Advantage Lithium Arranges $12 Mln Private Placement

(Energy Analytics Institute, Jared Yamin, 18.Jul.2018) – Vancouver, British Columbia-based Advantage Lithium Corp. arranged a private placement of 15,585,000 common shares of Advantage Lithium at a price of $0.77 per Common Share for gross proceeds of $12,000,450.

“We are pleased to be adding prominent institutional investors to our shareholder registry and very encouraged to see Orocobre and other insiders supporting their pro-rata equity positions in Advantage,” said Advantage Lithium Corp. President, CEO & Director David Sidoo in an official company statement.

Subscribers have been identified to fill the placement. Proceeds from the placement will destined to cover general working capital and to fund continued development and exploration activities on its lithium properties in Argentina, the company announced in an official statement.

Common shares issued pursuant to the private placement will be subject to a four month hold period from the date of closing. The private placement remains subject to the approval of the TSXV.

Focused on developing its 75% owned Cauchari lithium project, located in Jujuy, Advantage Lithium Corp also owns 100% interest in three additional lithium exploration properties in Argentina: Antofalla, Incahuasi, and Guayatayoc.

Insiders

Advantage Lithium anticipates insiders of the corporation, including Orocobre Limited, will exercise participation rights in order to maintain their existing ownership interest in the company. In connection with the private placement, the insider also intends to arrange for the sale of up to 8,571,450 common shares, held by the insider prior to the closing of the private placement, through the facilities of the TSX Venture Exchange Inc., and to use 100% of the proceeds from the swap to participate in the private placement. The swap will allow Advantage Lithium to add key cornerstone institutional investors to the company’s register of shareholders, according to the statement.

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Moody’s Upgrades Ecopetrol Rating

(Energy Analytics Institute, Piero Stewart, 18.Jul.2018) – The risk-rating agency Moody’s increased the baseline credit assessment (BCA) two notches, to ba1 from ba3 for Colombia’s state oil company.

The agency said the higher BCA was primarily due to Ecopetrol’s “solid metrics and progress in its strategy of growth and adding to reserves, with a reserves replacement index of 126% at the end of 2017,” reported Ecopetrol in an official statement, citing a Moody’s press release.

In the release, Moody’s highlighted Ecopetrol’s four areas of growth:

1. Implementation of improved recovery and infill projects,

2. Exploration,

3. Assessment of opportunities in non-conventional deposits, and

4. Inorganic growth leveraged on its strong cash position.

Moody’s also stressed “Ecopetrol’s solid liquidity and the management team’s commitment to protecting credit metrics.”

The agency maintained Ecopetrol’s rating at Baa3 with a stable outlook.

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Ecuador Non-Oil Exports Up in 2018

(Energy Analytics Institute, Jared Yamin, 18.Jul.2018) – Non-petroleum exports from the South American country rose to $5,484 million from January to May of 2018 compared to $5,149 million in the same period in 2017.

Exports of bananas and plantains, aquaculture, fish, flowers, plants, cocoa, processed products and metal mechanics accounted for 80.8% of total shipments abroad during the most recent five-month period, according to Proecuador, which conducted an analysis based on figures from the Central Bank of Ecuador.

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Ecuador Extracting Nearly 523 Mb/d

(Energy Analytics Institute, Piero Stewart, 18.Jul.2018) – The South America country is currently extracting nearly 523,000 barrels per day of crude oil, announced the daily newspaper El Universo.

Ecuador is seeking to urgently boost output after a June 2018 announcement by OPEC stipulating the increases.

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ENAP to Spend $65.2 Mln in Ecuador

(Energy Analytics Institute, Jared Yamin, 18.Jul.2018) – ENAP announced it will increase investments in three fields it operates in Ecuador.

“The new agreement stipulates an additional investment of $65.2 million for the drilling of 10 wells, which will allow the development of approximately 10.3 million barrels of oil through 2034,” announced Ecuador’s Hydrocarbons Ministry in a statement.

In 2010, ENAP signed a service contract for the operation of three blocks in Ecuador. Actual production from the blocks is some 18,000 barrels per day of crude oil. Lastly, in 2018, the company plans investments of nearly $50 million, according to the statement.

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Duque Names Maria Fernanda Suarez Energy Minister

(Reuters, 18.Jul.2018) – Colombia’s President-elect Ivan Duque on Wednesday named Maria Fernanda Suarez as mining and energy minister when he takes office in August, a role that will require her to bolster oil production to help weak economic growth and settle messy mining disputes.

Suarez, 44, is currently executive vice president at state oil company Ecopetrol. She served as director of public credit at the finance ministry and as vice president of investments for the Porvenir pension fund. She has also held senior positions at Citibank, ABN AMRO and Bank of America.

Suarez has a Masters degree in public policy from Georgetown University. She will replace German Arce.

“She has a brilliant resume in the public and private sectors,” Duque said in a statement.

As mines and energy minister, Suarez faces a difficult task as Colombia struggles to increase oil production to help increase revenue and bolster the weak economy after years of weak international oil prices.

“With her, we will promote greater diversification of national energy, efficiency and competitiveness in the sector, provide energy security for Colombia, and social and environmental responsibility in all energy mining production sectors,” Duque said.

At current rates of production, Colombia has less than six years worth of oil reserves, the energy ministry says, and urgent investment in exploration is needed to replace reserves.

Duque’s solution to dwindling oil reserves is to encourage investment in exploration, which he says could provide years more oil production, and give tax relief to the sector.

He has also pledged additional investment at state-run Ecopetrol’s refineries to allow exports of more higher-value derivatives.

Still, with the economy growing at an expected pace of just 2.7 percent this year and a budget deficit that needs to be reduced, funding such expenditure may be tough.

The Colombian Petroleum Association (ACP), says the industry needs to spend up to $7 billion a year just to keep output between 800,000 and 860,000 barrels per day.

Oil companies are already grappling with security concerns as well as local referendums – on whether to allow mining in certain areas – and environmental court rulings that have stymied major mining projects in Latin America’s fourth-largest economy.

A recent paper by the ACP, which represents private crude producers, warned that planned referendums put one-fifth of oil production at risk.

Private oil companies plan to invest up to $4.9 billion this year, ACP said, while Ecopetrol plans to spend up to $4 billion.

(Reporting by Helen Murphy Editing by Nick Zieminski)

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Guyanese Tanker Workers Undergo Safety Training

(Stabroek News, 18.Jul.2018) – Approximately 35 Guyanese Pritchard-Gordon Tankers (PGT) workers were educated on safety practices as Shell partnered with the company to host a one-day workshop yesterday.

The workshop was hosted at the Pegasus Hotel, where the workers were taken through the rounds by PGT’s Nick Griffith.

“My main focus for this seminar is to improve safety on board of our ships; not that we have a poor safety record but there are always ways of improving safety on board and it has been proven that little incidents, little triggers can show that there’s underperformance and if we have a lot of small and minor incidents then it’s possible that they can result in larger accidents which we definitely want to avoid,” Griffith told Stabroek News.

He stressed that they have not had any serious incidents in a long time but there have been recurrences of minor ones.

According to the company’s website, PGT “specialises in ocean transportation of crude oil and refined petroleum products in environmentally sensitive areas, using purpose built, shallow draft, double hull tankers.”

Griffith said that he hopes that the workers will be even more equipped than they already are to take the necessary safety precautions when they are working and to ensure that they spread the word to the other workers for a more holistic improvement.

He explained that the main topic of yesterday’s seminar was mooring, which he said is a quite dangerous operation.

“You’re using a lot of ropes under pressure and strain and those ropes, if used incorrectly, can break and the rope will snap and it will whiplash and if that rope hits a person’s leg they could lose it. If it hits them around a vital organ they can ultimately die or fall over and bang their head and it has been seen in the past that mooring is a very dangerous operation,” he said.

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Colombia Names New Mining Minister

Colombia new Mining Minister. Source: Mining Ministry.

(Energy Analytics Institute, Piero Stewart, 18.Jul.2018) – Colombia’s President elect Iván Duque named Ecopetrol Executive Vice President María Fernanda Suárez as the country’s new mining minister, according to reports in the daily newspaper La Republica.

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YPF to Sell Bonds Ending 2-Mth Debt Drought

(Bloomberg, Pablo Rosendo Gonzalez, 18.Jul.2018) – Argentine’s state-controlled oil company YPF SA has asked banks to submit proposals for a bond sale in the second half of the year to fund an aggressive growth plan for its power unit.

YPF Energia Electrica SA will try to sell at least $500 million of bonds as it seeks to double its generation capacity by 2020, according to two people with direct knowledge of the plan, who asked not to be named as talks are private.

YPF declined to comment.

This is the latest step in the company’s plan to turn its power unit, which will be re-branded as YPF Luz in the coming days, into Argentina’s third-largest energy generator. In March, YPF sold a 24.99 percent stake in the business for $275 million to General Electric Co. Negotiations for a third partner — previously identified as Blackstone Group by people familiar — have so far failed to materialize.

YPF Chairman Miguel Angel Gutierrez said in June there were no active talks for another partner, though one could be brought in as YPF Luz grows, adding that a stock-market listing was also a possibility.

Business Plan

YPF Luz is looking to invest $2 billion in renewable and thermal projects through 2020. The company is currently the fifth-largest producer in Argentina, with 1,800 megawatts generation capability with 270 employees. The two largest generators are Central Puerto SA and Pampa Energia SA.

Once YPF Luz receives offers from banks, a debt sale may take place as soon as August, the people said. The company may seek to sell more than $500 million of bonds, two of the people said, adding that market conditions for Argentine companies right now make sales that large difficult.

“It’s good to be ready to issue, but going out right now doesn’t seem a good alternative for the company,” TPCG analyst Florencia Mayorga Torres said by phone. “I can imagine they will wait until at least the fourth quarter to sell, hoping the market sentiment regarding Argentina improves.”

Most Prolific

YPF is Argentina’s most prolific bond issuer, with 35 debt securities currently outstanding, according to data compiled by Bloomberg. Its most actively traded bond, $1.5 billion of 8.5 percent senior unsecured notes maturing in 2025, yields around 8.9 percent after spiking to a high of 9.74 percent last month. With $1.2 billion in dollar-denominated bonds and other financing due in 2018, YPF may also have to come to market with another bond offering soon.

If YPF’s bond sale takes place, it may put an end to a company-debt drought that started after Transportadora de Gas del Sur SA sold $500 million of seven-year bonds to yield 6.8 percent on April 26. The drought has been so severe that Argentina’s biggest company, Telecom Argentina SA, has postponed a $1 billion bond sale four times on market volatility.

The increase in borrowing costs has also been a result of the decision by Argentina, Latin America’s third-largest market, to go to the International Monetary Fund to request a $50 billion credit facility to insure debt repayment. On June 13, the lender of last resort summarized its view on Argentina’s repay ability saying “the federal debt is sustainable but not with a high probability.”

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ENAP Names New General Manger

ENAP’s new General Manager Andrés Roccatagliata. Source: ENAP

(Energy Analytics Institute, Jared Yamin, 17.Jul.2018) – Chile’s state oil company ENAP names a new general manager.

The company selected Andrés Roccatagliata Orsini, who will assume the post on August 6, 2018, announced the company in an official statement on its website.

Roccatagliata is a commercial engineer by training and presently the Vice President of Ripley Bank in Chile and Peru.

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Petrobras Output in Campos Drops

(Reuters, Marta Nogueira, 17.Jul.2018) – Oil production by Brazilian state-led Petroleo Brasileiro SA in the Campos basin fell 1.4 percent in June over the previous month to 1.042 million barrels a day, its lowest level since 2001, as mature fields decline, according to company data.

Output has dropped 15.8 percent in 12 months due to the ageing of fields off-shore from Rio de Janeiro and Espirito Santo that account for almost half of the crude pumped by Petrobras. The decline has offset rising output from new platforms in the pre-salt region of the Santos basin.

Petrobras has looked at creative ways to handle mature fields by either selling them or entering partnerships to boost recovery efforts.

On June 14 it concluded the sale of a 25 percent stake worth $2.9 billion in the Roncador field to Equinor.

The partnership with the Norwegian company formerly known as Statoil will include measures to slow the decline of production in Roncador and raise the recovery factor.

In a move by private equity firms to gain a foothold in Brazil, Warburg Pincus and EIG Global Energy have placed bids for shallow water mature oilfields being sold by Petrobras, industry sources told Reuters last month.

The clusters located in the Campos basin off the coast of Rio de Janeiro state are likely to fetch proposals of around $1 billion in total, which would help boost a wider effort by Petrobras to sell assets and reduce debt. (Reporting by Marta Nogueira Editing by Leslie Adler)

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Cano Limon Pipeline Restarts After 180 Days

(Reuters, 17.Jul.2018) – Pumping through the Colombia’sCano Limon-Covenas oil pipeline restarted after a 180-day stoppage due to repeated attacks by Marxist ELN rebels, military and industry sources said on Tuesday.

The 485-mile (780-km) pipeline has been attacked 58 times this year by the National Liberation Army (ELN), the country’s largest active guerrilla group, according to military sources.

Apart from bombing damage, 41 illegal valves used to steal crude were found on the pipeline, said state-owned Ecopetrol SA, which owns the pipeline via its subsidiary Cenit.

Although this is one of the most extensive paralyses since the pipeline opened in the mid-1980s, activity in the Cano Limon field, operated by Occidental Petroleum Corp and located in the northern Arauca province, has not been affected.

Crude from the field had been transported using a smaller pipeline, which is still at risk of attack, sources said.

Ecopetrol which produces around 60 percent of Colombia’s 866,000 barrels a day of oil.

The ELN, considered a terrorist group by the United States and European Union, has about 1,500 combatants and opposes multinational companies, claiming they seize natural resources without benefiting Colombians.

Outgoing President Juan Manuel Santos and the ELN launched peace negotiations in 2017 but the talks, which shifted from Ecuador to Cuba in May, have been fraught. The guerrillas stepped up their attacks after the end of a bilateral ceasefire in January.

President-elect Ivan Duque, who was voted in last month, has said he will halt the talks unless the ELN declares a unilateral ceasefire and concentrates its forces into a single area.

Cano Limon has been bombed more than 1,400 times during its 32-year history. The attacks have kept it offline for the equivalent of 11 years and spilled about 2 million barrels of crude.

Writing by Helen Murphy

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Colombia’s Cano Limon Pipeline Restarts

(Seeking Alpha, Carl Surran, 17.Jul.2018) – Colombia’s Cano Limon-Covenas pipeline has resumed pumping oil after a 180-day stoppage due to repeated attacks by Marxist ELN rebels, according to loval military and industry sources.

Apart from bombing damage, 41 illegal valves used to steal crude were found on the pipeline, says Ecopetrol (NYSE:EC), which owns the pipeline.

While this was one of the most extensive stoppages ever for the 485-mile pipeline, activity in the Cano Limon field, operated by Occidental Petroleum (NYSE:OXY), reportedly has not been affected, as crude from the field had been transported using a smaller pipeline, which is still at risk of attack.

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Venezuela Claims It Plans To Raise Oil Production

(OilPrice.com, Tsvetana Paraskova, 17.Jul.2018) – Venezuela’s Oil Minister Manuel Quevedo has discussed plans with state-held oil company PDVSA to raise the country’s crude oil production in the second half of the year.

While Venezuela and its struggling oil firm claim that they are revising their production planning in order to increase the country’s oil production capacity and make this year a year of “consolidation and stabilization”, basically no one else thinks or claims that Venezuela could soon be able to reverse its steep production decline which sees it losing more than 40,000 bpd of crude oil production every month for several months now.

According to OPEC’s secondary sources in the latest Monthly Oil Market Report, Venezuela’s crude oil production dropped in June by 47,500 bpd from May, to average 1.340 million bpd last month. This compares with an average of 2.154 million bpd in 2016, and an average of 1.911 million bpd in 2017. Venezuela, for its part, has been self-reporting to OPEC much higher production figures, with the June production reported at 1.531 million bpd.

Amid plummeting crude oil production, PDVSA is said to have failed to honor its supply obligations in early June, and has started to refine imported crude oil.

The plunging oil production is nearing the psychological threshold of just 1 million bpd as early as this year, analysts and industry experts say, and don’t see how production can be restored after years of underinvestment and mismanagement.

On top of the lack of investment and an exodus of oil workers who don’t see the point of working for salaries that become worthless overnight due to the 13,860-percent hyperinflation, ConocoPhillips is looking to and is already seizing PDVSA assets in the Caribbean in a bid to enforce a court ruling that awarded the U.S. firm US$2 billion in compensation for the forced nationalization of company assets in Venezuela.

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Why Is Venezuela Still Sending Subsidized Oil To Cuba?

(OilPrice.com, Haley Zaremba, 17.Jul.2018) – In the past, oil has accounted for 96 percent of Venezuela’s exports and over 40 percent of government revenues. Now, as the nation’s economy continues to crumble amid sanctions, political strife, and low oil prices, the Venezuela’s all-important oil production is plummeting. In fact, last month’s production was the lowest in 30 years at 1.5 million barrels a day. In desperation, the struggling administration has even begun to shut down production proactively as their terminal storage meets maximum capacity and the government faces major bottlenecks at storage facilities and ports.

As oil production and exports drop, the Venezuelan government has even less money to buy essentials like food, medicines, and other basic goods–a well-established crisis growing worse all the time. The International Monetary Fund (IMF) has said that the brutal economic crisis underway in Venezuela is one of the worst in modern history. The nation’s once powerful economy has plummeted 45 percent in the last five years, and the IMF projects that it will shrink 15 percent in 2018 alone. Out-of-control inflation rates will reach 13,800 percent.

However, in the middle of the chaos — a collapsing regime, widespread hunger, medical shortages — there is one holdover from the socialist platform that autocratic President Nicolas Maduro has refused to lapse on. Despite the crisis on his own soil, Maduro continues to grant generous oil subsidies to Cuba.

The small island nation, not without its own economic issues, has been dependent on cheap Venezuelan oil since the 1990s. After the fall of the Soviet Union, comrade Cuba was in economic shambles. It was at this point that they turned to Venezuela reduced-rate crude oil, in exchange for sending skilled laborers across the Caribbean.

Now, as Venezuela sinks deeper and deeper into an extreme economic depression, few could have predicted that they would still be making good on that decade-old agreement with Cuba–even the Cubans themselves have been scrambling for new sources of cheap crude. Last year Venezuela even cut off exports to Cuba for eight months, but then once again began sending shipments of light oil to Cuba and Curacao in March 2017 at a great cost to their own refineries, which are running at just a small fraction of their capacity thanks to lack of maintenance and drained funds.

Despite all this, amazingly, there was a reported shipment of 500,000 barrels of Venezuelan crude shipped to northwestern Cuba last week, sparking an uproar back at home. Venezuela continues to supply Cuba with around 55,00 barrels of oil per day, costing the nation around $1.2 billion per year, an unthinkable generosity when 9 million Venezuelans are reporting that they can only afford to eat once a day. This money could be channeled into turning around Venezuela’s own crisis, to curb inflation and import desperately needed medicines that can no longer be found on empty Venezuelan shelves.

There is a new, albeit small, ray of hope, however, for Venezuela’s ailing economy. On July 1st Mexico overwhelmingly elected a leftist president for the first time in decades. Andres Manuel Lopez Obrador, known locally as AMLO, pledged on the campaign trail to bring Mexico’s foreign policy back to a standard of non-intervention. This would mean walking back current neoliberal Mexican President Enrique Peña-Nieto’s efforts to build a regional alliance against Maduro and put pressure on him to ease up on his increasingly despotic tendencies.

Despite public outcry against Maduro’s continued financial support of Cuba as his own people without food and desperately needed medicines, the reality is that Cuba is one of Venezuela’s last remaining allies. Even if Mexico is no longer actively working against Maduro’s regime, they won’t be supporting it the way that Cuba has and continues to do. The sad truth is that Maduro has and likely will continue to put politics over people, and cheap oil will continue to flow out of the pockets of Venezuela and into the ports of Havana, which sit ready and waiting.

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Ex-Venezuelan Energy Official Pleads Guilty

(AP, 16.Jul.2018) – A former official at a state-run electric company in Caracas, Venezuela, pleaded guilty to money laundering conspiracy relating to an alleged multibillion-dollar graft scheme in the Venezuelan oil industry.

Luis Carlos de Leon-Perez, a 42-year-old dual citizen of the United States and Venezuela, admitted his role in the scheme to bribe officials of Venezuela’s state-owned-and-controlled oil company, Petroleos de Venezuela, or PDVSA, the U.S. Attorney’s Office in Houston announced. He also pleaded guilty to conspiracy to violate the U.S. Foreign Corrupt Practices Act. He is scheduled to be sentenced Sept. 24.

De Leon admitted seeking bribes from owners of energy companies in the United States and elsewhere and directing some of the bribes to PDVSA officials.

In 2016, Venezuela’s opposition-led National Assembly said $11 billion went missing at PDVSA in 2004-2014, when Rafael Ramirez was in charge of the company. In 2015, the U.S. Treasury Department accused a bank in Andorra of laundering some $2 billion stolen from PDVSA.

Ramirez was one of Venezuela’s most powerful officials until he resigned as Venezuela’s ambassador to the United Nations in December. He was not charged in the indictment and has denied any wrongdoing, dismissing the U.S. probe into PDVSA as a politically motivated attempt to undermine President Nicolas Maduro’s socialist government.

De Leon was arrested in Spain last October and extradited to the United States after a federal grand jury in Houston returned a 20-count indictment against him, Nervis Gerardo Villalobos Cardenas, 51; Cesar David Rincon Godoy, 51: Alejandro Isturiz Chiesa, 33; and Rafael Ernesto Reiter Munoz, 39.

Cesar Rincon has already pleaded guilty to money laundering conspiracy. Roberto Enrique Rincon Fernandez, 57, of The Woodlands, Texas; and Abraham Jose Shiera Bastidas, 55, of Coral Gables, Florida, have pleaded guilty to violating the Foreign Corrupt Practices Act and await sentencing. Prosecutors say they paid bribes in exchange for contracts to build electricity generators for PDVSA at a time Venezuela was suffering widespread power outages.

In all, 12 suspects have entered guilty pleas relating to the investigation, the Justice Department said.

Villalobos, Ramirez’s former deputy at PDVSA; Reiter, PDVSA’s former corporate security chief, and Isturiz all await trial on charges of money laundering and money laundering conspiracy. Villalobos also is charged with conspiring to violate the Foreign Corrupt Practices Act. He and Reiter remain in Spain awaiting extradition, while Isturiz still has not been arrested.

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Plateau Energy Peru Unit Finds Lithium Resources

(Reuters, 16.Jul.2018) – Canadian miner Plateau Energy Metals Inc’s Peru unit Macusani Yellowcake S.A.C. said on Monday it has found 2.5 million tonnes of high-grade lithium resources and 124 million pounds of uranium resources in its Falchani hard rock deposit in the region Puno.

Ulises Solis, general manager of the unit, told a news conference that it was unclear how much of the lithium resources would eventually end up being classified as economically viable reserves.

Solis said a feasibility study would reveal that next year, and that a proposed $800 million, underground lithium-uranium mine could be built within a year to start production in 2020.

The announcement is the latest in a flurry of plans to expand or build new lithium mines amid forecasts for massive demand from the electric vehicle industry, which uses lithium in car batteries.

Plateau has drilled 3,000 meters or about 15 percent of the surface of its exploratory concessions in Puno, which are located at an altitude of about 4,500 meters in the Andes, Macusani said in a statement.

It plans to drill another 10,000 meters by early next year, Laurence Stefan, Plateau’s chief operating officer, said at the press conference.

Plateau headquarters did not immediately respond to a request for comment.

The company is working with the government to develop clear rules for mining radioactive materials that are still lacking in Peru, Solis said. (Reporting By Marco Aquino)

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NGC loses SIS challenge in Privy Council

(Trinidad and Tobago Newsday, 16.Jul.2018) – State-owned National Gas Company has lost an appeal in its multi-million claim against Super Industrial Services (SIS) and another company as the Privy Council today dismissed an appeal in which it challenged a decision to strike out its lawsuit on the ground that it failed to meet strict timelines for civil cases set in the Civil Proceedings Rules (CPR).

In February last year, the Court of Appeal, in a majority ruling, agreed with SIS’ contention that the judge was not actively managing the case when NGC failed to adhere to the rules in its prosecution of its claim against SIS and RFRL to set a case management conference after the lawsuit was filed in December 2015, as required by the rules.

In its lawsuit, NGC sought an order to prevent the dissipation assets in the contract dispute over the controversial Beetham Water Treatment Plant.

NGC had also btained a freezing order up to $180 million against SIS’ assets and an injunction restraining RFRL from dealing with certain assets. The freezing order was granted pursuant to arbitration proceedings which are still ongoing.

The dispute between the parties started in 2015 after delays in the US$162,055,318.77 project, which was due to be completed on October 21, 2016.

The contract was eventually terminated on November 24, 2016, after SIS reportedly informed NGC it was unable to continue with the work.

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New Fortress Invests $400 Mln in Pilot Project

(Jamaica Observer, 15.Jul.2018) – New Fortress Energy announced on Friday a new partnership with Jamaica Urban Transit Company (JUTC) for the introduction of the first natural gas-powered buses in Jamaica, which will significantly reduce emissions, pollution, maintenance and fuel costs.

As part of the partnership with the Government of Jamaica, New Fortress Energy will fund the pilot project for the conversion of five buses operated by JUTC to run on clean-burning liquefied natural gas (LNG) by early 2019.

The pilot programme, which consists of five new LNG-powered buses and a fuelling station in Kingston, is estimated to cost close to $400 million.

The new buses will reduce emissions and pollution and are expected to operate more efficiently, furthering the Government’s efforts to achieve energy diversification for sustainable economic growth and better protect the environment.

“We’re delighted to partner with the Government of Jamaica to introduce clean, reliable and affordable natural gas to the public transportation sector,” said Wes Edens, founder and chairman of New Fortress Energy.

“This partnership will be a catalyst for the transportation industry to reduce harmful emissions and pollution by using cleaner fuels. Jamaica continues to set an example with transformative energy investments that help grow the economy and protect the environment.”

Meanwhile, Minister of Transport and Mining Bobby Montague said, “We look forward to the conclusion of this pilot, using LNG-powered buses. We are very encouraged and excited about this groundbreaking initiative that will greatly enhance our environment. The Government is committed to support, create and enable the implementation of this pilot project. We anxiously await the results, so that a proper technical review can be done and chart a new pathway.”

He further noted that New Fortress Energy is funding five new buses so that the results of the pilot programme are not skewed by other factors.

The buses will be deployed across the system, and the ministry, along with JUTC stakeholders will be looking at the results to assess the success and viability.

In agreeing with the Minister, Paul Abrahams, managing director for JUTC, said; “This is indeed a significant milestone for our transport system and importantly, for our environment. We are very excited about it and look forward to the results post-pilot.”

Known as one of the safest, non-polluting and non-toxic fuels, LNG is an odorless fuel that offers significant energy efficiencies and emission reductions over alternative fossil fuel sources. It is cooled to a liquid form at -260°F and stored at atmospheric pressure, making it safe to handle and transport across the world.

The introduction of LNG as a clean and safe alternative fuel source in Jamaica is expected to lower energy costs and reduce environmental impact.

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US to Become World’s Top Oil Producer

(AP, 15.Jul.2018) – The United States has nosed ahead of Saudi Arabia and is on pace to surpass Russia to become the world’s biggest oil producer for the first time in more than four decades.

The latest forecast from the US Energy Information Administration predicts that US output will grow next year to 11.8 million barrels a day.

“If the forecast holds, that would make the US the world’s leading producer of crude,” says Linda Capuano, who heads the agency, a part of the US Energy Department.

Saudi Arabia and Russia could upend that forecast by boosting their own production. In the face of rising global oil prices, members of the Organization of the Petroleum Exporting Countries cartel and a few non-members, including Russia, agreed last month to ease production caps that had contributed to the run-up in prices.

President Donald Trump has urged the Saudis to pump more oil to contain rising prices. He tweeted on June 30 that King Salman agreed to boost production “maybe up to 2,000,000 barrels”. The White House later clarified that the king said his country has a reserve of 2 million barrels a day that could be tapped “if and when necessary”.

The idea that the US could ever again become the world’s top oil producer once seemed preposterous.

“A decade ago, the only question was how fast US production would go down,” said Daniel Yergin, author of several books about the oil industry, including a history, The Prize. The rebound of US output “has made a huge difference. If this had not happened, we would have had a severe shortage of world oil,” he said.

The United States led the world in oil production for much of the 20th century, but the Soviet Union surpassed America in 1974, and Saudi Arabia did the same in 1976, according to Energy Department figures.

By the end of the 1970s, the USSR was producing one-third more oil than the US; by the end of the 1980s, Soviet output was nearly double that of the US.

The last decade or so has seen a revolution in American energy production, however, led by techniques including hydraulic fracturing, or fracking, and horizontal drilling.

Those innovations – and the break-up of the Soviet Union – helped the US narrow the gap. Last year, Russia produced more than 10.3 million barrels a day, Saudi Arabia pumped just under 10 million, and the US came in under 9.4 million barrels a day, according to US government figures.

The US has been pumping more than 10 million barrels a day on average since February and probably pumped about 10.9 million barrels a day in June, up from 10.8 million in May, the energy agency said Tuesday in its latest short-term outlook.

According to the Energy Department, the US edged ahead of Saudi Arabia in February and stayed there in March; both trailed Russia.

Capuano’s agency forecast that US crude output will average 10.8 million barrels a day for all of 2018 and 11.8 million barrels a day in 2019. The current US record for a full year is 9.6 million barrels a day in 1970.

The trend of rising US output prompted Fatih Birol, executive director of the International Energy Agency, to predict this spring that the US would leapfrog Russia and become the world’s largest producer by next year – if not sooner.

One potential obstacle for US drillers is a bottleneck of pipeline capacity to ship oil from the Permian Basin of Texas and New Mexico to ports and refineries.

“They are growing the production, but they can’t get it out of the area fast enough because of pipeline constraints,” said Jim Rittersbusch, a consultant to oil traders.

Some analysts believe that Permian production could decline, or at least grow more slowly, in 2019 or 2020 as energy companies move from their best acreage to more marginal areas.

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Venezuela’s Maduro Introduces Petro in Turkey

(Energy Analytics Institute, Piero Stewart, 14.Jul.2018) – Venezuela’s President Nicolás Maduro introduced ‘el petro’ during a presentation in Turkey.

Maduro reiterated that the Petro crypto-currency is based or backed by an entire block located in Hugo Chavez Orinoco Heavy Oil Belt, or the Faja, which contains more than five billion barrels of certified oil reserves, reported PDVSA in an official statement.

Its value is equivalent to the price of an oil barrel, he said.

Maduro added that Venezuela offered numerous opportunities to investors and invited businessmen to jointly work on oil, gas and mining projects in the South American country.

“I place it at your disposal to strengthen relations and accelerate investments between Venezuela and Turkey,” he added during meetings with representatives from Turkish private and public companies.
***

Venezuela, Turkey Discussion Oil Supply

(Energy Analytics Institute, Piero Stewart, 14.Jul.2018) – Venezuela’s President Nicolás Maduro announced the two countries could soon sign a new oil agreement.

“A new agreement thereon shall be signed pretty soon,” reported PDVSA in an official statement, citing Maduro.

No specifics were provided in the statement.

***

Machado Says Venezuela “Show Can’t Go On”

(Energy Analytics Institute, Piero Stewart, 13.Jul.2018) – Opposition leader María Corina Machado said the “show can’t go on” during a video broadcast from Punto Fijo.

The leader’s video in reaction to a recent oil spill at PDVSA that the state oil company blamed on workers.

“A criminal regime that transformed PDVSA from one of the companies with the best industrial safety indices into one of the most dangerous in the world, now pretends to blame the workers for this new spill,” wrote Machado in an official Twitter post. “It’s monstrous. My support for oil workers. Resist!,” she added.

***

Ecuador Court Upholds $9 Bln Chevron Ruling

Oil site in Ecuador. Source: AP

(AP, 13.Jul.2018) – Ecuador’s highest court has upheld a US$9.5 billion judgment against oil giant Chevron for decades of rainforest damage.

Plaintiffs celebrated the constitutional court’s decision announced Tuesday night, saying it should pave the way for indigenous tribes to receive compensation for oil spills that contaminated groundwater and soil in their Amazon home.

“There’s no doubt now that we’ve won this long legal battle,” said Pablo Fajardo, the plaintiffs’ lawyer.

But the ruling is largely symbolic, as Chevron no longer operates in the South American country. That means Ecuador’s government will have to pursue assets owned by the San Ramon, California-based company in foreign courts, where it so far has had little luck.

Chevron had long argued that a 1998 agreement Texaco signed with Ecuador after a US$40-million clean-up absolves it of liability. Chevron bought Texaco in 2001.

Last week, an appeals court in Argentina rejected an attempt by Ecuador to collect on its award, echoing earlier rulings by courts in Canada, Gibraltar and Brazil.

In 2014, a US court of appeals in New York also denied Ecuador’s request, arguing that the original judgment was obtained through bribery, coercion and fraud.

Chevron said in a statement that the high court’s decision “is consistent with the pattern of denial of justice, fraud and corruption against Chevron in Ecuador”.

It added that Chevron “will continue to work through international courts to expose and hold accountable those responsible for the judicial fraud and extortion against Chevron in Ecuador”.

In an added twist, the American lawyer, who for years represented Ecuador in the matter, was barred on Tuesday from practising law in New York state.

The New York state appeals court found Steven Donziger guilty of professional misconduct, saying that in his appeal of the 2014 ruling, he did not challenge the judge’s findings of bribery, witness tampering, and the ghostwriting of a court opinion.

The findings “constitute uncontroverted evidence of serious professional misconduct which immediately threatens the public interest,” the appeals court said in announcing its suspension of Donzinger.

Donzinger did not immediately respond to an emailed request for comment.

***

Pemex, Energy Offices to be Moved

(Natural Gas Intelligence, Ronald Buchanan, 13.Jul.2018) – Mexico President-Elect Andres Manuel Lopez Obrador aims to decentralize the government in a sweeping plan to ease the congestion of population, buildings, vehicles and pollution in the “megalopolis” of Mexico City, a strategy likely to impact the country’s energy sector from top to bottom.

The government agencies set to be relocated to the provinces include state-owned Petroleos Mexicanos (Pemex); state power utility Comision Federal de Electricidad (CFE); energy ministry the Secretaría de Energía (Sener), as well as the energy regulators, the Comision Nacional de Hidrocarburos (CNH) and the Comision Reguladora de Energia (CRE).

Under the plan, Pemex headquarters would be moved from its 51-story Mexico City tower to Ciudad del Carmen on the southeastern Gulf Coast, a base of support that supplies operations in the Sound of Campeche, where most oil and gas is produced.

Sener, CNH and CRE are slated to be moved to Villahermosa, capital of Tabasco, the state where Lopez Obrador was born.

The age of the internet should ease the transition. These days, almost all government business is conducted online.

Since the 2013-14 energy reform, sessions of the CNH and CRE have been broadcast live by Internet, and the rules of both regulators insist in keeping a distance from representatives of the companies involved in auctions.

In order to ensure transparency and avoid any hint of corruption, CNH and CRE commissioners have to provide reports to their superiors of meetings with representatives of companies, rather as diplomats of the Western and Soviet blocks did whenever they met each other at cocktail parties during the Cold War.

The Federal District of Mexico City and its surrounding conurbation currently houses a population of close to 20 million.

Public transportation is far from adequate and roads are often gridlocked. Working hours in Mexico are the longest in the Organization for Economic Co-operation and Development, aka OECD. Many people spend four hours a day — two each way — between their homes and their workplaces.

Speaking in a video produced by his Morena party, Lopez Obrador said that the decentralization plan should help improve the quality of life in the capital as well as providing more equal opportunities for the nation’s regions.

“There are islands of rapid growth in the country, but they are surrounded by areas that have been abandoned,” he said.

Yet another reason, he added, was the susceptibility of the capital to earthquakes. About 10,000 people died in the 1985 earthquake. Since then, stricter building regulations and the use of more sophisticated technology have improved safety standards. Even so, two severe tremors last September caused at least 465 deaths, and 180,000 homes were destroyed in the capital and in southern Mexico.

The plan to decentralize is to be executed steadily, in a process that is likely to take almost all of the six years of the upcoming administration and with a minimum of disruption, according to Monterrey-based businessman Alfonso Romo, who Lopez Obrador has named to be his chief of staff.

Under the plan, five key ministries would remain in Mexico City: Gobernacion, the Interior ministry; the Finance and Foreign ministries; the ministries of Defense (Army and Air Force), and the Navy.

López Obrador has said on several occasions that, as president, he will live and work in the National Palace in the historic center of Mexico City, where critics claim his presence will make even worse the gridlock that often besets the area.

For decades, Mexican presidents have worked and lived in the relatively leafy surroundings of Los Pinos, the Mexican equivalent of the White House.

The Pemex tower, in a nondescript but central barrio of Mexico City, is now one of several tall buildings that dot the Mexico City skyline. But when it was built in the early 1980s it was by far the nation’s largest building and a symbol of Mexico’s huge oil boom that ended in an equally spectacular financial crash and the nationalization of the Mexican banks.

The corporate offices of the CFE are in a much more elegant part of central Mexico City than where the Pemex tower is located. The Energy Ministry is currently housed in the south of the capital, near the Plaza de Toros, the largest bullring in the world.

***

Guyana’s Doors Open for Caricom Investors

(CMC, 13.Jul.2018) – President David Granger has extended an invitation to Caricom member states to invest in the oil sector and other sectors of Guyana.

