EP Petroecuador To Open Envelopes For Diesel No. 2 Tender

(Energy Analytics Institute, Piero Stewart, 13.Nov.2018) — EP Petroecuador will open envelopes today related to the import of 3,120,000 barrels (plus or minus 2%) of No. 2 Diesel Oil No.

Approximately 36 companies qualified for the tender through registration via EP Petroecuador’ Suppliers Registry of the International Trade Management, the online media El Universo reported.

The companies were invited to submit their proposals on October 30, 2018.

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Ecuador To Use $58.29/bbl Oil Price In 2019 Budget

(Energy Analytics Institute, Piero Stewart, 11.Nov.2018) — Ecuador announced it will utilize a $58.29 per barrel oil price to calculate projected oil export revenues in 2019, reported online media El Universo.

Ecuador, along with Venezuela, are the lone countries from Latin America to be members of OPEC.

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Ecuador’s Energy Minister Calls For Audit Of Gasvesubio Export

(Energy Analytics Institute, Piero Stewart, 10.Nov.2018) — Ecuador’s Minister of Energy and Non-Renewable Natural Resources Carlos Pérez García has requested that the Comptroller of the country carry out a special examination of Contract 2016063 signed between EP Petroecuador and the private company Gasvesubio Export (owned by the Eljuri group), on January 28, 2016.

The formal request was made on August 21, 2018 and the Comptroller responded on September 18, 2018 stating the request had been sent to the National Directorate of Natural Resources Audit, reported online media El Universo.

The audit request comes after Petroamazonas EP Manager Álex Galárraga announced Ecuador’s plans to import gas from Peru due to the lack of reserves at the Amistad field to cover demand for at least three potential customers: TermoMachala (63 million cubic feet of natural gas), Bajo Alto (12 million) and Gasvesubio (14 million).

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Ecuadorian Armed Forces Discover Fuel Tanks Destined For Smuggling

(Energy Analytics Institute, Aaron Simonsky, 2.Nov.2018) — Ecuador’s Joint Task Force Armed Forces discovered 38 tanks filled with 55 gallons of fuel in an operation carried out on October 31, 2018. The tanks were being stored in a house in El Caucal, in the parish of Ancon de Sardinas in San Lorenzo, located along Ecuador’s border with Colombia, reported the daily newspaper El Comercio.

The 2,090 gallons of fuel were to be destined for smuggling and to supply cocaine processing laboratories that operate in Colombia, the daily reported citing task force investigations.

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Venezuela Solicits Audit of Pacific Coast Refinery, Río Napo

(Energy Analytics Institute, Piero Stewart, 13.Oct.2018) — Venezuela has solicited an audit of costs related to the Pacific Coast Refinery and Río Napo JV in order to discuss potential investment plans with Ecuador, reported the daily Ecuadorian newspaper El Universo.

In May 2018, Saudi Arabia’s Aramco announced it was interested in participating in construction of the refinery. At least three consortium have announced interest in the refinery, reported El Universo.

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Energy Analytics Institute (EAI): #LatAmNRG

Ecuador, Peru In Talks To Explore Oil And Gas Blocks: Energy Minister

(Reuters, Alexandra Valencia, 11.Oct.2018) — Ecuador has begun talks with neighboring Peru to jointly explore two oilfields at the border and allow state-run Petroamazonas to operate natural gas areas in Peru, Ecuadorian Energy Minister Carlos Perez said on Thursday.

Ecuador, which earlier this year awarded foreign and domestic energy firms exploration and production rights for four oil blocks in the Andean country, plans to continue offering areas through an onshore auction later this year and another in 2019 for natural gas blocks off its Pacific shore.

“We could form a joint venture between (state-run oil firms) Petroamazonas and Petroperu plus a private company to bring in capital,” Perez told Reuters in an interview.

The crude to be jointly produced along the border would feed Peru’s 65,000-barrel-per-day Talara refinery through an existing pipeline, while natural gas to be produced in Peruvian territory would be exported to Ecuador to ease a shortage there.

Ecuador President Lenin Moreno’s government is moving fast to attract foreign investment in the country’s energy industry to reverse a slow decline in crude output.

Other countries in the region, including Brazil, Mexico, Colombia and Argentina, also are competing for oil capital.

Oil contracts in Ecuador have been changed to allow operators to export independently and over a dozen crude and gas blocks are planned to be offered to foreign companies through production agreements and service contracts.

After completing the Intracampos 2 onshore oil tender in the last quarter of 2018, Ecuador will next year auction exploration and production rights for gas blocks off the Esmeraldas, Manabi and Guayas shores, which have been studied but reserves have not been confirmed.

The country’s largest gas field, Amistad, is also being offered for private investment.

“We want to bring large companies (to the gas auction) because bigger investment is required there,” Perez said.

Ecuador, which plans to boost oil output to 590,000 barrels per day (bpd) in 2019 from 520,000 bpd this year, supports a crude production increase at the December OPEC meeting, he said.

“Due to national interest, Ecuador wants to have the option of being able to increase production. That will be our point of view (in the upcoming OPEC meeting),” Perez said.

The current crude price of between $70 and $80 per barrel is “reasonable”, Perez said, adding that “we must find a balance” in the market.

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Energy Analytics Institute (EAI): #LatAmNRG

Coca Codo Sinclair Hydroelectric Plant Operating With 5 of 8 Turbines

(Energy Analytics Institute, Ian Silverman, 10.Oct.2018) — The dispatch of energy from the Coca Codo Sinclair hydroelectric plant, located between Napo and Orellana, was carried out Oct. 9 “with restrictions for security reasons.”

As of mid-day Oct. 9, the plant was only operating with five of its eight turbines, reported Ecuador’s daily newspaper El Universo.

Authorities continue to investigate problems at the turbines. It’s unclear when the other turbines will be back online.

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Energy Analytics Institute (EAI): #LatAmNRG

Cutting India’s Dependence on Middle-East Oil: 60% More Oil Lifted from Colombia

(Financial Express, Huma Siddiqui, 9.Oct.2018) — With the India-Colombia bilateral trade $1.5 bn, India lifted oil close to $ 400 million from January to July this year– an increase of 60% in the same period of the previous year.

With the India-Colombia bilateral trade $1.5 bn, India lifted oil close to $ 400 million from January to July this year– an increase of 60% in the same period of the previous year.

Speaking to FE ONLINE, on condition of anonymity, a very senior diplomat said that, “As US imports of Colombian and of other origin continue to decline, impending sanctions on Iran next month, supply constraints of OPEC, India is expected to look at other markets.”

“Imports of oil from Colombia and Ecuador will go up substantially in the coming months,” the senior diplomat added.

India has been looking at other countries for its energy security due to impending second round of US sanctions in November targeting Iran’s energy sector, and political unrest in South American nation Venezuela.

India has been gradually planning to increase the crude imports from Latin American nations to 50% over the next few years, sources confirmed to FE ONLINE.

There are four areas of cooperation in the oil sector identified by oil companies of both countries which cover:  exploration and production of oil; activities of refining, processing and purification of hydrocarbons; and looking for more oil in the country.

ONGC Videsh has operations in the Llanos field in Colombia’s Orinoco and explored five wells. The same company owns 50% of the Mansarovar, in a joint venture with the Chinese company Sinopec, in the region of Magdalena Medio.

During the last week’s visit of Minister of State for External Affairs, Gen VK Singh (Retd) to Colombia, it was decided that the Joint Study for negotiating Partial Scope Agreement to enhance bilateral trade will be finalised soon between the two countries.

The two countries are seeking for expansion of bilateral trade and investment in areas including IT, pharmaceuticals, automobiles, agriculture, urban planning & development, and Start ups.

India and Colombia in 2019 will be celebrating 60 years of establishment of diplomatic relations and decided that this historic milestone be celebrated in a befitting manner.

As reported by FE earlier, ONGC Videsh has discovered hydrocarbon reserves in its Mariposa-1 well, which is under drilling in CPO-5 block of Colombia. Also, Ecuador has inked a confidentiality agreement with ONGC Videsh and has been in discussion about the new blocks available in that country.

The Indian company which is already present in Colombia is exploring the possibility of expanding their footprints in Ecuador and has been looking at buying a stake in oil fields there. ONGC is looking for fields with a minimum 25,000 barrels per day of oil production.

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Ecuador Signs Oil Investment Contracts to Increase Output

(Xinhua, 5.Oct.2018) — Ecuadorian authorities signed investment contracts worth about 1.6 billion U.S. dollars with private companies to develop six oil fields in the country’s northeastern provinces, local newspaper El Comercio reported.

Ecuadorian President Lenin Moreno was present at the signing ceremony held in the coastal city of Guayaquil.

With four other contracts signed in February, the country has “picked up investments of more than 2.3 billion U.S. dollars in the petroleum sector” this year, Moreno said.

According to the president, the country produces some 500,000 barrels of crude oil daily and with the new investment, the output will increase by about 6 percent in the next 15 years.

Ecuador is one of the smallest producers in the Organization of the Petroleum Exporting Countries. Oil is the main source of its export earnings.

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Ecuador Signs Deals Worth $1.62 Bln for Development of 6 Oil, Gas Fields

(Sputnik, 5.Oct.2018) — The government of Ecuador, represented by the state-run Petroamazonas energy company, signed investment contracts worth $1.62 billion for the development of six oil and gas fields, local media reported.

The contracts concern the Cuyabeno-Sansahuari, Yuralpa, Oso and Blanca-Vinita fields, located in the provinces of Orellana, Napo and Sucumbios.

Under the deals, the contractors would fund the development projects, while Petroamazonas would pay for their services in line with tariffs tied to WTI crude oil price, the Telegrafo newspaper reported.

The government had also reconsidered its contracts on the Shushufindi and Pardeliservices consortia, which would allow it to receive the additional investment of $895 million in the projects, the outlet added.

Over the past months, the authorities of Ecuador have been seeking to attract foreign investment to boost oil production.

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Ecuador, UN to Audit 5 Oil Projects Promoted Under Correa

(Energy Analytics Institute, Jared Yamin, 2.Oct.2018) — Ecuador, with the assistance of the United Nations Organization (UN), is auditing five major oil projects promoted by former President Rafael Correa during his decade of government (2007-2017).

The total value of the projects amounts to an estimated $5.042 billion, according to an article by AFP published in Ecuador’s daily newspaper El Comercio.

“The United Nations and the Ecuadorian State are already carrying out cooperation to review the five major oil projects in the country,” said Presidency Private Secretary Juan Sebastián Roldán.

A civic commission estimates corruption under the administration of Correa’s government at about $24.742 billion, the article reported.

