Tullow Oil to Drill First Guyana Well in 3Q:19

(Reuters, 5.Sep.2018) — Tullow Oil plans to drill its first well in the much-watched Guyana offshore basin in the third quarter of next year in its Orinduik licence bordering discoveries by Exxon, a spokesman said on Wednesday.

Exxon and U.S. partner Hess Corp have said that more than 4 billion barrels of oil equivalent could be recovered from the Stabroek block off Guyana, which is part of one of the world’s biggest oil discoveries in the past decade.

Tullow owns 60 percent and Eco Atlantic Oil and Gas 40 percent in Orinduik. Total has an option to buy 25 percent from Eco.

“Hammerhead-1 is located approximately 7 km from the Orinduik licence boundary … Hammerhead-1 found material oil in turbidite channel systems,” the Tullow spokesman said of a recent Exxon discovery in the Stabroek block.

“Our 3D seismic (data), which includes Hammerhead, shows that these channel systems extend up-dip (?) into the Orinduik licence. We will now pick the well location for our first well on this licence and remain on track for drilling that well in the third quarter of 2019.”

Tullow also has a 37.5 percent stake in the Kanuku licence offshore Guyana alongside Repsol and Total. It also owns stakes in two blocks off Guyana’s neighbour Suriname, where its partners are Ratio, Equinor and Noble.

(Reporting by Shadia Nasralla; Editing by David Goodman and Mark Potter)

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Ex-Venezuelan Energy Official Pleads Guilty

(AP, 16.Jul.2018) – A former official at a state-run electric company in Caracas, Venezuela, pleaded guilty to money laundering conspiracy relating to an alleged multibillion-dollar graft scheme in the Venezuelan oil industry.

Luis Carlos de Leon-Perez, a 42-year-old dual citizen of the United States and Venezuela, admitted his role in the scheme to bribe officials of Venezuela’s state-owned-and-controlled oil company, Petroleos de Venezuela, or PDVSA, the U.S. Attorney’s Office in Houston announced. He also pleaded guilty to conspiracy to violate the U.S. Foreign Corrupt Practices Act. He is scheduled to be sentenced Sept. 24.

De Leon admitted seeking bribes from owners of energy companies in the United States and elsewhere and directing some of the bribes to PDVSA officials.

In 2016, Venezuela’s opposition-led National Assembly said $11 billion went missing at PDVSA in 2004-2014, when Rafael Ramirez was in charge of the company. In 2015, the U.S. Treasury Department accused a bank in Andorra of laundering some $2 billion stolen from PDVSA.

Ramirez was one of Venezuela’s most powerful officials until he resigned as Venezuela’s ambassador to the United Nations in December. He was not charged in the indictment and has denied any wrongdoing, dismissing the U.S. probe into PDVSA as a politically motivated attempt to undermine President Nicolas Maduro’s socialist government.

De Leon was arrested in Spain last October and extradited to the United States after a federal grand jury in Houston returned a 20-count indictment against him, Nervis Gerardo Villalobos Cardenas, 51; Cesar David Rincon Godoy, 51: Alejandro Isturiz Chiesa, 33; and Rafael Ernesto Reiter Munoz, 39.

Cesar Rincon has already pleaded guilty to money laundering conspiracy. Roberto Enrique Rincon Fernandez, 57, of The Woodlands, Texas; and Abraham Jose Shiera Bastidas, 55, of Coral Gables, Florida, have pleaded guilty to violating the Foreign Corrupt Practices Act and await sentencing. Prosecutors say they paid bribes in exchange for contracts to build electricity generators for PDVSA at a time Venezuela was suffering widespread power outages.

In all, 12 suspects have entered guilty pleas relating to the investigation, the Justice Department said.

Villalobos, Ramirez’s former deputy at PDVSA; Reiter, PDVSA’s former corporate security chief, and Isturiz all await trial on charges of money laundering and money laundering conspiracy. Villalobos also is charged with conspiring to violate the Foreign Corrupt Practices Act. He and Reiter remain in Spain awaiting extradition, while Isturiz still has not been arrested.

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ExxonMobil Reconfirms March 2020 for First Guyana Oil

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

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

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

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

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

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

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

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

The Minister of Natural Resources said the proceeds of Guyana’s oil production would be fairly shared among all Guyanese without discrimination as part of a process that would eventually lead to the removal of negative labels such as Third World, backwards, underdeveloped and developing from Guyana. “With the blessings that have been revealed, and are within our grasp, we purpose to develop a modern, peaceful and cohesive State-one in which every man, woman and child, without exception, reservation, and/or discrimination of any kind, is able to enjoy the full and equal benefits of the bounty we are about to be bestowed,” he said.
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PDVSA Owes Cardon IV Partners Eni and Repsol $1 Billion

(Energy Analytics Institute, Piero Stewart, 25.May.2018) ‐- Venezuela’s state oil company Petróleos de Venezuela owes an estimated $1 billion to its partners in the Cardón IV natural gas project offshore.

Gas Energy Latin America Partner Antero Alvarado told Petroguía in interview that Caracas-based PDVSA is accumulating estimated monthly expenses of $60 million for the purchase of gas from Repsol and Eni.

Financial problems at the project relate to indefiniteness of exports, tariff lags, and accumulated debts PDVSA has with the foreign partners that have the licenses, according to Alvarado.

