BP, Pan American Eye Exporting Argentina Shale Gas As LNG Via Chile

(S&P Global Platts, 15.Nov.2018) — Pan American Energy, the second-biggest oil producer and third for gas in Argentina, is working with BP on potentially exporting LNG out of Chile, a project that could prove faster to get Vaca Muerta shale gas to market than building a liquefaction facility in Argentina.

The project is in the conceptual design phase and would involve delivering supplies over an existing Argentina-Chile pipeline to the Quintero LNG regasification terminal in Chile, said Alejandro Lopez Angriman, vice president of reserves development at Pan American.

The Quintero terminal “can be turned around so it can liquefy to export,” he said on the sidelines of an energy conference in Mendoza, Argentina.

The pipeline has 10 million cu m/d of capacity for moving supplies from Vaca Muerta to Chile, but is mostly running empty. It has been used over the past few June-to-August winters to bring regasified LNG to Argentina from Chile.

To deliver supplies to Chile, the pipeline would have to be modified with a loop, Lopez Angriman said.

BP — which owns 50% of Pan American alongside Bridas, itself 50% owned by China’s CNOOC — is helping on the conceptual engineering for the project, he added.

The project could cost around $300 million if it goes forward, he added, with the first train exporting 25 million cu m/d.

LOOKING FOR NEW MARKETS

The research into the project comes as gas production surges in Argentina, led by Vaca Muerta, one of the world’s largest shale plays.

The country’s overall gas production rose 14% to 130 million cu m/d this year from a 16-year low of 113.7 million cu m/d in 2014, allowing the country to restart exports by pipeline to Chile after an 11-year suspension.

The Energy Secretariat estimates that with enough investment Vaca Muerta could double the country’s gas production over the next five years to 238 million cu m/d, allowing exports to surge to 100 million cu m/d in 2023 from less than 1 million cu m/d this year.

In the late 1990s and early 2000s, Argentina exported 20 million cu m/d to Brazil, Chile and Uruguay, and the pipelines are still in place. The country halted exports in the mid-2000s as production plunged, bringing shortages and a surge in imports of Bolivian gas and LNG. Imports have averaged 30 million cu m/d since 2012, but started declining this year, according to Energy Secretariat data.

Pan American got a permit this year to export gas to Chile, and it likely will start to make deliveries during the upcoming December to February summer for consumption in that market, Lopez Angriman said.

But he said that won’t be enough to sustain a larger development of Vaca Muerta, where he estimates one field could easily supply the LNG export terminal.

“The field could produce 25, 50, or even 100 million cu m/d,” Lopez Angriman said. “It’s incredible the number of wells that you can do in Vaca Muerta for gas.”

Frackers, he added, have de-risked the gas potential in Vaca Muerta, and the next step is to find the capital to put it into full-scale production. But to attract investors, more pipelines are needed to get the gas out and additional markets must be found to increase sales so production can be sustained year-round, not slowed during the summer with the closing of wells. State-run YPF, the country’s biggest gas producer, had to close gas wells in the third quarter of this year, in part because warming temperatures and a contracting economy reduced demand.

Argentina has sharp fluctuations in gas demand, from 115 million cu m/d in the summer and peaks at 180 million cu m/d in the winter, according to data from Enargas, the national gas regulator.

“It is not a good thing to convince investors to invest in shale gas when production has to be halted during the summer,” Lopez Angriman said.

CUTTING WELLHEAD COSTS

While gas exports can be increased to neighboring countries, these markets suffer the same predicament as Argentina: their demand for gas plunges in the summer. That means LNG must be pursued if output from Vaca Muerta is to be expanded, he said.

But to do that, a big challenge is to bring down development costs in the play so the gas can be competitive against Australia, Qatar, the US and other suppliers in sales to Southeast Asia, where demand is expected to grow, Lopez Angriman said.

He estimates that at around $3/MMBtu, sales can be competitive. But to get there, Vaca Muerta development costs must come down 30%, and the focus is on easing the strain of frack sand, which accounts for 30% of the well completion cost, he said.

Frackers have shaved the cost of sand to $190/mt from $250/mt over the past few years, but it is still higher than the $60/mt figure in the US.

“If we are going to compete with the US or Canada, one way or another we have to reduce the cost of sand,” he said.

Help is to come from moving more sand by boat and train to Vaca Muerta, located in the southwest. Most of the sand is currently being trucked 1,000 km (621 miles) from Entre Rios, a central province, with transport accounting for 50% of the total cost of sand.

There is a government-led plan to extend a cargo railway to Vaca Muerta, but it is not likely to start for three to four years. Once it is in operation, the cost will come down because it is cheaper to move the sand from Entre Rios by river and ocean to Bahia Blanca, an Atlantic port where it can be loaded onto the train for delivery to the well sites.

