Cut Venezuela’s Oil Exports, and Cut its Tyrant Down to Size

(Washington Examiner, 1.Oct.2018) — Meeting with the president of Chile at the White House on Friday, President Trump pledged to continue confronting humanitarian suffering in Venezuela.

The president deserves credit for his sustained leadership on this issue, but the time has come for more dramatic action. Specifically, the U.S. should orchestrate a global boycott of Venezuelan oil exports. Only such a boycott will exert the necessary pressure on Venezuelan President Nicolas Maduro’s despotic government to force it to change course.

Major change of some kind must come to the Latin American nation. Child starvation is skyrocketing, and prostitution is increasingly the only option for women who want to feed themselves and their children. Along Venezuela’s borders with Colombia and Peru, tens of thousands of refugees are lining up begging for relief.

For those remaining in Hugo Chavez’s dystopian socialist paradise, medicine has disappeared and store shelves are empty. But the most damning indictment of the Maduro-Chavez socialist experiment is the fact that today, in the nation with the world’s largest oil reserves, the lucky few must lug vast bundles of worthless cash and spend hours in lines outside stores to buy their basic needs. The unlucky many waste away on the streets and in the slums of Maduro’s narco-state.

This is happening as Maduro, the great revolutionary, echoes Che Guevara, the Marxist thug of old, by smoking expensive cigars and dining at the world’s finest steakhouses.

This is a regime that must go. But how?

An American military intervention would be a grave error, as would instigating a coup. The lessons of Iraq and Libya are clear on this score.

We also recognize that many Latin American nations which support tougher action against Maduro nevertheless oppose military intervention. But nations such as Argentina, Chile, Colombia, Paraguay, and Peru might support a strategy of economic pressure on Venezuela if engaged with honesty.

Maduro remains in power only because of the wealth he pockets by plundering his nation’s oil and exporting it. That’s why Washington has already restricted Maduro’s oil exports to America. That’s a good but insufficient step. President Trump could and should do far more.

Oil is a commodity sold in a global marketplace. Unilateral sanctions cannot work.

Trump should therefore replicate our policy towards Iran and announce that on a certain date in the next few months, the U.S. will introduce sanctions on foreign governments and businesses that buy Venezuelan oil or invest in the Venezuelan oil industry.

Given that China and India are Venezuela’s main oil export customers, the U.S. would have ample opportunity to drain Maduro’s wallet. After all, the U.S. is already engaged in a major trade conflict with China. By sanctioning its imports of Venezuelan oil, Trump wouldn’t simply put more pressure on Beijing, he would draw the world’s attention to the nature of President Xi Jinping’s regime, to the reality it cares nothing for the suffering of others or for international norms.

Referring to recent U.S. actions to earn favor in New Delhi, Trump could ask Indian Prime Minister Narendra Modi to wean the Indian economy off Maduro’s black gold. If necessary, Trump could offer India special access to American oil exports to offset losses. Many other Venezuelan oil export destinations are located in western Europe. Nations here make up a relatively small fraction of Venezuela’s total oil export base, but Trump should nevertheless press European governments to match their human rights rhetoric with action.

Oil export restrictions will impose extra suffering temporarily on Venezuelans. But look at the country now. Only Maduro and his cronies are benefitting from the exports.

Without oil wealth to pay off supporters, Maduro’s power is nonexistent. As the Miami Herald notes, much of Maduro’s ability to constrain his people centers on oil-bought support of the Cuban government and its highly capable intelligence services. If that oil support disappears, Cuba may find less reason to sustain Maduro’s rule.

Nevertheless, Maduro’s government is persecuting the Venezuelan people. Unless dramatic action is taken, their suffering will only increase. We can stop it, and we should do so now.

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Petrobras Offers Clarification On Valor Econômico News

(Petrobras, 1.Oct.2018) — Petrobras received the Official Letter No. 363/2018/CVM/SEP/GEA-1, which requests the following clarification:

Official Letter No. 363/2018/CVM/SEP/GEA-1

“Mr. Director,

1. We refer to the news published on this date, in the newspaper “Valor Econômico”, Companies section, under the title: “Petrobras estimates that it would have from R$20 billion to R$ 30 billion yet to be reimbursed,” which includes the following statements: Negotiated three years ago, the agreement between Petrobras, the SEC and the DoJ has stalled in the last two months due to the determination by the company, which was ultimately successful, in being considered a victim rather than a beneficiary of the corruption process.
[…]
Internal calculations indicate that the company has from R$20 billion to R$30 billion to be reimbursed.

