Latam Oil 39

8/11/2019 Latam Oil 39

1/18

Issue 533 30September2014 Week 39

Freeing up fracking Colombia wants to bolster its reserves by unlocking unconventionals,

which could see hydraulic fracturing begin in 2015 led by Ecopetrol and

ExxonMobil.

Rig request Argentina needs more equipment to tap the Vaca Muerta shale play, with over

120 drilling rigs required to put 1,000 wells into production.

Crisis in Caracas Venezuelas economy appears to be in a death spiral, which is not good news

for oil companies operating in the country.

Brain drain Mexicos energy reform has led to a brain drain from state-run oil company

Pemex, as incoming international oil companies snap up local talent.

8/11/2019 Latam Oil 39

2/18

COMMENTARY 3

Colombia sets sights on shale 3

Oil companies feel the pinch as

Venezuelas economy disintegrates 4

INVESTMENT 5

Buyers line up for Petrobras Argentinas

Santa Cruz blocks 5

Ecuador to award contracts for 17 fields in

October 6

PERFORMANCE 7

Pan American Energy rebuilding

production from Cerro Dragon 7

Pemex suffers skills crisis 7

POLICY 8

Petrobras feels political pressure 8

Chile strikes Angolan import deal 8

Santos updates Colombian peace talks

progress 9

Colombia to ease licensing process 9

Peru to hold talks with protesters at Block

108 10

PROJECTS & COMPANIES 10

Argentina needs more rigs for shale

development 10

Petroamerica responds to Putumayo 7

challenge 11

Pemex builds closer ties with IOCs 11

NEWS IN BRIEF 12

NEWS THIS WEEK

8/11/2019 Latam Oil 39

3/18

LatAmOil 30 September 2014, Week 39 page 3

Copyright 2014 NewsBase Ltd.

www.newsbase.com Edited by Ryan Stevenson

All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All

reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents

Colombias unconventional oil and gas

industry could kick off in 2015 when

environmental permits for hydraulic

fracturing (fracking) are due to be

awarded. The sector has received a shot

in the arm from news that the

government has approved the use of

fracking.

Ecopetrols president Javier Gutierrez

said on September 23 that the state-run

company expected to receive

environmental permits to begin

exploratory fracking in the Middle

Magdalena Basin next year. The Coyote,

Prometeo and Iwana wells would be

targeted first, he said.

Ecopetrol won five unconventional

exploration licences in Colombias 2012

oil and gas bid round, two of which it

picked up in partnership with US shale

specialist ExxonMobil.Although unconventional blocks were

offered in the 2012 licensing round,

fracking regulations were not formulated

until March this year. The next step is for

the National Environmental Licence

Authority to formalise the regulations,

without which exploration cannot begin.

Colombias Deputy Energy Minister,

Orlando Cabrales Segovia, said he was

confident this would occur relatively

quickly and that fracking would to be

under way at a number of sites by the

middle of next year. Cabrales noted that

22 unconventional blocks had been

assigned and six contracts signed and

forecast that in two years time there

could be up to 20 wells drilled using the

technique. Tapping unconventional

reserves is an imperative for the

Colombian authorities, with conventional

reserves dwindling. The countrys

conventional oil reserves currently standat around 2.5 billion barrels, which is

enough to sustain production for around

6.6 years at current extraction rates. After

regularly exceeding output of 1 million

barrels per day of crude in 2013, this year

overall Colombian production has fallen

below the psychologically important

million barrel mark, thus invigorating the

governments hunt for new reserves.

The authorities are expediting the

permitting process for fracking now

because they need to increase reserves,

and the income they receive from

royalties, in order to sustain their social

and infrastructure programmes, a source

in the governments planning department

toldNewsBase. Conventional

production is falling and offshore or

unconventional discoveries are required

to provide revenues for the government.

Early estimates suggest fracking could

open up reserves of up to 31.7 trillioncubic feet (898 billion cubic metres) of

gas, as well as increasing oil reserves.

This would be a major fillip for the

government, given that export sales of

Colombian crude, natural gas and

products totalled US$32.5 billion, up

almost tenfold from the US$3.38 billion

the treasury collected in 2003. Indeed

petroleum sales in 2013 accounted for

56% of all export dollars, up from 26%

in 2003.

Risks

Yet there are multiple obstacles that

could impede the rapid escalation of

shale oil and gas development in

Colombia. With environmental concerns

about fracking, the countrys already

convoluted permitting process for

conventional drilling could be even

lengthier for shale projects.

COMMENTARY

Colombia sets sights on shaleWith requisite regulation in place, Colombia could see hydraulic fracturing begin in 2015

with Ecopetrol and ExxonMobil to the foreBy Charlotte Ryan

Exploratory fracking work is due to start in the Middle Magdalena Basin next year

The government expects 22 shale wells to have been drilled by 2016

Parex, ExxonMobil and GeoPark are to submit applications for environmental permits in the near future

8/11/2019 Latam Oil 39

4/18






Community action against the oil

industry is a growing problem for

operators and could be exacerbated by

the perceived environmental problems

associated with fracking.

Tied into this is the issue of security,

which must always be taken intoconsideration in Colombia. The oil

industry remains a target for leftist

guerrillas and an attack on an

unconventional well could have a

devastating ecological impact given the

volume of chemicals that are used in the

fracking process.

Responding to questions about

environmental concerns, the government

source said: From that Ive heard,

experts say the real problems are the

noise, the dust thrown up by the lorries

and overuse of roads.He added that it tended to be smaller

companies that had faced problems with

community protests in Colombia, which

means the government has imposed

financial requirements, meaning only

bigger companies can qualify for

unconventional exploration.

What next?

As noted by Cabrales, the government

expects 22 shale wells to have been

drilled by 2016. But the uptake ofunconventional licences in both Ronda

2012 and 2014 (five and one blocks

respectively) shows that interest remains

relatively low. Nonetheless, it is a

positive that Ecopetrol is leading the way

and its presence ought to reassure other

operators that are looking to take the

plunge. The presence of ExxonMobil is

also a fillip for the authorities.

For Colombia to enjoy a shale oil and

gas boom like that seen in the US, the

right regulation must be implemented

and the issue of community relationsprioritised. There has been a backlash

against fracking in many countries, and

Colombias specific explosive cocktail of

mobilised indigenous populations, a

distrust of multinationals and active

guerrilla groups would exacerbate this

reaction.

Such risks aside, international oil

companies (IOCs) like Parex,

ExxonMobil and GeoPark are likely to

submit applications for environmental

permits in the near future.With lengthy delays in the Colombian

permitting process a perennial problem,

the middle of 2015 seems a feasible start

date for fracking, by which time the

countrys security situation should have

improved. (See: Santos updates

Colombian peace talks progress, page 9)

NewsBaseis cautiously optimistic

about the governments goals, but

watertight regulation and a rapid

permitting process is essential. (See:

Colombian government pledges to

shorten licensing process, page 9)Tapping unconventional reserves could

be the key to Colombia prolonging its oil

boom. Without fracking, the country may

already have seen its best days as an oil

producer.

Venezuelas deteriorating financial

situation and the threat of a bond default

is making it more expensive for oil

companies to operate in the country.

The black market exchange rate is

again touching 100 bolivars to the US

dollar, compared with the official rate of

6.3 bolivars to the dollar. The countrys

two other official exchange rates

SICAD I and SICAD II, which are both

set by opaque auctions are 12 and 49

bolivars to the dollar respectively.

The government said the introduction

of SICAD II in March would gradually

narrow the gap between the black market

and government rates. It did narrow

slightly after the new systems

introduction but has since widened.

Fears of a possible default and the

governments decision to reduce further

hard currency supplies to businesses and

individuals have boosted the black

market rate, as has Venezuelan President

Nicolas Maduros prevarication over

how to jumpstart the economy.

