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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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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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.”

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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.

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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.

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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.”

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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.

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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.

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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.

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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.

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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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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.

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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.”

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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.
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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.
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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.
***

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.”

***

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.
***

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.
***

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.
***

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.
***

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.”
***

Energy, Education, and Learning Through NRG ED

(Energy Analytics Institute, Aaron Simonsky, 24.May.2018) – Energy Analytics Institute, formerly LatinPetroleum Inc., continues to promote its “Energy Education Initiative” in the Americas, also known as “NRG ED.”

NRG ED is structured to work with K-12 schools, community colleges, four-year colleges and universities, workforce training programs, communities and businesses, and aims to promote reduction of non-renewable energy usage in favor of renewable energies. However, the core of the initiative is education, without which the NRG ED initiative would not be.

“At its core the initiative is really focused on education,” said Chad Archey, Editor-in-Chief at Energy Analytics Institute from Atlanta, Georgia.

EAI views basic education as most important in the overall learning process and also promotes educational initiatives and research from grade school to the professional level related to the energy sector. EAI aims to foment constructive dialogue regarding energy usage as well as ways to reduce the carbon footprint left by non-renewable energy resources through the following: 1) educational consultancy, 2) development and distribution of educational and training materials, and 3) promotion of debate and discussion regarding renewable energy alternatives.

Energy Analytics Institute (EAI), formerly LatinPetroleum Inc. (dba LatinPetroleum.com), is a Houston-based independent company focused on producing non-biased news, updates and special reports for investors interested in the Latin America and Caribbean petroleum sectors.
***

Mexico’s Vista Oil & Gas Signs Onshore JV with Jaguar

(Reuters, 23.May.2018) – Mexican energy investment firm Vista Oil & Gas will tie up with Jaguar Exploracion y Produccion on three onshore projects, the company said on Tuesday, acquiring 50 percent stakes with an initial payment of nearly $27.5 million.

Vista will pay Monterrey-based Jaguar a further $10 million to compensate the firm for past investments in the projects, or so-called carry costs, the firm said in a statement.

The three onshore projects were won at auctions last July by Jaguar, an upstart oil firm owned by Mexico’s Grupo Topaz, and are located in the Gulf coast states of Tabasco and Veracruz.

Two of the blocks will be operated by Vista, while the other will be run by Jaguar, in what Vista described as Mexico’s first joint venture between two private oil firms.

The joint venture between the two must still be approved by the National Hydrocarbons Commission, the Mexican oil regulator that supervises exploration and production contracts.

Last year, Vista became Mexico’s first publicly traded oil firm, four years after a landmark energy reform ended the decades-long monopoly enjoyed by state-owned Pemex.

Vista, which has targeted assets for possible acquisition in Mexico, Brazil, Colombia and Argentina, is backed by private equity firm Riverstone Capital.

***

President Energy Looks for Production When Chasing Deals

(Energy Analytics Institute, Ian Silverman, 17.May.2018) – The Finance Director of London-based President Energy plc, Rob Shepherd, made the comments during a televised interview with Proactive Investors about the company’s activities in Argentina and Paraguay.

“We don’t need acquisitions to grow, there’s enough organic opportunities in what we’ve got to create some interesting news flow. But, sure if the right deal is there we’ll happily go for it … we look for production,” said Shepherd.

***

Echo Energy Sees Favorable Investment Ops in Argentina

(Energy Analytics Institute, Ian Silverman, 1.May.2018) – “Argentina offers favourable investment opportunities in the upstream sector. A historical lack of investment means the country is now reliant on imported gas to feed its growing economy. The country is opening itself to foreign investment in a bid to replace reserves and halt the decline in domestic production,” announced London-based Echo Energy on its website.

“Argentina’s gas industry began in the 1960’s and has developed the country into a gas-intensive economy where 50% of its primary energy demand is now met by natural gas (BP Statistical Review of World Energy, 2017). Declining costs of credit default swaps (Reuters, 2017) related to an improving political and fiscal environment, only add to the attractiveness of the region,” the company added.
***

ECLAC Ssays Venezuela’s Economic Activity to Fall 8.5% in 2018

(Energy Analytics Institute, Aaron Simonsky, 1.May.2018) – The United Nations Economic Commission for Latin America and the Caribbean, also known as ECLAC or CEPAL by its Spanish acronym, projects economic activity in troubled Venezuela will contract 8.5% in 2018.

Gross domestic product or (GDP) estimates for other important countries and regions follows:

TABLE 1: ECLAC GDP ESTIMATES FOR 2018

Country/Region —————————- GDP (Est.)

Argentina ———————————— 2.5%
Bolivia ————————————— 4.0%
Brazil —————————————- 2.2%
Chile —————————————– 3.3%
Colombia ———————————— 2.6%
Ecuador ————————————– 2.0%
Paraguay ————————————- 4.0%
Uruguay ————————————– 3.0%
Venezuela ———————————– (8.5%)

Latin America and Caribbean (LAC) —- 2.2%
South America —————————— 2.0%
Central America and Mexico ————- 2.6%
Central America —————————- 3.6%
Latin America ——————————- 2.2%
Caribbean ———————————— 1.4%

Source: ECLAC, April 2018
***

Chile and Argentina to Boost Gas, Oil Output

(Santiago Times, 6.Apr.2018) – The state-run energy firms of Chile and Argentina have inaugurated a US$ 354 million project to increase production of natural gas off the southern tip of South America.

The project, east of Magellan Strait, operated by Chile’s state-run ENAP in partnership with YPF, will boost production of natural gas to 4 million cubic meters daily from the current 2.4 million, while increasing petroleum production by nearly 25% at the site, the firms said in a statement.

“This ambitious project contributes to the supply of energy in Argentina and bolsters regional integration,” ENAP General Manager Marcelo Tokman said in the statement.

YPF’s Pablo Bizzotto said the project is part of the company’s strategic project “providing funds, technology and innovations with the purpose of achieving the maximum energy development for Argentina”

The project, which includes five oil platforms, is at the Faro Virgenes zone, in the mouth of the eastern end of the Strait of Magellan in Argentina’s Santa Cruz province.

Chile’s Hydrocarbons secretary Marcos Pourteau was present at the inauguration ceremony together with Santa Cruz province governor, Alicia Kirchner, YPF Upstream Operations chief Pablo Bizzotto, ENAP’s General manager Marcelo Tokman and the General Manager of ENAP Argentina, Eduardo Tapia.

As part of the ceremony officials from both countries were flown by helicopter to one of the oil rigs, 18 kilometers offshore, for a tour of the facilities. Precisely one of the rigs is connected to land deposits in Faro de Virgenes via an 18km pipeline at the bottom of the sea.