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Oil Services Giant Schlumberger Contemplates New Investments in Ecuador

(Energy Analytics Institute, Jared Yamin, 2.Oct.2018) — Schlumberger is said to be contemplating “new investments” in Ecuador.

The announcement was revealed after a meeting between Schlumberger Manger Carlos Sarmiento and Ecuador’s President Lenin Moreno, during the latter’s visit to the United States, reported the Ecuadorian daily newspaper El Universo.

Details of the meeting were also revealed in a bulletin from Ecuador’s Secretariat of Communication, which in a short paragraph refers to a comment from Sarmiento — who manages Schlumberger’s operations in Colombia, Ecuador and Peru – that “reaffirmed his confidence in the country, and the commitment to generate new investments.”

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EP PetroEcuador Manager Supervises Terminal Operations [Video]

(Energy Analytics Institute, Jared Yamin, 27.Sep.2018) — EP PetroEcuador General Manager Pablo Flores supervised operations at the El Chorrillo, Pascuales and a Estación de Transferencia Tres Bocas Transfer Station in the province of Guayas.

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EP PetroEcuador Controls Fire at Esmeraldas Refinery AOV 14 Tank

(Energy Analytics Institute, Jared Yamin, 27.Sep.2018) — Today at approximately 12:10 pm a fire was reported at the Esmeraldas Refinery AOV 14 Asphalt tank.

The EP PetroEcuador fire brigade located at the refinery acted immediately to smother the flames and reduce harm to the environment and the other facilities related to the industrial plant. No injuries were reported and operations were not affected, announced EP PetroEcuador in an official statement on its website.

Officials with EP PetroEcuador continue to analyze the cause of the fire in order to implement corresponding corrective measures.

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Venezuela Faces Fresh Blow With Ship-Fuel Rules Threatening Exports

(Bloomberg, 27.Sep.2018) — New rules forcing ships to use cleaner marine fuels may deal yet another blow to cash-strapped Petroleos de Venezuela SA, an exporter of high-sulfur fuel oil.

From Jan. 1, 2020, vessels will have to switch to less-polluting bunker fuel or be fitted with equipment to curb emissions, under new International Maritime Organization rules. That’s expected to weaken demand for the high-sulfur residual fuel oil produced by PDVSA, pushing prices lower at the same time that the cost of importing clean fuels rises, said Mel Larson, a consultant at KBC Advanced Technologies Inc.

As refiners prepare to produce IMO-compliant fuels that rely on low-sulfur crude oils, sour crude produced by Venezuela and Mexico may be sold at deeper discounts. Meanwhile, demand for lighter distillates, including diesel, is expected to increase. That ultimately will take a toll on the economies of Venezuela, Mexico and Ecuador that rely on imported diesel and gasoline.

“IMO 2020 has the potential to hurt GDP growth in most Latin American economies, especially the ones that subsidize fuel prices,” Larson said by email. “As the cost of imported fuels rise, subsidizing gasoline and diesel will only serve to expand a country’s or company’s debt load.”

Most refiners in Latin America haven’t invested in units that can remove sulfur or crack residuals into more valuable molecules. That puts them at a disadvantage ahead of the rule, which is expected to slash global demand for high-sulfur bunker fuel to as low as 1 million barrels daily from 4 million barrels currently.

By this measure, Petroleos Mexicanos and PDVSA, respectively Latin America’s largest and second-largest exporters of fuel oil, are the ones who have most to lose.

Petroleo Brasileiro SA, on the other hand, is set to take advantage of the fuel shift, according to Guilherme Franca, executive manager of commercialization. Petrobras already exports IMO-compliant fuels and is exploring the re-opening of fuel oil storage tanks in Singapore to better supply bunker fuel markets in Asia.

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OPEC’s Decade of Turmoil Leaves Cartel Seeking a New Way Forward

(Bloomberg, Christopher Sell, 20.Sep.2018) — A global recession, both $140 and $30 oil, the U.S. shale revolution, a market-share war, and output cuts. OPEC’s 60-year history has rarely confronted a more challenging period than the past decade.

Now, instead of enjoying the higher prices resulting from 18 months of joint production cuts with a coalition of other major producers, the cartel faces new problems. A tweet-happy American president is ramping up geopolitical risk, renewed sanctions are hammering Iran’s exports, Venezuelan production is tanking as its economy collapses, and a political attack from Washington in the form of the NOPEC bill.

The alliance of exporters, spearheaded by Saudi Arabia and Russia, meets on Sunday in Algeria to consider its response to these challenges, while also taking the next steps to cement their alliance into 2019 and beyond. The Organization of Petroleum Exporting Countries response to crises over the past decade offer clues to the path it might take forward.

Global Crisis

Ten years ago, a banking crisis triggered a global economic downturn and a crash in oil prices as demand was obliterated. After peaking at a record $147.50 a barrel in July 2008, Brent crude fell as low $36.20 by year-end. Facing catastrophe, OPEC members put aside internal squabbles and agreed production cuts that were historic in their speed and scale — output fell 16 percent in just eight months. It worked, and prices began to recover in 2009 even as the world was mired in recession. After Chinese consumption came roaring back in 2010, the group was able to open its taps again as the cost of crude surged back toward $100.

Shale Boom

From 2011 onward, OPEC enjoyed years of riches and relative stability as oil traded near $100 a barrel, but a threat was emerging. A new generation of wildcatters from North Dakota to Texas was deploying innovative fracking technology to tap previously inaccessible shale oil deposits. OPEC was blind to the danger at first, then downplayed the risk even as some members raised the alarm — reasoning that shale was an expensive business and the cartel simply had to bide its time. By mid-2014, U.S. production had jumped more than 50 percent, crude prices were teetering on the brink and it was clear this new industry was reshaping the global market as OPEC stood by and watched.

Price War

By late 2014, there was a global oil glut, prices were collapsing and U.S. shale was showing no sign of slowing. Pressure increased on OPEC to respond as it had done in 2008 and cut output, but Saudi Arabia had a different plan. Driven by a combination of hubris and grievance — the kingdom thought it could easily vanquish high-cost shale and was sick of shouldering the burden of stabilizing prices alone — energy minister Ali Al-Naimi rejected requests from fellow members and opened the taps in a war for market share. At first it seemed to work — the price slump worsened and put immense financial pressure on OPEC, but also triggered a collapse in U.S. drilling and forced producers to close the taps.

Alliance with Russia

By mid-2016, Al-Naimi’s gambit looked like a failure. Crude still languished near $40 a barrel, putting some OPEC members on the brink of economic collapse. However, U.S. production was rising again after drillers made huge cost cuts and bloated crude stockpiles threatened to depress prices for years to come. A new Saudi minister, Khalid Al-Falih, was appointed and set about engineering a historic agreement including major producers from outside the group. By late 2016, he had secured the cooperation of 10 other nations, most importantly Russia, who agreed to remove 1.8 million barrels a day of supply from the market. Thanks to this deal, crude has staged a spectacular recovery from its bruising slump. In April, OPEC and its allies concluded they had achieved their goal of re-balancing the market and even higher prices beckoned.

U-Turn

If only it was that simple. OPEC’s moment of celebration faded fast as U.S. President Donald Trump threw a spanner in the oil market. Accusations on Twitter that the cartel was artificially inflating prices were followed by his renewal of sanctions on Iran’s exports and additional penalties that worsened the decline of Venezuela. Within a month, Saudi Arabia and Russia were signaling their intention to roll back the cuts, and in June they successfully pressured the rest of the group to agree. After 18 months of fairly harmonious supply restraint, some OPEC members were hastily reopening the taps, while others howled in protest from the sidelines.

What Next?

Where does OPEC turn now? Lessons from the group’s history point eastwards, toward a permanent partnership with Russia, said Harry Tchilinguirian, head of commodity strategy at BNP Paribas SA. It’s the most effective counterbalance to the shale revolution, which continues to reshape the market, he said.

“U.S. shale oil will be reaching the Atlantic Basin, and Asian markets alike, more regularly and in greater volumes as pipeline connections to the Gulf Coast and oil terminals are built or expanded,” Tchilinguirian said. This competitive challenge, along with demand dynamics that accompany the transition to cleaner energy, give OPEC an incentive to establish a permanent relationship with Russia and a growing number of non-members, he said.

Whether such an alliance would actually prove effective at managing the market in the long term is another matter, said Bob McNally, president of Rapidan Energy Group.

“The jury remains out as to whether this new Saudi-Russia led entity will succeed longer term at preventing future booms and busts or, like a number of other temporary ad-hoc cartels since oil’s earliest days, it will succumb to greed and indiscipline,” McNally said.

To contact the reporter on this story: Christopher Sell in London at csell1@bloomberg.net To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net Rakteem Katakey

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EP Petroecuador Detects Illegal Connection at Shushufindi Refinery

(Energy Analytics Institute, Piero Stewart, 15.Sep.2018) — EP Petroecuador detected a clandestine connection in the liquids line of the northern section of the gas capture station of the Shushufindi Refinery.

Technical personnel at the company immediately implemented a contingency plan to eliminate the illegal connection, which was detected on September 15, 2018, reported the state oil company in an official statement on its website.

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IEA Warns of Higher Oil Prices as Iran and Venezuela Losses Deepen

(Bloomberg, Grant Smith. 13.Sep.2018) — The International Energy Agency warned that oil prices could break out above $80 a barrel unless other producers act to offset deepening supply losses in Iran and Venezuela.

Iranian crude exports have fallen significantly before U.S. sanctions even take effect, the IEA said in a monthly report. The Middle Eastern nation will face further pressure in coming months and the economic crisis in Venezuela is pushing output there to the lowest in decades. It’s uncertain whether Saudi Arabia and other producers will fill any shortfall, or how far they’re able to, the agency said.

“Things are tightening up,” said the Paris-based IEA, which advises most major economies on energy policy. “If Venezuelan and Iranian exports do continue to fall, markets could tighten and oil prices could rise” unless there are offsetting production increases elsewhere, it said.

Oil climbed to a three-month high above $80 a barrel in London on Wednesday as fears of a supply crunch eclipsed concern about the risks to demand such as the U.S.-China trade dispute. While the Organization of Petroleum Exporting Countries and allies including Russia pledged to boost supply, the IEA said it remains to be seen how much will be delivered.

Saudi Arabia lifted output by 70,000 barrels a day to 10.42 million last month, but that remains “some distance from the 11 million barrels a day level that Saudi officials initially suggested was on the way,” the IEA said.

While the agency warned that “there is a risk to the 2019 outlook” for demand from challenges in emerging markets such as currency depreciation and trade disputes, it kept forecasts for consumption unchanged.