Next month Venezuela needs to pay

US$7.1 billion to service its debt on both

sovereign and PDVSA bonds. It remains

unclear whether Caracas will be able to

make all of the payments on time.

In light of the deteriorating situation,

Standard & Poors downgraded

Venezuelas debt to CCC+ from B-

earlier this month. The recession, high

inflation and growing pressures on

liquidity will continue to erode the

governments capacity to pay its external

obligations in the coming two years, the

ratings agency warned.

COMMENTARY

Oil companies feel the pinch as

Venezuelas economy disintegratesVenezuelas economy appears to be in a death spiral, which is not good news for oilcompanies operating in the country

By Peter Wilson

Standard & Poors has downgraded Venezuelas debt to CCC+ from B- as a default looms

The fiscal disaster has caused a cash crunch for PDVSA, impeding its ability to grow production

Oil companies could tie loans to PDVSA to project concessions but are wary of losing their shirts

8/11/2019 Latam Oil 39

5/18






A by-product of the soaring black

market exchange rate is the growing debt

owed by state-run oil company PDVSA

to the countrys central bank. In order to

cover its operating expenses, PDVSA has

been forced to borrow heavily from the

bank. According to Central Bankstatistics, PDVSAs debt is currently

512.5 billion bolivars (US$81 billion at

the governments official forex rate of

6.3 bolivars to the dollar).

PDVSA borrowed 31 billion bolivars

(US$5 billion) from the bank between

June 27 and July 25, the last date that

figures were made available.

The cash crunch has led PDVSA to

freeze various essential projects. The

company has halted the construction of

upgraders needed to refine extra-heavy

crude oil, as well as new domesticrefineries.

Ghost in the machine

PDVSAs worsening cash flow can be

traced back to decisions taken by the late

President Hugo Chavez. He ordered the

national oil company (NOC) to turn over

all of its dollar revenue to the Central

Bank at the official exchange rate. This

means PDVSA has been selling all of its

dollars at the official rate of 6.3 bolivars

to the dollar, even though that rate is

hardly used as the countrys economy

has become dollarised at the blackmarket rate.

PDVSA has also been unable to grow

output, and owing to various

government-to-government loans

repayable in oil (chiefly with China), the

company is exporting fewer barrels for

dollars. The companys exports have also

been hit by exports to Cuba and the

members of Venezuelas Petrocaribe

initiative, which are heavily subsidised.

In order to maintain its operations,PDVSA has turned to the Central Bank

to cover its expenses. But with falling

liquid currency reserves (which now

stand at about US$2 billion), the Central

Bank has had no choice but to print more

bolivars to advance funds to the state oil

company. This in turn has stoked

inflation, which is projected to end the

year at more than 70%, the highest in the

world.

What next?

The situation is an indictment of theeconomic mismanagement that prevails

in Venezuela. Despite a decade of strong

oil prices, PDVSA continues to see its

production decline and relies on central

bank funding to pay its bills. With the

government then picking PDVSAs

pocket to fund its myriad social

programmes, a vicious circle has been

created that has brought the country to

the crisis it currently finds itself in.

Venezuela has in part been able to

cover its expenses thanks to multiple

billion dollar loans from China.

However, even Beijing is becoming morereticent about extending credit as the

crisis in Caracas deepens.

PDVSAs international partners such

as Chevron, Repsol and CNPC also

seem reluctant to extend the company

more funds. These companies have lent

PDVSA more than US$12 billion in the

last few years, with the money ostensibly

being earmarked to boost output at

mature oilfields. It is unlikely that further

credits will be granted withoutconcessions, however.

PDVSAs foreign partners are

increasingly tying fresh loans to changes

in the rules governing oil joint ventures

operating in the country. Companies

want a bigger say in the running of their

joint ventures with PDVSA, as well as a

greater stake in the projects along with

reductions in taxes and royalties.

Freezing fresh credits is an important

negotiating tool for oil companies

seeking better terms. This is a small

glimmer of light for IOCs that arehanging on in Venezuela.

Until the government takes definitive

steps to solve the problem i.e. a mega-

devaluation, a cutback in spending and

domestic subsidies including an increase

in the price of petrol the situation is

likely to continue.

NewsBasebelieves PDVSA will have

little choice but to slow down

development of most of its projects

owing to the lack of funds, as the fiscal

situation worsens. Increasing oil

production would normally alleviate such

pressure. But Maduro seems eitherunwilling or unable to change the

countrys economic model, which has

condemned PDVSA to continued

delays.

Petrobras Argentina has received offers

from several local and international oil

companies (IOCs) for a series of blocks it

is selling in Santa Cruz Province.

The sale, which is being managed by

US bank Scotia Waterous, is for 20 areas

covering around 7,700 square km in the

Patagonian province in Argentina.

Output from the blocks totals around

20,000 barrels of oil equivalent per day,

with probable and proven reserves

standing at 44 million boe.

The blocks, which account for around

20% of Petrobras Argentina's production,

are valued at between US$200 million

and US$300 million. Licences for most

of the blocks expire in 2017.

COMMENTARY

INVESTMENT

Buyers line up for Petrobras

Argentinas Santa Cruz blocks

8/11/2019 Latam Oil 39

6/18






The province subsequently plans to

award ten-year extensions, although

investment conditions acceptable to the

local government and the successful

bidder would have to be negotiated first.

Several companies have expressed

interest in the assets, although localoperator Compania General de

Combustibles (CGC), owned by

Argentine tycoon Eduardo Eurnekian, is

considered the frontrunner. CGC is

already Petrobras partner in several of

the blocks, with asset participation

ranging from 20% to 50%. Joint venture

contracts between the two companies

include a clause of first refusal, which

gives CGC the opportunity to match the

best deal Scotia Waterous receives for

the blocks.

Argentina's Tecpetrol, owned by Italo-Argentine group Techint, has also

expressed interest, as has Roch, which is

owned by local businessman Ricardo

Chacra. He is expected to submit an offer

in partnership with an undisclosed

foreign investor. Pluspetrol, Argentina's

third largest upstream player, is also

reportedly interested.

State-run YPF is not anticipated to

make an offer, the company said, though

it may seek to negotiate entry into some

areas once the new owner is confirmed.

Brazils state-run Petrobras is in theprocess of divesting international assets

worth US$9.9 billion to raise funds for

the estimated US$237 billion it will

spend on developing pre-salt oilfields off

the coast of Rio de Janeiro State.

Ecuadors state-run oil Petroamazonas

expects to award contracts in October for

enhanced oil recovery (EOR) work at 17

oilfields in the Amazon region. The

fields are split into six groups, said

Petroamazonas manager, Oswaldo

Madrid.

In February, Petroamazonas said it had

received 14 bids for EOR at the 17 fields

in the southeast of the country. Seven

companies placed bids, including

Halliburton, Argentinas YPF and a

consortium led by Schlumberger.The government had originally invited

31 local and international oil companies

(IOCs) to submit offers in the tender.

Negotiations with the bidding companies

began in February.

Successful companies will be paid on a

lifting fee per barrel basis, said

Petroamazonas, but they will be expected

to provide financing for the EOR

techniques themselves.

Petroamazonas is the upstream

business of state-owned oil company

Petroecuador, which was formed from

assets acquired from Occidental

Petroleum in 2006. The firm wants to

boost foreign investment from companies

that have advanced technology and are

able to invest in high-risk projects in

Ecuador. Around 90% of Petroamazonas

fields are currently mature, with many of

them having already passed their peak

production potential.

The company is intending to adopt

EOR and secondary oil recovery methods

to boost oil production and push up

Ecuadors overall oil output. The country

is the smallest member of OPEC. It

produces around 540,000 barrels per day

of oil, of which Petroamazonas accounts

for approximately one third.