Speaking on the sidelines of the 39th Meeting of the Conference of Heads of Government of the Caribbean Community (Caricom) here recently, Granger said, “The vision that I have for the Caribbean Community is that all parts of the Caribbean must see this new resource as parts of the community, and they should be willing to share their expertise with us and they should be willing to invest in it. I would like to affirm that the doors of investment, the doors of infrastructure, the doors of information technology, the doors of innovation will be open to our colleagues in the Caribbean.”

The president also placed on record his Government’s willingness to collaborate with stakeholders in Trinidad and Tobago’s oil and gas industry as Guyana becomes a major oil producer with first oil expected in 2020.

“As you know, Guyana is still putting in place the legislative framework, the regulatory framework; we are looking to recruit skilled persons in that sector. It is still too soon to tell. I look forward to working with the Caribbean. Trinidad has a long-established oil and gas industry and I would feel that our Caribbean colleagues would be able to participate in everything that Guyana does — agriculture, timber, gold, diamond mining,” President Granger disclosed.

Following eight major oil finds, ExxonMobil is set to begin production in early 2020.

***

Ecuador’s ITT Output Around 60 Mb/d

(Energy Analytics Institute, Piero Stewart, 13.Jul.2018) – Oil production from the Ishpingo, Tambococha and Tiputini or ITT field is around 60,000 barrels per day.

With additional work activities, production from ITT is expected to reach up to 70,000 b/d, reported the daily newspaper El Universo, citing PetroAmazonas EP Manager Álex Galárraga. The official didn’t say when production is expected to approach these levels.

Galárraga added that the state company continues to work with the respective to obtaining the environmental license for Ishpingo, which isn’t likely to be obtained until September of 2018, he explained.

***

CNH Says Mexico Must Reduce Oil Dependence

(Energy Analytics Institute, Ian Silverman, 13.Jul.2018) – Mexico must reduce its dependence on the United States in regards energy issues.

The country can achieve this goal by increasing its refining capacity, reported the daily newspaper La Jornada, citing National Hydrocarbons Commission (CNH by its Spanish acronym) President Juan Carlos Zepeda. The official added that the next administration has a good possibility to fulfill the objective of assisting Mexico gain greater energy autonomy.

Zepada agreed that construction of a new refinery to assist reduce gasoline imports – which currently represent 75% of demand in Mexico and come entirely from the U.S. – would assist Mexico in terms of gaining energy autonomy.

The official also said strategies should be sought to stop importing 85% of the natural gas used by Mexico, and which at the moment also comes in great part from the U.S.

***

Indigenous Groups Await Chevron Payments

(Energy Analytics Institute, Ian Silverman, 12.Jul.2018) – Indigenous groups in Ecuador that were affected by activities of San Roman, California-based Chevron in the country continue to await payment from the oil giant.

Ermel Chávez, from the Amazon Defense Front, recently spoke about the issue during a press conference in Ecuador.

***

FDI in LAC Region Falls for Third Straight Year

(Energy Analytics Institute, Ian Silverman, 12.Jul.2018) – Foreign Direct Investment (FDI) in Latin America and the Caribbean fell for a third straight year in 2017, reported the Economic Commission for Latin America and the Caribbean or CEPAL by its Spanish acronym.

The details were revealed in CEPAL’s annual report titled “FDI in Latin America and the Caribbean 2018.”

***

Bolivia, Argentina to Meet Over Gas Volumes

(Energy Analytics Institute, Ian Silverman, 12.Jul.2018) – The Bolivian government is still analyzing Argentina’s request to increase natural gas export volumes during the winter season and reduce them in summer.

Meetings between officials from Bolivia and Argentina are expected in coming weeks to discuss the proposals, reported the daily newspaper La Razón, citing Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) President Óscar Barriga.

***

ANCAP and ALUR Combined $160 Mln Credits

(Energy Analytics Institute, Ian Silverman, 12.Jul.2018) – Two resolutions from the Uruguayan government late last month will authorize Ancap and ALUR to access credits for up to $160 million.

In 2018, Uruguay’s state oil company Ancap plans to overcome its $136 million financial indebtedness by renewing it for an amount of up to $90 million, reported the daily newspaper El Pais.

Additionally, Ancap solicited three loans with banking institutions for up to $70 million for its subsidiary Alcoholes del Uruguay (ALUR) with the purpose of canceling loans due for the same amount, reported the daily.

***

Eni Hat-trick at Mackenzie’s Annual Awards

(Wood Mackenzie, 12.Jul.2018) – Italian major Eni won its third consecutive Most-Admired Explorer title, an accolade awarded in conjunction with Wood Mackenzie’s industry-leading annual Exploration Survey.

Eni’s chief exploration officer, Luca Bertelli, accepted the award – which Eni has won for three years in a row – at the inaugural Wood Mackenzie Exploration Awards ceremony, held in conjunction with the subsurface and consultancy business’ annual Exploration Summit on 20 June, 2018.

Dr Andrew Latham, Vice President, Global Exploration Research, at Wood Mackenzie, said: “For the past 10 years, Wood Mackenzie has named the industry’s Most-Admired Explorer after collating the results of our industry-leading annual exploration survey. The survey canvasses views across the sector, marrying Wood Mackenzie’s understanding of the sector with industry opinion.

“We ask respondents to name the explorer they most admire. The award typically recognises big discoveries, ideally as operator and in new frontiers. With this year’s award, Italy’s Eni seals a hat-trick, having won in 2016 and 2017.”

Wood Mackenzie’s Exploration Awards build on our Exploration Survey. This year we broadened our approach, naming the outstanding companies in the sector, recognising the challenges and successes of the past year, and celebrating their success at a gala dinner.

Four other awards were announced at the event:

— Discovery of the Year (2017)

— New Venturer of the Year

— Best Explorer of Unconventional Plays

— Best E&P Explorer

Wood Mackenzie also honoured Bobby Ryan, who recently retired from Chevron, with a Lifetime Achievement Award for his contribution to global exploration.

While 2017 was a good year for exciting new discoveries, Talos Energy’s Zama find, offshore Mexico, stood out, earning them Discovery of the Year. Talos’ partners are Premier Oil and Sierra Oil & Gas. Zama is a big find in a new play and looks set to be a company-maker. It is also one of the first foreign-operated discoveries in Mexico since international oil companies returned to the country after an absence of over 70 years. This award was made based on our survey of exploration industry opinion, which saw more than 200 senior business leaders and experts vote for the discovery they consider to be the most exciting of the year.

The New Venturer of the Year award reflects the need for explorers to continually renew their portfolio. Wood Mackenzie has long argued that the capture of good acreage is the key differentiator in exploration performance. This award was based on Wood Mackenzie’s survey results and our analysis of licensing and farm-in deals over the year. Both our research and wider industry opinion reached the same conclusion. Our winner is ExxonMobil, a company prepared to place big bets on high-impact opportunities in both proven, emerging and frontier plays.

With the phenomenal growth of US shale plays, onshore exploration has become a key area of interest.  For the Best Explorer of Unconventional Plays award, we looked at company efforts at opening and extending unconventional plays.  When we compare our research with our survey results, where we asked which unconventionals explorer was most admired, EOG Resources was the clear winner.  EOG has grown its output to over 650,000 barrels of oil equivalent per day, due in large part to its exploration and development of US unconventional resources.

The Best E&P Explorer award reflects the tremendous contribution the smaller and mid-sized companies make to the sector. The award is again based on a mix of our research and our survey. Once more, both industry and Wood Mackenzie’s analysis reached the same conclusion. Our winner, Kosmos Energy, achieved the largest net resources found last year of any company and received the most votes in our survey.

Bobby Ryan, who recently announced his retirement from Chevron after a long and distinguished career at the helm of its global exploration business, received a Lifetime Achievement Award. Mr Ryan led Chevron’s global exploration business following its merger with Texaco in October 2000.

Dr Latham told guests at the gala dinner: “The list of discoveries made during his long tenure is impressive. Among the operated finds made during his watch were Wheatstone in Australia, Usan in Nigeria, Tahiti in the Gulf of Mexico and Rosebank in the UK.

“The Gulf of Mexico proved a particularly rich seam with St Malo, Big Foot, Jack, Blind Faith and Chevron’s latest discovery, Ballymore. Wood Mackenzie estimates that the total gross oil and gas reserves in discoveries made on Bobby’s watch is close to 30 billion barrels.”

He added: “We are pretty sure that his subsequent tenure lasting over 17 years sets the record for length of service at any major. Bobby is a worthy recipient of the award.”

***

No End In Sight For Venezuela’s Oil Crisis

(OilPrice.com, Nick Cunningham, 12.Jul.2018) – Venezuela’s oil production plunged by another 47,500 barrels per day (bpd) in June, compared to a month earlier. An exodus of workers and field shut downs were reported for the month, pointing to a grim near-term future that could see total production dip below 1 million barrels per day (mb/d) by the end of the year.

According to OPEC’s secondary sources, Venezuela’s output fell to 1.34 mb/d in June, which, aside from a brief interruption of output due to a strike in 2002-2003, puts production at its lowest point in nearly seven decades.

The problems plaguing Venezuela’s oil industry are well-publicized, but the situation continued to deteriorate in June. Two officials from state-owned PDVSA told Argus that workers are fleeing operations. “More production wells are being shut down, the skilled oilfield labor force declined in all upstream divisions by at least a combined 1,000 workers in June, and scheduled maintenance continues to be postponed,” a PDVSA official from the western division said.

A separate official from the eastern division told Argus that production continued to fall in the first 11 days of July as more rigs were scrapped and more wells were shut down. PDVSA is “dying operationally,” the official said.

You wouldn’t know that if you went by government statistics, however. While OPEC’s secondary sources estimated average output at 1.34 mb/d in June, the Venezuelan government reported production figures at 1.531 mb/d, flat from May levels. Those figures defy belief and are not credible, but PDVSA’s leader, Manuel Quevedo, is “cooking the official data sent to OPEC to hide the truth about [PDVSA] from president Maduro and from the public,” an official from the energy ministry told Argus.

Venezuela’s production is now down nearly 800,000 bpd from a year ago, and falling.

“Output from Venezuela’s ageing conventional oil fields is in rapid decline and upgraders operated by foreign joint-venture partners in the vast Orinoco heavy oil belt are malfunctioning and running below capacity,” the IEA said in its latest Oil Market Report. “At the end of June, PDVSA and Chevron restarted the 210 kb/d Petropiar upgrader after almost a month-long closure.”

“In total, upgrading projects in Venezuela can turn roughly 600 kb/d to 700 kb/d of extra-heavy Orinoco crude into export grades. Recently they have been largely out of action due to bottlenecks at loading facilities.”

China has decided to invest $250 million to help slow the decline underway in Venezuela, but it isn’t at all clear that that amount of money will have a significant impact. After all, China has poured $50 billion in loans into Venezuela over the past decade, and the trajectory of Venezuelan oil production has only gone in one direction.

There is also the possibility that the June figures might look a bit better than should be the case because PDVSA drained inventories. Reuters reports that Venezuela’s crude exports to the U.S. recovered a bit in June, compared to May, but that PDVSA drew down on stocks in Curacao and Aruba ahead of ConocoPhillips’ seizure of the facilities. As Conoco presses its case against PDVSA, Venezuela has largely lost control of its facilities on those Caribbean islands.

There is no shortage of reasons to believe the situation will continue on a downward spiral. Oil wells are being shut down and the worker exodus will put an even deeper strain on operations. More than $9 billion in bond payments fall due this year, and it is hard to imagine the government and PDVSA marshalling the resources to meet those payments. Inflation is set to top some 13,000 percent this year, a mind-boggling figure, while GDP could shrink by a further 15 percent. By the end of the year, GDP will have contracted by nearly 50 percent since 2013.

The lack of payment to PDVSA’s joint venture partners threatens to accelerate production losses. The rig count fell to just 26 in June, according to Argus, down from 70 in the first quarter of 2016.

Venezuela has been losing around 50,000 bpd each month so far this year, which means it could lose another 300,000 bpd before the end of 2018. The losses are tightening the oil market, and Saudi Arabia is now forced to ramp up production – and cut into its spare capacity – to make up for the declines.

****

TDI Operating One Rig in Mexico

(Energy Analytics Institute, Jared Yamin, 12.Jul.2018) – Trinidad Drilling Ltd. announced its international joint venture (TDI) currently has two rigs operating, one in Bahrain and one in Mexico.

Trinidad Drilling Ltd. – which provides contract drilling and related services in Mexico – revealed the details in an official statement, but provide details about the Mexican rig.

***

Mexico’s Gov’t to Focus on Boosting Fuel Output

(Reuters, 12.Jul.2018) – Mexico’s next energy agenda will prioritize increasing gasoline and diesel production and later decide on possible changes to the industry reform championed by the outgoing government, according to a top aide to President-elect Andres Manuel Lopez Obrador.

Rocio Nahle, tapped by Lopez Obrador to be energy minister, told local outlet Aristegui Noticias on Wednesday that the country’s next government will address the “energy imbalance” in which Mexico produces less fuel at home and turns to imports to meet national demand.

Lopez Obrador won a landslide victory in the July 1 election and will take office in December.

“We will be assessing if any legislative changes (to the oil opening) are necessary,” said Nahle, adding that the transition team would not immediately propose changes to the existing laws.

The comments by Nahle, who also won a Senate seat in the election, are in line with Lopez Obrador’s pledge last weekend to end Mexico’s massive fuel imports over the first three years of his term.

So far this year, Mexico has imported an average of about 590,000 barrels per day (bpd) of gasoline and another 232,000 bpd of diesel, almost all of it from the United States, as gasoline output at the country’s six refineries owned and operated by state-run Pemex has halved since 2013, the first year of outgoing President Enrique Pena Nieto’s term.

Domestic gasoline output barely meets a quarter of national demand from the country’s legions of motorists.

During the election campaign, Lopez Obrador was sharply critical of the Pena Nieto’s policy to allow foreign and private oil companies to operate fields on their own for the first time in decades, ending Pemex’s monopoly.

The overhaul was designed to reverse a decade-long oil output slide and has already resulted in competitive auctions that have awarded more than 100 exploration and production contracts, deals Lopez Obrador has repeatedly promised to review for signs of corruption.

Nahle said the next government will also begin construction of at least one new oil refinery, which she expects to be operating by the halfway point of Lopez Obrador’s six-year term.

So far this year, Pemex’s existing refineries are producing an average of 220,000 bpd of gasoline and about 125,000 bpd of diesel, according to company data.

***

AMLO Seeks to End Mexico’s Energy Dependence

(TeleSur, 11.Jul.2018) – Mexico’s national energy demand has become highly dependent on the United States.

Mexico’s next energy minister under president-elect Andres Manuel Lopez Obrador has said that the new administration’s energy agenda will be to increase domestic gas and diesel production and reduce dependency on foreign imports.

Rocio Nahle, appointed by AMLO for the energy ministry, said in an interview with a local paper that AMLO’s government will address the “energy imbalance” that makes it dependent on foreign imports to meet national demand.

AMLO has previously made pledges along this line during and after the election, saying that ending the massive fuel imports would be a priority for his first three years.

Mexico has imported an average of 590,000 barrels per day of gasoline and 232,000 per day of diesel, almost all of which comes from the United States. While the United States profits on gas sales to its neighbor, Mexico’s domestic production has decreased by half since the first year of outgoing President Enrique Peña Nieto’s term.

Today, gasoline output by Mexican state oil company Pemex meets less than a quarter of national demand, putting Mexico’s energy system in a situation of deep dependence on the United States.

During the election campaign, Lopez Obrador was sharply critical of the Pena Nieto’s policy to allow foreign and private oil companies to operate fields on their own for the first time in decades, ending Pemex’s monopoly.

Nahle said the next government will also begin construction of at least one new oil refinery, which she expects to be operating by the halfway point of Lopez Obrador’s six-year term.

AMLO also outlined several legislative priorities on Wednesday, particularly ending presidential legal immunity, and slashing the presidential salary.

The incoming administration would also put forward a law to remove obstacles to holding public consultations, as well as create a mechanism for recalling the president, he said.

Lopez Obrador said during the campaign he could hold public consultations on issues ranging from the government’s opening of the energy sector, the construction of Mexico City’s new airport, gay marriage and even his performance as president.

***

Argentina Affirms Liberalization Of Fuels Market

(Institute of the Americas, Jeremy Martin, 11.Jul.2018) – Directly answering a question during an interview in a local media program about the issue of fuels market and pricing, newly-installed Energy Minister Javier Iguacel said: “There is no restriction. There is a free market.” The statement, on its face, does not appear to be overly dramatic, but it is quite important when considered against the backdrop of the last several weeks in Argentina.

In addition to the change at the top of the energy ministry, the government’s negotiations with the IMF, and a major transport strike at the end of June, the Macri administration had felt immense pressure to revise if not reverse several areas of its economic reform agenda that many economists and pundits argued were exacerbating the country’s inflation woes.

Nowhere was this more important than in the energy sector and the issues of tariff adjustments and the liberalization of the fuels market that went into effect at the end of 2017 but were thrown into some disarray when former Minister Aranguren signed a so-called stability pact with several fuel retailers to temporarily freeze fuel prices in an effort to alleviate inflationary pressure.

Indeed, the change of Aranguren for Iguacel was almost certainly a response to political and public relations pressure, but also in favor of new leadership that would again drive forward with Macri’s liberalization plans and objectives. This point was affirmed when, during the same interview, Minister Iguacel spoke very assuredly on how he intended to manage the fuel market challenge: “a policy of total interventionism, where two or three people set prices in a small room has generated many distortions.”

Minister Iguacel has also begun to reorganize key staff and officials in the Ministry of Energy, replacing in many instances holdovers from Aranguren’s tenure particularly those viewed as close to the former minister and part of some of the decisions in his final months with regards to market interventions.
The most notable change to-date has been Minister Iguacel’s bringing aboard Mario Dell’Acqua, the president of Aerolineas Argentinas, the state-run airline. Dell’Acqua will take over as the president of the government-run and ministry of energy-directed Integración Energética Argentina SA (IEASA). In simplistic terms, IEASA is the agglomeration of state energy enterprises that had been assembled under the previous Kirchner governments and nominally under the banner and state firm ENARSA. Dell’Acqua’s role at IEASA will be crucial in unwinding several state-owned energy assets, investments in transmission company Transener and managing bidding for new electric generation capacity, particularly for Buenos Aires.

Nor did Iguacel miss an opportunity to criticize the energy policies, manipulation and intervention in the sector by Macri’s predecessor forcefully noting, for what could be argued was the umpteenth time, that many of the market issues and challenges faced by Argentina were wrought by decisions, lack of decisions or worse, corruption, from the previous administrations.

But beyond those critiques, the more recent developments surrounding the lack of competition, or true liberalization of the market, has also reared its ugly head with regards to supply. In recent weeks certain retailers and fuel stations have been without supply and blame has been aimed at oil companies, the government’s policies, and the market. But it is precisely the latter, or insufficient development of the market that the Macri administration has long argued is the reason for any supply challenges for oil and gas and fuels in Argentina.

Meanwhile, the president of Argentina’s Confederation of Hydrocarbons Trade Entities, or CECHA, Carlos Gold took more direct aim and placed the supply and pricing challenges at the feet of local oil companies who, he argued, have distorted the market by placing a quota on fuel delivery and when the quota is exceeded there is a price differential.

Since taking over the reorganized Ministry of Energy last month, Minister Iguacel has begun to patiently assemble his vision for managing the energy ministry and by extension the energy policy outlook for Argentina under President Macri. The latest statements and very clear indications with regards to the debate swirling around the fuels market underscore that the Macri government remains committed to its energy reform agenda. Moreover, the pressure from inflation, demands and criticisms from friends and foes to perhaps slow down the reform process will not cause a reversal at this point.

***

The Caracas Metro: Still Standing For Now

(Energy Analytics Institute, Piero Stewart, 11.Jul.2018) – The subway system serving the Venezuelan capital is on the verge of collapse due to lackluster maintenance amid ongoing economic, political and humanitarian crises.

Daily occurrences now include but are not limited to: armed robberies, shootings, petty thefts, fights, and of course power outages. It wasn’t always this way. We’re not pointing figures, but we beg to ask the question: who’s to blame?

***

PDVSA Gas Replaces Section of Gas Pipeline

Workers repairing a section of the natural gas pipeline. Source: PDVSA

(Energy Analytics Institute, Piero Stewart, 11.Jul.2018) – PDVSA Gas announced completion of work on the Cariaco-Margarita Wharf section of the Northeast G / J Gas José Francisco Bermúdez pipeline.

Work on the section entailed removing and replacing a 48 meter long section of the 16-inch diameter pipeline that transports natural gas from Sucre state to Nueva Esparta state, announced PDVSA in an official statement.

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Ecuador, Venezuela Output Down, OPEC Reports

(Energy Analytics Institute, Ian Silverman, 11.Jul.2018) – The Organization of Petroleum Exporting Countries published its July 2018 edition of its Monthly Oil Market Report (MOMR).

Crude oil production from Ecuador and Venezuela — the lone countries from Latin America to be members of OPEC — fell this month (see charts).

***

 

 

 

PetroCaribe Fund to Flow into Government Coffers

(Jamaica Gleaner, 11.Jul.2018) – In a matter of months, the US$1.6 billion, or more than J$208 billion, now in the PetroCaribe Development Fund (PDF) is to flow to the Consolidated Fund and could be administered as the Minister of Finance sees fit.

The transition is expected to happen by the end of the fiscal year, or by the time PDF Chief Executive Officer Dr Wesley Hughes leaves, that office when his contract expires next February.

Hughes told the Financial Gleaner that since about February this year, the finance ministry has had “preliminary discussions” with the PDF about the planned change in the structure of the fund that at its zenith managed more than US$3 billion in assets.

The talks, he said, mulled what form “integration” could take but arrived at no definitive conclusion. The PDF CEO pointed to the finance ministry as the source for any further questions about precisely how the fund, set up in law to service Jamaica’s debt to Venezuela and provide development funding, would operate as part of the Government’s central operations.

The finance ministry is yet to comment. Finance Minister Nigel Clarke is currently overseas engaging financial markets in a non-deal roadshow.

The PDF gets broad policy directions from the finance minister, but is largely an independent and self-financing entity, whose profits not only serviced Jamaica’s oil debt to Venezuela, but invested, mainly via loans, in development projects. It has pumped more than $335 billion into the economy through project financing, equity investments, and social and economic development grants.

“The expectation is that the fund will become more integrated in the Ministry of Finance. It will continue to operate the elements of managing the loans that are in place and long-term debt repayment commitments to Venezuela,” Hughes said. He, however, declined to speculate on the model by which these aims might be achieved.

In the April 2018 Article IV Consultation report on Jamaica, the International Monetary Fund (IMF) listed the integration of the PDF into Government’s central operations as an outstanding item still to be undertaken by the Jamaican Government.

The IMF report gave a March 2019 date for the completion of the action, which, it said, was an undertaking by the Government dating back to the second standby agreement review in September 2017. Hughes said there was no discussion of this commitment with the PDF at that time.

The change in status of the PDF from a public body corporate to being administered as part of central government is part of a raft of policy measures mandated under the current IMF agreement. The measures include the merger of several government organisations, divestment of some public bodies, and stepped-up initiatives to reduce the size of the public sector and wage bill.

The end of the PDF, as it was established by law under a 2006 amendment to the Petroleum Act, is expected to require legislation in Parliament and, possibly, concurrence from Venezuela, given that the PetroCaribe agreement for the concessionary import of oil remains in force, despite the scaling down of shipments and Jamaica’s massive reduction of its oil debt to Caracas. That debt is now at around US$120 million following the cash repayment of some US$1.5 billion three years ago, in a hugely discounted debt buy-back.

Hughes said closure of the fund was viewed as a possible strategic risk by its management in annual planning and financial projections.

As former chairman of the fund when he served as financial secretary in the finance ministry between 2009 and 2012, Hughes said the PDF was deliberately structured to complement the IMF staff monitoring arrangement that was in force in 2006, as well as to safeguard its mandate as political administrations change.

The insulation measures include the financial secretary’s chairmanship of the board and ex-officio membership on the board, accorded to senior public sector officials, including the Cabinet secretary, the head of the Planning Institute of Jamaica, and permanent secretaries of several ministries, such as the Office of the Prime Minister and the ministry with responsibility for energy. About three members are appointed by the finance minister.

Hughes considers the structure, including its direct reporting to Parliament, as adhering to global best practice.

“It’s not that we are not subject to political directives (but) for the most part these directives have been consistent with the Constitution, rules and regulations. After all, we are a public body; we are subject to Cabinet decisions,” he said.

“Cabinet is the highest decision-making body in the country. If they take a decision, our job is not to question it, but to find out how best and effective we can be in implementing that decision. If you don’t have that approach, anarchy is the outcome,” he added.

He also believes that the structure “has worked”, saying “we have found ourselves with sufficient room to do what we have to do to fulfil our mandates”.

***

Mexican Refineries a Must for “Energy Security”

(Energy Analytics Institute, Jared Yamin, 10.Jul.2018) – Given Mexico’s dependence on imported fuel, construction of two new refineries in the country “isn’t a business issue, it’s for energy security,” said researcher and hydrocarbons analyst Fluvio Ruiz Alarcón.

Just as recently as May 2018, Mexico imported 520,000 barrels per day of gasoline, which represented 65% national consumption during that month, reported the daily newspaper El Financiero, citing the analyst who referred to figures from state oil company Pemex.

In terms of whether it was better to reconfigure Mexico’s six existing refining complexes instead of building new ones, Ruiz Alarcón explained: “reconfiguration is basically building a refinery; just look at how long it took the projects that we’ve already done. They took years, ” added the adviser to the team of Mexico’s President Elect Andrés Manuel López Obrador (AMLO).

Ruiz said the first parts of the new president’s National Project consist of recovering the Bicentenario Refinery, a failed project of the Presidency of Felipe Calderón’s that was planned for construction in Tula, Hidalgo. The estimated construction cost of the refinery could range between $10 to $12 billion, depending on the type and size of the of refinery, he said.

***

Pemex Alerts Against Criminal Group

(Pemex, 10.Jul.2018) – The State-Owned Productive Company filed a criminal report before the Office of the Attorney General to initiate the investigation of this suspected criminal activity.

On June 29th, Petróleos Mexicanos filed a criminal claim before the Office of the Attorney General (initials in Spanish: PGR), upon detecting that a group of individuals is seeking to defraud the public by pretending to be part of the company’s senior management and claiming that they are authorized to sell all kinds of hydrocarbon products at preferential prices.

The operation of this group has the following traits:

1) Someone gets in touch with the victim (fuel marketers), whom they promise to sell hydrocarbons to, at a lower-than-market price.

2) If the person being contacted shows any interest, the caller lies and claims to introduce them to high-ranking Pemex officials for a negotiation and, if possible, sign a contract.

3) They arrange a meeting outside Pemex’s offices with false “officials” who supposedly belong to the company. During these meetings, the victim is shown counterfeit documentation, and they even sign false contracts to mislead them further.

4) They offer the delivery of tanker trucks with fuel or some other product and indicate that the payment is to be made to a bank account supposedly belonging to an “authorized third party” appointed by Pemex.

5) Of course, within a few days of receiving the corresponding payment, the victim loses all contact with those individuals, and therefore the fraud is complete.

The general public is called upon not to let yourselves be misled or participating in this kind of schemes, which only defraud persons and companies.

Petróleos Mexicanos informs that the only available process for the purchase of petroleum-based products directly from the company is through the commercial areas of Pemex Transformación Industrial (Pemex Industrial Transformation, Pemex TRI). The process involves prior undersigning of a marketing contract, which must be filled in and completed online using the Pemex TRI portal.

Our commercial advisors or account executives do not charge any amount to formalize these contracts or for any other procedure or operation.​

Pemex reaffirms its commitment to a lawful operation and asks the public to report any irregularities in the contract formalization process or other services provided by the company by calling the toll-free number: 01 800-Pemex00 or by sending an email to: contacto.combustibles@pemex.com

***

Costa Rica to Use Plastics for Roads

(Energy Analytics Institute, Ian Silverman, 10.Jul.2018) – A small Central American country will be considered a pioneer in the region with use of a type of “eco-friendly asphalt” that gives a new life to plastics.

This week the Costa Rican government announced the country would begin to pave streets with a mixture of asphalt and crushed plastics thanks to a development by the National Laboratory of Materials and Structural Models, the University of Costa Rica and several recycling organizations, reported the daily newspaper LaRed21.

The “green asphalt” is already used in other countries such as England, India and Canada, but Costa Rica will be the first from the Latin American region to implement the process.

***

EP PetroEcuador, Politécnica Nacional Sign Deal

(Energy Analytics Institute, Ian Silverman, 10.Jul.2018) – EP PetroEcuador and the Escuela Politécnica Nacional (EPN by its Spanish acronym) signed an Inter-institutional Technical Cooperation Agreement that relates to the early detection of seismic or volcanic phenomena that may affect the transport, storage, refining and commercialization of hydrocarbons of the state oil company, EP PetroEcuador announced in an official statement on its website.

***

UDLA Students Visit Soil Treatment Center

(Energy Analytics Institute, Ian Silverman, 10.Jul.2018) – Nearly 27 engineering students studying Environmental Engineering and Biotechnology Engineering at Ecuador’s Americas University (Universidad de las Américas or UDLA by its Spanish acronym) visited the El Salado Soil Treatment Center, located in the province of Napo.

The students visited the site with the objective to gain knowledge of remediation processes utilized in the area by PetroEcuador, announced the state oil company in an official statement on its website.

The visit today was a way to understand how in reality the soil is treated from an environment point of view, reported EP PetroEcuador, citing engineering student Solange Figueroa.

***

BP Opens 6 Petrol Stations in Campeche

(Energy Analytics Institute, Jared Yamin, 10.Jul.2018) – British Petroleum extended its operations in the country this week.

Today, we have arrived to Campeche, a state with an increase in tourist activity, reported the daily, citing BP Fuels Mexico General Director Alvaro Granada.

The British company initiated activities in Campeche with inauguration of an initial six of 10 planned petrol stations for this year in the state, reported the daily newspaper La Jornada.

In less than a year and a half, BP has emerged as the foreign company with the largest presence in Mexico. The company already covers an estimated 50% of the national territory, and operates nearly 300 petrol stations where it receives more than 500,000 customers daily.

“BP has come to offer a network of service stations that exceed the expectations of consumers in Campeche,” added Granada.

The inauguration of these first six petrol stations in Campeche and plans to open four more this year in the state form part of the company’s business plan to reach a network of 1,500 petrol stations by 2021.

***

Pemex Alerts on Fraud Via Identity Theft

(Energy Analytics Institute, Jared Yamin, 10.Jul.2018) – Pemex filed a complaint with the Attorney General’s Office demanding the entity investigate the alleged crimes.

In its complaint, Mexico’s state oil company Petróleos Mexicanos warned that a criminal group had been seizing the identities of officials in order to carry out the fraud.

“In early June it was detected that a group of individuals sought to defraud the public by pretending to be executives of the company, saying they were authorized to sell all types of hydrocarbons at preferential prices,” Pemex said in a statement.

***

Trinidad Seeks Assistance In Leak Cleanup

(LoopTT, 9.Jul.2018) – Cleanup operations continue following a leak at the Couva Marine 2 Well.

Personnel with the Energy Ministry and Petrotrin’s Incident Command team have been monitoring the leaking wellhead and assessing the nature and impact of the hydrocarbon emissions.

The leak, which was initially reported last Wednesday, is a combination of gas and light oil.

The incident command team met on Sunday to manage the impacts of the incident and to safely bring the matter to a safe conclusion.

The focus of the Incident Command Team over the past few days has been on analysing available data on the wells in the area and the development of strategies to bring the well under control. In doing so, the safety of personnel has been the number one priority.

A number of possible scenarios, including the drilling of a relief well, have been developed and proposed solutions are being evaluated.

The primary considerations in evaluating the various strategies have been the health and safety of personnel and to mitigate further negative impact on the environment.

In this regard, assistance has been sought from the multinational energy companies operating here, as well as foreign entities with which Petrotrin is affiliated, who have experience with the management of oil spills and well control incidents.

As of Sunday, an orange substance, which appears to be emulsified oil, appeared on Carrat Shed and Coffee beaches.

Containment booms with skimmers are being deployed in the area of the leaking well and cleanup crews were mobilised to effect remedial work in any affected areas.

Visits were made to the Carrat Shed and Coffee beaches to determine potential impact.

The Director of Maritime Services has issued an advisory to marine craft operators that “extreme caution is advised and requesting that they maintain a distance of 5 nautical miles”.

This advisory will remain in effect until the situation is resolved. Both Petrotrin and the Coast Guard will maintain patrols in the area and aerial and marine surveillance exercises will continue.

The Ministry urges fisherfolk and other marine craft operators to observe the maritime advisory and to stay clear of the area to avoid injury and also to allow those involved in containment and control activities to do so without impediment.

The Ministry assures that all necessary measures are being taken to ensure that a solution is obtained to repair the leak, and will continue to provide updates as further information becomes available.

***

Echo Says Completes Drilling CSo-2001(d) Well

(Echo Energy plc, 9.Jul.2018) – Echo Energy plc successfully completed drilling of the CSo-2001(d) well in which a notable gas column has been interpreted from the wireline logging suite.

The CSo-2001(d) well, located in the Fracción D licence operated by Compañia General de Combustibles S.A. (CGC), reached a total depth of 1511m in the Upper Jurassic Tobifera formation across which extensive gas and light hydrocarbon shows were recorded.

The well encountered over 60m of gas shows through the Upper Tobífera with gas peaks of over 168,000ppm and a full distribution of C1 to C5 hydrocarbons, measured with reference to background gas levels of less than 2,500ppm outside of the zone of interest.

Preliminary wireline log evaluation has now been completed from which the initial interpretations indicate around 30m of potential net pay within the section between 1272m and 1304m. This is towards the upper end of the range used in both contingent and prospective resource estimations and the interpretations are indicative of a gas with a high condensate gas ratio (wet gas).

The CSo-2001(d) well is targeting 19.0 bcf (gross best case) contingent resources assigned to the prospect in addition to a further 18.7 bcf (gross best case) of prospective resources in the recent Competent Person’s Report (CPR) produced by Gaffney Cline & Associates.

A final production casing is now being run prior to completion and testing which will now take place within the testing programme with the Quintana 01 rig, mobilising to the joint operations area during the week commencing 8 July 2018, as previously advised.

The CSo-2001(d) well is the last well in the current joint drilling campaign, and the Petreven H-205 rig will now demobilise to other areas where CGC have sole drilling operations ongoing.

The company will update shareholders with progress on both the testing and workover activities as the programme advances.

Fiona MacAulay, Chief Executive Officer of Echo, commented: “I am delighted that the our fourth well in the current drilling campaign has again successfully interpreted a notable gas column in the Tobifera. With the Quintana 01 completion and testing rig mobilising to the area this week we will be able to test this interval within the forthcoming testing sequence, enabling an early decision to be made on monetisation options in Fracción D. We are now looking forward to commencement of testing on the ELM 1004 well which will be the first well to be tested in this programme.”

***

Trinidad Seeks Help As Oil Well Ruptures

(Prensa Latina, 9.Jul.2018) – A fuel leak in the Couva platform, in the Gulf of Paria, Trinidad and Tobago, continues today after four days of being initiated, before which the government requests international assistance.

Since last Thursday, the well has been pouring hydrocarbons in this area, shared with Venezuela, which represents a major environmental risk for the region, local sources reported.

Initially the country requested help from the Petrotrin state refinery to close the well, however, the company does not have the technology required for such action.

For this reason, the government decided to ask for international help to put an end to this spill that, according to official sources, could be caused by a recent earthquake that exploded the head of the well, which began to pour from the surface of the seabed at about 12 meters deep.

Meanwhile, Secretary of Fishermen and Friends of the Sea, Gary Aboud, has called on mariners to steer clear of the site as it is volatile and highly flammable.

It is believed that the oil spill was triggered by a recent earthquake that caused the head of the well to pop, spewing the emissions, up from the surface of the seabed, about 40 feet below.

***

Frontera Ends Pacific Midstream Sale Agreement

(Frontera Energy Corporation, 9.Jul.2018) – Frontera Energy Corporation announced that, effective July 6, 2018, it has terminated its agreement to purchase 36.36% of Pacific Midstream Limited (PML).

Frontera elected to terminate its share sale agreement with the International Finance Corporation (IFC) and related funds to purchase the IFC’s 36.36% stake in PML, which had an acquisition price of $225 million. As a result of the termination, the company will be required to pay the IFC a $5 million break fee.

With the termination of the Share Sale Agreement, Frontera will continue to be a 63.64% shareholder in PML, with the IFC holding the remaining 36.36% interest. PML currently holds interests in Oleoducto Bicentenario de Colombia S.A.S (43% ownership) and Oleoducto de los Llanos Orientales S.A (35% ownership).

Frontera does not expect this transaction to have any impact on previously disclosed 2018 guidance metrics.

***

Frontera’s Intent to Implement Course Issuer Bid

(Frontera Energy Corporation, 9.Jul.2018) – Frontera Energy Corporation intends to implement a normal course issuer bid (NCIB) for its common shares.

The NCIB will be made in accordance with the policies of the Toronto Stock Exchange (TSX) and the commencement of purchases under the NCIB is subject to approval of the TSX.

Under the NCIB, Frontera intends to purchase, during a 12 month period, up to 3,543,270 Common Shares, representing approximately 3.5% of the Company’s 100,011,664 issued and outstanding Common Shares as at July 9, 2018.