In the meantime, supply risks dominate. Oil inventories in developed economies are already below-average and will decline further in the fourth quarter, the IEA predicted.

Venezuela, which is pumping at just half the rate it managed in early 2016, could see its output slump another 19 percent to 1 million barrels a day this year as infrastructure deteriorates and workers flee, the agency predicted.

Iranian production has already fallen to the lowest since July 2016, at 3.63 million barrels a day, as buyers retreat ahead of U.S. sanctions that come into force on Nov. 4.

Although Russia, Saudi Arabia and other Gulf members of OPEC promised to bolster production by about 1 million barrels a day, the IEA remained cautious on whether the full amount would be delivered. It’s unclear how quickly OPEC’s spare capacity, which stands at about 2.7 million barrels a day, can be activated, it said.

“We are entering a very crucial period for the oil market,” which could push prices out of the $70-to-$80 a barrel range seen in the past few months, the IEA said.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net. To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net Rachel Graham.

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Venezuela’s Aug. 2018 Oil Output Continues Decline: OPEC MOMR

(Energy Analytics Institute, Jared Yamin, 12.Sep.2018) — Venezuela’s oil production seems on an unstoppable downward trend.

The OPEC country’s production of crude oil fell 2.9 percent to 1,235 thousand barrels per day (Mb/d) in August 2018 compared to 1,272 Mb/d in July 2018, according to data published in OPEC’s Monthly Oil Market Report, published on September 12 and citing data based on secondary sources.

Ecuador

Ecuador’s oil production rose slightly to 529 Mb/d in August 2018 compared to 525 Mb/d in July 2018, according to OPEC’s secondary sources data.

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Ecuador Holds Open Licensing Round for Eight Onshore Blocks

(World Oil, 12.Sep.2018) — Carlos Pérez Garcia, Minister of Energy and Non-renewable Resources in Ecuador has announced an open licensing round for eight blocks onshore Ecuador, in Sucumbíos Province.

These comprise: Araza Este, Changue, Iguana, Perico, Espejo, Pañayacu Norte, Charapa and Sahino. The blocks offered are all onshore, conventional opportunities, most with prospective sandstone reservoirs (one with a carbonate reservoir). All are low-risk exploratory blocks and are located close to established fields.

Ecuador is an under-explored country with high oil potential. Existing infrastructure and well-developed oil services industry presents an attractive opportunity to take hydrocarbons to market. The Ministry is offering a Participation Contract, that is equitable and competitive and allows companies to share production and book reserves.

The Intracampos round is an exciting new opportunity to increase investment in the country, as Ecuador offers opportunities for short medium and long-term investment, with future rounds planned.

The licensing round will be launched in Quito at the JW Marriott to invited parties only, on Sept. 11, and the latest date for submission of proposals will be January 2019.

Presentations and data rooms will also take place in Houston on Sept. 25-27, at the St Regis Hotel, Houston.

Data available for viewing includes 3D and 2D seismic, correlation wells (LAS, ASCII or Images) and production data from analog fields.

On the morning of Sept. 25, there will be an opportunity to hear presentations on the exploration opportunities, the contractual and fiscal terms, and the legal framework for upstream petroleum activities in Ecuador. Private data or meeting rooms will be available for two further days, with slots available to book.

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Venezuela’s Oil Output Continues Fall, Ecuador’s Rises in Aug. 2018

(Energy Analytics Institute, Piero Stewart, 12.Sep.2018) — Crude oil production in August 2018 in South America’s lone OPEC member countries, Venezuela and Ecuador, continued along usual trends, according to data published in the organization’s September 2018 Monthly Oil Market Report

Crude oil production in Venezuela, the country with the world’s largest oil reserves, fell to 1,235 thousand barrels per day (Mb/d) in August 2018 compared to 1,272 Mb/d in July 2018, according to OPEC data from secondary sources.

On the other hand, Ecuador’s crude oil production rose to 529 Mb/d in August 2018 compared to 525 Mb/d in July 2018, according to OPEC

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International Tribunal Rules for Chevron in Ongoing Ecuador Case

(OGJ, Nick Snow, 10.Sep.2018) — An international tribunal administered by the Permanent Court of Arbitration in The Hague found that a $9.5-billion judgment that Ecuador’s government lodged against Chevron Corp. in 2011 violated international treaties, investment agreements, and international law.

Ecuador breached its obligations under a 1995 settlement agreement that released Chevron subsidiary Texaco Petroleum Co. (TexPet) and its affiliates from the same public environmental claims on which the $9.5-billion Ecuadorian judgment was exclusively based, the Sept. 9 decision said.

In a ruling nearly 5 years earlier, the same tribunal said agreements Ecuador’s government signed in 1995 and 1998 released TexPet from environmental liability for land on which it once produced oil (OGJ Online, Sept. 18, 2013). That ruling upheld an important claim Chevron made in its years-long defense against a lawsuit claiming billions of dollars for environmental damage.

In its latest decision, the tribunal found that TexPet “spent approximately $40 million in environmental remediation and community development under the 1995 settlement agreement” carried out by a “well-known engineering firm specializing in environmental remediation” and that Ecuador in 1998 executed a final release agreement “certifying that TexPet had performed all of its obligations under the 1995 settlement agreement.”

The tribunal found “no cogent evidence” supporting Ecuador’s claim that TexPet failed to comply with the terms of the remediation plan approved by the government. To the contrary, the award recites sworn testimony of Ecuadorian officials that TexPet’s “technical work and environmental work was done well,” while Ecuador’s national oil company “during more than 3 decades, had done absolutely nothing” to address its own environmental remediation obligations in the area, even though Ecuador and its national oil company received 97.3% of the project’s oil production revenues.

“An esteemed international tribunal, including an arbitrator appointed by Ecuador, has unanimously confirmed that, following completion of an agreed environmental remediation program, Chevron was released by the Republic of Ecuador from the environmental claims that the fraudulent Ecuadorian judgment purports to address,” R. Hewitt Pate, Chevron vice-president and general counsel, said on Sept. 9.

“Following years of litigation, including visits to the former area of operations by the tribunal, the tribunal found that Ecuador violated the final release agreement that had certified the successful completion of TexPet’s remediation,” he said.

The tribunal also reached the same conclusion as US courts regarding the issue of judicial fraud, Pate said. “The tribunal found extensive evidence of fraud and corruption by members of the Ecuadorian judiciary acting in collusion with American and Ecuadorian lawyers,” he said.

“This award is consistent with rulings by courts in the US, Argentina, Brazil, Canada, and Gibraltar confirming that the Ecuadorian judgment is unenforceable in any country that respects the rule of law,” Pate said. “Indeed, the tribunal explicitly found that it would be contrary to international law for the courts of any other [nation] to recognize or enforce the fraudulent Ecuadorian judgment.”

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Chevron Wins Ecuador Rainforest ‘Oil Dumping’ Case

(BBC, 8.Sep.2018) — An international tribunal in The Hague has ruled in favour of the US oil company, Chevron, in an environmental dispute with the government of Ecuador.

Chevron had been ordered to pay $9.5bn (£7.4bn) compensation to thousands of residents in Ecuador’s Amazon region.

They accused the company of dumping toxic waste in local lakes and rivers of the Lago Agrio region for decades.

The court said that the 2011 Ecuador Supreme Court ruling had been obtained through fraud, bribery and corruption.

The oil giant now stands to be awarded hundreds of millions of dollars in costs by The Hague’s Permanent Court of Arbitration.

Chevron maintained that it never owned any assets in Ecuador.

The alleged environmental damage was done by Texaco between 1964 and 1992. Texaco was later acquired by Chevron.

Chevron has argued that Texaco spent $40m ($31m) cleaning up the area during the 1990s, and signed an agreement with Ecuador in 1998 absolving it of any further responsibility.

Birth defects

Some 30,000 local residents, including five different Amazonian tribes, began the lawsuit against Texaco in 1993.

The plaintiffs say that the oil company knowingly dumped 18bn gallons (68bn litres) of toxic waste water and spilled 17m gallons of crude oil into the rainforest during its operations in north-east Ecuador.

They say the affected area covers 4,400 sq km (1,700 sq miles) on the border with Colombia.

Local residents believe the pollution has led to health problems such as cancer and birth defects.

In 2011, an Ecuadorean judge ordered Chevron to pay $18.2bn (£14.1bn) for “extensively polluting” the Lago Agrio region.

Ecuador’s highest court last year upheld the verdict against Chevron a year later, but reduced the amount of compensation to $9.5bn.

‘Unpunished forever’

Chevron argued that it only lost the case because the legal team representing the villagers paid nearly $300,000 (£232,000) in bribes in Ecuador.

In 2014, US district judge Lewis Kaplan in New York ruled that “corrupt means” were used by Ecuador’s legal team to win the 2011 case.

After the latest ruling in the Hague, a lawyer for the indigenous communities criticised the Ecuadorean government for accepting taking the case to an arbitration court.

“That is playing Chevron’s game and leaving the crime unpunished forever,” said Pablo Fajardo.

He said he was considering all legal avenues.

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#LatAmNRG

Esmeraldas Refinery Stoppage Delayed Until March 2019

(Energy Analytics Institute, Ian Silverman, 22.Aug.2018) – A scheduled 54-day stoppage at the Esmeraldas Refinery for the maintenance of the Non-Catalytic 1 and Catalytic 1 units will be postponed until March 2019.

The stoppage, originally planned to commence on August 16, 2018, was postponed by PetroEcuador as the contractor in charge of supplying pipes for the VH1 Furnace of the Vacuum Plant has experienced procurement delays, announced Ecuador’s Hydrocarbon Ministry in a statement on its website.

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Ecuador to Save $1 Bln With New Economic Measures

(Energy Analytics Institute, Ian Silverman, 21.Aug.2018) – The government of Ecuador aims to save about $1 billion annually with the implementation of new economic measures.

Ecuador’s President Lenín Moreno. Source: Efe

The new economic measures, which focus on reduction of bureaucracy, were announced on August 21, 2018 by Ecuador’s President Lenín Moreno and the country’s Economic and Finance Minister Richard Martínez. They will take effect this week, and benefit poor and retired citizens of the South American country, reported the daily newspaper El Comercio.

***

Four Cos. to Invest $727 Mln in Ecuador

(Energy Analytics Institute, Jared Yamin, 18.Aug.2018) – Ecuador announced four companies would invest $727.85 million to boost production in a number of fields.

The companies – Triboilgas Cía. Ltda, Vinccler C.A, Arotekh C.A. and Avanzia – plan the investments in the Cuyabeno/Sansahuari, Oso, Yuralpa and Blanca/Vinita fields located in provinces of Orellana, Sucumbíos and Napo, reported the daily newspaper El Universo.

