production, which languishes at around 72,000 barrels a day (b/d) at the moment.

That can be accomplished by the upstream producers doing more development drilling, as well as bringing new entrants into the industry. It also means tackling new sources of oil, such as the tar (or oil) sands in southern Trinidad.

Subscription required by Trinidad Express to read complete article.

***

Methanol, Ammonia Prices to Remain Flat

(Trinidad Guardian, 4.Jul.2018) – The Ministry of Energy and Energy Industries is predicting that over the next five years methanol prices will average US$375 per metric tonne, while ammonia prices will be closer to US$310 per metric tonne.

Subscription required by Trinidad Guardian to read complete article.

***

China Throws Venezuela’s Oil Industry $5B Lifeline

(OilPrice.com, Irina Slav) – China’s Development Bank has approved a US$5-billion loan for Venezuela’s oil industry, Bloomberg reports, quoting the troubled South American country’s Finance Minister Simon Zerpa.

“We’ve received the authorization for a direct investment of more than $250 million from China Development Bank to increase PDVSA production, and we’re already putting together financing for a special loan that China’s government is granting Venezuela for $5 billion for direct investments in production,” the official said.

The loan is literally a lifeline for PDVSA, which has been unable to stop an accelerating production decline resulting from years of mismanagement and a cash crunch brought about by the tightening grip of U.S. sanctions.

International Energy Agency figures suggest Venezuela produced an average 1.36 million barrels of oil daily last month. This is down from 2.9 million bpd five years ago. President Maduro vowed to increase production by 1 million bpd by the end of the year, but he admitted that the goal would be difficult to meet.

It became even more difficult after ConocoPhillips seized PDVSA storage facilities in the Caribbean, keeping it from meeting its export obligations and creating tanker bottlenecks at Venezuelan ports.

PDVSA’s exports to China also suffered as a result of the quickly deteriorating situation. Shipping data from Reuters last month suggested that these could have plummeted to an eight-year low. This would have provided additional motivation to China to lend Venezuela a hand with growing its oil production.

As a major creditor and ally, China is sure to benefit from some preferential oil export conditions amid rising international prices that would ensure its continued backing of Caracas.

“One of the best things about Venezuelan oil was its stable volumes for all these years and competitive prices,” a senior Chinese oil industry official with direct knowledge of the Venezuelan supply issues told Reuters last month. “But now they seem in very bad shape, not having the money to upgrade port facilities, no money even to remove the high water content in crude oil.”

***

PetroTal Reports First Oil from Bretana

(PetroTal Corp., 3.Jul.2018) – PetroTal Corp. achieved first oil production from the Bretana Norte discovery well at the Bretana field in Block 95 in Peru.

The company also provided further operations updates for both Bretana and Block 107. All figures referred to in this press release are denominated in U.S. dollars.

Operations Highlights

— First oil production achieved in five months, significantly ahead of schedule

— Discovery well flowed oil without stimulation

— Well produced 100 percent oil with minimal natural gas and no formation water to date

— Commissioning of facilities is progressing as expected and on schedule

— Water handling facilities on schedule for commissioning in October, 2018

— 7,000 barrels of oil produced to date through the ongoing long-term testing phase

— Signed oil sales contract allows for strong operating netbacks to PetroTal

— First oil sales and shipment expected in early July, 2018

— Osheki prospect in Block 107 remapped, independent resource audit being prepared

Operations Update

The company initially provided guidance that the Discovery Well, which had been tested but not produced, could commence production in 10 to 12 months from PetroTal taking over operational control of the field in late December 2017. The Company is pleased to announce that on June 1, 2018 the well was placed on production through long-term testing, allowing for the start of the commissioning of the newly installed oil production facilities, five months earlier than anticipated. Field personnel have controlled the choke sizes of the well over the initial four weeks to carefully manage the commissioning of the facilities and to properly commission the facilities. The Discovery Well is testing oil from the Vivian formation, producing 100 percent oil with minimal natural gas and no formation water. As previously announced, the company is restricting the well flow rates to avoid water production until the required water injection facilities are installed and commissioned in October of this year.