THE ARGENTINA LNG OPTION

Pan American also is looking at the option of building liquefaction capacity in Argentina, as are other companies.

On Monday, YPF said it plans to install a floating liquefaction barge in Bahia Blanca to export up to 2.5 million cu m/d of LNG from 2019, and then work on building a larger export terminal.

The government, meanwhile, is studying a project for exporting LNG from a six-train onshore terminal in Bahia Blanca, likely starting in 2023 with shipments of 40 million cu m/d, increasing to 120 million cu m/d in 2025.

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Chile’s Pontificia Universidad Católica Wins Airbus 2018 GEDC Award

2018 Airbus GEDC Diversity Award Winners – Gabriela García (left) and Constanza Miranda (right). Source: Airbus

(Airbus, 14.Nov.2018) — Pontificia Universidad Católica de Chile’s SaviaLab recognised for innovative use of technology to increase diversity in engineering education.

The SaviaLab diversity initiative from Pontificia Universidad Católica de Chile has been selected as the winner of the 2018 Airbus GEDC Diversity Award for innovative use of technology to increase diversity in engineering education.

The SaviaLab initiative seeks to bridge the gap of opportunity by offering science, technology, engineering and mathematics (STEM) outreach education to indigenous minorities and young people in rural areas across Chile.

Since 2014, the initiative has introduced over 3,300 students from 7 regions to potential STEM career paths. This educational ‘pre-engineering’ programme empowers others with concrete technology and innovation tools. The impact goes beyond the rural minorities to the university’s own students that represent minorities themselves.

The three finalist projects – NASA Swarmathon from the University of New Mexico, USA, SaviaLab from Pontificia Universidad Católica de Chile, and iSTEAM Underwater Robot Competition from Hong Kong University of Science and Technology – presented their diversity initiative to a Jury* of industry experts and distinguished guests at the WEEF-GEDC 2018 conference – the largest engineering education gathering in the world – in Albuquerque, New Mexico, USA.

This global award is administered by Airbus, the Global Engineering Deans Council (GEDC) and the United Nations Educational, Scientific and Cultural Organization (UNESCO).

Since Airbus launched the award in 2012, 198 entries representing 140 institutions from 37 countries have been submitted. For the 2018 edition, 39 entries were received from 19 countries. From the 18 finalist projects recognised in the first six years of the award alone, over 125,000 students who otherwise may not have chosen engineering have been directly impacted.

Increasing diversity amongst the global population of engineers is a well-documented challenge that Airbus, the GEDC and UNESCO are committed to addressing. As in the past, this year’s finalist projects were selected for their potential to be scaled up or replicated elsewhere. Airbus are proud to announce today the launch of an e-book dedicated to the Diversity Award’s most successful initiatives, to share the valuable insights which will inspire others to take action.

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Pattern Energy Reports Third Quarter 2018 Financial Results

(Pattern Energy Group, 5.Nov.2018) — Pattern Energy Group Inc. announced its financial results for the 2018 third quarter.

Highlights
(Comparisons made between fiscal Q3 2018 and fiscal Q3 2017 results, unless otherwise noted)

— Proportional gigawatt hours (“GWh”) sold of 1,623 GWh, up 7%

— Net cash provided by operating activities of $106.9 million

— Cash available for distribution (CAFD) of $31.7 million, up 235% and on track to meet full year guidance(1)

— Net loss of $31.5 million

— Adjusted EBITDA of $79.5 million, up 45%

— Revenue of $118.4 million, up 29%

— Declared a fourth quarter dividend of $0.4220 per Class A common share or $1.688 on an annualized basis, subsequent to the end of the period, unchanged from the previous quarter’s dividend

— Committed to a plan to repower the 283 MW Gulf Wind project starting in 2019

— Acquired a 51% owned interest in the 143 MW Mont Sainte-Marguerite project in Québec, for a purchase price of $37.7 million, representing a 10x multiple of the five-year average CAFD(1) of the project

— Completed the sale of the Company’s operations in Chile, which principally consist of its 81 MW owned interest in the 115 MW El Arrayán project for which Pattern Energy received cash proceeds of $70.4 million

“It was another solid quarter with CAFD up more than three times the same period last year, which puts us in a great position to achieve our targeted CAFD(1) for the year,” said Mike Garland, President of Pattern Energy. “We continue to take proactive measures to increase our CAFD without issuing common equity including, asset recycling, repowering Gulf Wind and the implementation of cost savings. During the quarter we sold El Arrayán at a premium to the multiple at which we trade and we are in the final stages of a second sale. This asset recycling provides us additional flexibility to make new investments in accretive opportunities, like the Mont Sainte-Marguerite acquisition or the Gulf Wind repowering, which increase CAFD. As the opportunity set at Pattern Energy Group 2 LP (“Pattern Development 2.0”) continues to mature and grow, especially in exciting markets like Japan, our material ownership interest in the development business is a clear differentiator to other players in the market.”

