Transparency in Bolivian Hydrocarbon Information Needed, Jubilee Foundation Says

(Energy Analytics Institute, Ian Silverman, 3.Oct.2018) — Transparency in information is necessary in order for Bolivia and producing departments of the small Andean country to understand the full details related to natural gas and crude oil reserves by department and field, announced the Jubilee Foundation.

Such important and timely information will allow experts and the country as a whole the necessary time to evaluate the data as it relates to resource management, reported the daily El Diario, citing the foundation.

The foundation was referring to a recent hydrocarbon reported released by the Canadian consortium Sproule International Limited.

In the report, the Sproule revealed Bolivia had 10.7 trillion cubic feet (Tcf) of proved gas reserves, 12.5 Tcf of proved plus probable reserves, and 14.7 Tcf of proved, probable plus possible reserves.

“The decrease in probable and possible reserves is a reflection of insufficient exploratory activity in recent years, despite the fact the government has issued six decrees between 2007-2017, that resulted in the awarding of new areas for the exploration and exploitation of hydrocarbons in favor of state oil company YPFB,” the daily reported, citing the report.

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YPF Updates On Oil Combustibles S.A. Bankruptcy Proceedings

(YPF, 3.Oct.2018) — YPF S.A. received notice of the decision adopted by the judge in charge of Oil Combustibles S.A.’s bankruptcy proceedings, which awarded the industrial assets of the bankrupt company to YPF and Destilería Argentina de Petróleo S.A. (DAPSA), pursuant to the local and international bidding process carried out in connection with the sale of Oil Combustibles S.A.’s assets.

The total price of the transaction amounts to $85,000,000, and such amount will be allocated in a manner to be agreed upon by YPF and DAPSA.

The assets that YPF will acquire, especially the docks and fuel storage tanks located in the Paraná River fluvial terminal, will allow YPF to expand its logistics capacity for future fuel imports and exports, as well as to achieve possible regional expansion.

DAPSA will be in charge of the management and supply of Oil Combustibles S.A.’s gas stations that were part of its commercial network.

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#LatAmNRG

Bolivia’s Economic Growth Expected to Exceed 4.5%: IMF

(Energy Analytics Institute, Aaron Simonsky, 3.Oct.2018) — Details of the International Monetary Fund (IMF) estimates were reported by the daily newspaper La Razón, citing a speech made by Bolivia’s President Evo Morales in the capital city La Paz.

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Trinidad Government Defends Decision To Close Petrotrin

(CMC, 3.Oct.2018) — The Trinidad and Tobago government Monday reiterated its position that it was necessary to close down the refinery of the state-owned oil company, Petrotrin, insisting that the company was losing billions of dollars (One TT dollar=US$0.16 cents) annually.

Finance Minister Colm Imbert, delivering the TT$51.7 billion budget to Parliament, said that the Keith Rowley administration had agreed following a “comprehensive assessment and analytical review of its operations” to shut down the refining and marketing business unit of Petrotrin.

“We are repurposing Petrotrin which would now focus on the full exploitation of its exploration and production activities and on a new terminalling business through which imports will now meet the demand of Trinidad and Tobago and the Caricom region for the refined products previously produced by the refinery,” Imbert said.

He said these would include motor gasoline, diesel, aviation fuel, liquefied petroleum gas and other derived and refined products.

He said in 1985 when a former people’s National Movement (PNM) had decided to purchase the failing refinery assets from the international private sector in a bid to save jobs, the situation has changed.

“Since that time, the refinery economics have further deteriorated as the refinery has failed to adapt to the changing fuel environment which demanded cleaner standards for fuel technologies in local and foreign markets.

“The continuing efforts over time by the managerial, technical and governance personnel to improve the efficiency of the refinery to meet the standards for the internationally marketable products fell short of requirements.”

Imbert said that all the major plant upgrades failed – from the gas optimisation plant to the ultra-low sulphur diesel complex and the gas-to-liquids plant – all experiencing substantial cost overruns in the process.