In connection with its NCIB, Frontera also intends to enter into an automatic share purchase plan with a designated broker to facilitate the purchase of Common Shares under the NCIB at times when Frontera would ordinarily not be permitted to purchase its Common Shares due to regulatory restrictions or self-imposed blackout periods. Frontera self-imposes regular blackouts during the period commencing 15 days prior to the end of each fiscal quarter (and 30 days prior to the end of each fiscal year) and ending at the opening of trading on the first business day following public release of its financial results for such periods. Pursuant to the Plan, before entering a blackout period, Frontera may, but is not required to, instruct the designated broker to make purchases under the NCIB based on parameters established by Frontera. Such purchases will be determined by the designated broker based on Frontera’s parameters in accordance with the rules of the TSX, applicable securities laws and the terms of the Plan.

Frontera believes that, from time to time, the market price of its Common Shares may not fully reflect the underlying value of its business and future prospects and financial position. In such circumstances, Frontera may purchase for cancellation outstanding Common Shares, thereby benefitting all shareholders by increasing the underlying value of the remaining Common Shares.

The average daily trading volume of Frontera’s Common Shares was 56,920 Common Shares over the period between January 1, 2018 and June 30, 2018. Consequently, under TSX rules, Frontera would be allowed under its NCIB to purchase daily, through the facilities of the TSX or alternative trading systems, if eligible, a maximum of 14,230 Common Shares representing 25 per cent of the average daily trading volume, as calculated per the TSX rules. In addition, Frontera would be able to make, once per week, a block purchase of Common Shares not directly or indirectly owned by insiders of Frontera, in accordance with TSX rules.

***

Renaissance Approved to Develop Chiapas Blocks

(Renaissance Oil Corp. 9.Jul.2018) – Renaissance Oil Corp. received final authorizations from the relevant Mexican authorities to proceed with the development program on the company’s three 100% held producing properties in the state of Chiapas.

This development program, designed to significantly enhance production along with the exploration of new formations, comprises:

  1. Major work-overs on three existing wells, one at Malva and two at Topén;
  2. Drilling up to four Cretaceous wells, two at Malva, one Mundo Nuevo and one at Topén; and
  3. Extensive coring in new zones of interest across the Chiapas Blocks.

Major work-overs are scheduled to commence in August 2018, announced Renaissance in an official statement. The wells are tied into the existing pipeline infrastructure, allowing for immediate increases in production from the average of 1,643 boe/d for the month of May 2018.

The first of the four new wells is scheduled to spud in Q4, 2018. All three of the Chiapas Blocks have infrastructure in place with significant excess capacity to Pemex facilities, allowing for cost effective tie-ins and short cycle time to first production.

***

Renaissance Says Pitepec Block Details Attractive

(Renaissance Oil Corp. 9.Jul.2018) – Renaissance Oil Corp. recently signed a Right of First Refusal (ROFR), for the Pitepec block, adjacent to the north of the Amatitlán block in the Tampico Misantla Basin.

“As a result of our comprehensive analysis, the Pitepec block displays all of the attributes of a premier unconventional tight oil play,” said Renaissance Chief Geochemist Dan Jarvie in a company statement.

The Pitepec property, spanning over 248 km2 (61,300 acres), is currently producing 1,487 barrels per day (b/d) of light oil from the shallow Chicontepec formation and, importantly, much like the Amatitlán block, is in the main Upper Jurassic shale fairway, announced Renaissance in an official statement. While the more shallow Chicontepec formation has been the predominant producing zone for the Pitepec block to date, Renaissance’s log and core analysis from previous wells testing the unconventional Upper Jurassic shale formations indicate these deeper source rocks are high potential reservoirs for commercial development. The ROFR expires on May 31, 2019.

“The Upper Jurassic shales are organically rich with thermal maturity measurements indicative of greater than 40-degree API light oil. The high carbonate content (averaging over 50%) is indicative of a brittle rock fabric that readily fractures and releases retained oil,” said Jarvie.

***

ENAP Says Clean Energy is Chile’s Future

(Energy Analytics Institute, Ian Silverman, 9.Jul.2018) – Chile’s state oil company ENAP says it’s developing a wind park in Magallanes in an official Twitter post. No further details were revealed.

However, the benefits of the wind park include:

— It’s renewable,

— No greenhouse gases emitted, and

— Permits sustainable development.

***

Role of Peru’s Hydrocarbon Industry on Development

(Energy Analytics Institute, Ian Silverman, 9.Jul.2018) – PeruPetro will host a conference titled “Role of the Petroleum and Gas Industry for Peru’s Economic Development.”

Details follow:

When: 7 July 2018

Where: Talara, Peru

Venue: Javier Pérez de Cuellar Auditorium (2nd floor of Municipal Library)

Contact: PeruPetro

***

Haiti Backtracks on Fuel Increase

(Energy Analytics Institute, Ian Silverman, 9.Jul.2018) – The Haitian government reversed a controversial fuel hike announced over the weekend due to violent protest in the capital and other parts of the country.

The fuel hike was implemented as part of IMF stipulated sanctions, reported the daily newspaper Listin Diario.

The Miami Herald reported that “the announced fuel hikes, which took effect at midnight Friday before being temporarily suspended, called for a 38 percent increase for gas, 47 percent for diesel and 51 percent for kerosene.”

***

IEnova to Spend $150 Mln on Mexican Terminal

(San Diego Union Tribune, Rob Nikolewski, 9.Jul.2018) – Continuing its aggressive corporate strategy, IEnova – the Mexican subsidiary of San Diego-based Sempra Energy – added another asset to its energy portfolio Monday by announcing it will spend $150 million to build and operate a liquid fuels marine terminal in the northwest state of Sinaloa.

The federal port authority in the town of Topolobampo, located on the Gulf of California, awarded a 20-year contract to IEnova to construct the terminal that in its first phase will have a storage capacity of 1 million barrels of fuel, mainly gasoline and diesel.

IEnova officials said the company has “achieved significant commercial progress with potential customers” to have the terminal fully contracted and said additional phases of the project could expand to include storage of other products such as petrochemicals.

“IEnova’s success in developing new energy infrastructure is contributing to Mexico’s economic growth, creating jobs and diversifying energy supply while benefiting millions of Mexican energy consumers,” said Joseph Householder, Sempra’s chief operating officer, in a statement.

Monday’s announcement comes just three months after IEnova announced a $130 million investment in a liquid fuels terminal near Ensenada, Mexico, to serve customers in the northern border state of Baja, California. The company signed a long-term contract with the local unit of Chevron as part of the deal.

IEnova has invested about $7.6 billion in energy projects in Mexico, ranging from wind farms to solar power plants to natural gas pipelines and facilities, capitalizing on the country’s energy reform measures that are aimed at attracting private investors to help upgrade Mexico’s energy infrastructure.

Just 7 percent of the country’s households have access to natural gas and the Mexican government wants 35 percent of its power generation to come from renewable sources by 2024.

“We are in the right place, at the right time, with the right team and with the right parent company,” said IEnova CEO Carlos Ruiz Sacristán at an analysts conference in New York City last month.

Meanwhile, a group of activist investors with 4.9 percent stake in Sempra wants to add or replace at least six members of Sempra’s board and has called for the parent company to sell or spin off some of its subsidiaries, including IEnova.

Headed by Elliott Management and Bluescape Resources, the group says assets like IEnova may be valuable but believes a dramatic streamlining of Sempra can add up to $16 billion in shareholder value.

On June 28, Sempra CEO Jeff Martin announced the company will sell all of its solar and wind holdings in the U.S., as well as gas storage facilities in the Deep South, but did not mention making any changes in regards to IEnova or other subsidiaries.

***

ExxonMobil says Not Funding Political Party in Guyana

(Stabroek News, Marcelle Thomas, 8.Jul.2018) – Facing questions from a parliamentary committee, ExxonMobil yesterday denied that it was funding any political party or political initiatives in Guyana.

A meeting between the Parliamentary Sectoral Committee on Natural Resources and the US oil giant became testy when allegations of possible funding of political initiatives were put to the company by opposition members.

In the Parliament Chamber, ExxonMobil quickly shot down suggestions that it was funding any initiative of the A Partnership for National Unity and Alliance for Change (APNU+AFC) coalition, saying that the company was not politically aligned.

Opposition members of the committee also raised questions about ExxonMobil’s funding of international environmental body, Conservation International (CI), stating that this was a clear conflict of interest for the latter.

Last evening, in response to questions from Stabroek News, Conservation International rejected the assertions by the parliamentary committee members, stating that notwithstanding the funding, the organisation will remain objective and impartial.

“As a science-based organization with over two decades of conservation success in Guyana, Conservation International is in a unique position to help Guyana achieve its green development goals. We carefully deliberated and determined that this effort will achieve its goals while also maintaining our independence and objectivity,” Global representative Salma Balramy said in response to the questions from this newspaper.

“We’ve worked with Guyana’s government and people in over 50 communities to help protect nearly three million acres of indigenous lands while improving livelihoods. As long-time partners of Guyana’s commitment to its people and ecosystems, Conservation International is confident this is a necessary step at this critical time in Guyana’s development,” she added.

Government representative on the committee Ronald Bulkan also rebuffed the line of questioning by the opposition MPs, lamenting that it was “a shame” that the meeting had descended to allegations against the company and CI, and members did not use the opportunity to grill the company on how Guyana’s citizenry were benefiting from its presence and works here.

“Sorry ma’am, I have to stop you. ExxonMobil is not involved with politics in Guyana. We don’t choose sides, we’re apolitical. We’re not funding any political party, any political side, any political initiatives, none, just full stop,” ExxonMobil’s Country Director Rod Henson said as he interrupted People’s Progressive Party/Civic (PPP/C) member Pauline Sukhai during her questioning about political funding here by the company.

ExxonMobil, according to a letter dispatched to it by the committee, was to “provide an update” on the “company’s operations and answer questions of concern to members.”

But while Henson had replied saying that he “welcomed the opportunity…to provide an update on EEPGL’s (ExxonMobil’s subsidiary) operations,” he explained yesterday that the communication was bungled as he believed that he would only be updating on the local content aspect of EEPGL’s operations and thus only came prepared to deal with that subject.

Nonetheless, he said that he would answer questions outside of his prepared subject as best as he could but provided no answers on who initiated the controversial US$18 million signing bonus between EEPGL and the government or what were short and long-term cost projections of work by his company.

Present at yesterday’s meeting were committee Chairman Odinga Lumumba and fellow opposition PPP/C MPs Neil Kumar, Pauline Sukhai and Yvonne Pearson. For the government side, Audwin Rutherford, Jermaine Figueira and Bulkan were present. The Committee was informed that Minister of Finance Winston Jordan was out of the country and Minister of State Joseph Harmon was meeting with residents in the flooded areas of Region Nine.

Tempering expectations

Henson made a presentation on general operations of the company, with a focus on local content, where he echoed earlier positions of tempering expectations that the footprint for many direct related oil and gas jobs would be met. He said again that there is only room for a few hundred direct jobs.

Highlights and highpoints were given as Henson also declared that for the first quarter of this year the company paid out US$21 million for products and services from which 227 Guyanese companies benefitted.

Then came the question and answer segment of the hearing, which focused heavily on local content and the grant given to CI.

Sukhai said that she was concerned about word in the public that the company was helping to fund government’s Green State Development Strategy (GSDS) though its partnership with CI.

Earlier this week, the philanthropic arm of ExxonMobil, the ExxonMobil Foundation, announced US$10 million ($2 billion) in funding for CI and the University of Guyana to train Guyanese for sustainable job openings and to expand community-supported conservation.

A statement from the Foundation had said that the investment is also aimed at supporting Guyana’s Green State Development Plan, the country’s 15-year development plan that, among other things, intends to diversify Guyana’s economy and balance economic growth with sustainable management and conservation of the country’s ecosystems.

This was pounced upon by Sukhai.

“The Green State Development Strategy is not in its totality or comprehensively documented and consulted upon as yet. In fact, that strategy has not even reached the Parliament for its debate or for its approval or to be laid as government’s main focal point strategy. There is a line of thought out in the public that ExxonMobil is actually funding a political initiative that is not yet established and approved by the National Assembly and that is, as I mentioned before, the Green State Development Strategy,” Sukhai said before she was quickly stopped by Henson from going further.

“I would like to say that there are concerns out there, which is speaking to the fact –two lines of thought and two lines of criticism-and that is CI is an international NGO and CI is considered to be an international watchdog on environment, nature and all the things that go with conservation, preservation of our environment and so on. Don’t you think that CI being a grantee of ten million US dollars is actually in a conflict of interest because they should be monitoring?” she nevertheless pressed.

She said that that while Henson may want to stop her questions, answers were needed as, “we have to stop the concern in the public domain, because that is what is circulating and that’s why I chose to raise it here with you, so you can have a chance to clarify.”

A seemingly shocked and perturbed Henson replied, “I can’t control every individual’s thoughts and opinions, but I appreciate your opportunity to allow me to say that’s complete hogwash.”

Henson would later be asked by the Chairman to withdraw the “hogwash” remark and he did but he stressed that he still wanted to dissuade any views that his company was political.

Further probing came from Chairman Lumumba, who wanted to know if when ExxonMobil signed the agreement with CI, whether “there was government input or government approval” and why the company does not see its funding as a conflict given CI’s watchdog role here.

“This is our ExxonMobil initiative. This was not directed by the government. This is a good thing. ExxonMobil partners with this organisation around the world. It is not just Conservation International, this is an excellent partnership with the University of Guyana,” Henson said.

“Chair, I think Conservation International would disagree with you and I disagree with you, respectfully. I don’t think this impedes Conservation International’s role in anyway in the country. We made the government aware but again this is an ExxonMobil initiative, something we chose to do,” he added.

Sugar

Questions were also posited by Sukhai and Kumar on if ExxonMobil had a role in the recent announcement that 100 sugar workers were getting skills training though a programme with the Ministry of Natural Resources.

“Is Exxon funding any of that training?” Sukhai asked, to which Henson replied, “No, we are not funding that.”

Questions were asked about the 227 companies which ExxonMobil said benefited in the first quarter and the Chairman asked for the list and services provided to be made available to the Committee so that it could be analysed to determine if the country was getting value for money. He pointed out also that since the list was publicly released there had been many criticisms and questions linger on if the list met the definition of what local content should be.

A puzzled Henson said that he had given the list to government and questioned if the bipartisan committee was not part of government.  “Aren’t you the government?” Henson asked, to which Lumumba replied “No, we are the opposition.” The ExxonMobil head said that he was prepared to go over the list with the committee if it desired.

Kumar also spoke of sugar workers being “on the breadline” and of “closed sugar estates” and wanted to also know if the company was helping government with legislation crafting as it pertained to local content. Henson said that the Guyana was a sovereign country and the company had no role in how its government spends money and could not be a part of law crafting.

Bulkan zoomed in on the opposition’s posture and told the Chairman that it was regrettable that the meeting yesterday seemed to stray from the focus of ExxonMobil’s operations.

“I would like to take strong objection to the [statement that the] government in one instance has placed persons on the breadline and that the government has closed sugar estates. I think we are in danger of being sidetracked from the purpose of this meeting,” Bulkan said.

“We have also heard, and I think it is it is regrettable, that the GSDS, as initiated by this administration, is political. It is not a political initiative, it is a government initiative and I think it is unfair for us to come and say here that it is not fully developed and to suggest that the activities of the company’s  funding to CI, to suggest it has an impact on the GSDS. I think it is unhelpful…,” he added.

Following the meeting, Henson told reporters that it was his error about the meeting’s overall focus as he came only to deal with local content. He said he welcomed the opportunity to talk and would take up another invite if extended.

***

Quevedo Prays for Higher Venezuelan Output

(Energy Analytics Institute, Piero Stewart, 8.Jul.2018) – Venezuela’s Oil Minister General Manuel Quevedo prayed to God in search of divine assistance to boost Venezuela’s oil production.

The prayer was made by Quevedo during his participation in a special mass held at the headquarters of PDVSA and Venezuela’s Oil Ministry in the company of workers from both entities, reported PetroGui@, citing an official statement from the Oil Ministry.

“The recovery of PDVSA is also the recovery of the whole country,” said Priest Pablo Urquiaga of the Church of the Resurrection of the Lord in Caricuao, during the ceremony in La Campiña.

***

Could Guyana’s Oil Fortunes Curse Country?

(Energy Analytics Institute, Pietro D. Pitts, 8.Jul.2018) – Recent success in Guyana’s oil sector could be a wolf in sheep’s clothing.

Guyana doesn’t yet produce oil but in coming years its oil output is expected to surpass that of Peru and Trinidad and Tobago and could approach that of Ecuador, one of two lone OPEC producing countries in South America.

Having the world’s largest oil reserves, the first LNG export terminal in the Americas, or large gas reserves doesn’t mean all a country’s political, economic and social problems will be solved. Just ask Venezuela, Trinidad and Tobago, and Bolivia, respectively. Case studies of these three countries have shown that not just countries in Africa, such as Nigeria, are vulnerable to the Dutch Disease even in the 21st Century.

A look just at Guyana’s poor Corruption Perceptions Index ranking from Transparency International, much lower than the average for the Americas indicates the government is failing in efforts to tackle corruption.

It is hardly likely that Guyana’s faith will change by 2020 when the oil starts flowing and revenues start to climb. What will happen then is almost predictable unless a miracle happens between now and then.

***

Ecopetrol to Operate Dina Gas Plant

(Energy Analytics Institute, Piero Stewart, 8.Jul.2018) – The gas plant has treatment capacity of 10 million cubic feet per day (MMcf/d) of natural gas.

Ecopetrol initiated direct operation of Dina gas treatment plant (PTGD by its Spanish acronym), located in Huila, which since April 2010 has been operated by Masa Storkdesde.

The latter company was responsible for its construction, operation and maintenance, announced Ecopetrol in an official company statement.

***

Chile to Export Gas to Argentina

(Energy Analytics Institute, Ian Silverman, 8.Jul.2018) – Chile signed an agreement to export natural gas to Argentina over the next three years.

The agreement allows Chile to export a maximum 3 million cubic meters per day (MMcm/d) of natural gas to Argentina during the austral winter, state oil company ENAP announced in an official statement on its website.

The framework contract, which replicates other similar agreements in recent years, was signed between ENAP and the Argentine state company IEASA.

“The start of a third consecutive shipment of natural gas to Argentina represents a great step forward towards energy integration between both countries,” said ENAP General Manager Marcelo Tokman.

***

Melbana Says UK Investors Eyeing Cuba

(Melbana Energy Limited, 2.Jul.2018) – Melbana Energy Limited announced a potential dual listing on the UK’s Alternative Investment Market (AIM) is being actively considered, as it is clear there is strong UK investor interest in Cuba as an investment destination.

The company is considering any number of corporate business development initiatives, after recent marketing initiatives in the UK.

A General Meeting (GM) will shortly be scheduled to, amongst other things, provide the necessary constititutional changes required to enable an AIM listing should the Melbana Board determine to do so in the future. These proposed changes to the constitution are preparatory only and will provide flexibility but have no effect unless the Board determines to proceed with an AIM listing.

To facilitate our business development activities Melbana has engaged McDaniel & Associate Consultants, an independent expert with substantial Cuban experience, to assess the prospective resources available in Block 9 with their assessment report expected to be available in the third quarter.

***

ET Energy Launches 31.6 MWp Projects in Chile

(Energy Analytics Institute, Ian Silverman, 7.Jul.2018) – ET Energy commenced construction of two solar projects in Chile.

“For us, the development and construction of these two projects demonstrate again our ability to develop and deliver high quality, investment grade solar assets in Latin America. With our global expertise in project development, financing, EPC and O&M, we continue to strive to deliver high quality assets to our clients,” reported ET Energy in an official statement, citing President and CEO Dennis She.

Both projects are part of a larger portfolio of ten projects totaling 31.6 MWp, which are developed by ET Energy under Chile’s Program for Distributed Energy (PMGD). A major attraction of PMGD projects is that they suffer from fewer development and distribution challenges than large-scale projects.

These two projects are located in the 6th Region of Chile south of Santiago. Each project is 3.168 MWp, provided by 9,600 polycrystalline panels mounted on single-axis trackers. Construction is expected to be finished within 4 months. Four additional projects of similar characteristics will initiate construction in the coming weeks. These projects will create jobs during construction, and inject clean, renewable energy into the national grid, providing electricity to consumers in the area.

Latin America is potentially the next booming solar market; forecasts are for over 40GW of solar energy installations by 2021, of which Chile will be significant drivers, according to ET Energy.

***

Echo Announces Mobilization of Well Testing

(Echo Energy plc, 6.Jul.2018) – Echo Energy plc announces mobilisation of the Quintana 01 testing / completion rig to the Fracción C, Fracción D and LLC assets (onshore Argentina and operated by Compañia General de Combustibles S.A. (CGC) in joint venture with Echo) is scheduled to commence during the week commencing 8 July 2018.

Mobilisation is anticipated to take approximately 5 days and the rig will be moving firstly to the ELM-1004 well, which was suspended for testing in May 2018. Testing of ELM-1004 is anticipated to take 2-3 weeks, following which the rig will move on to test the remaining three wells in the current four well exploration programme.

The company is yet to determine the order in which the remaining three wells will be tested as the test design for the recent EMS-1001 well, which will include the running of cased hole logs prior to testing, is currently being prepared in conjunction with external experts to optimise the data evaluation. As a result, the position of the EMS-1001 well test within the overall testing programme is yet to be determined and is dependent on finalisation of that design.

Additionally, and whilst the rig is on contract, the company and CGC are considering the completion of a number of additional well interventions and workovers both in Estancia La Maggie (within Fracción C) and Fracción D to either restore or increase well productivity from existing wells.

The company will update shareholders with progress on both the testing and workover activities as the programme advances.

***

Pemex Divests Participation in PMV

(Pemex, 6.Jul.2018) – Petróleos Mexicanos divested its participation in Petroquímica Mexicana de Vinilo through an agreement with Mexichem.

As part of Pemex’s strategy of maximizing value by focusing its resources on strategic assets, the company announced divestment of its participation in Petroquímica Mexicana de Vinilo S.A. de C.V. (PMV, Mexican Vinyl Petrochemicals), which represents 44.09% of the representative shares of this company’s capital stock.

In September 2013, Pemex and Mexichem became partners to integrate the salt-chlorine-soda ash-ethylene-vinyl monochloride value chain through the corporation PMV, in which Pemex maintained a strong participation through its affiliated company PPQ Cadena Productiva SL.

The interruption of the salt-chlorine-soda ash-ethylene-vinyl monochloride production chain results from the decision made by the PMV Board of Directors to not rebuild the Chlorates III plant within the Pajaritos Petrochemical Complex in the State of Veracruz following the accident that occurred on April 20, 2016. This turns the salt-chlorine-soda ash production chain into PMV’s main activity, which in turn motivates Mexichem into regaining full control of the salt-chlorine-soda ash production process.

The operation adds up to an approximate amount of 3 billion 436 million pesos, which includes the purchase of the share participation held in PMV by PPQ Cadena Productiva SL and the reinstatement of the assets of the Pajaritos Petrochemical Complex to Petróleos Mexicanos, which is a value that ranks within appraisals of similar companies and transactions of this kind in the petrochemical sector.

On the other hand, it is to be noted that the above amount will be adjusted as of the closing date, at which time the rights and obligations of each partner will be recognized. This is also common practice in transactions of this kind.

This transaction has already been signed off by the corresponding corporate areas of both Pemex and Mexichem and it already includes the reinstatement of the assets of the Pajaritos Petrochemical Complex, which were originally signed over to the partnership, to Petróleos Mexicanos.

***

Ecopetrol to Prepay Loan of COP$ 1.4 Tln

(Energy Analytics Institute, Piero Stewart, 6.Jul.2018) – Colombia’s state oil company Ecopetrol will prepay the entire syndicated loan it entered into in 2013 with local banks.

The loan was scheduled to be amortized up to 2025, announced Ecopetrol in an official statement.

As stipulated in the loan agreement, Ecopetrol can at any time pay off all the principal voluntarily, with no penalty whatsoever, subject to at least 30 calendar days’ advance notice to the lenders. Pursuant thereto, the prepayment will be made August 6, 2018 in the total amount of COP$1,430,333,333,333, which includes principal and interest.

***

Guyana Pre-2020 Investment Boom

(Energy Analytics Institute, Piero Stewart, 6.Jul.2018) – Oil production will begin in 2020, and the boom in investment beforehand will continue to drive activity, writes Caribbean Economist Marla Dukharan in her “Caribbean Monthly Economic Report.”

Guyana, located in the northeastern region of South America, is readying for an oil boom to come soon from commercialization of recent oil discoveries. Exxon Mobil and partners have to date found recoverable resources estimated at more than 3.2 billion oil-equivalent barrels on the Stabroek Block offshore Guyana. Three of ExxonMobil’s developments will produce more than 500,000 barrels per day, and initial oil flows are slated for 2020.

The economist also said Guyana’s reserves, which amounted to $507 million in April 2018, where down $77 million or 13% compared to December 2017.

“The IMF revised its growth estimate for 2017 down to 2.1% from 3.5%. Growth is then expected to ramp up to 3.5% in 2018, 3.7% in 2019, and with the impact of oil production, 27.8% by 2023. Nope this is not a typo,” wrote Dukharan in her July report.

***

Ecopetrol Finds New Oil in Cundinamarca

(Energy Analytics Institute, Piero Stewart, 5.Jul.2018) – A find at the Búfalo-1 well confirmed the presence of oil in the Valle Medio del Magdalena, located near the town of Guaduas, Department of Cundinamarca.

The well is the first discovery in the VMM32 Exploration Contract and is located very close to Ecopetrol’s transport infrastructure, which could facilitate its commercial production stage, the company announced in an official statement

The finding recorded a depth of 1,153 meters, in the Middle Magdalena Valley basin, where the presence of dry gas and light crudes was evident in the Grupo Honda.

Ecopetrol holds a 51% interest in the Bufalo-1 well and is the operator. Its partner, CPVEN E&P Corp, holds the remaining 49% interest.

***

China Gives New Life to Venezuela Despite US’ Ire

(Sputnik News, 5.Jul.2018) – China is lending its helping hand to Venezuela to stabilize the country’s oil sector, analysts told Sputnik, adding that Beijing’s economic activities in Latin America are apparently getting on Washington’s nerves.

China is about to breathe new life into Venezuela’s collapsing oil sector regardless of Washington’s displeasure: On July 4, 2018, Bloomberg reported that the China Development Bank is going to invest more than $250 million in the country’s crude production.

Liu Qian, analyst at the China Institute of Strategic Energy Studies, hailed Beijing’s move, stressing that Venezuela has long been one of China’s largest oil suppliers: “China’s direct investment of $250 million in Venezuelan national oil company [Petróleos de Venezuela, S.A.] will positively affect the stabilization of oil production in Venezuela and ensure delivery of crude oil to China,” he told Sputnik China.

However, according to Liu, Venezuelan economic difficulties could hardly be resolved by a one-time financial injection: “China does not exclude the provision of loans or other types of assistance to stabilize and boost oil production [in Venezuela] within the framework of a ‘loan-for-oil’ model of energy cooperation,” he highlighted.

The Chinese analyst underscored that the ongoing economic crisis in the Latin American country and the subsequent slump in oil production had affected the global energy market. Hence, the revival of the country’s energy industry might stabilize crude output, bring more oil to the market and thus prevent global oil supply shortages, he suggested.

China’s Economic Expansion in US’ ‘Backyard’

Washington is keeping a wary eye on China’s activities in Latin America, which the US has long seen as its “backyard,” with Venezuela being the White House’s major irritant.

“As usual, the US reacts very painfully to the fact that China is conducting nothing short of economic expansion in Latin America,” Vladimir Sudarev, professor at Moscow State Institute of International Relations (MGIMO) and expert on Latin America opined. “They throw a scare into Latin American countries saying that while their cooperation with China is profitable today, the day after tomorrow they will be completely dependent on China.”

However, neither Latin American states, nor China are falling for Washington’s gloomy prognoses, the Russian academic remarked.

While the US is taking measures to isolate Venezuela, China is not following suit, boosting its ties with the Caribbean country. In December 2017, Beijing invited Venezuelan Foreign Minister Jorge Arreas on an official visit. Furthermore, Finance Minister Simon Zerpa, who has recently held a meeting with officials from the China Development Bank and China National Petroleum Corporation, was subjected to US sanctions.

US President Donald Trump has repeatedly made tough statements against the Venezuelan government. He even went so far as to discuss a potential invasion of the Latin American country and the removal of President Nicholas Maduro with his aides.

Commenting on the Chinese initiative, Sudarev cast doubt on the assumption that China was seeking to support the Maduro government through the massive investment in the country’s oil sector.

“They have been investing [in Venezuela] for a long time, and, of course, in a certain sense they are interested in supporting a bankrupt Venezuelan state [oil] company so that it could regularly supply crude to China. They are being guided by pragmatic interests and not [the desire] to support the government of Nicholas Maduro,” he opined.

Sudarev envisioned that it will take time for Petróleos de Venezuela, S.A. (PDVSA) to regain its footing. According to the academic, it is unlikely that the company will manage to immediately absorb the Chinese multi-million loan and begin production at the levels it did 10 years ago. Moreover, he did not rule out that China’s investments in the Venezuelan oil sector could result in financial losses.

According to the International Energy Agency, in June 2018, Venezuelan oil production fell to 1.36 million barrels per day. For comparison’s sake, in 2013 the country’s output amounted to 2.9 million barrels a day. Now Maduro is promising to increase the daily crude output by 1 million barrels, while his critics are predicting a drop in production to 1 million barrel per day.

It is expected that the oil loan and another financial agreements will be officially inked by Beijing and Caracas in the coming weeks.

The views and opinions expressed by the contributors do not necessarily reflect those of Sputnik.

***

PetroAmazonas EP Producing Close to 405 Mb/d

(Energy Analytics Institute, Ian Silverman, 5.Jul.2018) – Ecuador’s PetroAmazonas EP actual production is close to 405,000 barrels per day (b/d).

The company’s average cost was $17.08 per barrel in May 2018, reported the entity in an official statement on its website.

***

PetroVictoria Producing 10,000 b/d

(Energy Analytics Institute, Ian Silverman, 5.Jul.2018) – The heavy oil project is currently producing 10,000 barrels per day, according to PDVSA.

PetroVictoria, is a joint venture comprised of Venezuela’s PDVSA and Russia’s Rosneft to develop heavy oil reserves in Venezuela as part of the Carabobo-2/4 project.

In May 2013, Rosneft and Venezuelan Corporacion Venezolana del Petroleo (CVP), a subsidiary of Caracas-based PDVSA, signed an agreement to establish the PetroVictoria joint venture. PDVSA holds a 60% interest in the venture, while Rosneft holds the remaining 40%

***

PDVSA Installs Two Heavy Oil Desalters

Heavy oil desalters. Source: PDVSA

(Energy Analytics Institute, Ian Silverman, 5.Jul.2018) – The land transfer of two from Bolívar to Anzoátegui states, for oil crude desalination has successfully been completed.

The main function of both desalination plants is the subtraction of water and salt contained in heavy oil crude.

The two mega-structures were constructed with local Venezuelan talent in VHICOA workshops, a joint venture of the subsidiary PDVSA Industrial, with aim to boost productive capabilities, announced Petróleos de Venezuela, S.A. in an official statement.

The two identical containers, weighing 149 tons and spanning 25 meters long and 6.5 meters high, where built in a period of time of 11 months. The containers aim to guarantee processing of 52,000 barrels per day (b/d) of crude oil, in addition to the current production of the Petromonagas Operational Center (COPEM), presently estimated at 130,000 b/d, according to PDVSA.

Both desalters were certified by inspectors from the American Society of the Mechanical Engineers (ASME). Inspectors from Colombia, Mexico, Brazil and the USA certified the work on the structures, which have 22 millimeters thick steel sheet joints with a capability to withstand very high pressures and temperatures.

The VHICOA teams will be an important part of the PetroMonagas (PDVSA/Rosneft) Early Production Facility Center. The project, with has a registered process report of 65 percent, is located in the Carabobo Division of the Hugo Chávez Orinoco Oil Belt, also known as the Faja, and includes the participation of oil field service giant Schlumberger.

The oil crude processing modular center will be added to COPEM, once Schlumberger, the main contractor, ends the Engineering, Procurement and Construction (EPC), in February 2019. PDVSA aims to leverage early production from PetroVictoria, a joint venture comprised of PDVSA and Rosneft, which is currently producing 10,000 b/d.

***

First T&T Jack Up Delivers Gas

Jack up. Source: Trinidad and Tobago Newsday.

(Trinidad and Tobago Newsday, Sasha Harrinanan, 4.Jul.2018) – Well Services Rig 110, owned by local drilling contractor Well Services Petroleum Co Ltd (Well Services), is the first local jack up rig to be used for a natural gas campaign in TT waters.

Well Services announced yesterday it had drilled and completed a three well campaign for the Iguana field in Block 1(a) – offshore Trinidad’s west coast. Block 1(a) is owned and operated by DeNovo Energy Ltd (DeNovo). This was TT’s first ever west coast natural gas development campaign.

DeNovo ­­­founder and CEO Joel Pemberton said, “This milestone moves us closer to the delivery of first gas from the Iguana field later this year. Gas produced by DeNovo will be sold to NGC.”

Pemberton said Well Services and Rig 110 were chosen because of their proven ability to deliver safely, and their known aptitude for collaborating to overcome operational challenges.

“Together, DeNovo and Well Services delivered this campaign with many first-time achievements, which showcases the power and resilience of both our teams. As a Trinbagonian, I am proud to see local companies operating at global standards, collaborating on competitive solutions, and delivering in the best interest of TT,” Pemberton shared.

Rig 110 delivered drilling and completions activities with zero lost time incidents, in line with DeNovo’s fast-track development plan for the Iguana field. Rig 110 was also the first rig to install a platform subsea structure in the region, securely setting the Iguana Conductor Supported Platform, driving seven conductors, and completing its first flow back well testing and flaring.

Well Services’ operations manager Neil McCartney praised his team for working quickly and clinically to ensure all drilling targets were reached, “despite numerous technical challenges due to the complicated subsurface structure of the field.”

***

Atlas to Invest $114.4 Mln in Uruguay

(Energy Analytics Institute, Ian Silverman, 4.Jul.2018) – U.S. company Atlas Renewable Energy plans investments of $114.4 million in Uruguay.

Atlas announced closing of long-term financing for its two solar plants: Del Litoral and El Naranjal, both located in Salto, reported the daily newspaper El Pais.

The two projects have 238,720 solar panel modules, installed capacity of 75.8 megawatts of power (MWp), and produce 144.3 giga-watt hour (GWh) per year, the daily reported.

***

Ecuador Cos Invest $400 Mln in Certificates

(Energy Analytics Institute, Jared Yamin, 4.Jul.2018) – The two electric companies from the South American country will invest a total of $400 million in Treasury Certificates.

The companies, the Electricity Corporation of Ecuador (Celec by its Spanish acronym) and the National Electricity Corporation (Cnel by its Spanish acronym), will invest $300 million and $100 million, respectively, reported the daily newspaper El Universo.

***

Ecuador Looks to Avoid Issuing More Debt

(Energy Analytics Institute, Jared Yamin, 4.Jul.2018) – The South America country will explore other financial options to cover its deficit of some $9.5 billion.

“We don’t believe it’s the best time for Ecuador to issue bonds,” reported the daily newspaper El Universo, citing announcements made by Ecuador’s Finance Minister Richard Martinez during a press conference in Quito.

***

Bolivia’s Hydroelectric Potential 38,000 MW, CAF Says

(Energy Analytics Institute, Jared Yamin, 4.Jul.2018) – This figure is according to the most recent study results, and excludes protected areas.

The figure climbs to a bit over 60,000 megawatts if protected areas are included, reported the daily newspaper La Razón, citing Antonio Pinheiro, CAF Development Bank Corporate Vice President of Infrastructure.

***

ENDE to Investigate High Electricity Rates

(Energy Analytics Institute, Jared Yamin, 4.Jul.2018) – Citizens in the city of Trinidad, located in department of Beni, continue to protests elevated electricity rates.

As a result, the Beni Electricity Distributor (ENDE DELBENI S.A.M.), a subsidiary of the National Electricity Company (ENDE), plans to investigate complaints circulating of customers being charged electricity rates up to 300% higher in the city.

“There is a special situation here. People are complaining about their high invoices, and the task at hand now is to try to verify, inspect, and investigate what is happening,” reported the daily La Razón, citing company official Humberto Villegas.

***

Petrobras, CNPC to Finish Rio Refinery

(Efe, 4.Jul.2018) – Brazilian state oil company Petrobras and China’s state-owned China National Petroleum Corporation signed a letter of intent to conclude construction of a refinery in Rio de Janeiro, the South American company said.

Work on the refinery, known as the Rio de Janeiro Petrochemical Complex (Comperj), has been stalled since 2015 due to the sprawling Car Wash probe, initially focused on a massive bribes-for-inflated contracts scandal centered on Petrobras

***

China to Invest $250 mln to Boost Venezuela’s Oil Sector

(Bloomberg, 4.Jul.2018) – Venezuela’s distressed oil sector may get some much needed financing from China, Finance Minister Simon Zerpa said after meetings with officials from China Development Bank and China National Petroleum Corporation.

China Development Bank will invest more than US$250 million to boost Venezuela oil production in the Orinoco Belt, Zerpa, who is currently in Beijing for bilateral talks, said in a ministry statement.

“We’ve received the authorisation for a direct investment of more than US$250 million from China Development Bank to increase PDVSA production, and we’re already putting together financing for a special loan that China’s government is granting Venezuela for US$5 billion for direct investments in production,” Zerpa said.

The two countries will sign an additional three or four financing deals in the coming weeks, he said.

Venezuela’s oil output averaged 2.9 million barrels a day in 2013, when President Nicolas Maduro was first elected.