In addition to putting the Discovery Well on production, the company is installing initial water handling facilities at Bretana. The project is on schedule to begin commissioning water treatment and reinjection facilities by late October 2018. At that time, oil production rates from the Discovery Well are anticipated to increase to between 2,000 and 2,300 barrels per day (b/d). The company has also completed refurbishment and construction on the existing drilling pad and is now able to drill additional wells without causing material interruptions to production.

Manolo Zuniga, President and Chief Executive Officer of PetroTal, stated: “We are extremely pleased for having been able to achieve first production in just five months. The well and the newly installed equipment have met expectations of field personnel and there have been no issues with achieving oil flow at sufficient rates to commission equipment. As mentioned above, the well is being produced under a restricted choke to avoid producing water until the full facilities are installed to handle produced water in October of this year. In the meantime, the well is expected to produce without stimulation at rates of up to 1,000 b/d, depending on the planned activities and objectives of field personnel, gather well and reservoir data, and meet the requirements of the initial oil sales contract which calls for PetroTal to sell up to 1,000 b/d to the Iquitos refinery.”

Oil Sales Contract

The Company is pleased to announce the execution of an initial oil sales contract with PetroPeru, Peru’s state oil company and owner of the Iquitos refinery, pursuant to which the company is entitled to sell up to 1,000 Bbls/d to the refinery during the initial long-term testing phase. The company successfully negotiated a discount equivalent to 14 percent from Brent; however, the company does not pay pipeline tariffs during the contract term as all oil is barged to the refinery. Additionally, the crude oil will be picked up at the Bretana field and transported to the refinery by PetroPeru at a cost equivalent to our internal cost projections. As a result, the company expects to achieve strong operating netbacks. The company expects to deliver most of the initial oil recovered to date to the refinery in early July. The chart below outlines the company’s anticipated operating netbacks at certain benchmark reference prices:

             
Benchmark Brent Prices $60.00 $65.00 $70.00 $75.00 $80.00 $85.00
             
Realized Price $51.44 $55.73 $60.02 $64.31 $68.59 $72.88
               
  Royalty $2.57 $2.79 $3.00 $3.22 $3.43 $3.64
  Barging $5.50 $5.50 $5.50 $5.50 $5.50 $5.50
  Pipeline 0 0 0 0 0 0
  Lifting $21.95 $21.95 $21.95 $21.95 $21.95 $21.95
             
Operating Netback $21.42 $25.49 $29.57 $33.64 $37.71 $41.79

The higher per unit lifting costs included above are driven by the initial lower production rates during the initial commissioning and testing phase.  The Company expects future lifting costs to approximate $11 per barrel once production reaches 5,000 b/d.

Mr. Zuniga continued “As demonstrated, the avoidance of paying the pipeline tariff effectively reduces our cost structure, thus the negotiated 14 percent discount is beneficial for both PetroTal and PetroPeru, the owner of the Iquitos refinery. We use a lifting cost of $21.95 per barrel on this initial production as the early restriction on production rates affect the unit costs. Additionally, we have yet to finalize the commissioning process, so this initial estimate could vary.  In any event, you can see that this is a robust project.”

Block 107 Osheki Prospect

The company has completed the remapping of the Osheki prospect based on all available data. The revised maps suggest there is closure on the structure and up to three producing horizons may hold hydrocarbons. Updated maps are available in the investor presentation on the Company’s website at www.petrotal-corp.com.

In addition, the company has retained Netherland, Sewell & Associates, Inc., qualified independent reserves evaluators, to prepare an initial hydrocarbons volumes assessment of the Osheki prospect. Once this assessment is complete, the company expects to open the Block 107 data room for prospective partners to review.

***

National Oil Co for Guyana Would Be Disaster

(Stabroek News, 3.Jun.2018) – The creation of a National Oil Company (NOC) will be “a disaster” for this country warns former Government Advisor on Petroleum, Dr. Jan Mangal who says that Guyana should learn from the experiences of sister Caribbean countries, Trinidad and Tobago and Jamaica.

However, the government says that it has been advised by a number of international organizations, including Chatham House of the UK, that a NOC would be beneficial to this country.

“Here we go again with national oil companies in the Caribbean. Both Petrotrin (Trinidad) and Petrojam (Jamaica) are in the news because of corruption,” Mangal said as he urged Guyanese to not support a call for the establishment of one here.

