LatAmNRG Prospector: Week 23 2019

LATAMNRG PROSPECTOR VOL 23 2019

Colombian Streets Filled With Protests Against Fracking

Exploring The Innovative Evolution Of Hydraulic Fracturing

Petrobras Announces Favorable Supreme Court Decision

PetroEcuador Completes Second Spot Sale Of 2019 With A $3.09/bbl WTI Spread

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

OCEANS DAY Millions To Collaborate Worldwide For World Oceans Day This June 8

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

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(World Oceans Day, 7.Jun.2019) — The World Oceans Day Youth Advisory Council will help steer the way this week leading up to World Oceans Day on June 8. With increasing awareness of plastic pollution entering waterways around the globe, millions of people will take action for a better future by eliminating single-use plastics, including straws, bags and bottles. In 2018, over 1,500 events were organized in more than 140 inland and coastal countries, including events hosted by schools, aquariums, zoos and businesses.

“World Oceans Day is the perfect chance to shine the spotlight on the ocean and to celebrate the many ways that oceans sustain people and our planet,” said Jack Johnson, Musician, Surfer and Environmental Activist.

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“We can all take action on World Oceans Day, joining youth leaders and a global movement, to come together in support of healthy and plastic free seas,” Johnson said.

The World Oceans Day Youth Advisory Council, with 24 members ages 16 – 23 from 20 diverse countries, provides new and unique perspectives, ideas and recommendations for rallying the world for our ocean.

With continued engagement year-round, Council members help shape the development of World Oceans Day by inspiring actions, big and small, that provide opportunities for ocean conservation 365 days a year.

https://www.worldoceansday.org/action-center to learn more about this year’s theme and ways to get involved.

“Youth are leading the charge to create change,” said Bill Mott, Executive Director of The Ocean Project, the nonprofit organization that has coordinated World Oceans Day internationally since 2002. “Whether you live far inland or on the coast, the ocean affects each one of us and our personal decisions affect the ocean. We believe that youth are the key to success and are not only leaders of tomorrow, but also of today. Thanks to our supporters, including Proctor & Gamble and Footprint, we can continue to create opportunities and engage youth and others around the world on World Oceans Day and yearround.”

Exploring The Innovative Evolution Of Hydraulic Fracturing (JPT, Matt Zborowski, 3.Jun.2019) — Fueled by a culture of innovation, hydraulic fracturing has transformed the energy landscape from inside North America out. But achieving that paradigm shift took years of improving subsurface understanding, technology development, and fine tuning the completions practice through trial and error.

Authors from Liberty Oilfield Services set out to document this evolution in SPE 194345 as they took a deep dive into fracturing history. Their paper traces the advancements in fracturing study and deployment from its earliest days to the present.

“I’m absolutely amazed by the World Oceans Day Youth Advisory Council and have discovered extremely talented leaders from all over the world that are working hard in their local communities to raise awareness in protecting the ocean and marine species,” said Nicolás Chesta, a World Oceans Day Youth Advisory Council representative from Chile. “This group of young people is generating an important impact and I’m really grateful to be a part of it.”

For 2019, the theme, Together We Can, will focus on what we can all do together to create a healthy ocean and better future. Millions of people are expected to virtually join hands around the world to show their support for protecting our shared ocean. Visit:

Fracturing first took place in 1947 and has grown exponentially in uptake over the past 2 decades. The result has been the shale revolution, which has catapulted the US to at or near the top of the world in both crude oil and natural gas production.

Between 2000—just after fracturing pioneer Mitchell Energy began commercial shale production—and 2018, yearly US dry-gas production went to 83 Bcf/D from 53 Bcf/D while US crude output climbed to just under 11 million B/D from 5.8 million B/D, according to data from the US Energy Information Administration. Once largely dependent on imports, the country has become a net gas exporter and oil exports are reaching new heights.

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FINANCIAL Echo Energy Plc Says Current 3D Campaign Nearly Completed In Argentina

at 800 mg/L Lithium out of a measured and indicated resource of 4,005,000, with a cut off at 400 mg/L Lithium.

The PFS also provided a mine plan strategy at the 3Q Project which focused extracting the high-grade lithium brine first.

The reserve estimation contains a high-grade core of 368,000 tonne of lithium carbonate to be exploited in the first 10 years with an average grade of above 1,000 mg/L Lithium. This high-grade core is critical given it enables the Company to build less ponds at the beginning of the project, therefore lowering initial capital expenditures, while achieving the target production of 20,000 tonnes of lithium carbonate, as stated in the PFS. This high-grade core was only drilled down to 100 metres depth in the previous drilling campaigns used to estimate the resource and reserve. The objective of the 2019 drilling season was to extend at depth the high-grade zone in the northern portion of the 3Q Project.

