LatAmOil Week 24

7/24/2019 LatAmOil Week 24

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Issue 568 16June2015 Week 24

Sea change on subsalt Opponents and allies o Brazils ruling party have united to champion a bill

that aims to end Petrobras subsalt obligations.

Hotter water Venezuela and Guyana have locked horns afer ExxonMobils recent offshoreoil discovery in waters long contested by the two countries.

Everything must go BPZ Energy plans to sell its Peruvian assets as part o its process o filing or

Chapter 11 bankruptcy protection.

Competition call Chevron has said more competition is needed to put Argentinas biggest shale

play, Vaca Muerta, into mass production.


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COMMENTARY 3

Brazils subsalt policy may be reversed 3

Venezuela, Guyana lock horns over

contested waters 4

PIPELINES & TRANSPORT 6

Amerisur signs deal for Ecuador-

Colombia pipeline 6

INVESTMENT 6

Argentine province to launch block

tender in July 6

Brazils woes may be

golden opportunity 7

BPZ to sell Peruvian assets 7

Investors show muted interest in

PDVSA asset 8

PERFORMANCE 9

Skanska exits LatAm following losses,

corruption scandals 9

POLICY 9

Argentina helps gas utilities in bid to

lift output 9

Brazil local content rule maintained for

next auction 10

PROJECTS & COMPANIES 11

Chevron calls for more Vaca Muerta

competition 11

YPF makes Vaca Muerta

gas discovery 11

Brazil announces new subsalt giant 12

NEWS IN BRIEF 12
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LatAmOil 16 June 2015, Week 24 page 3

Have a question or comment? Contact the editorRyan Stevenson ([email protected])

Copyright 2015 NewsBase Ltd.

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

Is Brazil about to attempt a 180-degree

turn in its subsalt policy? Yes, if its

senate has its way. The country is

currently wallowing in a profound

political and economic crisis and the oil

sector is a central element to both.

The fallout of the Car Wash corruption

scandal in Petrobras has undermined

President Dilma Rousseffspolitical

standing. Hundreds of thousands of

Brazilians have taken to the streets to

protest against the corruption of her

ruling Workers Party. Her coalition

allies, sensing her and her partys

weakness, have turned on her.She now increasingly appears a

hostage of Congress, while her party

comes across as a dissident within its

own government.

This political frailty is exacerbated by

the presidents mishandling of the

economy, which is experiencing a

deepening recession. Her many economic

mistakes make it difficult to single one

out as key to ending the boom presided

over by her predecessor, Luiz Inacio Lula

da Silva. But, again, oil is a centralelement.

On the back foot

Losses stemming from graft at Petrobras,

the burden of Rousseffs ruinous fuel

subsidy policy on the company and the

current chaos in the oil services sector

owing to the corruption investigations

have all forced the industry to retrench.

Petrobras is slashing investment as it

downsizes in order to rebuild its financial

health and corporate reputation, while its

suppliers face years of legal tangles as a

result of their participation in the plot

with politicians to shake the major down

for billions.

But, ironically, this conjunction of

crises has also created an opportunity for

the oil sector. With Rousseff weakened,

and the Brazilian energy industry in a

mess at a time of global downsizing, her

opponents are moving to repeal one of

her signature achievementsor, as it is

increasingly viewed, failures of

judgement.

Brazils Congress is moving to reshape

the oil legislation that Rousseff designed

to govern the development of the subsalt

reserves. The legislation, which demands

that Petrobras be operator of all subsaltblocks with a minimum 30% stake, was

imposed in 2009 by Rousseff over the

objections of Petrobras itself and the oil

industry.

The new production-sharing agreement

(PSA) legislation is now blamed for

slowing down the development of the

subsalt reserves, as offering up blocks

would force Petrobras to participate in

each one and increase the financial and

operational burden on the indebted

company.

