Plateau Energy Peru Unit Finds Lithium Resources

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

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

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

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

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

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

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

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

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FDI in LAC Region Falls for Third Straight Year

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

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

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Frontera Ends Pacific Midstream Sale Agreement

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

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

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

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

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Frontera’s Intent to Implement Course Issuer Bid

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

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

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

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

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

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

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Role of Peru’s Hydrocarbon Industry on Development

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

Details follow:

When: 7 July 2018

Where: Talara, Peru

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

Contact: PeruPetro

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PetroTal Reports First Oil from Bretana

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

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

Operations Highlights

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

— Discovery well flowed oil without stimulation

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

— Commissioning of facilities is progressing as expected and on schedule

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

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

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

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

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

Operations Update

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

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

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

Oil Sales Contract

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

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

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

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

Block 107 Osheki Prospect

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

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

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Frontera to Spud Delfin Sur-1 Offshore Peru

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

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

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Frontera Closes $350 Mln Notes Offering

(Energy Analytics Institute, Ian Silverman, 25.Jun.2018) – The Canadian company plans to use majority of proceeds to repurchase notes due in 2021.

Frontera Energy Corporation completed the offering of $350 million in senior unsecured notes due 2023 at a coupon rate of 9.70% pursuant to Rule 144A and Regulation S of the U.S. Securities Act of 1933, as amended, the company announced in an official statement.

Certain proceeds from the offering were used to repurchase, at a premium, the company’s $250 million 10.0% senior secured notes due 2021 pursuant to a tender offer. The remaining proceeds will be used for general corporate purposes.

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Frontera Prices $350 Mln Notes at 9.7%

(Energy Analytics Institute, Piero Stewart 22.Jun.2018) – Canada’s Frontera Energy Corporation successfully priced an offering of $350 million.

The offering was comprised of senior unsecured notes due 2023 at a coupon rate of 9.70% pursuant to Rule 144A and Regulation S of the U.S. Securities Act of 1933, as amended, with closing expected to occur on or about June 25, 2018. There is no guarantee issuance and sale of the notes will be consummated, announced Frontera in an official statement on its website.

Frontera, a public company, has operations focused in Latin America that consist of portfolio of assets with interests in more than 30 exploration and production blocks in Colombia and Peru.

Proceeds from the offering will be used for the following purposes: 1) to repurchase, at a premium, the company’s $250 million 10% senior secured notes due 2021 pursuant to a tender offer, and 2) for general corporate purposes.

The Notes have been assigned a rating of BB-(EXP) by S&P Global Ratings and B+(EXP)/RR4 by Fitch Ratings.
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Frontera Announces Details Of Share Split

(Energy Analytics Institute, Ian Silverman, 12.Jun.2018) – The offer will consist of a two-for-one share split of the company’s issued and outstanding common shares.

The record date of the Share Split will be June 21, 2018 at the close of business, announced Frontera Energy Corporation in an official statement. The company’s transfer agent, Computershare Investor Services Inc., will send shareholders of record one additional common share for every share held on June 26, 2018. No action is required to be taken by the shareholders.

The Toronto Stock Exchange has determined to implement due bill trading in connection with the Share Split. Anyone purchasing common shares during the period commencing June 20, 2018 and ending on June 26, 2018 inclusively shall receive a due bill. Frontera’s common shares will commence trading on an ex-distribution basis on June 27, 2018 and the due bill redemption date will be June 28, 2018.

DIRECT REGISTRATION SYSTEM

Frontera announced use of the direct registration system or DRS to electronically register common shares issued pursuant to the Share Split. Computershare will send out DRS advice statements to registered shareholders, indicating the number of additional common shares that they are receiving as a result of the Share Split. In addition, Computershare will electronically issue the appropriate number of common shares to CDS Clearing and Depositary Services Inc. and The Depository Trust Company for distribution to the non-registered shareholders of the Company. Beneficial shareholders who hold their common shares in an account with their investment dealer or other intermediary will have their accounts automatically updated to reflect the Share Split in accordance with the applicable brokerage account providers’ usual procedures.

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Force Majeure Affects NorPeruano Pipeline

(Energy Analytics Institute, Ian Silverman, 3.Jun.2018) – Canada’s Frontera Energy Corporation announced it was notified by Petroperu S.A. of a force majeure event affecting a portion of the NorPeruano pipeline following the identification of oil traces in the Pastaza River, an area outside Block 192.