In January, Oil Minister Pedro

Merizalde said that Ecuador was hopingto step up its crude production to 600,000

bpd within two years. The Andean

country then hopes to raise crude

production further to 700,000 bpd once

oil production begins at the Ishpingo-

Tiputini-Tambococha (ITT) block. The

Amazonian ITT block, which has

estimated reserves of around 900 million

barrels of oil, was given the green light

by the environment ministry at the end of

May.

Financing and environmental issues

makeNewsBase Researchless bullish

than Merizalde in its forecast for

Ecuadors oil production over the next

few years, however. The countrys

socialist government under PresidentRafael Correa is volatile and the political

risk inherent in investing there has led to

the exodus of many IOCs. The fact that

only per barrel service fees are available

to foreign oil producers is also off-

putting for potential investors.

With this in mind, the countrys

production could fall to around 465,000

bpd by 2020. This number includes

25,000 bpd from the ITT fields, which

NBRdoes not expect to yield sufficient

volumes to offset rapid declines at

mature fields elsewhere.

A change in the rules regarding foreign

investment and per barrel lifting fees

could reverse the downward trend. But

such a change does not appear

imminent.

INVESTMENT

Ecuador to award contracts

for 17 fields in October

8/11/2019 Latam Oil 39

7/18






Pan American Energy, Argentinas

second largest oil producer, is investing

US$1.5 billion in its operations this year

as it looks to rebuild production from the

Cerro Dragon oilfield.

The company said the investment

would raise oil output from Cerro

Dragon to 94,000 barrels per day, 80% of

the volume that was produced in 2012,

prior to the destruction of facilities at the

field by striking workers.

The 2012 conflict saw unionised

workers who were agitating for wage

increases occupy Cerro Dragon for 179days and destroy millions of dollars

worth of equipment. The action lowered

output to 81,000 bpd of oil in June 2012

from a high of 101,000 bpd in March of

the same year. This represented a drop of

27% in three months.

By the end of 2015 the company

expects to have spent US$4 billion on

reviving production, which it believes

could stand at 100,000 bpd of oil by the

close of the year. The firm has purchased

five new automated excavation units at a

cost of US$20 million each, which will

allow the development of an additional

250 new wells next year.

Cerro Dragon is in Chubut Province in

Argentine Patagonia, and covers an area

of 3,842 square kilometres. The site has

3,120 active wells, 622 injection wells

and 8,270 employees and contractors.

Production currently stands at around

92,000 bpd of oil and 8.47 million cubic

metres of gas per day, of which 5.9 mcm

is sold, with the remainder used to power

the site's operations.

Pan American, which has run Cerro

Dragon since 1997, is owned by the

Bridas, which comprises Argentinas

Bulgheroni Group, China's CNOOC and

UK-based BP.

Mexicos ongoing energy reform has led

to a brain drain from state-run oil

company Pemex. The companys head of

investor relations, Rolando Galindo, told

a conference last week that the fast pace

of the reform had led to a large

movement of qualified personnel [from

Permex] to other firms.

Mexicos exploration and production

(E&P) sector will be opened to foreign

and domestic private firms in 2015,

which has led to an exodus of staff fromPemex as new entrants look to snap up

workers with an inside knowledge of the

local industry.

Galindo said the firm was losing at

least 3,000 staff each year, while Mexico

produces just 50 qualified petroleum

engineers per annum. The reform

package approved by Mexicos Congress

in August partially addressed the

problem by removing Pemex from the

civil service pay scale, where wages are

substantially lower than those paid by the

private sector.

However, it is hard to see how Pemex

can avert a skills crisis. Incoming

companies are able to offer its workers

substantially higher wages for the

foreseeable future. New entrants wouldalso be able to extend Mexican

employees the opportunities to work

abroad. Exacerbating the crisis is the fact

that Pemex will have to begin hiring

from overseas for the first time, which

will be an institutional shock for the

company. Although undoubtedly a short-

term challenge for Pemex, the shake-up

is likely to benefit the company in the

long run. The top-down culture at the

firm will eventually be replaced by a

more organic decision-making process,

aligning the firm with other more nimble

international operators.

Dissent tends to expose opportunities

that are not considered in authoritarian

environments. And a shake-up of

structure may also encourage a morepragmatic business outlook by spurring a

move away from Pemexs typically

wishful thinking, which has coloured

much of its long-term production

estimates.

PERFORMANCE

Pan American Energy rebuildingproduction from Cerro Dragon

Pemex suffers skills crisis

8/11/2019 Latam Oil 39

8/18






The Brazilian underworld figure

involved in the Petrobras kickback

scandal has agreed to co-operate withprosecutors. The news raises the prospect

of further details emerging about the link

between leading politicians and

corruption within the state-controlled oil

company.

Alberto Youssef, a leading player in

Brazils black market financial sector

which illegally moves billions of dollars

out of the country each year, agreed to

co-operate in a bid to reduce his likely

future sentence following his arrest on

money-laundering charges. He is accused

of helping move US$4 billion offshore,

including hundreds of millions from

Petrobras.

It follows a similar move by his co-

accused, former Petrobras refining

director Paulo Roberto Costa, who

named leading politicians and political

parties as the beneficiaries of a scheme

that saw Petrobras overbilled by

companies who then kicked back some

of the illegal profits to pro-government

factions in congress.

The scandal has been one of the major

controversies in Brazils bitterpresidential election campaign, with the

opposition accusing Brazilian President

Dilma Rousseff of allowing her political

allies to ransack the company in return

for their support in Congress. Costa owed

his prominent position in the company to

a party in Rousseffs coalition, which

was then named by him as a prime

beneficiary of the scheme.

Rousseff who was energy minister

and then chair of the Petrobras board

before finally becoming president of

Brazil claims she knew nothing about

the alleged illegalities within the

company.

Brazils political class has been left

nervous by the realisation that two

figures that police say are central to the

money-laundering scheme involving

Petrobras are now co-operating with

prosecutors. A congressional inquiry into

corruption at Petrobras has been denied

access to the information Costa has

provided as part of his plea bargain.

With evidence mounting that some of

the huge cost overruns afflictingPetrobras, especially at the new Abreu e

Lima refinery being built near the city of

Recife, are the result of corruption,

Rousseff was forced into promising new

anti-corruption legislation last week

whilst continuing to deny any

wrongdoing.

Police and state auditors are now

investigating how the refinery, which

was originally budgeted at US$825

million, has escalated in cost to US$8.25

billion. Auditors have already identified

over-billing by companies working for

Petrobras.

As refining director Costa approved

dozens of requests by contractors to

readjust the cost of contracts upwards by

hundreds of millions of dollars. Police

financial forensic experts are now

seeking to track how some of that money

was then re-circulated to dozens of pro-

government officials.

Brazil and Colombia have lowered the

crude export prices they charge Chile by

1%. The move came after Chile struck a

trade deal with Angola to eliminate a 6%

tariff on oil imports from the African

country. Latin American countries are

exempt from the 6% tariff under regional

trade pacts.

The agreement between Santiago and

Luanda was signed in mid-August by

Chile's state-owned energy firm Enap

and its Angolan counterpart Sonangol.

The deal has strengthened Enap's

position with respect to how much it pays

its pre-existing suppliers for oil

shipments.

Chile is to import three shipments of

Angolan oil this year for a total cost of

US$300 million. The third cargo was due

to have arrived before the end of

September. The new agreement between

the hydrocarbon-rich African country

and Chile, which produces negligible

amounts of oil and gas, is forecast to

expand trade next year to a possible nine

shipments, equivalent to 9 million barrels

of crude, at an estimated cost of US$900

million. This increase would make

Angola Chile's largest oil provider

outside the Americas.

