BP Extends Contract With Joe Douglas In Trinidad By One Well

(Energy Analytics Institute, Jared Yamin, 2.Nov.2018) — BP has extended its contract with the Joe Douglas in Trinidad by one well with an expected duration of 76 days. The extension includes one additional two-well option at then market rates, Rowan Companies plc announced in an official statement.

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Royal Dutch Shell Provides 3Q:18 Highlights For Brazil And Argentina

(Energy Analytics Institute, Jared Yamin, 2.Nov.2018) — Royal Dutch Shell provided an update related to portfolio developments in Brazil and Argentina during the third quarter 2018.

Third Quarter 2018 Portfolio Developments

Upstream

During the quarter, Shell and its partner Chevron won a 35-year production-sharing contract for the Saturno pre-salt block located off the coast of Brazil in the Santos Basin (Shell interest 50%).

In October, Shell and its partners announced first production at the Lula Extreme South deep-water development in the Brazilian pre-salt Santos Basin (Shell pre-unitisation interest 25%).

Downstream

In October, Shell completed the sale of its Downstream business in Argentina to Raízen. The business acquired by Raízen will continue the relationship with Shell through various commercial agreements, including long-term brand licence agreements as well as products supply and offtake contracts.

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Canacol Energy 3Q:18 Results Release, Conference Call Date

(Canacol Energy Ltd., 2.Nov.2018) — Canacol Energy Ltd. will announce its third quarter 2018 financial results after the market close on Tuesday, November 13, 2018. Senior Management will hold a conference call to discuss results on Wednesday, November 14 at 8:00am MST / 10:00am ET.

The conference call may be accessed by dial in or via webcast:

Pre-register here: http://dpregister.com/10125537

Webcast link: https://services.choruscall.com/links/cne181114.html

All remarks made during the conference call will be current at the time of the call and may not be updated to reflect subsequent material developments.

Third quarter 2018 financial results will be available through the Investor Relations section of the company’s website. A replay of the webcast will be available on our website until November 21. The transcript of the webcast will be posted on the website within five days after the call is completed.

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Ex-Venezuela Oil Official Pleads Guilty In Graft Probe

(AP, 2.Nov.2018) The former finance chief of Venezuela’s state oil company pleaded guilty on Wednesday to participating in an alleged US$1.2-billion embezzlement scheme, a major breakthrough for US prosecutors targeting corruption by people close to President Nicolas Maduro, including his stepsons.

Appearing in a Miami federal court, Abraham Ortega promised to fully cooperate with prosecutors, making him the highest-ranking Venezuelan official ever to do so.

As part of his plea, Ortega admitted that in his position with PDVSA, he accepted US$5 million in bribes to give priority loan status to a French company and a Russian bank, which were both minority shareholders in joint ventures with the oil company.

He also said he accepted US$12 million in bribes for his role in an embezzlement scheme that involved cooking up fake loans to PDVSA and repaying them at a preferential, government-set exchange rate, turning huge profits for alleged co-conspirators among the “boliburgues” elites that amassed fortunes under the Bolivarian Revolution started by the late Hugo Chávez.

Ortega’s guilty plea came just two days after a former Swiss banker, also involved in the conspiracy, was sentenced to 10 years in prison.

A third man, Colombian national Gustavo Hernandez, has been detained in Italy pending extradition. Ortega said Hernandez helped him launder his cut through a sophisticated network of brokerage firms, banks and real estate investment firms in the United States and elsewhere.

Ortega, 51, arrived at court looking calm, telling Judge Kathleen Williams that he drank a beer at lunch.

“Guilty” he said in Spanish with a strong voice, upon entering his plea to one count of conspiracy to commit money laundering.

He also agreed to forfeit US$12 million held in banks in New Jersey, The Bahamas and Switzerland. Sentencing was scheduled for January 9.

Ortega held a number of senior finance roles at PDVSA between 2004 and 2016, including the last two years as the company’s chief financial officer.

