PDVSA Bewilders Bond Analysts By Making $949 Million Payment

(Bloomberg, Davide Scigliuzzo, 31.Oct.2018) — Venezuela just forked over almost $1 billion to stay current on a bond backed by shares of its U.S. refiner Citgo.

The question is why.

Yes, the payment ensures that Venezuela’s state-run oil company PDVSA gets to hold onto Citgo Holding Inc. for now, but many analysts think it’s just a matter of time before it has to forfeit the company.

“It is hard to visualize a scenario in which Venezuela does not sooner or later lose Citgo to one of its defaulted creditors,” Francisco Rodriguez, chief economist at brokerage Torino Capital, wrote in a note on Monday.

With the country starved for cash and already in default on many of its foreign bonds, the line of creditors that could lay their hands on Citgo is very, very long: Russia (from collateral for loans from state-run Rosneft); Canadian miner Crystallex International Corp. and U.S. oil giant ConocoPhillips (both of which won international arbitration cases against Venezuela); Citgo’s own bondholders (from collateral on debt); and the PDVSA bondholders who were paid Monday.

Given this backdrop, most analysts have struggled to come up with a clear-cut explanation for why the payment was made. Here are a handful of the most plausible theories that they put forward:

— Citgo’s strategic value for the Venezuelan government is so great that the payment may be worth it even if the company will be lost to creditors in coming months. Citgo is a reliable buyer of PDVSA crude abroad and also provides the company with additives that make Venezuela’s heavy crude easier to export.

— Venezuela is appealing a U.S. ruling that awarded Crystallex the right to collect on an arbitration award by taking shares of PDV Holding, the Delaware corporation through which PDVSA controls Citgo. By staying current on the collateralized PDVSA bonds, Venezuela can buy time as it awaits a verdict. Attempts by PDVSA to stop a sale of Citgo have so far failed. A key hearing is scheduled for Dec. 20.

— A default on the collateralized PDVSA bonds could complicate Venezuela’s relations with Russia. If holders of the bonds foreclose on the 50.1 stake in Citgo that represents their collateral and force a sale of the company, Rosneft, that has a claim to the remaining 49.9 percent, could be sidelined in that process.

— Citgo may have achieved symbolic value for President Nicolas Maduro even if the socialist regime has considered getting rid of the unit in the past. Losing Venezuela’s most valuable asset abroad could be seen as a defeat for a government that is already deeply unpopular at home and has made of standing up to hostile foreign powers a key part of its rhetoric.

— For now the 2020 bond is trading over 91 cents on the dollar with investors eyeing the next payment in April.

— With assistance by Patricia Laya, Fabiola Zerpa, Ben Bartenstein, and Jose Enrique Arrioja

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Weatherford Reports Higher Activity Levels In Argentina and Mexico

(Energy Analytics Institute, Ian Silverman, 29.Oct.2018) — Weatherford International plc reported Western Hemisphere 3Q:18 revenues of $762 million were down $7 million, or 1%, sequentially, and down $5 million, or 1%, year-over-year, the company reported in an official statement.

Compared to the second quarter of 2018, revenues in Canada improved seasonally as the rig count increased following the spring breakup, but were offset by lower results in the United States and negative foreign exchange impacts in Latin America.

Year-over-year revenue increases from integrated service projects in Latin America were offset by lower activity levels in Canada as crude differentials expanded, which reduced demand for Completions and Production services and products.

Third quarter segment operating income of $78 million was up $28 million sequentially and up $75 million year-over-year. The sequential increase benefited from lower expenses and improved operating efficiencies mainly associated with the transformation. The year-over-year improvements were driven by a combination of higher activity levels in Argentina and Mexico and the positive impacts from our transformation efforts, which overcame lower operating results in Canada and foreign exchange effects in Latin America, the company said.

Operational highlights in Latin America during the quarter include:

— In Mexico, Weatherford replaced an incumbent’s system with the Magnus RSS, which ran onshore alongside the RipTide® drilling reamer to drill and enlarge a directional well with a 42° profile.

— Weatherford displaced an incumbent in Brazil by signing a new tubular running contract with Petrobras. The contract awards Weatherford work on 14 deepwater rigs, which represents significant market share.

— Working in collaboration with a customer, Weatherford devised an integrated solution that included logging, pressure pumping services, and the FracAdvisor® workflow to execute the first documented multistage frac job in the Jurassic Superior Pimienta Shale in Mexico. The large-scale solution complied with new government regulations and overcame significant logistical issues to fracture 17 stages in less time than allotted.

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Venezuela, Mexico Divert Crude To U.S. As Canadian Barrels Get Stuck

(Reuters, Marianna Parraga, Collin Eaton, 26.Oct.2018) — Cash-strapped state-run oil companies in Mexico and Venezuela have begun diverting crude historically processed for domestic use and sending it to U.S. refiners now facing transportation constraints to secure similar grades from Canada, data shows.

The situation reflects an unusual set of events, including urgent needs by Venezuela and Mexico for cash for debt payments and investment, and demand for heavy crude in the United States due to less availability of Canadian oil, said traders and analysts.

The United States imported 1.675 million barrels per day (bpd) of Latin American crude in August, the highest level since May 2017, according to Refinitiv Eikon data.

That gain occurred even though the preferred Latin American grade, Mexican Maya, fetches an about $50 a barrel premium to Western Canadian Select (WCS), because of transportation costs. Moving a barrel of Maya via tanker to the U.S. Gulf Coast costs about $1.50, compared to $35 for WCS via pipeline and rail.

“Those who are arriving late to the (Canadian oil) party will have to pay more for a Latin American heavy crude or Iraqi Basrah Heavy,” said a trader who regularly buys Canadian and Latin American grades.

CASH NEEDS RISE

Latin America’s recent export drive has come mostly from Mexico, Brazil and Venezuela, despite a long-standing regional oil output drop. In the last decade, suppliers with the exception of Brazil have reduced crude shipments overall, especially to the United States.

In the case of Venezuela, state-run PDVSA “needs cash both for paying holders of the 2020 bond this month and for paying (an arbitration award to) ConocoPhillips,” said Robert Campbell, oil products research chief at consultancy Energy Aspects, referring to two huge bills due in coming days.

Petroleos Mexicanos is raising cash mainly for refinancing its heavy corporate debt. Selling more of its coveted Maya crude could help refurbish refineries working at historically low rates.

Pemex and PDVSA did not respond to requests for comments.

Before the shale boom, many U.S. Gulf Coast refiners configured their plants to run Latin American and Middle Eastern crudes, with Venezuela and Mexico as top suppliers. As those shipments dwindled, refiners turned to shale and Canadian oil.

But pipeline constraints in Canada are shifting imports again, at least in the short term.

U.S. refiners want more Canadian crude “because it’s cheap,” one trader said, but “unless someone builds a new pipeline,” it will be difficult boost imports further.

U.S. imports of Canadian crude by pipeline rose to 3.6 million bpd in the week ending Oct. 12, hitting 98 percent of capacity. Crude-by-rail shipments also are up, to a record 284,000 bpd in the week ended Oct. 12 from 85,000 bpd in October 2017, according to data provider Genscape.

“These pipelines are absolutely full,” said Dylan White, an oil markets analyst at Genscape. “There’s no room for growth.”

IMBALANCES

The strategy of boosting crude exports while importing more fuel could backfire for Latin sellers. Pemex would have to boost fuel purchases if its refineries do not restart in coming months after outages and unplanned maintenance work, and PDVSA has few options to stop imports from growing.

Latin America has increased U.S. fuel purchases by 7 percent to 2.87 million bpd so far in 2018, lifted by purchases by Mexico, Venezuela, Chile and Peru, according to the U.S. Energy Information Administration.

“Mexico has chosen to import more gasoline. It makes a lot of sense, but it could go out of control,” Campbell said, referring to relatively cheap gasoline prices compared to Latin American heavy crudes.

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Bondholders Raise Hopes Venezuela Will Pay Up On Due Debt

(Ft.com, Gideon Long, 25.Oct.2018) — In a month in which emerging market government bonds have been hammered by the prospect of US rate increases, geopolitical risk and fears of a US-China trade spat, one bond — in crisis-racked Venezuela of all places — has rallied to record highs.

The 2020 bond issued by the state oil company PDVSA has rallied 14 per cent in six weeks to trade at over 91 cents, up from a year low of 80 cents in early September. By contrast, most PDVSA bonds trade at around 20 cents.

The reason for this unusual outperformance is that investors are increasingly convinced that the cash-strapped oil company will come up with an $842m principal payment due this weekend to avoid default and potentially lose a key asset, US-based refiner Citgo.

“I believe that they [Venezuela and PDVSA] are willing to pay,” said Siobhan Morden, head of Latin America fixed income strategy at Nomura. “Their track record suggests willingness to pay to protect strategic assets.”

Payment in itself would be remarkable: Venezuela and PDVSA have defaulted on all their other commitments to bondholders over the past year and are now $7bn in arrears on their combined traded debt of about $60bn.

But this bond is different. If PDVSA fails to service it, the company risks losing its prized US asset Citgo, a Houston-based group with three refineries in the Gulf of Mexico and the Midwest that process about a third of Venezuela’s oil exports to the US.

PDVSA has pledged half of Citgo as collateral on the $2.5bn 2020 bond, and the other half as security on a loan from the Russian oil company Rosneft. If it fails to pay, bondholders could in theory go after their half. There is no grace period on the amortisation payment, although the company has an additional 30 days to make an interest payment of $107m, also due this weekend.

Even so, 2020 bondholders would have a fight on their hands because everyone, it seems, wants a bit of Citgo. Having largely given up on ever being paid by Venezuela or PDVSA, creditors are increasingly going after their assets abroad, Citgo being the jewel in the crown.

The Canadian mining company Crystallex is trying to seize Citgo to compensate it for $1.4bn owed by the Venezuelan state. The US oil company ConocoPhillips is in a similar position, seeking payback for money owed by PDVSA. It has previously seized assets in the Caribbean, where PDVSA processes much of its oil exports.

As for bondholders, in what has become a complex multi-directional legal battle, the world’s largest asset manager BlackRock and New York-based Contrarian Capital Management have waded in on behalf of US and UK investment managers who hold some 60 per cent of the 2020 bonds.

For now, Rosneft is watching from the sidelines but if PDVSA were to default on its separate loan from the Russian company, it too would be eligible to claim almost half of Citgo. In theory, that could leave the Russians in the novel position of having a major holding in a US refiner, something US President Donald Trump would want to avoid.

Even if PDVSA makes this payment, Venezuela faces a daunting debt mountain. The sovereign must pay a final $1bn on its 2018 bonds in December, and alongside PDVSA must find $9.3bn for bondholders in 2019 and more than $10bn in 2020, although no one expects it to do so.