***

TGS To Build Vaca Muerta Gas Pipeline, Conditioning Plant

(Reuters, 3.Apr.2018) — Argentine natural gas company Transportadora de Gas del Sur (TGS) will invest an initial $250 million on gas transportation infrastructure in 2018 and 2019 in the Vaca Muerta shale fields, the company said on Tuesday.

TGS said in a filing it would build a 92-kilometer (57-mile) gathering pipeline with 1.3 billion cubic feet per day capacity and later a conditioning plant to adapt the quality of natural gas before it enters the transport pipelines.

Overall investment will eventually reach an estimated $800 million with additional expansions planned, the company said.

Insufficient transportation infrastructure has held back oil and gas production and investment in Vaca Muerta, the world’s second-largest shale fields.

The TGS plant will have an initial capacity of 177 million cubic feet per day with expandable modules of up to 2.0 billion cubic feet per day.

Reuters reported last October that TGS, controlled by Pampa Energia, was planning the $800 million investment in natural gas infrastructure, citing a company source.

The pipeline will cross the Bajada de Añelo, Bajo del Choique, La Invernada, Pampa de las Yeguas I y II, Parva Negra Este y Oeste, La Escalonada, Rincón La Ceniza, Los Toldos Norte, Sur, Este y Oeste, La Calera, El Orejano abd Sierra Chata areas.

(Reporting by Juliana Castilla; Writing by Caroline Stauffer)
***

Frontera Energy to Double Investment in Colombia, Peru

(Reuters, 2.Apr.2018) – Canada’s Frontera Energy Corp named a new chief executive on Monday, and said it plans to more than double its investment in operations in Colombia and Peru during 2018, to up to $500 million.

Frontera will direct between $225 million and $240 million of investment to new wells and maintenance in the two countries, the company said in a statement.

The investment will fund between 125 and 135 development wells, 11 to 15 exploratory wells and 15 to 25 work-over wells, the company said. Work-over wells require major maintenance or remedial treatment.

Richard Herbert, formerly of BP Plc, will replace Barry Larson as chief executive. At BP, Herbert was responsible for exploration and development projects worldwide, Frontera said.

Frontera had an average daily production of 70,082 barrels of crude per day (bpd) in 2017, the statement said, down 32 percent from 2016 because of the end of its contract to operate Rubiales field, its top producer. The company aims to produce between 65,000 and 70,000 bpd this year, it said.

Based on a Brent oil price of $63 per barrel, the company anticipates 2018 earnings before interest, taxes, depreciation and amortization (EBITDA) of between $375 million and $425 million, it said.

Frontera had a net loss of $217 million in 2017, compared with net profit of $2.4 billion in 2016, the company said by telephone.

(Reporting by Luis Jaime Acosta; writing by Julia Symmes Cobb; editing by Jonathan Oatis)
***

President Energy Updates on Argentine Reserves

(President Energy Plc, 15.Mar.2017) – President Energy Reports Audited Argentine Reserves Upgrade President Energy Group 2P Hydrocarbon Reserves now in excess of 20 MMBoe.

Highlights:

— Argentine 1P Oil Reserves increase by 9% to 12 MMBoe of which 11.5 MMBbls is oil

— Argentine 2P Reserves increase by 10% to 19.9 MMBoe of which 19.1 million barrels (MMBbls) is oil with the balance gas

— President Energy Group 2P Reserves now total over 20 million barrels of oil equivalent (MMBoe), including the Company’s producing Louisiana interests

President Energy’s Hydrocarbon Reserves at its Puesto Guardian Concession, Salta, Argentina have been independently certified and audited by VYP Consultants, a Reserves Auditor regulated by and registered with the Argentine Federal Secretary of Energy. The audit, conducted under SEC and World Petroleum Congress regulatory principles, will be submitted to and filed with the Secretary of Energy as part of President Energy’s annual operating obligations.

The increase in reserves reflects the impact of successful frac and stimulation campaigns on previously non-producing carbonate zones in the Cretaceous Formations which we are looking to replicate and enhance in this year’s programme.

The Argentine Audited Reserves are shown in the following table:

Type —- MMBoe —– MMBbls

1P ——- 12 ———— 11.5

2P ——- 19.9 ———- 19.1

Source: President Energy

“The company’s 2P Hydrocarbon Reserves are comparable to companies whose market capitalisation is a multiple of President’s. Whilst five separate fields in the Concession have each their own characteristics, with the 2017 workover programme the key factor is to increase the production to reserves ratio,” said President Energy Chairman Peter Levine. “The audit nevertheless highlights the potential of Puesto Guardian and its asset value is clear with the results demonstrating the continued ability of President to replace reserves even with the projected increase in production this year.”

***

President Energy Provides Update on Argentine Ops

(President Energy Plc, 12.Mar.2017) – President Energy announced that the first workover of a previously producing well, DP12 at the Dos Puntitas field, has been completed on time and on budget.

The workover of DP12 went to plan with minimal non-productive time and the well, which had previously had a leak in the production packer and a faulty Jet Pump Bottom Hole Assembly, has been treated with an acid stimulation and is achieving an initial production in excess of 120 bopd, in line with expectations.

The rig has now moved to workover the second of the previously producing wells, DP1001 at the Dos Puntitas field, and operations have now commenced at that site after which the previously announced workover and frac programme of old shut-in wells is still expected to commence end March.

“A good start for the warm-up to the 2017 workover campaign where we have successfully broken in the Rig provided by our new drilling contractor Quintana, with the new crew and field management team bedding in and working efficiently. Pleasingly, no performance issues were experienced during drilling relating to the rig, crew or any other of President’s contractors,” said President Energy Chairman Peter Levine. “The experience gained so far stands us in good stead when we start to work over and frac the old shut-in wells come end of March onwards, targeting our objective of 1,200 bopd by end September 2017.”

***

Moody’s Changes Outlook on Argentine Cos

(Moody’s Investors Service, 7.Mar.2017) – Moody’s Investors Service revised to positive from stable the outlook for several companies operating in Argentina, while all ratings were affirmed. The companies’ outlook change follows the revision of the Argentine government’s B3 rating outlook to positive from stable on March 6, 2017.

ISSUERS AND RATINGS AFFIRMED — OUTLOOK CHANGED TO POSITIVE

Arauco Argentina S.A.: the Corporate Family Rating (CFR) was affirmed at B1 and the rating of the senior unsecured notes, guaranteed by Celulosa Arauco y Constitucion S.A. (Baa3 stable), was affirmed at Baa3. The outlook of the issuer was changed to positive from stable and the outlook of the notes remains stable.

Arcor S.A.I.C.: the CFR and the rating of the senior unsecured global bonds was affirmed at B1.

Pan American Energy LLC, Argentine Branch: the ratings of the backed senior unsecured medium-term notes programs were affirmed at (P)B1 and the rating of the backed global medium-term notes was affirmed at B1. The outlook was changed to positive from stable.

Pan American Energy LLC: the CFR was affirmed at B1. The outlook was changed to positive from stable.

YPF Sociedad Anonima: the senior unsecured notes were affirmed at B3. The rating of the medium-term notes program was affirmed at (P)B3. The outlook was changed to positive from stable.

RATINGS RATIONALE

The rating outlook revision for these companies follows the outlook change of Argentine government’s B3 Issuer rating outlook to positive from stable on March 6th, 2017, supported by the rising likelihood that the recently policies introduced, which have laid the ground for future improvements to Argentina’s economic and fiscal strength, and the improvements in Argentina’s institutional strength will be sustained and bring improvements in Argentina’s credit profile.

Moody’s expects that Argentina’s economy will return to growth in 2017 and 2018, supported by the government’s improved policy mix which has sought to reduce inflation and increase investor confidence.

The positive outlook for the affected companies reflects Moody’s view that the creditworthiness of these companies cannot be completely de-linked from the credit quality of the Argentine government, and thus their ratings need to closely reflect the risk that they share with the sovereign. Moody’s believes that a weaker sovereign has the potential to create a ratings drag on companies operating within its borders, and therefore it is appropriate to limit the extent to which these issuers can be rated higher than the sovereign, in line with Moody’s Rating Implementation Guidance.

***

EcoStim Secures $17 Million in New Funding

(Eco-Stim Energy Solutions, Inc., 6.Mar.2017) – Eco-Stim Energy Solutions, Inc. announced that an affiliate of Fir Tree Partners (FTP) entered into a transaction with an affiliate of Albright Capital Management LLC (ACM) pursuant to which FTP has purchased from ACM $22 million aggregate principal amount of the company’s outstanding 14% convertible notes due 2018 and approximately two million shares of the company’s outstanding common stock.

This transaction is part of a comprehensive recapitalization designed to position the company to capitalize on attractive growth prospects and create a path to a potential equitization of substantially all of the company’s debt, subject to shareholder approval.

As part of the recapitalization, the company issued to FTP an additional $17 million aggregate principal amount of convertible notes to provide the company with needed growth capital and issued to FTP approximately $2.4 million principal amount of additional convertible notes in payment of accrued interest on the existing convertible notes. After giving effect to these transactions, the company now has approximately $41.4 million of outstanding convertible notes, which FTP has agreed to convert into common stock at a conversion price of $1.40 per share, subject to receipt of shareholder approval and satisfaction of certain other conditions. Assuming all of the $41.4 million in notes are converted, on a proforma basis the company would issue 29.6 million shares to FTP and would then have approximately 44.6 million shares outstanding and no outstanding debt. The company’s management team and largest shareholder have agreed to vote in favor of the conversion. If the note conversion is not approved by shareholders all of the outstanding convertible notes will mature in May 2018. All outstanding convertible notes will accrue interest at 20%. In addition, FTP has the right, which they exercised, to name three members to the Board of Directors, which now consists of seven members. FTP will also have approval rights with respect to certain future actions by the company.

“The company has endured through a challenging period and its outstanding debt with ACM had certain covenants that were likely to be violated in the near term. This recapitalization with FTP allows the company to avoid these covenant defaults, while providing the company with needed growth capital and a clear path to eliminating debt while preserving upside to our current shareholder base,” said Eco-Stim President and CEO J. Chris Boswell.

Alexander Nickolatos, Chief Financial Officer added, “The debt conversion price of $1.40 represents a significant premium to the last 30-day average trading price. If shareholders approve the conversion of all outstanding debt, we believe the debt free balance sheet should unlock value for all shareholders and allow the Company to grow as the market continues to recover. We are pleased to welcome Fir Tree and their three directors onto the Board of Directors. It has been a real pleasure working with them on this transaction and we look forward to growing the Company together.”

Andrew Teno, a Director at FTP, said, “Fir Tree looks forward to working with EcoStim’s management team to pursue long-term growth opportunities in the US and in Argentina. We believe that access to growth capital and a fully equitized balance sheet will benefit all of EcoStim’s shareholders.”

***

Andes Energía, YPF to Develop Vaca Muerta

(Energy Analytics Institute (EAI), Clifford Fingers III, 16.Feb.2017) – Andes Energía and YPF plan joint investments to boost hydrocarbon production in the Vaca Muerta in Argentina.

“We have projects to drill hundreds of wells,” reported the daily Clarín, citing Andes General Manager Alejandro Jotayan. “The great potential is in shale oil in the Vaca Muerta where we have 250,000 net acres (1,000 square kilometers), both in Neuquén as well as in the south in Mendoza.”

In 2016, we invested almost all our cash flow in Chachahuen (Mendoza) in a block in partnership with YPF, announced Jotayan during an interview with Télam. Both companies invested $100 million on 90 exploration and development wells as well as production management and treatment facilities. In 2017, Andes plans to deepen its work in Chachahuen and continue with development of the Vaca Muerta, said Jotayan.

“YPF and Chevron are producing 50,000 barrels per day on 60,000 acres,” said Jotayan. “You can imagine what we could do with 250,000 acres.”

***

Moody’s Assigns Rating to Pampa Energía

(Moody’s Investors Service, 6.Jan.2017) – Moody’s Investors Service assigned a B3 Corporate Family Rating (CFR) to Pampa Energía S.A. At the same time, Moody’s assigned a B3 rating to the company’s proposed long term senior unsecured notes. Proceeds from the notes will be used to refinance debt and for capital investments as well as other general business purposes. The outlook on the ratings is stable.

This is the first time that Moody’s assigns ratings to Pampa.

RATINGS RATIONALE

Pampa’s B3 ratings assume a successful merger of Petrobras Argentina S.A. into Pampa, expected to be finalized in the first quarter of 2017. From one side, the ratings consider Pampa’s negative free cash flow, although fueled by expansionary capex in natural gas and power projects, which have favorable prospects; low interest coverage and low retained cash flow compared to total debt, pro forma for the proposed notes; as well as exposure to volatile, highly-regulated power and oil and gas industries in Argentina. On the other hand, these factors are mitigated by the company’s strategy to focus on businesses with positive pricing outlooks, namely natural gas production and power generation; the expected stable demand for electricity and strong demand for natural gas in Argentina; as well as low foreign exchange risk.

Pro forma for the acquisition of PESA, Pampa’s free cash flow will be negative for the foreseeable future, given high expansionary capital expenditures, which are little flexible, compared to operating cash generation. Moody’s assumes that Pampa will issue up to $1 billion in new notes, and thus that its debt burden will be high compared to retained cash flow in the next 2 years: retained cash flow/total debt ratio will hover between 20% and 25% in the next two years (Moody’s considers the $300 million owed to Cammesa, Argentina’s wholesale power market administrator, as short-term payable, not financial debt). Likewise, Moody’s forecasts that the company’s Moody’s-adjusted EBITDA/interest expenses will be below 3.5 times in 2017, which is currently low for a volatile business profile, although with prospects of improvement in the medium term.

Pampa operates in the power as well as the oil and gas industries in Argentina, which are highly-regulated and pose high operating risk. But the industry fundamentals in Argentina for the gas industry in particular are favorable since local natural gas production supplies only 75% of the country’s needs, while the 25% difference is imported from Bolivia and Chile, among others, a situation which should prevail for the next 6 to 7 years, at current local natural gas production growth rate. This dependence on imports of gas, which is paid in kind and with scarce US dollars, sustains solid prospects for the gas industry in the country in the medium to long term. While margins in the refining business have been under pressure given low economic growth and demand for oil products, as well as labor pressure for high wages and benefits, this line of business is small on a consolidated basis.

Similarly, Pampa’s electricity distribution assets are well-positioned to benefit from regulatory reforms and tariff increases, which should come over the course of 2017 and 2018. In addition, the company owns a co-controlling interest in Transener, the largest high voltage power transmission company in Argentina, which has with 20,630 km of transmission lines, equivalent to an 85% market share. However, margins at the power industry have been historically low and Moody’s expects that flat demand for power, in line with the country’s weak GDP growth rate, will challenge the company’s ability to transfer inflation and local currency devaluation costs to power tariffs in later years. For instance, Moody’s estimates that, during 2016, inflation in Argentina was around 30%.

Thus, Moody’s believes that Pampa’s credit metrics related to debt burden and interest coverage will remain in line with its B3 rating in the next 24 months or more, even considering a successful resetting of electricity tariffs at profitable levels, which Pampa expects to happen before the end of February.

Foreign exchange risk is low for Pampa. About half of the company’s costs, mainly in the oil and gas business, is linked to the US dollar and, pro forma for the proposed notes, close to 100% of the company’s debt will be in US dollars. However, close to 80% of Pampa’s EBITDA is generated in the gas and power generation businesses, whose sales are US dollar-linked, although dependent on prevailing exchange rate. While the peso/dollar exchange rate had been controlled and kept low by the Argentine government in the past, since the new government took place, in early 2016, the exchange rate has been set by the market, with limited government intervention.

Currently there is a low level of structural subordination between the holding company’s debt and its subsidiaries’. Pro forma for the merger of PESA into Pampa, close to 50% of the consolidated EBITDA, which Moody’s estimates will reach about $810 billion in 2017, will be generated at the holding level (i.e. at Pampa itself) and will be related to exploration and production of oil and gas. In turn, the holding company will hold about 90% of the group’s debt. Most of the cash-generating subsidiaries in the group are controlled by Pampa at around 99%. However, the proposed notes’ indenture provides for no limit to debt increase at the subsidiaries level, although on a consolidated basis Pampa’s debt leverage cannot exceed 3.5 times on an incurrence basis.

As of September 2016 and pro forma for the acquisition of PESA, Pampa’s refinancing risk is high but would decline significantly after the issuance of the proposed new notes, which Moody’s believes will amount to $1 billion. In addition, the company counts with solid relationships with banks, although credit facilities are uncommitted, and is currently working with Export Credit Agencies and other multilateral financial institutions in order to diversify its external funding sources. The company’s liquidity situation depends on a timely refinancing of upcoming debt maturities of about $760 million in 2017, $100 million in 2018 and $33 million in 2019. In addition, as per the company’s financial policies, it would always maintain a minimum of up to $100 million in cash at all times, which would not be available to repay debt. Furthermore, Moody’s believes that Pampa will spend about $720 million in capex in 2017. However, besides the proceeds from the new notes, sources of cash include a sizable $476 million in consolidated cash on hand as of September 2016, pro forma for the merger with PESA, and about $810 million in EBITDA in 2017, as per Moody’s estimates. Convertibility of local currency into US dollars and transferability of foreign currency abroad are risks also considered in Pampa’s ratings.

The stable outlook on Pampa’s ratings reflects Moody’s expectation that the Argentine power companies will be successful in the current negotiations with the government to increase electricity tariffs, to be set for the next 5 years. It also considers that natural gas prices will remain strong in Argentina given lower local supply vis-a-vis demand.

Pampa’s B3 ratings could be downgraded if the company materially increases its leverage, measured as retained cash flow (funds from operations less dividends) to total debt lower than 10%, or if its interest coverage, as per EBITDA to interest expense, declined to below 2 times with limited prospects of a quick turnaround. Also, a deterioration of the company’s liquidity profile could lead to a rating downgrade.

In turn, a rating upgrade could occur is Pampa’s retained cash flow to total debt ratio is higher than 35% and its EBITDA to interest expense rate is above 6 times on a sustainable basis. An upgrade on the ratings of the Government of Argentina would not necessarily translate into an immediate upgrade of Pampa’s ratings.

Pampa is engaged in generation, distribution and transmission of electric power in Argentina as well as on oil and gas production, refining, petrochemicals and hydrocarbon commercialization and transportation in Argentina and, to a lesser extent, in Venezuela. Pro forma for the merger with PESA, as of September 30, 2016, Pampa was the third largest power generator in Argentina, with approximately 10.6% market share. In addition, it was the fourth oil and gas producer in the country, with an equity oil and gas production of over 58.3 thousands of barrels of oil equivalent per day.

***

Eco-Stim Energy Secures $2 Mln Loan

(Eco-Stim Energy Solutions, Inc., 1.Dec.2016) – Eco-Stim Energy Solutions, Inc. finalized a $2 million secured loan from existing shareholders. The loan will have a one-year term with the proceeds used to prepay a $1 million note scheduled to mature on December 15, 2016, related to previous equipment purchases, as well as for general corporate purposes.

“This note is one of the sources of liquidity we discussed on our recent quarterly conference call. We continue to pursue other financing solutions to enhance our liquidity and to fund the future growth of our company, and believe this transaction is an important signal of support from our shareholders and their confidence in our business plan,” said EcoStim’s Chief Financial Officer Alexander Nickolatos. “We are also pleased that our largest creditor fully cooperated to free up certain collateral and accommodate this shareholder loan.”

***

Next Hot Spot for Shale Drilling? Argentina

(CNN Money, 28.Jul.2016) – Argentina has exceptional hydrocarbon reserves, but politics has greatly affected its development.

The economy in Argentina is best described as a “pendulum”, going from loose economic policies in the ’80s to Washington-consensus liberalisation in the ’90s and back again under the Kirchner regime.

Since the current president Macri took office in December 2015, he has been reversing the policies of his predecessor and has focused on boosting the economy with free-market measures through eliminating currency controls and lowering utility subsidies.

