LatAmNRG Prospector: Week 4 2019

EAI LATAMNRG PROSPECTOR VOL 4 2019

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

Petrobras And PDVSA Lead CAPEX Among Companies In South America

Siemens Gamesa Awarded Order For Voltalia Wind Project In Brazil

(Oilfield Technology, David Bizley, 23.Jan.2019) — Petrobras and PDVSA are the top spenders among all oil and gas companies in South America, in terms of new build capital expenditure (CAPEX) to be spent during 2018 - 2025, according to GlobalData.

(Siemens Gamesa, 24.Jan.2019) — Siemens Gamesa Renewable Energy (SGRE) recently signed its third contract with Voltalia in Brazil to supply the wind project Ventos da Serra do Mel 2 (VSM 2).

The company’s report: Top Oil and Gas Companies Planned Projects and Capital Expenditure Outlook in South America – Petrobras and PDVSA Lead Capex across Oil and Gas Value Chain, reveals that Petrobras tops the list with CAPEX of US$49.4 billion followed by PDVSA and Exxon Mobil with CAPEX of US$25.4 billion and US$14 billion.

The scope of the contract with Voltalia, recognized international player in renewable energy with a presence in 18 countries, includes the supply of 36 units of the SG 3.4-132 wind turbine model with a flexible power rating of 3.55 MW for the VSM 2 wind complex, located in Rio Grande do Norte, northeastern region of Brazil, for a combined total nominal capacity of 128 MW. Commissioning of VSM 2 is planned for 2020.

WoodMac On CNOOC Ltd’s Strategy: Guyana, Brazil

Petrobras Announces Unfavorable CARF Decision

(WoodMac, 25.Jan.2019) — CNOOC Ltd announced its strategic plan for 2019, setting a bullish tone for the rest of the Chinese national oil companies to follow. Wood Mackenzie’s senior analyst Maxim Petrov shares his views.

(Petrobras, 23.Jan.2019) — Petrobras announced that the Administrative Board of Tax Appeals (CARF) issued yesterday, by a majority vote, an unfavorable decision on a tax administrative proceeding that addresses the collection of Corporate Income Tax (IRPJ) and Social Contribution on Net Profits (CSLL), related to 2012, on profits earned by controlled and subsidiary companies abroad, in the approximate amount of R$ 1.7 billion.

Petrobras awaits the notification and will appeal to the Superior Chamber of CARF. The company understands that the judgment does not change the classification of expectation of possible loss.

The update should be viewed within the context of increased political pressure to secure China’s energy selfsufficiency. President Xi Jinping’s call for greater self reliance and the growing economic slowdown in the second half of 2018 have provided impetus for companies to start meeting their national objectives.

Petrobras Rejects Latest EIGbacked Bid For Oilfields: Sources (Reuters, Gram Slattery, 23.Jan.2019) — Petroleo Brasileiro SA rejected the most recent bid by an EIG Global Energy Partners-backed firm to purchase a pair of shallow-water oil clusters, two sources with direct knowledge of the matter said, potentially derailing a major divestment late in the process.

Albemarle And Corfo Announce Resolution In Chile (Albemarle, 24.Jan.2019) — Albemarle Corporation reached an agreement with the Chilean Economic Development Agency (Corfo) on the process for establishing and validating the preferential price and terms to be offered to specialized manufacturers meeting the criteria set forth in the Amendment. As a result, Corfo will not file the previously disclosed arbitration claim.

In December 2016, Albemarle and Corfo entered into an Amendment to the Basic Agreement to increase the company’s authorized lithium quota to 2 million metric tons (MT) on an LCE basis.

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The Amendment provides Albemarle with the right to produce over 80,000 MT annually of technical and battery grade lithium salts through at least 2043 at its expanding battery grade manufacturing facilities at La Negra, Chile.

In 2019, Albemarle will produce 40,000 to 45,000 MT on an LCE basis in that facility, and the expansion of that site to the full 85,000 MT remains on track to begin commissioning in 2020.

Bairstow was an energy projects lawyer with the global law firm Ashurst LLP. Ms Bairstow holds a Bachelor of Laws (Hons) and a Bachelor of International Business from Griffith University.