Spain’s Repsol and Italy’s Eni, joint operators, discovered the Perla field in 2009. Initial production at the field, located in shallow waters in the Gulf of Venezuela, commenced in 2015 at 150 million cubic feet per day (MMcf/d). Two additional phases of the project’s development were planned to boost production to 800 MMcf/d in 2017 and then a peak of 1,200 MMcf/d in 2020, according to Eni data. The Perla field is also expected to be producing 15,000 barrels per day (b/d) of condensate, which will rise to 38,000 b/d by 2020.
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Mexico Awards Blocks In Final Oil Auction Before Election

(Reuters, David Alire Garcia & Marianna Parraga, 27.Mar.2018) — Mexico awarded just under half of the 35 shallow-water blocks it tendered on Tuesday, in an auction muddied by the promises of the presidential frontrunner to review contracts awarded under a historic energy opening if he wins the July 1 election.

The country’s oil regulator awarded 16 blocks in the Gulf of Mexico to firms including Spain’s Repsol, France’s Total, Italy’s Eni, Britain’s Premier Oil and Mexico’s state-run Pemex, which was the biggest winner overall.

A final, competitive round of bidding in the Southeast Basins improved what started as a patchy showing, with little interest in fields believed to contain high amounts of natural gas.

About $8.6 billion in investment is expected from the projects to be developed in the awarded blocks, Mexico’s Energy Minister Pedro Joaquin Coldwell said, with early production starting in 2022 and a production potential of 280,000 barrels per day (bpd).

Andres Manuel Lopez Obrador, who has a comfortable lead in most polls, said that if he wins the July vote, he would review more than 90 contracts signed since Mexico passed legislation in 2013 ending Pemex’s 75-year monopoly, looking for signs of corruption.

Running for office for a third time, Lopez Obrador has also said he would hold a referendum on the future of the reform, and ask President Enrique Pena Nieto to cancel two auctions planned for the second half of the year.

Mexico’s next president takes office in December.

Despite the political uncertainty, Tim Davis, the group exploration manager for Premier Oil, said he was bullish about the future of the oil and gas opening.

“I think you could see a slowdown (if Lopez Obrador wins). But … I think they will see the benefits,” of the investment that’s coming in and the invigoration of new ideas and new companies arriving.

Repsol and Premier Oil individually claimed two areas each in the shallow-water fields offered in the Burgos basin, where less than a third of blocks were awarded. Premier won another block in a consortium with DEA Deutsche Erdoel and Sapura Energy.

Consortia made up of state-run Pemex, Mexico’s Citla Energy, Spain’s Cepsa, Britain’s Capricorn Energy and Germany’s DEA Deutsche Erdoel posted winning bids for four blocks in the Tampico-Misantla-Veracruz basin further south along the Gulf. There, around a third of blocks were awarded.

In the final Southeast Basins tender, competition was higher, and the oil regulator awarded all eight of the shallow-water blocks it tendered to consortia including Total, Eni, Royal Dutch Shell and Pemex.

“This is very high percentage (of awarded blocks),” said Coldwell.

Mexico’s government collected $124 million in cash payments from the auction, below the $525 million collected in a January deepwater auction.

The Southeast Basins areas are located in a portion of the Gulf where many of the companies that won blocks on Tuesday had already secured areas in earlier shallow and deepwater bidding rounds.

By securing neighboring blocks in the Gulf, companies are able to build clusters in order to reduce infrastructure costs.

Mexico’s Deputy Secretary for Hydrocarbons Aldo Flores blamed the weaker early interest on the quantity of natural gas areas in the auction, saying companies were more interested in finding crude.

“This will continue to be a challenge for us given the abundance of natural gas in Texas at very low prices,” Flores told Reuters on the sidelines of the auction in Mexico City.

Mexico is also competing for private companies’ interest with Brazil, which is holding its own auction this week, with another scheduled in June.

Brazil holds its own election in October, with the most likely leftist contender in the presidential race, Ciro Ferreira Gomes, warning he would expropriate energy assets bought by investors if he wins.

(Reporting by David Alire Garcia, Adriana Barrera and Marianna Parraga; Writing by Gabriel Stargardter Editing by Frank Jack Daniel, Susan Thomas and Diane Craft)
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Repsol Starts Gas Production at the Sagari Field in Peru

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

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

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

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

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

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

(Petrobras, 21.Dec.2016) – Petrobras signed a Master Agreement with the French company Total, in connection with the Strategic Alliance established in the Memorandum of Understanding signed on 10/24/2016, as previously announced to the market.

Entering into strategic partnerships is an important part of Petrobras’ 2017-2021 Business and Management Plan, as it contributes to mitigating risks, strengthening corporate governance and sharing information, experiences and technologies, in addition to improving the Company’s financial viability through cash inflows and the release of investments.

Petrobras and Total have strong similarities in the upstream segment, sharing a relevant common base of E&P assets and the search for technological development in similar themes.

The companies jointly participate in 19 consortiums worldwide in exploration and production in key projects such as the Libra area, which is the first production sharing contract in the Brazilian pre-salt in Santos Basin, besides exploration areas in Equatorial Margin, Espírito Santo Basin and Pelotas Basin. In addition, both companies are partners in the Brazil-Bolívia gas pipeline.

With this new agreement, both companies will strongly reinforce their technological cooperation in the areas of geoscience, subsea systems and joint studies in areas of mutual interest, aiming to reduce investment risks and increase the probability of exploratory success over the next years. The companies will also become partners in the Iara and Lapa fields, in the pre-salt Santos Basin, and in two thermal plants, sharing the use of the regasification terminal infrastructure in the state of Bahia.