(Energy Analytics Institute, Aaron Simonsky, 6.Jun.2019) — Echo Energy plc says activities at Tapi Aike in Argentina have moved to the west of the basin as infrastructure has been established to connect gas to urban markets, and added that its current 3D campaign in Argentina is nearing completion, the company says in its most recent corporate video.

Neo Lithium Finds High Grade Lithium At Greater Depth In Argentina (Neo Lithium, 6.Jun.2019) — Neo Lithium Corp. announced report new drilling results from its whollyowned Tres Quebradas lithium brine project (“3Q Project”) in Catamarca Province, Argentina.

The Company filed a reserve estimation on May 7, 2019 within prefeasibility study (PFS) which defined proven and probable reserves of 1,294,000 tones of lithium carbonate with an average grade of 790 mg/L Lithium with a cut off

The Company received geochemical results from 10 samples of the last hole of the season, PB1-R-25 that yielded an average over 178 metres, from 87 metres to 265 metres deep, of 1,117 mg/L Lithium, 11,319 mg/L K, Mg/Li=1.59 and SO4/Li=0.1. The hole is located on the eastern border of the 3Q lake, an area where the reserve estimation assumed brine to be present to only 10 meters depth, however the hole encountered brine all the way from surface to 265 metres depth.

The rocks found in the hole are porous halite, sands, silt, clays and gravels from the surface to the bottom of the hole. Drilling stop at 280 metres depth due to technical difficulties.

The well was finished with blind casing with cement and clay pallets from surface to 87 metres to isolate the upper known aquifers from the bottom of the well, and 8 inches metal screen from 87 metres to 265 metres. The well was pumped over 72 hours to collect 10 brine samples (one sample every 7 hours approximately). This hole effectively expands the zone of high-grade brine down from 100 m to 265 m, providing significant upside for future resource and reserves expansions.

The Company had also drilled hole PB1-R-24, which was reported on April 8, 2019, and yielded from surface to 160 meters 1,128 mg/l Lithium, confirming the expansion potential at depth.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

“We were able to validate this season that our high-grade resource and reserve statement have significant potential to increase,” stated Waldo Perez, President and CEO of Neo Lithium. “The 3Q Project is the highest-grade project in Argentina and will continue to grow as drilling demonstrate the importance of the northern high-grade zone”

Regarding the sale of Petrobras’ 90% stake in the Transportadora Associada de Gás S.A.(TAG), the company informs that Minister Edson Fachin revoked the injunction granted in Complaint 33292, which allows the conclusion of the operation.

Concerning the sale of 100% of its stake in Araucária Nitrogenados S.A., suspended pursuant to an injunction issued by the Federal Court of Rio de Janeiro, the company clarifies that it will continue to defend its interests, taking into account the decision of the Plenary of the Federal Supreme Court.

Ultrapar Announces Early Tender Results Of Offer For Its 5.250% Notes Due 2026 (Ultrapar, 6.Jun.2019) — Ultrapar International S.A. announced the early tender results of its offer to purchase for cash up to U.S.$200,000,000 aggregate principal amount.

BRAZIL Petrobras Announces Favorable Supreme Court Decision (Petrobras, 6.Jun.2019) — Petrobras said the Plenary of the Federal Supreme Court (STF) reversed the provisional injunction granted by Minister Ricardo Lewandowski in ADI 5624, which conditioned the sale of control of subsidiaries and subsidiaries of state-owned companies to prior legislative authorization and public bidding.

Petrobras continues with its divestments, fundamental for reducing its level of indebtedness and for generating value through active portfolio management, in line with its 2019-2023 Business Plan and Management and Resilience Plan, respecting the competitiveness and the constitutional principles applicable to the company.

Ultrapar International S.A., a public limited liability company (société anonyme) organized and established under the laws of the Grand Duchy of Luxembourg with registered office at 6, rue Eugène Ruppert, L-2453, Luxembourg, Grand Duchy of Luxembourg, and registered with the Luxembourg Register of Commerce and Companies (Registre de commerce et des sociétés, Luxembourg) under number B208982 (“Ultrapar”), hereby announces the early tender results of its offer to purchase for cash up to U.S.$200,000,000 aggregate principal amount (subject to increase by Ultrapar in its sole discretion under the circumstances described in the Offer to Purchase, the “Maximum Tender Amount”) of its outstanding 5.250% Notes due 2026 (CUSIP: 90401C AA7 and L9412A AA5, and ISIN: US90401CAA71 and USL9412AAA53) (the “Notes”), upon the terms and subject to the conditions described in the Offer to Purchase dated May 22, 2019 (as it may be amended or supplemented from time to time, the “Offer to Purchase”).

