Aker Solutions Wins Major Services Contract in Brazil

(Aker Solutions, 18.Sep.2018) — The Campos Basin extends approximately 100,000 square kilometers. The three-year contract is valued at more than BRL 250 million and includes an option for a two-year extension.

Aker Solutions will be renovating, repairing and upgrading offshore production units for Petrobras’ Campos Basin Operational Unit (UO-BC). The contract will also allow Aker Solutions to demonstrate its value as a full-service provider, and manage the yard where replacement parts and other equipment will be fabricated.

“We are pleased to expand our business in Brazil, a key international market,” said Luis Araujo, chief executive officer of Aker Solutions. “This is the second big contract we have signed after entering the maintenance and modification market in Brazil, reinforcing the importance of having a complete portfolio and being able to provide an integrated solution from concept to decommissioning.”

The company will execute the work from its C.S.E. Mecânica e Instrumentação Ltda (C.S.E.) services base in Macaé, Rio de Janeiro. Aker Solutions acquired a majority stake in C.S.E. in December 2016. Earlier this year Petrobras named C.S.E. the best supplier for onshore and offshore maintenance and HSSE, highlighting its focus on customers and excellence. The company competed against 5,000 suppliers and won 4 of 21 awards.

The work starts in October 2018, with final deliveries scheduled for 2021.

The contract will be booked in the third quarter 2018.

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Petrobras to Boost Oil Output in 2019, Cut Debt $10 Billion – CFO

(Reuters, Devika Krishna Kumar, Simon Webb, 17.Sep.2018) — Brazil’s state-run oil giant Petróleo Brasileiro SA aims to raise output as much as 10 percent to around 2.3 million barrels per day (bpd) in 2019 and cut net debt by $10 billion (7.62 billion pounds), Chief Financial Officer Rafael Grisolia told Reuters.

The world’s most indebted oil company is on course to reduce debt to $69 billion by the end of this year despite falling short of its $21 billion asset sales target, Grisolia told Reuters in an interview in New York late Friday.

The firm has significantly reduced its net debt from the $106 billion it had accumulated in 2014 to finance development of massive deepwater Atlantic oil fields. Then, Petrobras lost investor confidence as oil prices fell, a corruption scandal engulfed the company and losses from government fuel subsidies mounted.

Petrobras aims to cut net debt by a further $10 billion in 2019 to reach a ratio of 2 times net debt-to-EBITDA, he said. The firm will continue cutting debt until the ratio hits 1-1.5 times, he said, which would put it in line with global oil majors.

“If you look at our direct competitors and peers like Chevron, Exxon and BP, we need to look for a more light capital structure,” Grisolia said.

The firm should reach a ratio of 1.5 in 2020 as part of its next five-year business plan, he said, although that would depend on international oil prices and other variables such as foreign exchange rates.

Over the next 5-6 years, once the firm had achieved debt restructuring targets, Petrobras may consider foreign investments to facilitate exports of rising output from the development of the prolific deepwater pre-salt fields, he said.

The firm may invest in terminals abroad to receive liquefied natural gas (LNG), he said. That would help Brazil export more gas, he added.

Exxon Mobil, BP and Royal Dutch Shell RDSA.L are among firms that plan to invest billions of dollars in developing deepwater Brazilian energy reserves in coming years. Brazil is expected to account for a large share of the rise in global oil and gas output from non-OPEC countries.

OIL PRICES HELP

Oil production is expected to rise by about 8-10 percent next year from about 2.1 million barrels per day (bpd) in 2018, Grisolia said. That should contribute to increased revenue, he added.

Crude prices rallied to three-and-a-half year highs this summer as global supplies tightened, leading to higher fuel prices.

Higher oil prices than the company estimated in its 2018 budget have raised revenue and allowed Petrobras to hit its debt reduction target, he said. That compensated for the $7 billion from asset sales that Petrobras expected to receive this year, he added.

The company has already received $5 billion from sales and will receiving another $2 billion before the end of the year, he said.

“All the divestment and cash from divestment will help, but we don’t necessarily need them to achieve the target of $69 billion by the end of the year,” he said.

FUEL SUBSIDIES

Earlier this year, a nationwide truckers’ protest over rising diesel prices paralysed Latin America’s largest economy and forced the government to lower diesel prices through tax cuts and subsidies.

That hurt Petrobras’ share price as investors worried the firm would again lose cash to subsidize fuel sales.

The firm expected to receive 2 billion reais to 2.5 billion reais from the country’s oil regulator within two weeks to compensate for subsidies, Grisolia said.

Subsidies have made it less profitable for the private sector to import diesel, he said, but some imports continued and he did not foresee any fuel shortages.

“Although the volume of imports to Brazil is lower, they are not zero, they are happening.” he added. “We do recognise that margins are tighter.”

Petrobras is running refineries close to maximum capacity and importing some fuel, he said.

Petrobras has a gasoline hedge in place to cushion the impact of fuel price volatility and is considering a diesel hedge. The cost of the hedge was marginal, Grisolia said.

Banks that Petrobras typically works with for currency operations were executing the fuel hedge, he said, such as Goldman Sachs, Bank of America, Bank of Brazil and Citibank.

Petrobras has hosted meetings with economic advisors to presidential candidates ahead of wide-open elections next month. Grisolia said talks had been positive, but declined to say which teams he had met or comment on their strategies.

Candidates have different plans for the company and the role of the private sector in energy, bringing some uncertainty to investors.

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Stena Bulk, Petrobras, Ink Two-Year Contract

(Energy Analytics Institute, Jared Yamin, 8.Sep.2018) — Stena Bulk signed a deal to charter two MR tankers to Petrobras.

Under the deal, Stena Bulk will charter its MR product tankers Stena Conqueror (47,000 dwt, built in 2003) and Stena Conquest (47,000 dwt, built in 2004) to Brazil’s state-owned oil company.

“We have a long-standing, highly-valued relationship with Petrobras when it comes to both Suezmax and MR tankers and we are committed to continue to provide them with safe and efficient deliveries,” said Stena Bulk CEO and President Erik Hånell in an official company statement.

The contract is for a term of two years and includes the option to extend the charters for another 11 months. The vessels will carry refined products along the Brazilian coast.

“We continue to cater for Petrobras’ shipping requirements as a preferred customer and logistical partner of Stena Bulk,” said Stena Bulk Products & Chemicals USA General Manager Claes Leschly Bang.

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Petrobras Unveils Gasoline Hedge in Bid to Weather Volatility

(Reuters, 6.Sep.2018) — Brazil’s state-run oil company Petroleo Brasileiro SA on Thursday unveiled a hedging program for gasoline prices in a bid to boost pricing flexibility and protect its financial results during times of high volatility.

Petrobras, as the company is known, said in a securities filing the program would allow it to change the frequency of pricing adjustments in the domestic market, keeping them stable for up to 15 days at a time.

The logo of Brazil’s state-run Petrobras oil company is seen on a tank in at Petrobras Paulinia refinery in Paulinia, Brazil July 1, 2017. Reuters/Paulo Whitaker

Petrobras will buy gasoline futures in U.S. markets as part of the program, said Chief Financial Officer Rafael Salvador Grisolia at a news conference. He said the policy would go into effect immediately.

The company would only keep prices on hold for two weeks at a time during times of volatility in international markets and would keep daily pricing adjustments as an option, he said.

Preferred shares in Petrobras were down 0.4 percent in mid-morning trading in Sao Paulo, at 18.59 reais, whereas the benchmark Bovespa index was up 0.2 percent.

Itau BBA analysts said there is uncertainty around “how the strategy will be employed”, as the structure of hedge positions while prices are frozen is unknown. Gabriel Francisco, analyst at XP Investimentos, said the hedging policy is negative, as “it may be interpreted as a setback to a market-based pricing policy”.

The move comes after a truckers’ strike over rising diesel prices paralyzed Latin America’s largest economy in May and forced unpopular President Michel Temer to cut diesel costs through a mix of tax breaks and subsidies.

The tumult prompted Petrobras’s chief executive officer to resign and raised fears of government meddling in pricing, which has cost Petrobras billions of dollars in the past. Petrobras has not yet been compensated for the subsidies that took effect in June.

In the meanwhile, there has been speculation over whether the company will face pressure to lower gasoline prices, which have climbed internationally as oil prices have gained ground.

Petrobras said on Thursday it was still committed to allowing gasoline prices to fluctuate in line with international markets and the exchange rate.

It also promised to uphold a policy, in effect since October 2016, of not pricing the fuel below international parity.

Reporting by Marta Nogueira, Alexandra Alper and Paula Laier; Editing by Bernadette Baum and Alistair Bell

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Output from Main Pre-Salt Field to Peak in 2019

(Efe, 6.Sep.2018) — Output from Brazil’s most prolific pre-salt field will climb to a peak of 1 million barrels of oil per day in 2019, according to the executive manager for deep-water exploration and production at state oil company Petrobras.

The Lula field, located in the Santos Basin, will achieve that level after two Floating Production Storage and Offloading (FPSO) units are put into operation this year, Joelson Falcao Mendes said.

“The P69 will start production in October and the P67, which is currently in Guanabara Bay (in southeast Brazil), in December or January,” he added.

Seven FPSO units are currently in operation at the Lula field, each with the daily capacity to process 150,000 barrels of oil and compress 6 million cubic meters (211.5 million cubic feet) of natural gas.