The companies also undertake to expand their joint activities outside Brazil, with Petrobras having the option of taking a stake in the Perdido Foldbelt area in the Mexican portion of the Gulf of Mexico.

The transaction has a global estimated value of $2.2 billion including cash, contingent payments and the carry of investments in production development of common assets to both companies, to be paid by Total to Petrobras and its subsidiaries as appropriate.

The signing of the relevant Sale and Purchase Agreements (SPA) related to the assets from this Master Agreement is subject to internal and external control and regulatory approvals, including the Brazilian Federal Accounting Court (TCU), potential preemptive rights from the current partners of Iara, plus other precedent conditions. The companies have a mutual commitment to make all the necessary efforts to sign all contracts within 60 days.

The main terms and conditions of this Agreement are as follows:

– the sale of a 22.5% interest to Total, in the Iara area (Sururu, Berbigão and Oeste de Atapu fields) in Block BM-S-11. Petrobras will remain the operator and will keep the largest stake in that consortium, with a 42.5% interest.

– the sale of 35% interest to Total in Lapa field in Block BM-S-9, with transfer of the operation to Total. Petrobras will have a 10% interest in this concession.

– Petrobras’ option to take a 20% participation in block 2 of the Perdido Foldbelt area in the Mexican portion of the Gulf of Mexico, acquired by Total in partnership with Exxon in the round of bidding held by the Mexican government on 12/05/2016.

– shared use of the Bahia regasification terminal, with a capacity of 14 million m3/day.

– partnership, with Total holding a 50% stake, in the thermal plants Rômulo de Almeida and Celso Furtado, located in Bahia, with energy generation capacity of 322 MW.

– joint studies in the exploratory areas in the Equatorial Margin and in the southern area of Santos Basin, taking advantage of the existing synergy between the two companies, since each has outstanding geological knowledge of the oil basins located on both sides of the Atlantic.

– technological partnership agreement in geological processing and subsea engineering, in which the companies have complementary knowledge, which can boost the gains from the application of new technologies in the partnership areas.

The information below refers to the concessions established in the Agreement:

Concessions in Upstream

In the Iara concession, Petrobras holds a 65% interest and is the operator. Shell, with 25%, and Galp with 10%, are partners in this area, which is part of Block BMS-11. The reservoirs of this concession have higher complexity and are in the production development phase. The partnership with Total in this area will bring benefits such as the release of investments and new technological solutions for its development, maximizing profitability and the volume of oil to be recovered.

The limits of this consortium extend into the Entorno de Iara area, from the Transfer of Rights agreement, in which Petrobras holds a 100% interest. The fields Berbigão, Sururu and Oeste de Atapu must enter into Individualization Production Agreements (unitization) with this area of the Transfer of Rights.

In the Lapa field, Petrobras holds a 45% interest and is the operator. Shell, with 30%, and Repsol with 25%, are partners in this field, which is part of BM-S-9 block. The development of the Lapa field is at an advanced stage, with the recent start of production, as announced on 12/20/2016, and presents geological characteristics and oil quality different from other pre-salt fields. Total, as future operator of this field, will bring benefits to the consortium, by incorporating its experience and knowledge in the continuity of its development plan.

The technological partnerships in the Iara and Lapa areas will develop and apply certain subsea technologies in a pioneering manner in Brazil. The efforts to reduce risks and increase the probability and the success in exploration will rely on a 4D seismic application in the context of carbonate reservoirs, with specific studies on CO2 migration and geomechanical studies, in addition to the development of a methodology for the construction of models to support investment decisions.

Gas & Energy Concessions

In the case of the G&E area, Petrobras and Total are forming an innovative partnership in the Brazilian thermal market. The initiative is aligned with the strategies of Petrobras for the Gas and Energy segment in the 2017-2021 Business and Management Plan, which establishes the restructuring of the Energy Businesses and maximizes the value generated in the gas chain. This vision considers a regulatory evolution, that is already under discussion with Brazilian federal authorities, forecasting an improvement of the procurement rules, access to the pipeline network and LNG regasification terminals.

The partnership with Total includes two thermal plants (Rômulo Almeida and Celso Furtado), connected to the Regasification Terminal located in São Francisco do Conde, in Bahia.

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Venezuela to Soon Initiate Gas Shipments to Colombia

(Energy Analytics Institute, Piero Stewart, 4.Jul.2016) – Venezuela plans to soon initiate shipments of natural gas to Colombia, reported Venezuela’s new agency AVN, citing the country’s Oil Minister Eulogio Del Pino.

The gas will come from the Perla field offshore, which is part of the Cardon IV project.

“We are producing 600 million cubic feet per day of natural gas, sufficient to export and satisfy domestic needs,” said Del Pino, who also serves as the president of the state oil company PDVSA.

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Company Profile: Oleoducto Central S.A. (Ocensa)

(Moody’s, 4.Jun.2016) – Oleoducto Central S.A. (Ocensa) is the largest crude oil pipeline and the only public-use pipeline in Colombia. Its pipeline is ~845 km in length with 745,000 b/d of capacity starting in mid-2016. Ocensa connects the country’s largest crude producing fields in the Llanos Basin at El Porvenir to export facilities at Covenas on the Caribbean coast.