(1) The forward looking measures of 2018 full year cash available for distribution (CAFD) and the five-year average annual purchase price multiple are non-GAAP measures that cannot be reconciled to net cash provided by operating activities as the most directly comparable GAAP financial measure without unreasonable effort primarily because of the uncertainties involved in estimating forward-looking changes in working capital balances which are added to earnings to arrive at cash provided by operations and subtracted therefrom to arrive at CAFD. A description of the adjustments to determine CAFD can be found within Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Metrics, of Pattern Energy’s 2018 Quarterly Report on Form 10-Q for the period ended September 30, 2018.

Financial and Operating Results

Pattern Energy sold 1,622,991 megawatt hours (“MWh”) of electricity on a proportional basis in the third quarter of 2018 compared to 1,513,997 MWh sold in the same period last year. Pattern Energy sold 6,021,515 MWh of electricity on a proportional basis for the nine months ended September 30, 2018 (“YTD 2018”) compared to 5,663,782 MWh sold in the same period last year. The 7% increase in the quarterly period was primarily due to volume increases as a result of acquisitions in 2017 and 2018, favorable wind and increased availability compared to last year. Production for the quarter was 8% below the long-term average forecast for the period with strength in Canada, Japan and Puerto Rico offset by weakness in the Eastern U.S.

Net cash provided by operating activities was $106.9 million for the third quarter of 2018 compared to $2.1 million for the same period last year. Net cash provided by operating activities was $230.5 million for YTD 2018 as compared to $159.3 million for the same period last year. The increase in the quarterly period of $104.8 million was primarily due to a $24.3 million increase in revenue (excluding unrealized loss on energy derivative and amortization included in electricity sales), a $33.8 million increase in advanced lease revenue, decreased payments of $26.7 million in payable, accrued and current liabilities, due primarily to the timing of payments, a $13.6 million increase in other current assets primarily due to a $7.7 million increase in sales tax receivable and a $7.3 million increase in related party receivable, a $6.5 million decrease in interest payments, and a $1.7 million  decrease in transmission costs. The increase to net cash provided by operating activities was partially offset by a decrease of $1.6 million in distributions from unconsolidated investments.

Cash available for distribution increased 235% to $31.7 million for the third quarter of 2018, compared to $9.5 million for the same period last year. Cash available for distribution increased 28% to $133.4 million for YTD 2018 compared to $103.8 million for the same period in the prior year. The $22.2 million increase in the quarterly period was primarily due to a $24.3 million increase in revenues (excluding the unrealized loss on the energy derivative and amortization included in electricity sales) due to acquisitions in 2017 and 2018, a $5.9 million decrease in principal payments of project-level debt, a $1.7 million decrease in transmission costs and a $0.8 million increase in the release of restricted cash. These increases were partially offset by a $3.0 million increase in distributions to noncontrolling interests, a $4.0 million decrease in distributions from unconsolidated investments and $1.4 million of costs related to the sale of El Arrayán.

Net loss was $31.5 million in the third quarter of 2018, compared to a net loss of $48.4 million for the same period last year. Net loss was $45.9 million for YTD 2018 compared to a net loss of $60.5 million in the same period last year. The improvement of $16.8 million in the quarterly period was primarily attributable to a $26.4 million increase in revenue due to 2017 and 2018 acquisitions and a $5.1 million decrease in other expense primarily due to gains on derivatives. These increases were partially offset by a $4.5 million increase in cost of revenue related to 2017 and 2018 acquisitions, a $3.3 million increase in operating expenses related to an impairment expense on the El Arrayán sale and a $6.9 million increase in tax provisions.

Adjusted EBITDA increased 45% to $79.5 million for the third quarter of 2018 compared to $54.7 million for the same period last year. Adjusted EBITDA increased 19% to $292.2 million for YTD 2018 compared to $244.8 million for the same period last year. The $24.8 million increase in the quarterly period was primarily due to a $24.3 million increase in revenue (excluding unrealized loss on energy derivative and amortization included in electricity sales) primarily attributable to volume increases as a result of 2017 and 2018 acquisitions, favorable wind and increased availability compared to last year. Adjusted EBITDA for the third quarter also reflects a charge to earnings of approximately $4.3 million for the equity pick-up in the financial results of Pattern Development 2.0.