“Guyanese: Please remember these two nations have much larger and better run economies than ours, and much stronger institutions. Hence imagine what will happen in Guyana, with our weaker capacity, if elements in our government and their private sector cohorts are allowed to create a national oil company with access to our oil. It will be a disaster,” he added, pointing to recent scandals in Jamaica and neighbouring Trinidad and Tobago.

Recently, Jamaica’s Petrojam, which supplies a range of domestic, transportation and industrial petroleum products in that country, was hit with a number of allegations of corruption and victimisation. It saw questions surrounding the use of public funds snowballing in recent weeks during which there has been an outcry for Prime Minister Andrew Holness to act, the Jamaica Gleaner newspaper has reported.

Over in Trinidad and Tobago, a forensic audit report by the Canada-based Kroll Consulting Canada found that the state-owned Petrotrin paid a company, A&V, for oil produced between January and June of 2017, which it did not receive. In September, Petrotrin announced that it had launched an investigation into the reports of inconsistencies in the volumes reported from its exploration and production fields.

Mangal, whose contract as an Advisor to President David Granger ended in March of this year, has said that he will, “Outline the mechanism used by some oil companies and their local friends (in government and in the private sector) to defraud needy people in countries around the world, like in Guyana.”

But government says that although the establishment of a NOC is not in its immediate plans, there will be one formed sometime in the future and that it has been advised by several international organizations that it was the way to go.

“Government has been advised by several international organizations, foremost amongst which is Chatham House though Dr. Valerie Marcel, that the NOC is the direction we would be headed. We believe we will get there one day but it is not a matter that is on our list of immediate,” Minister of Natural Resources Raphael Trotman told Stabroek News when contacted.

Further, he added, “The rationale for a NOC is always that countries get a greater share of the revenue and at the same time gain valuable experience. We are keeping the idea alive but there is no discussion when.”

Other experts have also said that they believe that an NOC, if properly equipped with needed regulations and insulated from politics, would serve beneficially to the people of Guyana.

“State controlled oil major, is an absolute must! And the sooner, the better. NOCs control approximately 75% of the world’s oil market and 90% of the world’s oil reserves, evidence that having NOCs have become a normalcy. The advantages of an NOC are unlimited.  In recent years, NOCs have developed global reach and influence,” a former United States Department of Energy Manager, Dr. Vincent Adams had told this newspaper, in an interview earlier this year.

“With the proper contract arrangement with the NOC representing  the Government’s interest, the arrangement allows for personnel from the NOC working alongside their IOC counterparts and `learning by doing’, ultimately acquiring the ability to operate both within its own jurisdiction and abroad; thus, bringing revenues back to their home countries,” he added.

Vehicle

Most significantly, Adams believes, is that NOCs provide a vehicle for state participation and the ability to drive greater local content and capacity building in terms of directing the purchase of local goods and services. “The lessons learned from bauxite was that we were not ready for nationalization, since we failed to build the capacity to manage on our own upon nationalization. An NOC will give us that capability and strengthen our position in negotiations,” he asserted.

Using his country’s experience as a model, former Minister of Energy of Trinidad and Tobago, Kevin Ramnarine had also this year advised on an NOC but stressed that it must be insulated from political interference.

“This company’s board and management must be insulated from politics as is the case with Statoil (Norway) because if it is not, you will get a call to hire somebody’s nephew,” Ramnarine said.

“I would recommend that whatever state companies you form, it doesn’t have to be all, put part of the equity on the stock exchange,” he added.

He pointed to Norway’s Statoil and Russia’s Gazprom among other companies saying that Guyana can earn needed revenue through the establishment of such companies.

Pointing to the detriment of a state company influenced by politicians, as witnessed in his home country, he emphasized that before such a decision be taken here the companies must be removed from politics. “There is also the whole issue of political influence in state enterprises in Trinidad. When we look at the Norwegian company Statoil, their Board of Directors are independent, and for example the workers of Statoil get to vote on who should be a director…you begin to dilute the political influence in the company,” he posited.

The former People’s Partnership Energy Minister recommended that Guyana set up three state-owned companies. “I am going to recommend that Guyana sets up three state enterprises, one to participate in the upstream, alongside with companies like Exxon, one to focus on infrastructural development and one to focus on marketing of products… our new production-sharing contracts in Trinidad allow the ministry to market their own hydrocarbons,” he said.