  1. In this regard, we request a company’s statement as a verification of such news, notably as to the existence of estimates of amounts to be reimbursed, and if that’s the case, an explanation of the reasons why it was not considered a material fact, as well as comments on other information considered relevant on the matter.”
Clarification

The company clarifies that it does not recognize the existence of internal valuations that indicate the amounts mentioned in the news by “Valor Econômico”, in the amount ranging from R$20 billion to R$30 billion, to be reimbursed under the scope of Operation “Car Wash.”

Petrobras has been reporting to the market in a timely manner about the actions it has been taking and the amounts that have been recovered under the scope of the Operation, in order to provide its shareholders and other stakeholders with a more detailed view of the efforts made to protect the interests of the company.

In this regard, on August 28, 2018, Petrobras issued a Notice to the Market in which it was informed that, as a result of Cooperation and Leniency Agreements and repatriation, it has already recovered over R$2.5 billion. It also reported on 16 administrative misconduct lawsuits seeking compensation of R$10.9 billion as indemnity, and R$31.2 billion in connection with potential fines to be applied, as well as 53 criminal lawsuits in which Petrobras acts as assistant prosecutor, on account of the damage it suffered.

The company, which is recognized by the authorities as a victim of the acts unveiled by the Operation, will continue to take appropriate actions against companies and individuals that have caused it damages.

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#LatAmNRG

Pemex to Import U.S. LLS Crude for Oct Delivery

(Reuters, 1.Oct.2018) — Mexico’s state-run Pemex has launched a tender to buy 350,000 barrels of U.S. Light Louisiana Sweet (LLS) crude for October delivery, according to a document seen by Reuters on Monday, a deal that marks the first crude imports in over two decades.

Pemex, which plans to use the foreign crude to supplement its dwindling domestic fuel output, would mostly process the oil at its largest refinery, the 330,000-barrel-per-day Salina Cruz, the company’s chief executive said last week.

Since 2015, Pemex has been considering a crude swap with the United States so it can import lighter oil while exporting its flagship heavy Maya crude. The company finally opted for importing the U.S. light oil on the open market at least until the current administration finishes its term at the end of November.

“(The) Light Louisiana Sweet shall be obtained from conventional fields without being blended, processed chemically or being added with naphtha or condensates,” according to the document detailing the tender’s terms.

Pemex is requesting the cargo be delivered between Oct. 20-22 at its Pajaritos terminal in the Gulf coast state of Veracruz.

Payment will be made 45 days after delivery. Bids will be received until Oct. 3, and must be indexed to West Texas Intermediate crude prices, according to the document.

LLS is a very light crude grade with 38.5 API degrees of density and about 0.4 percent of sulfur content. Tests for choosing the crude to be purchased were completed several days ago, Pemex said.

Pemex’s fuel imports increased 17 percent in 2017 as Mexico’s refining network worked far below capacity. So far this year, fuel purchases have remained almost unchanged at 961,100 bpd as input of light grades to its domestic refineries has been limited. Independent retailers have started importing their own gasoline and diesel on top of that volume.

Apart from a limited oil exchange with the U.S. Strategic Petroleum Reserve in the late 1990s, Mexico has not recently swapped or otherwise imported U.S. crude.

Some U.S. crude exporters have this year sought new customers amid trade tensions between China and the United States affecting the bilateral oil trade.

U.S. crude exports have grown this year. In July, they averaged 2.139 million bpd versus 956,000 bpd in the same month last year, according to the Energy Information Administration.

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Trinidad to Raise Gasoline Price, Use $65/bbl Oil in 2019 Budget

(Energy Analytics Institute, Aaron Simonsky, 1.Oct.2018) — Trinidad and Tobago will use a $65 per barrel oil price to calculate its 2019 budget.

Other key highlights related to the 2018/2019 budget were outlined by Finance Minister Colm Imbert in a report titled: “A Genuine Economic Turnaround,” and published by CNC3.

The key highlights include:

Estimated Revenue: $47.724 billion

Estimated Expenditure: $51.776 billion

Estimated oil price: US$65/barrel

Estimated gas price: US2.75/mmbtu

Tobago: $2.229 billion. This represents $1.97 billion for recurrent expenditure, $231.63 million for capital expenditure and $18 million for URP.

Fuel: The cost of super gasoline will rise from $3.97/litre to $4.97/litre. Diesel will remain at $3.41 and premium will also be unaffected.

Pension: Public service pension will rise to a minimum of $3500/month to public servants upon retirement. Cap on senior citizen pensions being raised to $6,000, allowing person in receipt of both NIS and and Senior Citizen Grant to receive up to $3,000 from both.

Crime: Reward from crime stoppers up to $100,000 for information on 25 most wanted criminals, particularly for crimes of murder and kidnapping.

Health: Three rural health centres in Grand Riviere, Blanchissuese and Cedros to remain open on 24/7 basis.

Child Protection: 100 percent increase in all fines in relation to cruelty to children effective January 1st, 2019.

Environment: Penalties under litter act to increase 100 percent.

Tax evasion: Penalty fines go up from $3,000 to $10,000 for submission of incorrect information TD1s. Penalty with regard to tax fraud goes up from $50,000 to $250,000.

Social: Value of food cards to increase by $100 effective January 1st, 2019.

Disabilities: Disability grant’s age eligibility being removed to accommodate children under age of 18. Their grants will go from $800- $1500 and for those over 18 years old, it will increase from $1800-$2000 for January 1st. Public assistance grant to increase by $150.

Other highlights:

* Introduction of new Housing Bond scheme for construction of houses. Citizens who invest in housing bonds will be given preference in new HDC housing units and be able to transfer full amount of bonds towards housing units.

* Greater emphasis on electronic and cyber-crime. New-look Police Service will be more computerised. In process of establishing TT Police Service Operational Command Centre. It will manage all major national events and be staffed 24 hours. Current operational system being reviewed. Police will make more use of drone technology. GPS in vehicles, dashboard cameras, laptops in all vehicles, body cameras for police officers. Government will make necessary changes to ensure use of non-lethal weapons by police officers. Change of uniforms to be harder to counterfeit and more climate-friendly.

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Argentina: The Energy Challenge

(YPF, 1.Oct.2018) — Argentina’s unconventional oil & gas resources are among the world’s largest. YPF is working and investing to increase production with the aim of meeting the challenge of regaining energy self-sufficiency.

The importance of hydrocarbons

Energy is the basis of our society and our way of life. We depend on it for food production, transportation, heating, electricity, lighting, telecommunications and technology.

The economic development of the country depends on the availability of oil and gas, the main sources of energy which do not only generate electricity.

90% of the objects we use every day are derived from petroleum products. Petroleum is also essential for producing bottles, bags, cell phones, watches, clothing, paint, detergents, fertilizers, toothpaste, hair conditioner and much more.

Moreover, in Argentina, 1,800 million liters of diesel are used to produce 100 million tons of grain annually.

It is estimated that by 2040 renewable energies will occupy nearly 15% of the world’s energy matrix. However energy from fossil fuels will continue to occupy a high percentage of more than 80%.

Resources to regain self-sufficiency

Due to the natural decline of conventional hydrocarbon reserves and a sustained increase in demand for fuel and the thousands of products derived from it, in addition to alternative energies it is also necessary to explore and add new resources. Shale is a sedimentary formation with low permeability which contains unconventional hydrocarbons housed in the micropores of the rock. To extract oil and gas from this rock conventional perforations are performed similar to those used in Argentina over the past 70 years, and with the addition of a next-generation technology known as hydraulic stimulation. The highest safety standards are applied in this technique and this ensures both efficiency and environmental care.
Our country has an enormous worldwide potential to obtain large hydrocarbon reserves from unconventional resources.

Vaca Muerta

It is a geological formation of 30,000 km² (12,000 km² in concession to YPF) located mainly in the province of Neuquén and containing oil and gas found at a depth of more than 2,500 meters, far from the groundwater that in this region is located at a depth of between 300 and 400 meters.

The relevance of Vaca Muerta is so significant that the development of only a small part of this formation could cover the country’s energy deficit.

Read he full story online here.

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#LatAmNRG

Oil Workers Protest Pay in Venezuela

(Bloomberg, 1.Oct.2018) — Venezuelan oil workers protested against a new minimum wage at key crude processing facilities last week, claiming the new law disregards previous pay scales and union agreements.

Several dozen workers protested outside Petropiar, the oil upgrader controlled by Petroleos de Venezuela SA and Chevron Corp. in Anzoategui state Friday morning, chanting “Fair wages, now!,” according to videos and a workers’ bulletin seen by Bloomberg. Workers at Petrocedeno, another upgrader owned by PDVSA, Total SA and Equinor ASA, organized meetings last week to arrange a protest near the state prosecutor’s office in Puerto la Cruz on Oct. 3, according to Petrocedeno worker Leonardo Ugarte.

PDVSA employees are revolting against this month’s more than 3,000 percent increase in the nation’s minimum wage to 1,800 bolivars a month — about $15 at the black-market rate — which they claim is not enough to cover their needs. Venezuela’s inflation is running at about 111,000 percent, according to Bloomberg’s Cafe con Leche Index.

PDVSA’s human resources head Robert Perez traveled to Puerto La Cruz from Caracas to meet with workers and discuss details of the new wages, but most unions opted out of the meetings, Ugarte said.

Chevron deferred questions to Petropiar. Petrocedono JV partners Equinor and Total didn’t reply to requests for comment on Friday and Monday.

The protests have stalled procedures and work flow near the Orinoco Belt and Petropiar, according to a worker who asked to remain unnamed. They have also affected work at Petrocedeno, Venezuela’s largest upgrader, Ugarte said. Workers at a PDVSA fertilizer plant in Puerto La Cruz called Fertinitro also protested on Thursday, according to Gregorio Rodriguez, one of the city’s oil union leaders.

A PDVSA official confirmed Perez’s visit but declined to offer further details on whether Petropiar’s procedures had been stalled.

PDVSA workers from Puerto La Cruz oil docks marched in one of Puerto La Cruz’s main avenues carrying banners demanding better salary and respect for contracts, Rodriguez said.

“PDVSA’s management has not given us details of new salaries or how pay scales will be distributed,” Rodriguez said.

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$2.6 Billion to Close Petrotrin Refinery

Petrotrin refinery in Trinidad. Source: Trinidad Guardian

(LoopTT, Darlisa Ghouralal, 1.Oct.2018) — Severance packages for retrenched Petrotrin workers are expected to cost the State in the region of $2.6 billion.

Finance Minister Colm Imbert made the announcement based on initial estimates as he delivered the 2018/2019 fiscal package in Parliament on Monday.

State-owned oil company Petrotrin began its phased exit of the refining business on October 1.

This transition process is expected to be completed on November 30.

Approximately 4700 employees – 3500 permanent workers and approximately 1200 non-permanent workers – are expected to be affected in this restructuring exercise.

The Minister said 1400 employees are eligible for retirement packages in the closure of the Pointe-a-Pierre refinery, with some 800 workers to be recruited in Exploration and Production and 200 workers for the terminaling business unit.

He gave the assurance that support will be provided to the retrenched workers to ensure they make the transition to their new circumstances, as he expressed confidence that the transition will bring the Company back to a position of profitability.

“We are confident that the reinvented Petrotrin will assume its rightful place in the economy and positively contribute to the Treasury.”

The termination benefits will be paid on time, and in full, he continued.

Imbert added that Government remains open to any alternative proposal to the refinery, stating that the majority representative union, the Oilfields Workers Trade Union still has the first option to operate the refinery.

The Minister stressed that the closure of the refinery was a hard decision that had to be taken as it has been consistently losing over $2 billion over a number of years and, if left, unchecked will have a negative impact on Trinidad and Tobago’s economy.

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Obrador’s Government Will Renovate Refineries of Petroleos Mexicanos

(Prensa Latina, 1.Oct.2019) — The government of elected president Andres Manuel Lopez Obrador will make a strong investment to rehabilitare the six refineries presently property of Petroleos Mexicanos (Pemex) in the country, it was known today.

Obrador announced that in the period 2019-2020 they will use with such purpose 50 billion pesos (about three billion dollars).

Refineries are located in Tula, Hidalgo; Cadereyta, Nuevo Leon; Salamanca, Guanajuato; Minatitlan, Veracruz; Salina Cruz, Oaxaca, and Ciudad Madero, in Tamaulipas.

Those industries have had operational problems and México was forced to increase gasoline imports.