2018 Financial Guidance

Pattern Energy is re-confirming its targeted annual cash available for distribution(2) for 2018 within a range of $151 million to $181 million, representing an increase of 14% compared to cash available for distribution in 2017.

(2) The forward looking measure of 2018 full year cash available for distribution (CAFD) is a non-GAAP measure that cannot be reconciled to net cash provided by operating activities as the most directly comparable GAAP financial measure without unreasonable effort primarily because of the uncertainties involved in estimating forward-looking changes in working capital balances which are added to earnings to arrive at cash provided by operations and subtracted therefrom to arrive at CAFD. A description of the adjustments to determine CAFD can be found within Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Metrics, of Pattern Energy’s 2018 Quarterly Report on Form 10-Q for the period ended September 30, 2018.

Quarterly Dividend

Pattern Energy declared a dividend for the fourth quarter 2018, payable on January 31, 2019, to holders of record on December 31, 2018 in the amount of $0.4220 per Class A common share, which represents $1.688 on an annualized basis. The amount of the fourth quarter 2018 dividend is unchanged from the third quarter 2018 dividend.

Acquisition Pipeline

Pattern Energy Group LP (Pattern Development 1.0) and Pattern Development 2.0 (together, the Pattern Development Companies) have a pipeline of development projects totaling more than 10 GW. Pattern Energy has a ROFO on the pipeline of acquisition opportunities from the Pattern Development Companies. The identified ROFO list stands at 743 MW of potential owned capacity and represents a portion of the pipeline of development projects of the Pattern Development Companies, which are subject to Pattern Energy’s ROFO. Since its IPO, Pattern Energy has purchased, or agreed to purchase, 1,564 MW from Pattern Development 1.0 and in aggregate grown the identified ROFO list from 746 MW to more than 2 GW.

Below is a summary of the identified ROFO projects that Pattern Energy has the right to purchase from the Pattern Development Companies in connection with its respective purchase rights:

Cash Available for Distribution and Adjusted EBITDA Non-GAAP Reconciliations

The following tables reconcile non-GAAP net cash provided by operating activities to cash available for distribution and net loss to Adjusted EBITDA, respectively, for the periods presented (in thousands):

Conference Call and Webcast

Pattern Energy will host a conference call and webcast to discuss these results at 10:30 a.m. Eastern Time on Monday, November 5, 2018. Mike Garland, President and CEO, and Mike Lyon, CFO, will co-chair the call. Participants should call (888) 231-8191 or (647) 427-7450 and ask an operator for the Pattern Energy earnings call. Please dial in 10 minutes prior to the call to secure a line. A replay will be available shortly after the call. To access the replay, please dial (855) 859-2056 or (416) 849-0833 and enter access code 4369558. The replay recording will be available until 11:59 p.m. Eastern Time, November 28, 2018.

A live webcast of the conference call will be also available on the events page in the investor section of Pattern Energy’s website at www.patternenergy.com. An archived webcast will be available for one year.

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ENAP Places 11-Year Bonds In NYC For $680 Million

(Energy Analytics Institute, Aaron Simonsky, 30.Oct.2018) — ENAP finalized an international bond placement in New York for $680 million. The placement was at 5.261% with a spread of 215 basis points over the benchmark 10-year U.S. Treasury Bond, while coverage was 5.25%. Capital amortizations are in years 9, 10 and 11, the company announced in an official statement on its website.

Bank of America Merrill Lynch, Citigroup and Scotiabank acted as placement agents.

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Argentina Restarts Natural Gas Exports To Chile

(Reuters, Dave Sherwood, 30.Oct.2018) —  Argentina has begun exporting natural gas to Chile after a 12 year interlude, Chilean President Sebastian Pinera said on Tuesday, as the two South American neighbors seek to increasingly integrate their energy supply and electricity grids.

The unconventional gas is being piped from Argentina’s oil- and gas-rich Vaca Muerta shale field in the Neuquen basin, then sent over the Andes mountain range to Chile’s southern province of Biobio.

“We are working enthusiastically with (Argentine) President Mauricio Macri to integrate our energy supply,” Pinera said in a speech.

The exports mark a turning point in energy trade in the region. Argentina, which sits atop the world’s No. 2 shale gas reserves, was once a major supplier of natural gas to Chile, but triggered a diplomatic crisis in the mid-2000s by cutting off shipments when its own supplies ran low.

The move sent Chile, a global mining powerhouse that has few hydrocarbons of its own, scrambling to find new sources of supply. The spat also helped foster a move towards alternative energy sources like wind and solar in Chile.

