Latin America

Venezuela’s deteriorating oil quality riles major refiners

19 Oct 2017   Venezuela

Venezuela’s state-run oil firm, PDVSA, is increasingly delivering poor quality crude oil to major refiners in the United States, India and China, causing repeated complaints, canceled orders and demands for discounts, according to internal PDVSA documents and interviews with a dozen oil executives, workers, traders and inspectors. FILE PHOTO: The logo of the Venezuelan state oil company PDVSA is seen next to a mural depicting Venezuela’s late President Hugo Chavez at a gas station in Caracas, Venezuela March 2, 2017. REUTERS/Carlos Garcia Rawlins/File Photo The disputes involve cargoes soiled with high levels of water, salt or metals that can cause problems for refineries, according to the sources and internal PDVSA trade documents seen by Reuters. The quality issues stem from shortages of chemicals and equipment to properly treat and store the oil, resulting in shutdowns and slowdowns at PDVSA production facilities, along with hurried transporting to […]

Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes

17 Oct 2017   Venezuela

Venezuela’s President Nicolas Maduro claimed victory in a regional election on Sunday in a surprise win defying opinion polls, but the opposition refused to recognize the outcome, decrying fraud, in what could lead to another wave of sanctions against the regime and renewed unrest in the country sitting on the world’s biggest oil reserves. The pro-government electoral board said that Maduro’s allies and candidates had won 17 governorships, compared to the six governorships won by the opposition. The voter turnout was more than 61 percent. Maduro’s win was unexpected, as opinion polls before the vote had suggested that the opposition would easily win more than half of the state governorships. “Chavismo is alive in Venezuela”, Maduro said , hailing the socialist victory, while opposition leaders alleged fraud, demanding a full audit, and calling for street protests on Monday. “Neither Venezuelans nor the world will swallow this fiction,” Gerardo Blyde, […]

IMF crunches the numbers for possible Venezuela rescue

17 Oct 2017   Venezuela

The International Monetary Fund has begun preparations for a possible rescue of Venezuela that could require $30bn or more in international help annually and come alongside one of the world’s most complex bond restructurings and a big test of Fund rules.  The IMF has had no official relationship with Venezuela since Caracas cut off relations in 2007 and has not conducted an on-the-ground review in 13 years. Officials insist no rescue is imminent and publicly say they are simply conducting normal surveillance, stressing that they have had no meaningful contact with the government other than occasional low-level responses to requests for data.  But in recent months IMF staff have quietly crunched numbers for a potential bailout that, were it to happen, could be bigger financially and more politically complex than its much-criticised involvement in Greece.  “The market needs to be properly prepared for this,” said a senior IMF official. “This is going to be Argentina meets Greece in terms of complexity,” added Douglas Rediker, a former US representative at the IMF. Venezuela held elections for 23 state governorships on Sunday in which polls suggested the opposition would trounce the government amid a severe economic recession that has shrunk the economy by a third, and inflation that the IMF estimates at more than 1,000 per cent. Shortages of foreign currency have slashed imports by 80 per cent in five years, leaving the country teetering on the brink of default and suffering extreme shortages of food and medicine.

Venezuela Opposition Has Few Options After Vote Many Call Fraudulent

17 Oct 2017   Venezuela

Opponents of President Nicolás Maduro expressed skepticism on Monday over the results of regional elections that the governing party said it won decisively, leaving weary Venezuelans facing the grim prospects of a drawn-out battle to challenge the vote and more violent street clashes. The election set Venezuela on a new period of uncertainty after the pro-government National Electoral Council said Mr. Maduro’s allies won at least 17 of 23 gubernatorial races fought in a contest that a range of polls had showed the opposition would win handily. The government had barred observers from well-known international organizations. Opposition leaders had hoped sweeping victories would put pressure on Mr. Maduro to enter into negotiations that would lead to a presidential election in 2018, opening the way for his likely […]

Top Venezuela refineries at 34 percent of capacity: union, documents

17 Oct 2017   Venezuela

Venezuela’s main refining complex, hobbled by a lack of oil and maintenance issues, is down to operating at about a third of its 955,000-barrel-per-day capacity, according to a union official and documents from the state-run oil company PDVSA. The Paraguana Refining Center, home to the Amuay and Cardon refineries along Venezuela’s western coast, has reduced output repeatedly in recent months, contributing to intermittent fuel shortages in the South American OPEC nation. PDVSA had planned for Paraguana to process 385,000 bpd this month, according to internal company documents seen by Reuters. But it is currently operating at 34 percent of capacity and output is likely to come in well below the October target. The complex had been operating at 42 percent of capacity in August. Low utilization rates at several refineries in Venezuela and Mexico could raise the prospects for higher U.S. fuel exports, according […]

$800 Million Gas Pipeline Proposed As Argentina Preps For Shale Boom

14 Oct 2017   Argentina

Gas transporter TGS, controlled by Pampa Energía, has proposed an $800 million pipeline and gas treatment plant in Argentina’s Vaca Muerta shale fields, a company source said, aiming to address a key barrier to increasing production. The project, subject to approval by the government of Neuquen province, could be built in a year and a half and would transport gas produced by companies including state-run YPF SA, Tecpetrol, Dow Argentina and Exxon Mobil Corp, the source said. Argentina’s President Mauricio Macri has made attracting investment to ramp up natural gas production a priority of his government, which is trying to end reliance on costly energy imports. But expanded output is limited by current pipeline capacity in […]