The company is owned 72.65 percent by Ecopetrol through its wholly-owned midstream subsidiary, Cenit SAS. The remaining stakes are owned 22.35 percent by Advent International and 5 percent by Darby Overseas (a subsidiary of Franklin Templeton), both private equity firms. Advent purchased its stake in December 2013 from long-time owner/shippers Total SA, Repsol Oil & Gas Canada Inc. formerly Talisman Energy Inc., and CEPSA, a Spanish refining subsidiary of IPIC, an investment fund of the government of Abu Dhabi.

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Repsol Visits Bolivia to Discuss Investments

(Energy Analytics Institute, Jared Yamin, 9.May.2016) – Repsol President Antonio Brufau visited Bolivia to discuss overall investments in the small landlocked country with officials from YPFB and investments in three areas with similar potential as that in the Margarita field.

The three areas include Boyuy, Ipaguazu and Boycobo and contain an estimated 4 Tcf of natural gas, reported the daily newspaper La Razón, citing Bolivia’s Hydrocarbon Minister Luis Alberto Sánchez.

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PDVSA Advances with Plants at Sinovensa, Petrocarabobo

(Energy Analytics Institute, Piero Stewart, 28.Apr.2016) — PDVSA has started work on the heavy oil treatment plants at the joint-venture companies Petrolera Sinovensa and Petrocarabobo, located in the south of Monagas and Anzoátegui states, respectively.

Investments in the Petrolera Sinovensa plant are expected to total $40 million plus an additional 600 million Venezuelan bolivars. Construction of the plant will generate 220 direct and 600 indirect employment opportunities, reported PDVSA in an official statement on its website, citing PDVSA Exploration and Production Vice President Orlando Chacín. The project contemplates the construction of 12 plants with 100,000 barrels per day of capacity over the next five years.

Sinovensa partners PDVSA with a 60 percent majority interest and the China National Petroleum Corporation with the remaining 40 percent interest.

Petrocarabobo

The Petrocarabobo joint venture has estimated proved reserves of 13.500 billion barrels and anticipates construction of a 400,000 barrel per day heavy oil upgrader that will convert 8.5 degree API oil into a lighter 32 degree API oil, said PDVSA New Orinoco Oil Projects Executive Director Rubén Figuera.

The processing module will have an initial capacity to process 50,000 barrels per day.

Investments in the Petrocarabobo plant are expected to total $65 million plus an additional 180 million Venezuelan bolivars.

“The project includes development of two additional modules that will allow for the expansion of the plant to 90,000 barrels per day over the short term,” said Figuera.

The Petrocarabobo treatment plant partners Repsol YPF (Spain) with an 11 percent interest, ONGC (India) with an 11 percent interest, Indian Oil (India) with a 3.5 percent interest, Oil India Limited (India) with a 3.5 percent interest and PDVSA as the majority owner in the project with a 71 percent interest.

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Venezuela to Start Mariscal Sucre Project by YE:15

(Energy Analytics Institute, Pietro D. Pitts, 1.Oct.2015) – Venezuela will soon start offshore gas production at the Mariscal Sucre project.

Production from Cardon IV block is currently at 300 million cubic feet per day (MMcf/d) and expected to reach 450 MMcf/d shortly, said PDVSA President Eulogio Del Pino during a conference in Cumana.

Spain’s Repsol and Italy’s Eni hold a 50:50 interest in the Cardon IV project. PDVSA has yet to exercise its option to back into the project.

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Ecopetrol Announces Caribbean Deepwater Find

(Ecopetrol S.A., 28.Jul.2015) – Ecopetrol informs that at a depth of 3720 meters, the Kronos-1 well verified the presence of hydrocarbons in ultra-deepwater of Colombian south Caribbean area. This discovery proves the geological model proposed for an unexplored area with high hydrocarbon potential.

Kronos-1 is located in block Fuerte Sur, 53 kilometers (33 miles) offshore, where partners Anadarko, operator, and Ecopetrol, each hold 50% interest.

“This discovery adds to the one accomplished in December at the Orca-1 well, located in the deep water of Tayrona block offshore Guajira, where we are partners with Petrobras, Repsol and Statoil,” reported Ecopetrol, citing company president Juan Carlos Echeverry. “These results are very important and confirm the potential of the Colombian Caribbean petroleum system in a vast area and are aligned with Ecopetrol´s new strategy, in which one of the key areas is the exploration on high potential marine basins.”

According to operator’s quarterly operations report, after drilling at a water depth of 1,584 meters (5,195 ft), the well reached total depth of 3,720 meters (12,200 ft) and encountered a net pay thickness between 40 to 70 meters (130-230 ft) of gas bearing sandstones.

Ecopetrol and Anadarko’s integrated technical teams are continuing to evaluate the Kronos discovery results. Nowadays the drilling operation continues, aiming to reach a deeper target to determine possible additional results.

In 2012, the Ecopetrol – Anadarko partnership undertook exploration in the South Caribbean in blocks Fuerte Norte , Fuerte Sur , COL5, URA4 and Purple Angel.

Our partner, Anadarko, is one of the most recognized companies worldwide for its experience in deepwater and ultra-deepwater exploration, project management and execution. Currently Anadarko is executing the biggest seismic acquisition campaign in the history of the Colombian Caribbean with an extension of more than 16,000 square kilometers.

Once activities at Kronos-1 are concluded, the drillship Bolette Dolphin, employed in this operation, will move to Fuerte Norte Block to continue drilling Calasu-1 well, located 145 kilometers or approximately 100 miles north east of Kronos-1.