Chile currently purchases around

200,000 bpd of crude, with Brazilian and

Colombian imports accounting for 60%

of the total. However, sources close to

Enap said these two countries had now

agreed to reduce prices to their Southern

Cone neighbour by 1%, amounting to

yearly savings of around US$70 million

for Santiago. Enap reported oil purchases

worth US$6.9 billion in its 2013 end-of-

year financial report, with this figure

likely to grow in 2014.

Chile's other major suppliers are

Argentina, Ecuador, Mexico and

Venezuela, which still maintain a price

advantage owing to the lower cost of

freight and transportation, given their

proximity to the market.

The administration of Chilean

President Michelle Bachelet set out new

energy reforms earlier this year, which

included strengthening and improving

Enap's competitiveness by allowing the

company access to markets and crude

grades under the same conditions as its

main global competitors.

POLICY

Petrobras feels political pressure

Chile strikes Angolan import deal

8/11/2019 Latam Oil 39

9/18






The oil and mining sectors would stand

to gain the most from a Colombian peace

agreement, government officials said last

week.

The comments were made after

Colombian President Juan Manuel

Santos spoke about advances in the

Colombian peace process at the United

Nations General Assembly in New York

on September 25. He said that the talks

with the Revolutionary Armed Forces of

Colombia (FARC), which began two

years ago, had already led to agreement

on three out of the five main negotiatingpoints. Santos said he expected progress

on the other two points to be made

soon.

The government believes a peace deal

would add 1-2% to the countrys GDP

and create a more stable atmosphere for

infrastructure and project development.

Colombia has seen an influx of foreign

oil and gas companies since the early

2000s, when ex-president Alvaro Uribe

introduced business-friendly reforms.

Last year nearly US$8 billion was

invested in oil and extraction in the

country, meaning crude oil accounted for

more than half of total exports and over

10% of GDP. Santos has previously

referred to the oil and gas sector as a

growth locomotive for Colombia.

Despite this, attacks on oil

infrastructure have been on the rise inrecent years, causing serious problems

for Colombian operators. Ecopetrol and

Pacific Rubiales, the two biggest

operators in the country, have both

blamed disappointing results this year on

pipeline attacks.

The industry has failed to meet its

production target of 1 million barrels per

day of oil this year and reserves have

dropped to 6.6 years. First-quarter

investment in the sector this year was at

its lowest level seen since 2010.

A peace agreement would make more

of the country accessible to exploration,

opening up many areas that are currently

controlled by rebels. It would also free

up more government funds to invest in

infrastructure and all being well, reduce

the number of attacks on pipelines. Most

such attacks are currently carried out bythe National Liberation Army (ELN), the

countrys second largest rebel group,

which is due to begin peace talks with

the government soon.

Colombian Environment Minister

Gabriel Vallejo has said the governmentwill shorten the time required to process

licences for the oil sector. Vallejo said

environmental standards would not be

compromised in the move, which would

also improve the efficiency of the

mining, energy and infrastructure sectors.

The objective is not to say yes to

everyone, but to say yes or no within a

certain time, so theres clarity,

communication and agility, Vallejo told

reporters.

The slow environmental permitting

process is frequently identified as a

negative by investors in Colombias oiland gas sector.

Under the new system, authorities

would have a maximum of 70 days in

which to respond to a request for a

licence. Under the present structure,

companies have had to wait as long as 19

months, although there is a theoretical

maximum period of 90 days. The speedy

approval of licences is also dependent onfirms submitting completed

environmental impact studies, the

minister noted.

Vellejo explained the National

Authority for Environmental Licensing

would be restructured to facilitate the

new timing structure. In addition,

uncertainty over which body companies

must apply to would be clarified to avoid

the mistaken need to submit applications

to more than one agency.

The oil industry has blamed delays in

the issuing of licences for holding back

growth in Colombias oil production.Colombias bureaucracy has struggled to

keep pace with the rapid growth of its oil

industry since the 1990s. This has partly

been to blame for a fall in output this

year. In August, Colombian crude

production was 983,000 barrels per day,

down from the 2013 average of 1.003

million bpd.

Vellejo also repeated the governmentsapproval of hydraulic fracturing, but

stressed the technology would only be

permitted if applications met high

environmental standards.

The president of Colombias state-

controlled Ecopetrol, Javier Genaro

Gutierrez, has said the company wants to

use fracking at the Coyote, Prometeo and

Iguana wells in the Middle Magdalena

region.

Lets not condemn it just to condemn

it. We want to do it well, said Gutierrez,

who explained his company planned to

apply for licences to use the technique inthe exploratory level. Theoretically,

Ecopetrol could win approval to start

fracking in 2015.

In its 2014 bidding round, Colombia

offered 19 unconventional contracts out

of a total of 97 offshore and onshore

blocks.

POLICY

Santos updates Colombianpeace talks progress

Colombia to ease licensing process

8/11/2019 Latam Oil 39

10/18






Perus energy ministry and state agency

Perupetro are to hold talks with

environmental protesters at a site in the

Amazon where Argentinas Pluspetrol

intends to explore for gas.

The protesters are blocking roads in

the central jungle area where Pluspetrol

won bidding for Block 108 in 2005. The

Argentine firm was awarded an

environmental permit for the block,

which is located in the Ene Basin, last

year.

Its understandable that owing to the

political situation these arguments aim togain some notoriety, but we will in no

way accept these acts of violence, Juan

Ortiz, general hydrocarbon director at the

energy ministry, told reporters in Lima

last week. Block 108 is strategically

located near the Camisea gas fields, and

there are high expectations for finding

gas or oil, he added.

Pluspetrol is intending to conduct a

US$8 million seismic programme at the

block, Ortiz said.

The protests by indigenous groups are

connected to the regional and municipal

elections that are due to take place in the

region on October 5, he added.

Peru is aiming to double its crude oil

production over the next decade. Current

oil production is almost one quarter the

level it was in the early 1980s, standing

at around 68,000 barrels per day, down

from more than 200,000 bpd two decades

ago.

Offshore developmentsIn related news, Perupetro has awarded

US seismic company Spectrum a contract

for the reprocessing of its existing 2-D

seismic data that covers a 13,000-square

km offshore area. The data is to be

delivered in October and used to launch a

new international tender. Between six

and nine offshore blocks will be included

in the tender.

In December, Peru struggled to attract

enough oil companies to submit bids in

an auction of nine offshore hydrocarbon

concessions, owing to a lack of

geological information about the area.

Although 20 companies were initially

said to be interested, the auction was

eventually called off when Petroperu said

that only two companies were likely to

make bids.

Peru has proven reserves of around

579 million barrels, according to data

from the US Energy Information

Administration (EIA).

NewsBase Researchis confident that acombination of the countrys pro-

business investment policies and further

offshore exploration could turn around

Perus oil production.NBR expects the

countrys crude oil output to get back to

around 170,000 bpd by 2020, although

issues with red tape holding back

exploration and production must be

addressed for this target to be met.

Argentina will need to deploy more than

120 drilling rigs to put a further 1,000

wells into production in the Vaca Muerta

shale play in the southwest Neuquen

province.

Jorge Capitanich, chief of staff forArgentine President Cristina Fernandez

de Kirchner, said the development of

Vaca Muerta would be a boon for the

countrys faltering economy.

When the development of

unconventional oil and gas in Vaca

Muerta reaches 1,000 productive wells,

Neuquens gross domestic product will

grow by between 75% and 100%, he

said in a televised press conference.

This will have an impact of 3% to 4%

growth in the countrys gross domestic

product.

A challenge is to deploy more rigs,with 312 already in production and few

more available.

YPF, the state-run oil company and

most active operator in Vaca Muerta,

said it would have to import rigs to

continue its pace of development, with

already 260 wells in production. YPF has

said it wants to drill a total of 300 wells

this year. Of its productive wells, 39 are

in sweet spots that accounted for most of

its 25,000 barrels per day of oil

equivalent in production from the play in

the first half of this year.