Pinera said the two countries had very different, but often complementary, energy needs, and that depending on the time of year and circumstance, could either export or import fuel and electricity across their shared border.

“This will permit us to back one another up without having to spend excess money to do so,” he said.

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Environmental Emergency: 720,000 Lt. Oil Spill in Chile

(TeleSur, 19.Oct.2018) — The spill is the largest ever registered in the region of Tierra del Fuego.

In the southernmost region of Tierra del Fuego in Chile, an oil spill has unleashed an environmental emergency affecting at least 6,000 square meters, according to the National Emergency Office.

This is the largest spill registered in the Magallanes region. On Wednesday an oil leak from a plant owned by Chile’s National Oil Company (ENAP) and operated by YPF, Argentina’s Fiscal Oil Fields, reached the narrow river Chorrillo Paraguaya carrying the leak and affecting more land and water surface.

Chile’s regional secretariat for the Environment Ministry said, “the spill was contained in Rio Cullen, so it is affecting this river and several unnamed lakes.” Authorities don’t expect the spill to reach the Strait of Magellan or the Atlantic Ocean.

Authorities have yet to determine what caused the leak while YPF confirmed they have recovered 60 percent of the leaked oil.

“We will take all the measures to understand why these situations occur … and to determine what measures the companies will take to ensure these accidents do not take place because they generate gigantic environmental damage that we cannot accept,” Chile’s Environment Minister and businesswoman Carolina Schmidt said Thursday.

Senators Guido Girardi and Aysen Ordenes of the Environmental Commission announced legal actions against those responsible for the spill. “We cannot be complacent. The minister has said that everything is under control — that’s a lie, everything is not under control, this cannot be controlled. It takes a long time to control and we are going to present a criminal suit for environmental reparation…” Girardi said.

Greenpeace Chile has also expressed their concern over the spill and announced they will monitor the situation to ensure “an effective and transparent response by the authorities to minimize the effects in the area.”

Environmental Scandal Rocks Chile

A toxic cloud above Quintero in Chile is affecting hundreds of people in the coastal town.

Posted by teleSUR English on Thursday, September 13, 2018

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Related Stories:

Vaca Muerta Megaproject – A Fracking Carbon Bomb In Patagonia

Pattern Energy Completes Sale of Chilean Ops

(Pattern Energy Group Inc., 21.Aug.2018) – Pattern Energy Group Inc. completed the sale of its operations in Chile, which principally consist of its 81 megawatt owned interest in the 115 MW El Arrayán Wind project, to affiliates of Arroyo Energy Investors for which Pattern Energy received a cash consideration of $70.5 million before transaction related expenses of approximately $2.0 million. This price represents a cash available for distribution (CAFD) multiple that is greater than the CAFD multiple for projects the company has acquired in the past.

“This is an excellent result that underscores the value of our portfolio and demonstrates a key part of our strategy, which is to recycle non-strategic holdings and use the capital to reinvest in accretive assets, repurchase stock or make other beneficial investments,” said Pattern Energy CEO Mike Garland in an official company statement.

“Due to changes in the Chilean power market, we felt it was better for the company to focus on its core business areas and reduce overhead. We continue to see excellent growth opportunities in the United States, Canada, Mexico, and Japan,” Garland concluded.

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GeoPark Announces New Jauke Gas Field Discovery in Chile

(GeoPark, 20.Aug.2018) — GeoPark Limited announced the successful drilling and testing of the Jauke 1 exploration well in the Fell block (GeoPark operated, 100% WI) in Chile.

“This discovery illustrates the hydrocarbon-generating capacity of GeoPark’s unique Latin American multi-country platform,” said GeoPark Chief Executive Officer James F. Park.

GeoPark drilled and completed the Jauke 1 exploration well to a total depth of 9,592 feet. A production test through different chokes in the Springhill formation resulted in an average production rate of 5.8 mil lion standard cubic feet per day of gas (or 970 boepd) with a wellhead pressure of 2,738 pounds per square inch.

Additional production history is required to determine stabilized flow rates of the well and the extent of the reservoir. Surface facilities are in place, the well is in production, and the gas is being sold to Methanex through a long term gas contract. Drilling and completion costs are estimated at $3.4 million, and at current gas prices and testing rates, this well is expected to have a payback period of 6-7 months.

The Jauke gas field is part of the large Dicky geological structure in the Fell block – and has the potential for multiple development drilling opportunities. Petrophysical analysis also indicates hydrocarbon potential in the shallower El Salto formation which will be tested i n the future. The Jauke exploration effort is part of GeoPark’s 2018 overall 40-45 well drilling program in Colombia, Argentina, Brazil, and Chile – with five drilling rigs currently in operation.

