Ecuador, UN to Audit 5 Oil Projects Promoted Under Correa

(Energy Analytics Institute, Jared Yamin, 2.Oct.2018) — Ecuador, with the assistance of the United Nations Organization (UN), is auditing five major oil projects promoted by former President Rafael Correa during his decade of government (2007-2017).

The total value of the projects amounts to an estimated $5.042 billion, according to an article by AFP published in Ecuador’s daily newspaper El Comercio.

“The United Nations and the Ecuadorian State are already carrying out cooperation to review the five major oil projects in the country,” said Presidency Private Secretary Juan Sebastián Roldán.

A civic commission estimates corruption under the administration of Correa’s government at about $24.742 billion, the article reported.

***

Venezuelan Oil Port Repairs Delayed, Crude Exports Fall: Sources

(Reuters, Marianna Parraga, 2.Oct.2018) — Repairs to a dock at Venezuela’s main oil export port will take at least another month to complete following a tanker collision more than a month ago, further restraining the OPEC member nation’s crude exports, according to sources and shipping data.

A minor incident in late August forced state-run oil company PDVSA to shut the Jose port’s South dock, one of three used to ship heavy and upgraded oil to customers including Russia’s Rosneft and U.S.-based Chevron Corp, and to receive diluents needed for the exports.

Jose port typically handles about 70 percent of Venezuela’s total crude exports, which in September declined 14 percent compared with the previous month to 1.105 million barrels per day (bpd), according to Refinitiv Eikon data.

Oil exports are the financial backbone of Venezuela’s economy, which is struggling to overcome hyperinflation, a long-standing recession and scarcity of basic goods.

PDVSA had estimated the berth would reopen by the end of September, but needed parts have not been obtained as PDVSA continues facing problems to pay foreign providers due to financial sanctions imposed by the United States, sources close to its operations said.

PDVSA’s crews completed the removal of the damaged fences last week, but replacements have not arrived in the country.

“The fences were bought, but funds to pay the provider were retained due to the U.S. sanctions. A new deal to buy them through a third party will take at least another month,” one of the people familiar with the matter said.

PDVSA was not immediately available for comment.

U.S. President Donald Trump’s administration last year imposed financial sanctions on Venezuela and PDVSA, affecting their ability to make transfers in dollars and complete payments through the U.S. banking system.

PDVSA has neither resumed shipments from most of its Caribbean terminals, which remain frozen after U.S. producer ConocoPhillips’ legal actions earlier this year to satisfy a $2 billion arbitration award, according to the data.

Conoco and PDVSA in August struck a payment agreement, but the Venezuelan oil firm has yet to complete a $500 million installment due by the end of November to unlock its Caribbean operations.

Venezuela’s crude output fell again in August to 1.448 million bpd according to official figures, putting its annual average at 1.544 million bpd, the lowest in over six decades.

Economic measures recently announced by President Nicolas Maduro’s government, including a steep salary increase, have fallen short for Venezuela to regain access to sufficient foreign credit and reverse the downturn.

***

Baker Hughes to Bid for Petrobras PSC -Baker Hughes Executive

(Reuters, Marta Nogueira, Alexandra Alper, 2.Oct.2018) — General Electric Co’s unit Baker Hughes is preparing an offer for a production-sharing deal with Brazil’s Petrobras, a Baker Hughes executive said on Tuesday, as the state-run oil company seeks creative ways to boost output from mature fields.

Reuters reported in June that Baker Hughes was considering a bid, while Halliburton Co and Schlumberger NV were already preparing them, seeking to clinch Petrobras’ first-ever tender for a production sharing deal with an oil services company.

“It’s a lot of work. Anything that is the first time requires lots of work,” Alejandro Duran, Baker Hughes’ Brazil country manager, told Reuters in an interview. He added that talks with Petrobras were already under way.

He said Baker Hughes will host additional meetings in Houston soon to discuss the issue.

“It is interesting, Petrobras coming to the market with a new thing. It has to be a win-win. That is the most important thing now.”

Petrobras did not immediately respond to a request for comment.

Petrobras, the world’s most indebted oil company, is looking for ways to squeeze better returns from some of its aging fields as it focuses its limited capital budget on developing the country’s prolific pre-salt fields, where billions of barrels of oil are trapped under a thick layer of salt offshore.

A deal would represent a novel way for it to boost output from mature fields without losing control or risking capital, by partnering with one of the world’s largest oil service providers.

It would also allow services companies to put to use expensive equipment idled for years as Brazil’s oil industry was hammered by low oil prices and a massive investigation into corruption at Petrobras.

The state-owned oil company is paying an $853 million fine to the U.S. Justice Department to settle charges related to that probe, which found evidence that political appointees on its board and elsewhere handed overpriced contracts to engineering firms in return for illicit party funding and bribes.

The oil services companies are expected to compete in the tender by promising to boost production from the Potiguar basin’s waning Canto do Amaro field in northern Brazil, where production began in 1986, and offering a bigger share of output to Petrobras, sources said in June.

Based on the results from the project, Petrobras will decide whether to apply this model in other areas, the oil company said in July, confirming the Reuters story.

Proposals were originally due in June, but at least one company sought an extension.

Duran said he thought proposals were due this month but could be extended again.

The winner would be responsible for investment and operation and maintenance costs for the wells. The tender includes a 15-year contract and Petrobras would remain the operator.

GE’s Baker Hughes has not typically taken stakes in customer projects. However, last year it announced a deal with Twinza Oil Limited to provide a range of services for the development of an offshore gas field in Papua New Guinea.

(Reporting by Marta Nogueira and Alexandra Alper in Rio de Janeiro Writing by Alexandra Alper Editing by Christian Plumb and Matthew Lewis)

***

Why Companhia Energetica, and Petrobras Stocks All Popped Today

(The Motley Fool, Rich Smith, 2.Oct.2018) — Investors are upbeat facing the upcoming Brazilian presidential election.

What happened

Brazilian oil giant Petroleo Brasileiro (Petrobras) saw its stock surge 8.9% in Tuesday trading, while its preferred “A-shares” — Petroleo Brasileiro — did even better, closing up 10.2%.

Shares of Brazilian electric utility Companhia Energetica de Minas Gerais gained 9.4% on the day.

Companhia de Saneamento Basico do Estado de Sao Paulo, a Brazilian wastewater treatment company, closed 9.6% higher.

What do these three companies have in common? They’re all based in Brazil, naturally — and they’re all benefiting from positive sentiment about the upcoming Brazilian presidential election.

So what

On Sunday, Oct. 7, Brazil will hold the first round of voting for its new president. At least eight different candidates are competing for the post, but the two leading candidates today are former paratrooper Jair Bolsonaro from the conservative Social Liberal Party and Fernando Haddad from the more liberal Workers’ Party. As the two most likely top vote getters in Round 1, these two candidates are expected to face off in a second round of voting on Oct. 28.

That’s where today’s news comes in. A new poll released by Brazilian media company Ibope Monday showed Bolsonaro, who suffered an assassination attempt earlier this year, closing the gap with his rival Haddad — who, up to last week, had been leading in the polls for likely second-round voting. As of this week, the two candidates appear to be tied, which, according to analysts at Goldman Sachs, should be good news for business (and stocks), because Bolsonaro is believed to support more market-friendly moves such as deregulation and balanced budgets than is his opponent.

Now what

I see two risks here, however. First, polls can be wrong. Investors hanging their hopes on the results of just one poll — and one saying Bolsonaro has only tied his opponent and not that he’s moved into the lead, no less — are at risk of being disappointed if voters end up voting differently than they told pollsters they would.

Second, most of the attention here is being focused on the likely results of a second round of voting that is still four weeks away — before the first round has even been conducted. Until investors know for certain who the runoff candidates will be, it might be unwise to place bets on one of two unknowns beating a second unknown.

If you absolutely, positively have to place a bet, though … my advice would be to focus your examination on Companhia de Saneamento Basico do Estado de Sao Paulo. Its P/E ratio is the lowest of the three stocks that leapt today — a mere 7.3 times earnings even after the pop. Also, one thing’s for certain: Regardless of who wins the election in October, people in Brazil are going to continue drinking water. Seems to me that makes Companhia de Saneamento Basico a safe stock to bet on.

10 stocks we like better than Petroleo Brasileiro (A Shares)
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Petroleo Brasileiro (A Shares) wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

***

Mexico’s President-Elect AMLO Commits to Respect Oil Contracts

(Renaissance Oil Corp., 2.Oct.2018) — Renaissance Oil Corp. announced that Mexico’s president-elect, Andres Manuel Lopez Obrador, who will take office on December 1, 2018, assured private energy executives on September 27, 2018 that their contracts will not be canceled if they meet existing terms.

During the meeting with AMEXHI, Mexico’s association of oil and gas producers, which Renaissance is a member of, Mr. Lopez Obrador underlined the importance of the private sector’s participation in developing the oil and gas sector in Mexico and its important role in increasing production in the following years.

Further, Mr. Lopez Obrador’s designated Energy Minister, Rocio Nahle, confirmed the incoming administration’s support for the contracts as well as a commitment to resolving regulatory delays.

“Renaissance is reassured by these developments and encouraged that the Mexican government is supportive of the important role international oil companies, like Renaissance, play in the development of the Mexican petroleum industry,” said Renaissance CEO Craig Steinke.

***

Oil Services Giant Schlumberger Contemplates New Investments in Ecuador

(Energy Analytics Institute, Jared Yamin, 2.Oct.2018) — Schlumberger is said to be contemplating “new investments” in Ecuador.

The announcement was revealed after a meeting between Schlumberger Manger Carlos Sarmiento and Ecuador’s President Lenin Moreno, during the latter’s visit to the United States, reported the Ecuadorian daily newspaper El Universo.

Details of the meeting were also revealed in a bulletin from Ecuador’s Secretariat of Communication, which in a short paragraph refers to a comment from Sarmiento — who manages Schlumberger’s operations in Colombia, Ecuador and Peru – that “reaffirmed his confidence in the country, and the commitment to generate new investments.”

***