The process for the participation of companies began last March. It is anticipated that by September contracts will be signed with the companies, which are from the Latin American countries of Ecuador, Venezuela and Mexico, reported the daily.

***

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.

***

 

OPEC MOMR Shows Further Oil Declines in Venezuela

(Energy Analytics Institute, Piero Stewart, 14.Aug.2018) – Venezuela’s crude oil production declines seem unstoppable.

OPEC’s August 2018 MOMR.

Venezuela’s crude oil production fell to 1.278 million barrels per day (MMb/d) in July 2018 compared to 1.325 MMb/d in June 2018 based on secondary sources, reported OPEC in its August Monthly Oil Market Report (MOMR).

This compares to 1.911 MMb/d in 2017 and 2.154 MMb/d in 2016, according to OPEC’s data.

“According to secondary sources, total OPEC-15 crude oil production averaged 32.32 mb/d in July, an increase of 41 tb/d over the previous month. Crude oil output increased mostly in Kuwait, Nigeria, UAE and Iraq, while production showed declines in Libya, I.R. Iran, Saudi Arabia and Venezuela,” according to OPEC’s August MOMR.

Editor’s note: OPEC uses the abbreviation mb/d to stand for million barrels per day, while many oil analyst and companies frequently use the abbreviation MMb/d to stand for the same.

***

CNEL EP Names Veintimilla General Manager

(Energy Analytics Institute, Ian Silverman, 13.Aug.2018) – The National Electricity Corporation (CNEL EP) named Wilfrido Demetrio Veintimilla Terreros, a professional with 41 years of experience in the electricity sector, as its new General Manager.

The decision was revealed on August 13, 2018 by the Board of Directors of the company, announced Ecuador Hydrocarbon Ministry in a statement on its website.

***

World Bank Says Oil To Average $65 in 2019

(Energy Analytics Institute, Jared Yamin, 12.Aug2018) – The World Bank expects the price of oil to average $65 per barrel in 2019.

“Oil prices are expected to average $65 per barrel in 2019. While projections indicate that prices will fall from their April 2018 level, they should be supported by a continuing restriction of production by member producer countries and non-members of the Organization of Petroleum Exporting Countries (OPEC) and firm demand,” reported the daily El Diario, citing Shantayanan Devarajan, director of Development Economics and interim chief economist at the World Bank.

“The acceleration of global growth and the increase in demand are important factors that explain the widespread increases in the price of most commodities and the forecasts of higher increases in the price of these products in the future,” announced Devarajan.

***

 

Petroamazonas EP Says Block 43 ITT Producing 75,000 b/d

(Energy Analytics Institute, Ian Silverman, 9.Aug.2018) – Block 43 ITT, located in the province of Orellana, is currently producing 75,000 barrels per day.

Production at the block is expected to reach 80,000 barrels per day by year end 2018, announced Ecuador’s Hydrocarbon Ministry in a statement on its website.

***

Glencore Lands PetroEcuador ‘Spot’ Deal

(Energy Analytics Institute, Ian Silverman, 14.Jul.2018) – Glencore Ltd won a recent EP PetroEcuador spot auction, which guarantees the Ecuadorian entity income of $279.3 million.

The Swiss company offered the best bid price with a positive differential of $ 1.08 per barrel, reported the daily newspaper El Universo.

EP Petroecuador invited 42 qualified companies to the public tender, and received eight offers from Enap, Eni Trading & Shiping, Glencore, Gunvor, Phillips 66, Repsol, Trafigura, and Unipec.

The sold crude oil will come in 11 shipments of 360,000 barrels each, and to be delivered during August-October of 2018.

***

Ecuador Non-Oil Exports Up in 2018

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

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

***

Ecuador Extracting Nearly 523 Mb/d

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

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

***

ENAP to Spend $65.2 Mln in Ecuador

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

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

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

***

Ecuador Court Upholds $9 Bln Chevron Ruling

Oil site in Ecuador. Source: AP

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

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

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

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

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

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

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

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

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

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

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

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

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

***

Ecuador’s ITT Output Around 60 Mb/d

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

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

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

***

Indigenous Groups Await Chevron Payments

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

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

***

FDI in LAC Region Falls for Third Straight Year

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

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

***

Ecuador, Venezuela Output Down, OPEC Reports

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

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

***

 

 

 

EP PetroEcuador, Politécnica Nacional Sign Deal

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

***

UDLA Students Visit Soil Treatment Center

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

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

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

***

PetroAmazonas EP Producing Close to 405 Mb/d

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

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

***

Ecuador Cos Invest $400 Mln in Certificates

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

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

***

Ecuador Looks to Avoid Issuing More Debt

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

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

***

OPEC Ministerial Meeting in December

(Energy Analytics Institute, Piero Stewart, 25.Jun.2018) – Ministers from the Oil Exporting Countries Organization (OPEC) announced during meetings in Vienna, Austria that the 5th OPEC+ countries Ministerial Meeting will take place in the same city on December 4, 2018.

***

OPEC Planning to Boost Output by 1 MMb/d

Twitter post from Ecuador’s Hydrocarbon Ministry.

(Energy Analytics Institute, Jared Yamin, 22.Jun.2018) – OPEC is looking to boost crude oil output by 1 million barrels per day (MMb/d).

The production agreement goes into effect in July 2018, the Organization of Petroleum Exporting Countries (OPEC) announced today in Vienna, Austria. Ecuador’s Hydrocarbon Ministry later published the details in a Twitter post.

***

OPEC’s Vienna Meeting: The Challenge of Failing NOCs

(The Council on Foreign Relations, Amy Myers Jaffe, 19.Jun.2018) – As energy ministers from major oil producing countries gather in Vienna this week to discuss the stability of global oil markets, the variables that will dictate outcomes have rapidly shifted. Pre-meeting narratives that previously focused on the appropriate level of external private investment—either too much, in the case of U.S. shale producers, or too little, in the case of private sector international oil companies—look woefully inadequate to explain current oil market conditions. Instead, how to deal with the accelerating political and institutional breakdown of several national oil companies across multiple continents now stands out as a pressing structural challenge for the Organization of Petroleum Exporting Countries (OPEC) and U.S. policymakers alike. I highlighted this problem vis a vis Venezuela last March. Stated intentions to replace lost barrels from Venezuela and potentially Iran has brought acrimony back into the OPEC fray. U.S. plans to sanction Iran’s oil exports are the most recent publicly visible geopolitical irritant, but the history has shown that eliminating the endogenous geopolitical swings in the oil cycle takes more intervention and planning capability than even the most well intended partnerships can master, much less nation states whose relations have been punctuated by direct military threats or proxy wars. Talk of a sustained Saudi-Russian alliance that would be effective in eliminating the factors that could cause gyrations in oil prices seem overstated.

All of OPEC’s fourteen members have flagship national oil companies (NOCs), that is, state-controlled entities that oversee their nation’s energy industry. Other important oil producing countries such as Brazil, Mexico, and Russia also have NOCs that dominate their oil and gas sectors. Many of these national firms are facing structural budgetary, corruption, or other internal political challenges, including attacks on facilities by local rebel groups, criminal gangs, terrorists, cyber hackers, and/or armed combatants in ongoing military conflicts.

As a result of these ongoing NOC difficulties, supplies from several OPEC countries, Venezuela, Libya, Iraq, Iran, Nigeria, and Angola have been volatile in recent years. In particular, the collapse of Venezuela’s oil industry and a slide in deep water oil production from Angola have been more instrumental to the market success of OPEC’s agreement with Russia and other non-OPEC oil producers than the producer group’s “planned” cuts in reducing excess inventories by almost 200 million barrels since early 2017 and pushing Brent oil prices up from about $55 to $75 a barrel. Cornerstone Macro noted in a recent report that oil stocks in industrialized countries experienced a counter seasonal decline of three million barrels in April, as compared to the more customary twenty million buildup on the heels of reduced global supplies and more robust than expected U.S. and global economic growth.

While Saudi Arabia, Kuwait, the United Arab Emirates, and Russia did make promised output reductions to help tighten oil supply over the course of 2017, unintended production declines continue to be more material. Not only did oil output declines from Venezuela, Algeria, Angola, Ecuador, and Gabon amount to losses of close to one million barrels a day since early 2017, according to Citibank, markets have come to expect accidental supply disruptions from conflict prone oil regions in Libya and Nigeria. That reality prompted one prominent energy columnist to conclude that OPEC has become “an increasingly unreliable supplier of an essential commodity.”

Whatever the outcome of the OPEC-non-OPEC Vienna group’s deliberations this week, it could turn out to be only a temporary fix to this more structural NOC problem than generally understood. Right now, OPEC spare productive capacity is highly limited. Saudi Arabia and Russia together would probably have difficulty adding much more than 1.5 million barrels a day to markets through the end of the year. Ongoing problems in Libya and Venezuela, combined with renewed sanctions on Iran, could possibly take more than that off the market. And what if a new supply problem emerges? Saudi Arabia and Russia are discussing longer run cooperation. What would that look like in a world where uncertainty plagues many national oil companies around the world, including, perhaps, their own firms?

Does budget-constrained Saudi Arabia agree to divert billions in tandem with Russian firms to expand additional oil fields’ productive capacity down the road to capture future market share that could be available as NOCs in other countries continue to fail? If Saudi and Russia make capacity expansion pushes, what becomes of OPEC as a coherent organization? Will the Vienna group need to shrink in number? Conversely, if Saudi Arabia and Russia choose to make only a quick stop-gap measure just to keep markets from overheating in the next few months and don’t invest in new capacity, will they sacrifice future revenues to private oil and gas investors who can bring on capacity more quickly if NOC capacity continues to falter?

The 2014-2015 price collapse has proven that a year or two of low prices won’t be sufficient to knock out growth in U.S. tight oil. That means restarting a price war in the short run isn’t an ideal option for OPEC, especially if those flooding the market do not appear to be able to survive the prolonged revenue drop that would make a price war option an effective threat. And my guess is that low oil prices also aren’t likely to be sufficient to knock out capital investment by the major international oil companies (IOCs). Those companies have started to pivot their strategies to direct their capital spending to activities that will be more productive than those pursued over the last decade when booking new large reserves was the priority. Rather, companies are focused on spending programs that can bring higher production more quickly, such as directing capital spending to shorter cycle field extensions and satellite field developments that can bring first oil into the market rapidly within one to three years (as opposed to mega-projects that took near a decade to develop). Companies are also developing new techniques to reduce the cycle time and costs on challenging green field projects.