Russia Gets Foothold In The World’s Hottest NatGas Discovery

12 Oct 2017   Argentina, Russia

Chinese E&P major Sinopec reportedly put its Argentina assets up for a $1 billion sale this week. With one of the interested buyers said to be Russia’s Rosneft. And that latter firm made ever bigger waves in the global natural gas industry this week. With the purchase of a stake in one of the largest — and most geopolitically complicated — development projects in the world. That’s the Zohr natgas field, offshore Egypt. A find made by Italian major Eni — which holds a massive reserve of 30 trillion cubic feet of natural gas. Eni announced this week it is selling a 30 percent interest in Zohr to Rosneft. With the Russian firm paying $1.125 billion for the stake, and reimbursing Eni for a proportionate share of historic costs. That will now give Rosneft a foothold in one of the world’s most important emerging natgas areas: the eastern Mediterranean. […]

Cuban oil work moves toward exploration phase

12 Oct 2017   Cuba

Geological surveys of an inland oil basin in Cuba are completed and work will now continue toward exploration drilling, an Australian energy company said. Melbana is one of the few Western companies, and the only one listed on Australia’s stock exchange, with an established footprint in Cuba. The company said it completed a work program for its Block 9 basin in Cuba, which involved geological surveys of the area, and was ready to move on to an exploratory phase. “Melbana is pleased to provide formal notification to the Cuban regulator of our ongoing commitment to Block 9 based on its world-class exploration potential and we are well placed having already commenced preparatory engineering, permitting, and procurement activities to support the work program and […]

Brazil to ramp up oil production before ‘renewable era’ hits: official

12 Oct 2017   Brazil

Brazil plans to boost oil exploration and production to seize on its reserves before the world enters the “renewable era” and other technologies hurt demand for the fossil fuel, Deputy Energy Minister Paulo Pedrosa told Reuters on Wednesday. Brazil’s state-run oil company Petrobras LPG fuelling stations are seen in the Guanabara bay in Rio de Janeiro, Brazil October 7, 2017. REUTERS/Pilar Olivares “The stone age did not end for lack of stone, and the oil age will not end for lack of oil,” Pedrosa said in an interview. “A race has begun to take advantage of the resource, because in the future it might not have value.” Since 2006, Brazil has discovered potentially massive stores of oil and gas trapped below a layer of salt under the ocean floor off its coast, but slumping global oil prices have complicated efforts to exploit these reserves. Pedrosa […]

The Panama Canal’s Big Bet Is Paying Off

9 Oct 2017   Panama

Since the start of the year, transiting tonnage at the Panama Canal has increased by nearly 23%. Above, a ship makes its way through the locks at the Panama Canal in August. “It’s an unprecedented increase and demand is driven by the expanded East Coast and U.S. Gulf ports that have been preparing for the new locks,” said Manuel Benitez, the Panama Canal Authority’s deputy administrator. The widened waterway means importers as far inland as Tennessee could find it cheaper to bring in Asian goods to ports like New York, Savannah, Ga., and Charleston, S.C., rather than move them by rail and truck from West Coast ports, which handle about two-thirds of Asia-to-Americas trade. The Panama Canal is also helping U.S. exporters of natural gas send bigger loads to Asian markets. “We are very big users of the Panama Canal,” said Anatol Feygin, chief commercial officer of Cheniere Energy […]

ExxonMobil ‘Puts Guyana on the Map’ with Discovery

6 Oct 2017   Guyana

Could ExxonMobil attain 2 billion-barrel oil reserves mark offshore Guyana? Exxon Mobil Corp. on Thursday reported its fifth new oil discovery after drilling the Turbot-1 well offshore Guyana with the Stena Carron drillship. “The results from this latest well further illustrate the tremendous potential we see from our exploration activities offshore Guyana,” ExxonMobil Exploration Co. President Steve Greenlee said in a company announcement. “ExxonMobil, along with its partners, will continue to further evaluate opportunities on the Stabroek Block.” According to ExxonMobil, Turbot is the latest in a string of discoveries in Guyana. Previous discoveries in the South American country include Liza, Payara, Snoek and Liza Deep. The company said that its affiliate Esso Exploration and Production Guyana Ltd. began drilling Turbot-1 on Aug. 14, 2017, and encountered a reservoir of 75 feet (23 meters) of high-quality, oil-bearing sandstone in the primary objective. According to Wood Mackenzie, the Turbot-1 discovery […]

Venezuela And Russia Team Up To Tackle The Petrodollar

6 Oct 2017   Russia, USA, Venezuela

Three weeks after the U.S. imposed financial sanctions on Venezuela in an effort to cripple its economy and choke the Maduro regime, which in turn prompted Caracas to announce it would no longer receive or send payments in dollars, Venezuela’s president Nicolas Maduro proposed to expand his own personal blockade of the U.S., by proposing that all oil producing countries discuss creating a currency basket for trading crude and refined products. One which is no longer reliant on the (petro)dollar. “ Developing a new mechanism of controlling the oil market is necessary ,” Maduro said on Wednesday at the Russian Energy Forum, being held in Moscow this week. Quoted by RT , Maduro also blamed trade in crude oil paper futures as having an adverse impact on the oil market, which has undermined attempts by OPEC to stabilize prices. To counteract such “speculation”, Maduro proposed an alternative currency basket, […]