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Seaway Signs Perla Gas Deal

(Seaway Heavy Lifting, 9.Apr.2015) – Seaway Heavy Lifting entered into a contract with Cardon IV in Venezuela for transportation and installation of the Perla project gas production platforms complete with tie-in of the subsea infrastructure.

The Perla development consists of 3 gas production platforms connected to the shore landing near Punto Fijo, through a 30 inch pipeline. The water depth in the field is 229 feet (70 meters). Seaway’s scope includes the transport and installation of the platforms and tie-in of the platforms to the pipelines, which have already been installed.

Cardon IV S.A. is a joint operating company currently owned by Italy’s Eni (50 percent) and Spain’s Repsol (50 percent). Petroleos de Venezuela SA has the option to back in to 35 percent share in the operation of this block, included in Rafael Urdaneta gas project in Venezuela.

Seaway’s crane vessel Stanislav Yudin will execute the lifting and installation work. The vessel will be out fitted with a saturation dive system to perform the tie-ins. In addition to the Stanislav Yudin and its two supporting vessels, a total of 7 tug/barge spreads will be operated to transport the platforms and subsea infrastructure from Gulf of Mexico ports to the site. The site is located northwest of Punto Fijo in Venezuelan offshore waters. Execution of the project is starting in 2Q:15, and will take approximately 5 months.

Project Management and Engineering has already started and is executed from Seaway’s home base in the Netherlands as well as from its new project office in the Woodlands near Houston.

“This challenging project is one of the largest in Seaway’s portfolio, and the project fits well with our experience and capabilities,” said Jan Willem van der Graaf, CEO of Seaway Heavy Lifting.

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LatAmNRG: Heard on the Street 1Q:15

(Energy Analytics Institute, 30.Mar.2015) – Information in this section, provided by Energy Analytics Institute editors and reporters, is hearsay and thus should be treated as such.

REGARDING COLOMBIA

* A small group of Venezuelans are interested in acquiring an interest in Colombian oil company Pacific Rubiales.

REGARDING VENEZUELA

* To stimulate investments in the oil sector, Venezuela has allowed almost all of the companies sell part of their dollars at the new Simadi Fx rate, which most recently closed at 191 bolivars per dollar.

* In 2014, Malaysa’s Petronas released its 11 percent interest in the PetroCarabobo heavy oil joint venture back to the Venezuelan government. PDVSA has assumed the interest in the meantime. Partners in PetroCarabobo include: PDVSA, Spain’s Repsol, and Indian companies ONGC, Oil India and Indian Oil Corp.

* Former PDVSA President Rafael Ramírez supposedly wants to run for the presidency of Venezuela.

* Venezuelan social programs are at risk unless there is an increase in the price of crude oil or there is a change by the Venezuelan government to reduce its reliance on oil income to sponsor its social programs.

* Supply of dollars unable to satisfy dollar demand thus forcing government to reduce allocation of dollars to importers and other seeking dollars.

* Russian president Vladimir Putin is expected to visit Venezuela soon to discuss bilateral trade between the countries.

* After the longest oil sector boom period in recent history in Venezuela, the country has no money set aside in a strategic oil fund or others to weather the pull back in oil prices.

* Parliament elections could take place in early December 2015.

Discussions between AVHI, PDVSA, and Venezuela’s Oil Ministry

Complaints from oil companies operating or contemplating operating and/or investing in Venezuela include, but are not limited to the following:

* The need to access the new competitive foreign exchange rate for all investments (CAPEX) and costs and expenses (OPEX) required by the mixed enterprises, licenses and PDVSA.

* The need for diluents for the projects in the Orinoco Heavy Oil Belt or Faja; application of the proposed extension to the Special Contributions Law.

* The need to be granted fiscal incentives (royalties, income taxes, etc.) according to results from basic engineering studies; the need to revise the payment of LCE over royalty volumes; the need to revise natural gas royalty payments for re-injected volumes; and the need to define a mechanism for CERTs.

In response to these stated issues, Venezuela’s Oil Ministry Asdrubal Chávez responded as such:

* We recognize this is a difficult situation and we want to work together with AVHI more intensely to find solutions to the problems.

* We acknowledge the effects of the foreign exchange system over production costs; progress has been made to solve this issue (i.e. Sicad I and Sicad II), but we need to make proposals to the government to reach a solution.

* Vice-Minister Angel González has been designating with this assignment to determine a reasonable value for a foregin exchange rate applicable to the petroleum industry.

* We are going to continue granting autonomy to the mixed enterprises or joint ventures.

* We need to work together to improve production costs, and become more efficient; it’s critical to adjust service companies’ costs.

* We want to form joint AVHI-oil ministry-PDVSA executive working groups, tasked with maintaining more regular meetings and studying proposals to solve issues of common interest.

* We are working in the oil ministry to solve the issues related to production of diluted crude oil mixed with naphtha.

In response to these stated issues, PDVSA’s President Eulogio Del Pino responded as such:

* Within our competences, we have been taking measures to solve issues discussed in the AVHI-oil ministry-PDVSA institutionalized dialogue mechanism.

* In terms of the agenda presented by AVHI, we recognize the critical issues of the foreign exchange regime and the decline in oil prices and their impact over the economic viability of the oil industry.

* We can advance information regarding the new foreign exchange system announced by President Nicolas Maduro and we plan to announce that new investments and exports from these investments will be exchanged at the new floating, market rate.