Brazil achieved output of 1.5 million barrels of pre-salt oil per day in 2018, a milestone that comes 10 years after the start of hydrocarbon production in that ultra-deep frontier.

At present, average production at the Lula field amounts to around 850,000 barrels of oil per day.

Petrobras says output at the pre-salt fields is expected to grow steadily through 2022 with the entry into operation of an additional 13 FPSO units and investment outlays totaling $35 billion.

Pre-salt fields are located in ultra-deep water some 300 kilometers off the coast and underneath a layer of salt up to 2 kilometers (1.2 miles) thick.

The Lula field is located in the BM-S-11 block, in which Petrobras has a 65 percent stake and the BG Group and Portugal’s Galp Energia have 25 percent and 10 percent stakes, respectively.

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Brazil Santos Lifting Costs Could Reach $5/bbl

(Reuters, 6.Sep.2018) — Lifting costs for the Santos basin in Brazil’s offshore pre-salt oil play should reach an all time low of $5 per barrel, but the timeline for reaching it will depend on the development of the transfer-of-rights area, an executive of Brazilian oil giant Petroleo Brasileiro told reporters on Wednesday.

Oil majors have plowed big money into Brazil, Latin America’s top producer, to lock in stakes to the offshore pre-salt layer, where billions of barrels of oil are trapped under a thick layer of salt.

The vastness of the resources helps reduce lifting costs, which have already slipped to $6 to $7 per barrel in the Santos basin’s Lula field, according to Joelson Falcao Mendes, Petrobras chief for oil production in ultra deepwaters.

The field, Brazil’s most productive, averages 879,000 barrels of oil per day, and is operated by Petrobras in a consortium with Royal Dutch Shell and Portugal’s Galp.

But reaching $5 in Santos will depend on the pace of development of the transfer-of-rights area, which was transferred by the government in 2010 to Petrobras to extract 5 billion barrels of oil and gas there.

However, the government and Petrobras are still squabbling over the value of the area, also located in the Santos basin.

Mendes, who was named to the committee negotiating the value of the area with the government, did not offer further details about how it would affect lifting costs. He spoke to reporters aboard the P-66 platform in the Lula field.

Mendes made the comments as white-capped waves rocked P-66, which began producing last year and has the capacity to process 150,000 barrels of oil daily.

However, Mendes said that the P-67 platform, which was scheduled to begin production between October and December of this year in the northern part of the Lula field, could be delayed into January.

He defended the time it took Petrobras to develop the logistically complex areas, noting that the consortium was finishing the development phase for Lula, which was discovered in 2006.

‘If there hadn’t been some construction delays for the systems, the timings would be even better. But regardless, they are pretty impressive and extremely competitive internationally,” he said.

(Reporting by Alexandra Alper; Editing by Phil Berlowitz)

***

Petro-Victory Purchases Assets in Brazil

(Petro-Victory Energy Corp., 4.Sep.2018) — Petro-Victory Energy Corp. announced a $1.6 million acquisition of production and working interests in 4 oil fields, comprised of 12,850 gross acres, located within three developed onshore basins in Brazil, and commits capital to materially expand production. The acquisition was financed using the company’s existing $10.0 million credit facility.

“These fields are located in mature, oil prone basins, with well understood geology and low geological risk. Reservoirs are of excellent quality and our hydrocarbon pay zones are at shallow depths (1-1.5km) allowing for low cost development drilling. The fields produce excellent quality light sweet crude with no impurities, meaning we can achieve a higher price for crude sold,” said Petro-Victory Chief Operating Officer Richard Lane.

Highlights

— $1.6 million acquisition cost ($125 per acre). $0.375 million paid at signing, $1.225 million paid upon Agencia Nacional do Petroleo Gas Natural e Biocombustiveis of Brazil (ANP) approval.

— Acquisition consists of:

– 100% operating interest in the Andorinha onshore producing oil field in the Potiguar Basin

– 100% operating interest in the Alto Alegre onshore oil field in the Potiguar Basin

– 50% non-operating interest in the Carapitanga producing onshore oil field in the Sergipe-Alagoas Basin

– 50% non-operating interest in the São João onshore oil field in the Barreirinhas Basin

— Existing infrastructure acquired includes 21 drilled wells, pipelines, power generation and electrical lines, pumping units, paved roads, storage tanks, 3D and 2D seismic with a combined estimated cost of > $50 million

— Seismic and well data will be used to construct a new development plan. Initial work has indicated significant upside opportunities.

— Potential for new wells to materially increase production. Management estimates the 4 fields have the potential to achieve >1,000 BOPD.

— Near term well recompletions estimated to increase net production to >100 BOPD

— Q2 2018 average production of 20 BOPD from four mature wells in the two producing fields, Andorinha and Carapitanga

— The company acquired the producing assets from Empresa de Engenharia de Petróleo Ltda. (ENGEPET) and has an operating partnership with ENGEPET to optimize field production for Carapitanga and Sao Joao fields.

— Transaction subject to approval from Agencia Nacional do Petroleo Gas Natural e Biocombustiveis of Brazil (ANP). The Acquisition has been conditionally approved by the TSX Venture Exchange (the TSXV) but is subject to final approval of the TSXV.

“This acquisition positions us in Brazil at a time when onshore oil and gas investment is poised for revitalization. The market opportunity in Brazil has become more attractive with improvements in the economy as well as a move higher in oil prices. We are excited as we leverage long-term relationships within Brazil that present opportunities that fit Petro-Victory’s growth and returns focused strategy. Our acquisition and expected capital costs will generate strong margins and cash flows,” Petro-Victory Chief Executive Officer Richard F. Gonzalez.

***

Brazil’s Energy Agency Opts for Argus Prices

(Argus Media, 30.Aug.2018) — Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP) will start using prices published by leading global energy and commodities price reporting and news agency Argus to set a government diesel subsidy.

ANP has announced that it will, from 31 August, adopt Argus delivered prices for diesel in the ports of Itaqui, Suape, Santos and Paranagua to calculate import parity prices as part of a formula that will also take into account local storage and logistics costs.

A countrywide truck drivers’ strike in May sparked by rising diesel prices led the Brazilian government to cap wholesale prices and offer temporary subsidies to diesel producers and importers. The subsidy programme ends on 31 December.

Argus Media chairman and chief executive Adrian Binks said: “We are delighted that ANP has decided to switch to Argus prices to support this important piece of regulation. Staff from our Rio de Janeiro office, which we opened six years ago, have been working with the government and market participants to develop pricing mechanisms suitable for their needs.”

***

Golar Power Affiliate CELSE Closes $1.3 Bln Financing

(Golar LNG, 25.Aug.2018) — Golar Power Limited’s affiliate, CELSE, closed a $1.34 billion financing facility for the Sergipe project.

On April 19, CELSE, the 50% Golar Power owned project company responsible for delivering the Sergipe I power project, executed a $1.34 billion non-recourse project finance facility. Excluding the FSRU facility, proceeds will fund remaining interest costs and capital expenditures for the project. Equity contributions from CELSE’s controlling partners, including Golar Power, have also been fully paid in. Assuming no dispatch under the Power Purchase Agreements, forecast annual EBITDA (1) from the power project (of which Golar is entitled to a 25% interest which will be reported as “equity in net earnings of affiliates” in the consolidated statements of income) including inflation uplifts to date is BRL 1.16 billion, equivalent to approximately $306 million at a USD/BRL rate of 3.8. Payments under the executed PPA are inflation indexed over the 25-year term and provide for pass-through of fuel costs when the power plant is called upon to dispatch. Around 94% of the project finance facility is also BRL denominated. This reduces net debt to $1.21 billion at the same USD/BRL rate, thus creating a natural hedge for currency movements.

The project, 66% complete by the end of July, is on schedule to commence operations on January 1, 2020. In excess of 2,000 workers are currently on site which is operating 24/7. Prefabricated GE modules, including generators and boilers, are being installed, transmission lines and pylons are being erected and the pipeline connecting the power station to the FSRU mooring is currently being laid.

Additional to the forecast annual EBITDA from the power project, the FSRU is expected to generate annual US CPI adjusted EBITDA of approximately US$41.0 million (of which Golar is entitled to a 50% interest which will be reported as “equity in net earnings of affiliates” in the consolidated statements of income). A financing commitment for the FSRU Nanook, due to deliver from the yard shortly, has been received and documentation is in its final stages. Net of the final FSRU delivery installment, the facility is expected to release approximately $70 million of cash to Golar Power.

The FSRU Nanook will, when it commences operations in 2019, represent the only entry point for LNG into Brazil outside Petrobras. Access to significant spare FSRU capacity could facilitate the supply of gas directly into the Brazilian grid as well as support a distribution hub for small scale distribution of LNG. The Company sees a number of very attractive opportunities to substitute expensive fuel based energy demand with cheaper and more environmentally friendly LNG solutions. The initial focus will be to target diesel to LNG conversions in the trucking industry as well as tailor-made LNG logistics solutions for the large mining and industrial market. Based on existing infrastructure in Sergipe, Golar Power is also well placed to participate in future Brazilian power auctions, with a clear competitive edge given that capital expenditure linked to the FSRU and grid connection has been substantially covered by the first phase of the project.

Note (1) on EBITDA: EBITDA is a non-GAAP measure. EBITDA is defined as operating income before interest, tax, depreciation and amortization. EBITDA is a non-GAAP financial measure. A non-GAAP financial measure is generally defined by the Securities and Exchange Commission as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable U.S. GAAP measure.