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Sonnedix Buys 138MW Chilean Solar Power Project

(Power Technology, 20.Jul.2018) – Global independent solar power producer Sonnedix has acquired a 138MW Meseta de Los Andes project in Chile, as part of its move to expand its renewable portfolio.

Spread over an area of 250ha, the Meseta de Los Andes project is located 80km from Santiago, which is said to be the main energy consumption centre of the country.

Currently, the project is in the greenfield stage. It will be developed by Spanish construction company AR Energia and is expected to enter construction by early 2020.

“The acquisition includes ten ground-mounted operating solar PV plants located in the Marche, Molise and Apulia regions.”

With the new acquisition, Sonnedix has further strengthened its presence in the Chilean solar market, where it currently has more than 400MW capacity of utility-scale solar photovoltaic (PV) projects under development, construction or in operation.

The project’s renewable energy generation is set to contribute to supplying power purchase agreements (PPAs) already secured by Sonnedix.

Sonnedix CEO Andreas Mustad said: “Sonnedix is making a long-term commitment to supporting Chile’s renewable energy mix.

“It reflects the scale – and pace – of growth across our platform as we develop, build and operate assets across the world.”

For this transaction, Sonnedix was advised by Guerrero Olivos (legal) and Enertis (technical advice).

In April this year, Sonnedix expanded its footprint in the Italian solar market with the acquisition of 11MW portfolio from Terni Energia, which is engaged in the development of technical solutions, products and services for the energy sector.

The acquisition includes ten ground-mounted operating solar PV plants located in the Marche, Molise and Apulia regions.

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ENAP Names New General Manger

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

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

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

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

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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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ENAP Says Clean Energy is Chile’s Future

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

However, the benefits of the wind park include:

— It’s renewable,

— No greenhouse gases emitted, and

— Permits sustainable development.

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Chile to Export Gas to Argentina

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

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

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

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

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ET Energy Launches 31.6 MWp Projects in Chile

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

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

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

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

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

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ENAP Board Appoints New CEO

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

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

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

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

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

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

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

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ENAP Articulates Gas Export Framework Deal

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

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

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

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

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

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

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

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

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

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

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ENAP to Invest $131 Mln in Iso Plant

(Energy Analytics Institute, Ian Silverman, 20.Jun.2018) – The investment entails construction of a new isomerization plant and associated pond for the storage of gasoline.

The project is part of a larger investment portfolio of more than $ 1.1 billion for the ENAP Bío Bío Refinery. The new investments aim to improve the company’s environmental performance and its conversion capacity, and thus improve its competitiveness.

The plan for construction of a new isomerization plant to be executed by ENAP Bío Bío Refinery was approved on June 6, 2018 by the Environmental Assessment Commission with nine votes in favor and one abstention, announced ENAP in an official statement on its website.

The project, which entered into environmental processing in December 2017, seeks to increase production of high quality gasoline and low sulfur content for distribution in Chile.

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ENAP to Invest $354 Mln in Project in Argentina

ENAP’s AM3 platform. Source: ENAP

(Energy Analytics Institute, Aaron Simonsky, 15.Jun.2018) – Chile’s ENAP plans investments of $354 million in a project located in the eastern mouth of the Strait of Magellan, on the Argentine side.

The company plans the investments in its Magallanes Area Incremental Project (PIAM) project, which has potential to substantially increase crude oil and natural gas production, ENAP reported in an official statement.

Despite severe weather conditions at sea in southern Argentina, the AM3 platform is already underway to produce 100% of the proposed volumes of oil and gas, becoming the last milestone of the PIAM of ENAP Sipetrol in that country.

With installation of the heliport, of approximately 60 tons, at 37 meters above sea level — the highest altitude of the expansion project was reached — the PIAM already has the entire infrastructure to start producing the incremental oil and gas in its entirety.

Natural gas production is expected to rise 60% to 4 million cubic meters per day (MMcm/d) from 2.4 MMcm/d, while associated oil production is expected to rise 43% to 1,000 cubic meters per day from 700 cubic meters per day currently.
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Argentina to Export Natural Gas to Chile by YE:18

(Reuters, Luc Cohen, 14.Jun.2018) – Argentina will begin exporting natural gas to neighboring Chile before the end of the year, the energy ministers of both countries said on Thursday, as output from the Vaca Muerta shale field rises.

The two South American countries had previously signed deals allowing for the export of gas or electricity in emergency situations, but required that an equivalent amount be re-imported within twelve months.

Chilean companies are in talks to sign import deals and the first flow of gas across the Andes could come in October or November of this year, Chile energy minister Susana Jimenez said in an interview in Bariloche, Argentina at the G20 Meeting of Energy Ministers.