In June, output dropped to around 1.36 million barrels per day, according to International Energy Agency data.

State oil company PDVSA has been struggling to send oil shipments to China after a legal order granted to ConocoPhillips froze its assets in Caribbean ports and terminals.

Maduro has vowed to boost production by 1 million additional barrels, while critics say output will plummet to 1 million barrels a day by the end of this year.

Venezuela and China officials will continue meetings on Wednesday, the ministry said in its statement. Zerpa, who has served in the post since October, was sanctioned by the US Treasury Department before his appointment.

***

Venezuela’s Declining Crude Exports Squeeze India’s Refiners

(Reuters, Marianna Parraga, 3.Jul.2018) – Venezuela’s crude shipments to India, its third largest export market, fell 21 percent in the first half of the year, according to internal documents from state-run PDVSA, adding to supply troubles for Indian refiners as they are increasingly pressed to diversify oil imports.

Venezuela’s production decline to a 30-year low and export woes stemming from mismanagement, lack of investment and payment delays are affecting almost all of the OPEC-nation’s customers.

But the impact on India is notable and comes as its refiners are now preparing for a “drastic reduction to zero” of oil imports from U.S.-sanctioned Iran.

Last week, PDVSA officials met with executives from India’s Reliance Industries and Russia’s Rosneft, which owns a majority stake in India-based Nayara Energy, to discuss trade issues, the state-run company said.

The talks focused on how to remedy export delays, according to a person familiar with the matter.

Venezuela sent almost 280,000 barrels per day (bpd) of heavy crude to India in the first half of the year, a 21 percent drop versus the 355,500 bpd shipped in the same period of 2017, according to PDVSA trade documents.

The decline is the second steepest after the United States, which has suffered a drop of about 30 percent in crude imports from Venezuela this year, the documents seen by Reuters show.

If crude supplies from Iran and Venezuela, two of India’s top five oil suppliers, cannot be secured in coming months, some of the nation’s refiners would have to rely almost entirely on sourcing the heavy barrels they need from Iraq, according to analysts.

“Indian refiners are very worried about supply from Iran, but also from Venezuela,” said Robert Campbell from consultancy Energy Aspects.

Saudi Arabia is expected to boost supply to India in the short term, but those barrels would not match the quality of the missing Venezuelan crude, he added. “The lack of heavy barrels is not a problem only in the Atlantic Basin but in Asia as well,” he added.

PDVSA and Nayara did not reply to requests for comment. India’s Reliance declined to comment.

India is the world’s fourth largest refiner after the United States, China and Russia. While Chinese and Russian firms resell a large portion of the Venezuelan crude and fuel they receive to monetize oil-for-loan agreements, Indian refiners need the barrels they get through crude supply contracts with PDVSA.

FEWER BARRELS FOR EVERYBODY

Venezuela’s crude output is declining faster than expected amid insufficient investment, attempts to seize its overseas assets over payment disputes and skilled workers leaving its oil industry due to low salaries and an extended corruption probe within PDVSA.

The country’s oil production averaged 1.58 million bpd in the first five months of 2018, according to figures reported to OPEC, its lowest annual level since 1985. The fall, which is putting pressure on global supply and contributing to growing oil prices, has also taken a toll on exports.

PDVSA last month requested customers not send tankers to its main port of Jose to alleviate congestion. But vessels have continued arriving mainly for Chinese, Indian and U.S. clients, according to Thomson Reuters vessel tracking data.

The tanker bottleneck has worsened since May, when ConocoPhillips started legal actions to seize PDVSA’s assets to satisfy a $2-billion arbitration award, blocking the state-run firm from using its Caribbean terminals.

In June, PDVSA shipped to India 268,300 bpd after servicing some vessels that had waited for up to a month to load. The Venezuelan firm plans to deliver some 240,000 bpd in July, according to Reuters and PDVSA data.

The unstable crude supply from Venezuela to India in recent months has mainly benefited Iraq, India’s largest crude source, and United Arab Emirates, which in May replaced Venezuela as India’s fourth biggest crude supplier.

Reporting by Marianna Parraga in Houston, additional reporting by Promit Mukherjee in Mumbai; Editing by Tom Brown and Marguerita Choy

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Oil Price Weighs on Barbados’ Inflation

(Trinidad Express, Aleem Khan, 4.Jul.2019) – High oil prices on their own appear to be good neither for Trinidad and Tobago nor Barbados, according to statements by an International Monetary Fund (IMF) senior economist, and Petroleum Company of Trinidad and Tobago Limited (Petrotrin) Chairman Wilfred Espinet, over the last week.

On June 27, for the second time, Espinet pointed out that Petrotrin is a net consumer of foreign exchange as it pays more for the crude oil than it earns from selling crude products. Espinet first raised the issue in Couva on May 4 while addressing an agglomeration of chambers of commerce.

Subscription required by Trinidad Express to read complete article.

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T&T’s Energy Issues

(Trinidad Express, David Renwick, 3.Jul.2018) – You don’t have to look very far to determine the issues facing the Trinidad and Tobago energy industry at the moment. Top of the list would be restoring crude oil production, which languishes at around 72,000 barrels a day (b/d) at the moment.

That can be accomplished by the upstream producers doing more development drilling, as well as bringing new entrants into the industry. It also means tackling new sources of oil, such as the tar (or oil) sands in southern Trinidad.

Subscription required by Trinidad Express to read complete article.

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Methanol, Ammonia Prices to Remain Flat

(Trinidad Guardian, 4.Jul.2018) – The Ministry of Energy and Energy Industries is predicting that over the next five years methanol prices will average US$375 per metric tonne, while ammonia prices will be closer to US$310 per metric tonne.

Subscription required by Trinidad Guardian to read complete article.

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China Throws Venezuela’s Oil Industry $5B Lifeline

(OilPrice.com, Irina Slav) – China’s Development Bank has approved a US$5-billion loan for Venezuela’s oil industry, Bloomberg reports, quoting the troubled South American country’s Finance Minister Simon Zerpa.

“We’ve received the authorization for a direct investment of more than $250 million from China Development Bank to increase PDVSA production, and we’re already putting together financing for a special loan that China’s government is granting Venezuela for $5 billion for direct investments in production,” the official said.

The loan is literally a lifeline for PDVSA, which has been unable to stop an accelerating production decline resulting from years of mismanagement and a cash crunch brought about by the tightening grip of U.S. sanctions.

International Energy Agency figures suggest Venezuela produced an average 1.36 million barrels of oil daily last month. This is down from 2.9 million bpd five years ago. President Maduro vowed to increase production by 1 million bpd by the end of the year, but he admitted that the goal would be difficult to meet.

It became even more difficult after ConocoPhillips seized PDVSA storage facilities in the Caribbean, keeping it from meeting its export obligations and creating tanker bottlenecks at Venezuelan ports.

PDVSA’s exports to China also suffered as a result of the quickly deteriorating situation. Shipping data from Reuters last month suggested that these could have plummeted to an eight-year low. This would have provided additional motivation to China to lend Venezuela a hand with growing its oil production.

As a major creditor and ally, China is sure to benefit from some preferential oil export conditions amid rising international prices that would ensure its continued backing of Caracas.

“One of the best things about Venezuelan oil was its stable volumes for all these years and competitive prices,” a senior Chinese oil industry official with direct knowledge of the Venezuelan supply issues told Reuters last month. “But now they seem in very bad shape, not having the money to upgrade port facilities, no money even to remove the high water content in crude oil.”

***

PetroTal Reports First Oil from Bretana

(PetroTal Corp., 3.Jul.2018) – PetroTal Corp. achieved first oil production from the Bretana Norte discovery well at the Bretana field in Block 95 in Peru.

The company also provided further operations updates for both Bretana and Block 107. All figures referred to in this press release are denominated in U.S. dollars.

Operations Highlights

— First oil production achieved in five months, significantly ahead of schedule

— Discovery well flowed oil without stimulation

— Well produced 100 percent oil with minimal natural gas and no formation water to date

— Commissioning of facilities is progressing as expected and on schedule

— Water handling facilities on schedule for commissioning in October, 2018

— 7,000 barrels of oil produced to date through the ongoing long-term testing phase

— Signed oil sales contract allows for strong operating netbacks to PetroTal

— First oil sales and shipment expected in early July, 2018

— Osheki prospect in Block 107 remapped, independent resource audit being prepared

Operations Update

The company initially provided guidance that the Discovery Well, which had been tested but not produced, could commence production in 10 to 12 months from PetroTal taking over operational control of the field in late December 2017. The Company is pleased to announce that on June 1, 2018 the well was placed on production through long-term testing, allowing for the start of the commissioning of the newly installed oil production facilities, five months earlier than anticipated. Field personnel have controlled the choke sizes of the well over the initial four weeks to carefully manage the commissioning of the facilities and to properly commission the facilities. The Discovery Well is testing oil from the Vivian formation, producing 100 percent oil with minimal natural gas and no formation water. As previously announced, the company is restricting the well flow rates to avoid water production until the required water injection facilities are installed and commissioned in October of this year.

In addition to putting the Discovery Well on production, the company is installing initial water handling facilities at Bretana. The project is on schedule to begin commissioning water treatment and reinjection facilities by late October 2018. At that time, oil production rates from the Discovery Well are anticipated to increase to between 2,000 and 2,300 barrels per day (b/d). The company has also completed refurbishment and construction on the existing drilling pad and is now able to drill additional wells without causing material interruptions to production.

Manolo Zuniga, President and Chief Executive Officer of PetroTal, stated: “We are extremely pleased for having been able to achieve first production in just five months. The well and the newly installed equipment have met expectations of field personnel and there have been no issues with achieving oil flow at sufficient rates to commission equipment. As mentioned above, the well is being produced under a restricted choke to avoid producing water until the full facilities are installed to handle produced water in October of this year. In the meantime, the well is expected to produce without stimulation at rates of up to 1,000 b/d, depending on the planned activities and objectives of field personnel, gather well and reservoir data, and meet the requirements of the initial oil sales contract which calls for PetroTal to sell up to 1,000 b/d to the Iquitos refinery.”

Oil Sales Contract

The Company is pleased to announce the execution of an initial oil sales contract with PetroPeru, Peru’s state oil company and owner of the Iquitos refinery, pursuant to which the company is entitled to sell up to 1,000 Bbls/d to the refinery during the initial long-term testing phase. The company successfully negotiated a discount equivalent to 14 percent from Brent; however, the company does not pay pipeline tariffs during the contract term as all oil is barged to the refinery. Additionally, the crude oil will be picked up at the Bretana field and transported to the refinery by PetroPeru at a cost equivalent to our internal cost projections. As a result, the company expects to achieve strong operating netbacks. The company expects to deliver most of the initial oil recovered to date to the refinery in early July. The chart below outlines the company’s anticipated operating netbacks at certain benchmark reference prices:

             
Benchmark Brent Prices $60.00 $65.00 $70.00 $75.00 $80.00 $85.00
             
Realized Price $51.44 $55.73 $60.02 $64.31 $68.59 $72.88
               
  Royalty $2.57 $2.79 $3.00 $3.22 $3.43 $3.64
  Barging $5.50 $5.50 $5.50 $5.50 $5.50 $5.50
  Pipeline 0 0 0 0 0 0
  Lifting $21.95 $21.95 $21.95 $21.95 $21.95 $21.95
             
Operating Netback $21.42 $25.49 $29.57 $33.64 $37.71 $41.79

The higher per unit lifting costs included above are driven by the initial lower production rates during the initial commissioning and testing phase.  The Company expects future lifting costs to approximate $11 per barrel once production reaches 5,000 b/d.

Mr. Zuniga continued “As demonstrated, the avoidance of paying the pipeline tariff effectively reduces our cost structure, thus the negotiated 14 percent discount is beneficial for both PetroTal and PetroPeru, the owner of the Iquitos refinery. We use a lifting cost of $21.95 per barrel on this initial production as the early restriction on production rates affect the unit costs. Additionally, we have yet to finalize the commissioning process, so this initial estimate could vary.  In any event, you can see that this is a robust project.”

Block 107 Osheki Prospect

The company has completed the remapping of the Osheki prospect based on all available data. The revised maps suggest there is closure on the structure and up to three producing horizons may hold hydrocarbons. Updated maps are available in the investor presentation on the Company’s website at www.petrotal-corp.com.

In addition, the company has retained Netherland, Sewell & Associates, Inc., qualified independent reserves evaluators, to prepare an initial hydrocarbons volumes assessment of the Osheki prospect. Once this assessment is complete, the company expects to open the Block 107 data room for prospective partners to review.

***

National Oil Co for Guyana Would Be Disaster

(Stabroek News, 3.Jun.2018) – The creation of a National Oil Company (NOC) will be “a disaster” for this country warns former Government Advisor on Petroleum, Dr. Jan Mangal who says that Guyana should learn from the experiences of sister Caribbean countries, Trinidad and Tobago and Jamaica.

However, the government says that it has been advised by a number of international organizations, including Chatham House of the UK, that a NOC would be beneficial to this country.

“Here we go again with national oil companies in the Caribbean. Both Petrotrin (Trinidad) and Petrojam (Jamaica) are in the news because of corruption,” Mangal said as he urged Guyanese to not support a call for the establishment of one here.

“Guyanese: Please remember these two nations have much larger and better run economies than ours, and much stronger institutions. Hence imagine what will happen in Guyana, with our weaker capacity, if elements in our government and their private sector cohorts are allowed to create a national oil company with access to our oil. It will be a disaster,” he added, pointing to recent scandals in Jamaica and neighbouring Trinidad and Tobago.

Recently, Jamaica’s Petrojam, which supplies a range of domestic, transportation and industrial petroleum products in that country, was hit with a number of allegations of corruption and victimisation. It saw questions surrounding the use of public funds snowballing in recent weeks during which there has been an outcry for Prime Minister Andrew Holness to act, the Jamaica Gleaner newspaper has reported.

Over in Trinidad and Tobago, a forensic audit report by the Canada-based Kroll Consulting Canada found that the state-owned Petrotrin paid a company, A&V, for oil produced between January and June of 2017, which it did not receive. In September, Petrotrin announced that it had launched an investigation into the reports of inconsistencies in the volumes reported from its exploration and production fields.

Mangal, whose contract as an Advisor to President David Granger ended in March of this year, has said that he will, “Outline the mechanism used by some oil companies and their local friends (in government and in the private sector) to defraud needy people in countries around the world, like in Guyana.”

But government says that although the establishment of a NOC is not in its immediate plans, there will be one formed sometime in the future and that it has been advised by several international organizations that it was the way to go.

“Government has been advised by several international organizations, foremost amongst which is Chatham House though Dr. Valerie Marcel, that the NOC is the direction we would be headed. We believe we will get there one day but it is not a matter that is on our list of immediate,” Minister of Natural Resources Raphael Trotman told Stabroek News when contacted.

Further, he added, “The rationale for a NOC is always that countries get a greater share of the revenue and at the same time gain valuable experience. We are keeping the idea alive but there is no discussion when.”

Other experts have also said that they believe that an NOC, if properly equipped with needed regulations and insulated from politics, would serve beneficially to the people of Guyana.

“State controlled oil major, is an absolute must! And the sooner, the better. NOCs control approximately 75% of the world’s oil market and 90% of the world’s oil reserves, evidence that having NOCs have become a normalcy. The advantages of an NOC are unlimited.  In recent years, NOCs have developed global reach and influence,” a former United States Department of Energy Manager, Dr. Vincent Adams had told this newspaper, in an interview earlier this year.

“With the proper contract arrangement with the NOC representing  the Government’s interest, the arrangement allows for personnel from the NOC working alongside their IOC counterparts and `learning by doing’, ultimately acquiring the ability to operate both within its own jurisdiction and abroad; thus, bringing revenues back to their home countries,” he added.

Vehicle

Most significantly, Adams believes, is that NOCs provide a vehicle for state participation and the ability to drive greater local content and capacity building in terms of directing the purchase of local goods and services. “The lessons learned from bauxite was that we were not ready for nationalization, since we failed to build the capacity to manage on our own upon nationalization. An NOC will give us that capability and strengthen our position in negotiations,” he asserted.

Using his country’s experience as a model, former Minister of Energy of Trinidad and Tobago, Kevin Ramnarine had also this year advised on an NOC but stressed that it must be insulated from political interference.

“This company’s board and management must be insulated from politics as is the case with Statoil (Norway) because if it is not, you will get a call to hire somebody’s nephew,” Ramnarine said.

“I would recommend that whatever state companies you form, it doesn’t have to be all, put part of the equity on the stock exchange,” he added.

He pointed to Norway’s Statoil and Russia’s Gazprom among other companies saying that Guyana can earn needed revenue through the establishment of such companies.

Pointing to the detriment of a state company influenced by politicians, as witnessed in his home country, he emphasized that before such a decision be taken here the companies must be removed from politics. “There is also the whole issue of political influence in state enterprises in Trinidad. When we look at the Norwegian company Statoil, their Board of Directors are independent, and for example the workers of Statoil get to vote on who should be a director…you begin to dilute the political influence in the company,” he posited.

The former People’s Partnership Energy Minister recommended that Guyana set up three state-owned companies. “I am going to recommend that Guyana sets up three state enterprises, one to participate in the upstream, alongside with companies like Exxon, one to focus on infrastructural development and one to focus on marketing of products… our new production-sharing contracts in Trinidad allow the ministry to market their own hydrocarbons,” he said.

***

US$1.4B Deal to Restart St Croix Refinery

(Stabroek News, 3.Jun.2018) – U.S. Virgin Islands Governor Kenneth E. Mapp announced yesterday an agreement which would reopen one of the world’s largest refineries, create hundreds of jobs in the territory and buttress the solvency of the Government Employees Retirement System (GERS).

According to a release from his office, Mapp said the US$1.4 billion pact was between the Government of the Virgin Islands and ArcLight Capital Partners, LLC, the owners of what had been one of the largest oil refineries in the world when it was shut down on the USVI island of St Croix in 2012. The release said that the deal includes reopening the refinery portion of the operation, which when restarted, will funnel hundreds of millions of dollars into the local economy.

The release said that under the agreement with ArcLight Capital, the owners of what is now called Limetree Bay Terminals, the company will invest approximately US$1.4 billion to upgrade the existing refinery located in St. Croix. Over the next 18 months, this will create more than 1,200 local construction jobs.

Once refinery operations begin at the end of 2019, as many as 700 permanent jobs will be created. The new jobs will be in addition to the over 750 jobs now at the terminal storage facility. The initial refining operations provide for the processing of around 200,000 barrels of crude oil feedstock per day.

“This agreement is great news for the people of the Virgin Islands as we continue to grow and expand our economy,” said Mapp, who added it is tremendous news for the ‘big island,’ which felt the full brunt of the shutdown of refining operations in 2012.  He added that the capital investment will not only benefit St. Croix since the monies from the agreement will boost the solvency of GERS and will also help fund a new 110-room, “upscale lifestyle” hotel, flagged by a major four-star brand on the sister island of St. Thomas.

Upon the closing of the transaction, ArcLight Capital will make a US$70 million closing payment to the Government of the Virgin Islands. The payment includes US$30 million for the purchase from the government of approximately 225 acres of land and 122 homes. The release said this property was acquired as part of the government’s settlement of certain claims against HOVIC, PDVSA of Venezuela, Hovensa and Hess Oil Corporation.

Once refinery operations begin and after crediting the US$40 million of prepaid taxes, Limetree will make annual payments to the government in lieu of taxes at a base rate of US$22.5 million a year. With market adjustments based on the refinery’s performance, this could increase to as much as US$70 million per year, but will not fall below US$14 million a year, the release said.

The release said that according to industry experts and consultants Gaffney, Cline & Associates, the government expects to receive more than US$600 million over the first 10 years of the restart of the refining operations. This income is in addition to the US$11.5 million currently flowing to the government from the oil storage terminal each year.

“For comparison sake, in the over 30 years that Hess Oil operated the refinery on the island of St. Croix, the company paid approximately US$330 million in corporate taxes to the government. As you may recall, in 2015 Hess Oil filed suit for the return of (those tax payments),” Mapp pointed out in the release. Hess Oil is one of the partners of ExxonMobil’s subsidiary, Esso in the Stabroek Block in Guyana’s waters.

Mapp said: “This landmark agreement did not happen overnight. It is the result of much hard work by the owners of ArcLight Capital and my Administration over the past two years. It is the product of complex negotiations with major players in the global oil industry. It required tremendous work with the Trump Administration and the President’s Council of Environmental Quality, the EPA (United States Environmental Protection Agency) and the U.S. Department of Justice. More work remains to be done, but this agreement allows the Virgin Islands to accelerate its recovery, grow its economy, create jobs for its people, propel new startup businesses, as well as support existing businesses and ultimately provide revenues for our government and our retirement system,” he said.

The release added that qualified Virgin Islands residents will be given preference in all hiring. ArcLight Capital will be obligated, and the local government will assist, to advertise and publicize all job opportunities for local residents. Residents of St. Thomas and St. John, who may be interested in working during the reconstruction of the refinery, will be offered a place to live while working on St. Croix without charge, the release added.

***

Petrozamora Incorporates Steam Generators in Zulia

(Energy Analytics Institute, Piero Stewart, 3.Jul.2018) – PDVSA Petrozamora, a joint venture comprised of PDVSA and Russia’s Gazprom, completed recovery and incorporation of two steam generators.

The generators, Simón Bolívar 24 (SB-24) and Simón Bolívar 40 (SB-40), are located in located in the state Zulia at the Lagunillas Field in an area denominated location U74, reported PDVSA in an official statement.

The actions by CVP form part of a plan to recover lost production, and includes reincorporating eleven (11) boilers designed to improve the artificial lift processes at the Bachaquero and Lagunillas fields, both of which are operated by the joint venture.

***

PetroPiar Ends Preventative Maintenance

Workers at PetroPiar JV in Venezuela. Source: PDVSA

(Energy Analytics Institute, Piero Stewart, 3.Jul.2018) – Work on the upgrader concluded four days ahead of schedule, according to Caracas-based PDVSA.

Operational activities at the upgrader included substitutions in the naphtha and light vacuum gas oil (LVGO) lines, maintenance of interchangers, internal drum replacements (Demister), and replacements related to the value 48 sealing system (Metax System), as well as the repair of atmospheric furnace tubes, announced PDVSA in an official statement.

The PetroPiar mixed company enterprise partners PDVSA, as the Venezuelan state oil company is known, and US-based Chevron Corporation.

***

PentaNova, YPF Discuss Llancanelo Issues

(PentaNova Energy Corp., 3.Jul.2018) – PentaNova has been attempting to negotiate a payment plan for cash call balances with YPF without success to date.

As part of the various Argentina acquisitions completed by PentaNova in August and October 2017 relating to the Llancanelo heavy oil asset, the company, through its wholly-owned subsidiary Alianza Petrolera Argentina SA (Alianza) initially acquired a 39% working interest in the Llancanelo block, and assumed cash call balances owed to YPF, and in November 2017, the company farmed-in to acquire an additional 11% working interest from YPF, subject to regulatory and administrative approvals and to the satisfaction of certain terms and conditions.

The company recently received formal notification from YPF advising that, under the terms of the governing agreement of the Llancanelo joint venture project, oil production pertaining to the company’s participating interest in the concession will be retained by YPF, with sales of such oil production, net of operating costs, being credited towards PentaNova’s outstanding cash call balances. Furthermore, the governing agreement of the Llancancelo joint venture states that a failure to pay the outstanding cash call balance may result in the defaulting party losing it’s working interest. The company is currently holding discussions with YPF in order to find a solution to retain the 39% working interest in addition to exploring financing options to cover the cash call balance. YPF is the operator of the Llancancelo concession.

In relation to the Farm-in agreement, Alianza has not been able to satisfy certain conditions precedent, including securing financing for its farm-in obligations and obtaining regulatory and administrative approval before the longstop date of June 22, 2018, and is consequently engaged in discussions with YPF.

***

World Bank Sees $65/bbl Oil for 2019

(Energy Analytics Institute, Ian Silverman, 3.July.2018) – The price of crude oil is forecast to approach around $65/barrel in 2019 by the organization.

However, the oil price levels next year are expected to be lower that levels in 2018, reported the daily newspaper El Diario, citing World Bank Economist Shantayanan Devarajan.

***

Cabinet Removes Energy Portfolio Over Petrojam

(Jamaica Gleaner, 2.Jul.2018) – Dr Andrew Wheatley has been stripped of the energy portfolio as the government implements a raft of changes at the controversy-plagued oil refinery Petrojam.

A statement a short while ago from the Cabinet indicates that the portfolio has been shifted to the Office of the Prime Minister.

It says the move is in the interest of transparency in light of ongoing investigations.

Petrojam is currently under investigation by at least four oversight state entities, which are probing claims of corruption, fraud and mismanagement.

The oil refinery’s parent ministry is the Ministry of Science, Energy and Technology.

With the shift in portfolio responsibility, Wheatley retains ministerial control of science and technology.

There have been calls for Wheatley to resign or be fired by the prime minister over the handling of the affairs of petrojam but those calls have been ignored.

FULL STATEMENT

Cabinet today continued its consideration of a report it received last week on Petrojam and, having regard to investigations already underway, decided the following:

  1. The residential status of all persons nominated to boards must be stated in the Cabinet Submission seeking approval for appointment.
  2. Overseas travel of Board Chairmen or Board members must receive prior approval of the Minister.
  3. Public bodies will be prohibited from entering into sole source retainer contracts without the prior approval of Cabinet.
  4. The Ministry of Finance has been tasked to develop and finalise uniformed regulations for public bodies around donations and corporate social responsibility. Among other things, this would see limits on the amount that can be approved at the agency level. It will be a requirement that all donations be disclosed with details to include the amount, the receiving entity, the purpose of the donation and connected party consideration with the management, board of directors or the Minister.
  5. After discussion with Minister Wheatley, it was agreed that Petrojam requires strategic review of both of its management and operations, as well as its long-term commercial viability and role in Jamaica’s energy security.  Having regard to this and the ongoing investigation, Minister Wheatley agreed with the Prime Minister that in the interest of transparency, the energy portfolio will be transferred to the Office of the Prime Minister, effective July 4, 2018.
  6. A special enterprise team will be assembled to conduct and oversee the organisational and strategic review of Petrojam.

***

Free Oil Market to Reign in Argentina

(Bloomberg, 2.Jul.2018) – Argentina’s move to a free market for energy prices remains on track.

A recent decision to cap crude oil prices and limit fuel price gains in order to stem inflation was an outlier, according to Javier Iguacel, the nation’s new energy minister. Restricting crude price increases only extinguishes competition and, in turn, the possibility of cutting costs, he said.

“There’ll be no more agreements,” Iguacel said in an interview. “It’s a free market. Companies can set the fuel prices they consider best for business. And they shouldn’t expect a lower domestic oil barrel either.”

Investors had become jittery because of the agreement from May to July, which capped oil at $68/bbl this month and constrained fuel price hikes in a bid to shield Argentines from a peso devaluation and a rally in crude. Inflation is running at more than 25%. Argentina had moved to a free market in October after years of interventionism.

State-run YPF SA raised fuel prices at the weekend for July by more than was originally agreed with Iguacel’s predecessor, ex-Royal Dutch Shell Plc executive Juan Jose Aranguren. That demonstrates the free market already reigns, he said.

In a sign Argentina is committed to deepening its market shift, Iguacel confirmed the government will eliminate the role of a state intermediary in future power contracts, starting in September. Now, Compania Administradora del Mercado Mayorista Electrico SA — Cammesa for short — sets the prices power generators pay for fuel and natural gas, and sell electricity. But not for much longer.

“We’re going to get out of the current system,” Iguacel said. “Generators will buy direct from producers, and large-scale consumers and distributors will buy direct from generators.”

Completing the move to a deregulated power market will take up to 18 months. Companies will be able to use an auction process to procure the best prices.

In the utilities sector, however, plans to end most subsidies for natural gas and electricity consumption by the end of next year might extend into 2020, the International Monetary Fund’s deadline for the government to balance its books, Iguacel said.

President Mauricio Macri’s Cambiemos alliance will campaign for re-election in 2019 and the removal of subsidies has been unpopular.

***

Melbana to Spud Cuba Well in December

(Melbana Energy Limited, 2.Jul.2018) – Australia’s Melbana Energy Limited announced preparatory work is continuing in Cuba in readiness for the planned drilling program in Block 9.

From a permitting perspective, intermediate approvals are continuing to be obtained for both the Alameda and Zapato exploration wells as progress is made towards submissions for the final Approval to Drill permits.

Civil works contract scope definition has progressed and the civil works tender evaluation for the Alameda-1 drilling pad was completed and the preferred contractor identified.

Melbana’s Cuba based team has undertaken a number of site visits and community liaison sessions to support potential civil works. Preferred contractor has been identified and discussions are continuing with the preferred drilling rig provider, which is an established local entity, with a drilling rig being identified and a drilling window nominated as notionally commencing in December 2018. The proposed rig is currently planned to be refurbished and upgraded for maintenance and operational purposes in late 3Q 2018. The final decision on drilling contractor, drilling target and timing will be influenced by a number of factors, including any incoming party into Block 9 and their plans, their preferred drilling targets and confirmation of drilling rig availability.

Farm out

Block 9 farmout activities are continuing, with multiple interested multinational parties engaged in assessing the prospectivity of the Block.

Santa Cruz

Work is continuing on the evaluation of the Santa Cruz Incremental Oil Recovery (IOR) opportunity.

***

Argentina to Free Retail Fuel Prices

(Reuters, Luc Cohen, 1.Jul.2018) – Argentina will allow fuel retailers to freely set pump prices starting in August, according to an Energy Ministry official familiar with the plan, a move that could encourage badly needed investment in the nation’s oil patch but risks worsening sky-high inflation and angering consumers.

Separately, the ministry is looking to set up an auction process for the natural-gas market that it hopes will lower prices, according to the official, who was not authorized to speak publicly.

The actions signal that President Mauricio Macri is moving ahead with free-market reforms to attract private investment to develop the nation’s abundant shale oil reserves, even as rising global oil prices and a precipitous weakening of the nation’s currency have led to pressure for more interventionist government policies.

The moves will also bring relief to the oil sector. Price controls have squeezed refiners’ margins, prompting one refinery to suspend operations.

Macri’s pro-business government freed fuel prices last year, part of its efforts to unwind state controls on Argentina’s economy. But his administration reversed course in May due to a rapid decline in the peso. The sudden depreciation rattled markets and prompted Argentina to turn to the International Monetary Fund (IMF) for emergency financing.

In May, the government reached a deal for a two-month freeze on pump prices with the three largest oil companies operating in Argentina: state-owned YPF, Shell, and BP’s Pan American Energy. It later set the price of domestic crude at $68, about $10 below the global Brent crude price, to mitigate the impact of freezing fuel prices on refiners’ margins.

By freeing pump prices, the government is betting that gas stations will limit price hikes to avoid losing customers, the official said, and that by freeing crude prices it would encourage more investment in domestic drilling, part of a long-term strategy to wean Argentina from petroleum imports.

“Price controls do not help with anything,” the official said.

The government and the oil companies agreed to loosen the freeze June 1, allowing for hikes of 5 percent in June and 3 percent in July. Macri’s administration had kept the industry guessing as to what it might do in August.

The earlier increases were unsatisfactory to oil industry players, three of whom complained privately to Reuters that the modest bumps did not come close to covering their increased costs.

Last month, global trader Trafigura announced it was suspending activities at its 30,500 barrel-per-day refinery in the port city of Bahia Blanca due to the “mismatch between fuel prices and production and import costs.”

An oil industry executive who spoke with Reuters recently expressed frustration with the bind.

“The adjustment that needs to be done is not 3 percent, it is 45 percent,” said the person, who requested anonymity to speak freely.

VACA MUERTA RAMP-UP

An end to retail price caps would likely infuriate Argentine consumers, who are already incensed at the government for the drop in the peso and inflation that is running at a 26.3 percent annual clip.

But Macri’s government has prioritized reviving the energy sector to shake Argentina’s dependence on imported oil and gas, and to put an end to market-distorting subsidies.

Argentina possesses the world’s second-largest reserves of shale natural gas and ranks No. 4 in reserves of shale oil, mostly in the Vaca Muerta fields in Patagonia. But it faces stiff competition to attract the billions in private investment needed to develop these resources. Oil production is languishing at multi-decade lows.

The picture is brighter with natural gas. Rising output in Vaca Muerta helped boost the country’s production by 3.4 percent in the first quarter of 2018 compared with the same period last year, according to government data.

“We are beginning to have an abundance of gas in Argentina,” the Energy Ministry official said.

As a result, the ministry will create an auction process for wholesale customers to bid on the open market for their natural gas supplies during the low-demand summer months, the official said. The plan is to phase out the current fixed-contract system in a move the government hopes will lower prices.

The auctions could start in September or October, and could account for as much as 70 percent of wholesale supply by March or April of 2019, the official said.

Argentina is also expected to begin gas exports to Chile in the fourth quarter of this year, another result of rising Vaca Muerta output.

Argentina will still need to import liquefied natural gas (LNG) to meet demand in winter months.

***

Pipeline Releases 125 Bbls into Magdalena River

(Energy Analytics Institute, Ian Silverman, 30.Jun.2018) – Ecopetrol announced an oil spill of 125 barrels into the Magdalena River.

The spill occurred while repair activities were being conducted to an underwater pipeline that transports crude from the auxiliary station of the municipality of Cantagallo (Bolívar) to the Isla 6 station located in the town of Puerto Wilches (Santander). The incident, which occurred on June 13, 2018, caused oil to spill into the Magdalena River, reported the daily newspaper El Tiempo.

The estimates, of the barrel amounts, were made utilizing hydraulic simulation computer tools, data about the length and altitude of the pipeline, pressure, the observed failure area of the pipeline, fluid characteristics, water cut of the transported fluid, the time at which the event started, as well as filling volume during commissioning.

***

ISA CTEEP Awarded $1.7 Bln Projects in Brazil

(Energy Analytics Institute, Ian Silverman, 30.Jun.2018) – The company was awarded two areas that total 2,560 kilometers of transmission lines, and substations with transformation capacity of 12,230 mega-volt amperes.

The announcement came as part of an auction of 20 energy transmission projects carried out by the National Agency of Electric Power of Brazil (Aneel by its Portuguese acronym) with the aim to strengthen Brazil’s national interconnected system, reported the daily El Tiempo.

“The company will invest close to $1.680 billion in the next five years,” reported the daily, citing Reynaldo Passanezi Filho, president of ISA CTEEP, an affiliate of Interconexión Eléctrica S.A. (ISA).

***

Frontera to Spud Delfin Sur-1 Offshore Peru

(Energy Analytics Institute, Ian Silverman, 30.Jun.2018) – Canada’s Frontera Energy Corporation announced commencement of mobilization of the Petrex-10 drilling offshore Peru.

Drilling of the Delfin Sur-1 exploration well is expected to begin in July 2018, the company announced in an official statement.

***

Brazil Deep-water Competitiveness: José Firmo

(Energy Analytics Institute, Aaron Simonsky, 29.Jun.2018) – “Today Brazil is the most competitive in all of deepwater and ultra-deepwater,” José Firmo, Brazilian Petroleum Institute, said during a debate hosted by Washington, DC-based Inter-American Dialogue.

***

ENAP Board Appoints New CEO

(ENAP, 29.Jun.2018) – The new executive has a long and successful career, which highlights his experience in the management of large companies, as well as an innovative business vision.

After an exhaustive search and selection process carried out by the consultancy Seminarium, ENAP Board of Directors, headed by its Chairwoman, Loreto Silva, made the decision to appoint Mr. Andrés Roccatagliata Orsini, as chief executive of the company, who will take office on August 6.

The Board of Directors sought an executive with extensive experience in leading large companies and high-performance teams, with an innovative business perspective to accompany in the challenge of making the company more dynamic and efficient, which improves the existing internal knowledge and allows enhancing the advantages of ENAP. The new chief executive will contribute his leadership capacity and renewed vision to generate the necessary synergies in a dynamic area that requires new solutions for new challenges.

“In ENAP and in this Board of Directors there are professionals who know well the energy business and the company, today we look for a fresh and innovative look that allows us to make the leap and get ahead of the sector. Andrés has a very refined business perspective, he knows how to look for opportunities, generate alliances and adapt large companies to highly competitive industries and environments,” explained Loreto Silva.

Andrés Roccatagliata, a business engineer by profession, currently serves as vice president of Banco Ripley in Chile and Peru, a position he assumed after being chief executive of Ripley for nearly a decade. Previously, he made a career of more than 20 years at Banco Santander, where he has started as a collecting agent to end as Manager of the Commercial Banking Division.

His main challenge will be given by the implementation of the recently approved Business Development Plan that will allow ENAP to adapt and innovate in such a competitive and dynamic environment as the energy sector, in order to improve the company’s equity and cash generation capacity.

In the opinion of the Chairwoman of the Board of Directors “We have made available all our work and dedication to install the new Corporate Government and move forward in the construction of an efficient and sustainable ENAP. Our first goal was the revision of the strategic plan to ensure that the company can fulfill its key role in the country’s development, which is to provide security of supply in clean fuels and build a sustainable energy future. Today, it will be up to Andrés to promote this view from innovation. Thanks to his leadership ability to summon teams of excellence and build optimal working climates, we are sure he will achieve it successfully,” said the head of the board of the state-owned company.

***

Venezuela’s Oil Ministry Has New Website

(Energy Analytics Institute, Piero Stewart, 29.Jun.2018) – Venezuela’s Oil Ministry launched its new website and promotional video regarding the same.