Force majeure will begin on June 4, 2018 and Frontera is uncertain of when full operation of the pipeline will resume. The company announced that should a portion of the pipeline be inoperative, it will result in Block 192 being declared in force majeure, the company announced in an official statement.

Frontera is working diligently with Petroperu S.A. and the local communities in providing resources in the identification and remediation processes and is hopeful that the period of force majeure will be of limited duration. Should Block 192 be declared in force majeure, the period of time this declaration would be in effect will be added to the end of the contract term for Block 192, currently anticipated to be June 10, 2019.

PRODUCTION IMPACT

If Block 192 is declared in force majeure, the anticipated impact would be approximately 8,600 barrels per day (b/d) of net production.

“We will take advantage of any downtime to undertake necessary maintenance and work-overs on Block 192. Despite the impact on net production, we do not believe that this force majeure event will have an effect on Peru sales volumes for Q2 due to the current build up of inventory in Peru. We also anticipate that our aggregate sales volumes for Q2 will be higher than the previous quarter, as the increase in oil inventory previously disclosed in the first quarter due to the timing of the loading of one cargo of crude oil will be reversed in the second quarter of 2018,” announced Frontera in its official statement.

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China Looks to Invest $10 Billion in Peru Over 3 Years

(Energy Analytics Institute, Piero Stewart, 1.Jun.2018) — China plans investments of $10 billion across various sectors in Peru over the next three years.

The Asian giant is planning to focus investments on sectors including energy, mines, telecommunications, construction and finance, reported the daily newspaper El Comercio, citing China’s Ambassador to Peru Jia Guide.

Work at Peru’s largest copper mine is at the forefront of China’s planned investments.

Expansion of the Toromocho copper mine located in Junín, which is controlled by Chinalco, will require an estimated investment of $1.355 billion. Plans for the mine include boosting production to 170,000 metric tons per day from 117,000, with an additional personal of some 3,500, announced Guide.
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Energy, Education, and Learning Through NRG ED

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

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

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

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

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

(Reuters, Marco Aquino & Mitra Taj, 23.May.2018) — The government of Peruvian President Martin Vizcarra canceled his predecessor’s decision to award five offshore oil contracts to London-based Tullow Oil PLC shortly before resigning, citing insufficient consultations with coastal residents.

The reversal, which was published in the official gazette on Wednesday, was a victory for fishermen and environmentalists who said that exploration and drilling would have put important fisheries and whale breeding grounds at risk.

It was another setback for efforts to shore up slumping energy investments in Peru, a relatively small oil producer where past bidding rounds have failed to draw offers.

Tullow, whose shares fell 5.2 percent in London on Wednesday, said it would consider “next steps.”

The contracts came under fire after Peruvians learned the disgraced former president, Pedro Pablo Kuczynski, had signed five decrees authorizing them just before stepping down in March over graft allegations.

Despite Kuczynski’s approval, the contracts themselves were never signed, state energy promoter Perupetro said.

Vizcarra’s government said Perupetro had negotiated the contracts directly with Tullow without giving communities along Peru’s northern coast enough time to weigh in.

“We want a country that develops investments with peace and tranquility, and that’s done with a good start to a project,” Prime Minister Cesar Villanueva told a press conference.

“With this repeal we are not even remotely opposed to private investment,” Villanueva added.

Since taking office, Vizcarra, Kuzynski’s former vice president, has distanced himself from his predecessor as he aims to strengthen ties with the opposition-controlled Congress and build grassroots support following Peru’s worst political crisis in nearly two decades.

The revocation of Kuczynski’s decrees “is deeply disappointing,” said George Cazenove, Tullow’s head of communications. “Tullow has complied with the process and procedures required under Peruvian law.”

Earlier this month, the comptroller’s office said it had found nothing illegal about the contracts, but that the process of granting oil concessions through direct talks should be more transparent and give other stakeholders more say.

Critics said a public auction should have been held and a higher royalty rate should have been set.

Tullow had planned an initial investment of $200 million in the five blocks, according to Perupetro.

The National Society of Mining, Petroleum and Energy business association said the government had only created more uncertainty for investors in Peru, where oil imports cost the country billions of dollars per year.
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Vizcarra Says Peru to Review Contracts, Including Tullow’s

(Energy Analytics Institute, Jared Yamin, 4.May.2018) – Peru’s President Martin Vizcarra announced his government plans to review all petroleum exploration contracts awarded in the country.