Faced with these desultory figures, Venezuela is rumoured to be considering a complete overhaul of PDVSA. This week the specialist energy reporting agency Argus said Caracas was thinking of replacing PDVSA with a new national energy company that would inherit PDVSA’S physical assets, including Citgo, but not its debts. That could pave the way for PDVSA to be formally declared bankrupt.

In addition to its traded debt, Venezuela owes billions of dollars to China and Russia. Meanwhile, oil production has plummeted to its lowest level since the 1940s, the economy has halved in size in five years and inflation is running at almost 500,000 per cent. Central bank reserves stand at $8.8bn, close to their lowest level for 30 years.

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PDVSA Prepares To Make $949 Mln Payment On Citgo-Backed Bond

(Bloomberg, 24.Oct.2018) — Petroleos de Venezuela SA’s plan to make a $949 million bond payment would mark a rare exception for Nicolas Maduro’s regime as it tries to hold on to the crown jewel of its U.S. assets.

Venezuela’s state-run oil company is preparing to make the coupon and partial principal repayment that’s due Oct. 29 on the 2020 notes, according to a person with direct knowledge of the matter. The socialist state is behind on almost $7 billion in debt payments owed to investors, but this bond is backed by a majority stake in Citgo Holding Inc., meaning a non-payment would allow holders to lay claim to that asset.

The payment has been anticipated by investors. The $2.5 billion of notes traded as high as 92.75 cents on the dollar this week, far above most Venezuelan bonds, which hover near 25 cents. Analysts from JPMorgan Chase & Co (NYSE:JPM)., Torino Capital and Eurasia Group have also said the Maduro government would pay because of its desire to hold on to Citgo, although there are doubts about how much longer PDVSA can service the debt.

“The government’s strategy with regards to various creditor obligations seems to be to avoid or delay paying wherever possible but pay or settle when valuable external assets are in jeopardy,” Risa Grais-Targow, a senior analyst at Eurasia Group, wrote in a note Monday. “There are limits to this strategy, as the government still faces meaningful cashflow constraints owing to declining cash-generating oil exports.”

Calls and emails seeking comment from PDVSA’s vice president of finance, Iris Medina Fernandez, weren’t returned. A representative for Venezuela’s oil ministry declined to comment. The person with knowledge of the situation asked not to be named because the matter is private.

Even with the payment, Citgo’s fate remains in flux. The 2020 notes fell by the most in nearly two months on Wednesday amid a broader sell-off across risky assets. Here are some of the other hurdles that Venezuela needs to navigate to maintain ownership of the company:

— Citgo Petroleum and its parent Citgo Holding have more than $3 billion of their own debt outstanding. At least some of that might need to be repaid if the company changes ownership through a foreclosure or a sale.

— PDVSA pledged a 49.9 percent stake in Citgo Holding as collateral for loans it received from Rosneft in 2016. If it defaults on those loans, the Russian state-controlled oil company could seek to seize the shares.

— A small Canadian mining company, Crystallex International Corp., was awarded the right to collect on an arbitration award by taking shares of PDV Holding (the U.S. parent of Citgo Holding), a verdict Venezuela is appealing.

— PDVSA is due to pay $500 million to ConocoPhillips (NYSE:COP) in November as the first installment of a $2 billion settlement the two companies reached this summer. If it misses the payment, Conoco could seek to attach PDVSA assets, including Citgo.

— Separately, an $8 billion bondholder group advised by Guggenheim Securities has said it’s “exploring options” to ensure that the nation’s overseas assets are available to satisfy its claims.

So far, PDVSA has shown it is determined to hold on to Citgo, even as U.S. sanctions prevent the refiner from distributing dividends back to Venezuela. Citgo plays a key role in facilitating the export of Venezuelan crude — the country’s main source of foreign exchange — and also provides Venezuela with much-needed refined products.

“It is not about the value of the equity, which may not be much,” said Richard Cooper, a partner at law firm Cleary Gottlieb Steen & Hamilton LLC, who has advised holders of Venezuela’s debt. “Citgo remains an incredibly important asset for PDVSA.”

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Engie And Caisse Said To Plan $9B Pipeline Bid

(Bloomberg, Cristiane Lucchesi, Francois Beaupuy, Scott Deveau, 15.Oct.2018) — French utility Engie SA and a Canadian pension fund plan to offer as much as $9 billion (34 billion reals) for Petrobras’s natural gas pipeline network, potentially a $1 billion boost from their initial bid, according to people with knowledge of the matter.

Petroleo Brasileiro SA is now finalizing terms with Engie and the Canadian fund, Caisse de Depot et Placement du Quebec, the people said, asking not to be named because the talks are private. Petrobras then plans to touch base with other groups for a second round of bids that must meet the terms agreed to with Engie. In April, Mubadala Development, in a consortium with EIG Global Energy Partners, and Macquarie Group Ltd. presented two separate bids, people said at the time.

Spokesmen from Engie, Caisse and Petrobras declined to comment.

The 2,800-mile (4,500 kilometer) pipeline network, Transportadora Associada de Gas, or TAG, spans ten states in northeastern Brazil. It’s being sold as part of a wider push by Petrobras to sell $21 billion in assets to slash debt. If consummated, it would be the company’s biggest divestment ever.

Engie, whose initial $8 billion bid including debt was the highest, is planning to raise its offer to ensure it prevails at a time when cheap credit is available to help finance the acquisition, the people with knowledge of the talks said.

Petrobras aims to conclude a deal this year, the people said, but the divestment program still faces uncertainty. In July, Ricardo Lewandowski, a Supreme Court judge, ruled that the sale of any government-owned company asset, including subsidiaries, must be approved by Congress.

Petrobras will try to resume negotiations over TAG even without a final decision from the court, Valor newspaper reported Oct. 10.

In 2017, Petrobras sold Nova Transportadora do Sudeste, a similar but smaller pipeline network in Brazil’s southeast, to a consortium led by Brookfield Asset Management for $5.2 billion.

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Energy Analytics Institute (EAI): #LatAmNRG

Guyana, Canadian Province Signing Oil And Gas Pact

(Stabroek News, 13.Oct.2018) — The Guyana government and the Canadian province of Newfoundland and Labrador will be signing a technical cooperation agreement on oil and gas in the coming week, when Georgetown will also be hosting a visit by a 50-odd member trade mission from the territory seeking partnerships with local companies to tap the sector.

The High Commission of Canada yesterday said in a statement that Minister of Natural Resources from Newfoundland and Labrador Siobhan Coady will be signing a Memorandum of Understanding (MoU) on behalf of her province with the Government of Guyana for technical cooperation on oil and gas.

During her visit, it noted, Minister Coady will also be attending the events organised for the visiting trade mission, which will be visiting from October 15th to October 18th, 2018.

The statement explained that the High Commission and the Province of Newfoundland and Labrador are collaborating with the Government of Guyana through GO-Invest to bring the Canadian oil and gas trade mission of approximately 50 persons from the province’s offshore oil and gas industry.

“Canadian companies are hoping to leverage partnerships with appropriate Guyanese businesses, and work with them to access opportunities in the oil and gas sector,” it noted.

“Guyana presents world-class, deep-water petroleum prospects which offer business opportunities that align with Newfoundland and Labrador’s petroleum expertise and experience. The development of potential partnerships between the two jurisdictions could serve to build strong business relationships, transfer technology, and skills development to support the growth of Guyana’s offshore oil and gas industry,” it added.

Newfoundland companies, it further said, have been servicing Floating Production Storage and Offloading vessels for over 15 years. Companies from this province have also been servicing rigs and drill ships for 40 years, it added.

According to the High Commission, the experience of Newfoundland can be a great potential resource to Guyana in developing its offshore industry through working with experienced partners, such as government and private sector, suppliers and service companies. “This trade mission will expose Canadian companies to the market opportunities, investment regime and qualified local companies,” the High Commission said, while highlighting that the local support for the trade mission so far has been overwhelming. “This highlights the willingness of Guyanese to partner with Canadians, which is largely due to the Canadian model of leveraging local partnerships through building partners’ capabilities to access together the opportunities in this nascent sector,” it added.

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Energy Analytics Institute (EAI): #LatAmNRG

Transparency in Bolivian Hydrocarbon Information Needed, Jubilee Foundation Says

(Energy Analytics Institute, Ian Silverman, 3.Oct.2018) — Transparency in information is necessary in order for Bolivia and producing departments of the small Andean country to understand the full details related to natural gas and crude oil reserves by department and field, announced the Jubilee Foundation.

Such important and timely information will allow experts and the country as a whole the necessary time to evaluate the data as it relates to resource management, reported the daily El Diario, citing the foundation.

The foundation was referring to a recent hydrocarbon reported released by the Canadian consortium Sproule International Limited.

In the report, the Sproule revealed Bolivia had 10.7 trillion cubic feet (Tcf) of proved gas reserves, 12.5 Tcf of proved plus probable reserves, and 14.7 Tcf of proved, probable plus possible reserves.

“The decrease in probable and possible reserves is a reflection of insufficient exploratory activity in recent years, despite the fact the government has issued six decrees between 2007-2017, that resulted in the awarding of new areas for the exploration and exploitation of hydrocarbons in favor of state oil company YPFB,” the daily reported, citing the report.

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Methane Fears Cloud Argentina’s Shale Oil And Gas Future

(Financial Times, Benedict Mander, 23.Sep.2018) — Green energy groups say huge shale oil and gas reserve is leaking greenhouse gases.

Jorge Daniel Taillant used a $100,000 infrared camera this year to investigate whether oil and gas installations in Vaca Muerta were leaking toxic gases. The grainy black-and-white thermal images that the ecology activist took confirmed what he suspected.

Although invisible to the naked eye, gases were detected seeping into the atmosphere from every one of the sites he visited. Particularly significant was methane, a potent greenhouse gas.

“Methane is leaking everywhere,” says Mr Taillant, executive director of the Center for Human Rights and Environment, a non-governmental organisation founded in Argentina and now based in the US. He says at least 5 per cent of Vaca Muerta gas produced is lost, often leaked intentionally when pressure needs to be released.

“There is a history of abuse as no one is controlling the sector,” says Mr Taillant. “And that’s not going to change any time soon — there is no credible environmental authority.”

Argentina’s ambitions to develop Vaca Muerta are ringing alarm bells among environmentalists, since it is considered to be one of the few remaining significant but mostly undeveloped energy reserves left on the planet.

As such, some experts say the development of Vaca Muerta and other comparable resources in Venezuela and Russia could jeopardise the UN 2016 Paris Agreement on climate change.

“If Argentina is to fully develop Vaca Muerta, it would blow a hole in the carbon budget,” argues Guy Edwards, co-director of Brown University’s climate and development lab in the US.