His lawyer, Lilly Ann Sanchez, said he had been living outside Venezuela the past year, but decided to come to the United States and voluntarily cooperate with authorities once charges against him and others were announced over the summer.

“The US government has amassed a tremendous amount of evidence and witnesses wherein Mr Ortega really had no choice but to come and face those charges,” Sanchez said.

Two US officials familiar with the probe have said the Swiss banker sentenced earlier this week, Matthias Krull, told prosecutors that the money-laundering plot included Maduro’s three stepsons – identified in court papers as “The Kids” – and the owner of Venezuela’s largest private TV network, businessman Raul Gorrin.

The two officials agreed to give those details only if granted anonymity, because they were not authorised to discuss the case publicly.

None of them have been charged and they are not named in the complaint. A 10-page factual statement, entered as part of the plea, also refers to the same men but does not provide additional details about their alleged involvement in the conspiracy.

The US Justice Department said authorities in Italy, Spain, Britain and Malta assisted in the investigation.

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YPF Injects $4 Million In Aerolíneas Argentinas, Jorge Newbery Airport

(Energy Analytics Institute, Aaron Simonsky, 2.Nov.2018) — Argentina’s YPF announced it will make an investment of nearly $4 million in Aerolíneas Argentinas destined to renovate 9 supply units and for other work related to process optimization at the Jorge Newbery Airport.

The announcement was jointly made by Grupo Aerolíneas President Luis Malvido and YPF President Miguel Gutiérrez on November 2, 2018 at a ceremony held at the air park facilities of the Jorge Newbery Airport, the state oil company announced in an official statement.

“The search for synergies and procedures that optimize our activities is a feature that distinguishes both Aerolineas Argentinas and YPF,” said Luis Malvido.

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Gazprombank Says No Role In Venezuela Graft Case

(Reuters, Alexandra Ulmer, 2.Nov.2018) — Russian bank Gazprombank on Friday said it had no role in a Venezuelan corruption case at state energy company PDVSA.

Abraham Ortega, a former financial executive at PDVSA, accepted $5 million in bribes to favor a French oil company and a Russian bank, U.S. prosecutors in Florida said on Wednesday in a statement, which did not name either company.

A source with knowledge of the matter on Thursday told Reuters that French oil company Perenco and Gazprombank were the two companies.

“Gazprombank denies information of any connection between the bank and/or any of the bank’s group of companies to alleged $1.2 billion money laundering, as well as alleged corruption cases at PDVSA. Gazprombank did not receive any official requests or notifications from U.S. justice authorities,” the company said in a statement.

Prosecutors said that in exchange for the bribes, Ortega helped companies gain “priority status” to loan money to oil joint ventures in which they were partners with PDVSA.

Gazprombank said it had structured a loan financing of capital investments and operational costs of its Petrozamora joint venture with PDVSA in 2013, “on the market conditions, without any preferences from Venezuelan side.”

“Such financing structure does not differ from usual financing practice by foreign investors,” Gazprombank said in a statement.

PDVSA in 2013 said it signed a deal with Gazprombank for $1 billion in financing for the Petrozamora joint venture.

Perenco on Thursday declined to comment. PDVSA has not responded to requests for comment.

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YPFB Makes Initial Shipment Of Nitrogen Fertilizer To Brazil

(Energy Analytics Institute, Aaron Simonsky and Ian Silverman, 2.Nov.2018) — YPFB made its initial shipment of nitrogen fertilizer from Puerto Quijarro, in late October, to Baurú, a city located in the state of Sao Paulo in Brazil.

“The importance of this milestone lies in the speed with which YPFB’s urea was placed in new markets,” announced Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) President Óscar Barriga in an official company statement.

“New Brazilian states beyond Mato Grosso and Mato Grosso do Sul, where the YPFB urea was initially marketed, are also demanding Bolivian urea,” added Barriga.

In addition to Sao Paulo, the states in Brazil where Bolivia’s granulated urea is being commercialized include: Mato Groso, Mato Grosso do Sul, Sao Paulo, Minas Gerais, Rondonopolis, Goias and Paraná.