His comments come as artisan fishermen in northern Peru continue to protest decrees that authorized Perupetro to award five petroleum lots, also known as ‘lotes’ in Spanish, to Ireland’s Tullow Oil, reported the daily El Comercio.

“If we find things that don’t have justification, we will not sign the contracts,” said Vizcarra. “This includes lots awarded to Tullow Oil.”
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ECLAC Ssays Venezuela’s Economic Activity to Fall 8.5% in 2018

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

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

TABLE 1: ECLAC GDP ESTIMATES FOR 2018

Country/Region —————————- GDP (Est.)

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

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

Source: ECLAC, April 2018
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Frontera Energy to Double Investment in Colombia, Peru

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

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

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

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

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

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

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

(Reporting by Luis Jaime Acosta; writing by Julia Symmes Cobb; editing by Jonathan Oatis)
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Repsol Starts Gas Production at the Sagari Field in Peru

(Repsol, 27.Dec.2017) – Repsol has begun gas production from the Sagari field, located in block 57 in the Cusco region of Peru, reinforcing the company´s gas output drive in its reserves development strategy.

The start of production at Sagari will lead to a 25% increase in the block’s total output. Starting in January 2018, it will produce 5.6 million cubic meters per day: approximately one fourth of Peru’s total gas demand.

The Sagari field was discovered in 2012. Repsol holds a 53.84% share and operates the field, partnered by CPNC of China with the remaining 46.16% stake.

Block 57 is located to the east of the Andes mountain range, in one of the most prolific gas production areas of Peru. The Repsol-operated Kinteroni field is also located nearby, and has been in production since 2014.

Repsol has been present in the Peruvian market for two decades, and has become a leader in the local energy sector with involvement throughout the entire value chain.

Repsol is one of the largest energy operators in Peru, holding mineral rights to four mineral blocks, of which three are in production. It also operates the Pampilla (the country’s primary petroleum refinery), has a network of more than 480 service stations and participates in the lubricant, aviation fuel and asphalt markets, among others.
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GeoPark’s Morona Block Approval in Peru

(GeoPark Limited, 1.Dec.2016) – GeoPark Limited obtained final regulatory approval for its acquisition of the Morona Block in Peru.

In its first project returning to the upstream business, the Peruvian state-owned company Petróleos del Perú S.A. (Petroperu) awarded a 75% working interest (“WI”) in and operatorship of the Morona Block to GeoPark by a Joint Investment and Operating Agreement dated October 1, 2014, and its amendments. The agreement was subject to Peru regulatory approval, which was completed on December 1, 2016 following the issuance of Supreme Decree 031-2016-MEM.

The Morona Block covers an area of 1.9 million acres in the Marañón Basin, a priority target basin for GeoPark and one of the most prolific hydrocarbon basins in Latin America, with over 1 billion barrels of oil produced. The Morona Block contains the Situche Central oil field, which has been delineated by two wells (with short term tests of approximately 2,400 and 5,200 bopd of 35-36° API oil) and by 3D seismic. The block also includes extensive geophysical surveys, an operating field camp and logistics infrastructure. The area has undergone oil and gas exploration activities for the past 40 years, with ongoing association agreements and cooperation projects with the local communities.

DeGolyer & MacNaughton, the independent reserve engineering firm, has certified 2P reserves of 40.2 million barrels of oil (mmbo) and 3P reserves of 82.9 mmbo for the Situche Central oil field (at 100% WI) with no oil-water contact yet encountered in the field. Gaffney, Cline & Associates has audited a maximum unrisked upside potential in the Situche Central oil field to be approximately 200 mmbo (at 100% WI). The total Morona Block also includes a large exploration potential with high impact prospects and plays – including gross unrisked exploration resources ranging from 300 to 500 mmbo, as audited by Gaffney, Cline & Associates.

In accordance with the terms of the Agreement, GeoPark has committed to carry Petroperu on a work program that provides for testing and start-up production of one of the existing wells in the field, subject to certain technical and economic conditions being met. Expected capital expenditures in 2017 for the Morona Block are mainly related to facility maintenance and environmental and engineering studies.

“We appreciate the support of the Peruvian government to advance the Morona Block and we very much look forward to partnering with Petroperu and the local communities in developing and exploring this exciting project,” said GeoPark Chief Executive Officer James F. Park. “ The Morona Block is the type of high-value project we look for in Latin America – with an already-discoered big oil field and the opportunity to convert existing reserves into production and cash flows, combined with high impact exploration potential in a proven and prolific hydrocarbon system. The timing and size of this project also fits very well within GeoPark’s existing high quality portfolio of production and exploration assets across the region and represents an important piece of GeoPark’s ambitious medium to long term growth plans.”