“It is one of the key reserves that, according to climate science, should stay underground if there is a chance of achieving the Paris goals,” he adds.

Most recognise it is unrealistic to expect Argentina to leave Vaca Muerta untouched. Its development is considered a national priority across the political spectrum, given its potential as an engine for economic growth. Javier Iguacel, the energy secretary, ridiculed the idea that Argentina might simply stop exploiting its hydrocarbons. “ Norway is not going to stop producing oil, and nor are we,” he says.

Argentina’s energy-related emissions are projected to increase 45 per cent between 2010 and 2030, according to the Berlin-based non-profit institute Climate Analytics, largely because of Vaca Muerta. Few expect Buenos Aires to meet its commitment to the Paris Agreement. Like every other country, its goals were not very ambitious to begin with, says Mr Edwards.

Instead, activists are pushing to mitigate the problems that can be controlled, with methane being “far and above the biggest issue from a climate perspective”, says Jonathan Banks, senior policy adviser at the Clean Air Task Force, a green energy advocate.

Although carbon dioxide stays in the atmosphere for as long as 1,000 years, methane begins to disappear after 20, during which time it is more than 80 times more potent than carbon dioxide in warming the climate, Mr Banks says.

Fortunately, he adds, methane is also one of the easiest and cheapest climate problems to deal with. That is why many countries and regions such as Canada, Mexico and California have focused on methane emissions when finding ways to meet Paris targets.

“Good maintenance, better equipment and installations, and just good practices can dramatically reduce emissions from these developments,” Mr Banks adds. “As far as climate change goes, it’s cheap stuff. It’s not a nuclear power plant, it’s tightening bolts.”

A study by the International Energy Agency found it is possible to reduce global methane emissions from the oil and gas industry by up to half at no net cost. That would be equivalent to shutting down every coal plant active in China today, the report says.

Yet even if Argentina succeeds in reducing methane emissions, there is the broader question of whether developing Vaca Muerta makes strategic sense, given how environmental concerns and technological advances are shaking up the energy sector.

The Inter-American Development Bank recently highlighted the danger of “stranded assets”, given that renewable energy is becoming increasingly competitive, warning that countries could be stuck with fossil fuel infrastructure that may become obsolete faster than expected. Others, such as Brown University’s Mr Edwards, say backing fossil fuels risks curtailing interest in renewable energy.

Argentina’s plan is to supply its own market with renewable energy and the gas from Vaca Muerta, which officials say is cleaner than other options. This is despite concerns from environmental lobbyists that leaking methane could be just as bad as the pollution from coal-fired power stations. If Argentina manages to fulfil its goal of becoming a net exporter of gas, this could even help China rely less on its dirty coal-fired power stations, indirectly aiding the environment, Mr Iguacel says.

“What’s the timeframe?” Mr Edwards asks. “If most countries are on some kind of path to decarbonising their energy sectors, do you really want to be pumping billions into an industry that is looking like it is on the way out in the coming decades?”

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PetroTal Seeks Exploration Partner for the Osheki Prospect in Peru

(Energy Analytics Institute, Aaron Simonsky, 13.Sep.2018) — PetroTal Corp. is seeking joint venture partners to drill the first exploration well by the fourth quarter 2019 or early 2020.

“We are currently engaging potential joint venture partners to drill the exploration prospect and expect the full data room to be open as soon as September 15, 2018,” reported PetroTal in an official statement, citing its Vice President of Asset Development Chuck Fetzner.

The announcement from the company comes after it reported an independent evaluation of the prospective resources with respect to the Osheki prospect in Block 107, located in the Ucayali Basin of eastern Peru. Drilling permits for the prospect have already been approved.

Calgary-based PetroTal id focused on developing and exploiting the Bretaña oil field, as well as evaluating the Osheki prospect in Block 107, which could provide significant growth for the company.

Osheki Resource Upgrade

Based on an independent assessment completed by Netherland Sewell & Associates, Inc. (NSAI), with an effective date of June 30, the Osheki prospect is estimated to have 534 million barrels (MMbbls) of mean prospective recoverable resources. This estimate is based on a recovery factor of 30 percent of the estimated 1.78 billion barrels of mean prospective original oil in place (OOIP), using maps generated from seismic acquired in 2007 and 2014. The mean risked prospective resources figure for the Osheki prospect is 85 MMbbls.

“Today’s increase in prospective resources at Osheki is a milestone in the development of our asset portfolio in Peru. It firmly endorses the quality of the Osheki prospect, which also contains further potential material upside from additional leads in Block 107,” said PetroTal President and Chief Executive Officer Manolo Zuniga in the company statement.

 

He continued: “This important development follows the Bretaña oil field successfully coming online ahead of schedule in June, with the remaining long-term testing equipment installation on schedule to allow us to increase production from the current ~1,000 bopd to over 2,000 bopd by the end of October. Bretaña has a clear path to increasing production to above 10,000 barrels of oil per day by 2020.”

The prospect was de-risked with a new 3D geologic model supporting Cretaceous age reservoirs with high quality Permian source rocks. Block 107 has four additional leads that, with Osheki, could contain a total of 4.58 billion barrels of recoverable resource in the high estimate case.

“In a report commissioned prior to PetroTal taking on the assets, it was estimated there was 313 MMbbls of mean recoverable prospective resource for the Osheki prospect. In NSAI’s June 30, 2018 report, the estimate has increased by more than 60 percent. When we combined the two seismic programs we were able to see closure in as many as three different horizons. The Osheki prospect is a sub-thrust play similar to the Cusiana complex in the Llanos Foothills of Colombia,” concluded Fetzner.

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UNICEF Works on Developing Resilience in Caribbean Islands Affected by Hurricanes

A year after two category 5 hurricanes caused destruction across parts of the Caribbean, most children in the affected countries are now back in school and have access to the services they need, thanks to the efforts of UNICEF and partners. In Anguilla, children draw as part of their Return to Happiness session. © UNICEF/UN0180293/Ward (CNW Group/UNICEF Canada)

(UNICEF Canada, 12.Sep.2018) — A year after two category 5 hurricanes caused destruction across parts of the Caribbean, most children in the affected countries are now back in school and have access to the services they need, thanks to the efforts of UNICEF and partners.

In September 2017, hurricanes Irma and María caused catastrophic damage and severely impaired facilities and services, including schools, water systems and more, across several countries in the Eastern Caribbean, Cuba and Haiti, leaving at least 1.4 million people, including 357,000 children, in dire need of assistance. A year later, most of the affected children have returned to school, and resumed their access to services—including water and sanitation.

“Despite the fact that rebuilding and recovery are almost complete, vulnerable children in these countries remain our priority, responsibility and mandate,” stated Maria Cristina Perceval, UNICEF Regional Director for Latin America and the Caribbean. “In a region impacted by hurricanes and climate vulnerabilities, building resilience is not just an option, but a need, especially for vulnerable communities and even more so, children,” she added.

The extent of the hurricanes’ impact on several islands had initially made it extremely challenging for UNICEF and partners to reach children and families most in need.

However, thanks to the generous support of donors and partners, $11.6 million was raised in the aftermath of the hurricanes last year, which helped alleviate the impact on affected children and young people. Water and sanitation services were restored, children could go back to school as buildings were rebuilt and classrooms re-stocked, family-friendly safe spaces were set up that provided psychosocial support, and a cash assistance programme was set up for families in need.

Now, with the new hurricane season underway, the continuity of programmes that began during the emergency response last year remains crucial as efforts are made to reinforce the preparedness and social protection systems; to minimize the possible consequences of future catastrophes and the effects of climate vulnerabilities; and to promote resilience in the region.

As part of its response to build resilience amongst children and communities:

— In the Eastern Caribbean countries of Anguilla, Barbuda, British Virgin Islands, Dominica and the Turks and Caicos Islands, UNICEF will continue to support the implementation of the Caribbean Safe Schools Programme, and work with governments to strengthen social protection systems. Under this programme 25,000 children in five countries will be part of disaster risk reduction plans, which are aimed at making the region’s education sector more resilient to hurricanes and other natural disasters.

— In Haiti, where 126,000 children were affected, UNICEF has invested in cholera prevention initiatives in the most affected areas and will continue to support the sustainability of prevention and protection systems.

— In Cuba, where 176,000 children were affected, UNICEF is providing critical items to support the re-establishment of a protective learning environment for 53,261 girls and 54,879 boys in 14 prioritized municipalities. In addition, in support of efforts to rehabilitate education infrastructure, UNICEF procured 56,000 m2 of waterproof covers for 69 schools and kindergartens. UNICEF also reached a total of 560,315 people (274,554 women and girls) in the 14 prioritized municipalities with safe water treatment and storage.

About UNICEF

UNICEF has saved more children’s lives than any other humanitarian organization. We work tirelessly to help children and their families, doing whatever it takes to ensure children survive. We provide children with healthcare and immunization, clean water, nutrition and food security, education, emergency relief and more.

UNICEF is supported entirely by voluntary donations and helps children regardless of race, religion or politics. As part of the UN, we are active in over 190 countries – more than any other organization. Our determination and our reach are unparalleled. Because nowhere is too far to go to help a child survive. For more information about UNICEF, please visit www.unicef.ca. For updates, follow us on Twitter and Facebook or visit unicef.ca.

Frontera Receives Global Compact Awards from UN

(Frontera Energy Corporation, 7.Sep.2018) — Frontera Energy Corporation has been named a Canadian Sustainable Development Goals award winner for the second consecutive year by the Global Compact Network Canada, the Canadian network of the United Nations Global Compact.

Frontera was awarded the SDG Leadership Award in the large organizations category, through public voting, for its outstanding efforts in adopting and implementing the United Nations Sustainable Development Goals in its engagement with indigenous communities in Colombia and Peru.

The public also voted Frontera as the winner of the ‘Partnership Award’ for its excellent work in engaging stakeholders through ongoing partnership and advancement towards the Sustainable Development Goals.

“We are proud of our commitments and continuing a legacy of sustainable growth for our stakeholders. We congratulate the United Nations Global Compact Network Canada on their five-year anniversary and the large impact they have made on promoting Sustainable Development Goals in Canada,” said Frontera Chief Executive Officer Richard Herbert.

These awards intend to encourage all Canadian organizations to embed the 17 Sustainable Development Goals within their organizations and highlights the progress that both private and public sectors have made towards solving pressing environmental, social and economic challenges. Since its inception in 2013, the Canadian Chapter of the United Nations Global Compact has been dedicated to assisting over 150 Canadian organizations with the advancement of the United Nations Global Compact’s 10 Principles and 17 Sustainable Development Goals.