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Golar Applies for FSRU Permits in Brazil

(TO&GY, 24.Aug.2018) — Offshore midstream company Golar LNG has started the process to acquire an environmental permit for its Terminal Gas Sul (TGS) project in the Brazilian state of Santa Catarina, international media reported Thursday.

The project, which entails a new pipeline and FSRU capable of storing 160,000 cubic metres (5.65 mcf) of gas and regasifying 15 mcm (530 mcf) of LNG per day in Babitonga Bay, aims to supplement or even replace gas flowing into southern Brazil from Bolivia.

According Golar’s environmental permit application, the unit would likely receive around two LNG cargoes per month. Gas would move from the FSRU through a 2-kilometre subsea pipeline connected to a 31-kilometre pipeline onshore.

The company expects to receive the project permit in 2018 and approval from Brazil’s National Agency of Petroleum, Natural Gas and Biofuels in 2019. Project construction is scheduled to start in Q3 2019, with the unit coming on line in Q2 2021

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Oil Auction from Brazil Transfer-of-Rights Unlikely in 2018

(Reuters, 23.Aug.2018) — A Brazilian auction of rights to develop additional oil-producing areas in the country’s so-called transfer-of-rights region is unlikely this year, Brazil’s Deputy Mining and Energy Minister Marcio Felix said on Tuesday.

The government in 2010 transferred to state-run oil company Petróleo Brasileiro S.A., known as Petrobras, rights to extract 5 billion barrels of oil and gas in the offshore Santos Basin, at a value based on oil prices at the time. The volumes are now estimated to be much larger, and the cash-strapped government wants to sell the rights to extract the extra oil.

The choice reserves cannot be auctioned off until the government and Petrobras reach a deal over the disputed value of the area. Brazil’s Senate also has to approve legislation already passed the lower house, allowing Petrobras to cede up to a 70 percent stake of the area to other oil companies.

While hopes were high for a deal and an auction this year, prospects are dimming, said Deputy Mining and Energy Minister Marcio Felix, at an event in Rio de Janeiro ahead of hotly contested presidential elections in October.

“It would be hard (to do it in 2018), but we haven’t thrown in the towel yet,” he said, adding that if the legislation is not approved by Sept. 15, an auction cannot happen this year.

The 2010 contract stipulated that costs, among other things, would be reviewed after the area was declared commercially viable in 2014. That has led to years of sparring, as oil prices have fluctuated, with both parties claiming to be owed billions of dollars.

Resolving the spat would let the cash-strapped government raise extra revenue to close a huge budget gap by selling the rights to billions of barrels of oil.

The area lies in Brazil’s pre-salt region, where billions of barrels of oil are buried under thousands of feet of salt beneath the ocean floor.

(Reporting by Rodrigo Viga Gaier; Editing by Richard Chang)

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Petrobras to Start Replan Refinery Reopen in 48 Hours

(Reuters, 22.Aug.2018) — Brazil’s state-run oil company Petróleo Brasileiro SA may begin procedures to reopen its largest refinery, closed after an explosion and fire, in 48 hours, Gustavo Marsaioli, a spokesman for the oil workers’ union, said on Wednesday.

Marsaioli said Petrobras intends to reopen the Paulinia refinery, known as Replan, at half-capacity given the fire early on Monday that affected part of the facility. The unaffected part may go back into production a week after procedures for reopening are completed, Marsaioli said.

Petrobras did not immediately respond to a request for comment.

Replan accounts for about 20 percent of Petrobras’ refining capacity, processing the equivalent of 434,000 barrels of oil per day, according to the company’s website.

A Petrobras executive said the incident was serious but that the company had enough stocks to cover Replan halting operations for 15 days.

(Reporting by Roberto Samora; Writing by Tatiana Bautzer and Alexandra Alper; editing by Jonathan Oatis and Susan Thomas)

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Brazil’s Opposing Energy Views

(OilPrice.com, Haley Zaremba, 21.Aug.2018) – Brazil’s energy industry seems to be caught in a moment of deep ambivalence–on one side of the issue, they are breaking records in terms of renewable resources and green energy; on the other, they are pushing hard revive fossil fuels and bring hundreds of thousands of jobs back to the struggling oil and gas industry.

This month the Brazilian Ministry of Mines and Energy released astonishing figures that put Brazil right at the forefront of the green energy movement. The Boletim de Monitoramento do Sistema Elétrico (Electric System Monitoring Report) shows that renewable energy sources made up 81.9 percent of the country’s installed capacity for energy production (160,381 megawatts in total), and a whopping 87.8 percent of total Brazilian energy production in the month of June.

The vast majority of Brazil’s energy production is hydropower, clocking in at 63.7 percent of the total energy generated in June. The second biggest source of renewable energy comes from biofuels produced at biomass plants which use materials such as sugarcane bagasse, rice husk, and wood waste to make organic fuels. Wind farms accounted for another 8.1 percent of the energy produced in June, and solar clocked in at just one percent (although the solar sector is already showing signs of growth).

Despite these amazing figures, Brazil is not leaning into their success in the field of green energy. The nation’s oil and gas industry is finally showing signs that it is coming out the other side of an economic crisis brought on by recession, low oil prices, and reduced investment. Now, as economic conditions improve, foreign investors are returning to the fold and analysts are predicting a major turnaround is just around the corner for Brazilian fossil fuels.

Half a million new jobs are going to be added in the oil and gas industry by 2020, according to a study carried out by the Brazil Development Bank. A separate study conducted by the Federation of Industries of the State of Rio de Janeiro said that thanks to greater flexibility in local regulations, several new projects will be able to take off, creating more activity and a further increase in jobs in the oil and gas industry.

Particularly large growth is predicted in Brazil’s upstream exploration and production sector (E&P), with 44 offshore productions systems slated to begin operations in by 2030. Just one of these units, located in the south eastern state of Espirito Santo will create around 1,000 when assembly begins under Petrobras, Brazil’s largest oil company, in 2020. Another major site of a potential employment boost is the city of Macaé, located at the heart of the Brazilian offshore drilling industry. Several international oil and gas companies had backed off their activity in the area when gas prices were at their lowest, but now they are likely to ramp up production once again.

Brazil’s position on the precipice between two opposing visions for energy–renewable and traditional–is representative of a larger conflict in today’s energy industry. We’re in a strange and unprecedented moment where even Big Oil is acknowledging and in many ways preparing for a world that is moving away from fossil fuels, while simultaneously we are facing more demand for oil, gas, and coal in this decade than ever before.

Just look at the headlines: scientists are making major biofuel breakthroughs while the U.S. turns its back on biomass, Asia is leading the renewable energy race as Japan re-embraces coal, India and China are facing unprecedented numbers of cars on the road and ever-higher demand for gasoline but are leading the charge for electric cars. Everywhere you look in the energy sector, contradiction rules. Brazil is not the exception, but the rule.

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Petrobras Sees No Fuel Supply Shortage After Replan Fire

(Reuters, 20.Aug.2018) – A director at Brazilian state-run oil company Petroleo Brasileiro SA said on Monday a fire at the company’s largest refinery Replan, in the state of São Paulo, is not expected to compromise fuel supplies in the short run.

Jorge Celestino Ramos, the company’s refining and natural gas director, said fuel supplies are guaranteed for 15 days as other refineries may compensate any shortfall at Replan, where production remains halted since the early hours of the day.

(Reporting by Rodrigo Viga Gaier Writing by Ana Mano Editing by Chizu Nomiyama)

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Oceaneering Subsidiary Secures Contract with Petrobras

(Oceaneering International, Inc., 20.Aug.2018) – Marine Production Systems do Brasil Ltda., one of Oceaneering International, Inc.’s wholly owned subsidiaries, has secured a four-year contract with a one-year optional extension period from Petróleo Brasileiro S.A. (Petrobras) in Brazil.

“We are excited by this Petrobras award and the opportunity to expand our portfolio of service and product offerings in the growing Brazilian market,” announced Oceaneering President and Chief Executive Officer Roderick A. Larson in an official statement released by the company.

The contract will support intervention and completion operations in Brazil, announced Oceaneering in an official statement.

Under the terms of the contract, Oceaneering will supply and operate three drill pipe riser (DPR) systems with installation workover control systems, or IWOCS, along with project management, engineering and support services. The company plans to manufacture the associated umbilicals for the DPR systems at its facility in Niteroi, Brazil. Oceaneering will start constructing and building the assets in the third quarter of 2018, and expects work under the contract to commence in the third quarter of 2019. The contract value is expected to exceed $50 million in revenue during the initial four-year period.

“We look forward to supporting Petrobras in connection with this and future projects,” said Larson.

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Guyana to Become 5th Largest Oil Producer in LAC Region

(Energy Analytics Institute, Piero Stewart, 15.Aug.2018) – If all goes off as planned, by 2025, Guyana will be the 5th largest oil producer in the Latin American and Caribbean region.

Source: Trading Economics

That’s according to an analysis of data posted by Trading Economics, and extrapolation of estimates of Guyana’s future oil production, as announced by Kevin Ramnarine, the former Energy Minister of Trinidad and Tobago.

“Oil production in Guyana is expected to come online at 120,000 barrels per day in 2020 and peak at 750,000 barrels per day by 2025, according to Exxon,” said Ramnarine, now an international petroleum consultant, during a webinar with Guyana’s Minister of Finance, the Honorable Winston Jordan and hosted by Caribbean Economist Marla Dukharan.

Considering initial production of 120,000 barrels per day in 2020, Guyana will first occupy the spot as the 7th largest oil producer in the LAC region, assuming no drastic changes in the other countries’ production profiles over the next couple of years.

However, in the process, by the time peak production is reached five years latter, Guyana will have surpassed OPEC producer Ecuador, assuming production in that country, as well as others, doesn’t experience a drastic decline, as has been the case in Venezuela in recent years.

***

 

Colombia Says Odebrecht Bribes Larger Than Previously Known

(Bloomberg, Ezra Fieser, 15.Aug.2018) – Odebrecht SA, the Brazilian construction giant, paid at least $32.5 million in bribes in Colombia — three times the amount it confessed to almost two years ago when it admitted to carrying out one of the largest graft schemes in corporate history, Colombia’s attorney general said.

Nestor Humberto Martinez speaks to the press in Cali, Colombia. Photographer: Luis Robayo/AFP via Getty Images

In an interview in his Bogota office, Attorney General Nestor Humberto Martinez described a deeper and more pervasive scandal than the one Odebrecht admitted to in a 2016 plea agreement with Brazilian and U.S. authorities. That agreement listed $11.1 million in bribes paid to win two Colombian infrastructure projects as part of a plot that reached a dozen countries in the Americas and Africa. Martinez said the $11.1 million came from Brazil and the rest from Colombian contracts, making a new total of $32.5 million.

Odebrecht bribed dozens of Colombian officials and executives to win six government contracts from 2009 to 2014, Martinez said. Almost three dozen people have already been indicted and five convicted, including an ex-senator and a former deputy minister. The prosecutor’s office has also submitted evidence to the supreme court against an additional nine politicians.

$3.5 billion

The exceptional global scope of Odebrecht’s bribery emerged in 2016 when the company reached a $3.5 billion settlement with U.S., Brazilian and Swiss authorities. It admitted to having paid $788 million in a dozen countries for more than 100 contracts in what the U.S. Justice Department called the largest foreign graft case in history.

The company has since reached settlements with several Latin American governments, including the Dominican Republic, Peru and Panama. In Colombia, the case has dragged on and Odebrecht has implied that the delay is a result of self-protective foot-dragging. In addition, Odebrecht is seeking compensation of as much as $1.3 billion for the work it did on the nation’s biggest highway before the bribery scandal stopped it. Hearings in that case have been delayed until Sept. 11.

Martinez said the probe has taken so long because it’s complex and deep, and Colombia wanted to do its own investigation. Alone in the region, Colombia rejected offers from Brazil to share evidence because they came with the condition that neither Odebrecht nor its executives could be implicated in the crimes.

“Colombia was the only country that did not agree to receive evidence from the Brazilian prosecutors,” he said. “That’s why we were able to get this investigation to the point where it is. That’s why there are three Brazilians indicted with arrest orders pending.”

The three — Amilton Hideaki Sendai, Eder Paolo Ferracuti and Marcio Marangoni — all held positions with Odebrecht or a subsidiary and are believed to be in Brazil, prosecutors said.

Calls to Odebrecht Colombia seeking comment have gone unanswered.

Conflict of Interest?

Martinez, a cabinet member in three Colombian governments, has been accused of conflict of interest in the case because before becoming attorney general in 2016, he was a key lawyer for Grupo Aval, the parent company of Odebrecht’s Colombia partner on one of its contracts. The implication has been that he’s protecting his previous employer.

Grupo Aval, Colombia’s biggest banking group and controlled by Luis Carlos Sarmiento Angulo, partnered in 2010 with Odebrecht to build a section of a 1,000-km (621-mile) road called Ruta del Sol connecting the Bogota region with the Caribbean coast. It did so through Corficolombiana SA, which it controls. A family-held construction company, Solarte Group, also took a minority stake.

Martinez rejected the conflict-of-interest accusation. He said that on the two occasions that Odebrecht cases came across his desk, he recused himself, with court permission. He showed a copy of one such court decision, dated June 21. Martinez said he would similarly step aside for any future Odebrecht cases.

Maria Paulina Riveros, the deputy attorney general who has stood in for Martinez, said one of those arrested is Jose Elias Melo, former chief executive officer of Corficolombiana. The trial against Melo, who is under house arrest, is expected to begin this month.

“It surprises me that there’s a perception of different treatment for those linked to the case,” Riveros said. Prosecutors have charged “well-known people such as Mr. Melo, as well as members of congress.”

Final Stretch

Riveros said the case against Odebrecht is in its final stretch, and most of the investigation should conclude before the end of the year.

Odebrecht was building Ruta del Sol and had five other contracts in Colombia. Prosecutors said it set up shell companies that submitted invoices for work they never did, used the proceeds to pay expenses and middle men, and channeled whatever was left over into bribes.

The scheme began to unravel when prosecutors received cooperation from former Senator Otto Nicolas Bula Bula and ex-Deputy Minister of Transportation Gabriel Garcia Morales, both of whom were charged.

“It was like a chain,” Riveros said. “When they began to cooperate, all of these other lines of the investigation started to unfold.”

— With assistance by Matthew Bristow, and Jose Enrique Arrioja

***

Technology, New Innovations and the LatAm Energy Sector

(Energy Analytics Institute, Pietro D. Pitts, 14.Aug.2018) – The ability to use hydraulic fracturing to tap shale formations, to remotely monitor and manage assets, and use advanced technology to heat reservoirs, are a few of the many new innovations used in the capital intense hydrocarbon sector.

Faced with rising competition worldwide for conventional crude oil and natural gas reserves, both of which are limited and depleting resource bases, the global hydrocarbon sector has in general gravitated towards a common goal, maximizing oil and gas reserve recoveries, while at the same time maintaining or preferable reducing operating costs.

While advanced oil-field technologies such as three-dimensional (3D) and four-dimensional (4D) seismic have been used globally for many years, the varying complexities of today’s hydrocarbon sector require ever more sophisticated technologies with capabilities to process data in real-time, among other advances, and that help international oil companies (IOCs) and national oil companies (NOCs) to make rapid and most importantly, accurate decisions.

Still, the global hydrocarbon sector has been slow to embrace the use of Information Technology (IT) to assist in the collection, processing, analysis and distribution of data in real-time. But, this case has been especially true in the Latin American and Caribbean (LAC) region.

Regional NOCs have slowly taken to incorporate IT into their operations as they have come to realize the advantages outweigh the proposed disadvantages, which include but are not limited to giving access to sensitive information to third-party companies from countries that often do not share the same political or economic ideologies.

Today’s advanced and innovative technologies, including but not limited to: sensors, automated valves, and remote satellites, now help IOCs, and increasingly more regional NOCs, monitor producing fields and wells and any number of assets from remote centralized control centers in cities such as Mexico City, Sao Paulo, Caracas or Buenos Aires.

In essence, these technologies help the companies streamline their processes with the ultimate aim to increase oil and gas recovery factors and production, monitor assets for potential accidents or thefts, while helping to reduce time needed to gather information on their assets while also reducing personnel excesses. The bottom line is that the incorporation of certain technologies has assisted companies to reduce operating costs.

The ability to use hydraulic fracturing to tap shale formations, to remotely monitor and manage assets, and use advanced technology to heat reservoirs, are a few of the many new innovations in use in today’s hydrocarbon sector.

***

Andrade Calls Out to Duque Over Odebrecht Case

(TheAndradeStory.com, 13.Aug.2018 – On Thursday (8/9) afternoon, the Office of the Attorney General of Colombia announced two new charges against the former head of the National Infrastructure Agency (“ANI”), Luis F. Andrade. These are in addition to eight previous charges placed against him last year related to the Odebrecht corruption scandal.

Mr. Andrade, a U.S. citizen, led the creation of ANI in 2011 and served as its President for six years. Previously, he was a Senior Partner at McKinsey & Co., where he worked for 25 years. Since December, Mr. Andrade has been serving in preventive detention with a possible sentence of up to 30 years. In the meantime, the executives of Odebrecht and Grupo AVAL, who might have authorized or might have known about the illegal payments are not being charged or being charged with lesser offenses by the Prosecutor.

The Attorney General, the nation’s highest legal officer, has close ties to Odebrecht and its local partner, Grupo AVAL. He worked as external counsel for the Odebrecht PPPs in Colombia and for two decades was external counsel to Grupo AVAL. At the time he issued a favorable legal opinion for the decision, which is the main object of charges against Andrade. Then, as President Santos’s Chief of staff, he participated in the approval process for which Andrade is being charged. The Attorney General’s close involvement in the charges involving Mr. Andrade’s case make him uniquely unqualified to render legal judgement absent of bias. An independent investigator is needed to oversee all cases and charges involving Odebreht or Grupo AVAL.

With the new charges, Andrade continues to fall victim to an aggressive persecution by the Attorney General’s office and its conflicted interests. For this, Mr. Andrade is calling for newly elected President Duque to appoint an independent investigator to oversee the cases involving Odebrecht and Grupo AVAL. It is only tenable to investigate thoroughly those who might have authorized or might have known about the illegal payments through an independent investigator given the evident conflicts of interest in the Attorney General’s office.

The following statement can be attributed to Mr. Luis F. Andrade:

“I am concerned for my family and Colombia. The aggressive persecution by the Attorney General’s office is founded in bias and contrary interests. I believe an independent and thorough investigation into the Odebrecht contracts in Colombia – including my case – is necessary. Transparency is required to strengthen Colombia’s institutions if the United States and Colombia want to achieve the mutual interest of putting an end to drug-trafficking and organized crime. I look forward to continuing to correct the record as my reputation and innocence are besmirched – this is why I chose to launch a website with the facts of the case as they occurred.”

More details here: http://www.theandradestory.com/

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Mexico’s CNH to Speak at EnerCom Conference

(Energy Analytics Institute, Jared Yamin, 9.Aug2018) – The 23rd annual EnerCom conference will take place in the Denver Downtown Westin Hotel on Aug. 19-22, 2018.

Companies with exposure to Latin America that will participate in special panels during the event include the following:

Oil & Gas in Mexico Panel

— Talos Energy Inc. – Gulf Coast region and Gulf of Mexico offshore operations

— International Frontier Resources – drilling the Tecolutla Block onshore Mexico

— Mexican Commission National Hydrocarbons (CNH) – Mexico’s national oil and gas regulator

International Panel

— Jadestone Energy, Inc. – Asia Pacific E&P

— Valeura Energy Inc. – Canadian E&P with principal operations in Turkey

— GeoPark – Latin oil and gas company developing assets in Chile, Colombia, Brazil, Peru and Argentina

***

Petrobras Receives Over R$ 1 Bln from Operation Car Wash

(Petrobras, 9.Aug.2018) – Petrobras informs that it has received a return of R$ 1.034 billion through cooperation and leniency agreements signed with individuals and legal entities by the Federal Public Prosecutor’s Office in Curitiba and by the Office of the Attorney General in Brasília under Operation Car Wash.

This is the highest refund received by Petrobras in a single period, which added to the resources already transferred to the company since the beginning of the Operation exceeds the amount of R$ 2.5 billion.

The company, which is recognized by the authorities as a victim of the acts unraveled by the Operation, will continue to adopt applicable measures against companies and individuals who have caused damage to the company. Petrobras acts as co-author with the Federal Prosecutor’s Office and the Federal Government in 16 administrative improbable lawsuits in progress, in addition to being a prosecution assistant in 51 criminal lawsuits.

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Petrobras Approves Pmt of Interest on Capital

(Petrobras, 6.Aug.2018) – Petrobras reports that its Board of Directors approved in a meeting held yesterday the distribution of early remuneration to shareholders as Interest on Capital (IOC), as defined in art. 9, sole paragraph of its bylaws and in article 9 of Law 9.249/95.

The value to be distributed, totaling R$652.2 million, corresponds to a gross amount of R$0.05 per share, to be paid on August 23, 2018 proportional to each shareholder’s stake and to be provisioned in the 3Q 2018 financial statements, based on shareholding positions as of August 13, 2018.

Starting from the first business day after the cut-off date (August 14, 2018), shares will be traded ex-interest on capital at B3 and other stock exchanges where the company is listed.

This IOC advance will be imputed to the mandatory minimum dividend (article 53, paragraph 4, of the Bylaws) including for the purpose of payment of priority minimum dividends of preferred shares.

The amount of R$ 0.05 per common share or preferred share related to the JCP will be subject to income tax, by applying the applicable tax rate. Income tax withholdings will not be applied to shareholders whose registered data proves to be immune or exempt, or shareholders domiciled in countries or jurisdictions for which the law establishes different treatment.

The Shareholder Compensation Policy can be accessed on the Internet at the company’s website. 

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Petrobras Posts 1H:18 Profit, Reduces Debt

(Petrobras, 3.Aug.2018) – Petrobras reported net income of R$ 17 billion in the first half of 2018. The positive result was mainly influenced by the increase in international oil prices, associated with the depreciation of the  Brazilian Real against the US dollar. In the same period, net debt fell 13% compared to December 2017, to US$ 73.66 billion.

Operating income and cash inflows of US$ 5 billion from divestments in the first half were the main factors for reducing net debt, which totaled 3.23 times earnings before interest, taxes, depreciation and amortization (adjusted Ebitda), compared to 3.67 at the end of 2017. Without the provision for the Class Action agreement, the indicator would have been 2.86. As a result, Petrobras remains committed to reaching the goal of 2.5 by the end of this year. The indicator for the top metric, the Total Recordable Injuries (TRI) was 1.06 per million man-hours at the end of June. Petrobras remains committed to the already announced metric of 1.0.

With the reduction and liability management, Petrobras reduced its financial expenses (most interest) by R$ 1.6 billion in the first half and extended its debt, without having to pay a higher price. The average term maturity increased from 8.62 to 9.11 years and the average interest rate remained around 6%.

The performance of the company’s operations maintained a positive trend, which had already been recorded in previous quarters, with an operating income 18% higher than the first half of 2017, totaling R$ 34.5 billion, with lower general and administrative expenses and lower equipment idleness expenses. Total oil and gas production was 2.7 million barrels of oil equivalent per day (boed) in the first half, in line with the target set for 2018.

The operational highlights included the start-up of the first production system in Transfer of Rights area, the P-74, in the Búzios field, and a new production system in the Campos Basin, with the FPSO Cidade Campos dos Goytacazes, in Tartaruga Verde field. Another highlight was the arrival of the P-67 to Brazil, which will be the eighth platform to operate in the Lula / Cernambi fields. Since 2017, Petrobras has increased its exploration area by 31%, with acquisitions in the bidding rounds of the National Petroleum, Natural Gas and Biofuels Agency (ANP), prioritizing those with greater potential in the Campos and Santos Basins.

There was also a reduction in sales volume in Brazil (mainly gasoline, due to increased ethanol competition) and a drop in the volume of exported oil. Petrobras’ share of the diesel market increased from 74% in 2017 to 87% in June 2018. In gasoline, the increase was 83% in 2017 to 85% in June 2018.

Positive results lead to the collection of R$ 75.2 billion in taxes and government participation

In the first half of 2018, Petrobras generated R$ 75.2 billion in taxes and government participation, including royalties in Brazil, for the three federative levels: the Union, states and municipalities. The rise in international oil prices from US$ 51.81 in the first half of 2017 to US$ 70.55 this year was the main factor contributing to this increase of 28% over the first half of 2017.

Remuneration to shareholders

Petrobras will anticipate payment to shareholders in the form of interest on capital (JCP) in the amount of R$ 0.05 / share for both classes of shares. The payment, in the total amount of R$ 652.2 million, will occur on 08/23/2018. The accumulated amount of prepayments in the first half is R$ 1.3 billion.

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Shell Offers 1H:18 LatAm Updates

(Energy Analytics Institute, Jared Yamin, 1.Aug.2018) – Royal Dutch Shell plc announced the following updates during the first half of 2018.

Mexico

In the deep-water bid round in Mexico in January for the Gulf of Mexico, Shell won four exploration blocks on its own, four with its partner Qatar Petroleum and one with its partner Pemex Exploración y Producción. Shell will be the operator of all nine blocks.

Brazil

Shell won four additional deep-water exploration blocks in Brazil, one block on its own, and three in joint bids with Chevron, Petrobras and Galp. Shell will be the operator of two blocks.

Argentina

In April, Shell signed an agreement to sell its Downstream business in Argentina to Raízen. The sale includes the Buenos Aires refinery, around 645 retail stations, the global commercial businesses, as well as supply and distribution activities in the country. The businesses acquired by Raízen will continue the relationship with Shell through various commercial agreements.

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Shell Provides 3Q:18 Outlook Update

(Energy Analytics Institute, Jared Yamin, 1.Aug.2018) – Royal Dutch Shell plc offered the following outlook for the third quarter of 2018.

Compared with the third quarter 2017, Integrated Gas production is expected to be 40 – 70 thousand boe/d lower, mainly due to divestments and higher maintenance. LNG liquefaction volumes are expected to be at a similar level.

Compared with the third quarter 2017, Upstream production is expected to be 210 – 240 thousand boe/d lower, mainly due to divestments, field decline and higher maintenance, partly offset by volumes from new fields.

Given the unplanned downtime events in the third quarter 2017, refinery availability is expected to increase in the third quarter 2018 compared with the same period a year ago. This will be partly offset by higher planned maintenance.

Oil products sales volumes are expected to be at a similar level compared with the same period a year ago.

Given the unplanned downtime events in the third quarter 2017, chemicals availability is expected to increase in the third quarter 2018 compared with the same period a year ago. This will be partly offset by higher planned maintenance from the turnaround season.

Corporate earnings excluding identified items are expected to be a net charge of $ 400 – 450 million in the third quarter and a net charge of around $1.4 – 1.6 billion for the full year 2018. This excludes the impact of currency exchange effects.

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Shell Brazil Invests in FPSO Tanks Solution

(World Oil, 31.Jul.2018) – Aberdeen-based inspection technology and service provider for the oil and gas industry, Innospection, Shell Brazil and SENAI CIMATEC technology institute in Salvador, Brazil, have recently signed a partnership agreement to develop a robot-based technology for in-service inspection of cargo oil tanks of FPSOs.