By reserving the lions share of the

subsalt for Petrobras Rousseff has

managed to diminish the attraction of

Brazils so-called passport to the

future, with minimal interest in the

Libra fieldthe first and to date only

auction held under the new legislation

that attracted but one bid at the minimum

price set by the regulator.

It is this legislation that is now being

targeted by a bill making its way through

Congress.

Shifting allegianceWhen the legislation was passed

Congress was the lapdog of former

president Lula. But sensing the current

presidents weakness it has rebelled and

its leadership now openly works against

her on numerous fronts, even when it is

nominally allied to her government.

This is best illustrated by the role of

Senate President Renan Calheiros. A

close associate of Lula, he was an

important ally of Rousseff during her

first term, but has now all but formallybroken with her. He is helping shepherd

a bill through the upper chamber that was

written by opposition leader Jose Serra.

Serras central aim is to remove the

obligation for Petrobras to participate in

every future subsalt block.

Obliging Petrobras to be present in

every new subsalt well with a

participation of 30% is an absurd demand

in the context of the current crisis, he

said when promoting the bill.

COMMENTARY

Brazils subsalt policy

may be reversedWith both the president and ruling party weakened by the countrys ongoing corruption

scandals, a bipartisan group is looking to overhaul contentious subsalt policy

y Tom Hennigan

The senate is preparing to vote on a bill aimed at ending Petrobras subsalt obligationsPetrobras is heavily in debt and does not have the resources to operate every subsalt blockThe bill is likely to succeed given its support by the ruling Workers Partys allies and opponents
mailto:[email protected]:[email protected]


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It was already inappropriate before

the crisis. Now, taking away the

obligation does not signify that Petrobras

will not participate; it will participate

when it has resources, when it seems a

good business, when it is possible.

Renans backing means the proposal is

a serious one with a real chance of

changing the law.

This change would be welcomed by

the oil industry, which has lobbied hard

but fruitlessly against the new legislation

and would also likely be welcomed by

many in Petrobras, many of whom had

argued privately against the legislation

but were shouted down by Rousseff.

Serras bill should be voted on this

week in the full senate, where it has beenfast-tracked by Renan in his attempt to

embarrass Rousseff. As well as the

opposition, among those backing the

proposal are the members of Renans

own PMDB party, the main coalition

partner of Rousseffs Workers Party.

As the largest party in Congress, the

PMDBs support leaves the bill with a

strong chance of being passed. The

Workers Partys leader in the senate,

Humberto Costa, has promised to resist

the new bill but admits that unless there

is a largeand so far non-existent

social mobilisation against it the

legislation will pass.

But even within the Workers Party

there is backing for Serras repeal

movement.

Dissention in the ranks

Notably, Senator Delcidio Amaral has

come out in support of the proposal. As a

former Petrobras executive he is

considered one of the Workers Partys

experts on energy. With the president so

politically weakened she has been unable

to impose party discipline in support ofone of her signature policies. Even her

recently appointed energy minister,

Eduardo Braga, has come out in favour

of changing the legislation.

Not even in Petrobras is there

consensus in relation to being exclusive

operator and I thinkbut this is a

personal opinion as a senator, not as

leader of the governmentit is

fundamental that we debate this

question, said Amaral last week.

Even if the senate passes Serras bill

the legislation would face a vote in the

lower house, though this has proved even

more rebellious in recent months.

Should it pass there Rousseff would

need to use her veto to defend a policy

that only she still seems to believe in.

And given the current weakness of her

position it is possible that even that could

be voted down by Congress.

Thus Brazils oil industry and the

multinationals who felt the legislation

was designed to restrict them to a

secondary role in the subsaltcould yet

see the current mess in the sector play

out to their advantage if Congress votesto relieve Petrobras of its onerous

obligations in the subsalt.

It would be a classic example of

turning a crisis into an opportunity for

everyone, except Rousseff, who faces

another humiliating defeat to add to the

collection she has been accumulating

since her somewhat pyrrhic victory in

October 2014s presidential election.