***

US$1.4B Deal to Restart St Croix Refinery

(Stabroek News, 3.Jun.2018) – U.S. Virgin Islands Governor Kenneth E. Mapp announced yesterday an agreement which would reopen one of the world’s largest refineries, create hundreds of jobs in the territory and buttress the solvency of the Government Employees Retirement System (GERS).

According to a release from his office, Mapp said the US$1.4 billion pact was between the Government of the Virgin Islands and ArcLight Capital Partners, LLC, the owners of what had been one of the largest oil refineries in the world when it was shut down on the USVI island of St Croix in 2012. The release said that the deal includes reopening the refinery portion of the operation, which when restarted, will funnel hundreds of millions of dollars into the local economy.

The release said that under the agreement with ArcLight Capital, the owners of what is now called Limetree Bay Terminals, the company will invest approximately US$1.4 billion to upgrade the existing refinery located in St. Croix. Over the next 18 months, this will create more than 1,200 local construction jobs.

Once refinery operations begin at the end of 2019, as many as 700 permanent jobs will be created. The new jobs will be in addition to the over 750 jobs now at the terminal storage facility. The initial refining operations provide for the processing of around 200,000 barrels of crude oil feedstock per day.

“This agreement is great news for the people of the Virgin Islands as we continue to grow and expand our economy,” said Mapp, who added it is tremendous news for the ‘big island,’ which felt the full brunt of the shutdown of refining operations in 2012.  He added that the capital investment will not only benefit St. Croix since the monies from the agreement will boost the solvency of GERS and will also help fund a new 110-room, “upscale lifestyle” hotel, flagged by a major four-star brand on the sister island of St. Thomas.

Upon the closing of the transaction, ArcLight Capital will make a US$70 million closing payment to the Government of the Virgin Islands. The payment includes US$30 million for the purchase from the government of approximately 225 acres of land and 122 homes. The release said this property was acquired as part of the government’s settlement of certain claims against HOVIC, PDVSA of Venezuela, Hovensa and Hess Oil Corporation.

Once refinery operations begin and after crediting the US$40 million of prepaid taxes, Limetree will make annual payments to the government in lieu of taxes at a base rate of US$22.5 million a year. With market adjustments based on the refinery’s performance, this could increase to as much as US$70 million per year, but will not fall below US$14 million a year, the release said.

The release said that according to industry experts and consultants Gaffney, Cline & Associates, the government expects to receive more than US$600 million over the first 10 years of the restart of the refining operations. This income is in addition to the US$11.5 million currently flowing to the government from the oil storage terminal each year.

“For comparison sake, in the over 30 years that Hess Oil operated the refinery on the island of St. Croix, the company paid approximately US$330 million in corporate taxes to the government. As you may recall, in 2015 Hess Oil filed suit for the return of (those tax payments),” Mapp pointed out in the release. Hess Oil is one of the partners of ExxonMobil’s subsidiary, Esso in the Stabroek Block in Guyana’s waters.

Mapp said: “This landmark agreement did not happen overnight. It is the result of much hard work by the owners of ArcLight Capital and my Administration over the past two years. It is the product of complex negotiations with major players in the global oil industry. It required tremendous work with the Trump Administration and the President’s Council of Environmental Quality, the EPA (United States Environmental Protection Agency) and the U.S. Department of Justice. More work remains to be done, but this agreement allows the Virgin Islands to accelerate its recovery, grow its economy, create jobs for its people, propel new startup businesses, as well as support existing businesses and ultimately provide revenues for our government and our retirement system,” he said.

The release added that qualified Virgin Islands residents will be given preference in all hiring. ArcLight Capital will be obligated, and the local government will assist, to advertise and publicize all job opportunities for local residents. Residents of St. Thomas and St. John, who may be interested in working during the reconstruction of the refinery, will be offered a place to live while working on St. Croix without charge, the release added.

***

Petrozamora Incorporates Steam Generators in Zulia

(Energy Analytics Institute, Piero Stewart, 3.Jul.2018) – PDVSA Petrozamora, a joint venture comprised of PDVSA and Russia’s Gazprom, completed recovery and incorporation of two steam generators.