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Peru Approaching Lithium Discovery Announcement with Caution

(Efe, 6.Sep.2018) — Peru’s government is exercising caution after mining company Macusani Yellowcake announced in July that it had discovered the world’s largest lithium deposit, the energy and mines minister said Thursday.

The company, a unit of Canada’s Plateau Energy Metals, estimated that the deposit in Peru’s Altiplano region holds at least 2.5 million tons of lithium (more than the reserves of Bolivia and Chile) and 124 million pounds of uranium, Francisco Ismodes said.

“We have to treat it with caution,” Ismodes said at a press conference in Lima.

Though acknowledging the importance of the announcement, he said Peru’s lithium is mixed with rock and thus its characteristics are different from the reserves of that light and soft metal that are found in Bolivia.

Ismodes said the Peruvian government had only had preliminary meetings thus far with the mining company that carried out the exploration work in the country’s southeastern Puno region, near the border with Bolivia, and acknowledged that the government needed to gather more information.

Since the so-called Falchani deposit also contains uranium, the Energy and Mines Ministry is working on a bill for the development of that radioactive element and plans to introduce it before year’s end.

Peru currently has no regulations governing uranium development.
Ismodes also guaranteed that no project would be launched to develop the lithium deposit without taking into account protected cultural or landscape heritage sites.

Plateau Energy Metals’ chief operating officer, Laurence Stefan, said initially that annual production of lithium rocks at the Falchani deposit could total between 5-6 million tons, allowing the company to obtain 50,000 to 60,000 tons of lithium carbonate.

Strong demand is expected in the future for lithium-ion batteries, which power a wide range of electrical and electronic devices, including electric vehicles, mobile phones and laptop computers.

***

The Latest Episode in the Crystallex-Venezuela Saga

(Mining.com, Valentina Ruiz Leotaud, 29.Aug.2018) — State-owned Petróleos de Venezuela SA or PDVSA announced on Twitter that it filed an appeal requesting that a Delaware court vacate a decision made public on August 23 granting Canadian miner Crystallex the right to seize its U.S. assets.

In its statement, the oil company said it had filed a petition on Friday, August 24, 2018, to the 3rd U.S. Circuit Court of Appeals. The petition is to direct the Delaware District Court to acknowledge it had been “divested of jurisdiction with respect to PDVSA and its property.”

The petition refers to a decision made on August 9, 2018, by U.S. District Judge Leonard Stark in the eastern U.S. state. Stark approved a request by Crystallex to attach shares in PDV Holdings, a U.S. subsidiary of PDVSA that indirectly controls refiner Citgo.

Citgo owns three refineries in Louisiana, Texas and Illinois, as well as other assets that have been valued between $8 billion and $10 billion.

With this move, Crystallex is aiming at collecting a $1.4-billion-award in compensation following a decade-long dispute over Venezuela’s 2008 nationalization of its gold mine in the southern Bolívar state. The amount is comprised of $1.2 billion plus $200 million of interest awarded by a World Bank arbitration tribunal in 2016.

If PDVSA’s appeal does not proceed, the Nicolás Maduro government could be forced to comply to Crystallex’s demands.

The Canadian firm has accused the Nicolás Maduro government of performing “fraudulent transfers” to avoid paying what it owes. Among those transactions, Crystallex has cited the payment of dividends from PDV Holding to PDVSA for $2.2 billion and the issuance of 49.9% of Citgo’s shares to secure a $1.5 billion loan granted by Russian giant Rosneft in 2016.

A lawsuit introduced by the miner against such asset transfers by Citgo was initially dismissed in January 2018, but the Toronto-based company requested a new hearing.

Nevertheless, PDVSA’s lawyers have argued that Crystallex cannot seize the holding company’s shares because it doesn’t have proper grounds for suing in the U.S. and because it couldn’t show the unit was the Venezuelan company’s “alter ego.”

In November 2017, Crystallex and Venezuela agreed to settle the dispute before Ontario Superior Court Justice Glenn Hainey. However, the deal did not resolve the fight over the $1.2 billion award because the cash-strapped South American country did not honour its payments.

With files from Reuters, Bloomberg, El Universal.

***

Trinidad Imports 40% of Oil from Russia

(Energy Analytics Institute, Ian Silverman, 27.Aug.2018) —Trinidad and Tobago is relying on Russia as its main source of imported crude oil.

Between January and June 2018, the small twin-island country imported over 15 million barrels of crude oil from the [Petrotrin] refinery. Of that, 40% of the crude oil imports came from Russia, 29% from Colombia, 22% from Gabon, 8% from Canada and 1% from Barbados, announced Trinidad and Tobago’s Energy Chamber in a twitter post.

Caribbean Economist Marla Dukharan commented on the situation in the following twitter post.

***

Rosneft May Challenge Crystallex Claim To Citgo Shares

(Oilprice.com, Irina Slav, 23.Aug.2018) — Rosneft has asked a U.S. federal court to establish “a robust appraisal and sale process” of Citgo shares following Canadian miner Crystallex’ win at court against the parent company of Citgo, PDVSA, Argus Media reports citing documents submitted by Rosneft to court.

“Such a course of action is particularly appropriate under the circumstances given the multitude of parties and interests potentially affected by a sale of PdVH,” the documents said.

Crystallex was ruled the winner in a long-running case against Venezuela, which it has sued over the forced nationalization of its assets by the Hugo Chavez government. A U.S. federal judge last week awarded the miner the right to approach Venezuela’s U.S. oil unit, Citgo, to seek its compensation of US$1.4 billion.

Yet the Russian state company has priority rights over 49.9 percent in Citgo. PDVSA used the stake as collateral for a US$1.5-billion loan provided by Rosneft in 2016. The move at the time sparked a lot of negative comments in the United States, with some legislators worried that Rosneft could at some point take control over the U.S. company. The rest of the Citgo stock has been pledged as collateral to a PDVSA bond issue that matures in two years, Argus Media notes.

Now Crystallex wants to take control over the refiner, which operates a refinery network with a daily capacity of 750,000 bpd, and then sell the stock on to another investor or investors to get its US$1.4 billion. The sum was awarded to the Canadian miner as compensation for the forced nationalization of its operations in Venezuela by the Hugo Chavez government.

At the time, the Associated Press noted that the ruling by Chief Judge Leonard P. Stark is unique: government assets such as Citgo’s parent, PDVSA, are as a rule protected from lawsuits targeting a state. Yet in Stark’s ruling, the judge said that Venezuela had blurred the lines between the government and the state oil firm, with a military official at the helm of PDVSA.

***

Venezuela Agrees to Pay $2 Bln Over Seizure of Oil Projects

(The New York Times, Clifford Krauss, 20.Aug.2018) – More than a decade ago, Venezuela seized several oil projects from the American oil company ConocoPhillips without compensation. Now, under pressure after ConocoPhillips carried out its own seizures, the Venezuelans are going to make amends.

ConocoPhillips announced on Monday that the state oil company, Petróleos de Venezuela, or Pdvsa, had agreed to a $2 billion judgment handed down by an International Chamber of Commerce tribunal that arbitrated the dispute. Pdvsa will be allowed to pay over nearly five years, but as it is nearly bankrupt, even those terms may be hard to meet.

After winning the arbitration ruling in April, ConocoPhillips seized Pdvsa oil inventories, cargoes and terminals on several Dutch Caribbean islands. The move seriously hampered Venezuela’s efforts to export oil to the United States and Asia, and emboldened other creditors to seek financial retribution.

“What they did was choke the exports and made it clear to Pdvsa that the cost of not coming to an agreement would be higher than actually settling on a payment schedule,” said Francisco J. Monaldi, a Venezuelan oil expert at Rice University.

As its oil production has plummeted to the lowest levels in decades, Venezuela has fallen behind on more than $6 billion in bond payments. Pdvsa has already defaulted on more than $2 billion in bonds after failing to make interest payments over the last year, and owes billions of dollars more to service companies.

Adding to Venezuela’s woes, the Trump administration has imposed sanctions that prohibit the purchase and sale of Venezuelan government debt, including bonds issued by the state oil company.

Mr. Monaldi said Pdvsa would be forced to pay ConocoPhillips with money it would have paid other creditors and would probably delay some oil shipments to China it owes in separate loan agreements. He added that “there is not a negligible probability” that at some point it will discontinue payments for lack of money.

Hyperinflation, corruption and growing starvation have crippled the Venezuelan economy, as the socialist government is forced to choose between buying food and medicine and satisfying the demands of creditors. Over the last few days, the government has scrambled to deal with its economic crisis by sharply devaluing its currency, raising wages and promising to shave energy subsidies.

Venezuela has the largest oil reserves in the world. Its crisis has tightened global oil markets at a time when threatened United States oil sanctions against Iran could drive up prices.

The settlement with ConocoPhillips over the 2007 seizure resolves a drawn-out legal struggle, at least for the time being.

“As a result of the settlement, ConocoPhillips has agreed to suspend its legal enforcement actions of the I.C.C. award, including in the Dutch Caribbean,” ConocoPhillips said in a statement.

Pdvsa, which did not comment on the agreement, is to pay the first $500 million within 90 days.

ConocoPhillips is pursuing a separate arbitration case over the same seizure against the government of Venezuela before the World Bank’s International Center for Settlement of Investment Disputes, which could result in another large settlement award, perhaps as high as $6 billion.

That amount would probably be unpayable, experts say, but it could put ConocoPhillips in a strong position to obtain access to Venezuelan oil fields in the future if the current government eventually falls.

Pdvsa’s problems with creditors are far-reaching, putting its American Citgo assets, including three large refineries and a pipeline network, in jeopardy. A federal judge in Delaware recently ruled that Crystallex, a Canadian gold mining company, could seize over $1 billion in shares of Citgo as compensation for a 2008 nationalization of a mining operation in Venezuela.

Citgo is appealing. If it loses, that may open the way for more claims on Citgo assets by companies whose investments have been expropriated in Venezuela, including Exxon Mobil.

***

Frontera Confirms Discovery at Acorazado-1 Well in Colombia

(Energy Analytics Institute, Jared Yamin, 19.Aug.2018) – Canada’s Frontera Energy Corporation confirmed the presence of hydrocarbons in the Mirador reservoir in the Acorazado-1 exploration well in Colombia.

The well is located on the 100% owned and operated Llanos 25 block onshore Colombia. As a result, the well is being cased in preparation for testing, announced Frontera in an official statement. The testing program, depending upon results, is expected to take several weeks, the company said.

The Acorazado-1 exploration well reached a total measured depth of 15,470 feet into the target formation where the company recorded hydrocarbon shows in a Mirador Reservoir section with 356 feet of gross thickness.

Frontera says the well was drilled ahead of schedule and under budget. The pre-drill cost estimate to drill the well was $35 million to$50 million.