A century-old territorial dispute between

Venezuela and neighbouring Guyana

seems set to escalate following

ExxonMobils offshore discovery of oil

in the contested Essequibo region.

Venezuelan President Nicolas Maduro

poured oil onto the flames in May when

he issued a decree extending his

countrys claim over the disputed waters

to include the region where the super-

major had made its discovery. He also

warned the company to stop its activities.

Venezuelan Foreign Minister Delcy

Rodriguez later echoed Maduros

warnings in a televised interview, saying

that the newly elected Guyanese

government was seeking to provoke her

country, supported by the imperial

power of an American transnational

ExxonMobil.

Rodriguez said the 1966 Geneva

Agreement, which was signed by both

countries and the UK, prohibited any

economic activities in contested

territories.

The territorial dispute itself dates back

to 1899, when an arbitration panel

awarded the Essequibo region to British

Guiana, which gained its independence

in 1966. Essequibo makes up three-fifths

of Guyana and is still claimed by

Venezuela, which includes it as a zone

in reclamation on its maps.

COMMENTARY

Venezuela, Guyana lock hornsover contested watersThe discovery of oil in waters claimed by both countries has upped the ante of their

dispute

y Peter Wilson

ExxonMobil has found oil offshore in the contested Essequibo regionGeorgetown has awarded exploration rights to the area despite Caracas objections

Venezuelan sabre rattling will likely have little effect beyond scoring political points at home


5/19






Rodriguez added that until there was

an accord there can be no unilateral use

of these waters.

Hot water

Guyana, which imports most of its

petroleum products from Venezuela

under the Petrocaribe initiative, has

called on United Nations Secretary

General Ban Ki-Moon to mediate in the

dispute.

ExxonMobil has given few details

concerning its oil discovery in the

offshore Stabroek tract, but Venezuela

has twice warned the company

previously not to explore in the region.

Both times Georgetown strenuously

objected, claiming that Caracas wasinterfering in its sovereign affairs.

ExxonMobil began exploratory drilling

in March in a US$200 million project.

Tensions have been on the rise since

2012, when Guyana began granting

offshore exploration rights to various oil

companies, including Anadarko

Petroleum and ExxonMobil.

In 2013, Venezuelas navy seized an

exploration vessel in the disputed waters

that was carrying out a seismic study for

Anadarko Petroleum. The company hasrights to the Roraima tract, which is west

of Stabroek. More than a dozen

companies have been granted rights,

including Chinese companies that are

partners with Venezuelas state-owned

PDVSA.

While Venezuela has periodically

questioned the Essequibo award,

claiming that the judges

were bribed, Caracas had

sought to normalise ties

during the late Hugo

Chavezs presidency.

Venezuelas state airline

began weekly flights to its

neighbour and trade

increased. Guyana also

joined Venezuelas

Petrocaribe initiative, and

presently receives about

8,000 barrels per day of

fuel.

Petrocaribe was formed

in 2005 to cushion

Caribbean and Central

American countries from soaring energy

prices, while giving them the option to

pay for gasoline and other products with

goods and services. The initiative allows

members to defer payments for up to two

years, and provides long-term financing

of up to 25 years. Participating countries

can access subsidised financing when oil

prices are above US$40 per barrel.

Guyana had been partially paying for its

cargoes in rice.

Many of Petrocaribes members,

several of which also belong to the

Caricom pact, have publicly supported

Guyana in its dispute. These supporters

include a traditional ally of Venezuela,

Cuba.

What next

NewsBasebelieves that Maduro will fan

the flames of the conflict with his smaller

neighbour while falling short of any

military action.

The dispute allows Maduro to play the

nationalism card, diverting public

attention from Venezuelasgrowing

economic woes that have eroded support

for the president and his United Socialist

Party of Venezuela (PSUV). Inflation is

raging and the Central Bank has notreleased any figures for six months, with

analysts saying the inflation rate is likely

to end the year at more than 150%.