The generators, Simón Bolívar 24 (SB-24) and Simón Bolívar 40 (SB-40), are located in located in the state Zulia at the Lagunillas Field in an area denominated location U74, reported PDVSA in an official statement.

The actions by CVP form part of a plan to recover lost production, and includes reincorporating eleven (11) boilers designed to improve the artificial lift processes at the Bachaquero and Lagunillas fields, both of which are operated by the joint venture.

***

PetroPiar Ends Preventative Maintenance

Workers at PetroPiar JV in Venezuela. Source: PDVSA

(Energy Analytics Institute, Piero Stewart, 3.Jul.2018) – Work on the upgrader concluded four days ahead of schedule, according to Caracas-based PDVSA.

Operational activities at the upgrader included substitutions in the naphtha and light vacuum gas oil (LVGO) lines, maintenance of interchangers, internal drum replacements (Demister), and replacements related to the value 48 sealing system (Metax System), as well as the repair of atmospheric furnace tubes, announced PDVSA in an official statement.

The PetroPiar mixed company enterprise partners PDVSA, as the Venezuelan state oil company is known, and US-based Chevron Corporation.

***

PentaNova, YPF Discuss Llancanelo Issues

(PentaNova Energy Corp., 3.Jul.2018) – PentaNova has been attempting to negotiate a payment plan for cash call balances with YPF without success to date.

As part of the various Argentina acquisitions completed by PentaNova in August and October 2017 relating to the Llancanelo heavy oil asset, the company, through its wholly-owned subsidiary Alianza Petrolera Argentina SA (Alianza) initially acquired a 39% working interest in the Llancanelo block, and assumed cash call balances owed to YPF, and in November 2017, the company farmed-in to acquire an additional 11% working interest from YPF, subject to regulatory and administrative approvals and to the satisfaction of certain terms and conditions.

The company recently received formal notification from YPF advising that, under the terms of the governing agreement of the Llancanelo joint venture project, oil production pertaining to the company’s participating interest in the concession will be retained by YPF, with sales of such oil production, net of operating costs, being credited towards PentaNova’s outstanding cash call balances. Furthermore, the governing agreement of the Llancancelo joint venture states that a failure to pay the outstanding cash call balance may result in the defaulting party losing it’s working interest. The company is currently holding discussions with YPF in order to find a solution to retain the 39% working interest in addition to exploring financing options to cover the cash call balance. YPF is the operator of the Llancancelo concession.

In relation to the Farm-in agreement, Alianza has not been able to satisfy certain conditions precedent, including securing financing for its farm-in obligations and obtaining regulatory and administrative approval before the longstop date of June 22, 2018, and is consequently engaged in discussions with YPF.

***

Japan Commits $17.8 Mln to Guyana’s Renewable Energy

(NewEnergyEvents, 3.Jul.2018) – The Government of Guyana has secured a deal with Japan for US$17.8M dedicated to renewable energy  development and system efficiency improvements. This grant will also provide US$1.3M for energy saving LED lights, which are expected to fund 10,930 units of LED streetlights.

This investment will be used to improve the efficiency of the power system in Georgetown and surrounding areas. This will be achieved by enhancing distribution and supply equipment. The grant will also establish a photovoltaic and an energy management system at the CARICOM Secretariat.

***

World Bank Sees $65/bbl Oil for 2019

(Energy Analytics Institute, Ian Silverman, 3.July.2018) – The price of crude oil is forecast to approach around $65/barrel in 2019 by the organization.

However, the oil price levels next year are expected to be lower that levels in 2018, reported the daily newspaper El Diario, citing World Bank Economist Shantayanan Devarajan.

***

Cabinet Removes Energy Portfolio Over Petrojam

(Jamaica Gleaner, 2.Jul.2018) – Dr Andrew Wheatley has been stripped of the energy portfolio as the government implements a raft of changes at the controversy-plagued oil refinery Petrojam.

A statement a short while ago from the Cabinet indicates that the portfolio has been shifted to the Office of the Prime Minister.

It says the move is in the interest of transparency in light of ongoing investigations.

Petrojam is currently under investigation by at least four oversight state entities, which are probing claims of corruption, fraud and mismanagement.

The oil refinery’s parent ministry is the Ministry of Science, Energy and Technology.

With the shift in portfolio responsibility, Wheatley retains ministerial control of science and technology.