***

Sapura E&P Signs PSC in Mexico

(Energy Analytics Institute, Ian Silverman, 29.Jun.2018) – Three months after being awarded Mexico’s Block 30, Sapura and its partners sign a PSC.

“We are proud to be the only Malaysian-owned company to be awarded during this bidding round, together with our partners. This is a significant milestone for Sapura Energy Group in reinforcing our position in the industry, establishing our presence in Mexico and growing our E&P portfolio,” said Sapura Energy President and Group Chief Executive Officer Tan Sri Dato’ Seri Shahril Shamsuddin in an official company statement.

Sapura Exploration and Production, a wholly-owned subsidiary of Sapura Energy Berhad and its joint venture consortium partners, DEA Deutsche Erdoel Mexico and Premier Oil, signed a Production Sharing Contract (PSC) for Block 30 with Comision Nacional De Hidrocarburos of Mexico (CNH by its Spanish acronym) on June 27, 2018.

The signing ceremony took place in Mexico City where Sapura Energy was represented by Tan Sri Dato’ Seri Shahril. Also present was His Excellency Pedro Joaquín Coldwell, Secretary of Energy, Mexico and Juan Carlos Zepeda Molina, Commissioner President of the CNH.

Block 30, within the Sureste Basin, is a proven and prolific hydrocarbon province in the Gulf of Mexico. It is located in shallow waters of about 70 meters deep, directly to the south west of Premier’s Zama discovery and to the north of the Amoca oil field. The consortium had outbid six other bidders for this most contested block during the recently concluded shallow water bid round.

The shallow water operating conditions within Block 30 are similar to Malaysia. Sapura Energy has operated in Mexico since late 2012 and has worked closely with state oil company PEMEX on a number of offshore projects, which brings familiarity to local commercial conditions in Mexico.

Sapura E&P entered into the bidding agreement with DEA and Premier based on an equity split of DEA 40%, Sapura Energy 30% and Premier 30%.

***

Sterlite, State Grid Win Brazil Power Licenses

(Reuters, 29.Jun.2018) – India’s Sterlite, China’s State Grid, and Colombia’s Isa clinched licenses to build power transmission lines in Brazil in a government auction on Thursday that is expected to draw a total of 6 billion reais ($1.55 billion) in investment.

Some 47 companies and consortia registered to present bids at the auction at Sao Paulo’s stock exchange B3, which led to a competitive round.

Under auction rules, the companies that offered the biggest discounts in the tariffs would win. Brazil’s electricity regulator, Aneel, registered a 55 percent fall in average tariffs the companies will be allowed to charge.

Sterlite, which debuted in Brazil last year, clinched six projects that will require around 3.6 billion reais to build, according to Aneel.

Cteep, a unit of Colombia’s Isa, won two projects, with projected investments of 880 million reais, while CPFL, a subsidiary of China’s State Grid, was granted a project that is slated to cost about 102 million reais.

Electricity heavyweights such as Portugal’s EDP and Spain’s Iberdrola, bidding through their joint venture Neoenergia, left empty-handed, amid the hot competition.

The licenses include a 30-year contract to operate the lines, with pre-defined annual revenues coming from the tariffs to be charged for the service.

***

Venezuela, Trinidad Review Joint Projects

Officials from Venezuela and Trinidad & Tobago during their meetings in Caracas. Source: PDVSA

(Energy Analytics Institute, Piero Stewart, 29.Jun.2018) – A delegation from Trinidad & Tobago traveled to Venezuela to discuss joint projects and gas related issues.

The meetings were aimed at guarantying the supply of Venezuelan natural gas to the Trinidad & Tobago domestic market, announced PDVSA in an official statement. The officials also discussed plans for gas trading in foreign markets.

Venezuela’s Oil Minister and PDVSA President Manuel Quevedo hosted the meetings.

The Trinidad & Tobago delegation consisted of Stuart Young, Minister of Procurator’s General Office and Legal Matters; Selwyn Lashey, Minister of Energy and Energy Industries; Mark Loquan, President Gas National Company and finally Paul Byam, Trinidad & Tobago Ambassador in Venezuela.

Other Venezuelan officials present during the meetings included: Venezuela’s Vice Minister of Gas, Douglas Sosa as well as Nemrod Contreras, Vice President of Gas.

***

Gazprom to Invest $1.2 Bln in Bolivia

(Energy Analytics Institute, Aaron Simonsky, 28.Jun.2018) – Gazprom confirmed it will invest $1.22 billion in the Bolivian petroleum sector.

The Russian company’s investments will be destined towards exploration activities at the Vitiacua field located in the department of Chuquisaca. Gazprom didn’t rule out financing rehabilitation projects for older Bolivian fields, reported the daily newspaper La Razon.

The announcement came during a ceremony in the presence of Bolivia’s President Evo Morales with Gazprom and the Russian fertilizer company Acron. Other meetings in Moscow included the presence of numerous authorities from the government of Russian President Vladimir Putin.

Bolivia and Russia also discussed deals related to geological cooperation on issues related to groundwater, the daily reported.

***

Ecopetrol Director to Divest of Shares

(Energy Analytics Institute, Ian Silverman, 28.Jun.2018) – Authorization has been granted to a director to sell shares of Ecopetrol S.A.

The Board of Directors of the Ecopetrol has unanimously authorized company Director Dr. Héctor Manosalva Rojas to sell 49,380 of his shares in Ecopetrol.

The transaction was authorized under Article 404 of the Colombian Commercial Code (Código de Comercio), reported the state oil company in an official statement.

***

S&P Affirms Ecopetrol Rating

(Energy Analytics Institute, Ian Silverman, 28.Jun.2018) – The rating agency affirmed the investment rating for Ecopetrol, S.A.

Standard & Poor’s kept Ecopetrol’s long-term international rating at BBB-, with stable outlook, and stand-alone credit rating at bb+, reported Ecopetrol in an official statement.

In a recent report, the agency highlighted Ecopetrol’s solid financial results, with strengthened credit metrics, thanks to the capital discipline and efficiencies it has implemented, according to Ecopetrol. The rating agency noted the positive performance of the downstream and midstream segments, emphasizing the Cartagena refinery’s operating results during its stabilization stage. S&P also recognized Ecopetrol’s focus on increasing reserves, with the positive results posted on the 2017 balance sheet.

***

DOE Assists with $1B Investment in Mexico

(Natural Gas Intelligence, 28.Jun.2018) – Citing a “profound opportunity in Latin America,” Department of Energy (DOE) Secretary Rick Perry said the U.S. government would partner with the Overseas Private Investment Corporation (OPIC) and invest $1 billion in Mexico’s energy sector over the next three years.

The joint initiative, officially the “Partnership to Power the Americas,” was announced Thursday on the sidelines of the World Gas Conference in Washington, DC. Both Perry and OPIC CEO Ray Washburne said the initiative would help American energy companies working throughout the Western Hemisphere.

Specifically, OPIC, a self-sustaining agency of the federal government, would provide financing and insurance when it is unavailable in the private sector. Perry said the initiative would “fund some projects that maybe wouldn’t otherwise get done.

“Our goal here is to create solutions that utilize the expertise, goods and services of our businesses in order to increase energy access, strengthen energy security and ultimately affect prosperity and opportunity in this Western Hemispheric region. We’re in a great position right now to do that, thanks to our U.S. energy abundance and the technical ingenuity that resides in the U.S. There is an enormous potential in Latin America.”

Washburne added that the partnership “will help establish a seamless process for bringing the best of U.S. energy technology and expertise to places in Latin America where it is needed most.”

Perry said recoverable shale and tight gas in the entire Western Hemisphere, which includes the United States and Canada, could potentially make up approximately 40% of the world’s reserves. “Yet the private sector incentives are needed to foster the development of infrastructure that we’re going to be needing for those greater business opportunities,” he said.

“OPIC is going to be prioritizing assistance to those companies seeking to expand in Latin America when private resources are unavailable or insufficient. In turn, we at DOE will be providing the connections, the expertise. We’ll help identify technology areas and sectors where U.S.-based companies have the potential to excel in these markets but lack the capital to do so.”

‘Complete Confidence’ In Mexico’s Next President

Perry said that whomever wins Sunday’s presidential election in Mexico, he had “complete confidence” that the winner would ultimately work closely with the United States to develop that nation’s energy infrastructure. Andres Manuel Lopez Obrador, a frequent critic of energy reforms enacted under President Enrique Pena Nieto, is expected to prevail.

“Regardless of your political leanings, you’re going to need resources to address the needs of your country and your citizens,” Perry said. “The most powerful and expeditious way to address resources coming into the country is through the energy sector. I think Mexico is going to be very willing to work with private sector partners, with the United States.”

The DOE-OPIC joint initiative will “most likely” assist American companies working to develop oil and natural gas pipelines and associated infrastructure throughout Mexico.

“We see Mexico continuing as a good neighbor,” Perry said. “We see Mexico as an economic partner. To help build their foundational economy, energy will play a very important role. We look forward to meeting with the new administration, whoever that individual may be, and finding ways that we can help the citizens of both the United States and Mexico together.”

***

EDP Introduces Blockchain Solution in Brazil

(Renewables Now, 28.Jun.2018) – Energias de Portugal SA (ELI:EDP) announced on Thursday it has become the first to use blockchain technology to measure and record energy consumption and distributed generation (DG) coming from its consumers in Brazil.

EDP’s new solution simplifies the process of managing the energy produced and consumed by its clients’ solar arrays. The initiative is a partnership with the Austrian Riddle & Code.

The new system is a non-removable cryptographic tag that is attached to domestic energy meters to measure the co-consumption of each user. It facilitates transactions and calculations for charging and taxing, EDP said.

This project follows the introduction of Brazil’s legislation on remote consumption of distributed energy, in which consumers can rent a quota from a solar plant that is not allocated on their land, the company noted.

***

Brazil to Auction 20 Transmission Lines

(RioTimes, Lise Alves, Senior Contributing Reporter, 28.Jun.2018) – ANEEL (Electric Energy Regulator) in Brazil will conduct the first energy transmission auction of the year on Thursday (June 28th) with twenty lots of transmission lines up for sale. According to officials the sale of these lots will generate R$6 billion in investments and approximately 13,600 jobs.

“Twenty lots of new concessions will be auctioned, totaling 2,563 km of transmission lines and 12,200 MVA [megavolt-ampere] of transformation capacity in substations,” said the Minister of Mines and Energy, Wellington Moreira Franco on Wednesday.

According to Moreira Franco, the lots to be auctioned are distributed in sixteen states: Santa Catarina, Rio de Janeiro, Ceará, Rio Grande do Norte , Paraíba, Bahia, Sergipe, Alagoas, São Paulo, Tocantins, Goiás, Rio Grande do Sul, Pará, Piauí, Maranhão and Minas Gerais.

“The projects being implemented, for the period 2018 to 2022, will add a total of 34,000 km to our transmission network. This equals to an annual average of 6,800 km. We are talking about R$60 billion in investments,” added the Energy and Mines Minister.

According to Aneel, the transmission facilities must enter into commercial operation within 36 to 63 months from the signing of the concession agreements. and the winning concessionaire shall be entitled to receive revenues from energy produced by the facilities for the next thirty years.

In 2017, there were two auctions, the first in April, when 31 lots were sold, with an estimated investment of R$12.7 billion, and the second in December, when eleven lots were sold, with a planned investment of R$8.7 billion.

***

Ecopetrol Files Collective Labor Claim

(Energy Analytics Institute, Ian Silverman, 28.Jun.2018) – Colombia’s state oil company has filed a collective labor agreement claim with the Ministry of Labor.

As prescribed by law, signatories of collective labor agreements are authorized to state their intentions to amend them through a claim and, if petitions are filed by the unions, the company, in this case Ecopetrol, and the union organizations would have to initiate negotiations for a new collective labor agreement, reported the company in an official statement.

The collective labor agreement between Ecopetrol and its direct employees is for a four (4) year period that began in 2014 and expires on June 30, 2018. Therefore, as explained in the paragraph above, the purpose of the claim filed by Ecopetrol is to state its intention to modify certain provisions of the agreement, consistent with the company’s growth and future prospects.

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Citgo Appoints Aruba Refinery Executives

(Reuters, 28.Jun.2018) – Citgo Petroleum, the U.S. refining arm of Venezuela’s state-run oil company PDVSA, said it appointed two senior executives to new positions as it works to refurbish an idled Aruba refinery.

Luis Marquez was named vice president and general manager at the refinery, a 235,000-barrel-per-day plant in San Nicholas that has been awaiting an overhaul. Edward Oduber also was appointed interim on-site project manager for the refurbishment of the refinery, during Phase II of the project, the company said.

Citgo in 2016 signed an up to 25-year lease with the government of Aruba to refurbish and operate the plant as part of a $685 million project. Earlier this year, it had slowed work on the overhaul due to a lack of credit.

Marquez, who replaced interim general manager Raymond Buckley, began his career in 1981 at the Amuay Refinery in Venezuela and has held positions at PDVSA International Refining, PDVSA Argentina, PDVSA Ecuador, and Petrocedeño, the company said.

Edward began at the San Nicolas refinery in Aruba in 1990, and held positions with Citgo Aruba, Valero Aruba, and Coastal Aruba.

Citgo said that Joe Crawford Jr will continue as general manager maintenance and operations overseeing the operating portions of the facility along with the loading facilities, terminal and distribution network. (Reporting by Gary McWilliams; Editing by Amrutha Gayathri)

***

PDVSA, Rosneft Officials Discuss Projects

(Energy Analytics Institute, Piero Stewart, 28.Jun.2018) – Officials from both oil companies held meetings in Caracas to discuss partnerships.

PDVSA President Manuel Quevedo, who also serves as Venezuela’s Oil Minister, conducted a meeting with Rosneft Vice President Didier Casimiro to discuss joint projects between the Venezuelan and Russian companies, respectively, and consider new opportunities to strengthen strategic relationships, announced PDVSA in an official statement.

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PDVSA, Reliance Discuss Trade Opportunities

Reliance and PDVSA officials during their discussions in Caracas. Source: PDVSA

(Energy Analytics Institute, Piero Stewart, 28.Jun.2018) – Officials from PDVSA and Reliance assess new trade opportunities.

PDVSA President Manuel Quevedo met with a delegation headed by Jayaraman Rajamaran, President and Head – Physical Trading – Crude/Oil Products Refining & Marketing at Reliance Industries Ltd.

Reliance – owner of Jamnagar refinery, the world’s most important refining complex – is an important trade partner to PDVSA.

Besides trade opportunities, the officials discussed issued aimed at increasing technical exchanges about processes and refining best practices, announced PDVSA in an official statement.

***

OPEC Deal Implies 1.972 MMb/d from Venezuela

(Energy Analytics Institute, Piero Stewart, 27.Jun.2018) – OPEC’s recent agreement in Vienna implies Venezuela’s commitment to comply with oil production of 1.972 million barrels per day for the second semester of 2018.

The agreement was announced at the recent meeting – the 4th Ministerial Meeting of Oil Exporting Countries Organization (OPEC) and Non OPEC countries – held in Vienna, Austria with the view to continue joining efforts to achieve world oil market stability through 2016 Production Adjustment Cooperation Statement continuity, announced Petróleos de Venezuela, S.A. (PDVSA) in an official statement.

“The agreement to achieve 100 percent of production level, according to Resolution dated November 30th, 2016, implies to keep the present adjustment and the commitment of Venezuela to comply with 1.972 million barrels a day for the second semester 2018,” announced PDVSA, citing PDVSA President Manuel Quevedo.

Venezuela, the country with the world’s largest oil reserves, produced 1.392 million barrels per day (MMb/d) in May 2018, according to OPEC’s most recent Oil Market Report, citing data from secondary sources. This compares to oil production of 1.911 MMb/d in 2017 and 2.154 MMb/d in 2016, according to the OPEC data.

The Joint Monitoring Ministerial Committee plans to follow up with compliance of production adjustment levels by the OPEC nations, announced Quevedo, who also serves as Venezuela Oil Minister, without provide details.

***

ENAP Articulates Gas Export Framework Deal

(ENAP, 27.Jun.2018) – The signing of this agreement positions ENAP as a leading company in managing agreements that allow greater energy integration between both countries.

A new operation to export natural gas from our country to Argentina began today after the signing of a framework agreement between the two countries, which establishes the general conditions for the supply of this hydrocarbon during winter for the next three years.

The signature of this agreement that strengthens the energy integration between both nations is a result of the efforts made by ENAP with the Argentine state-owned company IEASA (ex ENARSA).

For the third consecutive year, shipments would be supplied by ENAP, ENEL, and Aprovisionadora Global de Energía S.A. (AGESA, part of the CGE group) and would be transported through the Electrogas and GasAndes pipelines. This last gas pipeline connects the Metropolitan Region of Chile with the Province of Mendoza in Argentina through a 450 km pipeline that crosses the mountain range of the Andes.

The signing of a framework export agreement for the next three years will allow the daily export of a maximum volume of 3 million cubic meters for the period that the parties negotiate annually.

The process was led by ENAP, which acted as an articulator of the business with its state-owned counterpart in the neighboring country IEASA (ex ENARSA), reviewing and integrating the quantities of natural gas available in the local market of the different actors.

Marcelo Tokman, Chief Executive of ENAP, said: “The start of a third consecutive shipment of natural gas to Argentina represents a great step forward towards energy integration between both countries.” For her part, Loreto Silva, Chairwoman of the company’s Board of Directors, stressed: “ENAP, once again, stands out as an articulator of energy solutions that will allow Chile to place available gas in other markets, and be a viable business alternative for our neighbors in moments of greater energy need.”

The General Manager of Enel Chile, Nicola Cotugno, highlighted the business model and the benefits for the country. “This operation is done for the third year, and it is only the beginning for multiple businesses that can be articulated between both markets. We see different integration opportunities between Chile and Argentina, in which Enel will be present, contributing its capacity to generate value, for its shareholders and for the countries in which it is present. In addition, this operation is complemented by those carried out by Enel in Chile, supplying gas for generation, consumption of industrial customers and residential gas distributors, from Antofagasta to Temuco.”

For his part, the general manager of Aprovisionadora Global de Energía (AGESA, subsidiary of CGE), Klaus Lührmann said: “It is very important the participation of Provisionadora for the third consecutive year in the export of natural gas to Argentina during winter, even more so if we take into account the recent subscription between Chile and Argentina of the agreement on energy integration that will allow, in the short-term, the free commercialization, import, export, and transport of natural gas and electric power”.

Raúl Montalva, General Manager of GasAndes, said: “We hope that this gas transport, through our pipeline, will increase in the future, incorporating greater volumes transported in any direction, making fully functional the bidirectionality of our pipeline and thus contribute even more to the energy integration between Chile and Argentina.”

***

Petrojam Partner Knocks Contract Process

(Jamaica Gleaner, 27.Jun.2018) – Petrojam, the beleaguered government-controlled oil refinery, spent over $14 billion or 74 per cent of its domestic expenditure over a two-year period to last October via direct and emergency sourcing, rather than competitive bidding contracts, an internal audit by Jamaica’s partner in the refinery revealed.

The audit report, a copy of which was obtained by the Financial Gleaner, was completed in February and forwarded by PDVSA’s internal audit corporate manager Juan Rodriguez to Petrojam chairman Percival Percival Bahado-Singh, who, with the two other Jamaican directors, were forced to resign last week in the face of deepening allegations of widespread corruption at the refinery.

PDVSA, the state-owned Venezuelan oil company, owns 49 per cent of Petrojam.

While its report concluded that most of these direct-source contracts may have been necessary to solve urgent operational and other problems, the auditors complained that “there were items that could have been awarded under a competitive method” – an observation that is likely embolden critics of the refinery’s management in the belief that the excessive use of sole-source contracts opens the way to corruption.

These concerns will be further exacerbated by the report’s tone, which suggests less-than-robust record-keeping and data analysis that made audit verification, in many instances, difficult.

Petrojam’s parent, the Petroleum Corporation of Jamaica, redirected requests for comment on the report to Petrojam, but the refinery’s boss did not respond.

Phillip Paulwell, the shadow energy minister, said he was aware of the report and its contents, but was still studying it before arriving at firm conclusions.

“It does have some glaring matters of concern,” he told the Financial Gleaner. “I am taking my time to ensure that I understand all the issues and their implications,” he said.

With regard to the direct sourcing contracts, the Jamaican Government’s procurement rules allow for these up to a maximum of $1.5 million – it used to be $500,000 up to 2016 – except in circumstances such as emergencies, the goods or services are available only from a single contractor, or for national interest considerations.

Over the period covered by the audit, from January 2015 to October 2017, Petrojam awarded 3,583 contracts, of which 2,263, or 63 per cent, were via direct awards – although 325 of these, or 14 per cent, were to its subsidiary, Petrojam Ethanol Limited. Twenty-five per cent of the direct sourcing contracts exceeded the threshold for such award and six per cent of the contracts were deemed to have been triggered by emergencies.

The audit tests of 14 awarded by direct sourcing found that nine presented reasonable justification, while in five cases, the auditors found no “written justification”. Those cases, however, related to the repair and cleaning storage tanks, and all were approved by the general manager.

The auditors, concerned that competitive bidding accounted for only 25 per cent of Petrojam’s domestic contracts, called for an improvement in the “utilisation rate of the limited bidding and competitive bidding methodologies”.

CLOUDY AREA

The spot purchase of oil was an area in where the auditors could not always ascertain that Petrojam received the volumes for which it paid. Part of the problem has to do with the less-than-optimal functionality of the refinery’s storage tanks and other systems to ensure an absolute correlation between the returns in processed products and the expectations from the declared volumes of crude, based on simulations.

But it also appears that records of spot purchases, such as from the commodities trader, Vitol, were rigorously maintained to ensure that price calculations supported purchase invoices.

For instance, PDVSA auditors noted that the list of purchases of crude and finished products, which they were provided by designated officials, didn’t come from the Systems Application and Products, or SAP systems management software, which is widely used in the oil industry.

Further, they said: “Seventeen of 23 invoices (74 per cent) did not have the verification of the price calculation in the support of the purchase invoices the validation of the reasonableness of the amounts invoiced …”.

In other case, five of nine deliveries, purchased on the condition of delivery at terminal, or DAT, indicated gross volume rather than net volume at the discharge port, “increasing the risk of inconsistencies between the volume record in SAP” and the refinery stats on which monthly losses at the refinery are estimated.

Additionally, two of the 23 reviewed purchases showed volume difference of over 139,000 barrels “between the figures indicated on the commercial invoices provided by the customer (Vitol) and reflected in the independent inspector’s discharge reports”.

There were also significant differences on the price per barrel of oil, the auditors noted, “between the invoices reported in SAP by the accounting department”.

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Guyana Potential Game Changer for Petrotrin

Installations at Petrotrin. Source: Petrotrin

(Trinidad and Tobago Newsday, Julien Neaves, 27.Jun.2018) – Guyana and its eight oil finds can be a game changer for state-owned Petrotrin and TT, says National Gas Company (NGC) Chairman Gerry Brooks.

He was speaking during a presentation at the Chamber of Industry and Commerce’s Business Outlook breakfast meeting held on Wednesday at the Chamber’s offices, Westmoorings.

Brooks said Guyana’s eight finds equated to 500,000 barrels of oil and 120,000 by 2018.

He added the Guyanese were “shopping” in Mexico and had help from the International Monetary Fund.

“We have to go there in a very professional manner, a very engaging manner, a very thoughtful manner.”

Brooks said “everybody” was in Guyana and there was excellent specialised oilfield services including from Repsol.

“There is a lot of expertise. There is a lot of opportunity for Trinidad and Tobago.”

He said NGC was leading the charge and the expectation was that there would be a mutual cooperation agreement which will find a framework for the countries to work together.

“We will work closely with the State companies (in Guyana).”

***

PentaNova Board Member Resigns

(PentaNova Energy Corp., 27.Jun.2018) – PentaNova Energy Corp. announced that Ms. Susannah Pierce, who joined the board in 2017, resigned from the company’s Board of Directors on June 21, 2018 due to increasing personal and professional commitments.

At the time of Ms. Pierce’s resignation, she served on the Board’s Audit Committee. Following her departure, the PentaNova Board of Directors consists of 8 members.

PentaNova has greatly benefited from Ms. Pierce’s contributions, drawing from her experience and success in the oil and gas industry. The company thanks her for her support and contributions and wishes her continued success in the future.

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Petrobras New CFO Election

(Petrobras, 27.Jun.2018) – Petrobras informs that its Board of Directors, at a meeting held today, appointed the engineer Rafael Salvador Grisolia to the position of Chief Financial and Investor Relations Officer of the company, with an office term until March 26, 2019, the same term of the other officers of the Executive Board.

Rafael Grisolia is a Production Engineer, holding an MBA from Coppead/UFRJ. Has a 30 year extensive career experience having worked at the financial department of Esso – an affiliate of ExxonMobil Corp., and at Cosan Combustíveis e Lubrificantes SA, held a position of Chief Financial Officer (CFO) and Investor Relations Officer (IRO) of Cremer SA, CFO of Grupo Trigo SA, CFO and IRO of Inbrands SA. Since August 2017, as Chief Financial Officer (CFO) and Investor Relations Officer (IRO) at Petrobras Distribuidora SA (BR).

The nomination was subject to prior analysis by the Nominating, Compensation and Succession Committee of Petrobras’ Board of Directors.

***

Linking Permian, Eagle Ford to Monterrey

(Natural Gas Intelligence, Carolyn Davis, 27.Jun.2018) – The mantra for a San Antonio, TX-based midstream operator, whose portfolio is increasingly weighted to southern destinations, could well be what’s good for Texas is good for Mexico.

Howard Midstream Energy Partners LLC, aka Howard Energy Partners (HEP), is making inroads in the Lone Star State and across the border as it builds out its multiple systems to carry natural gas and liquids to serve a growing customer base in northern Mexico, i.e. the Monterrey Energy Corridor.

Monterrey, the largest city and capital of the state of Nuevo León, has become an industrialized mecca for projects, something not lost on HEP executives, said President Brandon Seale. He discussed the myriad opportunities with an industry audience at the 4th Mexico Gas Summit held earlier this month in San Antonio.

HEP’s processing and pipeline assets extend from the Permian Basin to South Texas, and east of Houston in Port Arthur, all strategically sited to serve the “end goal,” said Seale, northern Mexico’s “growing appetite for hydrocarbons.”

Because of where HEP’s assets are in South Texas, the operator was “always going to be at the tail-end of the value chain,” he said. “We were trying to push product back to Houston or to other markets, but we wanted to be at the front-end of the value chain. So we stepped into Mexico with a very simple strategy,” to diversify and bring aboard strategic partners.

HEP about seven years ago bought the Maverick Dimmit and Zavala Gathering System, about 344 miles of pipeline in the South Texas counties of Maverick, Dimmit, Zavala and Frio.

Designed for rich and lean gas service, the system gathers for production from the Eagle Ford and Pearsall formations, and interconnects with several big pipelines that move gas in all directions, including south.

“From Day 1, we were selling gas to Mexico,” Seale said. “Mexico was always on our radar. And the funny thing is, if you don’t live and work close to the border, sometimes you look at infrastructure maps and you forget Mexico is there…It just looks like a big white space on the map. But of course, the resources don’t stop at the border and infrastructure doesn’t really stop either…The magnitude of the opportunity was always present in our minds.”

For example, Texas has an estimated 300,000 wellheads. In Mexico, there’s about 8,000. Texas has nearly 250,000 miles of gathering transportation pipelines. In Mexico, there’s around 75,000 miles.

“There’s a huge, huge opportunity there,” Seale said. “The resource is there…with some of the biggest wells ever drilled in the history of the world…Staggering, staggering numbers.”

Around the time the Maverick purchase was made, Mexico was becoming a net hydrocarbon importing country.

“The situation was quite acute on the natural gas side,” Seales noted. The country was suffering from critical power alerts and brownouts, and state-owned Petroleos Mexicanos at times would cut off service to customers with no notice. It was “exceedingly distractive,” he said.

Mexico had to turn to the Pacific markets to buy liquefied natural gas at “exorbitant” prices, when West Texas operators “would have given their left arm to sell gas at $2.50/Mcf. It didn’t make sense…”

HEP got acquisitive again, and a year after the Maverick purchase, it acquired the Eagle Ford Escondido and Cuervo Creek gathering systems to the south in Webb County, primarily 12- 16-inch diameter high-pressure gas pipelines that gave it another 83 miles of pipeline, a 102-mile lean gas gathering system, two leased amine treating plants and multiple intrastate pipeline outlets.

A 30-inch diameter pipeline was installed in 2013 to provide a direct connect to a Kinder Morgan Inc. system, which moves gas from Katy, near Houston, southwest to Laredo.

Three years ago HEP installed a direct connection with the NET Midstream system, whose affiliate NET Mexico Pipeline Partners LLC‘s 120-mile, 42- and 48-inch diameter Texas pipeline moves gas from the Agua Dulce hub in South Texas to Mexico.

“Our markets were all getting to Mexico,” but they were getting there indirectly, Seales said. “At this point too, our system was basically full…packed to the gills. So we had to find new markets.” Those opportunities led to the the genesis of Nueva Era Pipeline LLC, a cross-border system that ramped up in May.

Nueva Era, a 30-inch diameter system that is designed to carry at least 600 MMcf/d and up to 1 Bcf/d, is a joint venture between HEP and Mexico’s Grupo Clisa to supply Monterrey.

Suppressed Demand

“There was a huge market” for natural gas in the Monterrey area that “was basically tapped out” around 2013, with no new sources of supply on the horizon. HEP executives also had a theory about suppressed demand for natural gas in the region.

“Basically, if you just looked at the charts, it looked like Mexico’s gas demand was flat,” Seale said. “But if you considered the external factors…the fact that historically, there were all these subsidies” for fuel oil and liquefied petroleum gas and other alternative fuels. “And if you consider that pricing on natural gas had never really been that transparent in Mexico, there were a lot of disincentives for people to use natural gas as a feedstock.

“As the experience in the U.S. in the last 30 years has taught us, if you deregulate the product, if you make it plentiful and if you make it transparent in price and you make it liquid, people will find a lot of ways to use it.”

The United States uses 80-90 Bcf/d of gas, while Mexico uses 8-9 Bcf/d, he said. “Somewhere in there is opportunity.”

Mexico’s state power company, Comision Federal de Electricidad, is the anchor shipper on Nueva Era with 504 MMcf/d of capacity. Another 496 Bcf/d is still available.

“The pipeline is mechanically complete,” Seales said. In mid-June the partnership was “awaiting final regulatory approvals,” to go into full service by the end of the month.

While trucks and rail are adequate to transport oil and liquids, a “pipeline is really the end goal” to transport all energy products, Seale said. With its cross-border system, North America’s energy markets are becoming “truly integrated…

By connecting Monterrey via a pipeline in South Texas, there’s energy integration across “the entire North American network,” allowing a trader to “swap a barrel from New Jersey to Monterrey…That’s pretty remarkable…And we feel like we’re in a unique position because of our experience with cross-border transactions” from working with U.S., Texas and Mexico’s diverse regulatory regimes.”

For HEP, the Texas coastal community of Corpus Christi, which is near Agua Dulce, is an important piece of the puzzle. The port city, already a manufacturing hub for the Gulf of Mexico energy industry, is quickly becoming the go-to destination for oil and petrochemical exports.

In addition, Cheniere Energy Inc. is building a liquefied natural gas export project in Corpus, and newbuild petrochemical facilities, including one led by ExxonMobil Corp., are on the drawing board.

And that’s not including the pipelines destined for the region from the Permian Basin and Eagle Ford Shale.

“The importance of Corpus is obvious in the market,” Seale said. “The number of pipeline projects to link West Texas to Corpus Christi are almost too big to count…” and “almost every midstream in the space is looking at their own project” to potentially add on capacity.

“What that signals is that the same thing that’s happening in natural gas that makes Agua Dulce…the natural gas hub, the natural liquid point, is happening now with crude and other refined products,” Seale said.

“If we do our job right, Corpus Christi should become the northernmost delivery point into northern Mexico,” he said. A plethora of investments are earmarked to support energy product transport south of the border.

Mexico is no longer the “blank spot on the map…the infrastructure map is now fully connected and day by day becomes only more integrated across the border.

Consider the Nueva Era system, he said. “With our Nueva Era pipeline, we can connect to Waha with these other pipelines coming down…In a few months in theory, a Waha-Monterrey route, which HEP is calling the “WahaRey” route “is going to be a viable option for any gas shipper in West Texas.

By the same token, the Agua Dulce-to-Monterrey route, aka “AguaRey” is already available. Already there’s 500 MMcf/d going into Monterrey,” with pipeline capacity “almost tapped out,” Seale said, as the region grows and commerce builds.

“Imagine what a 20-inch diameter presidential permit pipeline across the border could do for liquids products?” he asked the audience. “It would be something very, very similar.”

HEP is creating a path, he said, “connecting the most efficient and largest points of product in South Texas with Monterrey, the most industrialized market in Latin America, the gateway to all of Latin America…

“What’s good for Texas is good for Mexico, and what’s good for Mexico is good for Texas,” Seale said, borrowing a line from an HEP executive. “I really think that the integration of these energy markets is one of the finest results of that.”

***

PDVSA’s Amuay Halts Cat Cracker

(Reuters, 27.Jun.2018) – Venezuela’s 645,000 barrel-per-day (bpd) Amuay refinery has halted its catalytic cracking unit and its distillation unit No. 5, a refinery worker and a union leader said on Wednesday, while state oil company PDVSA said the units were operational.

The cat cracker was halted on Saturday while the distillation unit was taken off line on Tuesday, said union leader Ivan Freites.

“There’s not enough steam to keep that plant in operation,” he said about the distillation unit.

“The cracking and distillation units are operational,” PDVSA said in a response to a message sent by Reuters.

A refinery worker, who asked not to be identified, said problems with steam compression and electricity generation had forced the cat cracker offline, adding that one of the two distillation units in service may soon suffer the same problems.

***

Stuart Young Leads Venezuelan Energy Talks

(LoopTT, 27.Jun.2018) – Minister in the Office of the Prime Minister, Minister in the Ministry of the Attorney General and Legal Affairs and Minister of Communications Stuart Young led a Trinidad and Tobago delegation in Venezuela on Wednesday.

The team comprised of the President of the National Gas Company of Trinidad and Tobago Limited (NGC), Mark Loquan, former PS Selwyn Lashley and other members of NGC to Caracas, Venezuela to continue negotiations with respect to the Venezuelan Dragon across the border gas field.

The Venezuelan delegation was led by Minister Manuel Quevedo, People’s Minister of Petroleum and President of PDVSA, Vice Minister Douglas Sosa and executives of PDVSA and the Venezuelan Ministry of Petroleum.

Executives of Shell were also in attendance led by Derek Hudson, Country Chair of Shell Trinidad’s operations.

The parties spent hours negotiating, bringing the possibility of the cross-border gas deal closer.

There remains a number of areas where further work is required and Minister Young agreed to return to Caracas, Venezuela in two weeks for the two Ministers to attempt to settle the terms of the agreement.

Minister Young extended an invitation for Minister Quevedo to come to Trinidad to visit the LNG and other downstream Petro-chem operations.

All parties involved remain committed to the Dragon Gas Project becoming a reality.

***

Trinidad, Guyana and Suriname: Challenges

(AIPN, 27.Jun.2018) – Petroleum consultants and other energy sector experts will discuss the challenges and opportunities in Trinidad & Tobago, Guyana and Suriname during a discussion in London.

The select group will consist of Kevin Ramnarine, former Trinidad & Tobago Energy Minister (2014-15); Energy Strategic Advisor and Lecturer Carlos Bellorin, Principal Consultant, IHS Markit; Lecturer, Queen Mary University and SciencesPo Ekpen Omondude, former Senior Economic Adviser, The Commonwealth Secretariat (2008-2018); Director, Bargate Advisory Limited.

DISCUSSION BRIEF

With the discovery of Liza-1 within the Stabroek Block by ExxonMobil and its partners in 2015 – and after years of frustrating exploratory results – all eyes have been on the Southern Caribbean. After Liza-1 and the seven discoveries that followed (including Longtail-1 announced on 20 June 2018), the Guyana-Suriname Basin has all but confirmed its massive potential. On neighbouring sides of Guyana, the E&P outlook has also changed after 2015.

To the east in Trinidad & Tobago – one of the more mature producers in the region – successive governments have tried to bring the island’s hydrocarbons industry to the attention of investors with limited success. Without any significant recent discoveries, Trinidad & Tobago will need to improve its performance and hydrocarbons regime. This will be necessary to replace reserves and increase production if it is to maintain its gas-linked economy and leadership as a gas producer.

To the west lies Suriname. After recent wells have come up dry, it needs (at least) a commercial discovery to finally confirm its long-coveted potential. Venezuela also plays a pivotal role in regards these two, smaller, nations: an embattled Venezuela is currently engaged in a high-profile boundary dispute with Guyana and could enter into a strategic partnership with Trinidad & Tobago over two key gas fields.

During this session, we will touch on the most critical issues from these three countries, including comments on their legal-fiscal regimes and political risk while looking forward to their challenges and opportunities. We will offer an on-the-ground view of one the hottest new deepwater provinces in the world.

WHEN: Thursday, June 28, 2018 (5pm – 8:30pm Europe/London)
COORDINATOR: Akin Gump
VENUE: Bishops Square
WHERE: London E1 6EG United Kingdom

Registration will be from 5:00 – 5:30 p.m., followed by the presentations and Q&A until 7:00 p.m. A networking reception with drinks and canapes will follow from 7:00 – 8:30 p.m.

Online registration has been closed. On-site registration will be on a space available basis and is complimentary for all members and non-members. If you have any questions, please contact Carlos Bellorin at Carlos.Bellorin@ihsmarkit.com

***

Oil Potential in Argentina’s Tobifera Formation

(Energy Analytics Institute, Jared Yamin, 26.Jun.2018) – Echo Energy plc announced a significant light oil column has been interpreted in its third well, onshore Argentina.