In order to reach 1,000 productivewells, the Argentine Oil and Gas Institute

(IAPG) said US$13 billion in investment

was required along with the deployment

of 124 additional drilling rigs.

The industry group added that with the

1,000 wells, the country would save up to

US$19 billion per year on energy imports

by boosting oil and gas output.

POLICY

Peru to hold talks withprotesters at Block 108

PROJECTS & COMPANIES

Argentina needs more

rigs for shale development

8/11/2019 Latam Oil 39

11/18






Argentina has been ramping up

imports, led by gas, diesel, fuel oil and

gasoline, as well as crude from this year,

to compensate for the

dwindling output of

maturing conventional

reserves in a country

that has been in

production for more

than 100 years.With 1,000 shale

wells sunk, the country

would be able to halt

imports of LNG,

leading to annual

savings of US$6 billion.

Light crude supplies to refiners would

also be stepped up, allowing them to

ramp up processing capacity and in turn

reduce crude and fuel imports by up to

US$13 billion per year.

Capitanich said Vaca Muerta would

also be a boon for jobs. Some 7,500 jobs

arose out of Argentinas shale boom in

the first half of this year, he said, adding

that another 40,000-60,000 jobs would becreated as more wells were put into

production.

Vaca Muerta is the largest shale play in

Argentina. Estimates by the US Energy

Information Administration (EIA)

suggest it holds most of the countrys 27

billion barrels of shale oil resources and

802 trillion cubic feet (22.7 trillion cubic

metres) of shale gas.

Petroamerica responded to GeoGlobals

claim that it owned a stake in the

Putumayo 7 block in Colombia by saying

it was without merit.

Canada-based Petroamerica has a 50%

interest in the block after it struck a farm-

in agreement with PetroCaribbean

Resources in May. The stake was

originally sold to Suroco but became

Petroamericas property after it took overthe former company in July.

Petroamerica said it had recently

become aware of an allegation made by

GeoGlobal that it was entitled to a 10%

carried interest and an option for a

further 40% interest in the Putumayo 7

block. The Canadian company added that

after taking legal counsel, it had

dismissed GeoGlobals allegations.

GeoGlobal claims it was promised a

minimum 10% stake in the block by

PetroCaribbean, which was the original

owner of Putumayo-7. In 2010, it was

reported that GeoGlobal and

PetroCaribbean had entered into a

memorandum of understanding (MoU)

with regard to both the Putumayo 6 and

Putumayo 7 blocks. GeoGlobal alleges it

provided a guarantee of US$100 million

to the National Hydrocarbons Agency(ANH) to support the bid. The company

is disputing the sale on the grounds that

the MoU provided for the entering into of

an operating agreement and/or joint

venture, which never happened.

PetroCaribbean attempted to terminate

all of GeoGlobals rights to the blocks in

May 2013. But GeoGlobal contested the

move and has threatened legal recourse if

the matter is handled without its consent

or participation.

Petroamericas response last week that

it had sought legal advice on the matter

could be construed as an attempt to put

pressure on GeoGlobal to drop its claim.

This would appear to be a wise course of

action for the company, given that

determining the legal status of MoUs can

be a tricky process.

GeoGlobal recently announced thatKey Capital had acquired 65% of its

stock. With new majority shareholders

on board, the company might be better

advised to focus on improving its

exploration figures and stock

performance rather than engaging in a

potentially costly legal battle with

Petroamerica.

BHP Billiton has signed a co-operation

agreement with state-run Pemex as it

looks to enter Mexicos deepwater

sector.

The Anglo-Australian mining giant

said last week the two companies would

share technical knowledge and

experience as a result of the agreement

and that this was intended to be the start

of mutually beneficial long-term

relationship. We obviously wouldnt

be here if we didnt think the relationship

would extend beyond the exchange of

technical data, BHPs petroleum

president, Tim Cutt, told reporters. We

are excited about the deepwater and the

extension of the Palaeogene play into the

Perdido play.


Petroamerica responds toPutumayo 7 challenge

Pemex builds closer ties with IOCs

8/11/2019 Latam Oil 39

12/18






Melbourne-based BHP is already an

investor in the Perdido fold belt on the

US side of the Gulf of Mexico. The

company is also developing deepwater

assets in Trinidad and Tobago, where it

is in the process of conducting a large-

scale seismic survey.We see considerable opportunity in

Mexico following the recent economic

reform. This is a long-term opportunity

for us, said Cutt.

New legislation has ended Pemexs 76-

year monopoly over Mexicos

exploration and production sector. The

government wants to attract outside

investment and know-how into Mexico

as it sets out to develop its offshore and

unconventional resources.

Pemex lacks the requisite capital and

experience to develop Mexicos oil

industry and reverse the trend of

declining output. Mexican crude oil

production fell from around 3.4 million

barrels per day in 2004 to 2.6 million bpd

in 2013. Deepwater development is a

core focus of the reform andNewsBase

Research(NBR) believes that increasedinvestment by international oil

companies (IOCs) could spur production

of 80,000 barrels per day from wells in

the Perdido play by 2017, with a ramp-up

to approximately 500,000 bpd from

Mexicos deepwater areas forecast by

2030.

The relatively bullish forecast is based

on the success of companies like Royal

Dutch Shell in the US part of the Perdido

belt, where it operates the Great White,

Tobago and Silvertip deepwater projects.

These projects have peak production

capacity of 100,000 bpd of oil and 6

million cubic metres per day of gas.

Starting in February 2015, Mexico will

auction the rights to 169 onshore and

offshore, new and mature blocks. The

government has set up a roadshow for

local private companies and IOCs toparticipate in the bidding.

Prior to the start of the bid round,

Pemex has set out to develop

partnerships with leading IOCs. On

September 24, Indias ONGC Videsh Ltd

(OVL) also agreed a memorandum of

understanding (MOU) with Pemex to

discuss future co-operation and

collaboration. The company also recently

signed MoUs with Malaysias Petronas

and Argentinas YPF.

The following news items are sourced

from local and international news

sources. NewsBase is not responsible for

the contents of the stories and gives no

warranty for their factual accuracy.

POLICY

Chile enacts carbontax

Chile is the first country in South

America to pass regulation for taxing

carbon emissions after President

Michelle Bachelet enacted new

environmental legislation targeting the

country's main polluters. Coal- and other

fossil fuel-powered generators with

installed capacity equal to or larger than

50 megawatts will pay US$5 per tonne of

carbon released into the atmosphere. The

tax will come into play in 2018. The

policy is aimed at gradually reducingChile's carbon footprint to 20% of 2007

levels by 2020. Chile relies on mostly

imported fossil fuels for around 80% of

its energy needs and electricity

generators say the tax will raise energy

costs in the country.

REUTERS, September 28, 2014

COMPANIES

YPF, Pemex,Petronas sign MoU

Miguel Galuccio, CEO of Argentina

national oil company YPF, signed a

memorandum of understanding with his

equivalents at Mexico's state-ownedoperator Pemex and Petronas, the

Malaysian national energy company, in

order to share expertise, experience and

best practices, as well as evaluate

possible business opportunities between

the three companies, with a focus on

unconventionals. The agreement could

also look towards Pemex investing in

Argentina's vast Vaca Muerta shale

reserves as well as YPF participation in

Mexican unconventional exploitation.

Galuccio was a keynote speaker at the

World National Oil Companies CongressAmericas, held in Cancun.

IPROFESIONAL.COM,September 26, 2014

OGX founder facingnew criminalcharges in Brazil

Federal prosecutors in Sao Paulo filed

new criminal charges against Brazilian

businessman Eike Batista accusing him

of financial crimes and for the first time

charged seven former executives of histroubled oil company.

The charges, filed late Tuesday, were the

third set against Mr.

Batista in recent weeks. The most-recent

charges accuse him and the former

executives of inducing "thousands of

investors to error by announcing false

information" about the potential of

petroleum reserves in Mr. Batista's oil

company, formerly known as OGX.