Moreover, innovation in the private oil and gas sector is increasingly de-risking the landscape for future oil and gas investment for private investors. As technology improves, companies are going to be able to squeeze more barrels out of all kinds of existing known in place source rock, not just oil and gas from shale formations. The most recent example is the Austin Chalk where U.S. companies are rushing to test new drilling techniques to positive results.

There’s an additional rub. Saudi and Russian efforts could have trouble influencing intermediate oil demand trends. Even if the Vienna group takes production increase decisions this week that staves off any economically crippling oil price shock that could have sent oil demand into a tailspin, caution signs are already emerging that oil prices even at $70 a barrel are creating some economic headwinds. Markets are already nervous about trade wars. Reports are emerging that high fuel prices are hindering economies within the Euro zone and elsewhere. Rising fuel prices are visibly creating economic and political problems in India and other developing economies. And the United States needs strong demand growth elsewhere to manage its own economic issues. In the case of an unexpected global economic slowdown, OPEC supply disruptions could take a back seat again to “lower for longer” story lines about failing oil demand (potentially in the midst of rising U.S. production in 2019), which could make any discussion of a more permanent, workable Saudi-Russia oil alliance even harder to envision.
***

PetroAmazonas Production Costs Below $20/bbl

(Energy Analytics Institute, Aaron Simonsky, 15.Jun.2018) – Production costs at the state entity remain below the $20 per barrel mark.

PetroAmazonas EP’s production costs rose slightly to $17.01/bbl in May 2018, up sequentially from $16.46/bbl in April 2018. For the first five months of 2018, the company’s production costs have averaged $17.08/bbl, according to data posted to Twitter by EP PetroEcuador.

***

PetroEcuador Activities Normal After Earthquake

(Energy Analytics Institute, Aaron Simonsky, 15.Jun.2018) – Ecuador’s EP PetroEcuador announced all its activities continue under normal conditions after a magnitude 5 earthquake was reported this morning in Ecuador.

The epicenter was identified as Nobol (Guayas), the state entity reported in a Twitter posts.

***

Ecuador Oil Output at 519 Mb/d in May 2018

(Energy Analytics Institute, Jared Yamin, 15.Jun.2018) – Ecuador’s production of crude oil reached 519 thousand barrels per day (Mb/d) in May 2018, up compared to 518 Mb/d in April 2018, the Organization of Petroleum Exporting Countries (OPEC) reported in its monthly oil report.

Ecuador, one of only two OPEC member nations in Latin America, produced 545 Mb/d in 2016 and 530 Mb/d in 2017, according to OPEC.

***

Venezuela Oil Output Slides to 1.4 MMb/d in May 2018

(Energy Analytics Institute, Piero Stewart, 14.Jun.2018) – Venezuela’s oil production continues its downward slope.

Venezuela’s crude oil production fell to 1.392 million barrels per day (MMb/d) in May 2018, according to a recent report by the Organization of Petroleum Exporting Countries (OPEC), citing data from secondary sources. This compares to production of 1.434 MMb/d in April 2018, 1.474 MMb/d in March 2018, and 2.154 MMb/d in 2016.

***

Ecuador Producing 522 Mb/d of Crude Oil in late May 2018

(Energy Analytics Institute, Jared Yamin, 29.May.2018) ‐- South America’s Ecuador is producing 522,372 barrels per day.

Total crude oil production from the small OPEC member nation was 522,372 barrels per day (b/d) on May 28, 2018, according to data posted in a report available on the website of the Ecuador’s Hydrocarbon Regulation and Control Agency or ARCH by its Spanish acronym. Of the total production, Petroamazonas EP contributed 403,141 b/d, while private companies contributed the remaining 119,232 b/d.

Ecuador’s average crude oil production was 512,000 b/d during the three-month period January thru March of 2018, according to data from Ecuador’s Central Bank or BCE by its Spanish acronym.

***

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.
***

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
***

Pampa Energía Announces Settlement Agreement in Ecuador

(Pampa Energía S.A., 19.Mar.2018) – Pampa Energía S.A. announced that regarding the conflict that EcuadorTLC (a subsidiary company established in the Republic of Ecuador and which Pampa holds a 100% ownership directly and indirectly) held with other members of the Bloque 18 Consortium (the ‘Plaintiff Parties’) against the Republic of Ecuador, and which award resolution went through the International Arbitration under the UNCITRAL’s rules (Case CPA No. 2014-32: 1. EcuadorTLC S.A. et al. c. 1. The Republic of Ecuador 2. EP Petroecuador) (the ‘Arbitration’). The participation of EcuadorTLC in the Bloque 18 Consortium is 30% and the Final Award duly issued by the Arbitration Court and corresponding to EcuadorTLC stake, amounts to $176 million (the ‘Final Award’).

With respect to the Arbitration, on March 19, 2018, the Republic of Ecuador and the Plaintiff Parties executed an agreement (the ‘Agreement’) by which the Plaintiff Parties will not pursue the collection of the Final Award, in exchange for a compensation for general damages, that in the case of EcuadorTLC consists of (i) release from fiscal and labor claims currently in trial stage, amounting for more than $100 million, and (ii) an additional compensation of $68 million before the end of first half 2018 (including the recovery of granted guarantees). Furthermore, we estimate that the Agreement will generate an approximate net reporting profit of US$40 million.

Moreover, the Republic of Ecuador has declared and acknowledged within the Agreement that (i) said agreement is completely valid and binding to the Republic of Ecuador, (ii) any payment default by the Republic of Ecuador under the Agreement will allow the Plaintiff Parties to fully execute the Final Award, and (iii) there is no pending obligation remaining by the Plaintiff Parties in relation to the Bloque 18 Consortium’s operation and exploitation.

***

Shushufindi Plant Has 20 Mb/d LPG Capacity

(Energy Analytics Institute, Clifford Fingers III, 10.Mar.2017) – Ecuador’s Shushufindi refinery has the capacity to bottle or fill 20,000 cylinders per day of liquefied petroleum gas or LPG, Ecuador’s Hydrocarbon Ministry wrote in a twitter post, citing Oil Minister Jose Icaza Romero during a visit to the plant.

***

ICSID Orders Ecuador Pay ConocoPhillips $380 Mln

(ConocoPhillips, 8.Feb.2017) – ConocoPhillips’ wholly owned subsidiary, Burlington Resources Inc., received an arbitration award of $380 million from an international arbitration tribunal, constituted under the International Centre for the Settlement of Investment Disputes (ICSID), for Ecuador’s unlawful expropriation of Burlington’s significant investment in breach of the U.S.-Ecuador bilateral investment treaty.

“The Tribunal’s decision on damages sends a clear message that governments cannot expropriate investments without fair compensation,” said Janet Carrig, senior vice president, Legal and General Counsel. “ConocoPhillips sought to protect its interests to the fullest degree and the Tribunal acknowledged our legal rights and the unlawful nature of Ecuador’s actions.”

The decision is subject to potential annulment proceedings, but the company believes any application seeking to annul the award would be meritless and ConocoPhillips would strongly defend against it. The timing and manner of collection remain to be determined.

The Tribunal also issued a separate decision finding that Ecuador was entitled to $42 million for limited environmental and infrastructure impacts associated with the operations of the Consortium (comprising Burlington and Perenco). The Tribunal noted that “…while Ecuador also prevailed on part of its counterclaims, the amount awarded to Ecuador is an extremely small percentage of the amount claimed.”

***

Ecuador Announces $1 Billion Bond Placement

(Energy Analytics Institute, Ian Silverman, 16.Jan.2017) – Ecuador, the only other Latin American country to belong to the Organization of Petroleum Exporting Countries (OPEC), successfully completed a $1 billion bond placement, announced President Rafael Correa in an official Twitter post.

The bonds, placed on January 10, 2017, have an annual interest rate of 9.1 percent and mature in 2027.

Demand for the offering was $2.2 billion, which “reflects confidence in the country,” wrote Correa.

***

PetroEcuador Reports Increase In Shareholder Equity

(Energy Analytics Institute, 27.Jun.2016, Clifford Fingers III) – EP PetroEcuador announced its Shareholder’s Equity rose to $5.659 billion in 2015 compared to $3.914 billion in 2014, reported the state company in an official statement.

The company’s total assets rose to $9.662 billion in 2015 compared to $8.604 billion in 2014.

***

Ecuador’s SOTE Pipeline Spans 503 Kms

(Energy Analytics Institute, 27.Jun.2016, Clifford Fingers III) – Ecuador’s SOTE pipeline spans 503 kilometers from the pumping station Lago Agrio No. 1 in the Amazon to the Balao Maritime Terminal in the province of Esmeraldas, announced EP PetroEcuador in an official statement on its website.

***

Ecuador’s SOTE Celebrates 44 Years of Operation

(Energy Analytics Institute, 27.Jun.2016, Clifford Fingers III) – The TranEcuadorian Oil Pipeline (SOTE by its Spanish acronym) was inaugurated on June 26, 1972 with a capacity to transport 250,000 barrels per day. During its active life, the pipeline has transported 4,750 million barrels of oil, EP PetroEcuador announced in an official statement on its website.

Later work on the pipeline allowed the company to expand the pipeline’s capacity from 250,000 barrels per day to 300,000 barrels per day in 1987; to 325,000 barrels per day in 1992; and 360,000 barrels per day in 2000, reported the company, citing PetroEcuador General Manager Pedro Merizalde Pavón.

The pipeline starts at Lago Agrio in the eastern region of Ecuador and spans 497 kilometers to the Balao Maritime terminal in the Esmeraldas province. The pipeline is under constant surveillance by PetroEcuador via its SCADA system and an estimated 381 technicians, all of them from Ecuador, work to maintain the pipeline in operation and perform maintenance when necessary.

Recent earthquakes have not affected the pipeline’s terminals or transport infrastructure, according to PetroEcuador.

***

PetroEcuador to Export No. 6 Fuel Oil in July

(Energy Analytics Institute, 27.Jun.2016, Clifford Fingers III) – Trafigura PTE LTD won a bid by EP PetroEcuador whereby the former will export 950,000 barrels of No. 6 Fuel Oil, announced EP PetroEcuador in an official statement on its website.

The winning bid had a $1.49 per barrel discount.

The shipments from Ecuador will be processed in 5 shipments of 190,000 barrels each. The first shipments could leave the country during July 11-13, 2016.

The state oil company had invited 33 companies — qualified to offer No. 6 Fuel Oil — to bid for the exportation of the product, announced the state oil company in an official statement on its website.

The companies — Arkham S.A, B.B Energy (Asia), PTE LTD, Citizens Resources LLC, Glencore LTD, Novum Energy Trading Corp, Trafigura PTE LTD and Vitol INC — presented their offers on June 23, 2016. PetroEcuador announced that 7 offers were received as well as 8 excuses. Due to a tie related to two offers, the said companies had another 24 hours to present their new offers.