The EMS-1001 well, located in the Fraccíon C licence operated by Compañía General de Combustibles S.A. (CGC), reached a total depth of 2460m in the Upper Jurassic Tobifera formation across which significant gas and hydrocarbon shows were recorded.

Preliminary wireline log evaluation has now been completed, and a very significant hydrocarbon column has been interpreted between 1722m and 2220m in the Tobifera Formation. If hydrocarbon saturations across this section are confirmed, the preliminary evaluation might represent an interval of some 500m, which could significantly open up the play for the area.

“We are delighted that initial interpretation of our third well suggests a material and potentially transformational light oil column in the emerging Tobifera play of the basin, exceeding our high case expectations,” announced Echo Chief Executive Officer Fiona MacAulay in an official company statement. “We can already consider results for this well to date to be very encouraging from a volumetric and value perspective. Testing is the critical next step to establish the effectiveness and deliverabilty of the reservoir and we caution that any conclusions prior to test results would be premature.”

A final production casing is now being run prior to suspending the well for testing and the Company now anticipates the arrival of the test rig to the licences in July following completion of its current work programme elsewhere in the basin. The rig will now move to CSo-111(I), the fourth well in this current exploration campaign, located on the Company’s Fraccíon D asset.

Following the potentially material scale of the results of this third well, the company (together with its partner) is now undergoing a review of the testing and forward work programme.

Echo will now take the time required to confirm the early interpretation of the wireline logs and design an effective test program with a view to confirming the scale of our new oil discovery.

Tobifera Information

In the Tobifera interval over 120m of hydrocarbon shows and elevated gas of C1-C5 composition were recorded with gas peaks of over 50,000 ppm, as measured against referenced background gas levels of 3000-6000 ppm outside of the zone. The shows, gas readings and associated lithology encountered in the Tobifera led the company to deepen the well by a further 210m compared to the planned total depth in two additional tranches.

Not all of the column interpreted will produce hydrocarbons, with intervals of effective pay interpreted as being associated with the very elevated gas readings recorded over some 120m of the section. These are likely to correspond to zones of natural fractures in the formation, with additional potential from the interpreted hydrocarbon column likely to require fracture stimulation as is employed elsewhere in the Austral Basin. Initial assessment of the fluid type is a light oil based on pressure data, and results are very encouraging, but the company notes caution should be applied prior to testing of the well.

In the shallower Springhill target, the well encountered over 20m of hydrocarbon shows. The shows in the Springhill target were associated with elevated gas with peaks of over 137,000 ppm, as measured against referenced background gas levels of less than 7,000 ppm outside of the zone and the company is currently evaluating the effective net pay across the Springhill section encountered.

It should be noted that Pre-drill Pmean gross prospective unrisked oil initially in place for the structure targeted by EMS-1001 were estimated at approximately 60 MMbbls for the Springhill Formation,  (included in the recent Competent Person’s Report produced by Gaffney Cline & Associates). No resources were quoted for the Tobifera target as these were not evaluated or audited as part of the CPR process.

***

Geothermal a Superpower in Mexico’s Potential

(Mexico News Daily, 26.Jun.2018) – The capacity to generate geothermal energy is a veritable superpower within Mexico’s enormous energy potential but a significant barrier stands in the way of reaping its rewards: exploiting it is very expensive.

However, a New Zealand company that specializes in developing technologies to overcome earth, environmental and energy challenges is helping Mexico achieve that potential.

Since its creation in 2004, Seequent has developed a close relationship with Mexico and in April this year the company hosted the country’s ambassador to New Zealand at its Christchurch headquarters.

“Mexico is embracing the importance of developing geothermal, not just as an energy replacement source, but to future-proof base load energy needs for the future,” company CEO Shaun Maloney said in a statement issued after José Gerardo Traslosheros’ visit.

“Mexico is one of our fastest growing markets and represents a great opportunity as the world’s 13th largest economy. We’re continuing to invest in people and skills in the region,” the statement said.

Maloney subsequently told the newspaper El Financiero that Mexico has a source of energy under the ground that is “constantly flowing.”

However, he added that “to drill a hole for thermal energy, it costs around US $10 million and if you dig in the wrong place, you lose it all.”

Those high costs have held Mexico back from further exploiting its thermal capacity despite the introduction of the 2014 energy reform which enabled foreign and private companies to enter the Mexican market.

***

Colombia Preps for Hammer Time

(Renews, 26.Jun.2018) – The Colombian government will next month publish the initial heads of terms for the South American country’s first ever auction for renewables other than large hydro.

Energy regulator CREG and mining and energy planning unit UPME are finalising rules and regulations ahead of the auction slated to take place by the year-end.

Deputy head of mission at the Colombian Embassy to the UK German Espejo said more than 300 projects across onshore wind, solar, biomass and small hydro have registered to participate in the initiative.

Of those projects, around 215 with a combined capacity of 1.2GW had been certified as viable by UPME, he added at the Canning House Latin America renewables conference in London.

European participants are set to include Paris-based outfit Voltalia, which is developing three wind farms rated between 50MW and 200MW in the windy Caribbean region of La Guajira.

The developer said there was limited information about the possible market design of the auction, which is expected to back at least 1GW across all technologies.

CREG has previously announced four options for incentivising renewables in its wholesale market, including a green premium added to the spot price or a sealed bid auction similar to the UK’s Contracts for Difference regime.

Renewables trade association SER Colombia has proposed auctions offering fixed priced, 20-year contracts with a centralised buyer.

Solar, wind and biomass comprise less than 5% of Colombia’s 17GW installed renewables capacity. Large hydro dominates, but is suffering from reliability problems due to dwindling water levels.

In a further effort to boost its nascent clean power sector, Bogota is offering 50% annual reduction of taxable income for the first five years of investment in renewables projects.

The country has also introduced exemptions of import duties and VAT plus accelerated depreciation for accounting purposes on equipment and machinery for use in renewables.

***

Venezuela’s Petropiar Upgrader Begins Restart

(Reuters, 26.Jun.2018) – Venezuela’s PDVSA and Chevron have begun to restart their 210,000-barrel-per-day (bpd) Petropiar heavy crude upgrader after a nearly month-long, repair-related shutdown and a fire, according to the state-run company and two sources close to the facility.

Venezuela’s crude upgraders, which can convert near 700,000 bpd of extra-heavy crude from the country’s Orinoco Belt into exportable grades, have been mostly out of service in recent weeks while PDVSA focused on easing a tanker backlog that has delayed exports.

The country’s oil production fell to 1.39 million bpd in May, according to secondary sources cited by OPEC, the lowest level since the 1950s. Oil is Venezuela’s main export and the decline has only served to deepen an already severe economic crisis.

Workers attempted to restart Petropiar earlier in June, but quality issues that were ultimately solved delayed the process, one of the sources said. The restart typically takes several days to be completed while the upgrader’s performance is evaluated.

A fire early on Tuesday at one of the upgrader’s furnaces left one worker injured, but had no material impact on operations, PDVSA said in a statement.

“The event was immediately controlled,” the company said in the statement, adding that crude production and upgrading were not directly affected by the fire.

If Petropiar fully restarts in the coming days, the neighboring 190,000-bpd Petrocedeno facility would be the only upgrader completely shut for maintenance while the 160,000-bpd Petro San Felix complex works intermittently, according to the sources.

But the 150,000-bpd Petromonagas, operated by PDVSA and Russia’s Rosneft, is expected to be out of service later this month due to a planned major maintenance project.

Reduced crude upgrading means PDVSA and its partners in the Orinoco Belt, the country’s largest producing region, have to mix Diluted Crude Oil (DCO) for export, but the volume of the replacement grade is typically lower.

That could help to ease a bottleneck of tankers waiting to transport oil exports. As of June 26, there were more than 75 tankers anchored off Venezuelan ports waiting to load some 24 million barrels of crude and refined products, according to Thomson Reuters vessel tracking data, near flat from earlier this month.

***

PdV Restarting PetroPiar Upgrader

(Argus, 26.Jun.2018) – Venezuelan state-owned PdV is restarting its 210,000 b/d PetroPiar upgrader this week after completing month-long repairs, PdV and energy ministry officials said.

Chevron, which has a 30pc stake in Petropiar, is “working closely” with PdV to restart the facility, the PdV executive said.

Chevron regularly declines to comment on its minority-held operations in Venezuela.

PetroPiar is one of four PdV-run upgraders at the Jose industrial complex in Anzoátegui state.

Following the restart of PetroPiar, PdV is also expected to resume operations at its 160,000 b/d Petro San Felix upgrader, the two officials said. But several Petro San Felix processing units are still undergoing repairs, making a full restart unlikely until the second half of July, they added.

Petro San Felix, formerly called PetroAnzoátegui, is 100pc owned and operated by PdV.

PdV’s 200,000 b/d PetroCedeño upgrader remains shut down for major works that likely will not be completed until August, the PdV and ministry officials said. France´s Total and Norway’s Equinor hold a combined 40pc stake in PetroCedeño.

PdV’s 150,000 b/d PetroMonagas upgrader is currently operating at roughly 50pc of nameplate capacity and is scheduled for maintenance starting in July, the officials added. Russian state-controlled Rosneft owns 40pc of PetroMonagas.

The four upgraders, which have a combined synthetic crude production capacity of more than 600,000 b/d, have been mostly off line for repairs since May, when exports started backing up.

The backlog of close to 30mn bl of mostly heavy Merey crude and diluted crude oil (DCO) began after US independent ConocoPhillips imposed debt-related liens on PdV´s Dutch Caribbean assets, prompting the Venezuelan company to pull its tankers into Venezuelan waters and shift exports to an fob basis, a strategy that has so far failed to restore exports to their former rhythm. Among the operational challenges is transshipment, which PdV traditionally carried out in the islands.

ConocoPhillips is seeking to collect $2bn from PdV that it was awarded by an international arbitration tribunal in April for the 2007 expropriation of the US firm´s stakes in two of the upgraders.

The liens on PdV´s assets were partially lifted last month to allow PdV to supply fuel to the islands and start paying the debt through escrow accounts.

***

PDVSA Controls Fire at PetroPiar Furnace

(Energy Analytics Institute, Piero Stewart, 26.Jun.2018) – The early morning incident occurred at the José Antonio Anzoátegui Industrial Complex (CIJAA) in Barcelona, Venezuela.

The fire occurred at the hydro processing unit furnace 14 F-001, announced PDVSA in an official statement.

The PetroPiar joint venture upgrades crude oil from the Hugo Chavez Orinoco Heavy Oil Belt, also known as the Faja.

The state oil company is looking into the causes of the fire. A PDVSA employee, Pedro Flores (38), injured during the incident, was transported to a local facility to receive medical care, the company reported.

***

Mexico Considering Mechanism for Geothermal

(ThinkGeoEnergy, 26.Jun.2018) – Indicated in a recent webinar as part of the upcoming GEOLAC geothermal conference, a new price mechanism specifically tailored towards geothermal is being considered for Mexico.

As reported by ReNews, Mexico is considering a dedicated price support mechanism for geothermal energy outside its technology-neutral auctions dominated by wind and solar, as early as next year.

Under current tender schemes, geothermal essentially could not compete on the low pricing of intermittent sources such as wind and solar, a fact widely complained about by the industry. The auction system so far has not provided any value to geothermal energy and its baseload capacity offered to the market.

Mexican energy ministry SENER’s European representative Nelson Mojarro said “We understand it is more challenging for certain technologies and we are considering whether there needs to be another auction for other technologies specifically to boost geothermal,” he added.

The fourth Mexican renewables auction process for around 2,000 MW in capacity is currently being held with sealed bides and results expected to be announced in November this year. The next auction could then take place in 2019.

***

OPEC Ministerial Meeting in December

(Energy Analytics Institute, Piero Stewart, 25.Jun.2018) – Ministers from the Oil Exporting Countries Organization (OPEC) announced during meetings in Vienna, Austria that the 5th OPEC+ countries Ministerial Meeting will take place in the same city on December 4, 2018.

***

Macri’s Reverse Unnerves Shale Investors

(Financial Times, Benedict Mander, 25.Jun.2018) – The collapse of the Argentine peso and the government’s struggle to tackle soaring inflation are causing disquiet among companies developing Vaca Muerta, one of the world’s largest deposits of shale oil and gas.

In his drive to liberalise Argentina’s energy markets, President Mauricio Macri phased out consumer subsidies and increased tariffs. Local oil prices rose and late last year converged with those of international crude, providing an important stimulus for companies in Vaca Muerta, Argentina’s star investment attraction.

But the government has now capped the price at which companies producing oil in Argentina can sell to refineries, along with the price of petrol at the pump, to shield consumers from rising global oil prices and prevent inflation soaring even further.

Companies now must sell at prices considerably below the international level, which on Thursday was above $77 a barrel for Brent crude, the global benchmark. This, as well as the devaluation of the peso, is hitting profitability and forcing companies to reassess their plans in Vaca Muerta.

“Suddenly from moving in the right direction, it feels like the country is taking a step back,” said Anuj Sharma, chief executive of Phoenix Global Resources, a mid-sized oil company investing in Vaca Muerta. “If there’s one thing markets hate, it is uncertainty. It makes planning very difficult.” He added that it was hard to plan more than 3-5 months ahead.

As little as four years ago, the state oil company YPF estimated that the break-even oil price for wells in Vaca Muerta to be economically viable was about $80 a barrel. Wood Mackenzie, the energy consultants, now estimates the break-even price to be $56 a barrel. After the first well began producing commercially in 2013, Vaca Muerta is now producing 120,000 barrels a day, or more than 10 per cent of national production.

“Just 5 years ago Vaca Muerta was a dream. Now it is starting to become a reality. It is at an inflection point where you can actually make money drilling it,” said one senior executive whose company is investing in Vaca Muerta.

“You can argue that at $67-68 a barrel you can make more than the break-even price, but you are not obliged to drill Vaca Muerta. Elsewhere you get 75 or even higher if oil prices go up . . . if there’s no [price] visibility, it’s very hard to deploy billions into Vaca Muerta.”

With Javier Iguacel replacing Juan José Aranguren as energy minister as part of a shake-up last week, the government’s plans remain unclear. Mr Aranguren, a former executive at Royal Dutch Shell, was widely applauded by the private sector for increasing the tariffs that consumers pay for electricity and natural gas, which enabled the government to cut subsidies in its effort to rein in the fiscal deficit. But he is unpopular with voters.

How Mr Iguacel, a petroleum engineer who also has a private sector background, proceeds depends on a precarious political scenario for Mr Macri, who is seeking re-election next year. Tariff hikes — as well as a $50bn bailout from the IMF in response to the currency crisis — was one of the main motives for trade unions on Monday holding their third national strike since Mr Macri took power.

Freezing prices at petrol pumps may go some way to keeping voters happy, even if it is debatable what impact it might have on inflation, which is running at more than 25 per cent annually. But international companies are not keen on effectively financing Mr Macri’s “gradualist” economic reform programme, which seeks to cushion the impact of austerity on poorer Argentines.

“If prices remain uncoupled, that would be negative. Without doubt, investment would fall, production too, and we would have to import more,” said Daniel Gerold, an energy consultant in Buenos Aires. “If it becomes clear that prices do not follow clear rules or the law is not respected, even if costs are low in Vaca Muerta, investments are not going to come.”

Nevertheless, analysts are broadly optimistic about the prospects for Vaca Muerta, which has seen a sharp fall in costs in recent years, while production has jumped dramatically. Argentina might even have an oversupply of natural gas this summer, when demand is lower, said Amanda Kupchella, an analyst at Wood Mackenzie.

“There are a lot of things that just come with the territory in Argentina — like price controls, working with unions and so on. They are things that operators are used to dealing with,” said Ms Kupchella. “Productivity in Vaca Muerta is so good that it doesn’t seem to be keeping [investors] away . . . wells just seem to be getting better and better.”

Alejandro Bulgheroni, chairman of Pan American Energy Group, expects that in 2-3 years it will be as cheap to drill wells in Vaca Muerta as it is in the US.

“Let’s hope this is resolved and that we return to international prices,” said Mr Bulgheroni. Although it was a “difficult moment”, he recognised that under this government, negotiations had always ended in mutual agreements, with no impositions. “We have lived through much worse times.”

***

Tartaruga Verde Field Commences Production

(Petrobras, 25.Jun.2018) – Petrobras started production of Tartaruga Verde field, in deep waters of Campos Basin, by means of FPSO Cidade de Campos dos Goytacazes.

The FPSO is located about 127 km off the coast of the state of Rio de Janeiro, in water depth of 765 meters, with a capacity to process daily up to 150 thousand barrels of oil and 3.5 million cubic meters of gas and 5 million cubic meters of gas compression.

Tartaruga Verde field has good quality oil (27º API) and is located in the southern area of Campos Basin, in the post-salt, in water depth ranging from 700 to 1,300 meters and with reservoirs at 3,000 meters depth. It consists of two reservoirs, Tartaruga Verde, where Petrobras holds 100% interest, and Tartaruga Mestiça, a joint reservoir between the Union, represented by Pre-Sal Petróleo SA – “PPSA”, with a 30.65% interest, and Petrobras with 69.35%. All of the field production will be offloaded by FPSO Cidade de Campos dos Goytacazes.

This is the second platform to start operations this year and will contribute to the increase of Petrobras’ production under the 2018-2022 Business and Management Plan.

***

Frontera Closes $350 Mln Notes Offering

(Energy Analytics Institute, Ian Silverman, 25.Jun.2018) – The Canadian company plans to use majority of proceeds to repurchase notes due in 2021.

Frontera Energy Corporation completed the offering of $350 million in senior unsecured notes due 2023 at a coupon rate of 9.70% pursuant to Rule 144A and Regulation S of the U.S. Securities Act of 1933, as amended, the company announced in an official statement.

Certain proceeds from the offering were used to repurchase, at a premium, the company’s $250 million 10.0% senior secured notes due 2021 pursuant to a tender offer. The remaining proceeds will be used for general corporate purposes.

***

Brazil Labor Court Rules Against Petrobras

(Reuters, 21.Jun.2018) – Brazil’s top labor court ruled in favor of workers at Brazil’s state-controlled oil giant Petroleo Brasileiro in a wage spat that could cost the world’s most indebted oil company up to 17 billion reais ($4.5 billion).

Petrobras, as the company is known, could still appeal the Superior Labor Court’s ruling in the case, brought by Petrobras workers seeking more pay.
***

Argentine Minister, Gas Distributors Hold Meetings

(Energy Analytics Institute, Aaron Simonsky, 24.Jun.2018) – Argentina’s recently appointed Energy Minister Javier Iguacel conducted meetings with executives from gas distributors and transporters in the Southern Cone country to discuss some important issues.

The meetings come at a crucial time as many companies in the Argentine gas sector face problems related to the rising dollar as well as rising commodity prices. Additionally, the devaluation of the Argentine peso has resulted in higher prices for consumers just as the winter commences, reported the daily La Nacion.

The meetings where aimed to address these issues, among others, and perhaps establish a pricing formula that doesn’t boost consumer prices or result in an increase in energy subsidies.
***

Luis Arce Named New Director at YPFB Transporte

(Energy Analytics Institute, Aaron Simonsky, 24.Jun.2018) – Bolivia has named as a new director at YPFB Transporte.

Luis Arce, who served as Bolivia’s Economic and Finance Minister from January 23, 2006 until June 24, 2017, when he left his post for medical reasons, will replace Evelio Harb Pedraza, reported the daily La Razón, citing details from Bolivia’s Bolivian Stock Exchange (BBV by its Spanish acronym).

Additionally, David Gutiérrez was named as trustee to the state entity, replacing Benjamín Galván.

With the changes, YPFB Transporte’s board is now conformed of the following executives: Oscar Barriga, Wilmer Saavedra, Wilson Zelaya, Luis Arce, Florencio López, William Morales and Víctor Saldías.
***

Newsan, Vestas to Invest in Wind Turbines

(Energy Analytics Institute, Aaron Simonsky, 24.Jun.2018) – Newsan Group and Vestas have earmarked investments of $22.4 million in Argentina.

Newsan Group, an Argentina producer of domestic appliances and the country’s largest shrimp exporter, and Danish giant Vestas, plan the investments to manufacture wind turbines and the gondolas that house them at the Campana plant in Buenos Aires.

Vestas, the largest manufacturer of wind turbines in the world, will contribute $17.4 million of the investment total while Newsan will contribute the remaining $5 million, reported the daily La Nacion.

The project is estimated to create 200 direct and another 500 indirect jobs.
***

Gulf Of Mexico Production To Hit Record High

(OilPrice.com, Tsvetana Paraskova, 24.Jun.2018) – While the U.S. shale production in the Permian has been grabbing most of the market and media attention over the past two years, the Gulf of Mexico has been quietly staging a comeback.

Big Oil firms, the main operators in the Gulf of Mexico, have been cutting costs and simplifying designs to make offshore projects viable in the lower-for-longer oil price world.

Chevron, Shell, and BP continue with their deepwater developments offshore Louisiana and Texas and have brought down breakeven costs to $40 a barrel or less—comparable with the breakevens at some shale formations onshore. Now operators are vying for new exploration acreage close to existing production platforms that would bring development and production costs down even further.

While the market and media have focused on the record Permian production, the Gulf of Mexico’s production is also expected to hit a record high this year.

But there’s one huge difference between onshore and offshore in terms of resource development—for shale wells, production peaks in several months, while vast deepwater resources can pump oil for decades.

Big Oil continues to bet on resources and projects that will last for decades, but companies have drastically changed their approach to development. Gone are the days in which the race was to have ‘the biggest, the most complex and most expensive’ bespoke project the industry has seen. It may have worked at oil prices at $100, but at half that price of oil, the focus is on leaner projects and more collaborative work to bring costs down.

Top executives at the largest operators in the Gulf of Mexico admit that project costs before 2014 were unsustainable.

“We knew there was incredible waste, but 2014 was the trigger,” Harry Brekelmans, Shell Projects and Technology Director, tells Bloomberg.

“We knew there was no way we could put forward a project in the same way again.”

In April this year, Shell announced the final investment decision for Vito, a deepwater development in the Gulf of Mexico with a forward-looking, breakeven price estimated at less than $35 a barrel. After the oil prices started crashing, Shell began in 2015 to redesign the Vito project, reducing cost estimates by more than 70 percent from the original concept, the oil major said in late April.

Shell “collaborated internally and externally to optimize the supply chain, to drill standardized wells and to build tried-and-tested designs more efficiently,” Brekelmans said at the Offshore Technology Conference in Houston a week later.

Last month, Shell started early production at the Kaikias deepwater subsea development in the Gulf of Mexico a year ahead of schedule and at a forward-looking, break-even price of less than $30 per barrel of oil. Shell’s Brekelmans said earlier this year that the supermajor was targeting its deepwater projects to break even at $40 or preferably below that threshold.

Another oil major, BP, has cut project costs for its Mad Dog 2 project in the Gulf by 60 percent to US$9 billion, working with co-owners and contractors to simplify and standardize the platform’s design.

Chevron says that offshore crude oil extraction, including deepwater, is closing in on shale in terms of cost thanks to new production technologies.

“In the past, a lot of the cost of development has been new technology,” Jeff Shellebarger, president of Chevron’s North American division, told Bloomberg. “With the types of reservoirs we’re drilling today, most of that learning curve is behind us. Now we can keep those costs pretty competitive.”

According to Wood Mackenzie, oil and gas production in deepwater Gulf of Mexico is expected to reach an all-time record high this year at 1.935 million boepd, of which 80 percent is oil—beating the previous record from 2009 by nearly 10 percent and representing 13-percent growth year over year.

U.S. crude oil production in the Federal Gulf of Mexico increased slightly in 2017 to reach 1.65 million bpd, the highest annual level on record, the EIA said in April, adding that production is expected to continue growing this year and next, accounting for 16 percent of total U.S. crude oil production. According to the EIA, a total of 10 deepwater Gulf of Mexico field starts are expected in 2018 and 2019.

Exploration investment, however, is still flat, and operators are in a ‘wait and see’ mode, Wood Mackenzie said in March in a comment on the latest ‘lackluster’ U.S. lease sale in the Gulf. Bidding was focused on the Mississippi Canyon—an area with established infrastructure and lowest cost developments.

“Operators are keen to keep the utilization up on the infrastructure and every new barrel produced through these facilities, further realizes value from the original investment,” William Turner, senior research analyst at Wood Mackenzie, said.

“Meanwhile some patient but dedicated operators are on the brink of cracking the code on ultra-high-pressure developments. Once the industry sees some proven developments in fields like Anchor, others will follow suit and we will begin to see the return of significant volumes being discovered and developed in the region.”
***

India, Cuba Shake Over Renewable Energy

(PTI, 23.Jun.2018) – India and Cuba have agreed to enhance cooperation in biotechnology, renewable energy and traditional medicine as President Ram Nath Kovind held wide-ranging talks with his Cuban counterpart Miguel Diaz-Canel to further cement the strong bilateral ties.

Kovind, who arrived here on Thursday on the last leg of his three-nation tour which also took him to Greece and Suriname, commenced his engagements here by paying tributes at the statue of Mahatma Gandhi.

Leter, Kovind met his counterpart Diaz-Canel.

“President Kovind held delegation level talks with President Diaz-Canel of Cuba; both countries agreed to enhance cooperation in biotechnology, renewable energy and traditional medicine,” Ministry of External Affairs spokesperson Raveesh Kumar tweeted.

Cuba also reiterated support for India’s candidature for a permanent seat in the UN Security Council.

President also addressed the University of Havana on ‘India and the Global South’.

During his address, Kovind stressed on the need for India and Cuba to work work together to push for greater space for developing countries in global governance structures.
***

Factsheet: PDVSA’s El Palito Refinery

PDVSA’s 140,000 barrel-per-day El Palito refinery in Carabobo state. Source: PDVSA

(Energy Analytics Institute, Piero Stewart, 23.Jun.2018) – PDVSA’s El Palito refinery has been in service now for 58 years.

Operations at the refinery commenced on June 23, 1960. The refinery, with two units: a primary crude distillation unit and catalytic reform unit, had an initial processing capacity of 55,000 barrels per day, according to PDVSA data.

Today, El Palito has a processing capacity of 140,000 barrels per day. The refinery, located along the Morón – Puerto Cabello national highway in Carabobo state, has four plant sections, which can supply the demands of the local and international markets.

El Palito is a medium conversion refinery that processes crude oil of 28 degrees API. The refinery supply comes primarily from Apure and Barinas states via a 600-plus kilometer oil pipeline, the longest in Venezuela, and from Monagas and Anzoategui states via tanker shipments.
***

Mexico’s Presidential Elections and U.S. Energy Cos

(MarketPlace.org, Lorne Matalon, 22.Jun.2018) – Antonio Godinez Vera makes his living turning golden kernels of Mexican corn into a mash that becomes tortillas. People like Godinez, a small business owner with four employees, are part of a wave that could power Andrés Manuel López Obrador to the Mexican presidency when voters elect a new head of state on July 1.

The campaign is being closely watched by U.S. energy companies that have operated in Mexico since the country’s 2014 energy reform. That reform was an opening that allowed foreign energy companies to bid on offshore blocks in the Gulf of Mexico, onshore oil and gas development, wind and solar production and distribution and electricity generation contracts.

At a rally in suburban Mexico City, presidential front-runner López Obrador told the standing-room only crowd of 10,000 plus people that changes in Mexican energy policy haven’t produced lower prices for gasoline and electricity. López Obrador has called for a return to more state regulation of the energy industry, a prospect that could jeopardize billions of dollars in current and projected foreign investment in the sector.

“The country hasn’t gained a thing,” Godinez said as he described what he sees as the current failings of Mexico’s energy reform. Though reformers promised to narrow the gap between energy costs in the U.S. and Mexico, energy data suggest Godinez pays approximately 20 percent more for his electricity than a business does in the United States. The energy reform’s proponents are confident the benefits will be realized eventually.

In addition to studies showing voter dissatisfaction with the energy reform, high levels of violence and accusations of corruption against the current government mean Godinez will be backing López Obrador “to escape our misery.”

López Obrador has leveraged frustration over the cost of energy to highlight other campaign issues. López Obrador has stated that all that has grown since the current government assumed power in 2012 is inequality, insecurity and violence.

Violence isn’t just a campaign issue in the Mexican presidential race, it has also plagued the presidential campaign itself. A recent headline read, “11 Politicians Killed In Eight Days.” More than 100 candidates have been murdered since September 2017.

While the violence continues, voters are focused on local issues. In the southern Mexican state of Veracruz, López Obrador’s call to end privatization in the energy sector has hit a nerve. Veracruz is where much of the energy in Mexico is either produced or refined.

Ignacio Quesada is on the board of International Frontier Resources, one of the first foreign energy companies to be awarded a drilling contract after Mexico opened the doors to its energy sector four years ago.

“If they start reviewing everything, we are going to slow down, put more regulation, put more roadblocks. Things will get done but at a much slower pace,” Quesada explained. That’s the wrong direction in terms of simplifying the process.”

Much of the drilling expertise that Mexico said it needed to attract when it introduced its energy reform was perfected in the oil and gas-rich Permian Basin of Texas. Kirk Edwards, CEO of Latigo Petroleum in Odessa, Texas said some American energy companies considering Mexico are now sitting out the current election cycle before they commit millions of dollars on projects that typically take years to realize a return on investment.

“Nobody’s going start doing something like that today without the certainty of what may happen in the future,” Edwards said.

Another element is the role played by President Donald Trump.

“President Trump is a central character in the Mexican election,” explained Tony Payan, who directs the Mexico Center at Rice University in Houston. He said Trump’s anti-Mexico rhetoric has lifted López Obrador ardently nationalist campaign. Payan suggested that U.S. energy companies need be ready if López Obrador wins. “The rules of the game are definitely going to change,” he said.

The Mexican government has said foreign energy companies would ultimately contribute $200 billion to the country’s economy. However López Obrador says so far it is only those businesses, and not the people, who are seeing the benefits of that investment.
***

Frontera Prices $350 Mln Notes at 9.7%

(Energy Analytics Institute, Piero Stewart 22.Jun.2018) – Canada’s Frontera Energy Corporation successfully priced an offering of $350 million.

The offering was comprised of senior unsecured notes due 2023 at a coupon rate of 9.70% pursuant to Rule 144A and Regulation S of the U.S. Securities Act of 1933, as amended, with closing expected to occur on or about June 25, 2018. There is no guarantee issuance and sale of the notes will be consummated, announced Frontera in an official statement on its website.

Frontera, a public company, has operations focused in Latin America that consist of portfolio of assets with interests in more than 30 exploration and production blocks in Colombia and Peru.

Proceeds from the offering will be used for the following purposes: 1) to repurchase, at a premium, the company’s $250 million 10% senior secured notes due 2021 pursuant to a tender offer, and 2) for general corporate purposes.

The Notes have been assigned a rating of BB-(EXP) by S&P Global Ratings and B+(EXP)/RR4 by Fitch Ratings.
***

China Generates Energy, Controversy in Argentina

(Inter Press Service, Daniel Gutman, 22.Jun.2018) – As in other Latin American countries, in recent years China has been a strong investor in Argentina. The environmental impact and economic benefits of this phenomenon, however, are a subject of discussion among local stakeholders.

One of the key areas is energy. A study by the non-governmental Environment and Natural Resources Foundation (FARN) states that China has mainly been financing hydroelectric, nuclear and hydrocarbon projects.

Just four per cent of these investments are in renewable energies, which is precisely the sector where the country is clearly lagging.

“China’s main objective is to export its technology and inputs. And it has highly developed hydraulic, nuclear and oil sectors. There are no more rivers in China where dams can be built and this is why they are so interested in the dams on the Santa Cruz River,” María Marta Di Paola, FARN’s director of research, told IPS.

China is behind a controversial project to build two giant dams in Patagonia, on the Santa Cruz River, which was approved during the administration of Cristina Kirchner (2007-2015) and ratified by President Mauricio Macri, despite strong environmental concerns.

The dams would cost some five billion dollars, with a foreseen a capacity of 1,310 MW.

However, expert Gustavo Girado said that it is not China that refuses to get involved in renewable energy projects, but Argentina that has not yet made a firm commitment to the energy transition towards clean and unconventional renewable sources.

“Like any country with a lot of capital, China is interested in all possible businesses and takes what it is offered. In fact, in Argentina it also has a high level of participation in the RenovAr Plan,” explained Girado, an economist and director of a postgraduate course on contemporary China at the public National University of Lanús, based in Buenos Aires.

He was referring to the initiative launched by the Argentine government to develop renewable energies and revert the current scenario, in which fossil fuels account for 87 per cent of the country’s primary energy mix.

Also participating in this industry are Chinese companies, which during the period January-September 2017 produced 25 per cent of the total oil and 14 per cent of the natural gas extracted in the country.

Since 2016, the Ministry of Energy has signed 147 contracts for renewable energy projects that would contribute a total of 4,466 MW to the electric grid, most of them involving solar and wind power, which are currently under development.

The goal is to comply with the law enacted in 2015, which establishes that by 2025 renewables must contribute at least 20 per cent of the capacity of the electric grid, which today is around 30,000 MW.
***

Argentina Resurrects Oil Intervention Panic

(Bloomberg, Jonathan Gilbert, 22. Jun.2018) – Javier Iguacel has left the road for the oilfield, and that may mean a complete about-face on Argentine energy policies.

Iguacel, who’d led Argentina’s national road agency since January 2016, was sworn in Thursday as the nation’s energy minister at a time when his predecessor’s push to sell fuel and oil at market prices is colliding with rising inflation.

Analysts expect Iguacel to quickly cap Argentine crude prices and limit fuel rises. He may also slow a move toward market rates for electricity and natural gas bills, a policy that’s been unpopular among voters.

“Clearly, the liberalization of the oil market did not work,” Juan Manuel Vazquez, head of equity and credit research at Puente Hnos. SA in Buenos Aires, said in a note. “We expect the government to keep intervening through a combination of capped prices for upstreamers, limits to crude exports, and controlled price increases at the pump.”

Juan Jose Aranguren, a former executive at Royal Dutch Shell Plc who’d served as energy minister since President Mauricio Macri took office in December 2015, was replaced last week in a cabinet overhaul as the country grapples with a financial crisis.

Short-lived

The crusader for free oil and fuel markets shifted Argentina to full de-regulation in the last quarter of 2017 after a slow convergence between domestically controlled and international prices. But the recent oil rally and devaluation of the peso forced him to temporarily re-introduce controls in May to help Macri’s battle against inflation, which is running at more than 20%.

Still, Aranguren, who operated outside Macri’s closest circle of advisers, was resisting prolonged intervention, newspaper Clarin reported. “The rest of the economic team felt he was not a real team-player and was also seen radical in his attempt to liberalize the sector,” said Daniel Kerner, Latin America director at Eurasia Group.

Iguacel — who began his career at state-run driller YPF SA before roles at oil service provider Pecom Servicios Energia SA and, in Angola, at Pluspetrol SA — is expected to bow to Macri’s need to intervene heavily in the prices of crude and fuel. He preferred not to give interviews until he’s been in the job for longer.

“Our goal is that what Argentines pay for electricity, natural gas and fuel weighs less and less on their pockets,” Iguacel said after his swearing in ceremony.

Negative sentiment

The re-introduction of price controls and the removal of Aranguren have added to negative sentiment toward Argentina’s oil sector and YPF, Goldman Sachs analysts led by Bruno Pascon wrote in a research note.

Iguacel is also predicted to slow the pace at which the government moves to market rates for electricity and natural gas bills. Argentina needs to shift away from subsidizing energy consumption to close its fiscal deficit, especially with added pressure from the IMF.

While Aranguren was unwavering in his execution of the policy, analysts expect Iguacel to pause the shift as inflation and keeping voters content take priority. But if the cost-cutting government can’t bear the subsidies burden, who will? Companies, says Eurasia’s Kerner.
***

Venezuela’s Quevedo Speaks of Oil War, OPEC

PDVSA’s Manuel Quevedo in Vienna, Austria. Source: PDVSA

(Energy Analytics Institute, Piero Stewart, 22.Jun.2018) – Venezuela’s Oil Minister Manuel Quevedo spoke out in Europe against U.S. sanctions against Venezuela.

“[These sanctions] represent a direct attack against the oil market stability, due to a non-conventional war undertaken by the largest world oil crude consumer,” reported PDVSA in an official statement, citing comments from Quevedo during the “World Economy and Oil Future” panel, within the framework of the 7th OPEC Seminar held in Vienna, Austria.

Quevedo, who also serves as the president of Venezuela’s state oil company PDVSA, also said exporting countries have the historic duty to guarantee, in a sustainable manner, the energy required for the economic development of the world population, while investments and time required are achieved for the use of other energy sources.

“That is the reason why we need to have a balanced market to allow oil exporting countries to keep a sustainable energy supply, and guarantee the investment levels required for the new oil projects to ensure that future year demand is covered,” said Quevedo.
***

Colombia Boosts Exploration Drilling 77% During 2010-2017

(Energy Analytics Institute, Aaron Simonsky, 22.Jun.2018) – Colombia boosted the number of exploration wells drilled by 77% during the most recent seven years compared to the earlier seven.

Colombia drilled 697 exploration wells during the seven-year period 2010-2017, representing 303 more wells when compared to the 394 exploration wells drilled during the seven-year period 2002-2009, Colombia’s National Hydrocarbon Agency (ANH by its Spanish acronym) reported in a Twitter post.