In March, the government also announced a $7.50 per barrel subsidy on exported oil while Brent remained below $47.50 per barrel to attract foreign investment.

Argentina’s recoverable shale oil reserves are estimated at 27 billion barrels and hold the third largest shale gas and fourth-largest shale oil reserves in the world. Appearing in the spotlight is the Vaca Muerta formation with technically recoverable shale gas of 308 trillion cubic feet and 16 billion barrels of oil.

The Vaca Muerta Shale spans across four provinces – Neuquén, La Pampa, Mendoza and Rio Negro and is almost double the size of the Eagle Ford shale.

Current production from the Vaca Muerta formation is about 50,000 bbl/day, an amount that is expected to double by 2018. IHS Energy research indicates that the Vaca Muerta is characterized by favourable traits such as thick, high-quality, organic-rich shale, similar to the Permian Basin.

While the American consumer basks in low oil prices, the Argentinean consumer is helping to fund the oil industry. Government regulated oil prices were imposed to protect citizens from market fluctuations, although consumers currently face the reverse effect by paying a premium on Brent and WTI.

For 2016 the price of oil in Argentina is frozen at $67.50, with gas prices of $7.50—almost 4 times that of the United States.

The recent nationalization of YPF has opened doors for foreign investments, making Argentina’s oil industry more attractive. Chevron (CVX) has decreased drilling costs in Vaca Muerta by 20% this year. Chevron’s Argentinian drilling costs dropped from $14 million per well to $11.2 million per well in the last three months of 2015.

One major source of savings stemmed from the discovery of a sand deposit in Chubut enabling YPF to eliminate the use of imported sand. Sand is the main ingredient in hydraulic fracturing treatments, which are essential in the completion process in shale oil and gas wells.

In the current environment of low oil prices, Argentina’s regulated crude prices combined with 27 billion barrels of recoverable oil and 802 trillion cubic feet of gas is one of the most attractive ventures for oil companies.

While the U.S. experienced severe cuts in spending by as much as 40%, YPF increased spending by about 4%.

In 2013, Chevron and YPF signed a $1.6 billion exploration deal to develop tight shale oil and gas resources through drilling 132 wells. Dow Chemical Company (DOW) and Shell Argentina followed shortly thereafter by drilling 16 horizontal natural gas wells and a $500 million investment.

YPF also signed a memorandum of understanding with Malaysian oil company PETRONAS in a $550 million pilot project in 2014. Russia’s Gazprom, the world’s largest natural gas producer also engaged in a confidential deal for the development of the Vaca Muerta field.

Exxon Mobil (XOM) has announced the initiation a $250 million pilot project, which if successful would lead to the further development and an excess of $10 billion in additional investment.

Although Argentina is becoming an increasingly attractive investment for oil companies, Vaca Muerta remains vastly untapped. Analysts estimate that YPF is expected to need up to $200 billion to fully exploit the formation.

The rich geological characteristics of Vaca Muerta is only a piece of the puzzle, the recent change in government and the economic policy reforms have set the stage for a more favourable business environment in Argentina.

***

Enarsa to Import Gas From Chile

(Energy Analytics Institute, Jared Yamin, 23.May.2016) – Argentina’s state oil company Enarsa signed a contract to purchase natural gas from Chile at a price 53 percent higher than the LNG that arrives to Chile on tankers and 128 percent higher than what is pays for imports from Bolivia, reported the daily El Diario.

“Bolivia sends gas to Brazil and Argentina but does not have any more,” reported the daily La Razón, citing Energy Minister Juan José Aranguren. “Today, Argentina imports gas from Bolivia at $3/MMbtu, but will import gas from Chile at $7/MMbtu.”

The purchase of gas from Chile at $7/MMbtu will allow Argentina to save $46 million through the displacement of gasoil that it would have to buy at $10/MMbtu to generate electricity, said the minister.

Argentina will commence importing gas from Chile using the same gas pipelines that it used until 2006 to export gas to Chile, reported La Razón.

“We are replacing a product that costs us $10/MMbtu with another that costs us $7/MMbtu,” said Aranguren. “Obviously it is more than $3/MMbtu but there is not enough (Bolivian) gas.”

***

Bolivia Exported 24 MMcm/d to Brazil

(Energy Analytics Institute, Jared Yamin, 19.May.2016) – Bolivian exports to Brazil reached 24 million cubic meters per day on May 12, 2016 compared to 30 million cubic meters per day on May 8, 2016 while exports to Argentina reached 19 million cubic meters per day, up compared to 14 million cubic meters per day, respectively, reported the daily newspaper El Diario.

***

Moody’s Withdraws Pan America Rating

(Moody’s Investor Service, 9.Sep.2015) – Moody’s Latin America Agente de Calificación de Riesgo has withdrawn the Aa1.ar National Local Currency rating for the Senior Unsecured Bank Credit Facility of Pan American Energy LLC, Argentine Branch (PAE) for business reasons. However, the B2 Global Scale Rating remains unchanged.

Pan American Energy LLC, Argentine Branch is a wholly-owned subsidiary of Pan American Energy LLC (B2, stable). Pan American Energy LLC is a holding company owned 60% by BP p.l.c. (A2, Positive) and 40% by Bridas Corporation (not rated). Bridas Corporation in turn is 50% owned by CNOOC Limited (Aa3, Stable) and 50% by Bridas Energy Holdings (not rated).

The company engages in the exploration and production of oil and gas in the Southern Cone region of South America and is headquartered in Buenos Aires, Argentina.

***

Elevated Corporate Risks in Argentina

(Moody’s Investor Service, 16.Jul.2015) – Economic stagnation, a difficult political environment and heightened volatility in financial markets with the approach of presidential elections will be elevating pressures on non-financial companies in Argentina through mid-2016, says Moody’s Investors Service. Most of the 20 companies that Moody’s rates in Argentina, however, will not see significant deterioration in their credit metrics during this period.

“Weak economic activity and high double-digit inflation will diminish companies’ ability to pass cost increases to their customers, limiting their operating margins,” says Martina Gallardo Barreyro in the report “Corporate Credit Quality in Argentina: Economic Woes Elevate Argentina’s Corporate Risk Through Mid-2016.”

“In addition, a complicated macro environment will keep intensifying liquidity risks for most Argentine companies,” says Moody’s Gallardo Barreyro.

Some rated companies, however, have significantly improved their overall liquidity profile through refinancings of their foreign-denominated maturities. For examples in Jul.2015 Raghsa S.A. pushed back 58% of its $100 million maturities due in 2016-2017 until 2020-2021.

Moody’s expects consumer-related companies to face a slight deterioration in their credit metrics as demand stabilizes.

“Long-term demand growth will require a recovery in real available income, employment levels and general consumer financing conditions, all of which depend on government policies,” says Gallardo Barreyro.

Moody’s expects a sluggish recovery in Argentina only in 2016.

In other sectors, Moody’s expects marketing campaigns designed to capture new customers interested in 4G technology to strain the operating margins of the fixed telephony operators, while a strong increase in public-works spending in 2015 will support revenue growth among construction and infrastructure-related companies.

Commodity driven companies will have slow revenue growth because of falling commodity prices, while the impact of high inflation among them will vary. For example, oil companies such as YPF S.A. will be able to pass along most of their cost increases through to their prices.

***

Moody’s Confirms Petrobras Argentina Notes

(Moody’s, 28.Apr.2015) – Moody’s Latin America Agente de Calificación de Riesgo confirmed the Ba2/Aaa.ar global scale rating and national scale rating on Petrobras Argentina S.A.’s (Petrobras Argentina) $300 million in guaranteed Series S notes (CUSIP 71646JAB5).

The rating action reflects Moody’s Investors Service’s rating action on 27.Apr.2015 of confirming Petrobras’ (Petrobras, the guarantor) global debt ratings at Ba2. The ratings outlook is now stable, also in accordance to Petrobras’ rating outlook. This concludes the ratings review period started in late-Dec.2014.

***

Baker Hughes Announces 1Q:15 LatAm Results

(Baker Hughes Incorporated, 21.Apr.2015) – Baker Hughes Incorporated announced results for the first quarter of 2015.

Latin America revenue was $493 million for the 1Q:15, down $37 million, or 7%, compared to the 1Q:14. The drop in revenue can be attributed to activity declines in the Andean area, as reflected in a 24% decline in the rig count, and revenue declines in Venezuela from both lower rig count activity and unfavorable exchange rates as a result of the currency devaluations that occurred in the 2Q:14.

These reductions in revenue were partially offset by share gains in Mexico’s marine region, increased unconventional activity in Argentina, and share gains in Brazil as a result of a recent drilling services contract.

Adjusted operating profit margin for Latin America in the 1Q:15 was 9.1%, down 180 basis points compared to the 1Q:14. Not unlike revenue, profitability was impacted by reduced onshore activity levels, along with $14 million in reserves for doubtful accounts and inventories, and $5 million for a currency devaluation in Venezuela as the company adopted the prevailing market rate of 192 Venezuelan Bolivars per U.S. Dollar.

In the 2Q:15, the Latin America rig count is projected to drop less than 5%. However, this forecast includes a decrease of 5 deep-water drilling rigs in Brazil relating to demobilization of a local drilling rig supplier facing potential bankruptcy. The reduction of deep-water activity is expected to have a negative impact on the 2Q:15 results.

***

Petrobras Reports Sale of Assets in Argentina

(Petrobras, 31.Mar.2015) – The Board of Directors of Petrobras Argentina (PESA) approved the sale of all of its assets in the Austral Basin (province of Santa Cruz) to Compañia General de Combustibles S.A. (CGC) for $101 million.

PESA assets involved in the deal include 26 onshore exploration and production concessions, with average oil and gas output of 15,000 boe/d, as well as all the distribution, treatment and storage infrastructure required.

This is the first sale of Petrobras assets under the 2015-2016 Divestment Plan released on 2.Mar.2015. The plan is expected to raise $13.7 billion.

The payment was made when the contract was signed, and this sale will therefore be accounted in the 1Q:15 results, with an estimated impact of $65 million in net income.

Completion of the deal is subject to the approval of the competent Argentine authorities.

***

Moody’s Rates YPF’s Proposed Global Notes

(Global Credit Research, 4.Feb.2015) – Moody’s Investors Service assigned a Caa1 global foreign currency rating to YPF Sociedad Anonima’s (YPF)’s proposed $750 million in aggregate in addons to its outstanding 8.875% $587 million notes due in 2018 and 8.750% $1,000 million notes due in 2024. Both series were issued in the global capital markets.

The outlook on the ratings is negative.

***

Apco Completes $470 Mln Merger

(Apco Oil and Gas International Inc., 29.Jan.2015) – Apco Oil and Gas International Inc. completed its merger with Pluspetrol Black River Corporation, a wholly-owned subsidiary of Pluspetrol Resources Corporation, in an all-cash transaction with an equity value of approximately $427 million.

In connection with the transaction, Apco will be delisted from the NASDAQ Global Select Market and terminate its registration and reporting obligations with the Securities and Exchange Commission.

As previously announced, the transaction was approved by Apco’s shareholders at an extraordinary general meeting of shareholders held on January 26, 2015. Pursuant to the terms of the merger agreement, Apco shareholders will receive $14.50 in cash for each share of Class A and ordinary shares they own.

Holders of certificated Apco shares will receive a letter of transmittal and instructions on how to surrender their share certificates of Apco in exchange for the merger consideration and should wait to receive the letter of transmittal and instructions before surrendering their share certificates.

Jefferies served as the exclusive financial advisor to Apco in connection with the transaction. Weil, Gotshal and Manges LLP acted as legal advisors to Apco and Maples and Calder served as Apco’s special Cayman Islands counsel.

Cleary Gottlieb Steen and Hamilton LLP acted as legal advisors to Pluspetrol Resources Corporation and Appleby served as Pluspetrol Resources Corporation’s special Cayman Islands counsel.

***

WPX Completes Exit of International Interests

(WPX Energy Inc., 29.Jan.2015) – WPX Energy completed the disposition of its international interests upon the successful merger of Apco Oil and Gas International (APAGF) with a subsidiary of privately held Pluspetrol Resources Corporation. WPX is receiving approximately $294 million.

“We continue to execute, strengthen our financial position and implement our long-term strategy,” said WPX President and Chief Executive Officer Rick Muncrief. “WPX is solely focused now on domestic oil and natural gas operations.”

In the merger, all of the outstanding equity interests of Apco, including the shares comprising WPX’s 69 percent controlling equity interest in Apco, were cancelled and converted into the right to receive $14.50 per share.

In connection with its acquisition of Apco, Pluspetrol also acquired WPX’s additional nonmaterial Argentina-related assets.

Together, these non-operated, international holdings comprised 6 percent of WPX’s third-quarter 2014 production volumes from continuing operations and 3 percent of the company’s 2013 year-end proved reserves.

BofA Merrill Lynch acted as WPX’s exclusive financial advisor in connection with this transaction.

***

Apco Shareholder’s Approve Pluspetrol Merger

(Apco Oil and Gas International Inc., 26.Jan.2015) – Apco Oil and Gas International Inc. announced that its shareholders, at an extraordinary general meeting held on January 26, 2015, approved the proposal to adopt the previously announced merger agreement, dated October 2, 2014, pursuant to which Pluspetrol Resources Corporation will acquire Apco.