Food and medicine shortages continue:

the countrys medical association now

estimates shortages affect 70% of all the

countrys medicines.

Crime is soaring as economic activity

contracts; GDP is expected to fall by up

to 7% this year.

Given that congressional elections

must be held before the end of the year,

the Essequibo conflict carries potential

political gains for Maduro. But there are

pitfalls to this strategy.

By seeming to bully its much smaller

and poorer neighbour, Venezuela is

likely to lose goodwill and support from

Central American and Caribbean

countries. With the members of

Petrocaribe in its pocket, Venezuela has a

near majority in the Organization of

American States (OAS).

If the conflict worsens, Venezuela

could lose important votes, especially if

the OAS moves to investigate humanrights violations in the South American

country over the detention of political

prisoners. So far, Venezuela has been

able to deflect those objections, but a

prolonged dispute with Guyana could

draw unwelcome attention.

Maduro also has limited room to

manoeuvre.

Any sign of weakness on the issue

could hurt his standing with the military,

whose support he relies on to stay in

power. An attempt to compromise wouldalso play into the hands of the opposition

as elections near.

As such,NewsBaseexpects Maduro to

continue to exploit the issue for political

gain, pledging to defend Venezuelas

claims only to make more of a diplomatic

effort further down the road.

What also seems likely is that

Georgetown will try to

develop the zones

hydrocarbon reserves,

counting on the support of

its Caribbean neighbours

to stay the threat of

military action from

Caracas.

The Essequibo conflict

has festered for nearly 50

years and there is little

reason to believe it will

be resolved anytime soon,

especially given

Maduros weak political

standing.

COMMENTARY


6/19






South America-focused Amerisur

Resources has signed a pipeline deal with

Ecuadors Petroamazonas for the

construction of the Ecuador-Colombia oil

pipeline.

The company said it expected the

interconnector to become operational in

the fourth quarter of this year.

The deal also permits London-listed

Amerisur to use the pipeline from the

Ecuadorian border to the point of

connection with the Amazonas pipeline

network (RODA), the firm said.

Petroamazonas, which operates

RODA, has a minimum transport volume

commitment of 5,000 barrels per day of

oil through the new interconnector.

Todays news is a very significant

step forward as we progress the

interconnector pipeline and we are

delighted with the support shown in both

Ecuador and Colombia towards the

project, said Amerisurschairman, Giles

Clarke. Civil works within the Victor

Hugo Ruales central processing station

will begin in the next few days and we

are confident that the pipeline will be in

operation in Q4 2015.

Amerisur currently has interests in four

projects in Colombia: Platanillo, Fenix,

Put-12 and Put-30.

The 14,341-hectare (143-square km)

Platanillo block is located in the

Putumayo Basin, in southern Colombia.

Amerisur has successfully drilled 12

wells there since 2012.

In 2014, the Cardiff-headquartered

company built a new pipeline to connect

production from the Platanillo field in

Colombia to Ecuador, easing production

capacity constraints.

The new 10-km pipeline links the

Platanillo field to the Victor Hugo field.

As a result it connects the existing

Cuyabeno gathering system to the Trans-

Andean pipeline, which delivers oil to

the Pacific coast. Amerisur then exports

the crude from the port of Esmeraldas.

As well as Colombia, Amerisur has

assets in the San Pedro permit in

Paraguay. The San Pedro permit covers

around 800,000 hectares (8,000 square

km) in the northwest of the Parana Basin,

in the east of Paraguay near the border

with Brazil.

Amerisur is the largest of around 10

independent explorers that have been

working in Paraguay in the last few

years.

Paraguay is attempting to

commercialise large shale resources in

the Chaco-Parana Basin, an area which

has been explored in the last 50 years but

without any commercial discoveries.

More than 40 wells were drilled in the

last half century.

ArgentinasSalta Province will launch an

international tender for the Desecho

Chico and Chirete Norte blocks in July.

Both are expected to hold conventional

prospects.