To date in 2018, Bolivia has exported a total of 177,000 tons of granulated urea, equivalent to more than $50 million in revenues. Markets that currently consume Bolivian urea include: Brazil (65% of the 177,000 tons exported), Argentina (26%), Paraguay (8%) and Uruguay (1%), according to the YPFB statement.

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Echo Energy Appoints Independent Non-Executive Director

(Echo Energy, 2.Nov.2018) — Echo Energy announced appointment of Dr. Gavin Graham as an Independent Non-Executive Director of the company with immediate effect.

Dr. Graham has nearly 40 years’ experience in the oil & gas industry, with 29 of those years at Shell. Commencing his career in 1980 as a development geologist in Oman, Dr. Graham subsequently spent 17 years in exploration before moving into a range of field development, governance and leadership roles, culminating in his appointment in 2004 as Vice President New Business & Commercial, Middle East, Caspian & South Asia. His career with Shell was followed by 6 years’ experience with Petrofac, an oil-field services company, as Executive Vice President Business Development & Technical Services, working in Malaysia, Mexico and the UKCS. In 2017 Gavin joined the Polish state company, Grupa LOTOS, co-ordinating the start-up of a new company, LOTOS Upstream, where he is currently Chief Executive Officer. LOTOS Upstream is focused on its producing assets in the North Sea, Poland and Lithuania.

“We are delighted to welcome Gavin, with his considerable experience and skills, to the Board. I look forward to working with him as we approach the drilling of the multi Tcf potential at Tapi Aike,” said Echo Energy Chairman James Parsons.

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In Guyana, Exxon Oil Project Stirs International Tensions

(Houston Chronicle, James Osborne, 2.Nov.2018) — Almost 4,000 feet beneath the surface of the Atlantic Ocean, off the northern coastline of South America, Exxon Mobil is drilling one of the biggest oil discoveries of the last decade, the so-called Stabroek Block with an estimated 4 billion barrels of crude.

It stands to buoy the oil giant’s fortunes at a time the company’s oil and gas production is flagging. But the discovery has come at a price.

The massive find, located in the waters of the tiny country of Guyana, has reignited a century old territory dispute with its powerful and volatile neighbor Venezuela, flaming geopolitical tension in a region where the United States, China and Russia are increasingly competing for influence.

With Venezuela claiming a portion of Exxon’s field, Guyana has taken the case to the International Court of Justice, the United Nation’s court system in the Netherlands, as U.S. diplomatic and military officials in Washington watch adversaries in Beijing and Moscow warily.

“When we look at the controversy around the territory claims [by Venezuela] it gets pretty complicated pretty quickly,” said Ret. Vice Admiral Kevin Green, who oversaw U.S. naval operations in the Caribbean, Central and South America. “The United States is engaged globally in what is becoming more and more a great power competition. Both Russia and China see opportunities for themselves in that region, to quite frankly frustrate the United States.”

Trouble began even before Exxon, which declined to comment, realized how much oil was in Guyana.

In 2013, the Venezuelan Navy seized a ship contracted by The Woodlands exploration and production company Anadarko to survey the ocean’s bottom for oil. While the boat was in waters recognized internationally as Guyana’s, Venezuela claimed crew members had violated its territory and held them and the ship for a week before releasing them as part of a diplomatic deal.

Then Exxon announced in 2015 it had successfully drilled a test well in Stabroek. Within weeks, Guyana was tossed out of Petrocaribe, the Venezuelan food for oil program, in which countries across Central and South America and the Caribbean provide Venezuela’s 32 million inhabitants with food in exchange for subsidized crude.

Then Venezuela issued a statement asserting its ownership of two-thirds of Guyana’s land and waters claimed not only by Guyana, but also Trinidad and Tobago and Barbados.

The claim dates back to the late 1800s when Venezuela and Great Britain, which then controlled Guyana, could not agree on the border between their countries. An international tribunal intervened, and the dispute fell dormant until 1949 when a memo, written by one of attorneys that represented Venezuela in the tribunal, surfaced with the claim that judges had colluded with Britain.

Ever since, the border has been a rallying cry in Venezuelan politics. Guyana’s Ambassador to the United States Riyad Insanally said for years Venezuela had pressured oil companies not to explore in Guyana, using the threat of cutting companies off from Venezuelan oil fields – among the world’s largest.

But relations between Caracas and the international oil companies began to break down during the rule of the late Hugo Chavez, who nationalized a number of oil fields, including some held by Exxon.

“It was a bit like a Robert Ludlum novel,” Insanally said of the attorney’s memo. “No one likes being bullied and we feel we’ve been bullied for far too long. But we don’t have any military might, and we don’t have any economic clout. All we can is do is rely on the resourcefulness of our people and international diplomacy.”

The Venezuelan embassy in Washington did not return a call for comment.

The presence of Russia and China in a region long dominated by the United States has escalated what might have been a disagreement among neighbors. The U.S. rivals have again and again provided financial lifelines to Venezuela, devastated by an economic crisis, in exchange for increasing claims on their energy supplies. And they are increasingly investing in Guyana.

China recently loaned Guyana $130 million to expand its airport to allow 747s to land. Earlier this year, the nation of less than 1 million people signed onto China’s Belt and Road pact, through which the Asian superpower is investing in developing countries around the globe.

Rusal, the Russian aluminum giant owned by the oligarch Oleg Deripaska, a close associate of President Vladimir Putin, has operated bauxite mines in Guyana for more than a decade.

“Nobody wants to see Russian warships sailing around the Caribbean, and they do that occasionally,” said Thomas A. Shannon, Jr., an attorney and former under secretary of state for political affairs. “The region has largely been ours since we chased out the Germans and the French. We don’t need the presence of adversities or potential adversaries. But the way we do this it by taking care of our friends.”

The hope among U.S. officials is that the discovery of oil in Guyana’s waters will not only bring prosperity to a long impoverished nation, but also bring it deeper into the American fold.

So far, that seems to be proving out. U.S., British and Norwegian officials already are advising Guyana on how to manage its newfound wealth when oil is scheduled to start flowing in 2020. The aim is to avoid the so-called resource curse through which corruption and mismanagement become endemic upon the discovery of oil.

“The U.S. is still our major trading partner. Our links with the U.S. are much stronger than Russia and China. But we enjoy good relations with all three because that is the reality of being a small country,” Insanally said.

The presence of iconic American company like Exxon Mobil is only expected to increase Guyana’s bond with the United States. And so far, the oil giant has shown no signs of wavering in its commitment to drilling there, despite rising tensions around its operations.

It’s a calculated risk. Exxon’s oil and gas production has fallen for eight of the last nine quarters. Were Guyana to develop as Exxon has forecast, the additional production could potentially raise the oil giant’s global production by close to 8 percent, said Pavel Molchanov, an energy analyst at Raymond James.

“Exxon’s legacy production has been so weak in recent years, the company can use all the help it can get,” he said. “Guyana is in some ways the exception that proves the rule. It’s one of the few exploration success stories of this entire decade.”

But developing all of Exxon’s prospects in Guyana will not be quick. And that leaves plenty of time for what is now a legal argument expected to be decided by the courts to potentially escalate into a military conflict.

Brazilian President Michel Temer has already pledged to send in troops should Venezuela invade the disputed area inside Guyana.

“There’s some reports and analysis suggesting Venezuela will start some kind of military action against Guyana,” said Lisa Viscidi, an energy analyst at the Washington think tank Inter-American Dialogue. “It’s still really unlikely they would do that.”

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Natgasoline Places Around $900 Million Of New Debt

(Proman and CEL, 2.Nov.2018) — Consolidated Energy Limited (CEL) and OCI N.V. announced that their subsidiary Natgasoline LLC, the largest methanol production facility in the United States and one of the largest globally, has priced around $900 million of new senior secured debt financing, including a $565 million Term Loan B facility and $336 million of bonds in the US tax-exempt market to be issued by the Mission Economic Development Corporation, the proceeds of which will be loaned to the company. As part of the revised financing structure, Natgasoline has also secured a $60 million revolving credit facility that will not be drawn at closing.

Proceeds will be used to refinance the existing $252 million of tax-exempt bonds issued in 2016 and existing shareholder and contingency loans, as well as funding working capital and financing costs. The Term Loan B is priced at LIBOR+350 bps with maturity in 2025, a material saving compared to the 9% and 10% shareholder and contingency PIK notes it will replace. The coupon for the tax exempt bond was priced at 4.625%, with maturity in 2031 and a final yield of 4.72%, compared to a coupon of 5.75% for the bonds being refinanced.

The completion of the refinancing will therefore result in significant interest savings and a move to a long-term capital structure that is reflective of the expected strong cash generation and profitability profile of Natgasoline, which has been consistently running above nameplate capacity in recent months. It also provides a financing structure that allows for more flexibility in Natgasoline’s distributions to the joint venture sponsors.

CEL, a global leader in methanol, is a subsidiary of Proman Holding AG and Helm AG.

Proman is an integrated industrial group and global leader in natural gas derived products and services. Headquartered in Switzerland, with assets in the United States, Trinidad and Oman, and ongoing expansion into Mexico, Proman is the world’s second largest methanol producer and one of the ten leading fertilizer companies via, in part, its controlling stake in CEL.

David Cassidy, Chief Executive of Proman and Chairman of CEL and Natgasoline said, “Having made our initial investment in Natgasoline in early 2016, we are very pleased to have completed construction of the plant, delivered ramp-up to nameplate production, and established stable methanol production and sales in recent months. The Natgasoline team has done an outstanding job in delivering the successful start-up of what is now the United States’ largest methanol production facility. The strong support received for the asset from investors through this $900 million refinancing echoes our own belief in the operational and the financial strength of this world class methanol plant, which we believe will continue to be demonstrated over the coming decades, and in the importance for Consolidated Energy to have onshore US based production as part of our production base.”

“We are pleased to have received strong interest in these offerings from the capital markets,” said Nassef Sawiris, Chief Executive Officer of OCI N.V. “Optimizing our capital structure through lowering our cost of debt and extending maturities has been a primary objective for OCI in 2018 and these two transactions at Natgasoline fit well in this strategy. Securing the lower cost of capital further strengthens Natgasoline’s industry-leading low-cost profile, which will position the company well for generating strong free cash flows throughout methanol cycles.”

The closing of the Term Loan B Facility and the tax exempt bonds is expected to occur on 14 November 2018 and is subject to customary closing conditions. The commitments with respect to the Term Loan B Facility and the terms and conditions thereof (including the applicable interest rates) remain subject to the execution of the definitive documentation.

The tax exempt bond and Term Loan B have received a preliminarily project finance rating of BB- by Standard & Poor’s and the Term Loan B is rated Ba3 by Moody’s.

The tax exempt transaction was underwritten by Citigroup Global Markets and Morgan Stanley. Citigroup served as the bookrunner. J.P. Morgan served as Left Lead Arranger and Bookrunner on the Term Loan B; Goldman Sachs served as Joint Lead Arranger and Bookrunner.

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Ecuadorian Armed Forces Discover Fuel Tanks Destined For Smuggling

(Energy Analytics Institute, Aaron Simonsky, 2.Nov.2018) — Ecuador’s Joint Task Force Armed Forces discovered 38 tanks filled with 55 gallons of fuel in an operation carried out on October 31, 2018. The tanks were being stored in a house in El Caucal, in the parish of Ancon de Sardinas in San Lorenzo, located along Ecuador’s border with Colombia, reported the daily newspaper El Comercio.

The 2,090 gallons of fuel were to be destined for smuggling and to supply cocaine processing laboratories that operate in Colombia, the daily reported citing task force investigations.

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