Capitalized terms used in this announcement, but not defined herein, shall have the meanings given to such terms in the Offer to Purchase.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

Different Brazilian Justice OKs Privatizations Without Congressional Approval (Reuters, 6.Jun.2019 ) — Brazilian Supreme Court Justice Carmen Lucia voted to allow the divestment of state-run firms and subsidiaries without congressional approval, but added that all divestments, including of minority stakes, should be done through auction.

CHILE Santiago: Home To The 1st Club Worldwide To Operate 100% On Renewable Energy

Before Lucia’s vote, two Supreme Court justices had voted in favor of requiring congressional approval of divestments at state-run firms and three had voted in favor of allowing privatizations without congressional approval.

Engie Brazil CEO Expects Supreme Court To Ok $8.6 Billion Gas Pipeline Deal (Reuters, 6.Jun.2019) — Engie SA in Brazil CEO Mauricio Bahr said he expects the country’s highest court to approve the French company’s $8.6 billion acquisition of gas pipeline TAG from Brazil’s state-controlled Petroleo Brasileiro SA (Petrobras).

Bahr said he expects the Supreme Court to show “common sense” and allow the deal to proceed. The Supreme Court will decide whether Petrobras, as the company is known, can close the deal with Engie.

(Lonely Planet, Kelly Magyarics, 4.Jun.2019) — La Feria in Santiago, Chile’s Barrio Bellavista became the first nightclub in the world to sustainably cover 100% of the energy it uses.

Odebrecht Informs Petrobras That Sales Talks With Lyondell Are Off (Energy Analytics Institute, Aaron Simonsky, 4.Jun.2019) — Odebrecht S.A., the controlling shareholder of Braskem S.A., notified Petrobras that negotiations regarding the potential transaction involving the sale of Odebrecht’s entire stake in Braskem to the Dutch company Lyondell Basell were terminated, Petrobras announced in an official statement 4 June.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

COLOMBIA Colombian Streets Filled With Protests Against Fracking

along the Caño Limón Coveñas near La Pajuila, Saravena (Arauca).

The attack caused a pipeline rupture and resultant oil spill that covered soil and vegetable growth in the area, the company announced in an official statement.

To date in 2019, the pipeline has been attacked 18 times with 11 incidents occurring in Arauca and seven in Norte de Santander, Ecopetrol said.

ANH And Hocol Inaugurate Solar Powered Pumping System

(Energy Analytics Institute, Piero Stewart, 7.Jun.2019) — Protesters in Colombia took to the streets across the Andean country on 7 June to show their disagreement with the government of President Ivan Duque to move forward with fracking in the country.

Related Story: Exploring The Innovative Evolution of Hydraulic Fracturing Colombia has announced it is moving forward with unconventional pilot projects in Magdalena and Cesar Ranchería to gauge potential to extract and boost crude oil and natural gas reserves and production as well as to gauge community interest.

Ecopetrol Reports Attack Along Caño Limón Coveñas Pipeline In Arauca (Energy Analytics Institute, Piero Stewart, 7.Jun.2019) — Colombia’s state oil company Ecopetrol activated a contingency plan after the most recent attack on 7 June

(Energy Analytics Institute, Piero Stewart, 6.Jun.2019) — Colombia’s National Hydrocarbon Agency (ANH) inaugurated a new solar powered water pumping system in Ovejas in Sucre with investments from ANH and Hocol S.A., the agency announced in a social media post on Twitter.

Ecopetrol Shuts Section Of Pipeline After Oil Found In Cobaria River (Reuters, 4.Jun.2019) — Colombia’s state-run oil company Ecopetrol closed the valves on a section of its Cano Limon pipeline in central Boyaca province after crude oil was detected in a local river.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

The 485-mile (780-km) pipeline was not pumping when the oil was detected, the company said in a statement, but people in the area around the Cobaria river should not drink water.

Seven Companies Bid For 11 Contracts In Colombia Oil Auction (Reuters, 4.Jun.2019) — Seven companies have put in bids for 11 oil exploration contracts in Colombia, the government said, as the Andean country seeks to revitalize its oil sector. Frontera Energy, Geopark, Ecopetrol, Hocol, Parex Resources, Gran Tierra Energy and ONGC Videsh have put in a total of 19 offers, the national hydrocarbons agency said. Ten of the blocks are onshore and one is offshore.

explore business opportunities for the benefit of Ecuador and Japan, EP PetroEcuador said in a social media post on Twitter.

PetroEcuador Completes Second Spot Sale Of 2019 With A $3.09/bbl WTI Spread (Energy Analytics Institute, Piero Stewart, 6.Jun.2019) — EP PetroEcuador awarded for export 3,960,000 barrels of Oriente crude oil of 24-degree API plus/minus 5% to Tesoro Refining and Marketing Company LLC, the state company said in an official statement on 5 June.

The award was at a positive differential of $3.09 per barrel over the value of the West Texas Intermediate (WTI) reference crude and is estimated to generate income of $282 million to benefit the country, EP PetroEcuador General Manager Pablo Flores said in the statement.

EP Petroecuador invited 47 qualified companies to the bid, of which eight excuses as well as seven offers were submitted from the following companies: Gunvor S.A.; Phillips 66 Company; PTT International Trading PTE. LTD.; Treasury Refining and Marketing Company LLC; Trafigura PTE. LTD; Valero Marketing and Supply Company and Vitol INC. The bid marks the the second spot deal of 2019 for EP Petroecuador; the third to be delivered in 2019; and the seventh under the current government, the state entity said.

ECUADOR

According to the terms and conditions of bid, the volume offered will be exported in 11 shipments of around 360,000 barrels, to be delivered during the period July to September 2019.

EP PetroEcuador Hosts Executives From Japanese Companies (Energy Analytics Institute, Piero Stewart, 6.Jun.2019) — Executives from the Japanese companies Mitsubishi Motors, Nexi Nippon Export and Investment Insurance and Bank of Tokyo conducted meetings with EP PetroEcuador General Manager Pablo Flores to study and

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

MEXICO

VENEZUELA

A Double Whammy: Fitch Downgrades Mexico And Moody’s Lowers Outlook

U.S. Tightens Venezuela Oil Sanctions, Indicates More Actions To Come

(Reuters, 5.Jun.2019) — In a double blow for Mexico, credit ratings agency Fitch downgraded the nation’s sovereign debt rating on Wednesday, citing risks posed by heavily indebted oil company Pemex and trade tensions, while Moody’s lowered its outlook to negative.

(Reuters, Roberta Rampton, 6.Jun.2019) — The U.S. Treasury Department tightened its pressure on Venezuela’s state-owned oil company by making clear that exports of diluents by international shippers could be subject to U.S. sanctions.

The Mexican peso weakened as much as 1.3% on the news. Cutting Mexico’s rating to BBB, nearing junk status, Fitch said the financial woes of state oil company Pemex were taking a toll on the nation’s prospects.

The change, announced on the Treasury Department’s website, is the latest U.S. measure aimed at pressuring Venezuelan President Nicolas Maduro by limiting access to oil export revenue from PDVSA.

TRINIDAD

Citgo’s Search For CEO Moves Forward, Includes Former PDVSA Executives

Energy Minister Khan: No Venezuelan Crude For Trinidad (Trinidad and Tobago Newsday, Sean Douglas, 7.Jun.2019) — The refined oil imported by Paria Fuel Trading Company for local consumption after the closure of the Petrotrin refinery does not include oil produced by Venezuela’s state-run oil company PDVSA, Energy Minister Franklin Khan told the Senate on Thursday.

(Reuters, Marianna Parraga, 6.Jun.2019) — Citgo Petroleum Corp, the U.S. arm of Venezuela’s state-run oil firm PDVSA, is moving toward appointing a new chief executive, with candidate names including former executives from PDVSA and other companies soon to be submitted to the board. In February, former CEO Asdrubal Chavez and several other Citgo executives close to Venezuelan President Nicolas Maduro were ousted amid a battle for control of the subsidiary.

Opposition Senator Wade Mark had asked that if TT imported fuels from PDVSA’s retail company CITGO, how might TT be affected by US sanctions against the Venezuelan companies.

Venezuela Crude Oil Exports Sink In May (Oilprice.com, Julianne Geiger, 5.Jun.2019) — Venezuela’s oil exports slumped in May as the sanctions levied by the United States staunched the flow of oil from the troubled Latin American country that is in the middle of a severe crisis, according to Refinitive Eikon data.

Venezuela’s oil exports fell 17% in May to 874,500 barrels per day as it shut down almost all of its crude oil upgraders.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

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