* All the resources stemming from financing and from exports from new projects will be exchanged at a new floating rate (new foreign agreement to be announced soon).

* Reviewing the previous meetings’ minutes of the AVHI-oil ministry-PDVSA dialogue, we have progressed in most of the issues discussed: increasing financial authorization levels, adapting the mixed enterprises’ structure to develop major projects, a mixed payments scheme for natural gas licenses (agreement with YPERGAS), drilling rigs and personnel managed by mixed enterprises, delegation of procurement activities to mixed enterprises, diluent availability to Faja’s new developments, internal auditing process of our HSSE policies and activities, payments of dividends to partners.

* In the Faja’s Boyacá division, we are proposing the creation of a National Strategic Development Zone aimed at the development of exploration and production activities: the objective will be to provide incentives to improve the economic viability of the projects. Some of the possible fiscal incentives applicable to the projects are: accelerated depreciation, carry-over of ten-years of losses (for income tax calculations), shadow tax exemption, royalty reduction to twenty percent, and petroleum exports exchanged at the Sicad II rate.

* We need to improve our communication with our partners; we want to enhance cooperation and use the capabilities and best practices of AVHI member companies.

* One of our main objectives is to regulate all of the activities and contracts with mixed enterprises.

* We want to maintain and reinforce this institutionalized dialogue mechanism with AVHI: we support the proposal of a joint workgroup that can agree on proposals and present them at our quarterly meetings.

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Eni CEO Comments on Perla

(Energy Analytics Institute, Ian Silverman, 28.Aug.2013) – Eni Chief Executive Officer Paolo Scaroni comments during a special event at PDVSA’s headquarters in Caracas, Venezuela about his company’s participation in activities in Venezuela:

“Venezuela will be the most important country for Eni once the offshore Perla discovery reaches maximum production and other projects are online.”

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Speech by Rafael Ramirez from Puerto Ordaz

(Energy Analytics Institute, Piero Stewart, 27.Jul.2013) – PDVSA’s and Venezuela’s Oil Minister President Rafael Ramirez spoke at the closing of the Sixth National Production Meetings in Puerto Ordaz, Venezuela.

What follows are excerpts from the speech.

Speech by Rafael Ramirez on Venezuelan petroleum sector:

Ramirez: At the closing event for the 6th National Production Meetings here in Puerto Ordaz, we have many people and companies interested in working with PDVSA in the Faja.

We plan to use our petroleum resources to resolve problems created by capitalism, especially related to exclusion and poverty. Socialism is the alternative for humanity and the Venezuelan petroleum industry participates in the construction of socialism in Venezuela.

PDVSA oil exports for Jan.-Jun.2013 (See Table 1):

Table 1: PDVSA oil exports

—————– Jan-Jun.2013 —- Jan-Jun.2012

Oil (Mb/d) ——– 2,482 ———- 2,515

$/bbl ———— $100.14 ——– $105.41

Rev. ($mm) —— $48,490 ——– $51.092

Source: PDVSA

PDVSA spent $23.8 bln in 2012 on CAPEX and the plan for 2013 is to achieve CAPEX of $25.3 bln, of which $7.0 bln has been spent through the first half of the year. We have all the US dollars we need to execute our capital budget. PDVSA plans to finance 30-40% of required yearly investments.

Loans from China for $5 bln will allow us to continue to develop tremendous projects underway here in Venezuela.

PDVSA/Venezuela to continue to defend a $100/bbl oil price floor but would like prices to move above this level. Venezuela does not produce more because our political policy is to defend prices. We will maintain our 3 MMb/d production quota under OPEC.

Again, the 3 MMb/d production level is our OPEC quota, which represents about 11% of OPEC production volumes.

We are in the process of constructing production capacity that will be able to respond to additional barrels immediately for the market.

The effects of Sowing Oil Plan now allows Venezuelan state to capture 94% of the income per barrel while IOCs capture just 6%. During the 4th Republic PDVSA captured 47% while IOCs captured 53% (See Table 2).

Table 2: Tax Schemes

———————- 4th Republic —- New Gov’t

Royalties ————– 1% ———— 33.3%

Income Tax (ISLR) —— 34% ———– 50%

PDVSA participation —- 30% ———— 60%

Recovery factor ——– <8% ———– >20%

Source: PDVSA

Regarding discounts: We don’t offer discounts to anybody, we sell our petroleum at market prices.

Ramirez: The Old PDVSA sold gasoline with lead to the Venezuelan population and exported unleaded premium gasoline. We have assumed the cost of the gasoline subsidy but we have decided that we would sell to the Venezuelan population clean gasoline, gasoline that doesn’t pollute the environment.

The Faja will be produced with directional drilling platforms, which have an enormous potential and a very powerful effect, but with little effect on environment. For each acre we can achieve 40,000 b/d of production.

We have pilot projects in the Faja with recovery rates of 40%. We should aim for the maximum recovery rates in the Faja.

In the Faja we have to drill 10,200 new wells and build 560 directional drilling platforms in order to produce 4 MMb/d by the end of 2019.

With our resources and actual production levels (3 MMb/d) we have petroleum resources that can last for 300 years. With production of 6 MMb/d we have resources for 150 years.

Actually, we have 15,000 workers in the Faja, but we need to increase this number to 40,000.

The world’s last great oil province is here in the Faja. We are actually producing around 1.2 MMb/d in the Faja. 202 rigs are operating in the Faja each day, of these, 116 are owned by PDVSA.