Venezuela To Invite More Countries To Join Output Cuts

5 Oct 2017   OPEC, Venezuela

Up to 12 oil producing countries from South America and Africa have been invited to join the OPEC/non-OPEC production cut deal, Venezuela’s Oil Minister Eulogio del Pino said on the sidelines of an energy forum in Russia on Wednesday. At the event, Del Pino stressed on the importance that more countries join the output cut pact, Venezuela’s oil ministry said in a statement today. Currently, there are 24 countries in the deal, representing around 50 percent of the market; it would be a very positive message if we could include 12 more countries in the agreement, Del Pino said. OPEC ministers and ministers from other oil producing nations will discuss this week the progress of the production cut deal and a mechanism to monitor crude oil exports, on the sidelines of the Russian Energy Week between October 3 and 7, Russian Energy Minister Alexander Novak said on Tuesday. More […]

Venezuela plans new ways to sell oil if sanctions imposed: Maduro

5 Oct 2017   Venezuela

Venezuela has alternatives to allow it to sell oil if the US decides to imposes further sanctions on its oil sector, President Nicolas Maduro said Wednesday. “Big names are trying to negotiate at very high levels and avoid such decisions that are wrong and are quite unclear. Venezuela has its plan A, plan B and C, and other alternatives,” Maduro told delegates at the Russian Energy Week conference in Moscow. The Trump administration imposed new sanctions in late August, prohibiting trading new debt and equity issued by the Venezuelan government and state oil company PDVSA. These followed a widely criticized July 30 vote that allowed Maduro to replace the country’s National Assembly with a hand-picked Constituent Assembly expected to rewrite the constitution. Article continues below… Platts Price Assessment Methodology Explained Oct 10 or Dec 12, 2017 | 11 am – 1 pm CST | Houston, Texas Are you interested […]

Panama Canal Authority, shippers work to double LNG capacity

5 Oct 2017   LNG, Panama

The Panama Canal Authority is working with LNG shippers towards doubling the capacity set aside for LNG vessels by next October, the PCA said Wednesday. The PCA is working towards allowing two LNG vessels a day to transit the canal, from the single slot currently available. “Currently all LNG transits are limited to daylight hours. We are working towards lifting some transit restrictions by the third quarter of next year,” the PCA said in a statement, adding that there are currently no transit delays. Article continues below… Platts LNG Daily is vital reading as LNG supply dynamics continue to change in big markets like Japan, China, Middle East, India, Australia, South America and the US. This premier independent news and pricing publication for the global LNG industry gives readers information on every aspect of the global market from new LNG supply projects and contracts to gas pricing analysis. Request […]

Venezuela says invited 10-12 more countries to join OPEC-led oil cut

4 Oct 2017   Venezuela

An extra 10 to 12 oil-producing countries have been invited to join an OPEC-led output cut aimed at getting rid of a supply glut, Venezuela’s oil minister said on Wednesday. Eulogio del Pino, speaking on a visit to Moscow, said the invited countries were in South America and Africa. The OPEC-led supply cut at present covers 24 countries.

Wall Street Sees ‘Existential Crisis’ as Venezuela Payday Nears

3 Oct 2017   Venezuela

Traders fear payment delay as upcoming debt lacks grace period Default on bonds backed by Citgo would put refiner in play Venezuelan investors are getting ready for a wild ride over the next five weeks as the government stares down $3.5 billion in debt payments. While all the country’s due dates in the past year have elicited serious hand-wringing, the next few are on a whole new level. That’s because unlike recent transactions in which a 30-day grace period allowed Venezuela to avoid default, the upcoming deadlines have no leniency. Further complicating matters, some of the bonds are backed by a majority stake in Citgo Holding Inc. , potentially putting one of the biggest U.S. refiners in play. “There’s no ‘Oops, I did it again,”’ said Ray Zucaro, the chief investment officer at Miami-based RVX Asset Management, which holds PDVSA bonds, but not the ones with principal payments in […]

The Next Big Offshore Boom Is About To Happen Here

2 Oct 2017   Brazil

Say what you will about offshore oil and gas exploration, but it’s still alive and kicking—high production costs and all. The latest demonstration of the viability of deepwater projects, even in the post-2014 oil industry era, comes from none other than Brazil. On Wednesday, the country’s National Petroleum Agency put 287 oil and gas blocks up for auction, and only 37 found buyers. Too few, it might seem at first. But the proceeds came in at more than US$1.2 billion —a hefty share of this pledged by heavyweight Exxon. The NPA’s expectations for the proceeds were much more modest, at $157 million. The 287 blocks auctioned are just the first portion of a number of deposits that hold an estimated 10 billion barrels of crude in proven reserves. No wonder, then, that as many as 30 companies took part in the bidding round—the first of a total nine rounds, […]

Exxon’s Big Bet on Brazil Oil Could Signal Major Pre-salt Role

30 Sep 2017   Brazil

Exxon Mobil Corp’s big bet on Brazil’s offshore Campos basin shows its willingness to pay up to replenish its reserves and may pave the way for hefty bids in October auctions in the country’s rich pre-salt areas, analysts said. Marking a return to Brazilian exploration after a five-year absence, Exxon took eight blocks in the coveted basin, one of Brazil’s most productive, at an auction on Wednesday. Six were taken in partnership with state-run Petroleo Brasileiro (Petrobras). The auction’s record take included an Exxon bid of 2.24 billion reais ($704 million) for one block, Brazil’s highest-ever such bid. That showed how oil companies that can afford significant overheads are willing to shell out for and develop high quality reserves in far-flung locations, despite oil […]