Argentinas state-run YPF and Beijing-

based independent operator Petro AP

have already submitted expressions of

interest to provincial authorities.

Although bidding officially opens in

July, YPF is already on the list of

participants for the Desecho Chico

tender.

The state company submitted

documents expressing its interest in the

block on March 2. According to local

rules this gives the firm a head start in

the process.

If its Desecho Chico bid is successful,

it will mark the first time YPF has

operated a site in the province since the

company was privatised in 1991.

YPFs interest in secondary oil-

producing provinces follows the launch

of an ambitious five-year exploration

plan in the wake of its renationalisation

in 2012.

The plan has prioritised reserves

growth and exploring less-developed

hydrocarbon areas by drilling 250 wells

between 2012 and 2016.

Saltas gas production fell 55%

between 2009 and 2014, moving the

province from second to fourth place in

terms of national production.

Petro AP submitted documents in May

expressing its desire to invest in Chirete

Norte, which is located on the border

between Salta and Formosa Provinces.

Chirete Norte was part of a larger

block awarded to Brazils state-run

Petrobras in 2006, before it was

subsequently broken up in 2013. In

March 2014, Petro AP and Formosa

Province-owned REFSA agreed on the

joint development of the Selva Maria

block. Petro AP is also already present in

Jujuy and Mendoza Provinces.

PIPELINES & TRANSPORT

Amerisur signs deal for

Ecuador-Colombia pipeline

INVESTMENT

Argentine province to launchblock tender in July


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Brazil represents a once-in-a-

generationinvestment opportunity,

according to partner and co-head of

Norton Rose Fulbrights Brazil practice,

Andrew Hayes.

Speaking at the firms Energy

Academy event, Hayes said the countrys

economic problems and corruption

scandal meant it was paradoxically an

ideal time to invest.

Brazils state-run Petrobras has been

embroiled in an investigation that has

reached all levels of the company, after a

kickback scandal was uncovered.

Company executives had been taking

bribes from construction firms, allowing

them to inflate contracts. The list of those

being investigated includes executives in

the company and presidents of some of

the countrys biggest engineering and

construction firms.

According to the majors financial

results, released in April, the total cost of

the corruption has reached US$2 billion.In a recent report by the World Economic

Forum, Brazil was in 135th place out of

144 countries when it came to the proper

use of public funds.

At the same time, Brazilian President

Dilma Rousseff has presided over a

major economic downturn. Brazil, as are

many other countries, is suffering from

the impact of lower oil prices and the end

of the commodities boom. Government

intervention made inflation, which is

now at almost 8%, worse.

The countrys GDP is anticipated to

shrink this year, while unemployment

and interest rates are up. As for currency

the real has lost 40% of its value so far

this year. The country is even at risk of

losing its investment-grade credit rating.

According to Hayes, right now the

government is desperate to attract foreign

direct investment (FDI) and it may be a

good time for investors to take a look at

Brazil, for several reasons.

First, according to Hayes, Rousseff,

who was president of Petrobras for most

of the time covered by the scandal but

managed to avoid impeachment, is now

no more than a figurehead. This means

that the countrys opposition PMDB

party is setting the agenda, making things

more market-friendly.

Secondly, the corruption scandal has

meant Brazilian access to capital hasdisappeared. Hayes said a number of

companies were going into insolvency

and were selling off all sorts of assets.

The executive said: I have it from

insiders that you can approach Petrobras

for any field and if itsa good enough

offer they will sell.

There are also a lot of opportunities to

be had in infrastructure: the countrys

spending in this sector has been sliding

since the 1970s. But Rousseff is now

preparing a package of concessions for

private investors to build railways, roads,

ports and airports.

Looking to the future, Hayes believes

that Petrobras will continue to be a

market giant despite the scandal. He said:

Ultimately it will be larger producer

than ExxonMobil, I have no doubt. It will

be at the very least among the top 3 in

the world.