***

EP PetroEcuador Lays Out Goals for 2016

(Energy Analytics Institute, 27.Jun.2016, Clifford Fingers III) – EP PetroEcuador revealed some of its goals for 2016, reported the state company in an official statement.

The goals for 2016 include, but are not limited to the following:

— Operation of product pipeline Pascuales Cuenca,

— Company restructuring,

— Construction of new building for EP PetroEcuador in the city of Guayaquil,

— Civil-mechanical remediation at the Gas de Bajo Alto Plant,

— Modernization of coastal oil and product pipelines,

— 100 percent operation of the Esmeraldas refinery (Editor’s note: goal achieved in 2015),

— Implementation of KBC best practices,

— Overhaul of the La Libertad refinery,

— Environmental overhaul of 76,000 cubic meters of soil,

— Laboratory certifications ISO 17025,

— Social compensation programs,

— Environmental auditing processes,

— Improvement in the quality of fuels,

— Optimization of the new Monteverde terminal (sanitary and chemicals),

— Remodeling and certification of all service stations,

— Port facilities – entrance of 40,000 metric-ton ship in Tres Bocas,

— Supply of ECOPAIS gasoline in more regions of the country (Machala, Los Ríos and Azuay), and

— Construction of the portable water projects.

***

PetroEcuador Helps Control Fuel Oil Spill

(Energy Analytics Institute, 24.Jun.2016, Clifford Fingers III) – EP PetroEcuador turned over formal activities related to the containment, cleaning and monitoring along the Daule river, kilometer 24 in the Merced sector of Guayaquil to the company Balsasud Balsera Sudamericana, reported the state oil company in an official statement on its website.

On June 21, 2016 PetroEcuador announced that it had lent a helping hand to water company Interagua and Citizens Security Committee to control a fuel spill in the Daule River.

The spill of Fuel Oil No. 4 occurred when the fuel was being transported by a private tanker owned by Balsasud Balsera Sudamericana.

PetroEcuador assisted by sending technical personnel from its Security, Health and Environment department along with others from other departments to assist with the cleanup process.

***

Ecuador Permits Alcoholic Beverages at Service Stations

(Energy Analytics Institute, 21.Jun.2016, Clifford Fingers III) – Ecuador has decided it will allow its service stations to again distribute alcoholic beverages.

The distribution of alcoholic beverages at the stations will have some restrictions, reported the daily El Universo, citing Ecuador’s Interior Vice-Minister Diego Fuentes. The beverages cannot be consumed internally and products should have a ‘moderate alcoholic content. ‘

The government will also allow alcoholic beverages to be sold on Sundays. The sale of such beverages was restricted in 2010 as the Ecuadorian government sought to reduce the indices of violence and other insecurities while also trying to promote family union. The government also restricted the sale of alcoholic beverages between Monday and Saturday at so-called fun parks.

The move to sell alcoholic beverages on Sundays will allow Ecuador to “reactivate tourism and commerce in the country,” said Fuentes.

***

Ecuador Oil Output 556 Mb/d in May 2016

(Energy Analytics Institute, 21.Jun.2016, Clifford Fingers III) – Ecuador’s oil output reached 556,000 barrels per day in May of 2016, up sequentially from 555,000 barrels per day in April of 2016, reported the Organization of Petroleum Exporting Countries (OPEC) in its June 2016 Monthly Oil Market Report (MOMR), citing data from direct communications with the Andean nation.

***

Three Companies Interested in Esmeraldas Overhaul

(Energy Analytics Institute, 16.Jun.2016, Clifford Fingers III) – Three companies, Adelca, Novacero and Practipower, presented their bids to buy an estimated 6,500 tons of salvage left over from the Esmeraldas Refinery overhaul.

A total of 29 companies from Ecuador were qualified to present bids for salvage from the Esmeraldas Refinery such as electronic equipment, furnaces, bulbs, reactors and other pieces that were replaced during the recent overhaul of the refinery, reported EP PetroEcuador in an official statement on its website.

The bids will be analyzed and a winner will be announced within 48 hours, said Omar Quijano, an EP PetroEcuador executive with the law division within the state oil company.

***

Esmeraldas Overhaul to Reduce Imports by Nearly $355 Mln

(Energy Analytics Institute, 8.Jun.2016, Clifford Fingers III) – Ecuador will benefit financial from the recently completed overhaul of the Esmeraldas refinery.

The country will save more than an estimated $1 million per day due to the decrease in fuel and derivative imports which will translate into an annual savings of around $355 million, reported EP PetroEcuador in an official statement on its website, citing company General Manager Pedro Merizalde Pavón.

“The refinery is now operating at 100 percent of its capacity,” said EP PetroEcuador Refining Manager Diego Tapia.

Overhaul Summary

The overhaul of the refinery required an investment of $1.2 billion and allowed EP PetroEcuador to recuperate the mechanical integrity of the plant and return to its 110,000 barrel-per-day operating capacity.

An estimated 7,000 workers participated in overhaul activities, of which 6,400 were local hires.

The overhaul will translate into an annual savings of nearly $355 million due to the reduction of fuel and petroleum derivative imports.

As part of the overhaul, close to 5,300 tons of toxic waste was also shipped outside of Ecuador for proper treatment. Additionally, $137 million was invested in social projects especially in the area of education, health, sanitation, as well as road related activities.

***

PetroEcuador Provides Infrastructure Update

(Energy Analytics Institute, 1.Jun.2016, Clifford Fingers III) – At year-end 2015, EP PetroEcuador had the following infrastructure in Ecuador: 10 product pipelines, 8 fuel terminals and 5 maritime terminals, reported the state company in an official statement.

Table: Ecuador Products Pipelines

Shushufindi – Quito

Esmeraldas – Quito – Pascuales

Quito – Ambato

Libertad – Manta – Pascuales

Tres Bocas – Salitral

Tres Bocas – Fuel Oil

Tres Bocas – Pascuales

Ambato – Riobamba

Pascuales – Cuenca

Esmeraldas – Sto. Domingo – Quito

Source: EP PetroEcuador

Table: Ecuador Fuel Terminals

El Beaterio (Quito)

Sto. Domingo de Los Colorados

Ambato

Riobamba

Cuenca

Pascuales (Guayas)

Chorrillo (Guayas)

Barbasquillo (Manta)

Source: EP PetroEcuador

Table: Ecuador Martime Terminals

Tres Bocas

La Libertad

Monteverde

Maritimo Balo

Baltra

Source: EP PetroEcuador

***

PetroEcuador Gasoline Network of 276 Service Stations

EEnergy Analytics Institute, 1.Jun.2016, Clifford Fingers III) – EP PetroEcuador has a gasoline network comprising 276 service stations, reported the state company in an official statement.

PetroEcuador affiliates operated 215 of the service stations while PetroEcuador operated 7 alone. The state oil company also has 12 artisan fishery stations as well as 42 service stations located along the Ecuadorian borders.

Table: PetroEcuador Gasoline Stations in Ecuador

Service Stations ————— Units

EP PetroEcuador affiliate —- 215

EP PetroEcuador ————– 7

Border service stations ——- 42

Artisan fisheries ————— 12

Total Network —————– 276

 

LPG deposits ——————- 5

Source: EP PetroEcuador

***

PetroEcuador Says Tax Increase Not to Affect Fuels

(Energy Analytics Institute, 1.Jun.2016, Clifford Fingers III) – The price of Extra Gasoline, Extra Gasoline with Ethanol, Diesel 1, Diesel 2, Premium Diesel and LPG will not be affected by a temporary 2 percent increase in the sales tax to 14 percent from 12 percent, reported EP PetroEcuador in an official statement on its website.

The increase in the sales tax will not affect the following, as stated: the prices of Extra Gasoline, Extra Gasoline with Ethanol, and gasoline for artisan fishing; Diesel 1, Diesel 2 and Premium Diesel for the automobile, artisan fishing and national fishing and shrimping sectors; the price of LPG for domestic use and use by an taxis legally organized by Fedotaxis as well as for drying agriculture products such as corn, rice and soya.

The government of Ecuador decided to temporarily increase the sales tax in the country to be destined to activities related to the reconstruction and reactivation of areas affected by the earthquake reported on 16 April 2016.

***

Ecuador Seeks Foreign Investors for Pacific Refinery

(Energy Analytics Institute, 1.Jun.2016, Clifford Fingers III) – Ecuador’s President Rafael Correa named Horacio Yépez Maldonado as the country’s new ambassador to seek financing for the Pacific Refinery with the assistance of foreign investors.

Correa signed Decree 1063 on May 31, 2016 which stipulated that Maldonado seek financing for the project from potential investors in China, South Korea, India, European countries and others suggested by the country’s Foreign Relations Minister, reported the daily El Universo.

***

El Aromo Area Considered Seismic Zone

(Energy Analytics Institute, 30.May.2016, Clifford Fingers III) – The El Aromo area, where the Pacific Refinery will be located, near Manta in Manabí is considered a seismic zone by Seismologist and Volcanologist Hugo Yepes.

“This is a seismic zone with a history as noted and demonstrated with a large earthquake in 1906,” reported the daily newspaper El Diario, citing the specialist. “The areas around the El Aromo could encounter important seismic activities,” Yepes said without providing details.

***

PetroEcuador Reports 79% Decline In EBITDA

(Energy Analytics Institute, 25.May.2016, Clifford Fingers III) – EP PetroEcuador reported operational revenues of $9.284 billion in 2015, down $6.458 billion or 41 percent compared to $15.742 billion in 2014 due to variations in international oil prices, reported the state company in an official statement.

Operational expenses were $8.209 billion in 2015, down $2.441 billion or 23 percent compared to $10.650 billion in 2014 due to the price of hydrocarbon imports. As a result, EBITDA in 2015 fell $4.017 billion or 79 percent to $1.075 billion compared to $5.092 billion, respectively.

After taking into account Depreciation, Depletion & Amortization (DD&A) and other operational expenses, PetroEcuador reported EBIT of $0.971 billion in 2015 compared to $4.999 billion in 2014. After taking into account non-operational results of ($0.219) billion in 2015 and ($0.192) billion in 2014, the company reported net results of $0.752 billion in 2015, down $4.055 billion or 84 percent compared to $4.807 billion in 2014.

***

San Mateo Petrol Station Starts Operations

(Energy Analytics Institute, 25.May.2016, Clifford Fingers III) – The artisan fishing and ship vessel diesel station in San Mateo, located in the province of Manabí, started operations on May 19, 2016 and will benefit an estimated 1,106 artisanal fishers in the area, reported EP PetroEcuador in an official statement on its website.