Once the richest person in Brazil, Mr.

Batista had to sell assets and lost most of

his fortune after OGX failed to meet

targets. His wealth declined to less than

US$1 billion at the beginning of this year

from more than US$30 billion in 2012.

Mr. Batista recently said that his debts

exceed his assets by around US$1 billion.

OGX filed for bankruptcy protection last

year in Brazil.


NEWS IN BRIEF

8/11/2019 Latam Oil 39

13/18






OGX investors lost an estimated 14.4

billion Brazilian reais (US$5.97 billion)

between 2010 and 2013, according to the

federal prosecutor in Sao Paulo.

Prosecutors accused Mr. Batista and the

former executives of misrepresentation,

inducing investors to error and forming aconspiracy.

If convicted, Mr. Batista could face

between four and 14 years in prison. The

other executives, if convicted, could face

up to 22 years in prison, according to

prosecutors.

DOW JONES, September 24,2014

ELN apologises forkilling oil workers

The National Liberation Army (ELN),

Colombia's second-largest guerrilla

group, has apologised for the recent

killings of two contractors working for

state oil company Ecopetrol in Norte de

Santander province.

Jairo Aguilar and German Ariza were

repairing a segment of the Cano Limon-

Covenas oil pipeline on Sept. 17 when

they were shot by ELN guerrillas,

according to the Colombian military.

The pipeline, long a target for guerrilla

sabotage, has been attacked often in

recent months.

"It is not ELN's policy to harm workingpeople with its politico-military actions,"

the rebel group said. "We regret these

deaths resulting from personal mistakes

by the commander in charge of the

operation."

LATINO FOX NEWS, September29, 2014

Petroamerica to miss2014 guidanceexpectations

Petroamerica Oil Corp, a Canadian oil

and gas company operating in Colombia,has guidance on production for 2014.

Based on current projections for

production to the end of 2014,

Petroamerica expects to exit the year

with a production rate of more than 7,400

barrels oil equivalent per day (boepd) of

working interest production (before

royalties).

The total combined 2014 annual average

production for the Llanos and post-

closing Putumayo properties (after the

July 15, 2014 closing date of the Suroco

Energy Inc. transaction, annualized) isexpected to be 6,600 boepd of working

interest production (before royalties).

This guidance is below original 2014

expectations.

PETROAMERICA, September 25,2014

Pemex warns abouta lack of humanresources

With the opening of the oil sector to

private investment, Mexicos state oil

company Pemex is suffering a loss of

skilled labour to new competitors, El

Universal newspaper reported. Rolando

Galindo, head of investor relations at

Pemex, said the scarcity of human

resources is a leading worry for the

company. New arrivals like Halliburton

and Schlumberger are cherry-picking

engineers from Pemex for their Spanish

and their knowledge of the national

energy sector. They are not easy to

replace, said Galindo. This is because the

number of retiring engineers runs at

1,000 to 3,000 per year while only 50students are graduating per year with

degrees in oil engineering, he said.

EL UNIVERSAL, September 25,2014

Pemex to diversifyinto powergeneration

Mexicos state oil company Pemex plans

to enter into the power generation

business over the next few years, the

Wall Street Journal newspaper reported.

Pemex CEO Emilio Lozoya said thecompany will use natural gas and

cogeneration the use of the heat and

vapor from industrial processes to

generate power. This will allow the

company to go from using 6% of the

nations electricity supplies to generating

about 10%, Lozoya said at an oil

conference.

WALL STREET JOURNAL,September 25, 2014

Ruling imminent in

PDVSA/ExxonMobiltribunal

A World Bank arbitration tribunal will

rule in days that Venezuela must pay

between US$700 million and US$1.2

billion to ExxonMobil to compensate for

a 2007 nationalization, a newspaper said

on Thursday.

Pro-opposition Caracas daily El Nacional

cited a source at Venezuela's state oil

company PDVSA saying the

International Center for Settlement of

Investment Disputes (ICSID) would give

a judgment by Monday.

"Preliminary calculations indicate that

the total would be between US$700

million and US$1.2 billion," for the

takeover of Exxon Mobil's Cerro Negro

heavy oil project in the Orinoco region

by then President Hugo Chavez's

government, it said.


OIL

Local bonds could

help Vaca Muertadevelopment

Argentina's Securities and Exchange

Commission is analysing the possibility

of launching retail bonds, as well as other

financial instruments, with the aim of

capturing Argentine's foreign dollar

savings and redirecting them towards the

development of unconventional resources

in the Vaca Muerta shale play, said

Commission President Hector Helman.

Any such programme would look to

broaden the [Argentine] capital market

and give citizens investment alternatives,

and connect this with productive and

infrastructure sectors. Bank deposits,

capital market investments and

government securities in Argentina add

up to the equivalent of just over US$150

billion.

NEWS IN BRIEF

8/11/2019 Latam Oil 39

14/18






Argentina is currently locked out of

international debt markets due to an

ongoing legal battle with US holdout

bondholders and the government has

limited options for obtaining dollars.

DIARIO LA MAANA NEUQUEN,

Sept 29, 2014

Chubut ordersenvironmentalimpact report on twoTecpetrol wells

The Environment Subsecretary of

Argentina's Chubut province ordered a

temporary stop on the digging of two

wells by local operator Tecpetrol to

investigate claims the development is for

unconventional resources, which the

company denies. While Tecpetrol isindeed authorised to dig for

unconventionals in the area, it must

stipulate to the public where and when it

will conduct hydraulic fracturing, which

may not have been the case with the two

wells in question. In a contract signed

August 2013, Tecpetrol stipulated it

would develop conventional wells.

Drilling would reach 4,000 metres, and

the company did not rule out using

hydraulic fracturing techniques if it

reached the D-129 unconventional

formation.

PATAGONICO NET, September29, 2014

Argentina to ordersecond Nigeriancrude shipment

The government of Argentina will

purchase a shipment of Nigerian Bonny

Light crude, via the Energy Secretariat,

to make up for a 1.3% drop in output for

the Neuquen basin over the first seven

months of the year. This is only the

second cargo of oil to be imported this

year. Volume and delivery date are to be

determined, although it is expected to not

be later than the end of the year. The

operation will be partially subsidised so

that the cost of the imported crude does

not exceed local fuel prices, which

already increased 60% over the past 12

months, much more than the 40%

inflation rate. While Argentina continues

to produce oil in large volumes from its

San Jorge basin, the quality of the

product it lower and renders less in local

refineries.

LA NACION, September 23, 2014

Oil executivescautiously optimisticabout Mexico

Executives from international oil

companies say they are looking forward

to the possibilities opened up by

Mexico's energy overhaul, but are

proceeding with caution until details of

the government's terms for private

drilling become clear.

"Time will tell," Charles Davidson, chief

executive of Noble Energy, told

hundreds of industry executives

concerning the Houston-based driller's

interest in Mexico's swath of the Gulf of

Mexico. "We're tiptoeing into it."

But Mr. Davidson and other executives,

who are in Cancun for two days of

conferences and meetings among

themselves and with Mexican officials,

said the opportunities spawned by the

end of the government's 76-year

monopoly on the petroleum and

electricity industries are too good to

ignore."The potential for Mexico is absolutely

clear," said Sami Iskander, chief

operating officer of BG Group which

operates world-wide and specialises in

deepwater projects. "The prize is huge."

Under energy laws signed last month,

Mexico will in February begin auctioning

rights to 169 onshore and offshore tracts,

with the process expected to be

completed by the end of 2015. Both new

and mature fields will be put up for bids.

"It's exciting and it's early days," said

Andy Hopwood, BP's chief operating

officer for upstream strategy and regions.