This robot system called MCCR (MEC Combi Crawler Robot) will be deployed externally to the hull of Shell-operated and non-operated FPSOs worldwide. The robot will be able to clean marine fouling on ship hull, detect defect size and depth, among other features. This will allow for a potential increase in tank inspection efficiency, thus improving integrity and increasing safety for FPSOs. This solution is expected to allow for cost savings of 20% to 30% in tank inspections, when used in combination with other robotic inspection tools like aerial drones.

Shell Brasil Technology Manager Jose Ferrari said: “We are very excited with this promising partnership, which will lead to an optimized inspection process for our FPSOs, further contributing to streamlining the structural integrity management of our assets. We also look forward to having two important partners, Innospection and SENAI CIMATEC, who have previously worked for Shell in Brazil and abroad.”

Innospection, CEO, Andreas Boenisch said: “In several aspects this project has already achieved great milestones, from R&D collaboration between an Operator an Institute and a commercial technology company, to the high end robotic integration of various inspection technologies and surface cleaning into an almost autonomous subsea operating system, to a major cost saving aspect ofthe asset deployment and operation. We are excited to work with a great team on a great industry solution.”

SENAI CIMATEC Technology and Innovation Manager Daniel Motta adds that the project consolidates a partnership with Shell, started with the development of autonomous underwater vehicle (AUV) FlatFish. “We will be developing one more highly relevant project with Shell to boost its oil and gas exploration to even higher levels. It is a project that strengthens Brazil’s technology capabilities, thanks to a combination of resources from the Brazilian Oil and Gas Agency (ANP), Embrapii and our international partner Innospection.”

The project will cost approximately $9 million, from which $4.5 million will be funded by Shell Brasil through the ANP research levy on oil and gas revenues.

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Peregrino Module Sails to Brazilian Platform

(Energy Voice, David McPhee, 31.Jul.2018) – Watch as Equinor’s Peregrino modules set sail en route to the platform in Brazil to begin Phase 2 of the project.

Watch: Equinor Peregrino modules sail to Brazilian platform

The modules for the drilling facility have already been delivered but will now undergo stacking and testing.

Equinor said today that the platform and corresponding drilling facility will see installation in late 2019.

The offshore structure is set to begin production in 2020 and will produce for 20 years.

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Petrobras Targets China with New Crude Oil

(Reuters, Florence Tan and Alexandra Alper, 27.Jul.2018) – Brazil’s state-controlled energy company Petrobras plans to push more crude oil to top importer China by marketing a new medium-sweet grade that could be shipped from October, two sources with knowledge of the matter said.

Petrobras expects to start pumping pre-salt oil from new platforms in the fourth quarter that would add to output from Latin America’s biggest producer and lift its exports.

The new supply could enlarge Brazil’s market share in China as buyers there cut oil imports from the United States following Beijing’s announcement it would impose tariffs on U.S. crude in retaliation against similar moves by Washington.

“Petrobras’ oil export curve is increasing and China is currently the company’s main market,” a Petrobras spokesman said in an e-mail.

“With (Chinese) refineries’ growing interest in buying oil directly from producers … Petrobras will grow its presence with these refiners.”

Petrobras started production in April at its wholly-owned Buzios pre-salt field in the Santos basin from platform P-74, located about 200 km off the Rio de Janeiro coast in water depths of 2,000 metres, according to the company’s website.

Two more platforms, P-75 and P-76, are to come online in the fourth quarter. Total Buzios output is expected to grow to 750,000 bpd by 2021, once an additional four platforms come online, the company said.

Buzios crude has API gravity of 28.4 degrees and contains about 0.31 percent sulphur, similar in quality to Brazil’s Lula crude, one of the most popular oils in China, the company said.

The new supply could help lift Petrobras’ crude oil exports, which dropped 53.8 percent in June from a year ago to 696,000 barrels per day (2.86 million tonnes) as the company hiked its refinery output.

Petrobras’ overall production in June stood at 2.03 million bpd, down 1.5 percent from May.

Brazil’s oil liquids output, including biofuels, is expected to rise by 200,000 bpd to 3.5 million bpd in 2019, after holding steady in 2018, according to consultancy Energy Aspects.

CHINA RISING

China’s demand for low-sulphur crude, such as oil from Angola and Brazil, jumped over the past two years after its independent refiners, also known as teapots, were allowed to import crude.

That has moved Brazil up two notches since 2017 to fifth on China’s supplier list, with 657,000 bpd in the first quarter this year, according to data from China customs.

The teapots’ oil imports from Brazil more than doubled in the first half of 2018 to 350,000 bpd compared with the same period a year ago, according to Beijing consultancy SIA Energy.

More than half of Brazil’s shipments to China went through ports in Shandong province, home to most of China’s independent refiners, according to Thomson Reuters Eikon data.

Petrobras also supplied the first crude cargo to Chinese chemical producer Hengli Group for the start-up of its new refinery in northeast China in the fourth quarter of this year. New Brazilian crude Mero was also delivered to Shandong in June.

Petrobras has expanded its trading team in Singapore to step up marketing efforts in China, the two sources familiar with the matter said. The company has appointed a business development person from within the company and hired a crude trader from a Chinese refiner who will join in September, the sources said.

“In order to improve market share in China, and considering the entry of the teapots in the international market, Petrobras considers that it is necessary to have a professional fluent in Mandarin for the specific development of this market,” the company said, without confirming the new hire.

Asia’s largest refiner Sinopec bought a third of China’s Brazilian oil imports in the first half of 2018, up 13 percent from a year ago, SIA Energy analyst Seng Yick Tee said.

“Sinopec and independents have the appetite for additional crude imports from Brazil, and the potential tariffs on U.S. crude is one of the reasons,” Tee said.

Trade flow data on Eikon, however, shows Brazilian exports to Shandong look set to drop in the third quarter – before the additional Buzios platforms start up – as poor margins and tighter credit have forced teapots to cut runs.

The tough environment is expected to push independents to seek more competitive oil supplies, Tee said.

Other sellers of Brazilian crude include Royal Dutch Shell and Equinor. State-owned China National Petroleum Corp (CNPC) and CNOOC Ltd also have equity stakes in Brazilian oilfields.

***

EIA Beta Interactive Data Analysis

(Energy Analytics Institute, Ian Silverman, 26.Jul.2018) – Beta data from the EIA provide users with an interactive way to analyze multiple petroleum data.

According to the most recent beta crude oil reserve data provided by the US-based Energy Information Administration, two countries in the Latin American region make the list and rank among the top 15 countries worldwide in terms of these reserves. To no surprise, Venezuela tops the list and Brazil ranks 15th, according to the data.

In terms of natural gas reserves, again Venezuela tops the list among the top 15 countries worldwide, but this time the South American country ranks 8th, according to the data.

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Petrobras says Entorno de Sapinhoá Block Viable

(Reuters, 20.Jul.2018) – Brazil’s state-controlled oil company Petróleo Brasileiro SA said that areas it operates adjacent to the Entorno de Sapinhoá block in the Santos basin are commercially viable, according to a securities filing on Friday.

Petrobras has a 45 percent stake in Sapinhoá, while Shell Plc has a 30 percent stake and Repsol Sinopec has a 25 percent stake. (Reporting by Carolina Mandl Editing by Chizu Nomiyama)

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Petrobras to Start Up 4 New Platforms in 4Q

(Reuters, 18.Jul.2018) – Brazil’s state-controlled oil company Petrobras will start pumping pre-salt oil from four new platforms between October and December, the company’s director for production and technology development Hugo Repsold said.

Speaking to reporters at an oil industry event, he said Petrobras could study building its own platforms after 2022 and predicted the company would head toward sustainable growth of oil production in the next few years.

The four new platforms in the Santos basin are the P-67 and P-69 in the Lula oil field, and the P-75 and P-76 in the Buzios fields. A fifth platform planned for this year, the P-68 in the Berbigão field, will start in 2019.

Repsold said Petrobras was well on the road to recovery and was starting up platforms that had been delayed in recent years and which will now ensure continued growth in output.

He said the drop in Petrobras oil production in June to 2.03 million barrels per day – 1.5 percent less than May – was due to maintenance work on some platforms.

A revised business plan that should be published in the third quarter, he said, will include having the company’s own platforms that would enter production from 2023 onwards.

***

Total Advances Renewable Projects in Brazil

(UPI, Daniel J. Graeber, 18.Jul.2018) – A renewable energy division of French supermajor Total said Wednesday it was moving forward with new solar power developments in Brazil.

Total in September paid about $275 million to acquire a 23 percent stake in renewable energy company Eren, naming the new entity Total Eren. The renewable energy division announced Wednesday it was financing and building a combined 140 megawatts of nominal power in Brazil, roughly enough power for at least 100,000 homes.

Of the three projects either in the finance or construction phase, a project dubbed BJL 11 is the company’s first ever in Brazil. With close to 78,000 panels, the French company said it could generate enough power for 23,000 homes.

The move into Brazilian renewables follows the formation of a strategic partnership between Total and Petróleo Brasileiro, known commonly as Petrobras. The 2016 partnership reinforced operations at oil fields off the Brazilian coast, thermal plants and infrastructure associated with liquefied natural gas.

Last week, Petrobras signed a memorandum of understanding to examine solar and wind energy segments in the Brazilian market with Total Eren.

“The recently announced agreement with Petrobras and Total, two major players in the energy sector, makes me very much enthusiastic about future growth prospects in renewables in the country,” Fabienne Demol, the global head of business development of Total Eren, said in a statement.