The executive added that the

companys reserves base was enormous,

saying that geoscientists estimated 50

structures of 5 billion barrels each, and

concluded that for cost, the only place

better is the Persian Gulf.

Hayes predicted that the government

would remain the companys largest

shareholder. He said the new CEO,

Aldemir Bendine, appointed since the

scandal, saw great potential in

exploration and production and wanted tounbundle the companys downstream

assets. The company currently owns

power plants, which Hayes said would

take a great deal of work before they

could stand alone.

Hayes believes that the company will

have to allow more investment in the

upstream, as it does not have enough

manpower to manage by itself.

Peru-focused BPZ Energy has announced

the sale of its Peruvian assets as part of

its process of filing for Chapter 11

bankruptcy protection. The decision to

sell is pending approval by the US

bankruptcy court overseeing the

companys Chapter 11 case, BPZ said.

The firm, which filed for bankruptcy

protection earlier this month, is going to

attempt to sell all its assets in one single

transaction, it added.

Houston-based BPZ cited plunging

international oil prices as the reason for

seeking bankruptcy protection.

BPZ has licence contracts covering 1.9

million net acres (7,700 square km) in

four blocks in the northwest of Peru.

Operations at those blocks range from

early stage exploration to production.

In addition, the firm has a 51%

working interest in Block Z-1 with its

joint venture partner Toronto-based

Pacific Rubiales Energy, which holds the

remaining 49%.

INVESTMENT

Brazils woes may

be golden opportunity

BPZ to sellPeruvian assets


8/19






The companies are currently

undertaking development drilling at the

Corvina and Albacora fields in Block Z-

1. Along with Block Z-1, BPZ has 100%

working interests in three onshore blocks

Blocks XIX, XXII and XXIIIwhich

cover a total area of 1.6 million acres

(6,500 square km).

The company also has a non-operating

net profits interest in a producing

property in the southwest of Ecuador.

BPZs assets have a total value of

US$364 million and it has debt

amounting to US$275 million, the

company said in its Chapter 11 filing.

In November 2014, BPZ awarded T-

Rex Engineering and Construction a

contract to build two drilling platformsfor the Delfin and Piedra Redonda

prospects in Block Z-1. The platforms

are anticipated to be installed by the

middle of 2015.

A number of foreign firms have

retreated from Peru in recent years, citing

difficulties with indigenous communities

and the slow pace of projects.

In December 2014, Norways Interoil

transferred all its local operations to

Perus United Oilfields, following a

dispute with state-run Petroperu over the

operatorship of Blocks III and IV.

Canadas Talisman Energy and

Brazils state-run Petrobras have also

wrapped up operations in Peru in the last

few years.

Perus oil production has been steadily

declining since the 1980s, and the

government has spoken often of its needto return exploration to previous

levels.

In the face of weak oil prices and

repeated delays at the Petrocarabobo

heavy oil joint venture, Venezuelas

state-owned PDVSA has temporarily

shelved plans to sell an 11% stake

previously owned by Malaysias

Petronas.

PDVSA absorbed Petronas share in

2013 when the Malaysian company

abandoned the project, saying the

decision was part of a global asset

review. Industry officials said the

decision was a result of constant

disagreements with PDVSA over

taxes and the slow pace of the project.PDVSA now holds a 71% stake in the

project.

Petronas was one of several

minority partners in the

Petrocarabobo project, which has

been forecast to produce up to

200,000 barrels per day of light crude.

The project, which has a projected

lifespan of 25 years, will take extra

heavy crude oil, which has the

viscosity of tar, and process it into a

lighter blend via an upgrading facility.

The venture, formed in 2010, includes

Spains Repsol with 11%, IndiasOil and

Natural Gas Corp. (ONGC) with 11%,

Oil India Ltd (OIL) with 3.5% and Indian

Oil Corp. (IOC) with 3.5%.

PDVSA had hoped that Indian

independent Reliance Industries Ltd

(RIL) might take Petronas share, but this

is reportedly no longer expected.