“We see a great opportunity for mutual benefit,” she said, adding that the gas could come both from the Neuquen basin, home to Vaca Muerta, and from the Austral basin in southern Argentina.

The gas could be used for electricity generation, replacing imports from elsewhere, or to heat homes in areas where families still depend on wood, a source of pollution in the center-south region, Jimenez said. Chile produces little hydrocarbons of its own.

The unrestricted exports would mark a turning point in energy trade in the region. Argentina was once a major supplier of natural gas to Chile, but triggered a diplomatic crisis in the mid-2000s by cutting off shipments when its own supplies ran low.

Argentina sits atop the world’s No. 2 shale gas reserves but is still a net energy importer. Since taking office in December 2015, President Mauricio Macri has sought to loosen labor rules and boost infrastructure to attract investment.

Rising output from Vaca Muerta could help the country export more than it imports by 2021, Argentina’s energy minister Juan Jose Aranguren said at a news conference. The country is set to import slightly more than 50 cargoes of liquefied natural gas (LNG) this year, down from 68 last year and 90 in 2015.

Argentina still needs the LNG imports to meet peak winter demand, but in the southern hemisphere summer months it could see a surplus, Aranguren said.

“This summer we will start to sign permits for exporting natural gas to Chile without any restrictions,” he said.
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Chile to Receive 1st Iranian Oil Cargo in 16 Years

(Kallanish Energy, 11.Jun.2018) — As refineries and traders await clarity on whether they will be able to make reductions in their crude purchases from Iran or be forced to stop buying from the OPEC producer, Chile has imported its first Iranian oil cargo in at least 16 years.

Shipping data last Friday showed the Portugal-flagged oil tanker Monte Toledo sailing through the Oman Gulf towards the Pacific port of San Vicente, in Chile.

The Suezmax-class tanker, with capacity to carry 1 million barrels of oil, left Iran’s Khark port on June 2, and is expected to arrive on July 11, Kallanish Energy reports.

The revival of trade between Iran and Chile may pave the way for future shipments, as the Persian nation is expected to face sanctions whioch would dent its exports to European refineries.

Enap, the Chilean state oil company, owns a refinery at the San Vicente terminal. The company didn’t respond to Kallanish Energy’s request for comment on whether it plans to continue purchasing Iranian crude despite U.S. sanctions.

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Energy, Education, and Learning Through NRG ED

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

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

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

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

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

(By Rodolfo Guzman, Paola Perez, Paola Carvajal, Roberto Imperatore, Arthur D. Little, 22.May 2018) – Unconventional oil production has grown these past few years despite low oil prices since 2014. Although production in the US decreased in 2015, stabilization of prices and improvements in several operational areas allowed unconventionals to maintain a relevant role in the global supply. Last year, Arthur D. Little published a viewpoint analyzing the perspectives for unconventional resources in selected Latin American countries. While our outlook for Latin American opportunities remains positive, there are new factors to consider. The key shale players have stayed strongly focused on the US, the moderate oil price recovery expectations persist, and concerns about fracking operations are increasing. Therefore, host countries, especially in Latin America, are now under greater pressure to create conditions that favor the development of these resources.

In recent years, countries such as Mexico, Colombia and Chile with potential in unconventional hydrocarbons have been evaluating their prospective resources. However, these activities have not been enough to build momentum and attract resources to speed up the de-risking process for unconventional hydrocarbons. Building momentum requires a strategy for aligning technical, regulatory, and economic conditions to boost the de-risking process of the greenfield plays prior to the take-off of massive developments. Two major forces can, in our opinion, help build momentum: national oil company leadership and/or government promotion & incentives. Besides these levers, a deeper understanding of the local conditions of the oil & gas industry is fundamental for defining the strategy and tactics for building momentum.

In our view, the development of unconventional hydrocarbons in different geographies will continue shaping the global oil and natural gas markets. Countries with high potential and interest in expanding their production, such as Mexico, Colombia, and Chile, still need to build momentum to ensure the inflow of capital investments to speed up the exploration/evaluation phases. Although there is still uncertainty regarding the feasibility of large developments, the growing demand for hydrocarbons presents an opportunity for oil companies.

As the energy industry continues evolving, trends in supply and demand could change the incentives to develop the unconventional plays (growing share of renewable, peak of oil demand, etc.). Therefore, there is a closing window of opportunity for adopting a strategy to provide the required support to oil & gas players and take advantage of unconventional developments.