Talos Energy Provides Update On Zama Appraisal In Mexico

(Oilprice.com, Tsvetana Paraskova, 24.Jan.2019) — Five years after former president Enrique Peña Nieto ended Pemex’s monopoly and opened Mexico’s oil industry to private foreign investment, the new administration is betting again on the state oil firm to turn around the country’s production which has been declining each year since its 3.4-million-bpd peak in the early 2000s.

(Talos Energy, 23.Jan.2019) — Talos Energy Inc. provided an update on the Zama appraisal in Block 7 offshore Mexico. Talos is the operator of Block 7 in a consortium with its partners Sierra Oil and Gas S. de R.L. de C.V. and Premier Oil Plc. The Zama-2 appraisal well is the first of three appraisal penetrations drilled by the Consortium to better define the resource potential of the Zama discovery. The Zama-2 appraisal penetration was drilled in a down-dip location approximately 1.3 miles (2.1 kilometers) to the north of the Zama-1 discovery well in an effort to confirm the geological model and define the oil-water contact. This initial phase of the appraisal program was successfully and safely completed on January 20, 2019, approximately 28 days ahead of schedule and 25% below initially projected costs. The well reached the top of the Zama reservoir at approximately 10,759 feet (3,279 meters) of true vertical depth (TVD).

Mexico Pacific Names Sarah Bairstow To Lead Commercial Activities (Mexico Pacific, 17.Jan.2019) — Mexico Pacific Limited, LLC, the owner and developer of a LNG project on the Gulf of California in Mexico, announced today that Sarah Bairstow has joined as the CCO of MPL. Ms Bairstow joins MPL from ASX listed Santos Limited where she held the position of Head of LNG Marketing (Commercial) for the US$18.5b Santos Gladstone LNG (GLNG) Project. Ms Bairstow brings end-to-end commercial LNG project development and marketing experience to MPL, having successfully marketed and commercially delivered LNG projects from concept through commercial operations. Prior to Santos, Ms

Can Mexico Stop Its Oil Production Decline?

McDermott Awarded EPC Contract By bpTT For Cassia Compression Project (McDermott, 24.Jan.2019) — McDermott International, Inc. announced a significant contract award by BP Trinidad & Tobago, LLC (bpTT) for the engineering, procurement and construction (EPC) of the Cassia Compression Platform, located 35 miles (57 kilometers) southeast off the coast of Trinidad.

“This award demonstrates how, through strong collaboration and consistent project execution, we continue to build our relationship with bpTT,” said Richard Heo, McDermott’s Senior Vice President for North, Central and South America. “To ensure project execution excellence, we will leverage our One McDermott Way operating model to safely and efficiently deliver the Cassia Compression Platform with the highest quality.”

McDermott will provide engineering, procurement, construction, hook-up and commissioning of the 8,928 ton (8,100-metric ton) Cassia C topsides, a 3,747 ton (3,400-metric ton) jacket and a 793 ton (720-metric ton) bridge to link Cassia C with the existing Cassia B platform that currently sits in 223 feet (68 meters) of water. The scope also includes Brownfield modifications at Cassia B.

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The compression platform will be fabricated and constructed at McDermott’s world-class fabrication facility in Altamira, Mexico – where another recently delivered project for bpTT, Angelin, was fabricated.

Trinidad Offshore Fabrication Company (TOFCO), a fabricator in Trinidad, will fabricate the jacket and the bridge landing frame.

Nicolas Maduro Says U.S. Interested In Venezuela’s Oil, Gold, And Gas

IMF Says Venezuela Hyperinflation To Exceed 10,000,000 In 2019

(Energy Analytics Institute, Piero Stewart, 23.Jan.2019) — The intention of the U.S. government is to expropriate Venezuela’s crude oil, gold, and natural gas, which is why the OPEC country continues to receive the support of different governments and countries like Turkey, which do recognize the constitutionality in force in Venezuela, announced PDVSA Venezuela’s President Nicolas Maduro in a statement on state television.

(Energy Analytics Institute, Piero Stewart, 24.Jan.2019) — Hyperinflation in Venezuela is expected to exceed 10,000,000% in 2019, reported online media El Nacional, citing data from the International Monetary Fund (IMF).