At the extraordinary general meeting of shareholders, there were 24,778,669 shares voted by proxy or in person, representing approximately 84 percent of Apco’s total outstanding shares as of the record date, December 19, 2014.

With regard to the vote to approve the proposal to adopt the merger agreement, 24,736,376 shares were cast, representing more than 99 percent of the shares present by proxy or in person. Shares voted in favor of the proposal to adopt the merger agreement were 24,548,108, representing just over 99 percent of the shares present by proxy or in person.

In addition, the shareholders also approved the nonbinding advisory compensation proposal included in the proxy statement filed on December 22, 2014.

The consummation of the acquisition of Apco by Pluspetrol remains subject to the satisfaction or waiver of a number of customary closing conditions set forth in the merger agreement and discussed in detail in the definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission by Apco on December 22, 2014.

***

Apco Obtains Concession Extension in Argentina

(Apco Oil and Gas International Inc., 6.Jan.2015) – Apco Oil and Gas International Inc. announced that the Argentine province of Rio Negro has agreed to extend the concession term for the company’s operation in the Entre Lomas concession for 10 years. The Entre Lomas concession is extended to Jan. 21, 2026.

“Apco has been investing in Argentina for over 40 years, and this is an important step to continue that commitment into the future,” said Apco’s President and Chief Operating Officer Michael Kyle. “The agreement extends the reserve life of our fields and benefits the province through a continued stream of investments and employment for local residents.”

Under the extension, Apco will pay a net bonus of $7.9 million in January 2015 and spend approximately $57.6 million for exploitation, exploration and public works commitments during the remainder of the concession term. In addition, the provincial production tax increases was increased from the current level of 12 percent to 15 percent beginning January 2015.

The Entre Lomas concession currently produces approximately 5,600 gross barrels of oil per day and 19.5 million gross cubic feet of natural gas per day in the province of Rio Negro.

Apco has a 23 percent direct participation interest in the Entre Lomas concession and a total combined direct and equity participation in the concession of 52.79 percent including its 40.72 percent stock ownership interest in Petrolera Entre Lomas S.A. Petrolera holds a 73.15 percent direct participation interest and is the operator of the Entre Lomas concession.

***

LatAmNRG: Heard on the Street 3Q:13

(Energy Analytics Institute, 30.Sep.2013) – Information in this section, provided by Energy Analytics Institute editors and reporters, is hearsay and thus should be treated as such.

The names of our many sources have been withheld to protect their identities and family members in Venezuela.

COMBUSTIBLES
  • A number of gasoline stations along VenezuelaColombia border remain closed due to a lack of supply. [El Universal]
CORPORATE SUITE
  • Venezuelan Oil Minister and PDVSA President Rafael Ramirez was named as Venezuela’s Economic Vice President by President Nicolas Maduro. [EAI]
CROSS BORDER DEALS
  • T&T and Venezuela signed a cross border natural gas deal. Deal signed by Venezuelan Oil Minister Rafael Ramirez and Trinidad Energy Minister Kevin Ramnarine. [EAI]
  • Trinidad Energy Minister Kevin Ramnarine was been under pressure in Trinidad for recent agreements reached with Venezuela regarding cross-border commercialization deals for the Loran-Manatee gas fields. [EAI]
  • Central American energy connection could reduce prices from Guatemala to Panama. [El Espectador]
DISCOVERIES
  • Colombia’s state oil company Ecopetrol announces new oil discovery at Guainiez-1 well in Guaroa. [EAI]
DIVESTMENTS
  • Chile’s ENAP sells 49% interest in Primax Peru and Primax Ecuador for $312 mln. [El Universo]
ELECTRIC SECTOR
  • YPFB Corp. completed 23,141 domestic gas connections in May.2013. [La Razon]
  • Interconexión Eléctrica S.A (ISA) wins bid for design, financing, construction, operation and maintenance of Encuentro-Lagunas project in Chile. [Portafolio.co]
  • Peru’s Energy and Mining Ministry has identified hydrocarbon and electric sector projects worth $26,530 mln thru YE:20. [El Comercio.pe]
  • Electric consumption in Uruguay reaches 1,808 MW on Jun.20.2013 up from record of 1,745 MW achieved on Jul.4.2011. [El Pais]
EXPLORATION & PRODUCTION
  • Bolivian officials search for hydrocarbon investments and technology at Russian Gas Forum [La Razon]
  • Gas output in Bolivia reached 57.08 MMcm/d in the 1Q:13, up 24.2% compared with 45.94 MMcm/d in the 1Q:12. [La Razon]
  • Bolivia’s average production was 56.2 MMcm/d in the first five months of 2013. [El Espectador]
  • YPFB plans investments of $8,406 mln during 2013-2016. [La Razon]
  • YPFB Petroandina SAM President Jaime Arancibia announced the Lliquimuni block could contain 1 Tcf. [La Razon]
  • France’s Total announced plans to develop the 3 Tcf Incahuasi field in Bolivia, after drilling the ICS-2 exploration well. [La Razon]
  • Russia’s Rosneft is interested in investing in exploration and development activities in Bolivia. [La Razon]
  • Repsol’s oil production in Bolivia rose to 3,400 b/d from 2,600 b/d. [La Razon]
  • Ecuador’s Hydrocarbon Secretariat expects oil production to average 518,503 b/d in 2013, up from 503,610 b/d in 2012. [EAI]
  • Ecuador’s Hydrocarbon Secretariat expects the country’s petroleum sector will realize investments of $3.6 bln in 2013, up from $2 bln in 2012. [EAI]
  • Extraction of oil in the Yasuni National Park will utilize new technologies, Wilson Pastor said on state television. [EAI]
  • Ecuador gov’t cancels $34.5 mln committed by Germany for the protection of the Yasuni National Park. [EAI]
  • Mexico’s state oil company Pemex creates company to search for oil deep offshore and shale gas in the USA.
  • Venezuela’s Oil Minister Rafael Ramirez said during an interview on Venezuelan state television or VTV that the decision to stop sending oil to the US had to be taken by Venezuelan President Nicolas Maduro. [EAI]
ENERGY REFORMS
  • Mexico’s left is betting on more autonomy for Pemex without changing the constitution.
EXPORT-IMPORT
  • Venezuela is looking for additional partner(s) for the Mariscal Sucre gas project offshore, Venezuelan Oil Minister Rafael Ramirez says. [EAI]
  • Spanish gov’t requests legal security and respect for the rules of the game in Argentina. [La Nacion]
  • Venezuelan imports of electricity from Colombia continue to increase. [El Universal]
  • Gas imported by Argentina and Brazil up 56.95% and 20.26%, respectively, in the 1Q:13 compared with the 1Q:12 [La Razon]
  • Argentina imported 14.63 MMcm/d from Bolivia in the 1Q:13 compared with 9.32 MMcm/d in the 1Q:12 [La Razon]
  • Brazil imported 32.01 MMcm/d from Bolivia in the 1Q:13 compared with 26.62 MMcm/d in the 1Q:12 [La Razon]
  • Bolivia exported an average 14.1 MMcm/d of gas to Argentina in the first five months of 2013. [El Espectador]
  • Bolivia exported an average 31.3 MMcm/d of gas to Brazil in the first five months of 2013. [El Espectador]
  • Enarsa owes YPFB $180 mln for gas deliveries made in Mar.2013 [La Razon]
  • PDVSA currently exports 330,000 b/d to India but plans to increase this figure to 400,000 b/d, PDVSA President Rafael Ramirez said. The official said PDVSA is also exporting 630,000 b/d to China. [EAI]
  • PDVSA owed $270 mln by Paraguay’s Petropar according to Paraguayan News Portal. [EAI]
FINANCE / EQUITY AND DEBT OFFERINGS