Next, Frontera plans to run and cement a liner in preparation for testing, bringing the well cost to date to $40 million, excluding future testing costs.

Wireline logging operations combined with a limited pressure and sampling program have confirmed the presence of hydrocarbons in several potentially productive zones. Total hydrocarbon column and potential net pay is still under evaluation, the company said.

***

Frontera to Plug, Abandon Delfin Sur-1 Exploration Well

(Energy Analytics Institute, Jared Yamin, 18.Aug.2018) – Frontera Energy Corporation declared the Delfin Sur-1 exploration well offshore Peru non-commmercial.

On August 12, 2018, the company completed drilling the well, located on the Z-1 block offshore. The well was drilled to a total measured depth of 7,228 feet in the Heath Formation, on time and on budget and evaluated the Zorritos Formation where hydrocarbon shows were encountered but not in sufficient quantities to justify further evaluation. The well is being plugged and abandoned, the company announced in an official statement. Future activity on the block is under evaluation.

Frontera has a 49% working interest in the well and is the technical operator. The company’s net capital cost of the well was approximately $14 million.

***

Venezuelan Oil Assets to be Seized by Creditors

(Express, Simon Osborne, 16.Aug.2018) – Venezuela’s oil assets are being targeted by angry creditors after a US court granted a Canadian mining company permission to send in the bailiffs.

Firms owed billions by the beleaguered South American country and its state-owned oil firm PDVSA are now lining up to make sure they get a pay-out.

The Venezuelan economy is crippled by hyperinflation and the discredited regime of President Nicolás Maduro faces trade sanctions from the US, EU, Canada and Latin America’s biggest countries.

The country is essentially bankrupt and creditors see its oil assets as their best bet with the biggest target being Citgo, a Texas-based oil refiner that processes Venezuelan crude oil and is estimated to be worth roughly £3.15bn.

Oil tankers could also be targeted as US hedge fund Elliott Management did with an Argentine ship in 2012 after it won a US court ruling to collect on unpaid debts.

Venezuela, which is overdue on about £4.5bn in debt payments, is reportedly transferring oil cargoes to safe harbours including Cuba to avoid such risks.

Canadian mining company Crystallex won a key battle in its attempts to force Venezuela to pay £1.1bn in compensation for expropriation of a mining project when a US judge accepted its argument that PDVSA was an “alter ego” of the Venezuelan state and gave it the right to seize PDVSA assets in the US.

Francisco Rodriguez, chief economist of Torino Capital said the ruling could serve as a precedent.

He said: “This judgment is unambiguously negative for Venezuela, given its loss of an asset of significant value. In all likelihood the ruling will spur creditors to attempt to pursue PDVSA assets.”

ConocoPhillips has already won a £1.57bn arbitration award against PDVSA from the International Chamber of Commerce, the US oil major seized the company’s assets in the Caribbean.

The seizures left PDVSA without access to facilities that process almost a quarter of Venezuela’s oil exports.

To avoid the risk of other assets being taken, PDVSA asked its customers to load oil from its anchored vessels acting as floating storage units.

Citgo’s complicated ownership – half the company is security against more than £2.36bn of PDVSA bonds and half is collateral for a £1.18bn loan from Russian oil giant Rosneft – means any immediate plundering of its assets is extremely unlikely.

Robert Kahn, a professor at the American University and a former International Monetary Fund official, said: “The ruling is a win for Crystallex, no doubt. But I’m not convinced that it immediately marks a tipping point.”

Richard Cooper, senior partner at New York law firm Cleary Gottlieb Steen & Hamilton, said: “The Crystallex ruling doesn’t mean that every Republic of Venezuela bondholder can automatically assume that PDVSA assets are available to them.”

Venezuela also owes tens of billions of dollars to China and Russia but its sole foreign-exchange generating industry is in steep decline with oil output dropping below the 1947 levels of 1.3m barrels per day.

***

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.

***

 

Crystallex Cuts Others In Line for Citgo Assets

(Energy Analytics Institute, Jared Yamin, 11.Aug.2018) – Crystallex seems to have cut in line while there are many others already in line for CITGO assets and value.

What follows are comments published by Venezuelan oil analyst Francisco Monaldi in a series of tweets related to the legal battle over CITGO:

1) The value of CITGO is much higher than the claim by Crystallex, which by the way was an outrageously high amount for that expropriation,

2) This is the beginning of a shark fest of claims and lawsuits. There are many others in line for CITGO assets and value, CITGO bond holders, CITGO creditors, PDVSA 2020 bondholders, Rosneft, Conoco, other PDVSA and Venezuela creditors and ICSID claimants. It seems to me that Crystallex should not be ahead in this line,

3) In the short term this would be a blow for PDVSA making it harder to get diluents from the US and to earn cash from its heavy exports, but it is just the last in a long list of troubles including default and sanctions,

4) In the long term it would be a big blow to Venezuela, losing a strategic asset to access the USGC market in competition with Canadian heavy, particularly after Keystone is completed,

5) Outside of CITGO, Venezuela has only a few much less valuable assets, what claimants will try is to seize or disrupt PDVSA’s flows of oil and receivables, and force them to negotiate something, and

6) This is a tragic story of recklessness and incompetence by the chavismo, increasing the debt without investment, expropriating and destroying value, in the middle of an oil boom. The consequences, collapsed oil production and now the final reckoning with their claimants…

***

Crystallex Wins Right To Tap Citgo For Compensation

(OilPrice.com, Irina Slav, 10.Aug.2018) – Canadian gold miner Crystallex was ruled the winner in a long-running case against Venezuela, which it has sued for the forced nationalization of its assets by the Hugo Chavez government. A U.S. federal judge this week awarded the miner the right to approach Venezuela’s U.S. oil unit, Citgo, to seek its compensation of US$1.4 billion.

The Associated Press notes the ruling by Chief Judge Leonard P. Stark is unique: government assets such as Citgo’s parent, PDVSA, are as a rule protected from lawsuits targeting a state. Yet in Stark’s ruling, the judge said that Venezuela had blurred the lines between the government and the state oil firm, with a military official at the helm of PDVSA.

There is no reason to believe Crystallex will not seek to enforce the ruling as soon as possible after a decade-old legal battle. Should this happen, PDVSA, according to AP, might have to liquidate Citgo to get funds for the settlement. The company is worth a lot more than US$1.4 billion—it is valued at around US$8 billion—but cash-strapped Caracas does not have a lot of funding sources at the moment.

The judge has delayed the enforcing of the ruling for a week, possibly to give Crystallex and Caracas time to try and reach a payment agreement.

What could make matters worse for Venezuela is the fact that Crystallex is by far not the only company seeking compensation for the nationalization of its business in the country, and now more of those rulings could follow. ConocoPhillips is another one: the company earlier this year won a court order allowing it to seize PDVSA assets in the Caribbean as a way of getting US$2.04 billion in compensation for the nationalization of two projects by the Chavez government.

AP also quoted a broker from Caracas Capital Markets as saying bondholders could follow suit demanding their money, too. Bondholders are owed US$65 billion in bonds that Caracas stopped servicing a year ago.

“This was the most vulnerable low hanging fruit for debtholders to go after. It looks like Crystallex is the lucky lottery winner because they got there first,” Russ Dallen said.

***

Crystallex Court Win Against Venezuela Aided by Finding

(Reuters, Brian Ellsworth, 10.Aug.2018) – Crystallex’s victory in a legal battle with Venezuela that paves the way for it to collect a $1.4 billion award hinged on a finding that state oil company PDVSA is not separate from the Venezuelan government, court documents showed on Friday.

The U.S. District Court for the District of Delaware granted Crystallex’s request to take ownership of shares in PDVSA subsidiary of PDVH, which owns U.S.-based refiner Citgo, as part of a decade-long dispute over the 2008 nationalization of Crystallex assets.

“Crystallex has met its burden to rebut the presumption of separateness between PDVSA and Venezuela and proven that PDVSA is the alter ego of Venezuela,” wrote Judge Leonard P. Stark in the decision.

The issue has been closely watched by investors holding billions of dollars in Venezuelan bonds, which are almost all in default as the OPEC nation struggles under the collapse of its socialist economy.

Legal experts had generally believed that creditors of Venezuela, which has few foreign assets available to be seized by creditors, would have a difficult time pursuing claims against PDVSA because the two were considered separate.

Venezuela two years ago put up 49.9 percent of Citgo shares as collateral for a $1.5 billion loan from Russian oil major Rosneft. The remaining 50.1 percent was set aside as collateral for PDVSA’s 2020 bond.

Judge Stark said the court had not yet determined when it would issue a writ allowing Crystallex to assume ownership of the shares of PDV Holding Inc, or what mechanism should be used to sell those shares.

“The decision could make it more complicated if other courts ignore the boundary between the government and PDVSA,” said Mark Weidemaier, a professor at the University of North Carolina School of Law. “It expands the pool of creditors that could go after PDVSA and casts a shadow over its ability to keep its oil receivables safe.”

PDVSA did not immediately respond to a request for comment.

Information Minister Jorge Rodriguez, asked by a reporter about the decision during a press conference on Friday, declined to comment on it.

Legal counsel for Crystallex declined to comment.

PDVSA’s 2020 bond dropped 4.500 points in price to 85.500 on Friday

Bonds issued by PDVSA and Venezuela were down slightly, in line with a broad selloff in global markets on Friday.

( Additional reporting by Jonathan Stempel in New York, Editing by Paul Simao and Cynthia Osterman)

***

U.S. Judge Authorizes Seizure of Venezuela’s Citgo

(The Wall Street Journal, Andrew Scurria and Julie Wernau, 9.Aug.2018) – A U.S. federal judge authorized the seizure of Citgo Petroleum Corp. to satisfy a Venezuelan government debt, a ruling that could set off a scramble among Venezuela’s many unpaid creditors to wrest control of its only obviously seizable U.S. asset.

Judge Leonard P. Stark of the U.S. District Court in Wilmington, Del., issued the ruling Thursday. However, his full opinion, which could include conditions or impose further legal hurdles, was sealed. A redacted version is expected to be available at a later date.

The court order raises the likelihood that Venezuela’s state oil company, Petróleos de Venezuela SA, will lose control of a valuable external asset amid the country’s deepening economic and political crisis. The decision could still be appealed to a higher, federal court.

Attorneys for PdVSA weren’t available for comment. Citgo declined to comment.

Crystallex International Corp., a defunct Canadian gold miner that filed the legal action, is trying to collect on a judgment over lost mining rights involving Venezuela’s government. It has targeted Citgo, an oil refiner, because this is the largest U.S. asset of the cash-strapped and crisis-riven country.