The station has capacity to store 12,000 gallons of artisan fishing fuels and 12,000 gallons of ship vessel diesel.

***

Ecuador to Investigate Officials for Possible Fraud

(Energy Analytics Institute, 11.May.2016, Clifford Fingers III) – A number of public officials are under investigation for irregularities related to declaration of goods and links with companies created in tax havens.

The officials being investigated include: PetroEcuador’s former General Manager Álex Bravo Panchano, current PetroEcuador General Manager Pedro Merizalde and Ecuador’s former Hydrocarbons Minister Carlos Pareja Yannuzelli, reported the daily El Universo, citing comments from Ecuador’s Treasurer Carlos Pólit in Ecuavisa.

“We have detected the omission of certain information in the asset declarations of former PetroEcuador officials, and possibly some officials currently with the company,” said Pólit. As a result, we will review the public administrative information from the past seven years, he said.

***

La Libertad Refinery Fire Controlled With No Injuries

(Energy Analytics Institute, 11.May.2016, Clifford Fingers III) – A fire at the Parson plant of the La Libertad refinery, located in the Santa Elena province, was controlled within five minutes.

The fire was caused by a leak at a cargo pump which caught fire when it contacted a hot surface, reported EP PetroEcuador in an official statement on its website.

Operations at the Universal plant were suspended as part of preventative measures, according to the state oil company.

***

Ecuador Starts Exploitation Activities at Tiputini

(Energy Analytics Institute, 9.May.2016, Clifford Fingers III) – Ecuador starting exploitation activities at the Tiputin field, part of the Yasuní ITT block in July 2016, reported the news agency AFP, citing a statement from the country’s Hydrocarbon Ministry.

The Tiputini 04 well in Block 43 has estimated potential to produce up to 5,000 barrels per day, said Hydrocarbon Minister José Icaza Romero during a visit to the block.

A total of 40 wells are planned to recuperate an estimated 166 million barrels of reserves with an estimated investment of $2.6 million per well.

“Initial production is expected in July 2016,” said Romero. “It is estimated that by December 2016 average production will reach 20,000 barrels per day.”

The Tiputini field — which is located outside of the Yasuní — forms part of the ITT Block with estimated 920 million barrels of crude, and represents 20 percent of Ecuador’s total oil reserves.

***

Ecuador Output Averaged 542 Mb/d in 1Q:16

(Energy Analytics Institute, 9.May.2016, Clifford Fingers III) – Ecuador, the smallest country within the Organization of Petroleum Exporting Countries or OPEC, exported an average 542,000 barrels per day in the first quarter of 2016, down slightly from 543,000 barrels per day produced in the first quarter of 2015, reported the news agency AFP.

Ecuador, which is confronting economic difficulties due to collapse in oil prices, exported an estimated 416,000 barrels per day in 2015 at an average price of $41.88 per barrel, which translated into total revenues or $6.355 billion, according to the agency.

***

PetroEcuador Highlights Benefits of Esmeraldas Workover

(Energy Analytics Institute, 19.Apr.2016, Clifford Fingers III) – EP PetroEcuador stands to gain the most from the recent workover to the Esmeraldas Refinery, reported the state company in an official statement.

The primary benefit includes recuperating the 110,000 barrel-per-day capacity as well as increasing processing capacity, efficiency, and continuity while reducing the refining costs associated with the importation of refined products.

Other benefits to the workover include:

— Increasing the capacity of the FCC unit to 20,000 barrels per day from 18,000 barrels per day, thus boosting production of LPG and gasolines;

— Producing diesel with a lower sulfur content, resulting in a positive environmental impact and benefits to the health of citizens nearby;

— Save $305 million due to the reduction in derivative imports;

— Increase in the production of LPG by 250 tons/day, and gasoline by 5,600 barrels per day.

***

PetroEcuador Refineries Have 175 Mb/d Capacity

(Energy Analytics Institute, 5.Apr.2016, Clifford Fingers III) – EP PetroEcuador’s three refineries — Esmeraldas, La Libertad and Shushufindi — had a combined processing capacity of 175,000 barrels per day at year end 2015, reported the state company in an official statement.

The largest refinery is Esmeraldas, with a 110,000 barrel-per-day processing capacity. Followed thereafter by La Libertad (45,000 barrels per day) and finally Shushufindi (20,000 barrels per day).

Table: EP PetroEcuador Refineries in Ecuador (b/d/)

Refinery ———– Processing Capacity

Esmeraldas ——– 110,000

La Libertad ——– 45,000

Shushufindi ——- 20,000

Total Capacity —- 175,000

Source: EP PetroEcuador

***

PascualesCuena Product Pipeline Online in May 2016

(Energy Analytics Institute, 5.Apr.2016, Clifford Fingers III) – Construction of the Pascuales-Cuenca product pipeline will allow EP PetroEcuador to develop a LPG transport and distribution system to supply the southern region of the country, reported the state company in an official statement.

Construction of the pipeline will also allow the company to reduce risk related to constant use of roadways and CO2 emissions due to the reduced use of transport trucks.

Additionally, construction of the pipeline will allow PetroEcuador to eliminate product transport via transport trucks in the southern region of the country; thus, further reducing depreciation of the country’s roadways as well as vehicle congestion in the region.

The total budget for the project is $578.2 million, of which $541.9 million was invested in 2015. As of year-end 2015 the project had reached a completion status of 97.2 percent. It was estimated that the pipeline was to be online and completely operational by May 31, 2016.

The first part of the pipeline will include a 10-inch pipeline spanning 103 kilometers and will connect the Pascuales station with the La Troncal terminal and be able to transport 46,500 barrels per day.

The second part of the pipeline will include an 8-inch pipeline spanning 112 kilometers and will connect the La Troncal terminal with the Cuenca terminal and be able to transport 30,800 barrels per day.

***

PetroEcuador Exports Reached 131.4 MMbbls in 2015

(Energy Analytics Institute, 5.Apr.2016, Clifford Fingers III) – EP PetroEcuador reported crude exports of 131.4 million barrels (MMbbls) in 2015, which generated revenues of $5,477 million, reported the state company in an official statement.

Derivative sales in the Ecuadorian domestic market were 92.7 MMbbls, which generated revenues of $3,440 million.

Ecuador was a net importer of derivatives in 2015, importing 56.3 MMbbls and exporting just 5.6 MMbbls.

Table: Ecuador Data 2015

————————– MMBBLS —- $MLNS

Crude exports ————– 131.4 ——– $5,477

Derivative sales (internal) —- 92.7 ——— $3,440

Derivative exports ———- 5.6 ———- $256

Derivative imports ———- 56.3 ——— $3,698

Source: EP PetroEcuador

Ecuador Considers Venezuela as Partner in Refinery

(Energy Analytics Institute, 30.Mar.2016, Clifford Fingers III) – While Ecuador continues to seek financing from foreign investors looking to invest in the estimated $13 billion Pacific Refinery project, the country continues to reserve an interest for Venezuela.

“Venezuela is part of the project and is a strategic partner that will have an approximate 30 percent interest in the project,” reported the daily newspaper El Universo, citing Strategic Sector Coordinating Minister Rafael Poveda.

“To-date, Venezuela has made the necessary contributions as required,” said Poveda. In the future when the project advances to the construction phase it is expected that Venezuela will continue to contribute its allocated contributions to the project, he said.

****

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.

***

PetroEcuador Esmeraldas Refinery Restarts FCC Unit

(PetroEcuador, 18.Sep.2015) – PetroEcuador says activities initiated on September 11, 2015 to restart the fluid catalytic cracker unit at the Esmeraldas refinery, according to a statement posted to the state oil company’s website.

The definitive restart of FCC unit is estimated for late-November 2015. The unit has undergone 14-months of work. The new FCC unit will allow for a 20,000 barrel per day (b/d) increase in capacity.

PetroEcuador also plans to restart the #2 oil plant in November.

Both the FCC unit and the #2 oil plant are expected to be 100% operative by YE:15, according to PetroEcuador.

***

$1.2 Bln Esmeraldas Rehab Work Near Complete

(PetroEcuador, 18.Sep.2015) – PetroEcuador says that overhaul work is being performed on processing units at the 110,000 barrel per day (b/d) capacity Esmeraldas refinery that have deteriorated due to inadequate maintenance work, according to a statement posted to the state oil company’s website.

Work is being performed on the catalytic No. 1 and No. 2 units with capacity to process 50,000 b/d each. The FCC unit has also undergone intervention while new units constructed during the work overhaul include: demineralizer and effluents plants; 2 raw water pits; and a quality control laboratory.

***

Energy Should Be Key Integration Driver

(PDVSA, 10.Sept.2015) – The World Energy Council (WEC) and the Union of South American Nations (UNASUR), with the support of the Ministry of Electricity and Renewable Energy (MEER) of Ecuador, hosted the South American Energy Council (CES) at the headquarters of UNASUR in the city of Quito

The Fifth Meeting of the South American Energy Council of UNASUR (CES) began in Ecuador. It was chaired by Venezuela’s Oil Minister and PDVSA President Eulogio Del Pino, together with the ministers of energy, oil and related sectors from Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, and Uruguay.

They sought to strengthen regional integration through the exchange of knowledge and experiences while meeting the challenges beyond the borders of each country.

“It is an open space to debate the needs and hopes of the Latin American energy market. Energy should be the key driver for integration,” said Del Pino during the opening of CES.

The Venezuelan minister also said that they should introduce “concrete proposals to carry integration forward, to go from rhetoric to specific projects.” The Council is working on a South American Energy Treaty.

Del Pino said that “the region plays a key role. We should not be afraid of a South American energy market. We should find where the deficit is, the surplus, and find how we can complement each other. We need to go back to the South American Energy Treaty.”

The structure of that treaty was approved at the Second Meeting of the Council held in Quito on 25.Mar.2010.

During the opening of the event, they highlighted the value of South America’s natural resources, particularly, the large oil and gas reservoirs, as well as the great hydropower potential, mineral riches and bioenergy.

“This is a historical time of transition from conventional energy to clean energy. We have made proposals to OPEC to balance the energy market and the oil supply,” said Del Pino. “We need to commit ourselves to bring stability not only to consumer countries but to developing countries.”

The meeting reflects the regional integration policy promoted by Commander Chavez. He aided the creation of CES on 17.Dec.2007 with the “Building the Energy Integration of the South” declaration, on Margarita Island, Venezuela.

***

H5 Settles with Chevron Over Ecuador Lawsuit

(Chevron Corporation, 3.Sep.2015) – Chevron Corporation reached a settlement agreement with H5, a California-based e-discovery and litigation services firm.