Additionally, the ANH reported that a maximum 131 exploration wells were drilled in 2012 during the 2010-2017 time frame compared to a maximum of just 99 exploration wells that were drilling in 2008 during the 2002-2009 time frame.
***

OPEC Planning to Boost Output by 1 MMb/d

Twitter post from Ecuador’s Hydrocarbon Ministry.

(Energy Analytics Institute, Jared Yamin, 22.Jun.2018) – OPEC is looking to boost crude oil output by 1 million barrels per day (MMb/d).

The production agreement goes into effect in July 2018, the Organization of Petroleum Exporting Countries (OPEC) announced today in Vienna, Austria. Ecuador’s Hydrocarbon Ministry later published the details in a Twitter post.

***

Kinder Considers More NatGas Takeaway to Mexico

(Natural Gas Intelligence, Carolyn Davis, 22.Jun.2018) – The Permian Basin’s growing natural gas volumes may provide the perfect aperitif to quench Mexico’s thirst, according to Kinder Morgan Inc.

The Houston-based pipeline and midstream giant’s natural gas segment makes up about 90% of $900 million worth of projects that were added to backlog in the first quarter. Mexico is a likely another avenue for future expansion, said Vice President Gregory Ruben, who oversees business development.

Speaking at the 4th Mexico Gas Summit in San Antonio, TX, Ruben said some of Kinder’s future growth is based on Permian projections, where oil is surging, which in turn produces more associated gas. And the basin’s proximity to Mexico provides “connectivity opportunities,” he told the audience.

“We’re continuing to look for opportunities to expand our footprint into the marketplace.” Mexico’s energy reform has opened the door to opportunities, and the company now is looking for the “best connection at this point in time.”

From a footprint perspective, Kinder has holdings in many of the key U.S. gas basins, including in Appalachia, which “gives us quite a bit of opportunity to take advantage of the markets and the supply basins as they do develop over time.”

The interconnectivity with Mexico is a natural, Ruben said, as “we have been in partnership as far as delivering volumes into Mexico for quite some time” through legacy El Paso Natural Gas Pipeline Co., i.e. EPNG.

The company’s Mier-Monterrey gas pipeline during March was the second largest importer into Mexico at 490 MMcf/d. Kinder is considering an expansion of the pipeline, which now in “proposed status.”

The company today has “roughly 5.4 Bcf/d of interconnect capability and growing, across the border into Mexico,” Ruben said. And a “near-term” expansion is underway to add up to 200 MMcf/d to the 300 MMcf/d Border Pipeline.

Other projects also are in the works to move more gas south. During 1Q2018, contracts were secured to carry from the Permian about 1.2 Bcf of capacity via EPNG, with some supply destined for south of the border, Ruben said.

In addition, remaining capacity was taken for the proposed 2 Bcf/d Gulf Coast Express Pipeline (GCX) that also is designed to move gas supply from the Permian to South Texas — and beyond.

GCX is to date the only confirmed new pipeline in the works for Permian gas supply. Potential connectivity for GCX is seen at the Agua Dulce gas hub near Corpus Christi, where more volumes could be moved to Mexico and via liquefied natural gas exports.

Kinder’s Sierrita Gas Pipeline, with 200 MMcf/d, has been serving Mexico markets since 2014. Sierrita is being expanded by about 323 MMcf/d to move more to Sonora, where the Puerto Libertad Pipeline would transport supply to the Gulf of California. The expansion is set to be in service by 2020 and include a 15,900 hp compressor station.

“We’ve got quite a bit happening, and we’re continuing to work with market participants to grow that connectivity at the border with Mexico,” Ruben said.

Many of the future gas supply opportunities lead back to the Permian, as “we’re continuing to see upward adjustments in projections” by producers for wellhead supply.

Ruben offered Kinder scenarios for future Permian gas production. In the base case, it expects volumes to reach 16 Bcf/d in two years or so.

“That’s a huge amount of gas that’s got to try and find a home and try to find a place to go,” he said. “From an upside perspective, we could see 20 Bcf/d of wellhead production in the basin. So when you think about those numbers and you think about all the capacity that’s been built out, it does create some challenges…”

To get an idea of how well the Permian may handle future gas flows, the company’s team stacked up all of the expected demand from the western markets in Arizona and California, as well as Mexican consumption trends, to determine the “economic capacity” for future projects.

Kinder’s experts determined that moving gas north from the Permian was a nonstarter economically, as supply would run head on into gas-on-gas competition from Rockies Express Pipeline, which is carrying supple Appalachian gas west, along with growing volumes from Oklahoma’s stacked reservoirs in the  Anadarko Basin and beyond.

Some unused capacity was seen in the analysis in western flows, and there was some unused capacity to the Mexican border.

‘When you blend that in with capacity, it does create some compelling thoughts as far as what needs to happen to achieve balance within the basin,” Ruben said. “It’s a very compelling story.” GCX should begin transporting gas south in 2019, “and that gets us back into relative balance, but…based on how we see this growth should be moving forward from the basin,” more projects likely are needed to keep Permian gas in balance beyond 2020, he said.

“The good news is, if you are net buyer at Waha, there’s expected to be a lot of activity…”

***

Frontera Aims to Lower Costs in Colombia

(Energy Analytics Institute, Ian Silverman, 22.Jun.2018) – Frontera Energy Corporation aims to lower certain costs in Colombia.

The Canadian company continues with efforts to reduce its transportation costs, including those associated to the Bicentenario pipeline, which has been continuously affected by attacks directed at the Caño Limon pipeline, the company announced in an official statement.

Frontera expects talks involving Colombia’s state owned or majority state owned companies (such as Bicentenario) will continue past the second quarter of 2018 due to the ongoing presidential elections.

***

Venezuelan Minister: Can ‘Absolutely’ Grow Output

(CNBC, 22.Jun.2018) – Manuel Quevedo discusses the meeting of the world’s top oil producers in Vienna.

Venezuela’s Oil Minister Quevedo, who also serves as the President of PDVSA, discusses the issue from Vienna.

https://www.cnbc.com/video/2018/06/22/venezuelan-energy-minister-can-absolutely-grow-production.html

Colombia to Connect 1,360MW of Energy Capacity

(Energy Analytics Institute, Aaron Simonsky, 22.Jun.2018) – Wind capacity in Colombia will add 1,360 megawatts of generation capacity to its energy grid.

The South American country’s Mines and Energy Ministry reported in a Twitter post that the energy source would be connected to the National Interconnected System through specialized connections, without providing further details.
***

ExxonMobil, Partners Spent $24 Mln in Guyana

(Energy Analytics Institute, Piero Stewart, 22.Jun.2018) – US-based ExxonMobil Corporation and partners continue to invest in small-to-medium sized enterprises in Guyana.

Irving, Texas-based ExxonMobil and project partners spent $24 million with more than 300 local suppliers in 2017 and opened the Centre for Local Business Development in the capital city of Georgetown to promote the establishment and growth of small- and medium-sized local businesses, the oil giant announced in an official statement.

Guyanese businesses, contractors and employees continue to play an important role in ExxonMobil’s operations in the country. ExxonMobil’s priorities in Guyana are focused on enabling local workforce and supplier development and collaborating with government to support the growth and success of its economy, both in the energy and non-energy sectors.
***

Venezuela: U.S. Sanctions “An Attack On The Oil Market”

(OilPrice.com, Tsvetana Paraskova, 22.Jun.2018 – The U.S. sanctions against Venezuela are affecting consumers worldwide and are an attack on the oil market, Venezuelan Oil Minister Manuel Quevedo said on Thursday.

The minister, speaking at an OPEC International Seminar today—a day before OPEC ministers meet to discuss how much production to bring back to the market to ‘ease consumer and market anxiety’—Venezuela’s Quevedo said, as carried by Platts:

“These sanctions are very strong, the sanctions are practically immobilizing PDVSA.”

“They are trying to asphyxiate PDVSA,” the minister added.

“It affects not just the Venezuelan oil sector but the consumers worldwide,” Quevedo said, referring to the sanctions.

“It’s an attack on the oil market. Oil is an instrument for development, not an instrument for a political attack.”

The U.S. has been stepping up sanctions against Venezuela, after cutting off all access of PDVSA and its sovereign to U.S. banks, and cutting off all refinancing of new debt.

Amid plummeting production, PDVSA fails to honor its supply obligations, and has started to refine imported crude oil.

Venezuela’s production plunged again in May, by 42,500 bpd from April to below 1.4 million bpd—1.392 million bpd, according to OPEC’s secondary sources. Some analysts think that the plunge to 1 million bpd production is imminent.

Quevedo, however, claims that PDVSA has been complying with its contractual and financial obligations, never missing paying “even one dollar.”

According to internal PDVSA reports seen by Reuters, the company’s oil exports plunged 32 percent in the first half of June compared to May.

Amid the desperate state of its oil industry, Venezuela blames the U.S. for its hardships and is siding with Iran in opposing the Saudi-Russia-led proposal for a production boost, aimed at plugging shortfalls in supply from Iran and Venezuela.

“Venezuela’s situation should not be ignored. Venezuela could be any of your countries,” Reuters quoted Quevedo as telling his fellow OPEC ministers today.
***

Argentina Inaugurates Energy, Production Ministers

(Xinhua, 22.Jun.2018) – Argentinian President Mauricio Macri oversaw the inaugurations of Energy Minister Javier Iguacel and Production Minister Dante Sica on Thursday during a ceremony at the government’s headquarters.

Macri expressed his gratitude to the outgoing Energy Minister, Juan Aranguren and outgoing Production Minister, Francisco Cabrera, for the “important contributions” they made throughout their terms in office.

New Energy Minister, Javier Iguacel, is a former petroleum engineer and until last week was in charge of Argentina’s National Road Network (DNV).
In a press statement released shortly after his inauguration, Igaucel said that the objective of his role would be to “reduce energy costs for Argentinians and allow small and medium sized businesses (SMEs) to grow.”

New Production Minister Dante Sica is an economist and accountant with expertise in development, industrial politics and international negotiations.

After his swearing in, Sica told press that his greatest challenge would be to improve competitiveness and create a fully integrated economy.

He added that “special attention and focus will be given to SMEs, which are great generators of employment.”

Sica previously worked as a secretary overseeing industry, commerce and mining during the administration of former President Eduardo Duhalde.

Also present at the ceremony was the Chief of Cabinet of Ministers, Marcos Pena, and state ministers and secretaries from both chambers of Argentina’s National Congress.
***

Echo Energy Reports 2nd Price Extension

(Energy Analytics Institute, Ian Silverman, 21.Jun.2018) – A second and final Price Monitoring Extension has been activated in this security.

The auction call period is extended in this security for a further 5 minutes, announced Echo Energy in an official statement.

“Following the first price monitoring extension this security would still have executed more than a pre-determined percentage above or below the price of the most recent automated execution today. London Stock Exchange electronic order book users have a final opportunity to review the prices and sizes of orders entered in this security prior to the auction execution,” reported Echo.

Echo added: “The applicable percentage is set by reference to a security’s Millennium Exchange sector. This is set out in the Sector Breakdown tab of the Parameters document at www.londonstockexchange.com/tradingservices. Additionally, this information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider.”

***

Pentanova Announces Farmout Agreement in Colombia

(PentaNova Energy Corp., 21.Jun.2018) – PentaNova Energy Corp. announced signing of the SN-9 Farm Out Agreement with Panacol Oil & Gas, a wholly owned subsidiary of LATAM Oil & Gas.

“The SN-9 block has all the hallmarks of being an exceptional core asset for PentaNova being adjacent to the prolific Canacol Energy Ltd. gas producing assets. By entering into this Agreement with Panacol, PentaNova is in a position to execute the exploration program required to confirm the gas potential of the block,” said PentaNova President and CEO Ralph Gillcrist.

Under the terms of the Agreement, Panacol will fully fund the company’s commitments during the first phase of the SN-9 Exploration and Production Contract for the amount of $22.29 million, which will give Panacol the right to earn up to a 40% economic beneficial interest in the SN-9 Block from the company’s 80% economic beneficial interest. Assignment of working interests for both parties is subject to approval from the National Hydrocarbon Agency of Colombia.

The Agreement is expected to close within the next 30 days during which time Panacol will be required to place $3 million in escrow to fund near-term activities. In addition, Panacol is required to provide a standby letter of credit for $3.0 million to guarantee further payments into the escrow account and pay approximately $650,000 in past costs. Under the terms of the Agreement, Panacol will recover 50% of the funds invested from 70% of the proceeds of the company’s net production.

“We look forward to leveraging the abundant experience of the Panacol team to complement the PentaNova team and accelerating our operational activities,” said Gillcrist.

SN-9 Block

The 313,638 acre SN-9 block is located in the northern province of Cordoba, in the Lower Magdalena Basin of Colombia directly adjacent to, and west of, the major gas producing area operated by Canacol. Canacol produces 88% of its 106 million cubic feet per day (MMscf/d) gas production from this area and reported aggressive expansion plans in their Q1 2018 investor update on May 16, 2018, reflected in their 1Q 2018 Conference Call Transcript published on the Canacol website (www.Canacolenergy.com). PentaNova believes that the gas play being developed by Canacol extends into the south eastern portion of the SN-9 block. The SN-9 block has over 736 km of 2D seismic lines and one discovery well, Hechizo-1, drilled in 1992 that tested a combined rate of 10.3 MMscfd, confirming the likely extension of the gas play from Canacol’s area into SN-9. Given the proximity to the gas infrastructure that supplies the north of Colombia, the south eastern structures of the SN-9 block will be the focus of immediate activities for the Company.

SN-9 Future Planned Activities

The company anticipates completing the prior consultation process required to acquire seismic in the block by the end of June 2018 and plans to issue tenders for the acquisition of 140km2 of 3D seismic, and related services, over the next two weeks. The company expects to acquire the 3D seismic in October and November of 2018.

The prior consultation and permitting process required for drilling on the block is expected to start in July 2018, as soon as the prior consultation for seismic is complete. On completion of this process, anticipated for mid 2019, civil works will be initiated with a view to spudding the first exploration well midyear 2019.

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Uncertainty Looms Large Over LatAm Oil

(Oilprice.com, Tsvetana Paraskova, 20.Jun.2018) – While oil industry analysts and market participants are watching Venezuela closely for clues about how low its oil production will go, several other countries in Latin America are holding key elections this year, elections that will no doubt shape the countries’ short and medium-term oil policies. These developments could spell trouble for oil supply and oil investment in South America’s biggest crude-producing nations.

A populist leftist candidate pledging to undo energy reforms is widely expected to win Mexico’s presidential election in two weeks. There has been recent turmoil in Brazil’s fuel sector policies ahead of a wide-open presidential race for the October elections. A newly elected president in Colombia is vowing to amend a historic peace deal with the FARC rebels.

All these events add uncertainties to how politics will influence Latin American countries’ oil policies and investment climate for foreign oil companies, Paul Ruiz and Jena Merl write for The Fuse.

In Colombia, a conservative political newcomer, Iván Duque, won the presidential election this past weekend in the traditionally conservative country. The new president, however, has pledged to revise the 2016 deal with the Revolutionary Armed Forces of Colombia (FARC) rebels that put an end to 50 years of armed conflict. Duque wants to re-write the deal that guaranteed the rebels seats in Congress and allowed them to run in elections.

The new president, like the outgoing president Juan Manuel Santos, will have to face another rebel group, the National Liberation Army (ELN)—a Marxist guerrilla group that sabotages oil industry facilities to protest against foreign companies operating in Colombia. In January this year, Colombia suspended talks with ELN after bombings killed police officers. ELN has repeatedly attacked the second-largest oil pipeline in Colombia, Cano Limon-Covenas, causing oil spills and shutdowns.

Mexico is holding a presidential election on July 1, and a few weeks ahead of the vote, all polls point to populist leftist candidate Andrés Manuel López Obrador having a comfortable lead over other candidates. López Obrador pledges to roll back the landmark 2013 energy reform of outgoing president Enrique Peña Nieto, who opened Mexico’s oil sector to private investment for the first time in seven decades. The jury is still out as to whether López Obrador will backtrack entirely on the oil reforms, but uncertainties remain regarding the investment environment in the country—at least for this year.

Brazil is holding elections in October and the race is still wide open.

But in recent weeks, the country came to an economic standstill due to widespread truckers’ strikes over high fuel prices. President Michel Temer announced subsidies on diesel at the end of May, freezing prices for 60 days.

The recent turmoil in the country’s oil industry and renewed anxiety over political meddling in the energy sector add an uncertainty ahead of the election later this year. Pedro Parente, chief executive at state-run oil company Petrobras, resigned on June 1, after the strikes forced the government to cut diesel prices and after oil workers demanded that Brazil end the one-year-old policy to allow fuel prices be dictated by the market and international crude oil benchmarks.

Yet, some of the world’s biggest oil companies—including Exxon, Chevron, Shell, BP, and Equinor—bid aggressively in Brazil’s latest offshore bid round on June 7, snapping up acreage in three blocks in the coveted pre-salt layer.

Nevertheless, uncertainty over how Brazil will handle oil sector policies until and immediately after the October elections has increased.

Brazil is still expected to be one of the largest contributors to non-OPEC oil supply growth in the coming years. According to the International Energy Agency’s (IEA) Oil 2018 outlook from March, oil production growth from the United States, Brazil, Canada, and Norway “can keep the world well supplied, more than meeting global oil demand growth through 2020.”

According to OPEC’s latest Monthly Oil Market Report, non-OPEC oil supply in the second half of this year is expected to increase by 2.0 million bpd year on year, with the United States leading the pack, contributing 1.4 million bpd to growth, followed by Canada and Brazil.

While uncertainties mount in the political shifts and oil policy choices in other Latin American countries, there’s only one uncertainty left for Venezuela—how fast production from the collapsing oil industry will sink to as low as 1 million bpd. Some analysts reckon the plunge to 1 million bpd is imminent.
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ENAP to Invest $131 Mln in Iso Plant

(Energy Analytics Institute, Ian Silverman, 20.Jun.2018) – The investment entails construction of a new isomerization plant and associated pond for the storage of gasoline.

The project is part of a larger investment portfolio of more than $ 1.1 billion for the ENAP Bío Bío Refinery. The new investments aim to improve the company’s environmental performance and its conversion capacity, and thus improve its competitiveness.

The plan for construction of a new isomerization plant to be executed by ENAP Bío Bío Refinery was approved on June 6, 2018 by the Environmental Assessment Commission with nine votes in favor and one abstention, announced ENAP in an official statement on its website.

The project, which entered into environmental processing in December 2017, seeks to increase production of high quality gasoline and low sulfur content for distribution in Chile.

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Why Mexico’s Energy Reform Needs AMLO

(The Council on Foreign Relations, Amy Myers Jaffe, 20.Jun.2018) – Mexico’s energy reform has taken important first steps but to come to full fruition, several additional critical reforms remain to be designed and implemented, including another constitutional reform. The task of adopting and implementing new reforms is all the more difficult because not only did the government of Enrique Peña Nieto oversell the short-run benefits of the package of reforms, including energy, adopted at the beginning of his term but also his administration is linked with other, broader political failures, including corruption scandals and the mishandling of the economy. Peña Nieto’s missteps have wrested credibility from the political system and make it unlikely that a mainstream candidate could put together a governing coalition with sufficient political support to adopt the next stage in Mexico’s energy reform. That’s why a political outsider would be more uniquely positioned to further energy reform, should that be a credible political choice. Once Andrés Manuel López Obrador (AMLO) wins the election, he could have the credibility to put together a coalition with the support of the Mexican people that could justify the next stage in Mexico’s energy reform. Whether he will do so remains an open question, but the next stage of the energy reform is unlikely to happen without him.

Stage III of the Mexican Energy Reform

The first stage of the energy reform in Mexico was President Calderon’s 2008 reform that was designed to strengthen Pemex without breaking Pemex’s monopoly position. After a fractious national debate, the reform was adopted because it was promised it would make Pemex an effective national oil company. The failure of that reform led to stage two in Mexico’s energy reform, which was the constitutional reform instituted under President Peña Nieto. This constitutional reform was intended to make Mexico’s energy sector more efficient and able to meet the power, gas and oil needs of a growing economy, with a small nod to generating more clean energy. By design, it allowed Pemex to lead the process by permitting the national oil company (NOC) to select the best properties for its own exploitation in Round Zero before opening the bidding process to companies other than Pemex.

The first auctions for oil and gas blocks did not go well, partly due to falling oil prices and partly because terms reflected Mexico’s relative inexperience with auctions. However, more recent auctions have gone extremely well. Foreign capital has committed to investment over the life of their contracts of almost $150 billion, and some new fields have already been discovered. Winning bids including seventy-three companies from twenty countries attest to the interest in Mexico’s energy future. There’s been less success in developing the infrastructure to get new energy and more imported energy to end users and the government has not solved the theft from Pemex oil pipelines or Pemex’s CAPEX and its pension liabilities.

Given Pemex’s dominant position, the company needs to develop a better business model. To generate capital, it needs to take the steps taken in Brazil, Colombia, authorized in Peru, and maintained in Argentina after the renationalization of YPF: privatize some stock in the NOC. The sale of the stock would require a constitutional amendment, but would not put Pemex in the hands of private equity holders and its stock price would provide a basis for evaluating how well Pemex was reforming. The government and Pemex have already modified the weight of the Petroleum Workers’ Union on Pemex’s governing structure and balance sheet, but the pension obligations that were made with Pemex need to be restructured and funded through other mechanisms.

Building a New Political Coalition for Energy Reform

While these necessary reforms have a technocratic nature, they cannot be adopted by technocrats or political leaders by simple decree. The first two stages of Mexico’s energy reforms rested on the backs of strong political coalitions behind them. The next stage will also require a political coalition. Unfortunately, the political system that generated the first two reforms has been discredited in the eyes of the Mexican people by actions both within and outside the energy sector. The clearest sign of disappointment with the process is AMLO’s widely expected victory in a few weeks. AMLO represents a new political coalition. López Obrador will need to convince that new coalition that when his government continues to attract private capital into Mexico’s energy sector, the benefits of a strong and efficient energy sector will benefit the Mexican people and not go into the hands of corrupt officials or the economic elite. His restructuring of Pemex needs to emphasize that the company is a means to promote the country’s interests in a rejuvenated energy sector, not to benefit oil workers and the PRI party at the expense of Mexican society.

So What Will AMLO Do?

The three pillars of the Mexican economy over the past decades have been manufactured exports under NAFTA, remittances from Mexican migrants to the United States, and oil exports. AMLO has an ambitious agenda for generating public goods as well as rewarding the groups who supported his victory. The income earned from manufactured exports under NAFTA will likely stagnate, if not actually decrease, even if NAFTA is successively renegotiated, and could decrease more substantially if NAFTA is terminated. Remittances have probably peaked because Mexico’s demographics and growing economy result in fewer Mexicans going to the United States for work; U.S. policy will likely enhance that decline. Oil exports have fallen as reserves and production have been falling, and it will take up to ten years for significant new reserves to be discovered and produced. Those efforts will require companies following through on their promised investments as well as new investment. AMLO will need an energy sector that generates revenue during his six-year term and credibly paves the way for greater future benefits that will be distributed to the Mexican people. Such nationalist messages could strengthen his political coalition as he implements his reforms of what has become an illegitimate political system.
AMLO’s political discourse radicalized when López Obrador and half the Mexico electorate believed that he had been deprived of previous presidential election victories in the extremely close and controversial election in 2006 and a close second in 2012. But when López Obrador was mayor of Mexico City from 2000-2005 he was pragmatic, worked with the private sector, and was perceived as an effective leader. Analysts say lack of technology and funds required to modernize Mexico’s oil sector could lead to an additional output plunge of 700,000 b/d by 2020, unless the next administration takes some definitive action. Output is expected to rebound slightly this year and is currently averaging 1.9 million b/d, down roughly 5 to 10 percent from 2017. Pemex is targeting 1.95 million b/d for 2018. Pemex’s natural gas production has also been declining, and fuel theft has plagued the country’s refining sector.

López Obrador has said he will not seek a constitutional change to reverse the 2014 energy reform and will respect the legitimate contracts signed under the reform. There is hope that AMLO can be like President Lenín Moreno of Ecuador and implement reforms from the left with a significant role for the private sector. Will AMLO take this path? We won’t know until he begins to govern, but the Mexican economy and the Mexican people need him to enact reforms that allow Mexico to reap the benefits produced by their energy sector.

Editor’s Note:

This is a guest post by David R. Mares, the Institute of the Americas chair for Inter-American Affairs and professor for political science at the University of California San Diego and the Baker Institute scholar for Latin American energy studies at the James A. Baker III Institute for Public Policy at Rice University.
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ExxonMobil Announces 8th Find Offshore Guyana

(Energy Analytics Institute, Piero Stewart, 20.Jun.2018) – Irving, Texas-based Exxon Mobil Corporation’s good luck continues in Guyana.

The oil giant announced it has made its eighth oil discovery offshore Guyana at the Longtail-1 well, creating the potential for additional resource development in the southeast area of the Stabroek Block, Exxon announced in an official statement.

ExxonMobil encountered approximately 256 feet (78 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 18,057 feet (5,504 meters) depth in 6,365 feet (1,940 meters) of water. The Stena Carron drillship commenced drilling on May 25, 2018.

“The Longtail discovery is in close proximity to the Turbot discovery southeast of the Liza field,” said ExxonMobil Exploration Company President Steve Greenlee, in the company statement. “Longtail drilling results are under evaluation. However, the combined estimated recoverable resources of Turbot and Longtail will exceed 500 million barrels of oil equivalent, and will contribute to the evaluation of development options in this eastern portion of the block.”

Second Exploration Vessel

ExxonMobil is currently making plans to add a second exploration vessel offshore Guyana in addition to the Stena Carron drillship, bringing its total number of drillships on the Stabroek Block to three. The new vessel will operate in parallel to the Stena Carron to explore the block’s numerous high-value prospects.

The Noble Bob Douglas is completing initial stages of development drilling for Liza Phase 1, for which ExxonMobil announced a funding decision in 2017. Phase 1 will consist of 17 wells connected to a floating production, storage and offloading (FPSO) vessel designed to produce up to 120,000 barrels per day (b/d) of oil. First oil is expected in early 2020. Phase 2 concepts are similar to Phase 1 and involve a second FPSO with production capacity of 220,000 b/d. A third development, Payara, is planned to follow Liza Phase 2, according to ExxonMobil

The Stabroek Block is 6.6 million acres (26,800 square kilometers). Partners in the Stabroek Block include ExxonMobil affiliate Esso Exploration and Production Guyana Limited (Operator, WI 45%. Hess Guyana Exploration Ltd. (WI 30%) and CNOOC Nexen Petroleum Guyana Limited (WI 25%).
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Ecopetrol to Prepay $156 Mln in Loans

(Energy Analytics Institute, Ian Silverman, 20.Jun.2018) – Colombia’s state oil company Ecopetrol S.A. announced it will prepay all loans entered into in 2013 with international banks and guaranteed by the US Export-Import Bank, which had been subject to a payment schedule to 2023.

The loan agreements allow Ecopetrol to prepay without penalty all principal on the interest payment dates, which are scheduled for July 6 and 25, 2018. Total principal plus accrued interest owed is $155,979,564, the company announced in an official statement.

Ecopetrol said it is able to make this prepayment due to its cash position of COP 16.6 billion as of the first quarter of 2018. The Colombian company expects this cash position will remain strong and thus allow it to better confront crude price volatility scenarios and be prepared to seize opportunities that might arise for inorganic growth.

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Venezuelan Oil Output Charting New Lows

(UPI, Daniel J. Graeber, 19.Jun.2018) – Ahead of what could be pivotal talks among OPEC members, production from founding member Venezuela could hit new lows soon, an industry report found.

State-backed oil company Petróleos de Venezuela, known commonly as PDVSA, notified 11 of its international customers earlier this month that it wouldn’t be able to meet contractual obligations of 1.5 million barrels per day. According to commodity pricing group S&P Global Platts, PDVSA had only 694,000 barrels per day available for shipments.

“As workers have fled the country, state-owned oil company PDVSA has had a difficult time maintaining crude output, let alone boosting production,” its report, emailed to UPI on Tuesday, read. “PDVSA’s refining sector has also deteriorated on a lack of funds and manpower.”

PDVSA is facing mounting obligations to its partners, notably ConocoPhillips. Meanwhile, U.S. sanctions pressures have made it difficult to do business with Venezuelan entities, including PDVSA. A digital currency embraced by President Nicolas Maduro was banned under U.S. actions.

Secondary sources reported to OPEC that Venezuela produced around 1.4 million barrels per day last month, down by more than half a million barrels per day from last year’s average. OPEC ministers last this week are expected to decide to put more oil on the market to buffer against the chronic shortages from Venezuela, though the Maduro administration is opposed to those considerations.

Higher oil prices support oil-exporting nations and prices would drop if OPEC decides to make a supply-side move later this week.

According to the International Energy Agency, Venezuelan production could drop to as low as 800,000 barrels per day, though Platts expects output to say above the 1 million barrels per day mark through next year.

The country’s rig count, a loose barometer of future production, was 28 last month, down about half from the start of the year.

“PDVSA has experienced similar drops in the past,” the Platts report read. “In the 1980s, the number of rigs fell to less than 30, causing crude production to fall to 1.3 million barrels per day.”

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OPEC’s Vienna Meeting: The Challenge of Failing NOCs

(The Council on Foreign Relations, Amy Myers Jaffe, 19.Jun.2018) – As energy ministers from major oil producing countries gather in Vienna this week to discuss the stability of global oil markets, the variables that will dictate outcomes have rapidly shifted. Pre-meeting narratives that previously focused on the appropriate level of external private investment—either too much, in the case of U.S. shale producers, or too little, in the case of private sector international oil companies—look woefully inadequate to explain current oil market conditions. Instead, how to deal with the accelerating political and institutional breakdown of several national oil companies across multiple continents now stands out as a pressing structural challenge for the Organization of Petroleum Exporting Countries (OPEC) and U.S. policymakers alike. I highlighted this problem vis a vis Venezuela last March. Stated intentions to replace lost barrels from Venezuela and potentially Iran has brought acrimony back into the OPEC fray. U.S. plans to sanction Iran’s oil exports are the most recent publicly visible geopolitical irritant, but the history has shown that eliminating the endogenous geopolitical swings in the oil cycle takes more intervention and planning capability than even the most well intended partnerships can master, much less nation states whose relations have been punctuated by direct military threats or proxy wars. Talk of a sustained Saudi-Russian alliance that would be effective in eliminating the factors that could cause gyrations in oil prices seem overstated.

All of OPEC’s fourteen members have flagship national oil companies (NOCs), that is, state-controlled entities that oversee their nation’s energy industry. Other important oil producing countries such as Brazil, Mexico, and Russia also have NOCs that dominate their oil and gas sectors. Many of these national firms are facing structural budgetary, corruption, or other internal political challenges, including attacks on facilities by local rebel groups, criminal gangs, terrorists, cyber hackers, and/or armed combatants in ongoing military conflicts.

As a result of these ongoing NOC difficulties, supplies from several OPEC countries, Venezuela, Libya, Iraq, Iran, Nigeria, and Angola have been volatile in recent years. In particular, the collapse of Venezuela’s oil industry and a slide in deep water oil production from Angola have been more instrumental to the market success of OPEC’s agreement with Russia and other non-OPEC oil producers than the producer group’s “planned” cuts in reducing excess inventories by almost 200 million barrels since early 2017 and pushing Brent oil prices up from about $55 to $75 a barrel. Cornerstone Macro noted in a recent report that oil stocks in industrialized countries experienced a counter seasonal decline of three million barrels in April, as compared to the more customary twenty million buildup on the heels of reduced global supplies and more robust than expected U.S. and global economic growth.

While Saudi Arabia, Kuwait, the United Arab Emirates, and Russia did make promised output reductions to help tighten oil supply over the course of 2017, unintended production declines continue to be more material. Not only did oil output declines from Venezuela, Algeria, Angola, Ecuador, and Gabon amount to losses of close to one million barrels a day since early 2017, according to Citibank, markets have come to expect accidental supply disruptions from conflict prone oil regions in Libya and Nigeria. That reality prompted one prominent energy columnist to conclude that OPEC has become “an increasingly unreliable supplier of an essential commodity.”

Whatever the outcome of the OPEC-non-OPEC Vienna group’s deliberations this week, it could turn out to be only a temporary fix to this more structural NOC problem than generally understood. Right now, OPEC spare productive capacity is highly limited. Saudi Arabia and Russia together would probably have difficulty adding much more than 1.5 million barrels a day to markets through the end of the year. Ongoing problems in Libya and Venezuela, combined with renewed sanctions on Iran, could possibly take more than that off the market. And what if a new supply problem emerges? Saudi Arabia and Russia are discussing longer run cooperation. What would that look like in a world where uncertainty plagues many national oil companies around the world, including, perhaps, their own firms?

Does budget-constrained Saudi Arabia agree to divert billions in tandem with Russian firms to expand additional oil fields’ productive capacity down the road to capture future market share that could be available as NOCs in other countries continue to fail? If Saudi and Russia make capacity expansion pushes, what becomes of OPEC as a coherent organization? Will the Vienna group need to shrink in number? Conversely, if Saudi Arabia and Russia choose to make only a quick stop-gap measure just to keep markets from overheating in the next few months and don’t invest in new capacity, will they sacrifice future revenues to private oil and gas investors who can bring on capacity more quickly if NOC capacity continues to falter?

The 2014-2015 price collapse has proven that a year or two of low prices won’t be sufficient to knock out growth in U.S. tight oil. That means restarting a price war in the short run isn’t an ideal option for OPEC, especially if those flooding the market do not appear to be able to survive the prolonged revenue drop that would make a price war option an effective threat. And my guess is that low oil prices also aren’t likely to be sufficient to knock out capital investment by the major international oil companies (IOCs). Those companies have started to pivot their strategies to direct their capital spending to activities that will be more productive than those pursued over the last decade when booking new large reserves was the priority. Rather, companies are focused on spending programs that can bring higher production more quickly, such as directing capital spending to shorter cycle field extensions and satellite field developments that can bring first oil into the market rapidly within one to three years (as opposed to mega-projects that took near a decade to develop). Companies are also developing new techniques to reduce the cycle time and costs on challenging green field projects.

Moreover, innovation in the private oil and gas sector is increasingly de-risking the landscape for future oil and gas investment for private investors. As technology improves, companies are going to be able to squeeze more barrels out of all kinds of existing known in place source rock, not just oil and gas from shale formations. The most recent example is the Austin Chalk where U.S. companies are rushing to test new drilling techniques to positive results.

There’s an additional rub. Saudi and Russian efforts could have trouble influencing intermediate oil demand trends. Even if the Vienna group takes production increase decisions this week that staves off any economically crippling oil price shock that could have sent oil demand into a tailspin, caution signs are already emerging that oil prices even at $70 a barrel are creating some economic headwinds. Markets are already nervous about trade wars. Reports are emerging that high fuel prices are hindering economies within the Euro zone and elsewhere. Rising fuel prices are visibly creating economic and political problems in India and other developing economies. And the United States needs strong demand growth elsewhere to manage its own economic issues. In the case of an unexpected global economic slowdown, OPEC supply disruptions could take a back seat again to “lower for longer” story lines about failing oil demand (potentially in the midst of rising U.S. production in 2019), which could make any discussion of a more permanent, workable Saudi-Russia oil alliance even harder to envision.
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Oil Prices Expected to Rise

(FinancialBuzz.com, 19.Jun.2018) – Despite the recent downturn in oil prices, Goldman Sachs remains optimistic.

According to Reuters, Goldman Sachs forecast a tighter oil market for a longer duration due to strong demand growth and the probability that rising supply disruptions could counter any increase in OPEC production.

“Our updated global supply-demand balance continues to point to further declines in inventories and higher oil prices in 2H18,” the bank said. Goldman also repeated its Brent price forecast for a peak of $82.50 per barrel throughout the summer and a year-end approximation of $75.

The avalanche of political and economic developments around the world that influence oil prices are making it difficult to determine what the relationship between demand and supply will be. Goldman Sachs explained in the report that they expect OPEC and Russia production to increase by 1 million barrels per day by the end of 2018 and by another half a million barrels per day in the first half of 2019. While a production increase would decrease oil prices, the supply numbers are expected to be offset by increased political and economic disruptions in Venezuela and Iran.

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Argentina to Replace Energy and Production Ministers

(Reuters, Maximilian Heath, 17.Jun.2018) – Argentina´s government said on Saturday that it would replace its energy and production ministers, just two days after the resignation of former Central Bank President Federico Sturzenegger.

The shake-up follows several tumultuous weeks for the government of the center-right President Mauricio Macri, with extreme currency volatility leading Argentina to seek a politically contentious $50 billion lifeline from the International Monetary Fund.

The government said in a statement that Javier Iguacel, previously administrator general of the agency that oversees Argentina´s road network, would take the place of Juan José Aranguren as head of Argentina´s Energy Ministry.

Dante Sica, an economist and former secretary overseeing industry, commerce and mining under former President Eduardo Duhalde would replace Production Minister Francisco Cabrera.
Cabrera will move on to serve as President of Argentina´s Bank of Investment and International Trade (BICE), as well as advisor to President Mauricio Macri, the statement said.

Central Bank President Federico Sturzenegger resigned on Thursday in a move aimed at restoring trust in the central bank and calming markets.

Argentina´s government also said on Saturday that the country´s top mining agency would now report to the Ministry of Production. It had previously been housed within the Energy Ministry, the statement said.
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Venezuelan Oil Ministry, PDVSA Plan to Boost Output

PDVSA’s Manuel Quevedo speaking in Caracas. Source: PDVSA

(Energy Analytics Institute, Piero Stewart, 17.Jun.2018) – Venezuela’s Oil Ministry and PDVSA reiterated joint plans to boost crude oil output by 1 million barrels per day.