He said the cost of these upgrades has loaded the company with an unsustainable debt burden estimated at TT$12 billion of which TT$5.780 billion is due in August 2019.

“While the company continued to incur persistent losses, the gasoline optimisation programme saw its cost rise from TT$2.45 billion in 2005 to TT$12.6 billion when it was completed in 2013, the cost of the unfinished gas-to-liquids plant rose from TT$1.55 billion to TT$3.15 billion and that the cost of the ultra-low sulphur diesel complex rose from TT$791 million to $2.89 billion “

He said while the project is 98 per cent mechanically completed, it cannot be operated because the structural specifications were not followed, meaning that the foundation is faulty and cannot be used. It would take TT$2.5 billion to rectify the defects, Imbert added.

Petrotrin’s Pointe-a-Pierre refinery operations. Photo: Richard Charan
5000 JOBS

He said in the context of these managerial failures, the size of the employee-base at Petrotrin remained in the vicinity of 5,000, divided between the refining and marketing business unit and the exploration and production business unit.

“In addition, the monthly wage bill amounted to TT$183 million per month or TT$2.2 billion on an annual basis. Coupled with this wage bill, the medical plan was running at an annual cost to Petrotrin of approximately TT$245.0 million per year but with very low contribution rates by the employees ranging from TT$50 to TT $80 per month.”

Imbert said what is interesting about this TT$245 million, medical plan is that it currently covers 21,000 present and past employees and their unmarried family members under the age of 21 or under the age of 23 if still in school.

“It effectively covered a Petrotrin employee and spouse until death. This has to be one of the most generous medical plans in Trinidad and Tobago, if not in the entire Caribbean region,’ Imbert told legislators.

He said the survival of the company was only possible through the non-payment of TT$3.5 billion in taxes and royalties, in breach of the law, and the procuring of government guarantees in the amount of TT$1.5 billion for loans from financial institutions which have significantly increased the public debt.

“This has placed a severe burden on the Treasury and on taxpayers, especially in view of the fact that Petrotrin extracts 40,000 barrels per day of taxpayers’ oil, at a value of six billion dollars per year, for which taxpayers receive no benefit.”

Imbert said that despite the fact that Petrotrin is tottering on the brink, as recently as last month, it approached the Ministry of Finance for financial support by way of another government guarantee in the amount of US$56 million to purchase a cargo of crude oil, since the shipper refused to discharge the cargo without a guaranteed letter of credit.

“And just last week, Petrotrin approached the Ministry of Finance for more financial support to refinance debt instruments totalling a further US$180 million as they become due for payment,” Imbert said, telling legislators that in its current form the company “remains unprofitable and whatever scenario is analysed, it cannot generate a profit without drastic restructuring.

“The financials generated by independent consultants, both local and foreign, provide a grim outlook of a deteriorating financial situation which cannot be improved even if billions of dollars in capital are injected into the company, which capital is simply not available.”

He said the latest financials for the company are illustrative of a looming crisis which if left unresolved would have a serious impact on the national economy.

Imbert said the government will do all that it can to assist displaced workers at Petrotrin to transition to their new circumstances.

“We will provide all available support at our disposal. And we will work with the company to ensure that adequate funds are available to pay termination benefits on time and in full,” he said, adding ‘we are confident that the reinvented Petrotrin will resume its rightful place as a leader in the oil and gas sector of Trinidad and Tobago and will become a profitable and efficient entity that makes a positive contribution to the Treasury.

“May I also point out that the company has advised that it will continue to be a significant earner of foreign exchange, in the vicinity of US$200 million-plus per year, after it completes the transition to its new business model,” Imbert added.

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Venezuela’s Oil Exports Are Falling Even Faster Than Expected

(OilPrice.com, Irina Slav, 3.Oct.2018) — A delay in port repairs following a tanker collision is putting additional pressure on already pressured Venezuelan crude oil exports, Reuters quoted anonymous sources close to PDVSA as saying this week. It seems that Venezuela’s woes are only multiplying as time goes by, although news from official Caracas sources seems more upbeat. Oil, however, appears at the forefront of Venezuela’s plight.