Petrobas has 104 MW of wind power and 1.1 MW of solar power already in its portfolio in the Brazilian market.

Brazil generates about three quarters of its electricity from renewable energy resources. According to the U.S. Commerce Department, it’s the best renewable energy market in Latin America.

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Petrobras Output in Campos Drops

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

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

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

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

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

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

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

***

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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Petrobras, CNPC to Finish Rio Refinery

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

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

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ISA CTEEP Awarded $1.7 Bln Projects in Brazil

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

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

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

***

Brazil Deep-water Competitiveness: José Firmo

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

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Sterlite, State Grid Win Brazil Power Licenses

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

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

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

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

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

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

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

***

EDP Introduces Blockchain Solution in Brazil

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

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

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

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

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Brazil to Auction 20 Transmission Lines

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

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

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

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

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

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

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Petrobras New CFO Election

(Petrobras, 27.Jun.2018) – Petrobras informs that its Board of Directors, at a meeting held today, appointed the engineer Rafael Salvador Grisolia to the position of Chief Financial and Investor Relations Officer of the company, with an office term until March 26, 2019, the same term of the other officers of the Executive Board.

Rafael Grisolia is a Production Engineer, holding an MBA from Coppead/UFRJ. Has a 30 year extensive career experience having worked at the financial department of Esso – an affiliate of ExxonMobil Corp., and at Cosan Combustíveis e Lubrificantes SA, held a position of Chief Financial Officer (CFO) and Investor Relations Officer (IRO) of Cremer SA, CFO of Grupo Trigo SA, CFO and IRO of Inbrands SA. Since August 2017, as Chief Financial Officer (CFO) and Investor Relations Officer (IRO) at Petrobras Distribuidora SA (BR).

The nomination was subject to prior analysis by the Nominating, Compensation and Succession Committee of Petrobras’ Board of Directors.

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BHP Provides Update on Samarco

(BHP Billiton, 26.Jun.2018) – On 2 March 2016, Samarco Mineração S.A., Vale S.A., BHP Billiton Brasil Ltda (the Companies), and the Federal Government of Brazil, the Brazilian states of Espirito Santo and Minas Gerais and other public authorities entered into a Framework Agreement that provides for the settlement of the BRL20 billion Civil Claim. Under this Agreement the Companies agreed to establish a fund for clean-up costs and remediation and for compensation of impacts relating to the Fundão tailings dam failure.

The Companies, the other parties to the Framework Agreement, the Public Prosecutors Office and the Public Defense Office have agreed an arrangement which settles the BRL20 billion Civil Claim, enhances community participation in decisions related to the remediation and compensation programs under the Framework Agreement (Programs), and establishes a process to renegotiate those Programs over two years and to progress settlement of the BRL155 billion Civil Claim (Governance Agreement).

The Governance Agreement is conditional on the Federal Government of Brazil signing the agreement, and is subject to ratification by the 12th Federal Court of Minas Gerais.

Legal Claims

Under the Governance Agreement, the parties have agreed to file a petition with the 12th Federal Court to dismiss the BRL20 billion Civil Claim, and also agreed on a process to dismiss certain other public civil actions which cover the same claims as the BRL155 billion Civil Claim.

The Governance Agreement also provides for the suspension of the BRL155 billion Civil Claim for a period of two years following ratification of the Governance Agreement.

Renegotiation process

During the two year period, the parties will work together to design a single process for the renegotiation of the Programs and progress settlement of the BRL155 billion Civil Claim. The renegotiation process will take into account the principles and rules established under the Framework Agreement, and will be aimed at improvement of the Programs, with the involvement of the affected communities.

The renegotiation of the Programs will be based on certain agreed principles, such as full reparation consistent with Brazilian law, the requirement for a technical basis for any proposed changes, the findings of the socio-economic and socio-environmental experts appointed by both the Companies and the Prosecutors, and consideration of the feedback from the Local and Regional Commissions.

During the renegotiation period and up until revisions to the Programs are agreed, the Renova Foundation will continue to implement the Programs in accordance with the terms of the Framework Agreement and the Governance Agreement.

Governance Arrangements

A revised governance structure, based on the Framework Agreement, has been agreed to enhance community participation in the process.

The Inter-Federative Committee currently comprises 12 members, and the revised structure includes four additional members, with three being appointed by affected communities and one by the Public Defense Office. The Renova Board currently comprises seven members, with six being appointed by the Companies and one by the Inter-Federative Committee. Under the revised structure, two additional members of the Renova Board will be appointed by the affected communities.

A network of Local and Regional Commissions has also been established along the Rio Doce to secure community participation in the decision making relating to the Programs.

Notes:

Samarco Mineração S.A. is jointly owned by BHP Billiton Brasil Ltda and Vale S.A. Our 50 per cent interest is accounted for as an equity accounted investment.

Public Prosecutors Office includes the Federal, State of Minas Gerais and State of Espirito Santo public prosecutors offices.

Public Defense Office included the Federal, State of Minas Gerais and State of Espirito Santo public defense offices.

BRL155 billion Civil Claim

On 3 May 2016, the Federal Prosecutors commenced proceedings against Samarco, Vale and BHP Brasil for BRL155 billion (approximately US$41.5 billion) for social, environmental and economic compensation relating to the Samarco dam failure (BRL155 billion Civil Claim).

The claim includes the Federal Prosecutors seeking an injunction order that Samarco, Vale and BHP Brasil deposit BRL7.7 billion (approximately US$2 billion) into a special company account.

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Tartaruga Verde Field Commences Production

(Petrobras, 25.Jun.2018) – Petrobras started production of Tartaruga Verde field, in deep waters of Campos Basin, by means of FPSO Cidade de Campos dos Goytacazes.

The FPSO is located about 127 km off the coast of the state of Rio de Janeiro, in water depth of 765 meters, with a capacity to process daily up to 150 thousand barrels of oil and 3.5 million cubic meters of gas and 5 million cubic meters of gas compression.

Tartaruga Verde field has good quality oil (27º API) and is located in the southern area of Campos Basin, in the post-salt, in water depth ranging from 700 to 1,300 meters and with reservoirs at 3,000 meters depth. It consists of two reservoirs, Tartaruga Verde, where Petrobras holds 100% interest, and Tartaruga Mestiça, a joint reservoir between the Union, represented by Pre-Sal Petróleo SA – “PPSA”, with a 30.65% interest, and Petrobras with 69.35%. All of the field production will be offloaded by FPSO Cidade de Campos dos Goytacazes.

This is the second platform to start operations this year and will contribute to the increase of Petrobras’ production under the 2018-2022 Business and Management Plan.

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Brazil Labor Court Rules Against Petrobras

(Reuters, 21.Jun.2018) – Brazil’s top labor court ruled in favor of workers at Brazil’s state-controlled oil giant Petroleo Brasileiro in a wage spat that could cost the world’s most indebted oil company up to 17 billion reais ($4.5 billion).

Petrobras, as the company is known, could still appeal the Superior Labor Court’s ruling in the case, brought by Petrobras workers seeking more pay.
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Uncertainty Looms Large Over LatAm Oil

(Oilprice.com, Tsvetana Paraskova, 20.Jun.2018) – While oil industry analysts and market participants are watching Venezuela closely for clues about how low its oil production will go, several other countries in Latin America are holding key elections this year, elections that will no doubt shape the countries’ short and medium-term oil policies. These developments could spell trouble for oil supply and oil investment in South America’s biggest crude-producing nations.

A populist leftist candidate pledging to undo energy reforms is widely expected to win Mexico’s presidential election in two weeks. There has been recent turmoil in Brazil’s fuel sector policies ahead of a wide-open presidential race for the October elections. A newly elected president in Colombia is vowing to amend a historic peace deal with the FARC rebels.

All these events add uncertainties to how politics will influence Latin American countries’ oil policies and investment climate for foreign oil companies, Paul Ruiz and Jena Merl write for The Fuse.

In Colombia, a conservative political newcomer, Iván Duque, won the presidential election this past weekend in the traditionally conservative country. The new president, however, has pledged to revise the 2016 deal with the Revolutionary Armed Forces of Colombia (FARC) rebels that put an end to 50 years of armed conflict. Duque wants to re-write the deal that guaranteed the rebels seats in Congress and allowed them to run in elections.

The new president, like the outgoing president Juan Manuel Santos, will have to face another rebel group, the National Liberation Army (ELN)—a Marxist guerrilla group that sabotages oil industry facilities to protest against foreign companies operating in Colombia. In January this year, Colombia suspended talks with ELN after bombings killed police officers. ELN has repeatedly attacked the second-largest oil pipeline in Colombia, Cano Limon-Covenas, causing oil spills and shutdowns.

Mexico is holding a presidential election on July 1, and a few weeks ahead of the vote, all polls point to populist leftist candidate Andrés Manuel López Obrador having a comfortable lead over other candidates. López Obrador pledges to roll back the landmark 2013 energy reform of outgoing president Enrique Peña Nieto, who opened Mexico’s oil sector to private investment for the first time in seven decades. The jury is still out as to whether López Obrador will backtrack entirely on the oil reforms, but uncertainties remain regarding the investment environment in the country—at least for this year.

Brazil is holding elections in October and the race is still wide open.

But in recent weeks, the country came to an economic standstill due to widespread truckers’ strikes over high fuel prices. President Michel Temer announced subsidies on diesel at the end of May, freezing prices for 60 days.