Colombia:

  • Ecopetrol $900 mln bond issue was oversubscribed by 3.1 times. [El Espectador]
  • Ecopetrol road show was led by Bank of America and visited fixed income investors in Singapore, London, Hong Kong, Chile and Peru. [El Espectador]
  • Ecopetrol road show led by Bank of America visited the following US cities: New York, Chicago, Los Angeles and Boston. [El Espectador]

Venezuela:

  • Venezuela’s Central Bank (BCV) holds auction for $330mm with PDVSA bonds.

Venezuelan Debt to China:

  • China has loaned Venezuela nearly $40 bln to date, excluding new agreements signed recently between the countries, of which $20 bln has been paid back. [EAI]
  • Venezuela currently owes $20 bln to China, which represents almost 2.4 months of PDVSA’s revenues assuming oil prices above $100/bbl. [EAI]
  • Assuming China were to lend Venezuela another $44 bln, the country would owe the Chinese nearly $64 bln, which is about 6 months of PDVSA revenue with oil prices above $100/bbl. [EAI]
  • Venezuelan debt of $64 bln to China would represent almost 7.7 months of PDVSA’s revenues assuming oil prices above $100/bbl. [EAI]

Peru:

  • Investments in energy projects in Peru to fall 50% by YE:20. [El Comercio.pe]

Ecuador:

  • China’s Industrial and Commercial Bank (ICBC) could finance 70% of Pacific Coast refinery project. [El Comercio]
GENERAL
  • Colombia’s National Hydrocarbon Agency (ANH) said the country’s oil reserves were 2,377 MMbbls at YE:12. [Portafolio.co]
  • S&P and Fitch raise rating on Emgesa ISA to BBB from BBB-. [Portafolio.co]
  • Chinese executives with LinYi Cake Trade Co. visited Bolivia to inspect the construction process and advances at a pilot lithium battery plant in La Palca in Potosi. [La Razon]
HEAVY OIL
  • Peru to prioritize $1,500 mln in investments for the integration of heavy oil lots in the northern amazon region [El Comercio.pe]
  • PDVSA has 15,000 workers in the Orinoco Heavy Oil Belt of Faja but plans to increase this figure to 40,000, PDVSA President Rafael Ramirez says. [EAI]
  • PDVSA, Cupet (Cuba) and Sonangol (Angola) agree to create JV to produce 20,000 b/d in the Faja. [El Nacional]
  • PDVSA reports in 10.Oct.2013 press release that it has a 71% interest in PetroCarabobo 1 Faja project, meaning the company assumed Petronas’ 11% interest. Partners in the PetroCarabobo 1 project now include PDVSA (WI 71%), OVL (WI 11%), OIL (WI 3.5%), OIC (WI 3.5%) and Repsol (WI 11%). [EAI]
  • Rising drilling costs in the Faja are just one of many issues companies are confronting today. [EAI]
  • Russia’s Lukoil announced plans to exit the Junin Block 6 project in the Faja.

EDITOR’S NOTE: Smaller Russian companies are starting to exit the Faja, ceding more control to Rosneft or other Russian entities; a signal that something could definitely be wrong in Venezuela and the Faja. [EAI]

  • PDVSA announced during the HOLA 2013 conference that it was looking to utilize its heavy oil techniques in Mexico. [EAI]
LAWSUITS
  • Repsol turns down $5,000 mln offer from Argentine gov’t regarding 51% interest expropriated in 2012. [La Nacion]
  • Ecuador’s President Rafael Correa says on Ecuadorian state television that US-based Chevron Corp. is an enemy of Ecuador. [EAI]
LNG
  • By 2015 Uruguay’s ANCAP expects to be exporting 5 MMcm/d of gas from the Puntos de Sayago regasification plant in Uruguay to Argentina’s YPF. [LaRed21]
PETROCHEMICALS
  • Peru to prioritize $3,500 mln in investments for the petrochemical industry. [El Comercio.pe]
PIPELINES
  • Peru to prioritize $3,500 mln in investments for the southern gas pipeline. [El Comercio.pe]
PROTESTS / STRIKES
  • About 50 workers with Petrocedeno JV in Venezuela demand that PDVSA respect their benefits [El Universal]
REFINERIES
  • Peru to prioritize $3,514 mln in investments for the modernization of the Talara refinery. [El Comercio.pe]

Venezuela:

PDVSA’s participation in Abreu e Lima Refinery in Brazil:

  • PDVSA President Rafael Ramirez says co. and Petrobras officials continue to discuss JV prospects regarding the Abreu e Lima refinery. [EAI]
  • From an operational and strategic business plan point of view, PDVSA’s participation in the Abreu e Lima refinery does not make sense. [EAI]
  • Abreu e Lima refinery in Pernambuco could easily source sufficient oil from the Brazil’s offshore pre-salt region w/o having to look to Venezuela for heavy oil. [EAI]
  • Any decision PDVSA President Rafael Ramirez takes regarding the company’s participation in Abreu e Lima refinery w/Petrobras will be politically based. [EAI]

Comments regarding Amuay Refinery explosion on 25.Aug.2012:

  • PDVSA President Rafael Ramirez says explosion at Amuay refinery was sabotage. Amuay refinery explosion was caused by gas leak at Block B23. As a result of the explosion, 42 persons were killed, 5 are still missing, 150+ were seriously injured. published by the Energy Orientation Center (COENER). [EAI]
  • Amuay refinery explosion to cost PDVSA an estimated $1.8 bln, according to COENER. The refinery is processing 645,000 b/d nearly 10 months after major explosion. [Ultimas Noticias]
  • PDVSA to spend an estimated $585 mln on maintenance activities at the Amuay and Cardon refineries, PDVSA President Rafael Ramirez says. [EAI]
SOCIAL
  • CITGO Corp. donates 625,000 energy saving light bulbs to families in 21 cities in the USA [PDVSA

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