In the settlement, H5 has withdrawn its support from the litigation against Chevron in Ecuador and has assigned its 1.25% interest in the $9.5 bln Ecuadorian judgment to Chevron. In 2014, Chevron obtained court-ordered discovery from H5 for the company’s role in supporting and advancing the lawsuit led by Steven Donziger, which a federal judge found to be tainted by fraud.

“Chevron is pleased that H5 has ended its association with this scheme,” said R. Hewitt Pate, Chevron’s vice president and general counsel.

“Chevron is also pleased that H5 has taken the further action of disclaiming any interest in the Ecuadorian judgment and relinquishing its interest to Chevron. It remains Chevron’s intent to hold accountable those responsible for what a federal judge found to be a fraud.”

H5 became involved in the case in 2009, supporting a variety of activities. It helped enlist funding from Burford Capital Limited, a U.K.-based litigation funder, and James Russell DeLeon, a Gibraltar-based businessman. It also played an integral role in bringing the Patton Boggs law firm into the case to provide legal support. Burford, DeLeon and Patton Boggs have all since withdrawn their support from the fraudulent lawsuit and settled with Chevron. H5 also assisted Donziger’s team in responding to Chevron’s discovery related to the Cabrera Report, an Ecuadorian court-ordered damages report that a U.S. federal court later found was secretly authored by Donziger and Stratus Consulting, a Colorado-based environmental consulting firm. Stratus has also subsequently settled with Chevron.

On 4.Mar.2014, Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York ruled that the $9.5 bln judgment against Chevron in Ecuador was the product of fraud and racketeering activity, finding it unenforceable in the United States and holding Steven Donziger liable for RICO violations.

In a public statement released today H5 stated: “Today’s agreement with Chevron resolves all outstanding issues relating to H5 in the Lago Agrio matter. Beginning in 2009, H5 proceeded in good faith to provide a variety of electronic discovery and advisory services in relation to the Lago Agrio case in Ecuador. In this as in other matters, H5 was called on because of our expertise in complex litigation and investigations globally. Last year, Chevron obtained a ruling in its favor from U.S. District Judge Lewis A. Kaplan in New York. Although H5 was not a party to that lawsuit, H5 has reviewed Judge Kaplan’s extensive findings. In view of those findings, among other reasons, H5 has decided it does not want to profit from the Ecuadorian Judgment and is therefore relinquishing any interest in the judgment.”

In settling this matter, H5 is the latest party to disassociate from Donziger and the Lago Agrio Plaintiffs.

In addition to the withdrawal of Woodsford, Burford and DeLeon, who all repudiated the unethical tactics of Donziger and abandoned their financial interest in the fraudulent lawsuit, more than a dozen former insiders and allies testified against Donziger, including his former co-counsel, environmental consultants, funders, employees and Ecuadorian collaborators.

Chevron still has claims pending in Gibraltar against Amazonia Recovery Ltd., a Gibraltar-based company set up to receive and distribute funds resulting from the Ecuadorian judgment, and Pablo Fajardo, Luis Yanza and Ermel Chavez, who are directors of the company. Chevron has alleged that Amazonia is merely a vehicle to perpetuate the ongoing fraud.

***

Chevron Reaches Settlement in Ecuador

(Chevron, 6.Feb.2015) – Chevron Corporation reached a settlement agreement with James Russell DeLeon, the principal funder of the fraudulent lawsuit against Chevron in Ecuador. Chevron brought claims against DeLeon in Gibraltar, where DeLeon maintains a residence, for his role in funding and advancing the fraudulent lawsuit. In the settlement, DeLeon has resolved those claims by withdrawing financial support from the Ecuador litigation and assigning his interests in the litigation to Chevron. Chevron, in turn, has agreed to release all claims against DeLeon.

In filings with the Gibraltar court, DeLeon previously disclosed having invested approximately $23 million in the case in exchange for an approximate 7 percent stake in the $9.5 billion Ecuadorian judgment against Chevron. DeLeon’s funding entity, Torvia Limited, and his associate, Julian Jarvis, are also parties to the settlement.

“We are pleased that yet another long-time supporter has ended his association with this scheme,” said R. Hewitt Pate, Chevron’s vice president and general counsel. “Chevron will continue to hold accountable those who associate themselves with this fraudulent litigation.”

On March 4, 2014, Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York ruled that the $9.5 billion judgment against Chevron in Ecuador was the product of fraud and racketeering activity, finding it unenforceable in the United States and holding Steven Donziger, the lead lawyer behind the lawsuit, liable for RICO violations. The judgment also discussed DeLeon’s involvement, which included providing the main source of funding for the propaganda film Crude, contributing approximately 60 percent of the film’s total funding. As part of the settlement, DeLeon has agreed to assign to Chevron all of his financial interests in Crude.

DeLeon stated in a public statement that “commencing in March 2007, I provided funding to support the litigation in Ecuador against Chevron Corporation, in the good faith belief that I was supporting a worthy cause. However, I have since reviewed the March 4, 2014 opinion by Judge Kaplan of the United States District Court for the Southern District of New York setting out the Court’s findings and I have also considered the evidence presented during the trial. As a result, I have concluded that representatives of the Lago Agrio plaintiffs, including Steven Donziger, misled me about important facts. If I had known these facts, I would not have funded the litigation.I no longer seek or wish to receive any financial benefit from this matter and I have therefore decided to relinquish my entire interest in the litigation to Chevron.”

In settling this matter, DeLeon is the latest party, among many others, to disassociate himself from Donziger and the Lago Agrio Plaintiffs. During the seven-week federal racketeering trial against Donziger, more than a dozen former insiders and allies testified against him, including his former cocounsel, environmental consultants, funders, employees and his Ecuadorian collaborators.

Chevron still has cases pending in Gibraltar against U.K.-based Woodsford Litigation Funding Ltd. for its role in funding the lawsuit; Amazonia Recovery Ltd., a Gibraltar-based company set up by Donziger and his associates to receive and distribute funds resulting from the Ecuadorian judgment against Chevron; and Pablo Fajardo, Luis Yanza and Ermel Chavez, who are all directors of Amazonia Recovery Ltd.

***

LatAmNRG: Heard on the Street 3Q:13

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

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

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

Colombia:

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

Venezuela:

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

Venezuelan Debt to China:

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

Peru:

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

Ecuador:

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

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

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

Venezuela:

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

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

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

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

***

Q&A with Tissot Associate’s Roger Tissot

(Energy Analytics Institute, Pietro D. Pitts, 19.Jul.2013) – Tissot Associates Consultant Roger Tissot spoke with Energy Analytics Institute in a brief interview from Canada.

What follows are excerpts from the brief interview.

Regarding the decision of Ecuador’s government to develop the ITT fields:

EAI: Ecuador has decided to move forward with development of the ITT fields: how do you view the decision?

Tissot: I am not surprised by President Rafael Correa’s decision of to drill the ITT Fields in the Yasuni National Park and for three reasons:

  1. Credibility: Ecuador’s international reputation is not that good do to contradictions made by Correa in regard to not honoring oil contracts.
  2. Timing: The recession in Europe came at a bad time for the ITT initiative as many of these countries no longer have the ability to make investments. The US’ green policies favored Ecuador but the biggest problem here has to do with the relationship Ecuador has with the U.S. which is not great.
  3. Need: The need for dollar revenues/income was not been met as Correa originally planned, thus necessitating a change of policy by the government.

As such, in terms of problems with Ecuador’s plan to increase revenues and Exploit ITT fields, we need to consider the following: 1. How will the fields be developed? 2. Social challenges and/or protests to come from indigenous communities? 3. Will the government try to attract investors via bidding rounds or will it engage in direction negotiations with potential partners?

I think bidding rounds would be the best way to develop the ITT fields but what would the production plans entail?

EAI: Would Chinese companies make a good fit in Ecuador in terms of partnering with the government?

Tissot: Chinese companies would be logical partners for development of the ITT fields as well as other projects.

Regarding Petrocaribe and rumors that Venezuela is looking to increase interest rates under the initiative:

EAI: Should the member countries be surprised if Venezuela decides to increase interest rates?

Tissot: None of the Petrocaribe countries should be surprised by the Venezuelan government’s decision or potential decision to tighten the terms related to the initiative due to the excess spending by the Venezuelan government under late President Hugo Chavez that was obvious to everyone.

Frankly, many of the Petrocaribe countries are addicted to cheap Venezuelan oil which their governments could sell on the spot market to assist them raise revenues that could be used to assist them to cover other expenses.

In my view, Venezuela is facing a very bad fiscal situation and a not so good economic situation. President Nicolas Maduro does not have the ability or support to implement policies needed to address fiscal imbalances in Venezuela.

EAI: Is Petrocarible a good initiative and will it endure?

Tissot: Petrocaribe was a good social-economic tool for Chavez. I believe it will endure under Maduro as he tries to maintain “the legacy of Chavez” in the region.

Simply put, there are not many options for the Petrocaribe countries and they will most likely have to revert to their old ways of obtaining oil and derivatives, before the birth of Petrocaribe.

On the other hand, I do not see many companies willing to send oil and derivatives to the Caribbean or pick up the void that could be potentially left my PDVSA.

In my opinion, Petrocaribe is like giving foreign aid to a poor country to help them reduce debt and poverty levels. In other words, Petrocaribe was like a type of foreign aid with an ideological slant.

Editor’s Note:

The Petrocaribe initiative, the brain child of late Venezuelan President Hugo Chavez, was inspired by independence and sovereignty of peoples in an attempt to alleviate the hegemonic influence of the U.S. in Latin America and the Caribbean.

Measures by Venezuela to potentially increase interest rates under Petrocaribe, coupled with the recent 32% devaluation of the Bolivar, the Venezuelan currency, hints that the government is facing mounting economic and financial problems.

***

Ecuador Open Market Meetings in Houston

(Energy Analytics Institute, Ian Silverman, 25.Jun.2013) – PetroEcuador holds open market committee meetings in Houston, Texas.

Highlights from the discussion follow:

Comments from PetroEcuador International Commerce Executive Nilsen Arias:

  • “Oil’s contribution to the energy matrix was 85% in 2010, but will fall to 65-70% in 2013.”
  • “Demand for gasoline, diesel and naphtha to exceed production.”
  • Feb.2014 will mark the turnover of Las Esmeraldas refinery which will allow it to produce clean fuels.
  • Ecuador does not have refining capacity to produce LPG, diesel, naphtha, which are imported.
  • LPG imports used for domestic cooking in Ecuador.
  • Cutterstock used for produce fuel oil in Ecuador.
  • Ecuador imports high octane naphtha and ultra-low diesel.

***