To this end, officials from the OPEC nation’s oil ministry and state oil company meet in Caracas to discuss to jointly review heavy oil recovery plans among others aimed at boosting national oil production, reported PDVSA in an official statement.

“PDVSA divisions in Ayacucho, Boyacá, Carabobo and Junín, as well as with the regional office of the Hugo Chávez Frías Orinoco Heavy Oil Belt aim to develop strategies to increase the oil crude production over 1 million barrels at the national level,” reported PDVSA, citing company president Manuel Quevedo.
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Venezuela Oil Exports to China Slump

(Reuters, 17.Jun.2018) – Reuters) – China’s imports of Venezuelan crude oil could sink to their lowest in nearly eight years in July as the OPEC producer struggles with shrinking output and mounting logistics issues, according to people familiar with the matter and shipping data.

State-controlled PetroChina expects June loadings from Venezuela, mainly the Merey grade, to be half the normal rates, according to two Beijing-based oil officials briefed on the matter. Venezuela’s state firm PDVSA has promised the lost volume would be topped up in July loadings for arrival in August-September, they said.

The plunge in supplies to Venezuela’s most important customer, creditor and political ally is the latest indicator of tough times for the cash-strapped country with the world’s largest oil reserves. Crude output fell to the lowest annual average in over three decades between January and April, while claims on assets by creditors have cut off PDVSA’s access to export terminals.

The slide cuts both ways. China’s growing thirst for oil amid still-sturdy economic growth is increasing its reliance on imports, while Venezuela’s trouble exporting as its infrastructure crumbles means it’s missing out on crude oil prices that have risen to their highest in years.

“One of the best things about Venezuelan oil was its stable volumes for all these years and competitive prices,” said one senior oil industry official with direct knowledge of the supply situation. “But now they seem in very bad shape, not having the money to upgrade port facilities, no money even to remove the high water content in crude oil.”

The officials spoke on condition of anonymity because they weren’t authorised to discuss the matter with media.

Only one supertanker, the “New Pearl” carrying 2 million barrels of Venezuelan crude, is set to arrive in China’s eastern province of Shandong in July, down from this year’s monthly peak of 11 million barrels in March, according to Thomson Reuters Eikon trade flows data.

That would be the lowest monthly import volume since late 2010, according to Chinese customs data C-IMP-VECN-MTH.

PetroChina said it does not comment on market speculation. PDVSA did not immediately respond to Reuters’ requests for comment.

‘BIGGEST CASUALTY’

Disruptions in Venezuelan crude supplies to China started in April, and from mid-May through early June PDVSA did not load any crude for PetroChina, said the senior oil official. The Chinese firm lifted an average of around 20 million tonnes a year – or 400,000 barrels a day – in 2016 and 2017 of Venezuelan crude oil under a government-to-government loan-for-oil programme.

“Venezuela remains the biggest and most visible casualty of the (oil) market share war,” analysts at RBC Capital Markets led by Helima Croft said in a note on Thursday.

“We see almost no prospect of a turnaround in the Venezuelan story this year, at least barring a change in government, and even if the country comes under new management, it will still take a considerable amount of time and international assistance to right the ship and restore production.”

PDVSA has halted operations at units that convert extra-heavy oil into exportable crude. Early this month it asked customers to transfer oil at sea to clear a backlog of tankers waiting to load at its ports.

The Venezuelan firm has notified PetroChina of the new ship-to-ship requirement and agreed also to bear the additional cost, according to another industry executive with knowledge of the matter.

‘CHANGE DIET’

One trader with an independent Chinese refiner said he was still receiving offers of Venezuelan oil for August delivery at stable prices compared with a month ago, but added that the supply outlook is murky. “There isn’t a lot of cheap heavy crude (available) so some Chinese refineries might have to change diet a bit,” he said.

Sengyick Tee, a Beijing-based consultant at SIA Energy, said Chinese independents have increased imports of other heavy crude grades such as Castilla from Colombia and fuel oil as replacement.

Venezuela was the eighth-largest crude supplier to China last year, with 435,400 barrels per day (bpd), behind Brazil, according to China customs data.

But it already dropped to the ninth position in the first quarter of this year with an average volume of 381,300 bpd as China ramped up imports from Iraq, Kuwait and Brazil.

Venezuelan crude exports to India have also dropped 20 percent in the first five months to 323,600 bpd, according to data from shipping and industry sources.

Reliance Industries Ltd and Nayara Energy, key Venezuelan crude buyers, have stepped up imports of similar-quality oil from Brazil, Mexico, Kuwait, Iran, Iraq, the United Arab Emirates and Chad for replacement, data showed.

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Rick Perry Wants Argentina be More Like Texas

(Bloomberg, 17.Jun.2018) – The U.S. government is getting in on a shale boom 5,000 mi (8,000 km) from home.

Energy Secretary Rick Perry will help Argentina connect with U.S. companies that have shale oil and gas expertise as President Mauricio Macri — facing a natural gas trade deficit — hurries to replicate the success of the Permian basin, in Perry’s home state of Texas.

Fostering energy production from a regional ally will bolster the geopolitical influence of the U.S., Perry told reporters in Bariloche, Argentina.

“One of the things that I offered Juan Jose is U.S. technology partnerships, to make the introductions with the private sector,” Perry said, referring to Juan Jose Aranguren, Macri’s energy minister. “The technology that has allowed for the shale gas revolution in America we want to make available to Argentina.”

Perry was meeting Aranguren and other G20 counterparts in snow-covered Bariloche to discuss a global transition to cleaner energy — especially gas. Argentina is ramping up production of the fuel in Vaca Muerta, the Patagonian shale play where Chevron Corp. and DowDuPont Inc. were among the first to get drilling going.

Argentina’s state-run YPF SA, the biggest operator in Vaca Muerta, sees the next phase of shale development driven by mid-cap independent companies lured from the Permian. Their arrival will increase competition and, in turn, slash costs, Aranguren told reporters in Bariloche.

Now, Perry wants to add to that, bringing in U.S. pipeline developers to expand the play’s infrastructure and petrochemical companies to process the hydrocarbons once they’ve been moved out of the isolated shale fields.

Boosting output in Vaca Muerta, one of the world’s largest shale plays that remains largely untapped, will help the U.S. to direct geopolitics amid fractious relationships with major oil producers Russia and Venezuela, Perry said.

“Being able to not be held hostage by countries who don’t share our values is really important,” Perry said. “President Macri’s policies are right in line with U.S. values.”

Perry will advise Argentina — already facing transportation bottlenecks as YPF and billionaire Paolo Rocca’s Tecpetrol SA spur gas production — on avoiding pipeline capacity issues that have begun to plague the Permian, he said.

Transportadora de Gas del Sur SA recently announced it will build a $300-million gas pipeline in Vaca Muerta.

Perry will visit Vaca Muerta in the near future, Aranguren said.
***

Gazprom Reiterates Interest in Bolivia

Luis Poma and Vitaly Markelov at signing ceremony. Source: Gazprom

(Energy Analytics Institute, Jared Yamin, 16.Jun.2018) – Russian oil giant Gazprom remains attracted to the hydrocarbon opportunity set in Bolivia in South America.

A working meeting between Gazprom Management Committee Chairman Alexey Miller and Bolivia’s President Evo Morales was held at Gazprom’s office in Moscow where various agreements were signed with the aim to expand cooperation between Gazprom and Bolivia in the petroleum sector.

Land-locked Bolivia is the third-largest hydrocarbon producer in South America, extracting over 20 billion cubic meters of natural gas per year. Bolivia’s gas production is initially destined for the domestic market, while excess gas supply is exported primarily to Argentina and Brazil.

Miller expressed appreciation for the ongoing implementation of joint projects in Bolivia and discussed the opportunities to increase output at Bolivia’s Incahuasi natural gas field. The Russian official placed emphasis on joint plans for geological exploration in the promising Vitiacua oil and gas block, reported Gazprom in an official statement on its website.

A summary of the signed agreements follows:

Gazprom Management Committee Deputy Chairman Vitaly Markelov and Yacimientos Petroliferos Fiscales Bolivianos (YPFB) Vice President for Contract Management and Supervision Luis Poma signed a strategic cooperation agreement that envisions joint efforts in a wide range of areas including but not limited to the following: geological exploration, gas production and hydrocarbon transportation across Bolivia, development of the national gas and oil transportation infrastructure and NGV market, exchange of experience and personnel training, and sci-tech collaboration.

Gazprom EP International B.V. Managing Director Andrey Fick and Luis Poma also signed a term sheet related to the contract for exploration and production in the Vitiacua oil and gas block that will allow the companies to start drafting the main design documentation.

Finally, Bolivia’s Hydrocarbons and Energy Minister Luis Alberto Sanchez and Alexey Tyupanov, the CEO of EXIAR — the Russian Agency for Export Credit and Investment Insurance, which was established in late 2011, becoming Russia’s first export credit agency — signed an agreement to secure financing for supplies of gas-fueled machinery and equipment produced by Russian manufacturers.

GAZPROM IN BOLIVIA

In Bolivia, Gazprom International B.V., a company that participates in hydrocarbon prospecting, exploration and development projects outside Russia, represents Gazprom’s interests in projects in the country.

Gazprom in partnership with France’s Total S.A. (operator, WI 50%), Tecpetrol S.A. (WI 20%), and YPFB (WI 10%) develops the promising Ipati and Aquio oil- and gas-bearing blocks, within which the Incahuasi field is located. Gazprom (WI 50%) and Total (WI 50%) also implement a hydrocarbon exploration project in the Azero block.

In 2016, Gazprom, Bolivia’s Ministry of Hydrocarbons and Energy, and YPFB established the means for implementing Bolivia-based projects for hydrocarbon exploration, production, and transportation, and updated the general scheme for development of the country’s gas industry through 2040. Gazprom and YPFB also cooperate in personnel training and retraining.

Finally, in 2016, Gazprom and YPFB signed an agreement to explore the promising La Ceiba, Vitiacua and Madidi blocks. The La Ceiba and Vitiacua blocks are situated in the Chaco oil- and gas-bearing basin in the southern part of Bolivia (Tarija and Chuquisaca departments).

***

Venezuela Oil Output May Sink To 1 MMb/d

(OilPrice.com, Tsvetana Paraskova, 15.Jun.2018) – Venezuela’s plummeting oil production is nearing the psychological threshold of just 1 million bpd as early as this year, analysts and industry experts tell Platts.

Venezuela’s production plummeted again in May, by 42,500 bpd from April to below 1.4 million bpd—1.392 million bpd, according to OPEC’s secondary sources in its latest Monthly Oil Market Report published earlier this week.

According to the United States EIA, Venezuelan production was 1.43 million bpd last month, down from 1.46 million bpd in April and from 1.98 million bpd in May of last year.

Lejla Villar, who works on projections for EIA’s monthly Short-Term Energy Outlook (STEO), currently expects Venezuela’s production to fall to 1 million bpd in the second quarter of 2019, but she is waiting to see June export numbers from Venezuela—if they are low, Venezuelan production could sink to 1 million bpd sooner than that.

“If the worst-case scenario for June production comes true, then we could see Venezuela’s production fall to 1 million b/d sooner,” Villar told Platts.

“Depending what June does, this may or may not lead me to take a more pessimistic view on Venezuela’s production outlook through the end of 2019,” she said.

The International Energy Agency (IEA) forecasts that Venezuela’s oil production could drop to just 800,000 bpd or even lower next year.

“For Venezuela, we assume no respite in the production collapse that has taken 1 mb/d off the market in the past two years,” the IEA said in its Oil Market Report this week.

According to Francisco Monaldi, a Latin American energy policy expert at Rice University, Venezuela’s production will see a “major drop” this month and next and production will plunge to the 1-million-bpd threshold by November or December this year.

Ed Morse, Global Head of Commodity Research at Citi Group, believes that the plunge to 1 million bpd is imminent, as current production is likely around 1.1 million bpd-1.2 million bpd.

Venezuela’s rig count number is in the 20s, while it needs it into above-40 territory to sustain production flat, according to Morse.
***

Lake Maracaibo: Descent into Chaos [EAItv]

(Energy Analytics Institute, Piero Stewart, 15.Jun.2018) – A brief look at Lake Maracaibo’s descent into chaos. The Maracaibo basin has produced over 43 billion barrels of petroleum, and close to 19 billion barrels of proven reserves still remain.

ENAP to Invest $354 Mln in Project in Argentina

ENAP’s AM3 platform. Source: ENAP

(Energy Analytics Institute, Aaron Simonsky, 15.Jun.2018) – Chile’s ENAP plans investments of $354 million in a project located in the eastern mouth of the Strait of Magellan, on the Argentine side.

The company plans the investments in its Magallanes Area Incremental Project (PIAM) project, which has potential to substantially increase crude oil and natural gas production, ENAP reported in an official statement.

Despite severe weather conditions at sea in southern Argentina, the AM3 platform is already underway to produce 100% of the proposed volumes of oil and gas, becoming the last milestone of the PIAM of ENAP Sipetrol in that country.

With installation of the heliport, of approximately 60 tons, at 37 meters above sea level — the highest altitude of the expansion project was reached — the PIAM already has the entire infrastructure to start producing the incremental oil and gas in its entirety.

Natural gas production is expected to rise 60% to 4 million cubic meters per day (MMcm/d) from 2.4 MMcm/d, while associated oil production is expected to rise 43% to 1,000 cubic meters per day from 700 cubic meters per day currently.
***

PetroAmazonas Production Costs Below $20/bbl

(Energy Analytics Institute, Aaron Simonsky, 15.Jun.2018) – Production costs at the state entity remain below the $20 per barrel mark.

PetroAmazonas EP’s production costs rose slightly to $17.01/bbl in May 2018, up sequentially from $16.46/bbl in April 2018. For the first five months of 2018, the company’s production costs have averaged $17.08/bbl, according to data posted to Twitter by EP PetroEcuador.

***

PetroEcuador Activities Normal After Earthquake

(Energy Analytics Institute, Aaron Simonsky, 15.Jun.2018) – Ecuador’s EP PetroEcuador announced all its activities continue under normal conditions after a magnitude 5 earthquake was reported this morning in Ecuador.

The epicenter was identified as Nobol (Guayas), the state entity reported in a Twitter posts.

***

Colombia Produced 865,987 B/D in May 2018

(Finance Colombia, Jared Wade, 14.Jun.2018) –Colombia produced an average of 865,987 barrels of oil per day in May, an uptick of 1.6% over May 2017 according to government figures.
This level also represents a 0.1% increase from April, and the slight increase marks the third straight month of rising production, according to the Ministry of Mines and Energy.

After five months, the annual average for the country now stands at 854,190 barrels of oil per day. This is almost exactly in line with the 2017 average of 854,121 barrels of oil per day yet still below the 885,000-barrel daily average of 2016.

The annual figure, however, still exceeds the Ministry of Mines’ previously released “medium-term” estimate of 840,000 barrels of oil per day.

The vast majority of the oil in Colombia is produced by state-controlled oil company Ecopetrol. The Bogotá-based company has set a goal of 725,000 barrels of petroleum-equivalent per day for 2018 and expects to drill at least 620 development wells and 12 exploration wells during the year to help replace falling reserves.

Frontera Energy, formerly known as Pacific Rubiales, produced an average of 52,195 barrels of oil per day in Colombia the first quarter of 2018. This was a slight decrease from the 56,593 it produced in the country compared to the first quarter of 2017.
***

Ecuador Oil Output at 519 Mb/d in May 2018

(Energy Analytics Institute, Jared Yamin, 15.Jun.2018) – Ecuador’s production of crude oil reached 519 thousand barrels per day (Mb/d) in May 2018, up compared to 518 Mb/d in April 2018, the Organization of Petroleum Exporting Countries (OPEC) reported in its monthly oil report.

Ecuador, one of only two OPEC member nations in Latin America, produced 545 Mb/d in 2016 and 530 Mb/d in 2017, according to OPEC.

***

Colombia’s ANH Approves New Contract Model

(Energy Analytics Institute, Jared Yamin, 15.Jun.2018) – Colombia’s National Hydrocarbon Agency (ANH by its Spanish acronym) approved the new oil and gas exploration and exploitation contract model for offshore areas.

The contract aims to entice large petroleum companies to make favorable investments in Colombia — especially those made in the most vulnerable regions — through investments and work programs that benefit communities, royalties, economic rights and via a percentage participation in production that favors the state.

“This is great news for the country, given that a good contractual scheme is a fundamental element when it comes to a petroleum company defining its investments. Today, we are more competitive in the proposal to attract large investments,” announced the agency, citing ANH President Orlando Velandia Sepúlveda.“We look for companies with experience, the best technology and a robust financial structure,” he added.

This contractual model, when compared to the previous, represents a great advance in all aspects, and creates a positive environment for companies and investments to remain in Colombia, said Sepúlveda.

The new contractual model applies to operators executing technical evaluation contracts, and companies that have rights to convert contracts into exploration and production contracts, as well as the companies selected in future competitive processes in offshore areas.
***

G20 Energy Heads Gather in Argentina

(Xinhua, 14.Jun.2018) – Energy ministers from G20 countries met here on Thursday to discuss transitioning to renewable energy and other alternative green energy.

The gathering in Argentina’s southwestern city of Bariloche is part of the fourth ministerial meeting of the G20 group of developed and emerging economies, which Argentina currently chairs.
Ministers of energy and natural resources, as well as experts from international organizations such as OPEC and the OECD, are to discuss ways to promote energy efficiency, industry transparency and technology in the sector, as well as alternative sources of energy.

Argentine Energy and Mining Minister Juan Jose Aranguren, along with Canada’s minister of natural resources, James Gordon Carr, were to hold a press conference on the deliberations later in the day.

The G20 envoys were also scheduled to tour INVAP, Argentina’s state-run company specializing in designing and building equipment for nuclear, oil, chemical and aerospace industries.
A press conference is also scheduled after the meeting concludes Friday afternoon, with Aranguren, Thorsten Herdan, Germany’s director general of energy policy, and Yoji Muto, Japan’s minister of economy, trade and industry.

The Group of 20 accounts for 77 percent of the world’s energy consumption and more than 80 percent of the world’s renewable energy capacity, as well as 85 percent of global GDP, two-thirds of the world’s population and 75 percent of global trade.
***

Argentina to Export Natural Gas to Chile by YE:18

(Reuters, Luc Cohen, 14.Jun.2018) – Argentina will begin exporting natural gas to neighboring Chile before the end of the year, the energy ministers of both countries said on Thursday, as output from the Vaca Muerta shale field rises.

The two South American countries had previously signed deals allowing for the export of gas or electricity in emergency situations, but required that an equivalent amount be re-imported within twelve months.

Chilean companies are in talks to sign import deals and the first flow of gas across the Andes could come in October or November of this year, Chile energy minister Susana Jimenez said in an interview in Bariloche, Argentina at the G20 Meeting of Energy Ministers.

“We see a great opportunity for mutual benefit,” she said, adding that the gas could come both from the Neuquen basin, home to Vaca Muerta, and from the Austral basin in southern Argentina.

The gas could be used for electricity generation, replacing imports from elsewhere, or to heat homes in areas where families still depend on wood, a source of pollution in the center-south region, Jimenez said. Chile produces little hydrocarbons of its own.

The unrestricted exports would mark a turning point in energy trade in the region. Argentina was once a major supplier of natural gas to Chile, but triggered a diplomatic crisis in the mid-2000s by cutting off shipments when its own supplies ran low.

Argentina sits atop the world’s No. 2 shale gas reserves but is still a net energy importer. Since taking office in December 2015, President Mauricio Macri has sought to loosen labor rules and boost infrastructure to attract investment.

Rising output from Vaca Muerta could help the country export more than it imports by 2021, Argentina’s energy minister Juan Jose Aranguren said at a news conference. The country is set to import slightly more than 50 cargoes of liquefied natural gas (LNG) this year, down from 68 last year and 90 in 2015.

Argentina still needs the LNG imports to meet peak winter demand, but in the southern hemisphere summer months it could see a surplus, Aranguren said.

“This summer we will start to sign permits for exporting natural gas to Chile without any restrictions,” he said.
***

Mexico Energy Sector Faces Uncertainty

(Natural Gas Intelligence, Carolyn Davis, 14.Jun.2018) – Mexico’s historic energy reform launched four years ago may hit a few bumps if, as expected, left-wing presidential candidate Andres Manuel Lopez Obrador is elected on July 1, but there’s no turning back now, experts said last week.

At the 4th Mexico Gas Summit organized by Industry Exchange LLC, cautious optimism prevailed about the outlook for the oil and gas sector. During the campaign for president, Lopez Obrador, who has a huge lead in the polls, has threatened to disrupt energy reform by freezing bidding rounds and possibly reviewing contracts with private operators already in place.
However, there’s growing evidence that the new president, who would take office Dec. 1, may become more pragmatic as he gains an understanding of how the energy sector’s growth will benefit the country.

Duncan Wood, who directs the Mexican Institute at the Woodrow Wilson Center, helmed the first day of sessions and offered his take on the road ahead. Wood, who has worked on Mexico issues for more than 22 years, including as an analyst on energy policy, told the audience he was unsure “where the heck we’re going” in regards to the next administration. However, he remains cautiously optimistic.

“We’re very much at an inflection point, and I tend to be an optimist. So I tend to think that in the long-run, everything’s going to be fine. The fundamentals are good.”

He suggested the audience not “listen to all of the noise about what’s going on right now” regarding the election or what’s happening in the United States as President Trump threatens to impose more tariffs on Mexico and potentially upend the North American Free Trade Agreement (NAFTA).

“Focus on the long-term,” Wood said. The United States and Mexico “that are coming inexorably together, and if you look at Mexico in the long-term…Mexico is on its inexorable path to openness. It doesn’t mean that there won’t be setbacks. It means that there are going to be very, very interesting times. But the fact is, that in the long term, Mexico is actually on the right path. The reason for that, I think, is looking at the potential of the country and what its people are going to demand.”

Wood co-authored a paper with IPD Latin America Managing Director John Padilla that was published in May, “Mexico’s New Hydrocarbons Model: A Critical Assessment Four Years Later,” to “give politicians, policymakers, and other relevant stakeholders a clear assessment of what has been achieved so far and what remains to be done.”

The report relied on the results of a series of forums with participants from a broad cross-section of local industry, including executives from upstream to downstream, with lawyers, academics, former senior government officials and individuals with decades of experience in Mexico’s energy sector and abroad.

“What was really remarkable, in a series of four consultations with industry and experts in Mexico City, is that they were incredibly positive about the reform, so much so that when we came to write up the report, I had to stop John and say, ‘look, we actually need to go back to take a really cool headed analysis of this to say it’s extraordinary what has happened in Mexico’…

Four years on from beginning energy reform, and, “the fact that we have seen such a bold, dramatic and profound opening in Mexico is a huge achievement,” he said.

“We should never forget where we’ve come from because there are voices out there that want to take us back to that distant past. So that report that we wrote up I had to rewrite it…to make sure that it begins with a very optimistic opening about how much has been achieved through this reform process, because it is remarkable, and it is extraordinary, and I would argue that it’s unmatched anywhere else in the world.”

There are challenges for the energy sector ahead, however. Regulatory processes still need to be finessed, and more investments have to be made to ensure there is adequate infrastructure.
“In the short term, we deal with a great deal of uncertainty,” Wood said. “Even if we know who’s going to win the election, we don’t know what that particular candidate’s policies are because he’s laid out a whole bunch of policies that are very vague and a lot of people in Mexico don’t believe that’s what he really wants to do anyway. I tend to be a little bit more optimistic because I think that pragmatism will kick in…”

The other short-term anxiety centers around the future of NAFTA. If, as Trump has signaled, it ends up in the dust bin, “there are real and profound implications for the oil and gas sector…That is one of the issues that’s on the top of people’s minds as they’re investing in Mexico at this political moment.”

Without NAFTA, Mexico’s economy may suffer, which in turn could hamper energy demand, and in particular natural gas consumption, directly from a decline in the industrial sector and indirectly through electricity demand.

“But the long-term future, as I said, is very, very bright,” Wood said. “Think about the potential of Mexico in terms of its gas reserves, 15.3 Tcf of proven reserves…If you look at the technically recoverable shale gas reserves, in the Burgos Basin alone there is 343 Tcf. Mexico is a country of 545 Tcf of technically recoverable reserves.”

On the demand side, Mexico’s growing middle class also is consuming more natural gas, which means more power plants.

“All of the headlines for the past couple of years have been on the renewables front,” Wood said. “It’s been about solar and wind. But the reality is that those two kinds of new power plants are going to contribute a significant but not overwhelming percentage of new power in Mexico.

“It’s going to be natural gas plants that are really going to do the trick.”

U.S. gas pipeline exports also are paramount.

Some infrastructure projects still are experiencing challenges connecting on the Mexican side of the Texas border, Wood said. “But we’re looking at a situation where now, Mexico is responsible for 60% of U.S. natural gas exports…In the not-so-distant future, Mexico’s gas imports will account for one-tenth of all U.S. gas production.”
***

Jamaica Saves $230m Under Energy Efficiency

(JIS, 14.Jun.2018) – The Government has saved $230 million, to date, and reduced environmental emissions from the implementation of major programmes in energy efficiency, conservation and management.

The Petroleum Corporation of Jamaica (PCJ)-implemented initiatives are the Deployment of Renewable Energy and Energy Efficiency in the Public Sector Project, launched in 2016, to provide renewable energy and energy-efficiency systems in six hospitals; and the Energy Efficiency and Conservation Programme (EECP) to retrofit several government entities and facilitate training in best practices for energy efficiency and conservation.

The EECP has given way to the US$40-million Energy Management and Efficiency Programme (EMEP) officially launched on March 30 and is intended to improve energy efficiency in the public sector, through retrofits at government facilities, and enhance urban traffic management in order to shorten travel times. It will also strengthen the technical capabilities of the Ministry of Science, Energy and Technology to enhance energy planning.

Portfolio Minister, Dr Andrew Wheatley, said that together, these programmes have enabled the country to “cut down expenditure and high electricity bills within the public sector”.

“We are environmentally conscious people as well, so we (have) also reduced our carbon footprints. To date, we have cut our carbon dioxide emissions by 3,000 tonnes, and that is important. We have also reduced our demand for fossil fuels, reducing oil importation by some 2,293 barrels,” he noted further.

He was speaking at the launch of the PCJ/Government of Jamaica, Energy Champion Competition at The Jamaica Pegasus hotel in New Kingston on June 13.

Turning to the renewable energy programme, Wheatley explained that having already moved the original target of obtaining electricity from these sources from 20 to 30 per cent by the year 2030, the Government is contemplating raising the target even further.

“The reason for this is that we have been implementing renewables at a rapid pace. Currently, we are somewhere between 17 and 18 per cent of electricity coming from renewable sources,” he noted, adding that the Government is seeking to “aggressively go to the market to get more renewables on to the grid”.

“The Electricity Act and the licence given to the Jamaica Public Service (JPS) in January of 2016, speak to us making the necessary provisions to accommodate more renewables,” he pointed out.

Meanwhile, Manager of Corporate Affairs and Communications at the PCJ, Camille Taylor, explained that the aim of the Energy Champion Competition is to have every single member of the public sector and the wider public engaged in conserving energy.

“We want to see great savings across the public sector. We want to see great savings across households and businesses, and that is what the competition is all about,” she said.

A total of $20 million in prizes is up for grabs in the competition, which is an initiative of the PCJ under the EECP.

The competition includes categories for government agencies, schools financed by the Consolidated Fund, and individual citizens. Organisations can win a five-kilowatt or 10-kilowatt solar photovoltaic system valued at up to $5 million or a runner-up prize of up to $1.5 million in energy efficiency and conservation goods and appliances.

Entry requirements include a dedicated JPS meter at the participating entities’ location and the formation of an energy management committee, which will develop and implement an energy-efficiency and conservation plan.

Participating entities must demonstrate a reduction in energy use over a three-month period between October and December 2018 when compared to the corresponding period in the previous year.

During the 2017 staging of the competition, the National Works Agency (NWA) was crowned Energy Champions while eGov Jamaica Limited and the Ministry of Finance and the Public Service placed second and third, respectively, in the organisational component of the competition.

On the individual side, there were 17 winners of prizes that included smartwatches, mini smart switches, energy bulbs/LED desk lamps and tablets.
***

Acciona Starts Commissioning 183MW Mexican Wind Farm

(Renewables Now, 14.Jun.2018) – Acciona SA started commissioning its 183-MW El Cortijo wind farm in Mexico, the Spanish infrastructure group said on Wednesday.
This is the first wind farm of those being developed as a result of Mexico’s energy reform to enter service, the company added.

The El Cortijo project secured a contract for 585.5 GWh of power and associated clean energy certificates in Mexico’s first long-term power auction following the country’s energy reform. In the third auction, completed in November 2017, Acciona was awarded 52.04 MW of guaranteed capacity from the wind farm, which, the company explained, is a third revenue source for the facility, in addition to the sale of electricity and clean energy certificates.

The USD-235-million (EUR 199m) wind farm is located in the state of Tamaulipas and uses 61 Nordex 3-MW wind turbines of the AW125/3000 model.

The start of commissioning comes 15 months after the wind farm entered construction. The first turbines have now been connected to the grid and commissioning work will continue over the next few weeks.

El Cortijo is the fifth wind farm that Acciona owns in Mexico, bringing its wind capacity to 740 MW. The Spanish group is also building a 404-MWp solar park in Sonora.
(USD 1 = EUR 0.846)
***

Venezuela Oil Output Slides to 1.4 MMb/d in May 2018

(Energy Analytics Institute, Piero Stewart, 14.Jun.2018) – Venezuela’s oil production continues its downward slope.

Venezuela’s crude oil production fell to 1.392 million barrels per day (MMb/d) in May 2018, according to a recent report by the Organization of Petroleum Exporting Countries (OPEC), citing data from secondary sources. This compares to production of 1.434 MMb/d in April 2018, 1.474 MMb/d in March 2018, and 2.154 MMb/d in 2016.

***

PDVSA Announces Start-Up of Cardon Refinery AV3 Plant

(Energy Analytics Institute, Ian Silverman, 14.Jun.2018) – PDVSA announced its subsidiary PDV Mantenimiento oversaw the successful start up of the High Vacuum 3 (AV3) Plant at the Cardón Refinery located in the Paraguaná Peninsula in Western Venezuela.

Savings to PDVSA from the activation of the AV3 will amount to an estimated $55.5 million per month. Coupled with the start-up of the Number 3 Distillery Plant located in Amuay, the savings amount to an estimated $127.1 million per month related to the acquisition of vacuum distillate (VGO), a basic component to produce fuel, reported PDVSA in an official statement, citing PDV Mantenimiento Routine Maintenance Manager Rafael Camacho.

The AV3 start-up leverages processing of 23,000 barrels per day (b/d) of VGO, which is a load component to the Fluidized Catalytic Cracking (FCC) unit, reported PDVSA. The FCC is a vital process to produce fuel.

In Venezuela’s western Falcon state, Venezuela’s state oil entity PDVSA operates two refineries: Amuay, with a 645,000 barrel-a-day processing capacity and Cardón, with a 310,000 barrel-a-day capacity. In neighboring Zulia state, PDVSA operates the smaller Bajo Grande refinery, with a 16,000 barrel-a-day capacity.

Photo credit: PDVSA
***

A Visit to Weatherford Laboratories, Trinidad

(Energy Analytics Institute, Ian Silverman, 14.Jun.2018) – Have you ever wanted to visit Weatherford’s facilities in Trinidad?

The AAPG Young Professionals of Trinidad and Tobago (AAPGYPTT) have announced an open invite for a tour of Weatherford on the island. Details follow:

Date: Thursday June 14, 2018
Time: 8am- 2pm
Venue: Weatherford Laboratories, Trinidad

PPE will be required for this trip: 1. Hard hats 2. Steel toed shoes 3. Safety glasses. Additionally, lunch will be provided!

To secure your spot on this tour please click here: https://lnkd.in/etpXVxS
***

Bolivia, Russia Consolidate Energy Partnership

(Efe, 13.Jun.2018) – Bolivia’s President Evo Morales met with his Russian counterpart, Vladimir Putin, as part of a two-day visit to Moscow aimed at consolidating the countries’ bilateral energy partnership.

While receiving Morales at the Kremlin, Putin expressed Moscow’s willingness to expand its cooperation with the South American country in the hydrocarbons area.

“Gazprom (the state-owned Russian natural gas producer) is working at two (Bolivian) fields where it extracts 2.5 billion cubic meters of gas. It’s now studying expanding production, which could be doubled,” Putin said at the start of talks with Morales.

A consortium in which the Bolivian unit of French oil major Total is the operator with a 50 percent stake, Gazprom and Bolivia’s TecPetrol each have a 20 percent interest and a unit of Bolivian state energy company YPFB has a 10 percent stake participates in exploration projects at the Aquio and Ipati gas and oil blocks, where the Incahuasi gas and condensate field is being developed.

Gazprom and Total also are carrying out an exploration project at the Azero block, which like Aquio and Ipati is located in southern Bolivia.

Putin also noted that Rosatom, Russia’s federal agency on atomic energy, was developing a nuclear research center in Bolivia.

“So I’m very pleased to confirm that our relations are growing, and today we’ll issue a joint declaration documenting all areas of our interaction,” he added.

For his part, Morales underscored the countries’ shared values, particularly in terms of “respect for nature, for Mother Earth.”

Bolivia’s president expressed his country’s interest in cooperating with the Eurasian Economic Union, which is made up of the post-Soviet states of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.

Morales on Thursday will visit Gazprom’s headquarters, where he is expected to sign several agreements locking in roughly $1 billion in Russian investment in Bolivia’s hydrocarbons sector.
***

G20 Holds Energy Conference in Argentina

(Efe, 13.Jun.2018) – Energy sector representatives from the G20 countries are attending on Wednesday this year’s second meeting in Argentina to address the energy transition.

Access to electricity in Latin America and the Caribbean, access to information about the energy sector and the use of subsidies to promote new energy technologies are some of the topics that will be discussed during the meeting taking place in the Patagonian town of Bariloche, organizers said.

The first conference on the energy transition took place in Buenos Aires in February as part of the preparatory meetings for the G20 summit of heads of state and government, which will take place here in November.

Wednesday’s meeting between government officials and invited guests from the member countries takes place one day before the G20 energy ministers summit.

“This meeting will allow us to discuss some topics that are crucial to reach a common position between the G20 countries,” the secretary of Energy Planning of the Argentine Ministry of Energy, Daniel Redondo, said during the opening ceremony.

According to the G20, one of the main objectives of tomorrow’s summit is to “diversify the economy and strengthen energy security until it becomes possible to improve air quality and mitigate climate change.”
***

Enbridge Begins U.S.-Mexico Portion of Valley Pipeline

(Reuters, 13.Jun.2018) – Canadian energy company Enbridge Inc. said it started construction of the offshore border crossing section of its US$1.6-billion Valley Crossing natural gas pipeline between Texas and Mexico, according to a federal filing made available on Wednesday.

The company said in an e-mail the pipeline remains on track to enter service in October.

The latest filing pertains to a 1000-foot (305-meter) section of offshore pipe that extends to the U.S.-Mexico border. The remaining 165 miles of onshore and offshore pipe has been completed and commissioning activities will commence in the near future, Enbridge spokesman Devin Hotzel said in an e-mail.

The Valley Crossing project is designed to carry up to 2.6 billion cubic feet per day (bcfd) of gas from Texas to help Mexico meet its growing power needs as generators there shift away from fuel oil and imported liquefied natural gas.

One billion cubic feet is enough to fuel about five million U.S. homes for a day.

The Valley Crossing project has been under construction since April, 2017, according to the Enbridge website. In May, Enbridge said it had “substantially completed” the onshore part of the pipe and was working on the offshore part to meet a fourth-quarter 2018 in-service date.

Valley Crossing will connect in the Gulf of Mexico to the Sur de Texas-Tuxpan pipeline under construction by a joint venture between units of TransCanada Corp. and Sempra Energy. Once complete, it will be the biggest gas pipe between the two countries.

There are already about 20 pipelines that can move gas from the United States to Mexico with a total capacity of around 10.9 bcfd, according to U.S. energy data. That includes Howard Energy’s 0.6-bcfd Impulsora pipeline, which is expected to enter service this month.

Analysts have said, however, that constraints on the Mexican side of the border have so far limited a big increase in U.S. pipeline exports.

Since the start of the year, U.S. exports to Mexico have averaged 4.0 bcfd, up just a bit from the 3.9-bcfd average during the same period in 2017, according to Thomson Reuters data.

While the pipeline constraints remain, Mexican energy companies have been buying more U.S. liquefied natural gas (LNG) than any other country since February, 2016, when the first U.S. LNG export terminal opened in the lower 48 states at Cheniere Energy Inc.’s Sabine Pass in Louisiana.

Mexico bought 50 cargoes of LNG totalling 167.8 billion cubic feet of gas from the United States, 18.8 per cent of total U.S. LNG exports between February, 2016, through the end of 2017.
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Venezuela Forgoes Nearly $30 Bln in Oil Revenues

(Energy Analytics Institute, Piero Stewart, 12.Jun.2018) – Venezuela will continue to forgo substantial oil revenues this year due to its collapsing production.

In the last four years of the administration of Venezuelan President Nicolas Maduro, the country’s oil production has fallen between 1.361 million barrels per day (MMb/d) according to secondary sources and 1.533 MMb/d according to the state oil entity PDVSA, wrote Ecoanalitica Director Alejandro Grisanti in a Twitter post. As a result, Venezuela will forgo oil income in 2018 estimated between $29.8 billion and $33.6 billion respectively, wrote Grisanti, a former analyst at Barclays in New York City.

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