Download the full report here: http://www.adlittle.com/en/BuildingMomentum
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ECLAC Ssays Venezuela’s Economic Activity to Fall 8.5% in 2018

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

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

TABLE 1: ECLAC GDP ESTIMATES FOR 2018

Country/Region —————————- GDP (Est.)

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

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

Source: ECLAC, April 2018
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ConocoPhillips’s Chilean Interests

(Energy Analytics Institute, Aaron Simonsky, 25.Apr.2018) — ConocoPhillips is active in Chile in the Coiron Block in the Magallanes Basin, the company reported in a Fact Sheet updated on its website in March 2018. A short summary of its Chilean interest follows:

— Coiron Block: Partners in the block include: Empresa Nacional Del Petroleo (WI 51.0%, Operator) and ConocoPhillips (WI 49.0%)

In 2015, ConocoPhillips acquired a non-operated five percent interest in the Coiron Block in the Magallanes Basin covering approximately 400,000 gross acres. In 2016, ConocoPhillips drilled two exploration wells on the Coiron Block and finalized an agreement to increase its non-operated interest to 49 percent. In 2017, the two wells were expensed as dry holes.
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Chile and Argentina to Boost Gas, Oil Output

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

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

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

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

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

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

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

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Argentina Imports Natural Gas From Chile Under Two Contracts

(Energy Analytics Institute, Jared Yamin, 17.May.2017) – Argentina started importing natural gas from Chile, and will continue over an estimated three month period in order to cover increased demand during the winter period.

On May 11, 2016 Argentina initiated import of an estimated 5 million cubic meters per day of gas from Chile under two contracts: the first with France’s GDF Suez and the second with Chile’s Enap, reported the daily newspaper La Razón.

The contract with GDF Suez is for an estimated $73.4 million with a price of $7.20/MMBtu, while the contract with Enap is for $22 million with a price of $6.90/MMBtu.

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Enap Celebrates 71 Years Since First Oil Discovery

(By Energy Analytics Institute, Jared Yamin, 30.Dec.2016) – On 29 December 2016, Chile’s state oil company Empresa Nacional de Petróleo (Enap) celebrated 71 years since the first oil well discovery in Chile’s Springhill sector in Magallanes, the company reported in an official twitter post.

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Enarsa to Import Gas From Chile

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

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

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

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

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

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Petrobras Updates on Sale of Distribution Assets in Chile

(Petrobras, 4.May.2016) – Petrobras has completed negotiations with the Southern Cross Group on the main terms and conditions for the sale of 100 percent of Petrobras Chile Distribución Ltda. (PCD), owned through Petrobras Caribe Ltd.

Southern Cross Group is a private equity fund, founded in 1988, with $2.9 billion of assets under management and focuses on investments in Latin America, in companies in the manufacturing, services, logistics and consumer goods sectors.

PCD is the distribution company of Petrobras in Chile and has 279 service stations and 8 fuel distribution terminals, operations at 11 airports, a stake in 2 logistics companies and 1 lubricant plant.

The final value of the deal, after price adjustments agreed between the parties, is estimated to be $490 million.

This transaction, carried out through a competitive process, is part of the Divestment Program planned for in the 2015-2019 Business and Management Plan and is still subject to the deliberation and approval of its final terms and conditions by the Executive Board and Board of Directors of Petrobras and the Executive Committee of Southern Cross as well as getting the applicable regulatory approvals.

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Petroecuador Says Time to Buy Light Crude

(Reuters, 6.Oct.2015, Alexandra Valencia) – Ecuador’s state-run oil company Petroecuador said it is ready to advance discussions with 24 companies interested in supplying light crude to the Andean country.

The smallest OPEC member has said it wants to import crude for the first time in decades as light reserves are running out. The country primarily produces heavy crudes.

Ecuador is looking for foreign suppliers of around 30 million barrels of light crude to feed its renovated 110,000 barrel-per-day Esmeraldas refinery.

“If we reach an understanding convenient for Petroecuador, we are going to do it,” Petroecuador’s General Manager Carlos Pareja told reporters.

He confirmed meetings next week with companies that could submit offers of light crude, among which he highlighted Chile’s ENAP.

A document seen by Reuters separately said that Petroecuador is interested in acquiring crude of 28 API degrees of density and up to 0.7 percent sulfur.

The purchases would cover 12 months of deliveries, representing a volume of some 82,000 barrels per day (bpd) and becoming Latin America’s second-largest tender to buy crude, after Venezuela’s proposal to import 75,000-150,000 bpd.

Petroecuador’s intent is controversial in a country that has always been an exporter and is already suffering from low oil prices, reducing its dollar revenue.

However, Pareja defended his proposal noting that other countries such as Colombia are also looking for foreign suppliers of light crude.

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