The recent turmoil in the country’s oil industry and renewed anxiety over political meddling in the energy sector add an uncertainty ahead of the election later this year. Pedro Parente, chief executive at state-run oil company Petrobras, resigned on June 1, after the strikes forced the government to cut diesel prices and after oil workers demanded that Brazil end the one-year-old policy to allow fuel prices be dictated by the market and international crude oil benchmarks.

Yet, some of the world’s biggest oil companies—including Exxon, Chevron, Shell, BP, and Equinor—bid aggressively in Brazil’s latest offshore bid round on June 7, snapping up acreage in three blocks in the coveted pre-salt layer.

Nevertheless, uncertainty over how Brazil will handle oil sector policies until and immediately after the October elections has increased.

Brazil is still expected to be one of the largest contributors to non-OPEC oil supply growth in the coming years. According to the International Energy Agency’s (IEA) Oil 2018 outlook from March, oil production growth from the United States, Brazil, Canada, and Norway “can keep the world well supplied, more than meeting global oil demand growth through 2020.”

According to OPEC’s latest Monthly Oil Market Report, non-OPEC oil supply in the second half of this year is expected to increase by 2.0 million bpd year on year, with the United States leading the pack, contributing 1.4 million bpd to growth, followed by Canada and Brazil.

While uncertainties mount in the political shifts and oil policy choices in other Latin American countries, there’s only one uncertainty left for Venezuela—how fast production from the collapsing oil industry will sink to as low as 1 million bpd. Some analysts reckon the plunge to 1 million bpd is imminent.
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ExxonMobil Reconfirms March 2020 for First Guyana Oil

(Denis Chabrol, DemeraraWaves, 12.Jun.2018) – ExxonMobil on Tuesday reconfirmed that Guyana will pump up its first barrel of oil in March 2020, even as the Guyana government continued to fend off criticisms of the 2016 production sharing agreement.

Vice President of ExxonMobil Development Company, Lisa Walters said work was well advanced by several companies in Singapore, Brazil and the United States Gulf Coast to ensure that commercial oil production begins in less than two years. “We are on track for first oil in March of 2020,” she said. “In just a little over a year and a half, the Liza Destiny will deliver its first oil to its first tanker offshore,” she added.

ExxonMobil estimates that oil discoveries at Liza, Payara, Snoek and Turbot offshore Guyana total 3.2 billion barrels and would eventually lead to daily production of 500,000 barrels. ExxonMobil estimates that Liza Phase 1 will generate over US$7 billion in royalty and profit oil revenues for Guyana over the life of the project.

Walters said the drill-ship, Noble Bob Douglas, recently started drilling the production wells located at Liza more than 125 miles off the Demerara Coast. She said “all of the design work on the project is nearing completion” and “construction is well-underway worldwide” for the Floating Storage, Production, Storage and Offloading (FPSO) vessel named “Liza Destiny”. SBM Offshore has won the contract to construct that vessel, while TechnicFMC, and Saipem have been hired for sub-sea construction of the umbilical cords and flow-lines. Guyana Shorebase Inc was awarded the contract in June, 2017 for shore-base services and in August, 2017 the Noble Bob Douglas was hired for drilling services.

ExxonMobil’s Country Manager, Rod Henson also used the opportunity of the official start of the Liza Phase 1 Development Programme to show off that in the first quarter of 2018, over US$14 million were spent with Guyanese suppliers; together with its contractors ExxonMobil utilized 262 Guyanese registered suppliers, 227 of which are Guyanese owned.

Minister of Natural Resources, Raphael Trotman reiterated that the revised ExxonMobil Production Sharing Agreement has “the same or very similar contractual terms” as those Guyana has signed with other companies such as Anadarko Petroleum, Ratio, CGX, REPSOL, Ratio, Eco-Atlantic and Mid Atlantic.

“In that regard, they will enjoy the same rights and obligations as every other company that has been contracted by the government to explore and develop our hydrocarbons.

That they were the first to find a large deposit should no redefine their contractual terms or place them in any position less than that enjoyed prior to discovery. For government to do otherwise is not how responsible or how well-organised and governed States function,” she said.

The Minister of Natural Resources said the proceeds of Guyana’s oil production would be fairly shared among all Guyanese without discrimination as part of a process that would eventually lead to the removal of negative labels such as Third World, backwards, underdeveloped and developing from Guyana. “With the blessings that have been revealed, and are within our grasp, we purpose to develop a modern, peaceful and cohesive State-one in which every man, woman and child, without exception, reservation, and/or discrimination of any kind, is able to enjoy the full and equal benefits of the bounty we are about to be bestowed,” he said.
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Chevron Brazil Chief to Lead Venezuela Ops After Arrests

(Reuters, 9.Jun.2018) — US oil producer Chevron Corp permanently assigned its Brazil country chief to run its Venezuelan operations, three sources said this week, after the months-long detention of two executives escalated tensions between the Opec-member nation and foreign oil firms.

Javier La Rosa, who had been president of Chevron Brazil since 2016 according to his LinkedIn page, this month was named to replace the company’s Venezuela general manager, Christopher Whatley, said the sources, who spoke on Thursday and Friday.

Chevron did not immediately respond to a request for comment.

Mr La Rosa had headed Venezuela operations for the company from 2005 to 2008, his LinkedIn page said. He flew to Caracas shortly after Chevron employees were detained to temporarily lead the Venezuela unit, according to two other people familiar with the matter.

None of the sources could speak for attribution because they were not authorized to speak on the matter.

Mr La Rosa’s appointment comes after a tense showdown between foreign oil companies and the government in recent months as Venezuela’s political and economic meltdown deepened.

Venezuelan authorities this week released the two executives jailed since April as part of an ongoing graft probe into the oil sector, which has spooked other foreign companies operating in partnership with state oil company PDVSA.

The arrests, related to the executives’ refusal to sign a supply contract for furnace parts for a PDVSA joint venture, were made public after some oil-service companies pulled back from Venezuela, writing off billions of dollars in assets.

La Rosa is leaving Brazil just as Chevron begins to flex its muscle in Latin America’s largest crude producer. In a consortium with Petrobras and Royal Dutch Shell Plc , Chevron clinched its first block in Brazil’s coveted offshore pre-salt oil play on Thursday.

It was not immediately clear who will run Chevron’s Brazil operations.

Reuters reported in December that Chevron was in talks with oil services firm Schlumberger NV to resume drilling in an offshore field after a 2011 oil spill there cut production.

Chevron, the world’s seventh-largest publicly traded oil producer, with 2017 revenue of US$135 billion, operates in Venezuela mostly through minority stakes in five projects. Its earnings from Venezuela dropped 18 per cent last year to US$329 million, according to regulatory filings.
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Brazil Raises $830 Mln in Pre-Salt Auction

(Efe, 7.Jun.2018) – Brazil raised 3.15 billion reais (around $830 million) in fixed signing bonuses on Thursday in its fourth auction of oil blocks in a deepwater region of the Atlantic Ocean known as the pre-salt.

The winner of the largest and most coveted block – known as Uirapuru – was a consortium made up of Brazilian state oil company Petrobras (30 percent stake), Irving, Texas-based supermajor Exxon Mobil (28 percent), Norway’s Statoil (28 percent) and Portugal’s Petrogal (14 percent).

It won the block after offering the government a record 75.48 percent share of so-called profit oil, more than three times the minimum required by the National Petroleum Agency (ANP, Brazil’s oil regulator).

Two other consortiums also were awarded licenses for blocks in the pre-salt region, so-named because its massive reserves are located under water, rocks and a layer of salt at depths thousands of meters below the surface of the Atlantic.

One of them is made up of Royal Dutch Shell (40 percent), San Ramon, California-based Chevron (30 percent) and Petrobras (30 percent), while the other is led by Petrobras (45 percent) and also includes BP Energy (30 percent) and Statoil (25 percent).

Although Petrobras initially only was part of that latter consortium, it exercised its right under pre-salt regulations to be an operating partner in the other two consortiums with at least a 30 percent stake.

The ANP received offers that were well above what had been expected for the three most coveted blocks in the auction. The auction of a fourth smaller block, Itaimbezinho, did not attract any bidders and was declared void.

The bid round was among the most successful in recent years, according to ANP director Decio Oddone.

He said that in addition to the proceeds from the fixed signing bonuses the auction also would guarantee some 40 billion reais (some $10.5 billion) in income for the state over the 30-year lifespan of the contracts in the form of profit-sharing arrangements and taxes and royalties.

The consortium led by Shell and Chevron that won the right to develop a pre-salt block known as Tres Marias offered the government 49.95 percent of the profit oil, more than five times the minimum required.

The third block that attracted interest, Dois Irmaos, was awarded to the Petrobras-BP-Statoil consortium, which offered the government a 16.43 percent share of the profit oil, the minimum proportion required.

“It was a very successful auction because it attracted the attention of the world largest oil companies, which made offers that were higher than what we were expecting; it showed how competitive the pre-salt is,” Oddone said.

He said that all told the Brazilian government would have a nearly 90 percent share of liquid revenues from the development of Uirapuru, adding that such a high level was “not even seen in the Middle East.”

The four blocks on offer on Thursday contain roughly 5 billion barrels of oil and natural gas.

Prior to this latest auction Brazil had only awarded licenses to develop six blocks in the pre-salt region, which contains tens of billions of barrels of hydrocarbon reserves.
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