There have been calls for Wheatley to resign or be fired by the prime minister over the handling of the affairs of petrojam but those calls have been ignored.

FULL STATEMENT

Cabinet today continued its consideration of a report it received last week on Petrojam and, having regard to investigations already underway, decided the following:

  1. The residential status of all persons nominated to boards must be stated in the Cabinet Submission seeking approval for appointment.
  2. Overseas travel of Board Chairmen or Board members must receive prior approval of the Minister.
  3. Public bodies will be prohibited from entering into sole source retainer contracts without the prior approval of Cabinet.
  4. The Ministry of Finance has been tasked to develop and finalise uniformed regulations for public bodies around donations and corporate social responsibility. Among other things, this would see limits on the amount that can be approved at the agency level. It will be a requirement that all donations be disclosed with details to include the amount, the receiving entity, the purpose of the donation and connected party consideration with the management, board of directors or the Minister.
  5. After discussion with Minister Wheatley, it was agreed that Petrojam requires strategic review of both of its management and operations, as well as its long-term commercial viability and role in Jamaica’s energy security.  Having regard to this and the ongoing investigation, Minister Wheatley agreed with the Prime Minister that in the interest of transparency, the energy portfolio will be transferred to the Office of the Prime Minister, effective July 4, 2018.
  6. A special enterprise team will be assembled to conduct and oversee the organisational and strategic review of Petrojam.

***

Free Oil Market to Reign in Argentina

(Bloomberg, 2.Jul.2018) – Argentina’s move to a free market for energy prices remains on track.

A recent decision to cap crude oil prices and limit fuel price gains in order to stem inflation was an outlier, according to Javier Iguacel, the nation’s new energy minister. Restricting crude price increases only extinguishes competition and, in turn, the possibility of cutting costs, he said.

“There’ll be no more agreements,” Iguacel said in an interview. “It’s a free market. Companies can set the fuel prices they consider best for business. And they shouldn’t expect a lower domestic oil barrel either.”

Investors had become jittery because of the agreement from May to July, which capped oil at $68/bbl this month and constrained fuel price hikes in a bid to shield Argentines from a peso devaluation and a rally in crude. Inflation is running at more than 25%. Argentina had moved to a free market in October after years of interventionism.

State-run YPF SA raised fuel prices at the weekend for July by more than was originally agreed with Iguacel’s predecessor, ex-Royal Dutch Shell Plc executive Juan Jose Aranguren. That demonstrates the free market already reigns, he said.

In a sign Argentina is committed to deepening its market shift, Iguacel confirmed the government will eliminate the role of a state intermediary in future power contracts, starting in September. Now, Compania Administradora del Mercado Mayorista Electrico SA — Cammesa for short — sets the prices power generators pay for fuel and natural gas, and sell electricity. But not for much longer.

“We’re going to get out of the current system,” Iguacel said. “Generators will buy direct from producers, and large-scale consumers and distributors will buy direct from generators.”

Completing the move to a deregulated power market will take up to 18 months. Companies will be able to use an auction process to procure the best prices.

In the utilities sector, however, plans to end most subsidies for natural gas and electricity consumption by the end of next year might extend into 2020, the International Monetary Fund’s deadline for the government to balance its books, Iguacel said.

President Mauricio Macri’s Cambiemos alliance will campaign for re-election in 2019 and the removal of subsidies has been unpopular.

***

Melbana to Spud Cuba Well in December

(Melbana Energy Limited, 2.Jul.2018) – Australia’s Melbana Energy Limited announced preparatory work is continuing in Cuba in readiness for the planned drilling program in Block 9.

From a permitting perspective, intermediate approvals are continuing to be obtained for both the Alameda and Zapato exploration wells as progress is made towards submissions for the final Approval to Drill permits.

Civil works contract scope definition has progressed and the civil works tender evaluation for the Alameda-1 drilling pad was completed and the preferred contractor identified.

Melbana’s Cuba based team has undertaken a number of site visits and community liaison sessions to support potential civil works. Preferred contractor has been identified and discussions are continuing with the preferred drilling rig provider, which is an established local entity, with a drilling rig being identified and a drilling window nominated as notionally commencing in December 2018. The proposed rig is currently planned to be refurbished and upgraded for maintenance and operational purposes in late 3Q 2018. The final decision on drilling contractor, drilling target and timing will be influenced by a number of factors, including any incoming party into Block 9 and their plans, their preferred drilling targets and confirmation of drilling rig availability.