Oil Analysts Baffled As Venezuela Ditches Petrodollar

28 Sep 2017   Venezuela

At the end of August, the U.S. stepped up sanctions on Venezuela, prohibiting dealings in new debt or equity issued by state oil firm Petroleos de Venezuela SA (PDVSA) or the government. A couple of weeks later Venezuela responded to what it called an “economic blockade” by suspending trade in U.S. dollars and publishing Venezuelan oil basket prices in Chinese yuan. Analysts believe that although it has close strategic ties to China, Venezuela would mostly just harm itself with the move to “free the nation from the oppression of the dollar,” as Nicolas Maduro put it. Venezuela told oil traders it will no longer accept or offer U.S. dollars in payment for crude oil and fuels, the Wall Street Journal reported earlier this month, citing sources familiar with the developments. As a result, traders have started converting dollars into euros, and PDVSA’s foreign partners operating in the country may […]

Brazil Lets In Big Oil Firms After Keeping Them Out for a Decade

26 Sep 2017   Brazil

Brazil will on Wednesday begin reversing what industry officials say was a costly and ultimately disastrous decision a decade ago: setting aside billions of barrels from the Western Hemisphere’s largest oil discovery in 30 years for its state-run oil firm at a time when deep-pocketed foreign companies were clamoring to invest. Brazil removed key acreage from a 2007 auction that could have yielded $100 billion in signing bonuses plus hundreds of billions more in spending commitments when the price of oil was near record highs, according to several former executives at Western oil companies. Now, Brazil may generate just a fraction of what it could have as it looks to […]

Petrobras Creditors Agree To $6.22 Billion Debt Swap

26 Sep 2017   Brazil

Petrobras creditors have agreed to swap $6.22 billion in Petroleo Brasiliero bonds that are due between 2019 and 2021 for long-term securities, allowing Brazil’s state-owned oil company to lower its debt burden during a period of chronically low oil prices. In a Monday filing, Petrobras said it would swap $2.285 billion of crude oil debt into 5.299 percent bonds due in 2025 and another $3.935 billion into 5.999 percent securities maturing in 2028. In a bid to raise cash, Brazil proposed a plan to put up for privatization 57 major state infrastructure assets, including the sale of some or all of its 51-percent stake Electrobras, the state utility giant, by the middle of next year. “The overall perception is that the company can finally free itself from state control and that it will adopt meritocracy and negotiate better terms with suppliers,” Electrobras chief executive Wilson Ferreira Jr told Reuters […]

Brazil oil auction to gauge investor appetite amid reforms

26 Sep 2017   Brazil

Brazil’s oil auction this week will test whether a raft of market-friendly reforms under President Michel Temer can tempt investors back to a sector tarnished by a corruption scandal at state-controlled oil firm Petróleo Brasileiro SA. Brazil will auction 287 onshore and offshore exploration blocks on Wednesday, raking in at least 1.69 billion reais ($537 million) if all are assigned. Wednesday’s auction is Brazil’s fourteenth round for blocks outside of the coveted pre-salt area and should gauge appetite for the country’s second and third pre-salt rounds next month. Thirty-two companies will vie for the blocks this weeks, including Royal Dutch Shell Plc, BP Plc, Exxon Mobil Corp, Repsol, Total SA, Rosneft, CNOOC and Brazil’s state oil firm, known as Petrobras. The auction […]

Exclusive: Brazil’s Braskem terminates supply contract with Venezuela’s PDVSA

22 Sep 2017   Brazil, Venezuela

Brazil’s Braskem has terminated a contract to buy light virgin naphtha and natural gasoline from Venezuela’s state-run oil company PDVSA that would expire this month, the petrochemical company said on Thursday. The Sao Paulo-based company declined to comment on the reason for ending the long-term supply agreement, but said the contract represented less than 0.1 percent of its annual naphtha consumption. “Braskem continues regular purchases of raw materials, keeping up its industrial operations in Brazil,” it said in a statement to Reuters. Petróleos de Venezuela, S.A., commonly known as PDVSA, did not reply to a request for comment. The Venezuelan energy company has been struggling to maintain its commercial relationships amid difficulties paying providers and because of sanctions imposed […]

Will The White House Prevent Rosneft From Buying Citgo?

21 Sep 2017   Russia, USA, Venezuela

Senators have pressed the Trump Administration to review the chances of Russia’s Rosneft acquiring Venezuela’s PDVSA and its U.S. business, Citgo. Marco Rubio and Bob Menendez believe a change in the ownership of Citgo’s assets would constitute a security risk, Reuters reported . In a letter to Treasury Secretary Steven Mnuchin, the Republican and Democratic senators wrote that “ Given Venezuela’s increasingly dire economic and humanitarian situation, we are seriously concerned with a possible acquisition by Rosneft of PDVSA and Citgo .” Mnuchin is the chair of the Committee on Foreign Investment in the United States. The CFIUS is responsible for studying the national security implications of potential foreign acquisitions in the country. The possibility of Russia’s biggest oil company taking over Citgo first surfaced early this year, as PDVSA’s troubles with falling production and lower oil revenues deepened, bringing it closer to a default on pending debts. Rosneft […]

Venezuela’s Crisis Deepens As Hurricane Approaches |

20 Sep 2017   Venezuela

Oil traders have started to divert fuel shipments from their original destination in Venezuela as Hurricane Maria approaches the Caribbean, Reuters vessel tracking data has shown. Yet the hurricane, which moves at speeds of up to 125 mph, is not the only reason Venezuela’s waters are quickly emptying of tankers. The state oil firm, PDVSA, cannot pay for the cargoes that have already been delivered.  But sitting potentially indefinitely in tumultuous waters is now no longer an option, and in a bid to place these before the hurricane reaches the Venezuelan coast, traders are rerouting the tankers towards other Latin American and Caribbean ports, to sell the fuel to paying clients. Since September 3, six vessels with a combined load of 1.8 million barrels of diesel and other oil derivatives have been moved from the Venezuelan coast. One of these had been floating in Venezuelan waters since early July and has now been directed to Trinidad. Another, loaded with fuel from Europe, set sail back to the continent, Reuters said.  Hurricane season has been most unkind this year. After Harvey, oil terminals in the Caribbean have been operating intermittently, as more hurricanes followed, notably Irma and Jose. The affected region, according to Reuters, imports some 2.5 million bpd of oil products, the bulk coming from the U.S. Gulf Coast. These imports will likely be disrupted further as Maria approaches.