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Peru’s Large Oil Block Woes

(Maria Luisa Puig, Eurasia, 14.Sept.2015) – Indigenous groups occupied the installations of block 192, the largest oil field in the Amazon jungle, to force the government to listen to their economic and environmental demands. The Humala administration announced in Aug.2015 a 2-year contract with Canadian Pacific Exploration and Production (previously Pacific Rubiales) after an auction for a 30-year concession drew zero bids. Amid protests, Congress later passed a law that allows state-owned Petroperu to operate the block, a setback for the government.

Block 192 has faced several protests in the past, some of them also with disruptive effects on production. An inconclusive consultation process with some groups suggests these will persist.

More widely, recent protests highlight structural challenges facing investments in extractive sectors. Peruvians’ trust in institutions remains low, which makes protests the most viable alternative to channel discontent. The government has little capacity to prevent these or mediate between companies and social groups once they have started. At about 12,000 b/d, block 192 represents about 20% of Peru’s oil output.

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PetroPerú to Skip Contracts for Lotes III and IV

(Energy Analytics Institute, Layla Benitez-James, 1.Apr.2015) – Petroperú will not participate in the licenses contracts for the exploitation of hydrocarbons in Lotes III and IV.

The company decided not to participate in the contracts since the minimum investment demanded by the partner Graña y Montero was 30%, reported the daily newspaper La Republica.

Additionally, a letter from Graña y Montero stipulated that Petroperú pay $5 million upon signing of a decree and 25% of another $15 million during May-December of this year.

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BPZ Repayment of Convertible Bond Principal

(BPZ Resources, Inc., 2.Mar.2015) – BPZ Resources, Inc. announced it will exercise a provision under the bond indenture for the 6.5% Convertible Notes due March 1, 2015.

The bond has an outstanding principal amount of $60 million, whereby the company will avail itself of the 10-day grace period provided for in the Indenture on principal and a 30-day grace period on interest due for a total amount due of approximately $62 million. Once exercised, the grace periods will expire on March 10, 2015 for principal and March 30, 2015 for interest.

The company is engaged in discussions with representatives of certain holders of the Notes of the company’s Convertible Bonds issued with combined outstanding principal amounts of $229 million, maturing March 1, 2015 and October 1, 2017. These discussions include among other items, the potential terms under which one or both bond issues could be restructured to provide a capital structure which would allow the company to continue developing its oil and gas assets. Discussions are also underway with other potential investors regarding alternative financing solutions.

While the company is reviewing several options, an appropriate solution may not be found during the grace period. If the company does not make the payment due on the 2015 Notes and a resolution cannot be reached by the end of the grace period, the company would be in default under the terms of the 2015 Indenture. This action would result in cross defaults to the 2017 Convertible Bond issue, and could force the company to seek Chapter 11 Bankruptcy protection, which is designed to provide protection from creditors while a company seeks restructuring and financing solutions to enable it to remain an economically viable business.

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Gran Tierra Announces YE:14 Reserves

(Gran Tierra Energy Inc., 2 Feb.2015) – Gran Tierra Energy Inc. announced the results of an independent reserve evaluation of the company’s reserves by Gran Tierra Energy’s qualified reserve evaluator GLJ Petroleum Consultants Ltd. (GLJ) effective December 31, 2014.

Through continued strong reservoir management and appraisal drilling in Colombia and Brazil in 2014, Gran Tierra Energy was able to replace production and add reserves. However in Peru, negative well results after year-end will result in reserves being revised downward. The results of the company’s development program in the Moqueta field in Colombia have been encouraging, adding approximately 14% to it’s existing Proved (1P) company interest reserves in that country. Reservoir performance and additional development drilling contributed to positive 1P reserves technical adjustments at Costayaco.

In Brazil, due to new production from the Agua Grande formation, results of seismic reprocessing and additional reservoir volume in the Sergi formation, Gran Tierra Energy successfully increased 1P reserves in that country by 68%. Although 2014 Proved plus Probable (2P) and Proved plus Probable plus Possible (3P) reserves also appear to have increased at year-end, new drilling data from the Bretaña field in Peru subsequent to year-end indicate that the 2P reserves and 3P reserves associated with that field will be reduced after year-end. A new reserve report for the Bretaña field is expected before the end of the first quarter, once new maps, reservoir rock volumes and related data are integrated and evaluated.