“Venezuela has the right to peace. The North American empire has no friends, only interests: oil, gold, among other minerals,” said Maduro.

Venezuela’s Maduro Says PDVSA To Determine Affairs Of Citgo

Ninacaca Supply Plant To Be Build With 100% Local Labor (Energy Analytics Institute, Ian Silverman, 23.Jan.2019) — Construction of the New Ninacaca Supply Plant in Peru will be comprised 100% of an unskilled labor force from Pasco.

The plant will be constructed on more than 121 square meters of land, and have a storage capacity of 7,500 barrels of three fuels: diesel B5, 90 octane gasoline and 84 octane gasoline.

Guaido Plans Citgo Leadership Shakeup, New Venezuela Hydrocarbons Law: Sources (Energy Analytics Institute, Piero Stewart, 25.Jan.2019) — “Citgo is owned by the Venezuelan State, by PDVSA, and only PDVSA can determine the affairs of Citgo,” said Venezuela’s President Nicolas Maduro during a press conference in Caracas broadcast on Venezuelan state television.

“Citgo is property of the Venezuelan people and we will defend it,” he said.

(S&P Global Platts, 24.Jan.2019) — Venezuela’s selfdeclared interim president, Juan Guaido, will announce plans to revamp the board of Citgo Petroleum to give the embattled refiner fresh leadership and ease political pressures on the company, sources close to the opposition leader told S&P Global Platts.

The announcement could come as soon as today, the sources said, as Guaido aims to build momentum behind his move to oust President Nicolas Maduro following violent protests Wednesday that left 13 dead.

Citgo is the US-based refining subsidiary of Venezuelan state-owned oil company PDVSA, with units in Louisiana, Texas and Illinois.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

Oil Climbs On Venezuelan Crisis Despite Surging U.S. Supply (Reuters, Devika Krishna Kumar, 24.Jan.2019) — Oil prices edged higher on Friday as political turmoil in Venezuela threatened to tighten crude supply, but concerns over surging U.S. fuel stocks and global economic woes weighed on sentiment.

The United States signaled on Thursday it may impose sanctions on Venezuelan exports after recognizing opposition leader Juan Guaido as interim president this week, prompting President Nicholas Maduro to cut ties with Washington.

But the ongoing U.S.-China trade dispute and broader gloom over world economic growth put a check on prices.

Here’s What Venezuela Turmoil Means For Oil Prices (Market Watch, Myra P. Saefong, 23.Jan.2019) — Venezuela’s political turmoil may lead to a near-term shortage of crude for some U.S. refiners. But in the long run, it could lead to higher output for the South American country, which has seen production suffer under the regime of President Nicolás Maduro, analysts said on Wednesday.

alternatives last year before ultimately returning to Venezuelan crude.

Two Venezuelan Presidents Raises Questions About OPEC Leadership (Bloomberg, Tina Davis and Javier Blas, 23.Jan.2019) — Will there be two OPEC presidents now?

With Venezuela boasting two proclaimed heads of state, it’s worth remembering that the nation with the world’s largest oil reserves also currently holds the rotating role of president of the Organization of Petroleum Exporting Countries.

Several governments -- including the U.S. and Brazil -- on Wednesday recognized National Assembly leader Juan Guaido as the acting president of Venezuela. Even more awkward, fellow OPEC member Ecuador has come out in favor of Guaido over Nicolas Maduro.

In a statement, U.S. President Donald Trump said the U.S. had officially recognized Juan Guaido, the new head of Venezuela’s National Assembly, as interim president after the assembly declared Maduro illegitimate. Earlier, the Trump administration told U.S. energy companies it “could impose Venezuela oil sanctions as soon this week if the political situation there deteriorates further,” Reuters Venezuela tweeted Wednesday, citing sources.

Venezuela Oil Sanctions Likely to Hit Some U.S. Refiners Hard (Bloomberg, Lucia Kassai, Jennifer A Dlouhy, and David Marino, 23.Jan.2019) — The Trump administration has drafted a slate of sanctions but hasn’t decided whether to deploy them, said people familiar with the matter. Earlier this month, White House officials warned U.S. refiners that sanctions were being considered, and advised them to seek alternative sources of heavy crude. Some U.S. refiners worried about sanctions experimented with

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ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS