LatAmNRG Prospector: Week 14 2019

LATAMNRG PROSPECTOR VOL 14 2019

Neuquén Holds 73% Of Argentina’s Recoverable Shale Gas

Tecpetrol Says Resolution 46 Covers Entire Fortin de Piedra Gas Project

Hocol Reports Gas Find At Arrecife-1ST Well In Colombia

ECA LNG Receives US NonFTA Approval For Liquefaction Exports ECA LNG Receives US Non-FTA Approval For Liquefaction Exports YPFB President Says Incahuasi-5 Well To Add 3.5 MMcm/d Of NatGas Output

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

Energy Analytics Institute’s weekly LatAmNRG prospector and select highlights from the week. Read the full stories online 24/7 at www.energy-analytics-institute.org

ABOUT US

ARGENTINA Tecpetrol Says Resolution 46 Covers Entire Fortin de Piedra Gas Project (Energy Analytics Institute, Aaron Simonsky, 1.Apr.2019) — Tecpetrol, the oil and gas affiliate of Techint, considers that a resolution emitted by Argentina’s Finance Ministry rejects the appeal presented for incorrect liquidation of benefits offered by the country’s gas subsidy, officially Resolution 46/17, the company announced in a post on its Facebook page on 1 April 2019.

Energy Analytics Institute (EAI) is a Houston-based private organization focused on provided integrated services related to the Latin American and Caribbean upstream, downstream and midstream petroleum sectors.

I. EAI’s primary focus related to the Latin American and Caribbean petroleum sectors is to assist businesses establish and nurture relationships with other businesses or consumers by facilitating integrated business-to-business (B2B) and business-to-consumer (B2C) solutions.

II. EAI also organizes timely forums, seminars or executive speaking engagements related to the Latin American and Caribbean petroleum sector covering topics relevant to the upstream, midstream and downstream sectors.

III. EAI also provides unbiased breaking news, among project updates, related to the Latin American and Caribbean petroleum sectors covering countries small and big from Jamaica and Trinidad and Tobago in the Caribbean to Guyana, Bolivia and Peru in South America and bigger regional players including Mexico, Colombia, Venezuela, Brazil and Argentina.

CONTACT / FOLLOW US: Twitter: @EAI_USA and @EAI_LatAm E. news@energy-analytics-institute.org E. webmaster@energy-analytics-institute.org W. www.energy-analytics-institute.org

Buenos Aires-based Tecpetrol initiated work in early 2017 on a fast-tracked unconventional shale gas project at Fortín de Piedra in Argentina. To-date, the company has spent more than $1.8 billion of a total $2.3 billion earmarked for the project, Tecpetrol said.

Shale gas production at the project recently reached 17.5 million cubic meters per day (MMcm/d) in February 2019, up 1,150% from 1.4 MMcm/d in October 2017.

Tecpetrol’s original plan under Argentina’s gas subsidy plan was to achieve production of around 8.5 MMcm/d, which would have resulted in a government subsidy payment to the company of around $729 million, reported specialized website EconoJournal. However, based on actually production, Tecpetrol is seeking payment from government for around $1.446 billion, reflecting the doubling of production.

Tecpetrol said the following on Facebook: “The subsidy does not provide a limit to the volumes that are entitled to the incentive, nor was there a limit to the benefits granted by the Gas Production Stimulus Programs 1, 2 and 3 (the latter implemented by this administration).”

Resolution 46/17 expressly defines that the benefit covers the entire production of the project, Tecpetrol said in its post.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

Neuquén Holds 73% Of Argentina’s Recoverable Shale Gas (Energy Analytics Institute, Pietro D. Pitts, 7.Apr.2019) — Argentina contains the second largest recoverable nonconventional natural gas resources in the world with 802.2 trillion cubic feet (Tcf), only trailing Asian giant China, which holds 1,115 Tcf, according to data published

by US-based Energy Information Administration or (EIA).

Of the resources, Argentina’s Neuquén basin holds 583 Tcf, or 73% of the country’s total recoverable shale gas resources (see Table 1). The remaining resources are located in the following basins: Austral (130 Tcf, 16%), San Jorge (86 Tcf, 11%) and Paraná (3.2, 0%), as summarized below.

previous conventional concession that was due to expire in 2027.

The new unconventional concession agreement has been granted for a primary term of 35 years and contains provision for extensions thereafter. This new concession is the first of its kind to be issued in Mendoza province.

The concession agreement contains a pilot phase with certain works to be completed by June 2022. On conclusion of the pilot phase the company will have the option to move into unconventional development or to terminate the unconventional concession without penalty and resume the conventional development of the block.

Anuj Sharma, CEO, said: “The award of the unconventional concession represents the achievement of a significant milestone in our plans for the unconventional development of Puesto Rojas and reflects the commitment and hard work of our team over the last several months. The unconventional concession is the first of its kind to be issued in Mendoza and, subject to the satisfaction of the associated commitments, provides clarity and incentive for unconventional activity over Puesto Rojas for the foreseeable future.”

South Of The Vaca Muerta And Shaken: Elections in Río Negro Province

Phoenix Awarded Concession At Puesto Rojas Block In Argentina (Phoenix, 4.Apr.2019) — Phoenix Global Resources plc has been granted an unconventional concession for its Puesto Rojas block in Mendoza province.

(Baker Institute, 2.Apr.2019) — On April 7 Argentina will hold its second provincial election of the 2019 election season in the province of Río Negro. With less than a week to go, the gubernatorial race is too close to call, with three candidates having a plausible chance of victory. The stakes of this election are very high for Argentine President Mauricio Macri, since a victory by the gubernatorial candidate closely aligned with former president Cristina Fernández de Kirchner would be interpreted as a strong public rebuke of the Macri Administration at a very delicate time for the president, who is up for re-election in October.

The company has been notified by Mendoza Province that it has been successful in its application for an unconventional concession for the entire Puesto Rojas block. The new concession agreement replaces the

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

Argentina, China Still Discussing Nuclear Power Project – Undersecretary (Reuters, 2.Apr.2019) — Argentina is still negotiating the terms of a Beijing-bankrolled nuclear power project in Buenos Aires province, a government official said, adding that China’s own Hualong One reactor design would be a good choice for the scheme.

The two sides are still deciding on the “new financial structures” of the project, known as Atucha III, Julian Gadano, undersecretary for nuclear energy for Argentina, told the China Nuclear Energy Sustainable Development Forum in Beijing. The deal is worth a reported $8 billion.

BOLIVIA YPFB President Says Incahuasi5 Well To Add 3.5 MMcm/d Of NatGas Output

have a positive impact on Bolivia’s overall production profile.

The Incahuasi-5 well will have a maximum production potential of 3.5 million cubic meters per day (MMcm/d) of natural gas, reported YPFB in an official statement on 5 April 2019. As a result, production from the AquioIncahuasi gas field is expected to reach a maximum level of 11 MMcm/d, the entity said.

“The new well will boost production in the Santa Cruz department by 20%, which will guarantee Bolivia’s total gas production increases by nearly 7%,” Barriga said in the statement.

Bolivia Still Highly Dependent On Hydrocarbon Sector, Says Moody’s (Energy Analytics Institute, Ian Silverman, 3.Apr.2019) — The challenges for Bolivia to maintain an acceptable credit profile relate to the country reducing the high economic and financial dependence on the hydrocarbon sector, improving its institutional framework and raising income levels, reported online media El Diario, citing a presentation from Moody’s Investors Service Vice President-Senior Credit Officer William Foster.

Moody’s Ratifies Bolivia’s Rating At ‘Ba3’ (Energy Analytics Institute, Ian Silverman, 2.Apr.2019) — The international rating agency Moody’s ratified on 2 April Bolivia’s rating at ‘Ba3’, with economic, institutional and fiscal strength, reported Bolivia’s Information Agency (ABI).

(Energy Analytics Institute, Ian Silverman, 5.Apr.2019) — Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) President Oscar Barriga says the Incahuasi-5 well, located 250 kilometers southwest of Santa Cruz department, will

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

BRAZIL

COLOMBIA

Petrobras Announces TAG Sale Offer

Repsol, Exxon and Ecopetrol Enter Into Colombian Exploration Contracts

(Petrobras, 5.Apr.2019) — Petrobras informs that, in the scope of the competitive sale process of 90% of Transportadora Associada de Gás SA (“TAG”), ENGIE group, jointly with the Canadian investment fund Caisse de Depot and Placement du Quebec (“CDPQ”), presented the best proposal, representing an Enterprise Value of R$ 35.1 billion for 100% of TAG, as of December 2017.

After adjustments, the transaction, when completed, will represent to Petrobras a total estimated value of US$ 8.6 billion (R$/US$ 3.85). This amount includes the payment by the buyer of TAG debts before BNDES (US$ 800 million) on the transaction closing date.

Petrobras will continue to use TAG’s natural gas transportation services through the long-term contracts already in force between the two companies, without any impact on its operations and the delivery of gas to distributors and other customers.

We clarify that the transaction is still subject to approval

by Petrobras governance and competitive defense bodies.

The subsequent phases will be disclosed to the market in accordance with the company’s Disinvestment Methodology.

This transaction is in line with the Disinvestment Methodology and Decree 9.188/17 guidelines, which establishes the special disinvestment regime of federal mixed-capital companies.

(Energy Analytics Institute, Piero Stewart, 3.Apr.2019) — Colombia’s National Hydrocarbon Agency (ANH) announced that Ecopetrol, Repsol Exploración Colombia S.A., and ExxonMobil Exploration Colombia Ltd signed two separate offshore exploration contracts for the “Gua Off-1” and “Col-4” blocks, ANH said 3 April 2019 in an official statement.

Execution of both contracts includes development of an exploratory program that, if carried out in its entirety, that will require estimated investments that would exceed $700 million, ANH said.

“Gua Off-1” covers an area of 400,000 hectares and is located about 78 kilometers from the coast, near the department of La Guajira. The contract partners Repsol (operator, 50% working interest) and Ecopetrol (50% working interest).

“COL-4” covers an area of 400,000 hectares and is located about 100 kilometers from the coast, opposite the department of Bolívar. The contract partners Repsol (operator, 50% working interest) and ExxonMobil (50% working interest).

“The signing of these two offshore exploration and production contracts ratifies the confidence from important companies such as Repsol, ExxonMobil and Ecopetrol, and shows that the hydrocarbons reactivation policy promoted by President Ivan Duque is becoming a reality,” ANH President Luis Miguel Morelli said in the statement. “We hope this commitment to the offshore potential of the country will translate into development and well being, especially for the Caribbean region.”

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

Colombia Inaugurates 86.2 MW El Paso Solar Park In Cesar

Hocol Reports Gas Find At Arrecife-1ST Well In Colombia (Energy Analytics Institute, Piero Stewart, 3.Apr.2019) — Hocol, a company of Ecopetrol Group, announced a new natural gas discovery at its Arrecife-1ST well located in Colombia’s Córdoba department.

Data from well indicate discovery of sandstones with gas at several intervals from the Upper Ciénaga de Oro formation of Miocene geological age. The well reached a final depth of 10,050 feet (3,020 meters) and reached the formation at a depth of 7,173 feet (2,186 meters), Hocol announced in a statement on April 3.

Initial well tests revealed gas production potential between three million cubic feet per day (MMcf/d) and ten MMcf/d, with very low condensate content and no water production, Hocol said.

(Energy Analytics Institute, Piero Stewart, 5.Apr.2019) — Colombia inaugurated the 86.2-megawatt (MW) El Paso solar park in Cesar, the country’s Energy Minister María Fernanda Suárez L. announced via her official twitter feed.

Hocol, which holds a 100% stake in the Arrecife well, is analyzing the data with aim to conduct extensive tests in coming months.

The 250,000 panel solar plant will generate 176 gigawatt hours per year (GWh/year) and impact an estimated 102,000 residential clients, Fernanda said.

Colombia Seeks Investors And Operators For Electricaribe Services (Energy Analytics Institute, Piero Stewart, 2.Apr.2019) — Colombia’s government has initiated a new search process for one or several investors and/or operators suitable to assume provisions of energy services via Electricaribe in the Caribbean region, online media Portafolio reported on 2 April.

“This discovery leverages the exploratory strategy of Hocol and Ecopetrol Group, which continue to strengthen their position as a gas producer in northern Colombia,” Hocol President Rafael Guzmán said.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

CUBA New U.S. Sanctions Seek To Block Venezuelan Oil Shipments To Cuba (NYT, Annie Karni and Nicholas Casey, 5.Apr.2019) — The Trump administration announced on Friday its latest round of economic sanctions against the government of President Nicolás Maduro of Venezuela, this time aimed at oil shipments between Venezuela and Cuba, a country that the administration has accused of propping up Mr. Maduro’s authoritarian government.

MEXICO ECA LNG Receives US Non-FTA Approval For Liquefaction Exports (Sempra, 1.Apr.2019) — Sempra Energy announced that its subsidiary Energía Costa Azul (ECA) LNG received two authorizations from the U.S. Department of Energy (DOE) to export U.S. produced natural gas to Mexico and to reexport liquefied natural gas (LNG) to countries that do not have a free-trade agreement (non-FTA) with the U.S., from its Phase 1 and Phase 2 liquefaction-export facilities in development in Baja California, Mexico.

“The timing of these approvals is great news as we meet with customers and partners this week in Shanghai,” said Joseph A. Householder, president and chief operating officer for Sempra Energy. “ECA LNG’s location on the West Coast of North America is truly a differentiator and it has the potential to be a game changer. ECA LNG will source natural gas from some of the fastest-growing production regions in the U.S. and provide our customers with a competitive advantage in accessing world markets, especially Asia.”

“The authorizations are another step forward in the development of this project that could bring many benefits for Mexico, U.S. natural gas producers and our customers and partners in greater Asia,” said Carlos Ruiz Sacristán, chairman and CEO of Sempra North American Infrastructure. “We are pleased to continue to advance the development of ECA LNG, which can uniquely meet the energy needs of isolated markets in Mexico and customers in Asia.”

ECA LNG Phase 1 development opportunity is a single train LNG facility to be located adjacent to the existing LNG receipt terminal. It is expected to utilize current LNG storage tanks, marine berth and associated facilities.

Phase 2 of the project will include the addition of two trains and one LNG storage tank. The DOE authorizations allow the export of 636 billion cubic feet (Bcf) a year of U.S. sourced LNG from these infrastructure projects.

Phase 2 of the project will require additional DOE approval in order to export its full expected capacity.

The existing ECA receipt terminal was the first LNG receipt terminal constructed on North America’s West Coast.

Located about 15 miles north of Ensenada, Baja California, it began commercial operations in 2008 and is capable of processing up to 1 Bcf of natural gas per day.

The DOE approval comes as the company prepares to discuss the U.S. LNG market this week at the 19th International Conference & Exhibition on LNG (LNG2019), in Shanghai. LNG2019 is the largest LNG event to ever be held in China – the world’s fastest-growing LNG market.

Last November, Sempra Energy announced that its subsidiaries IEnova and Sempra LNG had signed Heads of Agreements (HOAs) with affiliates of Total S.A., Mitsui & Co., Ltd. and Tokyo Gas Co., Ltd. for Phase 1 of the ECA LNG project, subject to reaching definitive agreements.

TechnipFMC and Kiewit were selected as the engineering, procurement, construction and commissioning (EPC) contractors for the project, subject to reaching a definitive agreement on the EPC contract.

Development of the ECA LNG liquefaction project is contingent upon obtaining binding customer commitments, completing the required commercial agreements, securing all necessary permits, including additional export authorization from the Mexican and U.S. governments, obtaining financing, incentives and other factors, and reaching a final investment decision.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

______________

“LNG, even the most competitive, can’t cope with Texas gas, especially that of local hubs such as Waha, which has negative prices.” Monroy said. “However, the pipeline bottlenecks [in Mexico] significantly increase the price of gas, already in plant, be it LNG or Texas.” – Mexico City-based GMEC General Director Gonzalo Monroy told Energy Analytics Institute.

Arbitral Tribunal Temporarily Suspends PDVSA-Petropar Case (Energy Analytics Institute, Ian Silverman, 26.Mar.2019) — Under the framework of an international arbitration initiated by PDVSA against Paraguay’s Petropar, and processed under the arbitration rules of the International Chamber of Commerce (ICC), the Arbitral Tribunal granted a request for temporary suspension of the process.

______________

PARAGUAY Petropar Names Industrial Chemist To Head Mauricio José Troche Plant

In its rationale, the tribunal referred to issues raised by the parties and related to the participation of the Special Prosecutor from the Bolivarian Republic of Venezuela, Mr. José Ignacio Hernández, who was appointed by the Interim President of that country, Juan Guaidó, Petropar announced in an official statement on 26 Mar.

USA Students Put Energy Efficient Cars To The Test At Shell Ecomarathon Americas (Shell, 7.Apr.2019) — Make the Future Live California featuring Shell Eco-marathon Americas drew more than 1,000 students to Sonoma Raceway to compete for the title of most fuel-efficient vehicle.

Northern Illinois University of DeKalb, Illinois took home first place in the Internal Combustion Engine Prototype category with their gasoline-fueled vehicle achieving 1,524 miles per gallon. This was the college’s first time winning the Shell Eco-marathon Americas Mileage Challenge competition.

(Energy Analytics Institute, Ian Silverman, 3.Apr.2019) — Petropar named industrial chemist Carla Andrea Páez Paiv as the company’s new manager at its Mauricio José Troche plant, the company announced 3 April in an official statement.

“This award means everything to our team,” said Josh Helsper, team leader of Northern Illinois University. “It validates all the engineering we’ve learned and the work we’ve done.”

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

VENEZUELA Venezuela Flaring Nearly 2 Bcf/d Of Gas As Oil Output Falls (Energy Analytics Institute, Piero Stewart, 4.Apr.2019) — Venezuela, home to the world’s largest oil reserves and one of Latin America’s larger oil producers, is flaring around 2 billion cubic feet per day (Bcf/d) of natural gas associated with the production of the country’s breadand-butter commodity, Gas Energy Latin America partner Antero Alvarado announced April 4.

Mater Dei High School broke the United States UrbanConcept record in the Battery Electric category with a 68.2 miles per kilowatt-hour run. The high school has participated in every Mileage Challenge since the inaugural Americas competition in 2007.

This year, a total of 88 high school and college teams from across the Americas including Argentina, Brazil, Canada, Colombia, Ecuador, Guatemala, Mexico and the United States, participated in the competition, in two vehicle classes: Prototype and UrbanConcept. The Prototype class is focused on ultra-efficient, lightweight designs, typically with 3 wheels. The UrbanConcept class focused on more “roadworthy” vehicles aimed at meeting some of the reallife needs of drivers. Entries were divided into three energy categories: Internal Combustion Engine (gasoline, diesel and ethanol), Hydrogen Fuel Cell and Battery Electric.

“These students have dedicated countless hours to developing solutions that support a cleaner, lower-carbon energy future,” said Shanna Simmons, Global Technical Director Shell Eco-marathon. “The mileage challenge is a platform for students to test their theories on energy efficiency and receive hands-on experience before entering the workforce.”

“The main reason gas is being lost is because it is not being re-injected into oil reservoirs and as no progress has been made related to hydrocarbon recovery projects,” Alvarado said during a conference at the IESA business school in Caracas, Venezuela. “The bulk of the gas, nearly 1.7 Bcf/d, is being flared in the north of Monagas state.”

Resource-rich Venezuela is home to gas reserves of 225 trillion feet (Tcf) as of year-end 2017, according to BP data. Venezuela, which has yet to connect pipelines between the highly industrialized western region of the country and the gas producing eastern region, typically reinjects associated gas production to assist in the oil recovery process.

In 2015, the last year state oil company PDVSA published data about its operations, the company said that Venezuela produced 2.7 million barrels per day (MMb/d) of oil and 7.8 Bcf/d of gas, of which 2.5 Bcf/d was reinjected. Venezuela re-injected nearly 2.9 Bcf/d in 2011, PDVSA said.

Venezuela’s ol and gas sectors have experienced a melt down over the last 15 years and the combination of lower investments, stalled recovery and pipeline projects as well as collapsing oil production, which reached 1 MMb/d in February 2019 according to OPEC, are factors that continue to contribute to the high flaring volumes in this South American producing country.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

daily production was 890,000 barrels, according to a Bloomberg survey of officials, analysts and ship-tracking data.

Turkish Ship Company Is Transporting Venezuelan Crude (Argus, 4.Apr.2019) — Turkey-based Gungen is one of a handful of shipowners that continues to transport Venezuelan crude oil after the US levied sanctions on the South American country’s state-owned oil company PdV in January.

Follow the WOMEN IN ENERGY series online at https://www.instagram.com/energyanalyticsinstitute/

Most major oil tanker operators have turned away from Venezuelan crude because of legal, safety or other concerns. But two of Gungen’s six-strong Turkish-flagged Suezmax-only fleet have loaded Venezuelan oil in the last two weeks.

Venezuela Blackouts Cut Oil Output by Half During March (Bloomberg Fabiola Zerpa, 4.Apr.2019) — Power failures that plunged Venezuela into darkness for much of March also briefly slashed the country’s crude production by half, according to people familiar with the situation.

Rolling blackouts across much of the country that started on March 7 paralyzed most of the country’s oil wells and rigs, which have slowly come back online. Oil output averaged less than 600,000 barrels a day during the blackouts, the people said, who asked not to be identified because the information isn’t public. For the full month,

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

ANNEX 1: Solar Park El Paso in Cesar, Colombia

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS