Argentina Allocates $500 Million For Users To Generate Energy

(Energy Analytics Institute, Aaron Simonsky, 4.Nov.2018) — Argentina’s government has allocated $500 million for a special fund to be used to subsidize loans for the purchase of solar systems that allow users to generate their own electricity.

“There will be a credit subsidy so repayment of the investment is in no more than 7 years,” reported the daily newspaper Clarín, citing Argentina’s Energy Secretary Javier Iguacel. “The idea is to add 1,000 megawatts of this type of energy generation through 2030.”

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Bolsonaro To Push Forward Giant Brazil Oil Sale, Adviser Says

(Bloomberg, Sabrina Valle, 4.Nov.2018) — Jair Bolsonaro’s energy team is keen to push for the sale of prized Brazilian crude deposits in an auction that could give Big Oil access to more black gold than all of Mexico’s proved reserves.

The plan would be to take bids in mid-2019 to help raise billions of dollars needed to reduce the South American country’s ballooning budget deficit, said Luciano de Castro, an adviser to the president-elect who’s leaving the faculty of the University of Iowa to join Bolsonaro’s transition team. The current administration estimates the sale could raise as much as 100 billion reais ($27 billion).

“The auction would bring valuable resources to Brazil and to the government, and help on the fiscal deficit,” Castro said by phone from Iowa City, where he taught as an associate economics professor until last week.

The plan further confirms that Bolsonaro will seek energy asset sales to raise cash as he enlists pro-market hawks for his team — a stark contrast to his past views in favor of state control before running for president. Bolsonaro was elected on Oct. 28 promising to welcome foreign producers, but his closeness to nationalist military leaders cast some doubt over those pledges.

Potential …..

A bill authorizing the sale, which had stalled in congress because of Brazil’s unpredictable presidential race, is expected to be voted by the Senate this week.

Unlike other Brazilian oil auctions offering exploration rights to high-risk areas with no guarantee of commercial reserves, this sale would be for an area where state-run Petroleo Brasileiro SA has already made major discoveries. The so-called transfer-of-rights area is part of Brazil’s giant pre-salt reserves in the Atlantic Ocean.

The government transferred 5 billion barrels of those deposits to Petrobras in 2010, but the country’s oil regulator later found they hold more crude than initially estimated. The surplus that would be offered to oil majors could amount to as much as 15 billion barrels. If such volumes turn out to be commercially recoverable, it would represent about twice the proved reserves of Mexico or Norway.

The bill authorizing the sale also aims to remove the obligation for Petrobras to develop the offshore region by itself, a legacy of the leftist Workers’ Party that governed Brazil for 13 years through 2016. The party, which tried a comeback but finished second in the elections, viewed oil as a strategic industry where foreign control should be limited.

Daily Talks

Castro said he’s having daily talks with Paulo Guedes, appointed to be Bolsonaro’s finance minister, and with a group of generals gathered in Brasilia to set up the government’s agenda.

This week, he starts working with Bolsonaro’s transition team as they prepare to take office on Jan. 1. Castro, a former Brazilian Air Force lieutenant turned academic, says he will be focused on the new government’s energy program full-time, but that no official invitation for a position in the new administration has been made.

Among the energy team’s top priorities for the next weeks, Castro said, is finding a solution to keep a steady power supply for consumers in northern states served by state-controlled utility holding company Centrais Eletricas Brasileiras SA.

Eletrobras, as the holding company is known, recently sold four regional power providers buried in debt, in an attempt to improve its balance sheet. But it failed to sell power distributors Ceal and Amazonas Distribuidora, which run the risk of being shut.

“There is a chance we have a huge problem. There is a lot of concern about what will happen with these distributors,” Castro said.

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EOG Resources Reports 20% Collapse In Trinidad Gas Production

(Energy Analytics Institute, Piero Stewart, 4.Nov.2018) — EOG Resources, Inc. (EOG) reported a 20% collapse in natural gas production in Trinidad in the third quarter of 2018 (3Q:18). Looking forward to the next quarter, the scenario doesn’t look promising.

Gas production in Trinidad was 260 million cubic feet per day (MMcf/d) in 3Q:18, down 63 MMcf/d or 20% compared to 3Q:17, while crude oil production remained flat at 0.8 thousand barrels per day (Mb/d), the company reported in an official statement. On an equivalent basis, total gas and oil production in Trinidad was 44.1 thousand barrels of oil equivalents per day (Mboe/d) in 3Q:18, down 10.5 Mboe/d or 19% compared to 54.6 Mboe/d in 3Q:17.

In terms of prices, gas averaged $2.88 per thousand cubic feet (Mcf) and oil averaged $61.71 per barrel ($/bbl) in 3Q:18, up $0.84/Mcf and $22.29/bbl, or 41% and 57%, respectively.

Chart 1: Operational Update

Chart 2: Footnotes

4Q:18 PROJECTIONS

Looking forward to 4Q:18, EOG expects gas and oil production to average between 220-250 MMcf/d and 0.5-0.7 Mb/d, respectively. On an equivalent basis, gas and oil production is expected to average between 37.2-42.4 Mboe/d, the company reported.

Chart 3: Forecasts

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YPF To Invest $5 Billion Per Year During 2019-2023

(Energy Analytics Institute, Jared Yamin, 4.Nov.2018) — YPF expects to make investments of $5 billion per year during the 2019-2023 period as part of its initiative to be a leader in the production of energy in Argentina.

As a result, YPF’s hydrocarbon production is expected to grow between 5% and 7% per year, the company announced in an official statement on its website.

“YPF plans to focus on cost improvement and operational excellence, while seeking to efficiently manage the decline of conventional deposits and accelerate the development of the unconventional,” the company announced.

YPF has already begun to apply conventional technologies related to secondary and tertiary recovery at mature reservoirs with good results in pilot projects in the Neuquén basin and the San Jorge Gulf, the statement said.

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