A dock at Venezuela’s biggest oil port, Jose, was closed in late August after a tanker collided with it. At the time, Reuters reported that the repairs would delay the delivery of 5 million barrels of crude, destined for Rosneft, which, according to the news outlet, could put a strain on relations between the Russian company and PDVSA, which have a money-for-oil agreement. This is only the latest in PDVSA’s troubles with its oil exports.

Besides a steady decline in production, Venezuela’s state-run oil company earlier this year ran into problems with its storage capacity and export terminals in the Caribbean as U.S.-based ConocoPhillips took an aggressive approach to enforcing a court ruling that awarded it US$2 billion in compensation for the forced nationalization of two projects in Venezuela. The company this summer seized several of PDVSA’s assets on Caribbean islands, which made it difficult for the Venezuelan state company to meet its export obligations. Having few options, PDVSA eventually caved, settling with Conoco.

Dock repairs are further complicating matters. PDVSA is supposed to deliver to Rosneft some 4 million bpd of crude under the latest bilateral agreement signed this April. On top of that, it normally exports crude for U.S. Valero Energy and Chevron from the same dock, the South dock of the Jose port, which is responsible for processing processes as much as 70 percent of the country’s crude oil exports.

Not to anyone’s surprise, the delay in resuming shipments is largely a result of insufficient funds, partially thanks to U.S. sanctions, which have essentially closed nearly completely the door to foreign funding. China, not bound by these restrictions, recently agreed to a US$5-billion lifeline for the Venezuelan government and its oil industry, but these billions will take time to become available. Given the multitude of problems that PDVSA is having, it would be a tough job to allocate these funds so that there is enough for everything.

Caracas is still not giving up. Just this week the government announced the official launch of the petro on international markets in hopes of offsetting the effects of U.S. sanctions by using this oil-and gold-backed cryptocurrency. President Nicolas Maduro said at the launch that the petro would be legal tender for everything in Venezuela, including as a substitute for the dollar.

“All Venezuelans will have access to the Petro and through it to make international purchases,” Maduro said.

Venezuela also plans to boost its oil exports to China as part of plans to transform its economy and get back on its feet. To this end, it will work with Chinese oil companies to improve production. Maduro said in July that PDVSA would boost oil production by 1 million bpd from June levels by the end of the year, although he admitted that this goal would be difficult to achieve. Venezuela pumped 1.45 million bpd in August, and the year-to-date average stands at 1.544 million bpd. This is a far cry from the figure from five years ago, when its daily average was 2.9 million bpd. It’s a matter of a short time to see if the petro and Chinese money will be enough to reverse the decline in production and exports.

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Bolivia’s ENDE Suspends Rositas Hydroelectric Project

(Energy Analytics Institute, Ian Silverman, 3.Oct.2018) — Bolivia’s National Electricity Company (ENDE) has temporarily suspended the Rositas hydroelectric project.

Delegates from affected communities and two elected authorities from Vallegrande said there have been failures related to the project since the beginning, reported Bolivia’s daily newspaper La Razón.

Work related to the project — which consists of construction of a dam, a power plant with an installed capacity of 600 megawatts with average annual energy generation on the order of 3,000 gigawatts — was paralyzed during the environmental impact process, according to the daily.

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Jubilee Foundation Says Bolivian Gas Output Below Projections

(Energy Analytics Institute, Ian Silverman, 3.Oct.2018) — The Jubilee Foundation announced Bolivia’s production of natural gas is short of projections outlined in the country’s Integral Hydrocarbon Development Plan 2016-2020 by an estimated 13.8 million cubic meters day (MMmc/d).

According to the foundation, the small land-locked country should be producing 67.8 MMmc/d, but in reality production is only 54 MMmc/d, representing a shortfall of 25%, reported Bolivia’s daily newspaper El Diario.

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