Year-end 2014 highlights

Year-end 2014 highlights, calculated in accordance with United States Securities and Exchange Commission (SEC) rules (comparisons are to 2013 year-end amounts) follow:

In Peru, as announced on January 20, 2015, Gran Tierra Energy expects the Bretaña Sur well results will remove all Possible reserves associated with the southern L4 lobe of the Bretaña field booked at yearend 2014.

A reduction in Probable reserves in the field is also expected, the magnitude of which is unknown at the moment.

A new reserve report for the Bretaña field will be provided after analyzing new vertical seismic profile data from the new well, to reconcile the unexpected time-depth conversion encountered by the well against the time-depth conversion from the previous four wells in the Bretaña field that was used for the pre-drill seismic mapping. The new reserve report incorporating the new mapping and reservoir characterization is expected before the end of the first quarter;

Total 1P oil and gas reserves net after royalty (NAR) were 37. million barrels of oil equivalent (MMBOE) at December 31, 2014, compared with 42.1 MMBOE in 2013 (100% light and medium oil and liquids compared with 95% at year-end 2013), and after producing 9.2 MMBOE of company interest oil and gas before royalties, inventory adjustments and losses or 7 MMBOE NAR before inventory adjustments and losses, excluding Argentina production. The decrease was primarily due to the sale of Gran Tierra Energy’s Argentina business unit during 2014 which contributed 4.4 MMBOE NAR of 1P oil and gas reserves at December 31, 2013;

After producing 1.7 million barrels of oil (MMbbl) NAR before inventory adjustments from the Moqueta field in Colombia in 2014, appraisal drilling resulted in increased 1P reserves of 14% to 15.5 MMbbl, 2P reserves increased by 20% to 23.2 MMbbl and 3P reserves increased by 17% to 33.6 MMbbl on a company interest basis, and 1P reserves increased to 11.1 MMbbl, 2P reserves increased to 16.6 MMbbl and 3P reserves increased to 23.9 MMbbl, each on a NAR basis;

The Costayaco field in Colombia continued its strong performance. Costayaco 1P reserves decreased to 19.1 MMbbl NAR at year-end 2014 from 20.2 MMbbl NAR at year-end 2013, after production of 4.2 MMbbl NAR before inventory adjustments in 2014;

In Brazil, due to new production from the Agua Grande formation, results of seismic reprocessing, and additional reservoir volume in the Sergi formation, Gran Tierra Energy successfully increased 1P reserves by 68%;

Total 2P reserves NAR were 108.5 MMBOE at December 31, 2014, compared with 111.9 MMBOE in 2013 (99% oil and liquids compared with 97% at yearend 2013), prior to adjusting for the sale of the Argentina business unit, which had contributed 6.4 MMBOE NAR of 2P oil and gas reserves at December 31, 2013. Total 2P reserves are expected to be adjusted downward with release of the new Bretaña reserve report before the end of the first quarter;

Total 3P reserves NAR were 170.3 MMBOE at December 31, 2014, compared with 183.9 MMBOE in 2013 (99% oil and liquids compared with 94% at yearend 2013). The Argentina business unit contributed 16.7 MMBOE NAR of 3P oil and gas reserves at December 31, 2013. Total 3P reserves are expected to be adjusted downward with release of revised Bretaña reserves within a month;

In Peru, the Bretaña field contributed 2P reserves of 57.9 MMbbl NAR and 3P reserves of 104.4 MMbbl NAR. These are expected to be adjusted downward with release of a new Bretaña reserve report before the end of the first quarter;

Based on Gran Tierra Energy’s 2014 year-end SEC NAR reserves and Gran Tierra Energy’s 2014 total NAR production, Gran Tierra Energy’s 1P, 2P, and 3P reserves life indices are 5.3 years, 15.4 years, and 24.2 years respectively; The 2P and 3P reserve life indices are expected to be adjusted downward with release of the new Bretaña reserve report before the end of the first quarter;

Annual production for 2014, excluding Argentina production, averaged 25,182 company interest barrels of oil equivalent per day (BOEPD) before royalties, or 19,283 BOEPD NAR, both before inventory adjustments, or 18,523 BOEPD NAR adjusted for inventory changes and losses, including 17,619 BOEPD NAR from Colombia, and 904 BOPD NAR from Brazil. Production in the fourth quarter of 2014 was 18,953 BOEPD NAR before inventory adjustments or 17,169 BOEPD NAR adjusted for inventory changes and losses.

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BPZ Reports New Output from Albacora Well

(BPZ Resources, Inc., 22.Jan.2015) – BPZ Energy provided initial production rates from the Albacora A-27D development well at offshore Block Z-1. The company holds a 51% participation in Block Z-1 and all referenced well production in this release.

The A-27D well was drilled to a total measured depth of approximately 14,500 feet. For the last 10 days, the well has averaged approximately 1,135 barrels of oil per day (bopd) gross. For the last 24 hours, the well has averaged production of approximately 905 bopd, 3,700 thousand cubic feet of gas per day and 2 barrels of water per day. Gas is mostly reinjected due to the lack of a local commercial market at this time. The well is producing better than previous recent wells due to additional pay opened in the Lower Zorritos sands.

Given the positive results of the A-27D, the new Albacora A-22D development well was spud on January 10, 2015. Targeted measured depth of the A22D well is 14,445 feet, which will also test the Mid and Lower Zorritos sands. Results are expected in April.

The Corvina CX15-8D development well is currently being completed with results expected in February 2015. The 8D well location helps extend the Corvina field to the southwest.

Block Z-1 Production from the Corvina and Albacora fields for full year 2014 averaged 5,055 gross, or 2,578 bopd net to BPZ, which represents an 83% increase compared to full year 2013 production of 2,761 bopd gross, or 1,408 bopd net.

For the fourth quarter 2014, production averaged approximately 5,276 bopd gross, or 2,691 bopd net, which was 10% above third quarter 2014 production, and 94% higher than fourth quarter 2013 production. The 2014 exit rate for production was approximately 5,200 bopd, or 2,652 bopd net.January 2015 production to date has averaged approximately 5,443 bopd gross, or 2,776 bopd net.

Manolo Zuniga, President and CEO commented, “Given the positive results on the A-27D, we approved drilling of the A-22D well also targeting the Mid and Lower Zorritos formation, particularly the new deeper oil tested in the last three wells. We have also decided to perforate deeper sands in the Albacora A-21D and A-26D in the first quarter of 2015. These interventions should enable us to increase production with minimal capital, and we continue to look for other similar opportunities. While this work has been approved, the full 2015 capital plan is still under review as we work with our Block Z-1 partner to reduce costs, and with our advisors on financing alternatives.”

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Gran Tierra Completes Drilling in Peru

(Gran Tierra Energy Inc., 20.Jan.2015) – The Bretaña Sur appraisal well completed drilling operations on the L4 lobe on the Bretaña field and encountered approximately six feet of oil pay above the oil-water contact in the Vivian Sandstone Reservoir.

This oil column is less than what was estimated by Gran Tierra Energy prior to drilling and Gran Tierra Energy expects the Bretaña Sur results will remove the Possible reserves that have been booked for the Bretaña field. A reduction in Probable reserves in the field is also expected, the magnitude of which is unknown at the moment. Gran Tierra Energy will prepare a revised reserve report and information respecting the exact amount of the reduction in Gran Tierra Energy’s reserves will be provided after new mapping and the reservoir characterization is updated. This is expected to follow the company’s year-end 2014 reserve report, which will not include this new data as it has only become available after year-end.

Gran Tierra Energy is continuing with a design for a revised development scenario based upon new resource estimates that contemplates a field development from the existing northern (L2) platform and associated oil processing facilities, consistent with the first stage of the original draft development plan.

Equipment for the first long term test (LTT) production from the Bretaña discovery well has been delivered to the L2 platform and testing of facility components has begun, with first production expected to begin in the second quarter of 2015. The startup time, duration and level of production for the LTT may be adjusted further within the context of the operating and oil price environment at that time.

Gran Tierra Energy is operator and holds a 100% working interest in Block 95, Bretaña Field.

***

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

***

Camisea Gas Compression Plant Online by YE:15

(Energy Analytics Institute, Ian Silverman, 29.Aug.2013) – The Camisea gas compression plant will be ready in December 2015.

The plant will require an investment of $318 mln and will allow the gas pipeline to increase its capacity by 50%, reported the daily newspaper El Comercio.

Upon completion, the gas compression plant will allow the gas pipeline to increase its capacity to 850 MMcf/d of gas for the domestic market.

***