Mexican Energy Minister Pedro Joaqun

Coldwell said the aim is for Mexico's

crude oil production to rise by 500,000

barrels a day to 2.8 million barrels a day

by 2018. State oil company Pemex now

produces just over 2.3 million barrels a

day, down one million barrels from a

decade ago.

The best chance for Mexico to reach its

higher target within four years lies with

the redevelopment of mature inland and

shallow-water fields, said Ivan Cima and

Pablo Medina, midstream Latin Americaanalysts for Wood Mackenzie.

Sixty-two of the blocks being auctioned

next year are in the Chicontepec basin in

Veracruz state near the Gulf of Mexico,

where production has been stymied by

the difficult geology, they said. Eight

more are in the shale gas fields of

northern Mexico, near the Texas border,

where criminal gangs and scarce water

are concerns, and only one of the 26

wells drilled so far by Pemex produced

liquids, which are more valuable than dry

gas.Beyond those risks, private companies

need to be sure of the fiscal rules they

will face, Mr. Cima said. "That's the last

step. If that comes together, you're going

to see a big rush south, from both majors

and the little guys. But the economics

need to make sense."

Mr. Iskander, whose London-based BG

Group explores and produces oil and gas

in offshore Brazil and across Latin

America, said the size of the blocks

being auctioned in the first round needs

to be larger. He and other executives also

urged the government and Pemex torelease seismic and other data they hold

about the blocks to be auctioned.

"The geology looks very good," Mr.

Davidson said in an interview with The

Wall Street Journal. "We're very eager to

go to the next phase, which will involve

reviewing some of the data over the

prospective areas, because that will

narrow the search."

WSJ, September 25, 2014

Oil price drop would

hit petro-statesLatin American petro-states face being

hardest hit by the recent 15 per cent drop

in price of oil to below US$100 (GBP61)

per barrel, according to a new report

released.

NEWS IN BRIEF

8/11/2019 Latam Oil 39

15/18






The report by research consultancy

Capital Economics said lower oil prices

could hit Latin American producers

worst because many relied on higher

prices to balance budgets.

The report added that higher debts levels

Brazil, Mexico and Venezuela meantdeficit financing might be difficult, and

could force spending cuts.

Particularly badly affected would be

Venezuela, the report suggested,

highlighting that it would need an oil

price above US$200 per barrel to balance

its books.

CITY AM, September 25, 2014

Mexico cutsminimum crudeproduction target

Mexico has reduced to 2.4 million barrels

per day the minimum target that state-

owned Pemex must shoot for over the

next 20 years, El Universal newspaper

reported. That is 4% less than the

previous target of 2.5 million barrels for

the same period. The reduction is in

response to declining output as reserves

mature. Pemex produced 2.395 million

barrels per day between September 1 and

21, far less than a peak of about 3.5

million barrels per day a decade earlier.

EL UNIVERSAL, September 29,

2014

Mexican drug cartelsstealing billions fromoil industry

As Mexico prepares to develop rich shale

fields along the Gulf Coast, and attract

foreign investors, another challenge

awaits: taming the brutal drug cartels that

rule the region and are stealing billions of

dollars worth of oil from pipelines,

Associated Press newswire reported.

Figures released by state-owned Pemex

last week show the gangs are becomingmore prolific and sophisticated. So far

this year, thieves across Mexico have

drilled 2,481 illegal taps into state-owned

pipelines, up by more than one-third

from the same period of 2013. Pemex

estimates it has lost some 7.5 million

barrels worth US$1.15 billion, and

Pemex director Emilio Lozoya called the

trend "worrisome." Senator David

Penchyna, who heads the Senate Energy

Commission, said a reform of the energy

sector to bring in foreign investment

won't be viable if we aren't successful...in solving the problem of crime and

impunity.

ASSOCIATED PRESS,September 25, 2014

BHP Billiton seesT&T potential

BHP Billiton President, Petroleum and

Potash Tim Cutt told investors at the

Barclays CEO Energy-Power

Conference, September 2014, the

country's largest deepwater acreage

holder sees "Tier-1 oil potential" in

Trinidad and Tobago.

He said: "We have an established

operational presence in Trinidad and

Tobago with our shallow water

Angostura asset. The deepwater is

largely untested and has Tier-1 oil

potential."

He told investors the company has

"acceptable fiscal terms" in Trinidad and

Tobago where "we have a material

early-mover deepwater position with an

average working interest of greater than

70%".He said BHP Billiton "accessed four

additional exploration blocks in calendar

year 2014".

BREAKING NEWS T&T,September 24, 2014

Goudron wellexceeds Lenisexpectations

Leni Gas & Oil (LGO) announced well

GY-667 at the Goudron Field in Trinidad

has undergone a series of initial

production after perforating a 44-foot(13m) interval in the Lower Cruse

Sandstones resulting in a flow rate of 540

bpd.

The well is presently producing 40

degree API gravity water-free oil at a rate

of 142 bpd. Higher rates up to over 220

bpd have been successfully tested,

however, temporary field-wide

production constraints are in place.

Neil Ritson, LGO's chief executive,

commented: "The results from GY-667,

the company's first completion in the

Lower Cruse reservoir, have farexceeded our initial estimates of 60 bpd.

STOCKMARKETWIRE,September 29, 2014

PDVSA to reactivate1,000 mature wells

The president of Venezuelas state-run

PDVSA said that a pilot project to

reactivate about 1,000 idle wells would

be carried out to increase output levels in

the west area of Venezuela.

In a communique, Eulogio Del Pino said:

Crude oil output is expected to grow by

60,000-70,000 barrels per day."

"We have a very high deferred

production due to the longevity (mature

oil fields) of those oil deposits and their

features; that is why we need to make a

great effort to reactivate those wells as

soon as possible," he added.

Currently, the output of the state-run oil

giant stands at around 2.9 million bpd.

EL UNIVERSAL, September 26,2014

GASPetrobras finds gasat Poco Verde 1 wellin Brazil's Sergie-Alagoas Basin

Petrobras announced Wednesday that it

has identified the presence of gas while

drilling extension well 3-BRSA-1022-

SES (3-SES-181). The well is located in

the Discovery Evaluation Plan area of

Poco Verde in concession BM-SEAL-4

in Sergipe-Alagoas Basin ultra-deep

waters offshore Brazil.

The well, informally known as Poco

Verde 1, is situated 36 miles (58 km) off

the coast of Aracaju, at a water depth of

7,204 feet (2,196 metres).

NEWS IN BRIEF

8/11/2019 Latam Oil 39

16/18






Reservoirs containing good porosity

characteristics were detected, confirming

project expectations.

The Poco Verde accumulation is part of

the Sergipe-Alagoas Basin deep-water

development program.

Petrobras, BM-SEAL-4 operator with a75% stake, in partnership with India-

based company ONGC holder of 25%,

will proceed with the activities outlined

for the area.

PETROBRAS, September 25,2014

Central Americaplans gasdevelopments

A plan by Central American

governments to boost economic growth

in the region foresees major spending,

according to a draft.

Plans include completion of natural gas

pipeline connecting the southern

Mexican port of Salina Cruz with the city

of Escuintla in southern Guatemala,

aimed at bringing gas to the Central

American nations for cleaner, less costly

power generation. The US$1.2 billion

pipeline was announced in January.

Investment for a regasification plant in

Central America that would convert

liquefied natural gas (LNG) into natural

gas for power generation. That aims tocover potential demand in Guatemala, El

Salvador and Honduras.


Ecopetrol to requestfracking licences

Colombian state-controlled oil company

Ecopetrol said it will apply for the

environmental permits needed to employ

hydraulic fracturing, or "fracking," in its

exploration work.

Ecopetrol will request the licences at the

"exploratory level" and plans to beginusing that technique at the Coyote,

Prometeo and Iguana wells in the

Andean nation's Middle Magdalena

region, CEO Javier Gutierrez said.