Farm out

Block 9 farmout activities are continuing, with multiple interested multinational parties engaged in assessing the prospectivity of the Block.

Santa Cruz

Work is continuing on the evaluation of the Santa Cruz Incremental Oil Recovery (IOR) opportunity.

***

Argentina to Free Retail Fuel Prices

(Reuters, Luc Cohen, 1.Jul.2018) – Argentina will allow fuel retailers to freely set pump prices starting in August, according to an Energy Ministry official familiar with the plan, a move that could encourage badly needed investment in the nation’s oil patch but risks worsening sky-high inflation and angering consumers.

Separately, the ministry is looking to set up an auction process for the natural-gas market that it hopes will lower prices, according to the official, who was not authorized to speak publicly.

The actions signal that President Mauricio Macri is moving ahead with free-market reforms to attract private investment to develop the nation’s abundant shale oil reserves, even as rising global oil prices and a precipitous weakening of the nation’s currency have led to pressure for more interventionist government policies.

The moves will also bring relief to the oil sector. Price controls have squeezed refiners’ margins, prompting one refinery to suspend operations.

Macri’s pro-business government freed fuel prices last year, part of its efforts to unwind state controls on Argentina’s economy. But his administration reversed course in May due to a rapid decline in the peso. The sudden depreciation rattled markets and prompted Argentina to turn to the International Monetary Fund (IMF) for emergency financing.

In May, the government reached a deal for a two-month freeze on pump prices with the three largest oil companies operating in Argentina: state-owned YPF, Shell, and BP’s Pan American Energy. It later set the price of domestic crude at $68, about $10 below the global Brent crude price, to mitigate the impact of freezing fuel prices on refiners’ margins.

By freeing pump prices, the government is betting that gas stations will limit price hikes to avoid losing customers, the official said, and that by freeing crude prices it would encourage more investment in domestic drilling, part of a long-term strategy to wean Argentina from petroleum imports.

“Price controls do not help with anything,” the official said.

The government and the oil companies agreed to loosen the freeze June 1, allowing for hikes of 5 percent in June and 3 percent in July. Macri’s administration had kept the industry guessing as to what it might do in August.

The earlier increases were unsatisfactory to oil industry players, three of whom complained privately to Reuters that the modest bumps did not come close to covering their increased costs.

Last month, global trader Trafigura announced it was suspending activities at its 30,500 barrel-per-day refinery in the port city of Bahia Blanca due to the “mismatch between fuel prices and production and import costs.”

An oil industry executive who spoke with Reuters recently expressed frustration with the bind.

“The adjustment that needs to be done is not 3 percent, it is 45 percent,” said the person, who requested anonymity to speak freely.

VACA MUERTA RAMP-UP

An end to retail price caps would likely infuriate Argentine consumers, who are already incensed at the government for the drop in the peso and inflation that is running at a 26.3 percent annual clip.

But Macri’s government has prioritized reviving the energy sector to shake Argentina’s dependence on imported oil and gas, and to put an end to market-distorting subsidies.

Argentina possesses the world’s second-largest reserves of shale natural gas and ranks No. 4 in reserves of shale oil, mostly in the Vaca Muerta fields in Patagonia. But it faces stiff competition to attract the billions in private investment needed to develop these resources. Oil production is languishing at multi-decade lows.

The picture is brighter with natural gas. Rising output in Vaca Muerta helped boost the country’s production by 3.4 percent in the first quarter of 2018 compared with the same period last year, according to government data.

“We are beginning to have an abundance of gas in Argentina,” the Energy Ministry official said.

As a result, the ministry will create an auction process for wholesale customers to bid on the open market for their natural gas supplies during the low-demand summer months, the official said. The plan is to phase out the current fixed-contract system in a move the government hopes will lower prices.

The auctions could start in September or October, and could account for as much as 70 percent of wholesale supply by March or April of 2019, the official said.

Argentina is also expected to begin gas exports to Chile in the fourth quarter of this year, another result of rising Vaca Muerta output.

Argentina will still need to import liquefied natural gas (LNG) to meet demand in winter months.

***