Oil cargoes shift away Venezuela as hurricanes extend disruptions

19 Sep 2017   Venezuela

Hurricane Maria is shown in the Atlantic Ocean about 85 miles east of Martinique in this September 17, 2017 NASA handout satellite photo. NASA/Handout via REUTERS (Reuters) – Shippers are sending oil cargoes originally bound for Venezuela to other spots in Latin America and the Caribbean, in advance of coming hurricanes that threaten to further disrupt oil flows in the region, according to traders and Reuters data. After Hurricanes Harvey and Irma caused massive flooding and damage in Texas and Florida, fuel tankers floating off Venezuela’s coast have been shifted elsewhere, largely because the cash-strapped state firm PDVSA [PDVSA.UL] cannot pay for the cargoes. The latest threat for the Caribbean is Maria, now a Category 3 hurricane, which currently boasts wind speeds of 125 miles per hour (200 km per hour). The storm is expected to get stronger as it moves through the Leeward Islands later on Monday. Shippers […]

Venezuela publishes oil prices in Chinese currency to shun U.S. dollar

16 Sep 2017   Venezuela

Venezuela published the price of its oil and fuel in Chinese currency on Friday in what it called an effort to free the socialist-run country from the “tyranny of the dollar,” echoing a plan recently announced by President Nicolas Maduro. Maduro last week said his government would shun the dollar after the United States announced sanctions that blocked certain financial dealings with Venezuela on accusations that the ruling Socialist Party is undermining democracy. The global oil industry overwhelmingly uses the dollar for pricing of products. A weekly Oil Ministry bulletin published on Friday listed September prices in yuan, while including prices from previous weeks and months in dollars. “This format is the result of the announcement made on Sept 7 by the president … that Venezuela will implement new strategies to free the country from the tyranny of the dollar,” the ministry wrote in a statement […]

Citgo Petroleum says credit profile ‘strong’ as U.S. sanctions bite PDVSA

16 Sep 2017   Venezuela

Venezuelan state-oil firm PDVSA’s refining unit in the United States, Citgo Petroleum [PDVSAC.UL], on Friday said its credit profile remains “strong and stable,” with over $1 billion in excess open credit. Sanctions imposed on its parent company and one of its top executives by U.S. President Donald Trump’s administration this summer have created difficulties for PDVSA and its units to get the letters of credit they need to buy some oil cargoes, Reuters reported this week, citing bankers and traders. Some producers are now using intermediaries to shield themselves from credit risks from what is seen as a the rising chance of debt default and to avoid triggering sanctions, the sources said. Citgo said it continues to obtain all the crude required for its 749,000-barrel-per-day refining network in the United States using more than 30 suppliers. “The vast majority of these purchases are made through long […]

Venezuela Suspends Trade In U.S. Dollars

15 Sep 2017   Venezuela

Venezuela has told oil traders it will no longer accept or offer U.S. dollars in payment for crude oil and fuels, the Wall Street Journal reports , citing sources familiar with the developments. As a result, traders have started converting dollars into euros, and PDVSA’s foreign partners operating in the country may have to switch to euros as well. At the same time, Reuters reports , Venezuela yesterday suspended the sale of U.S. currency through its Dicom auction system that President Nicolas Maduro said the government will use to switch from dollars to a basket of other currencies. The decision comes on the heels of fresh U.S. sanctions that effectively aim to tie Caracas’ hands with the issue and sale of new debt, which increases the danger of it defaulting on existing loans. As a counter move, Caracas is moving to a combination of yuans, Russian rubles, and euros […]

Brazil’s Pre-Salt Areas Attract 17 Major Oil Bidders

15 Sep 2017   Brazil

As many as 17 companies have registered to bid next month in two rounds of exploration license awards in Brazil’s pre-salt layer, Brazilian Oil and Gas Secretary Marcio Felix said on the sidelines of an event on Thursday. Brazil is eager to award new exploration licenses in the most promising blocks in its pre-salt layer as it tries to boost its economy and attract more foreign investment. Before Felix gave the exact number of the different bidders in the two rounds, the country’s oil and gas regulator ANP had previously said that 10 firms had expressed interest to take part in the second round, with 15 companies registering to bid in the third round. Now the exact number is known—17—and all are major oil firms, Reuters quoted Felix as saying. Interest in pre-salt areas by majors has grown since Brazil removed in October last year the requirement by law […]

Sources Say Trump’s Citgo Sanctions Are Working

15 Sep 2017   Venezuela

Trading sources say President Donald Trump’s new sanctions against Venezuela’s American refining unit, Citgo, have succeeded in making it difficult for the PDVSA subsidiary to order crude for its facilities, a new Reuters report says. Oil distributors now require Citgo to provide prepayment letters or bank letters of credit, instead of allowing the company to employ the standard practice of ordering raw supplies on open credit. Citgo’s refineries produce 750,000 barrels per day of oil, sources said. The company owns three facilities: one in Illinois, one in Texas, and one in Louisiana. Together, they represent 4 percent of American fuel capacity. A pair of Canadian suppliers explained that their companies could not trade with Citgo directly anymore, resorting to third-party sales to avoid a credit risk. Another banker familiar with the matter put it this way: “This is not a credit issue, nobody thinks Citgo is unwilling to pay. […]

Venezuela’s crude supply to the United States was flat in August

14 Sep 2017   USA, Venezuela

Venezuelan crude sales to the United States in August were largely unchanged at 638,935 barrels per day (bpd) compared with the prior month, but continued to fall far short of year-earlier levels, according to Thomson Reuters Trade Flows data. State-run oil company PDVSA has sought to increase exports of diluted crude oil (DCO), a blend of imported naphtha and extra heavy oil from the Orinoco Belt, Venezuela’s largest producing region. But declining output of other grades and problems obtaining short-term financing due to a growing risk of default and sanctions imposed by the United States have affected PDVSA’s shipments to the United States in recent months. The closure of several Texas oil ports and refineries at the end of August ahead of Hurricane Harvey also affected the imported volumes. PDVSA and its joint ventures sent a total of 38 crude cargoes to the United States in […]

Argentina Doubles Down On Shale Gas And Renewables

14 Sep 2017   Argentina

Traditionally one of the most prominent oil and natural gas markets in South America, Argentina is increasingly turning towards alternative forms of energy, with the government exploring shale gas and renewable options as it looks to diversify its power market.  The shift comes amid challenges to longstanding hydrocarbons production, which has seen Argentina record export deficits in recent years.According to the “BP Statistical Review of World Energy 2017”, natural gas accounts for 50.2 percent of Argentina’s power. Oil was second at 35.9 percent and hydro third with 9.8 percent. Other forms of energy consumption consisted of nuclear power (2.1 percent) and coal (1.2 percent), with renewables accounting for just 0.8 percent.

While the country’s energy mix has remained relatively stable in recent years, changes to the energy market have created shifts that the government is now attempting to address.  Years of protective policy relating to the hydrocarbons sector have affected the industry’s competitiveness, and have subsequently had an impact on output.  In 2016 Argentina produced an average of 619,000 barrels of oil per day (bpd), a 27 percent decrease on 2006 levels. In contrast, consumption has increased by 44 percent to 687,000 bpd.  This resulted in Argentina moving from a net exporter of crude oil to a net importer in 2008. A similar transformation occurred in gas, where annual production fell from 46.1bn cu metres in 2006 to 38.3bn a decade later.

How Will Venezuela Deal With A PDVSA Default?

14 Sep 2017   Venezuela

While debt servicing has been a government priority, declining external liquidity and a deteriorating domestic situation (three-digit hyperinflation, shortages, and a political crisis between the government and the National Assembly) make it a daunting task. By 2020, the country must repay 30 percent of the external debt due to expire in the next 23 years. Venezuela can get access to liquidity via three main ways. The first option is to borrow directly on the financial market which implies that the country must pay an increasingly prohibitive risk premium due to investors’ fear of sovereign default. The second option, used intensively in recent years, is to borrow from allies, and especially China. Since 2009, Venezuela has borrowed at least $60 billion from China (through the Venezuelan-China fund) in exchange for selling oil at a discounted price. Loans were used to pay foreign manufacturers and repay external debt, such as in […]

Venezuela’s ‘Plan Rabbit’ encounters ‘cultural problem’

14 Sep 2017   Venezuela

Venezuelans tend to keep rabbits as pets and do not view them as a source of meat Venezuelan President Nicolás Maduro has devised a “rabbit plan” to counter the economic war he says is being waged against his government by “imperialist forces”. The president urged crisis-hit Venezuelans to breed rabbits and eat them as a source of animal protein. Venezuela is facing record levels of child malnutrition amid persistent food shortages. An opposition politician said the plan was “a bad joke”. President Maduro revealed the idea on state television, saying that “for animal protein, which is such an important issue, a ‘rabbit plan’ has been approved because rabbits also breed like rabbits”. The leader did say that the “rabbit plan” had not got off to a good start and the minister of urban agriculture, Freddy Bernal, said there had been a “cultural problem”. ‘People put bows on them’ President […]

Cuban oil drilling program low on funds

12 Sep 2017   Cuba

An effort to raise up to $4.8 million to help fund drilling operations at a reservoir in Cuba fell well short of its goal, Melbana Energy Ltd. said. Melbana is one of the few Western companies, and the only one listed on Australia’s stock exchange, with an established footprint in Cuba. It initiated a push last month to raise capital for its preliminary efforts and said that through the placement of shares alone, it received $1.8 million that it would use to fund drilling preparations in Cuba and cover general corporate costs. On Monday, the company said an entitlement offer to raise $4.8 million fell short of the goal, raising $1.5 million. All told, the company said […]

Fifteen Oil Majors Interested In Brazil’s Round 3 Pre-Salt Auction

12 Sep 2017   Brazil

Fifteen companies have pre-registered for Brazil’s third auction of oil exploration rights in the pre-salt area while ten companies have expressed interest in the second round, oil regulator ANP said on Monday. ANP told Reuters that all the companies were oil majors. The two auctions will take place on Oct. 27. Through production sharing contracts, firms will be able to bid on eight blocks in the Santos and Campos basins in the pre-salt area, where hydrocarbons are trapped under thick layers of salt beneath the ocean floor. The fields are considered among Brazil’s most prized energy assets. Those already under production are showing above-average productivity. The companies had a deadline of Sept. 8 to fill out an initial form expressing interest in the bidding process, but […]

BP folds Argentine assets into JV backed by Cnooc

BP has agreed to fold its Argentine assets into a new joint-venture backed by Cnooc of China in a deal that widens both groups’ interests in a country boasting some of the most promising shale oil and gas resources outside the US. Pan American Energy (PAE), an Argentine oil and gas producer 60 per cent owned by BP, will be combined with Axion Energy, one of the Latin American country’s largest oil refiners and fuel retailers, to create a new integrated energy group. The new company will be a 50-50 joint venture with Axion’s owner, Bridas Corporation, which is 50 per cent owned by state-controlled Cnooc. Bridas already owns the 40 per cent of PAE not held by BP and Axion is the primary customer for PAE’s Argentine crude oil output. BP said fully integrating the closely-connected businesses would unleash further operational synergies. No cash payments will be made by either party for the equity exchange, which BP said would create the largest private Argentine energy company. PAE accounted for 18 per cent of Argentine oil and gas production last year, with average output of 262,000 barrels a day. It operates the Cerro Dragon oilfield — the country’s largest — and also has positions in the Vaca Muerta shale region. Argentina has been attracting growing interest from global energy groups as a new frontier in the shale revolution, which has unlocked large volumes of oil and gas from “tight” rock formations in the US.

Petrobras extends deadline in sale of seven exploration areas

9 Sep 2017   Brazil

Brazil state-controlled oil firm Petrobras extended the deadline for interested parties to sign non-disclosure agreements in order to access technical, legal and financial information related to seven exploration areas it is seeking to sell. Petroleo Brasileiro, as the company is formally known, said in a stock exchange filing on Friday that it would extend the deadline until Sept. 29 “in view of interest from the market.” The shallow water areas are located in the states of Ceara, Rio Grande do Norte, Sergipe, Rio de Janeiro and Sao Paulo. The Brazilian company is in the midst of a campaign to sell $8 billion worth of assets this year as it seeks to reduce its debt burden. The filing did not say when the original deadline was.

Indigenous Mapuche thwart Argentina shale development

9 Sep 2017   Argentina

Indigenous Mapuche communities demanding cash payments and blocking oil wells in Argentina’s Vaca Muerta area are threatening the long delayed development of the world’s second-largest shale fields, oil companies say. Since the beginning of the year the Mapuche have cut off access to 14 wells in the Loma de la Lata field, one of only two shale fields currently producing in the Belgium-sized Vaca Muerta area, state-run YPF said in an e-mailed statement. YPF, Argentina’s largest oil company, spent 55 million pesos ($3 million) on payments to a Kaxipayiñ Mapuche community leader last year, more than double the payments in 2014, a company source said. The conflict is intensifying as President Mauricio Macri prioritizes attracting energy investment to develop the area and end Argentina’s reliance on imported energy. “It affects us a lot,” YPF Chairman Miguel Gutierrez said of the Mapuche conflict in a recent […]

Venezuela invites investors to discuss foreign debt

9 Sep 2017   Venezuela

Venezuela has invited international bondholders to negotiations over its foreign debt as the government in Caracas seeks to mitigate the impact of US sanctions and survive a deepening economic crisis. “In the next two weeks all holders of Venezuelan public debt that have been negatively affected by the decisions of Donald Trump and [head of the Venezuelan Parliament Julio Borges . . . are invited to several rounds of negotiations,” Nicolás Maduro, the country’s president, said. Almost three-quarters of the bondholders were from the US and Canada, Mr Maduro told the government-controlled constituent assembly on Thursday. Russia, a critical lender to the South American country, confirmed that it had been asked to help with a restructuring. Moscow has extended state loans as well as financial assistance from Rosneft, the Kremlin-controlled oil producer, to Venezuela’s state-owned PDVSA. “There was a request from our colleagues in Venezuela to carry out a restructuring,” Russian finance minister Anton Siluanov said. “There are difficulties in fulfilling the debt.” Mr Siluanov said discussions were taking place within the Paris Club of creditors and “on the other hand, we are directly engaged in bilateral contacts in order to work out a mechanism for restructuring the debt.” The Russian state is owed around $2.8bn by Venezuela. “I am confident that we will find acceptable solutions with Venezuela,” the minister told reporters.

Hurricane Irma Prompts Oil Storage, Port Shutdowns

9 Sep 2017   Caribbean

Hurricane Irma has prompted the shutdown of at least two oil storage complexes in the Caribbean, with a combined capacity of 18.6 million barrels, S&P Platts reports. One of these, a 14-million-barrel terminal on the island of St Eustatius operated by NuStar Energy sustained damages to some of its tanks and other equipment, the company said. The other facility, Buckeye Partners’ Yabucoa storage complex in Puerto Rico, was shut down on Tuesday and the company is now preparing its 26.2-million-barrel storage facility on Grand Bahama Island for the hurricane. Statoil, which also has a storage site in Freeport on Grand Bahama, is monitoring developments but has not yet closed the facility. The hurricane, which has already caused 14 deaths in the Caribbean, is moving toward Florida and is expected to make landfall on Sunday, passing through the Bahamas and Cuba en route. Some 1.2 million people have been affected […]

Factbox: Oil companies operating in the Caribbean brace for Hurricane Irma

8 Sep 2017   Caribbean

Energy infrastructure in the Caribbean was being shut down due to Hurricane Irma, even as recovery operations from storm Harvey were under way. NuStar Energy said its Statia terminal in St. Eustatius sustained damage from Irma, but no injuries or spills were reported. Buckeye Partners on Thursday said it shut vessel traffic to its BORCO facility in the Bahamas, the largest oil terminal in the Caribbean. Norway’s Statoil was also making preparations on Thursday to close its South Riding Point terminal on Grand Bahama Island, traders close to the facility told Reuters. Port Everglades, the largest in South Florida for fuel deliveries, said it will suspend operations as of Friday evening. Irma ranks as one of the five most powerful Atlantic hurricanes in the last 82 years and the strongest Atlantic storm recorded by the U.S. National Hurricane Center outside the Caribbean Sea and Gulf of Mexico. […]

Hurricane Irma worsens Latin America’s fuel supply crunch

7 Sep 2017   Latin America

Hurricane Irma has shut down oil terminals across the northern Caribbean, worsening a fuel supply crunch in Latin American countries that have struggled to meet demand since Hurricane Harvey disrupted shipments from the U.S. Gulf Coast last month. Latin America had already been scrambling for almost two weeks to find cargoes because of Harvey, which caused massive flooding in Texas and Louisiana, shutting down oil ports, refineries and production platforms. Irma, which is being followed by two other hurricanes in the Atlantic – is threatening Caribbean refineries, terminals and storage facilities. There is over 100 million barrels of storage capacity in the Caribbean, which is crucial for those nations because of limited ability to refine crude, and also as supply for South American […]

In Venezuela, Cooking With Firewood as Currency Collapses

4 Sep 2017   Venezuela

Food shortages were already common in Venezuela, so Tabata Soler knew painfully well how to navigate the country’s black market stalls to get basics like eggs and sugar. But then came a shortage she couldn’t fix: Suddenly, there was no propane gas for sale to do the cooking. And so for several nights this summer, Ms. Soler prepared dinner above a makeshift fire of broken wooden crates set ablaze with kerosene to feed her extended family of 12. “There was no other option,” said Ms. Soler, a 37-year-old nurse, while scouting again for gas for her stove. “We went back to the past where we cooked soup with firewood.” Five months of political turmoil in Venezuela have brought waves of protesters into the streets, left more than 120 people dead and a […]

Brazil Aims To Privatize State-Owned Utility Company

4 Sep 2017   Brazil

Imagine the setting. A conference room full of senior politicians. “The tapes are bad”, one says. “A lot of stuff about bribes”. Another adds, “Yeah, and we’re polling in the single digits. Any lower and we’ll resemble Japanese interest rates”. A conference room deep in the bowels of the White House in Washington, DC? Nope. Brasilia, Brazil. The scope of the Brazilian scandal, called locally “Lava Jato” (Car Wash), is truly impressive. It may encompass two former presidents, the sitting president, the heads of both houses of Congress, ninety lawmakers and one third of President Temer’s cabinet. Twenty different political parties implicated in this scandal in which bribes paid allegedly amount to two billion dollars. But, despite the disorder caused by the corruption charges, President Temer is desperately trying to stabilize the wobbly Brazilian economy and get the government’s finances in order. One key measure: privatize a vast swath […]

Exclusive: Latin America looks to Venezuelan fuel cargoes as Harvey swamps U.S.

1 Sep 2017   Venezuela

After Hurricane Harvey roared into Texas, flooding oil refineries and crippling ports along U.S. Gulf Coast, Latin American countries scouring the globe for other sources of fuel are zeroing in on a flotilla waiting to unload off the coast of Venezuela. Almost no fuel tankers have sailed from Texas for Latin America in six days, according to Thomson Reuters vessel tracking data. Terminals and refineries shut by the storm are unlikely to fully recover for weeks. The United States is the world’s largest net exporter of refined petroleum products, shipping around 5.05 million barrels of fuel per day. Latin America received almost half of that, or 2.5 million barrels per day (bpd). Most of it loads from the U.S. Gulf Coast. Latin America’s top recipients of U.S. fuel shipments are Mexico, Brazil and Venezuela, which is an OPEC member sitting on the world’s largest crude oil […]

‘Hope Is Gone’ as Venezuelan Protesters Vanish From Streets

1 Sep 2017   Venezuela

Wuilly Arteaga became a symbol of Venezuela’s protest movement as he played patriotic hymns from his violin in the face of tear gas and rubber bullets. Then he was arrested and beaten. When the 23-year-old was released after three weeks, he was stunned to find the protest movement had died and President Nicolás Maduro in greater control than ever. “It looks like hope is gone,” said Mr. Arteaga this week, bruises visible on his left cheek. “I feel like everything is so dark, I don’t see an exit.” Five months of violent antigovernment demonstrations have dissipated and the epicenter in Caracas, Plaza Altamira, sits eerily quiet. The barricades that opponents once set up to slow government armored vehicles are gone. Rumors of a military uprising are gone. And life has returned to normal, with people struggling to find enough to eat in a country stricken by shortages. Despite […]

Trump To Block Russian Ownership Of Venezuelan Subsidiary In US

1 Sep 2017   USA, Venezuela

Trump’s White House will block attempts by the Kremlin to acquire large portions of Venezuela’s Citgo, a U.S. subsidiary of the state-owned PDVSA. Rosneft agreed to acquire half of Citgo’s shares in exchange for a $1.5 billion loan in 2016. Cash-hungry PDVSA approved the deal, leaving American lawmakers concerned that a Russian firm would control roughly five percent of U.S. refining capacity via the buyouts. Citgo controls three refineries which process 750,000 barrels of oil per day. It also owns 48 storage facilities for refined petroleum products across the country and shares ownership in nine pipelines. The White House approved new sanctions against President Nicolas Maduro’s regime last week, making it harder for Venezuela’s embattled government to secure funds as Caracas spirals towards a default. U.S. President Donald Trump signed the executive order, which prevents American financial institutions from offering new funds to Venezuela or to its state oil […]