In relation to fracking, Gutierrez said:

"Let's not condemn it just to condemn it.

We want to do it well.

Early this month, the Colombian

government gave the green light to

fracking as it seeks to unlock trapped

natural gas reserves.

LATINO FOX NEWS, September

24, 2014

Peru ministerpredicts gas hub role

Peru has the fourth highest overall

proved reserves of natural gas in Latin

America, which places it above

neighbouring nations such as Bolivia,

Colombia and Brazil, the country's

Energy and Mines Ministry announced

Friday.

Peruvian Energy Minister Eleodoro

Mayorga noted that the estimated proven

natural gas reserves in Peru amount to

roughly 15 trillion cubic feet (Tcf) (42

Mcm), which are far larger reserves than

the above-mentioned countries.

"We have a very large potential to

discover, which allows us to believe that

in a few years Peru could become an

energy export hub", Mayorga said. The

basins of Madre de Dios and the Ene

River will be drilled this year.

ANDINA, September 26, 2014

SERVICES

Ship sails forPetrobras, BG,Repsol offshoreBrazil field

An oil production ship sailed from Rio de

Janeiro on route for a Brazilian offshore

oil field owned by Brazil's state-run

Petrobras, Britain's BG Group, and a

joint venture between Spain's Repsol SA

and China's Sinopec, Petrobras said on

Wednesday.

The ship, known as the Cidade de

Ilhabela, is expected to begin operations

by the end of the year in the Sapinhoa

offshore field in the BM-S-9 block south

of Rio. More than a year behind

schedule, Petroleo Brasileiro SA, as

Petrobras is formally known, is counting

on the vessel to help boost production

and revenue after five years of stagnating

output.

The floating production, storage and

offloading ship, or FPSO, is being leased

from the Netherlands's SBM Offshore

NV , and Brazil's Queiroz Galvao Oil

and Gas, Petrobras said in a statement.The ship sails as the future of SBM in

Brazil is in doubt. The company, the

world's largest operator of FPSOs is

under investigation in several countries

after allegations from a former employee

emerged in February suggesting SBM

paid US$250 million in bribes, with

US$139 million of that paid in Brazil.

The company's right to bid for future

FPSO leasing contracts was suspended

until it can answer questions from

Petrobras, the Brazilian oil company said

last week. SBM said on Sept. 11 that itexpects to be able to bid for contracts

again after Brazilian elections in

October, and that a Petrobras

investigation found no wrongdoing.

The FPSO Cidade de Ilhabela has the a

capacity to produce 150,000 barrels of oil

and 6 million cubic meters of gas a day.

The Sapinhoa field in Brazil's BM-S-9

block is 45% owned by Petrobras, 30%

owned by BG, and 25% by Repsol-

Sinopec.


Petrobras awardsSkandi Santoscontract extension

AKOFS Offshore, a part of Akastor

ASA, has been notified of a five-year

contract extension from Petrobras to use

the Skandi Santos, a Subsea Equipment

Support Vessel in Brazil.

The extension, worth about 2.5 billion

Norwegian krone, will start March 1,

2015 in direct continuation of current

contract. The vessel is currently

operating under a five-year contract with

Petrobras that began March 1, 2010.

The Skandi Santos is designed to install

and retrieve subsea trees and modules,

including subsea structures and

manifolds at water depths of up to 2,300

metres.

NEWS IN BRIEF

8/11/2019 Latam Oil 39

17/18






The vessel will during the contract

extension period continue with its current

scope of work and also start installing

Petrobras' new generation of subsea trees

offshore Brazil.

The Skandi Santos and the installed

remotely operated vehicles are owned byDOF Subsea and leased to AKOFS

Offshore, who owns and operates the

vessel's topside and subsea equipment.

AKASTOR ASA, September 29,2014

Ocean Installer winsSaipem SURFcontract offshoreBrazil

Ocean Installer has been awarded a

contract for SURF (subsea umbilicals,risers ad flowlines) support work in

Brazil for Saipem; the contract which

will see the Normand Clipper in Brazil

for eight months is valued at circa US$50

million, with options to extend

The scope of work includes a wide range

of services including survey, TDP

monitoring, metrology, installation aid

deployment/recovery and pre-

commissioning

Ocean Installer will support Saipem with

their installation of multiple steel

catenary lazy wave risers, free standing

hybrid risers and export pipelines for theIracema and pre-salt projects in the

Santos Basin pre-salt area for Petrobras.

The scope of work includes a wide range

of services including survey, TDP

monitoring, metrology, installation aid

deployment/recovery and pre-

commissioning.

Ocean Installer will make use of the

efficient long-term chartered construction

support vessel (CSV) Normand Clipper,

which is well suited for both shallow anddeep water operations. The vessel has a

DP class 2 system, 250-tonne crane

capacity and 1,700 square-metres deck.

The Normand Clipper will be mobilising

in October in the Gulf of Mexico (GoM)

before transiting to Brazil to start the

work.

OIL & GAS TECHNOLOGY,September 29, 2014

REFINING

Brazil auditor findsirregularities inPetrobras refinery

Brazil's federal auditing council TCU

said on Wednesday it found irregularities

in contracts for state-run oil company

Petrobras US$20 billion Abreu e Lima

refinery that is under construction in

Brazil's Northeast.

The refinery, one of the most expensive

ever built anywhere, is expected to start

operating by November.


Mexico halts oilrefinery project

Mexico has halted a project to build a

new refinery, citing insufficient funding

in the national budget, El Financiero

newspaper reported. The country has

spent 2.564 billion pesos (US$191

million) on feasibility and other studies

since the authorization of the project in

2009. Pemex, the state oil company, had

started to set the groundwork for buildingthe refinery in Tula, Hidalgo with plans

to start up operations in 2020. The

refinery was to have capacity to process

250,000 barrels per day.

EL FINANCIERO, September 24,2014

FUEL

Enap reports spillnear Valparaiso

Chilean state-owned energy companyEnap reported an oil spill in Quintero bay

adjacent to its Aconcagua refinery. The

company says the incident occurred

when a tanker operated by Agental

accidentally ruptured a connection

between the vessel and the terminal,

causing the escape of oil into the sea.

Enap said it will begin an investigation to

determine the causes of the spill

alongside Agental and the Chilean

Maritime authorities. Following a visit,

the governor of Valparaiso province,

where the terminal is located, said the

situation was under control and alleffort would be made to prevent the spill

form reaching the coast.

LA TERCERA, September 24,2014

NEWS IN BRIEF

8/11/2019 Latam Oil 39

18/18

LatAmOil 30 September 2014, Week 39 Back Page

For further details on the stories above and NewsBases entire product range:

tel: +44 (0) 131 478 7000 e-mail: [email protected] 2014 NewsBase Ltd.

b

HEADLINES FROM A SELECTION OF NEWSBASE MONITORS THIS WEEK

Oil and Gas Sector

AfrOilLekoil expects to carry out appraisal drilling on Nigerias

Ogo find in 2015.

AsianOilAWE has said its New Waitsia field in Western Australia

could hold more than 28 bcm of gas.

ChinaOilChina will increase its total refining capacity to 15.8

million barrels per day by 2020.

EurOilStatoil and its partners have found gas in the Pingvin

prospect in the Norwegian Barents Sea.

MEOGA senior official at Irans NIOC has said that the countrys

oil reserves will last for another 60 years.

GLNGPetronas could cancel the Pacific NorthWest LNG project,

citing Canadas poor investment climate.

NorthAmOilSuncor Energy is sending its first shipment of Western

Canadian heavy crude to Europe from the East Coast.

Unconventional OGMCabot Oil & Gas is buying Eagle Ford acreage for US$210

million from an undisclosed seller.

CUSTOMERS INCLUDE

NEWSBASE INFORMATION

Latam Oil 39

Documents

Transcript of Latam Oil 39