Changes to existing refineries in Venezuela to assist them in processing more Venezuelan heavy oil.

We plan to convert the Paraguana Refining Complex (CRP) in a petrochemical plant.

We are evaluating a scheme whereby we will convert and increase our existing upgrader. We are looking to have upgraders that could be refineries and/or have upgraders that can upgrade crude to 42 degrees API.

We estimate that for our upgraders/production projects we need at a minimum $42/bbl oil price.

We are looking to produce crudes of better quality for mixing with other crudes.

We want to reduce cost and improve efficiency in production. We have stopped the production declines in Western Venezuela.

The U.S. Geological Service says there are more than 170 Tcf of gas in the Faja. We aim to certify all these reserves.

Perla 3X gas discovery (9.5 Tcf) is high in condensate that will be sent to the CRP. The government expects to extract 30,000-40,000 b/d of condensate from project.

We are consuming a lot of diesel due to increasing usage by electric plants.

We have used 229 MMcf/d of gas to substitute the use of 37,000 b/d of diesel, allowing us to generate 896 MW of new production.

The largest markets for oil outside the USA are the Asian countries, especially China and India. We are sending more than 1 MMb/d to these two countries and volumes are expected to increase in the future. The decision to send oil to China and India is the correct political decision.

We have gained our sovereignty fighting and this is the fight we have engaged in to diversify our export markets.

We expect the JV partners to put up at least 20% of the total investments in the Faja upgraders.

In Venezuela there is not enough supply (goods and services). As such, by the end of 2019, we expect the national petroleum sector to supply at least 80% of the goods/services to all the oil projects.

We are producing about 7,000 MMcf/d of gas but aim to reach 10,511 MMcf/d by the end of 2019.

In the Junin 10 North block, an agreement with Total/Statoil did not work out but PDVSA has been developing the field alone.

Sinovensa is producing 134,000 b/d but the goal is to reach 165,000 b/d by YE:13 and 330,000 b/d from the project over the long-term.

Companies have production targets they should try to hit these targets

We have always paid our bond obligations. Our bonds are one of the best investments out there.

We have around 6 million tons of coke, the amount that Brazil consumes in one year. We want to use this coke here to get around storage and transport issues. Coke is a problem for Venezuela and PDVSA and we hope to resolve this issue by using the coke to generate electricity.

Portable water is also a serious problem for us as we need it for our operations in the Faja.

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Bolivia’s Nationalization of Oil and Gas

(Council on Foreign Relations, Carin Zissis, 12.May.2006) — In a region seen as turning leftward, forging alliances would seem a natural course of events. But Bolivian President Evo Morales’ decision to nationalize the oil and gas industry is exposing tensions, causing experts to say there is more diffusion than alliance-building in Latin America.

Introduction

On his hundredth day in office, Bolivian President Evo Morales moved to nationalize his nation’s oil and gas reserves, ordering the military to occupy Bolivia’s gas fields and giving foreign investors a six-month deadline to comply with demands or leave. The May 1 directive set off tensions in the region and beyond, particularly for foreign investors in Brazil, Spain, and Argentina. Morales’ nationalization agenda has been described as another chapter in Latin America’s turn to the left, and fears are rising that the Bolivian leader has fallen into the fold of Venezuela’s Hugo Chávez and Cuba’s Fidel Castro. But some experts emphasize there may be more infighting than cohesion overall in the region.

Why did Morales nationalize Bolivia’s hydrocarbon industry?

Morales, a former coca farmer and union leader, won a resounding victory in the December 2005 elections. As the Movement to Socialism (MAS) candidate, he campaigned in favor of nationalizing, among other sectors of the economy, the gas and oil industries with the cooperation of foreign investors. Experts say that, given such promises, the nationalization was no surprise. But Peter DeShazo, director of the Center for Strategic and International Studies’ Americas Program, says the move to occupy the gas fields with military forces lent a dramatic effect. “The confrontational nature of his move was certainly intended to get people’s attention,” he says, adding that Morales may be looking to garner votes in July elections for a constituent assembly that will redraft Bolivia’s constitution.

Nouriel Roubini, a professor of economics and international business at New York University, says one explanation for nationalization is ill will over encroachment on Bolivia’s territory by its neighbors. Since gaining independence in 1825, the Andean nation lost ocean access to Chile, as well as land to Brazil, Paraguay, and Peru. “There is this kind of historical resentment,” Roubini says, adding that Bolivians “are giving a slap in the face to Brazilians and Spaniards.” Morales echoed this sentiment at a May 11 summit of Latin American and European leaders, where he reaffirmed his energy-nationalization plans and signaled his government would seize large land holdings. Experts say this could also affect Brazil, whose farmers have major land holdings in Bolivia.

In spite of having the region’s second largest natural-gas reserves after Venezuela, Bolivia is among Latin America’s poorest nations. The landlocked country has also been marked by political instability; six presidents have held office in as many years, and one of them, Gonzalo “Goni” Sánchez de Lozada, was forced to resign in 2003 after protests against plans to export Bolivian gas turned violent. Among the free trader’s opponents was Morales, who said foreign investors received too much in gas-sale profits based on the hydrocarbons law in place at the time.

How will the nationalization plan work?

Morales’ May 1 decree states that foreign companies, which have invested almost $4 billion since Bolivia opened up its energy sector in the late 1990s, must hand majority control over to state-owned Yacimientos Petrolíferos Fiscales Bolivianos (YPFB). Firms have 180 days to renegotiate energy contracts with the Bolivian state, which experts say will likely lead to price increases. During that time, the companies which own the two largest oil fields will absorb a 32 percent hike (82 percent total) in royalties and taxes. Bolivia, which has 55 trillion cubic feet of natural gas, is expected to see a jump from $320 million to $780 million in annual oil-related revenues, and has installed new directors representing YPFB on the boards of foreign firms’ local subsidiaries. While negotiations occur, Bolivia will conduct an audit of the foreign companies. Morales recently warned foreign companies they will not be compensated if they have recovered their original investments.

Who stands to lose from the nationalization policy?

The firms with the largest holdings in Bolivia’s energy industry are the Spanish-Argentine venture Repsol YPF and Brazil’s Petrólio Brasileiro (Petrobras). Britain’s British Petroleum (BP) and France’s Total also have large investments. Repsol YPF has invested some $1.2 billion in Bolivia’s energy industry, and Argentina’s President Nestor Kirchner, whose country faces double-digit inflation rates, is concerned about rising gas prices jeopardizing Argentina’s economic recovery. But Brazil is under the greatest pressure if prices go up, as Bolivia provides it with about half of its gas. In the populous economic center of Sao Paolo that figure is closer to 75 percent. Petrobras has invested $1 billion in Bolivia’s natural-gas industry. Morales’ move has put Brazilian President Luiz Inácio Lula da Silva in a vulnerable position in the months leading up to his October reelection bid.

What are the reactions to Morales’ plan?

While foreign companies said they hope for cooperation, Repsol YPF has said it will act to protect its investments and take legal action if necessary. Petrobras has made similar threats and frozen investments. Experts say Bolivia needs investors such as Petrobras, which accounts for roughly 20 percent of the country’s gross domestic product (GDP) and 24 percent of its tax revenue. John Williamson, senior fellow at the Institute for International Economics, says Bolivia may see short-term gains but in the long term, it’s going to lead to less foreign investment. He also cautions that Morales’ move could cause divisions in the region.

Is Bolivia’s nationalization testing regional alliances?

Yes, say some experts. CFR Senior Fellow Julia Sweig says that Lula has been more silent in coming out against the nationalization than Spain’s President José Luis Rodríguez Zapatero because Lula—a former trade union leader like his Bolivian counterpart—is “sympathetic” to Morales’ intentions. Diego von Vacano, assistant professor of political science at Texas A&M University and a Bolivian national, says, “Lula wants to prevent a sort of face-off with Morales” because he “doesn’t want to destabilize the region.”

Yet, not all Latin American leaders who are leaning to the left are the same, experts say. “On one side, you have a number of administrations that are committed to moderate economic reform,” says Roubini. “On the other, you’ve had something of a backlash against the Washington Consensus [a set of liberal economic policies that Washington-based institutions urged Latin American countries to follow, including privatization, trade liberalization and fiscal discipline] and some emergence of populist leaders.” Among the latter group is Venezuela’s Chávez, an outspoken opponent of the Bush administration; DeShazo of CSIS calls Chávez Latin America’s “high priest” of economic nationalism.

What is Morales’ relationship with Chávez?

Just before the May 1 decree, Morales met with Chávez and Castro in Havana to sign a socialist trade agreement that made Morales a member of the Bolivarian Alternative for the Americas. The three are now calling it the “Axis of Good,” a pact originally signed by Chávez and Castro last year. Morales and Chávez threatened to pull out of the Andean Community if Colombia, Peru, and Ecuador sign free trade agreements with the United States. Castro and Chávez also said they would become Bolivia’s primary soybean importers. This plan may affect Brazil, because Morales has set a May 31 deadline for land redistribution in the Santa Cruz region, where Brazilian farmers grow more than a third of Bolivia’s soybeans and have invested heavily in land and agriculture.

But experts caution that it is not yet clear where Morales’ alliance falls. Sweig says “the embrace he’s getting from Chavez is getting harder and harder to resist,” but he also “understands that he has to function in a global context and not just an Andean one.” Sweig adds, “Bolivia is going to tack one way one day and one way the other.” There are also signs of infighting rather than a growth in alliances in the region. The Andean Community is not the only trading bloc with members threatening to bow out; in April, Uruguay warned it may leave Mercosur, the Southern Cone trading bloc, and suggested Paraguay is a partner on this. Williamson says the region “is more divided than I’ve ever seen it.” Sweig echoed this, saying, “I just don’t see the kind of diplomatic skill and institutional capacity to do alliance building. It’s not like the EU.”

What is the U.S. role in Bolivia and in the region?

Experts say the United States has paid less attention to Latin America after September 11, 2001, particularly as events have heated up in the Middle East. Meanwhile, Roubini says the situation in the region is “developing in such a way that is actually dangerous to U.S. interests.” According to Von Vacano, this period of crisis diplomacy between countries in the region would be a good time to become more engaged, and that the United States is “missing a chance to be a kind of broker, to get involved in South America without being heavy-handed.” Williamson says the United States should maintain an open hand to negotiate free trade agreements but “any U.S. influence is resented so much that it is counterproductive.” Sweig says the United States should tread carefully because intentions to influence outcomes can backfire. She points to Bolivia’s 2002 election, when the U.S. Ambassador Manuel Rocha urged Bolivians not to vote for Morales, who then surged in the polls and almost defeated Sánchez. The problem, Sweig says, “is when we say ’democracy,’ Latin Americans hear ’imperialism.’”

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