Many other creditors of Venezuela are also circling Citgo, but Crystallex is the first to win a judgment authorizing its seizure. Crystallex had argued that Citgo was ultimately owned by PdVSA, which is an “alter ego” of Venezuela that is liable for the South American country’s debts. The judge’s decision in favor of Crystallex allows it to take control of shares of Citgo’s U.S.-based parent company, the first step toward a sale of the company.

Venezuela and its various state-controlled entities together have $62 billion of unsecured bonds outstanding, with approximately $5 billion so far in unpaid interest and principal. Analysts estimate that the government has approximately $150 billion total in debt outstanding to creditors around the world.

Venezuela and its state-controlled entities including PdVSA began missing bond payments last year and have since spiraled into a widespread default. U.S. sanctions bar creditors from engaging the Venezuelan government in any kind of restructuring or buying new debt.

For Venezuela, losing control of Citgo could jeopardize one of its only remaining sources of oil revenue, the U.S. At the same time, investors in Venezuela’s defaulted debt—as well at least 43 companies pursuing legal claims against the government—risk losing one of the few obvious assets in the U.S. that can be seized for repayment.

The only payment made this year by Venezuela was $107 million on its PdVSA bonds, due 2020, for which Citgo is pledged as collateral. That was a clear move by Caracas to protect that asset, analysts have said.

Without ownership of Citgo, investors worry PdVSA would have little incentive to continue to pay on the debt

Any sale of Citgo stock would require U.S. Treasury Department approval, and Crystallex needs to clear other legal hurdles before the shares could be sold.

In trying to lay claim to Citgo, creditors are following a familiar playbook. Hedge funds led by Elliott Management Corp. did something similar when they went after Argentine assets following that country’s 2001 default, the largest sovereign default at the time, on more than $80 billion in sovereign debt.

When Argentina refused to pay settlements arising from the default, the hedge funds sought out Argentine assets to seize and argued that everything from the assets of its central bank to its state-controlled oil company were an “alter ego” of the state.

Elliott in 2012 persuaded a Ghanaian court to impound a training vessel of the Argentine Navy, and in 2014 asked a California court to block Argentina from launching satellites into space. Argentina settled with the hedge funds in 2016, delivering gains of as much as 900% on some of their original principal investments.

***

Crystallex Can Go After Venezuela’s US Refineries

(Associated Press, 9.Aug.2018) – A Canadian gold mining company on Thursday won the right to go after Venezuela’s prized U.S.-based oil refineries and collect $1.4 billion it lost in a decade-old take-over by the late socialist President Hugo Chavez.

Chief Judge Leonard P. Stark of the U.S. Federal District Court in Delaware made the ruling in favor of Crystallex, striking a blow to crisis-wracked Venezuela, which stands to lose its most valuable asset outside of the country – Citgo.

Chavez took over the gold mining firm and many other international companies as part of his Bolivarian revolution that’s left the country spiraling into deepening economic and political turmoil.

Venezuelans struggle to afford scarce food and medicine as masses flee across the border. In a sign of rising political tensions, current President Nicolas Maduro threw an opposition lawmaker in jail this week, charged in a failed assassination plot using two drones loaded with explosives.

The latest order by the U.S. judge could set off a scramble by a long list of creditors owed $65 billion from bonds that cash-strapped Venezuela has stopped paying within the last year, said Russ Dallen, a Miami-based partner at the brokerage firm Caracas Capital Markets.

“This was the most vulnerable low hanging fruit for debtholders to go after,” Dallen said. “It looks like Crystallex is the lucky lottery winner because they got there first.”

Chavez in early 2009 announced Venezuela’s take-over of the Canadian mining operations in Bolivar state, a mineral rich region with one of the continent’s largest gold deposits. He accused mining companies of damaging the environment and violating workers’ rights.

Crystallex spent years trying to negotiate a deal with Venezuela before making its case in 2011 to a World Bank arbitration panel, which sided with the Canadian firm, despite Venezuela’s vigorous fight.

U.S.-based Citgo, part of the state-run oil company PDVSA, has three refineries in Louisiana, Texas and Illinois in addition to a network of pipelines. If the order is carried out, Crystallex won’t get all of Citgo – valued at $8 billion – but Venezuela could be forced to liquidate it to make good on the court order.

Today, the gold mining region once operated by Crystallex is largely lawless and dangerous, run by rogue miners who blast the earth with water and mercury to expose gold nuggets and sell them to government forces, often leading to deadly conflicts.

The judge’s ruling is unique, because government assets, like PDVSA, are normally protected from lawsuits against a sovereign nation. But the judge found that Crystallex can attach Citgo’s parent because Venezuela has erased the lines between the government and its oil firm, now run by a military general.

Upon issuing the order, the judge delayed enforcing it for a week, which Dallen said could be a move to give Crystallex and Venezuela time to reach an agreement, such as returning to payment terms of an earlier resolution, Dallen said.

“This gives Venezuela the chance to honor its settlement agreement,” Dallen said. “Or they’ll lose Citgo.”

***

Guyana Oil Find Quadruples FDI Flows

(Jamaica Gleaner, CMC, 8.Aug.2018) – Regional commission ECLAC is reporting that foreign direct investments, FDI, in Guyana increased to US$212 million last year in part as a result of the oil and gas sector preparing for First Oil.

The flows nearly quadrupled relative to 2016 when foreign investments in the country were estimated at US$58 million.

Guyana has “bucked the trend” for flows to Latin America and the Caribbean as a region, which contracted 3.6 per cent last year, said the Economic Commission for Latin America.

“FDI grew in all sectors, except in manufacturing,” said ECLAC in a report on regional FDI flows. “The energy sector received US$90 million as part of a first wave of inward FDI related to ExxonMobil’s discovery of major oil reserves off Guyana’s coast. While it continues with its successful exploration efforts, ExxonMobil decided to launch the first development phase of the Liza field with an investment of US$4.4 billion,” the report added.

ExxonMobil expects to begin oil extraction in 2020.

The report also noted that Guyana hopes to take advantage of the international interest in the oil finds to promote other sectors, such as agriculture and mining.

“In the latter, Canadian mining company First Bauxite Corporation announced a bauxite production project valued at US$50 million, with construction of facilities set to begin in 2018,” ECLAC said.

Meanwhile, Guyana is putting together a list of priority projects it wishes to complete with resources provided under the China Belt and Road Initiative.

Under a Memorandum of Understanding signed with China, Minister of State Joseph Harmon said at a press briefing that Guyana will be able to tap into resources from the Belt and Road, which is intended to make available resources to recipient countries for projects related to transportation, and information and communications technology.

Guyana has now joined Panama, Bolivia, Trinidad & Tobago and Antigua & Barbuda as countries in Latin America and the Caribbean that have signed on to the initiative.

***

Advantage Lithium Arranges $12 Mln Private Placement

(Energy Analytics Institute, Jared Yamin, 18.Jul.2018) – Vancouver, British Columbia-based Advantage Lithium Corp. arranged a private placement of 15,585,000 common shares of Advantage Lithium at a price of $0.77 per Common Share for gross proceeds of $12,000,450.

“We are pleased to be adding prominent institutional investors to our shareholder registry and very encouraged to see Orocobre and other insiders supporting their pro-rata equity positions in Advantage,” said Advantage Lithium Corp. President, CEO & Director David Sidoo in an official company statement.

Subscribers have been identified to fill the placement. Proceeds from the placement will destined to cover general working capital and to fund continued development and exploration activities on its lithium properties in Argentina, the company announced in an official statement.

Common shares issued pursuant to the private placement will be subject to a four month hold period from the date of closing. The private placement remains subject to the approval of the TSXV.

Focused on developing its 75% owned Cauchari lithium project, located in Jujuy, Advantage Lithium Corp also owns 100% interest in three additional lithium exploration properties in Argentina: Antofalla, Incahuasi, and Guayatayoc.

Insiders

Advantage Lithium anticipates insiders of the corporation, including Orocobre Limited, will exercise participation rights in order to maintain their existing ownership interest in the company. In connection with the private placement, the insider also intends to arrange for the sale of up to 8,571,450 common shares, held by the insider prior to the closing of the private placement, through the facilities of the TSX Venture Exchange Inc., and to use 100% of the proceeds from the swap to participate in the private placement. The swap will allow Advantage Lithium to add key cornerstone institutional investors to the company’s register of shareholders, according to the statement.

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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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Costa Rica to Use Plastics for Roads

(Energy Analytics Institute, Ian Silverman, 10.Jul.2018) – A small Central American country will be considered a pioneer in the region with use of a type of “eco-friendly asphalt” that gives a new life to plastics.

This week the Costa Rican government announced the country would begin to pave streets with a mixture of asphalt and crushed plastics thanks to a development by the National Laboratory of Materials and Structural Models, the University of Costa Rica and several recycling organizations, reported the daily newspaper LaRed21.

The “green asphalt” is already used in other countries such as England, India and Canada, but Costa Rica will be the first from the Latin American region to implement the process.

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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 Aims to Lower Costs in Colombia

(Energy Analytics Institute, Ian Silverman, 22.Jun.2018) – Frontera Energy Corporation aims to lower certain costs in Colombia.

The Canadian company continues with efforts to reduce its transportation costs, including those associated to the Bicentenario pipeline, which has been continuously affected by attacks directed at the Caño Limon pipeline, the company announced in an official statement.

Frontera expects talks involving Colombia’s state owned or majority state owned companies (such as Bicentenario) will continue past the second quarter of 2018 due to the ongoing presidential elections.

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G20 Energy Heads Gather in Argentina

(Xinhua, 14.Jun.2018) – Energy ministers from G20 countries met here on Thursday to discuss transitioning to renewable energy and other alternative green energy.

The gathering in Argentina’s southwestern city of Bariloche is part of the fourth ministerial meeting of the G20 group of developed and emerging economies, which Argentina currently chairs.

Ministers of energy and natural resources, as well as experts from international organizations such as OPEC and the OECD, are to discuss ways to promote energy efficiency, industry transparency and technology in the sector, as well as alternative sources of energy.

Argentine Energy and Mining Minister Juan Jose Aranguren, along with Canada’s minister of natural resources, James Gordon Carr, were to hold a press conference on the deliberations later in the day.

The G20 envoys were also scheduled to tour INVAP, Argentina’s state-run company specializing in designing and building equipment for nuclear, oil, chemical and aerospace industries.

A press conference is also scheduled after the meeting concludes Friday afternoon, with Aranguren, Thorsten Herdan, Germany’s director general of energy policy, and Yoji Muto, Japan’s minister of economy, trade and industry.

The Group of 20 accounts for 77 percent of the world’s energy consumption and more than 80 percent of the world’s renewable energy capacity, as well as 85 percent of global GDP, two-thirds of the world’s population and 75 percent of global trade.
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Frontera Plows Forward in Colombia

(Energy Analytics Institute, Ian Silverman, 12.Jun.2018) – Canada’s Frontera Energy Corporation continues its active drilling program in Colombia.

The company had six (6) drilling rigs operating continuously in the first two months of the second quarter of 2018, of which three (3) were active in the Quifa heavy oil area, two (2) on the light oil-focused Guatiquia block, and one (1) drilling the high impact Acorazado-1 well in the Llanos 25 block, the company announced in an official statement.

Guatiquia block

Frontera commenced drilling the Alligator-3 development well on the Guatiquia block on May 10, 2018. On April 27, 2018, the well reached a total depth of 12,416 feet (12,189 feet TVD), encountering 31.5 feet of net pay in the Lower Sand-1A formation. The well was completed in the Lower Sand-1A formation with an electrical submersible pump.

The Lower Sand-1A formation has been flow tested for approximately 13 days at an average rate of 1,800 barrels per day (b/d) of 18.2 degree API oil with an average water cut of 40% at stabilized bottomhole flowing pressure with an approximate 34% drawdown. The well has produced a total of 27,500 barrels of oil since start of production.

At the Guatiquia block, Frontera continues to have exploration success. During the quarter, the company completed testing the Coralillo-1 well in two zones. On May 10, 2018, the company reported the Lower Sand-1A formation was flow tested for approximately 11 days at an average rate of 1,050 b/d of 15.3 degree API oil with an average water cut of 1% at stabilized bottomhole flowing pressure with a 60% drawdown. Subsequently, the well was shut-in for a 5-day pressure buildup test. Results confirmed positive reservoir properties, low formation damage and no depletion during the testing period.

Additionally, on May 18, 2018, the company began testing the well in the Guadalupe formation. In this formation, the well was initially flow tested for 10 days at an average rate of 800 b/d of 17.1 degree API oil with an average water cut of 1.1% at stabilized bottomhole flowing pressure with an approximate 38% drawdown. Since discovery, the Guadalupe formation has produced a total of 8,140 barrels of oil. Following the initial production test in the Guadalupe formation, the well was shut-in for a pressure buildup test. Given the positive results, on May 22, 2018, the company requested permission from the Agencia Nacional de Hidrocarburos (ANH by its Spanish acronym) to conduct long term testing for the well.

Quifa block

Frontera has drilled nine (9) horizontal oil development wells to date at the Quifa block during the second quarter of 2018. In addition, the company commenced construction of facilities to expand its water handling capabilities on the block, which is expected to be operational during the fourth quarter of 2018. The company plans to boost the number of active drilling rigs in the Quifa area from three (3) to five (5) in mid-June. As the company adds water handling capacity during the third quarter it expects the number of active drilling rigs to increase to six (6).

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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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Brookfield Buys Remaining Interest in Gas Natural Fenosa

(Energy Analytics Institute, Jared Yamin, 29.May.2018) ‐- Spain’s Gas Natural Fenosa is finally exiting Colombia.

The company sold 15.46 million shares, representing the remaining 41.89% interest in gas distributor Gas Natural ESP, to Canada’s Brookfield Asset Management, which had officially launched a takeover bid, announced the daily La Republica, citing a report from the Colombian Stock Exchange (BVC by is Spanish acronym).

The total value of the transaction is valued at COL$1.124 billion, according to the daily. With the closing of this deal, Brookfield, which already held a 59.1% interest in Gas Natural Fenosa, will be the outright owner of the company.

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Canacol Announces Timing of 2018 Shareholders Meeting

(Energy Analytics Institute, Ian Silverman, 26.May.2018) – Canacol Energy Ltd., the exploration and production company with operations focused in Colombia, announced its Annual General Meeting of Shareholders will be held on July 3, 2018, in Calgary, Canada.

Canacol’s common stock trades on the Toronto Stock Exchange, the OTCQX in the United States of America, and the Colombia Stock Exchange under ticker symbol CNE, CNNEF, and CNE.C, respectively.

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Lawsuits Push Venezuela to Brink of Default

(Energy Analytics Institute, Piero Stewart, 17.Feb.2017) – A Paris Court of Appeal’s rejection of an annulment from Venezuela will force the cash-strapped South American country to pay $730 million to Canada’s Gold Reserve Inc.

This lawsuit and others pending in international courts, should they be rendered with final decision against Venezuela, could push the country to the brink of default.

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Paris Court Favors with Gold Reserve

(Gold Reserve Inc., 7.Feb.2017) – Gold Reserve Inc. announced that on February 7, 2017, the Paris Court of Appeal rejected all of Venezuela’s arguments and issued a judgment dismissing the annulment applications filed by Venezuela pending before the French courts in relation to the arbitral award dated September 22, 2014 rendered by the International Centre for Settlement of Investment Disputes (ICSID), against the Bolivarian Republic of Venezuela.

At the Court in October 2014 and January 2015, respectively, Venezuela filed annulment applications regarding the Award and regarding the December 15, 2014 arbitral decision dismissing its request for rectification. During the same period, the company applied to the Court for exequatur of the Award, which entails recognition and enforcement of the Award in France. The Court issued the exequatur on January 29, 2015 declaring the Award to be recognized and enforceable in France.

The Court considered and rejected each of the arguments raised by Venezuela, confirming that (a) the arbitral tribunal properly took jurisdiction over the matter, (b) the parties were treated equitably, and the rights of defense and the adversarial principles were respected, (c) the arbitral tribunal ruled within the mandate conferred upon it, and (d) the Award is not contrary to French international public policy.

As a result, the Court has dismissed the annulment applications filed by Venezuela, and therefore the Award in the amount of $713,032,000 plus interest remains enforceable in France. The Court also ordered Venezuela to pay an amount of €150,000 for the company’s legal fees and costs. Venezuela can consider the option of appealing the judgment before the French Cour de cassation, which is the court of final resort in the French judicial system.

James Coleman, Chairman of the Board, stated, “Even though we prevailed in this matter we consider Venezuela our partner and look forward to satisfaction of the Settlement Agreement and advancing the development of the gold copper silver Siembra Minera Project (Brisas Cristinas).”

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Gran Tierra Common Stock Offering

(Gran Tierra Energy Inc., 29.Nov.2016) – Gran Tierra Energy Inc. closed the previously announced underwritten public offering of shares of its common stock. The company sold 43,335,000 shares of its common stock at a public offering price of US$3 per share, for aggregate gross proceeds to the company of approximately $130 million. The company intends to use the net proceeds from the offering to repay borrowings outstanding under the company’s revolving credit facility, which amounts may be reborrowed for general corporate purposes, including to fund appraisal and development and to finance potential acquisitions.

The offering was made to the public in the United States and Canada through a syndicate of underwriters led by Scotia Capital Inc., RBC Capital Markets and Dundee Capital Markets as joint book-running managers. The syndicate also included TD Securities Inc. as co-lead manager and Peters & Co. Limited, GMP Securities L.P., Morgan Stanley Canada Limited, CIBC World Markets, Canaccord Genuity Corp., Cormark Securities Inc., HSBC Securities (Canada) Inc., Natixis Securities Americas LLC and Paradigm Capital Inc. as co-managers.

The company has also granted underwriters an over-allotment option to purchase up to an additional 6,500,250 shares of its common stock solely to cover over-allotments, if any, on the same terms and conditions as the offering, including the offer price, exercisable at any time, in whole or in part, until 30 days after the date of the execution of the definitive agreement in respect of the offering. If the overallotment option is exercised in full, the aggregate gross proceeds from the offering will be approximately $149.5 million.

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President Obama Insists Venezuela Respect Democratic Process

(Energy Analytics Institute, Jared Yamin, 25.Jun.2016) – U.S. President Barack Obama insists the Venezuelan government respect the democratic process regarding calls for a recall referendum against Venezuelan President Nicolas Maduro, reported the daily El Universal.

“Political prisoners should be freed,” said Obama during a speech in Ottawa, Canada.

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Gran Tierra Announces New Executive Appointments

(Gran Tierra Energy Inc., 11.May.2015) – Gran Tierra Energy Inc. announced several new executive appointments effective immediately: Ryan Ellson, Chief Financial Officer; Alan Johnson, Vice President, Asset Management; Lawrence West, Vice President, Exploration; and Jim Evans, Vice President, Corporate Services.

“I am delighted to have four key members from the Caracal team join Gran Tierra,” said Gary Guidry, President and CEO of Gran Tierra. “The addition of Ryan, Alan, Lawrence and Jim will complement the existing excellent team at Gran Tierra.”

Mr. Ryan Ellson Joined the company as CFO. Ryan has 15 years of experience in a broad range of international corporate finance and accounting roles. Most recently, Ellson was Head of Finance for Glencore E&P (Canada) and prior thereto VP, Finance at Caracal Energy, a London Stock Exchange listed company with operations in Chad, Africa. While at Caracal Energy, Ellson was instrumental in negotiating a $330 million farm-out to Glencore, secured a $250 million reserve based lending facility (winner of several trade finance deals of the year), and involved in multiple capital raises totaling approximately $500 million. Ryan was also instrumental in the successful listing of the company on the London Stock Exchange. Prior to Caracal, Ellson held several management and executive positions with companies operating in Egypt, India and Canada. Ellson is a Charted Accountant and holds a Bachelor of Commerce and a Master of Professional Accounting from the University of Saskatchewan.

Ellson succeeds James Rozon. James will continue with the Company to assist with a smooth transition.

Additional appointments to complement the executive team at Gran Tierra include: Alan Johnson as VP Asset Management, Lawrence West as VP Exploration and Jim Evans as VP Compliance and Corporate Services.       Alan Johnson is a professional engineer with over 21 years of experience working internationally in the oil and gas industry. His experience includes varied technical, managerial and executive roles in drilling, production, reservoir, reserves, corporate planning and asset management.

Most recently Alan was Head of Asset Management for Glencore (E&P) Canada and prior thereto Director of Asset Management at Caracal Energy where he was responsible for all development activities in Chad, Africa. Alan was instrumental in developing oil and gas assets in remote areas of southern Chad, achieving first production in less than 18 months. Johnson started his E&P career with Shell International in the Dutch North Sea. He then held positions of increasing responsibility with Shell Canada, APF Energy, Rockyview Energy, Delphi Energy and BG Australia. Johnson graduated with a 1st Class B.Eng (Hons) from Heriot Watt University in Scotland. Johnson is a Chartered Engineer in the UK and a Professional Engineer in Alberta.

Lawrence West has 35 years of experience as an executive, explorationist, and geologist. Most recently West was VP, Exploration at Caracal Energy. Lawrence built a multi-disciplinary team to assess resources and grow reserves in the interior rift basins within Chad and led a successful exploration program. During his tenure he successfully executed two large 2D/3D seismic shoots in remote frontier basins, on time and on budget. Prior to Caracal he has been involved in starting and growing several public and private companies, including Reserve Royalty Corp., Chariot Energy, Auriga Energy and Orion Oil and Gas. Lawrence worked at Alberta Energy Company (AEC), where he was on the team that merged with Conwest. He built and led the AEC East team to the Rocky Mountain USA basins. His career began with Imperial Oil working on prospect and reservoir characterization, in multi-disciplinary teams, and as a technical mentor to exploration teams. Lawrence has an Honours Bachelor of Science in Geology from McMaster University and an MBA, specializing in economics, from the University of Calgary.

Jim Evans has over 20 years of experience including working the last 10 years in the international oil and gas industry. Most recently Jim was the Head of Compliance & Corporate Services for Glenore E&P (Canada) and prior thereto VP of Compliance & Corporate Services at Caracal Energy where he oversaw the execution of corporate strategy and goals, developed and implemented a robust corporate compliance program, and managed all aspects of IT, document control, security and administration. Evans also managed the recruitment, training and retention of staff in both Calgary and Chad.

He oversaw the growth of the company from seven employees to in excess of 400 as Caracal Energy exceeded 20,000 b/d at the time of sale to Glencore. Prior to Caracal, Evans held senior management and executive positions at Orion Oil and Gas and Tanganyika Oil, with operating experience in Egypt, Syria and Canada. Evans is a Certified General Accountant and holds a Bachelor of Commerce degree from the University of Calgary.

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LNG Projects Nixed Amid Low Oil

(Moody’s, 7.Apr.2015) – LNG suppliers are curtailing their capital budgets, amid low oil prices and a coming glut of new LNG supply from Australia and the U.S.A., Moody’s Investors Service said in its report, “Lower Oil Prices Cause Suppliers of Liquefied Natural Gas to Nix Projects.”

Moody’s says low LNG prices will result in the cancellation of the vast majority of the nearly 30 liquefaction projects currently proposed in the U.S.A., 18 in western Canada, and 4 in eastern Canada.

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Court Enters Default Against Venezuela

(Gold Reserve Inc., 30.Mar.2015) – Gold Reserve Inc. reported on developments in the proceedings instituted in the U.S. District Court for the District of Columbia to confirm the $740 million arbitral award dated 22.Sep.2014 rendered against the Bolivarian Republic of Venezuela. On 27.Mar.2015, the Court entered a default against Venezuela following its failure to file an appearance within the prescribed deadlines in the proceedings instituted by the company.

Legal History Leading up to the Default

On 6.Nov.2014, the company filed in the District Court for the District of Columbia a petition to confirm the Award that had been rendered by a tribunal constituted under the Additional Facility Rules of the International Center for the Settlement of Investment Disputes (ICSID) of the World Bank. Once the Award is confirmed, it will be enforceable in the U.S. as a judgment of the court.

The initial step for the proceeding was to serve Venezuela with the petition and other related documents.

Once served, Venezuela had 60 days to respond with any arguments it believes it has against the petition to confirm. Since the inception of these proceedings, Venezuela has been willfully avoiding service, refusing, among other things, to authorize its U.S. counsel to accept service.

As a result of that refusal to accept service, on 31.Dec.2014, the company initiated service in accordance with the statutory provision of the U.S. Code, and the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.

Receipt of the documents on 8.Jan.2015, was acknowledged by letter from the Venezuelan Foreign Ministry dated 6.Jan.2015, but only received by the company’s process server on 2.Mar.2015. In this letter, however, Venezuela contested the validity of the service, raising non-meritorious and irrelevant objections to service. Therefore, the company believes Venezuela was properly served on 8.Jan.2015.

As a result, and at the expiry of the 60-day period following the service of the documents, the company, on 26.Mar.2015 requested the Clerk of the District Court for the District of Columbia to enter default against Venezuela, on the basis that, as the letter from the Venezuelan Foreign Ministry clearly showed, the documents had been duly received by the proper recipient of the service process.

The Clerk agreed with the position of the company and entered default on 27.Mar.2015. The consequence of the default being entered against Venezuela in respect of appearance is that a default judgment may now be entered against Venezuela upon motion by the company.

After close of business on 27.Mar.2015, the same day that the default was entered, U.S. counsel appointed by Venezuela (the same counsel in the ICSID arbitration) entered an appearance for the purpose of opposing the entry of default and requesting that it be set aside. The company has responded to Venezuela’s opposition on 30.Mar.2015 and the matter will be decided by a judge in the near future.

The company remains firmly committed to the enforcement and collection of the Award, including interest and costs, in full, and will continue to vigorously pursue all available remedies. The Award, now amounting to approximately $750 million, continues to accrue interest at the rate of Libor plus 2% per annum.

“This is another example of Venezuela being dilatory in its actions regarding the payment of the Award. The company will continue to pursue the collection of our Award in a systematic and methodical way until Venezuela realizes that its needs to stop avoiding its international obligations and pay the Award, sooner rather than later,” said Gold Reserve President Doug Belanger. “The Company continues to have communications with designated representatives from the Venezuelan government.”

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Pacific Rubiales, Ecopetrol Extend Contract

(Pacific Rubiales Energy Corp, 14.Mar.2015) – Pacific Rubiales Energy Corp. and Ecopetrol, S.A. have agreed not to extend the Rubiales and Pirirí Field Association Contracts, expiring in June 2016 . Ecopetrol will evaluate different alternatives for the operation of the Rubiales Field. Meanwhile, Pacific Rubiales will consider submitting a new proposal to operate the field after the contract expiry. The companies have expressed interest in developing further business opportunities for the benefit of both parties and the country.

Pacific Rubiales, a Canadian company and producer of natural gas and crude oil, owns 100% of Meta Petroleum Corp., which operates the Rubiales, Piriri and Quifa heavy oil fields in the Llanos Basin, and 100% of Pacific Stratus Energy Colombia Corp., which operates the La Creciente natural gas field in the northwestern area of Colombia. Pacific Rubiales also previously acquired 100% of Petrominerales Ltd., which owns light and heavy oil assets in Colombia and oil and gas assets in Peru , and 100% of C&C Energia Ltd., which own light oil assets in the Llanos Basin. In addition, the company has a diversified portfolio of assets beyond Colombia , which includes producing and exploration assets in Peru, Guatemala, Brazil, Guyana and Papua New Guinea.

The company’s common shares trade on the Toronto Stock Exchange and La Bolsa de Valores de Colombia and as Brazilian Depositary Receipts on Brazil’s Bolsa de Valores Mercadorias e Futuros under the ticker symbols PRE, PREC, and PREB, respectively.

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Gran Tierra Announces Changes to Board

(Gran Tierra Energy Inc., 2.Feb.2015) – Gran Tierra Energy announced that the employment of its Chief Executive Officer and President Mr. Dana Coffield has been terminated. Coffield tendered his resignation from the Board of Directors, effective February 2, 2015. Coffield’s resignation from the Board of Directors was not the result of any disagreement with the Board of Directors.

The Board has appointed Chief Operating Officer Mr. Duncan Nightingale, as interim President and Chief Executive Officer, Mr. Jeffrey Scott as the Executive Chair of the Board of Directors and Mr. Scott Price as the Lead Independent Director.With these changes, Scott will become more involved in the operations of the company and provide day to day assistance to Nightingale. Scott resigned from the Audit Committee and Price was appointed as a member to that committee. These changes are effective immediately.

Nightingale is a 5 ½ year veteran of Gran Tierra Energy who served in the Calgary, Canada office as the Vice President of Exploration from September 2009 to January 2011, in the Bogotá, Colombia office as the Senior Manager Project Planning and Exploration from January 2011 until August 2011, as President of Gran Tierra Energy Colombia from August 2011 until August 2014, and was promoted to Gran Tierra Energy’s Chief Operating Officer on September 1, 2014.

Scott was a founder of Gran Tierra Energy and has served as the Chairman of the Board of Gran Tierra Energy since January 2005. Since 2001, Scott has served as President of Postell Energy Co. Ltd., a privately held oil and gas producing company. He has extensive oil and gas management experience, beginning as a production manager of Postell Energy Co. Ltd in 1985 advancing to President in 2001. Also, since February 2012, Scott has served as Executive Chairman of Sulvaris Inc., a private fertilizer technology company. Scott is also currently a director of Petromanas Energy Inc. He was previously a director of Tuscany International Drilling Inc., Essential Energy Services Trust, Suroco Energy, Inc., VGS Seismic Canada Inc., High Plains Energy Inc., Saxon Energy Services Inc. and Galena Capital Corp., all of which are publicly-traded companies.

Nightingale said: “I’m excited about my new position with the company and honored the Board has selected me for this position. I recognize, however, that it is not business as usual.”

“The Board feels it is time to re-examine the company’s strategy,” said Scott. “These are very challenging times and while we have a large inventory of opportunities and significant financial capacity, we believe it is unwise to accelerate certain opportunities in the current pricing environment. We will update the market as to this shift in our strategy in the near-term.”

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Q&A with Tudor Pickering’s David Pursell

(Energy Analytics Institute, Pietro D. Pitts, 18.Sep.2013) – Tudor Pickering Holt & Co. LLC Managing Director David Pursell spoke with Energy Analytics Institute in a brief interview from Dallas, Texas.

What follows are excerpts from the brief interview.

EAI: Are PDVSA’s CITGO assets along the US Gulf Coast strategic?

Pursell: They are strategic because they’re high complexity refineries that can handle the heavy Venezuelan crude grade. Plus, the products they make are going into the U.S., which is the most important refined product market in the world.

EAI: Could PDVSA’s CITGO assets be used as compensation if PDVSA were ordered to pay large lawsuit damages?

Pursell: You could probably take those assets in lieu of payment if ultimately there is a large damage award and the Venezuelans say they’re not going to pay you. The question is who’s going to buy those? If you buy cheap from Venezuela and a court later says we’re going to take them from you. Does this scare away a buyer?

EAI: Will Canadian crudes compete with Venezuelan crudes if the Keystone Pipeline is eventually built?

Pursell: Canadian crude will definitely compete with Venezuelan crude, as both are going to U.S. Gulf Coast.

EAI: How do you view PDVSA today?

Pursell: Venezuela before Chavez had three operating companies that were very good, they were clearly top quartile, Chavez came in, meshed them together and gutted technical expertise for political reasons and now PDVSA is a terrible company. He basically took PDVSA and made it Pemex, inept and not very good.

Editor’s Note:

Pursell holds a Masters in Petroleum Engineering. He has worked on a number of technical petroleum engineering consulting projects in Venezuela.

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