Petronas had intended to send oil from

the project to a new refinery complex in

southern Malaysia.

Petrocarabobo has already started

initial production, but the lack of an

upgrader, which carries a price tag of

US$5.3 billion, means that much of the

projects oil will likely stay in the

ground.

When created, PDVSA forecast that

Petrocarabobo would produce upwards

of 480,000 bpd by 2018. But the

company is now predicting

400,000 bpd of production by

2019.

But even those projections aretoo optimistic for some. Repsol

told shareholders in 2014 that

production of 400,000 bpd would

only be reached in 2021. That

forecast may be pushed back

further still.

PDVSAs decision may be a

wise one: shares in Petrocarabobo

will likely increase in value as oil

prices recover. Until prices do rise,

interest is likely to be remained

muted.

INVESTMENT

Investors show mutedinterest in PDVSA asset


9/19






Swedish infrastructure and oil services

company Skanska will wind down its

Latin America operations and exit the

region following disappointing financial

results and ongoing corruption

investigations in Brazil.

Skanskas costs in the region in 2014

exceeded its revenues by almost US$100

million, according to figures from its

most recent financial reporting. In

addition, senior Skanska staffers told

Argentine local press that the companys

stock had suffered as a result of

investigations into the companys

connection to corruption scandals

involving its Brazilian partners.

Citing an unnamed Swedish source,

local media said Corporacion America-

owned construction firm Helport and

Argentine industrial giant Panedile were

interested in Skanskas assets.

Argentinas biggest conventional oil

producer, Pan American Energy, is also

reportedly keen.

Skanska has good contracts, though

theyre yearlyrenewals and the oil

industry is lowering costs. But the

forecasts are positive, said one source

close to negotiations.

In April, Pan American signed a

US$137 million three-year extension

with Skanska for work related to Cerro

Dragon, Argentinas largestoil-

producing site.

The contract was a continuation of

current obligations rather than a new

undertaking, explained Skanska

representatives. This is in line with the

companys regional divestment position

over the long term.

Skanska reported a loss of around

US$61 million in its Latin American

operations in the second quarter of 2014,

the last time it released a detailed

statement for the region. Skanskas

remaining Latin American operations

have since been incorporated into the

companys central accounting.

Corruption allegations have also

bruised the companys reputation.

During the first quarter, there were

allegations regarding potential ethical

breaches in our Czech and Latin

American operations. I would once again

like to emphasise that we take any such

suspicions very seriously, said

Skanskas CEO, Johan Karlstrom.

This environment in South America,

with a lot of corruption, is of course very

difficult to work in, thepresident of

Skanska Latin America, Johan

Henriksson, told Swedish press.

Representatives of two of Skanskas

Brazilian business partners, including

construction firm Camargo Correa,

admitted to police investigations to

having bribed state-run Petrobras to

secure refinery and pipeline contracts in

Brazil.

Skanska is now internally auditing its

own dealings with local companies, said

Henriksson.

After years of keeping a lid on natural

gas rates, Argentina is allowing

distributors and transporters to raise them

in a latest effort to kindle investment in

exploration and production.

Last week, the Energy Secretariat

offered funds to distributors to shore up

their finances and allowed transporters to

increase rates for the second time in 14

years.

It made available 2.59 billion pesos

(US$286.47 million) to distributors,

saying they could use the funds to get up

to date in their payments to producers.

This is expected to reduce concerns of

a slowdown in exploration and

production, given that distributors owe

an estimated 1.5 billion pesos

(US$165.91 million) to producers.

The secretariat said the distributors

would be able to receive funds monthly

over 10 months, retroactive from March

1.

Metrogas, the countrys biggest gas

distributor, said it was considering

signing up for the funds, saying they

would help it cover spending and

investments while the rates it charges

consumers were renegotiated with the

government.

The negotiations are set to conclude by

the end of this year.

If Metrogas, which is 100% by state-

run YPF, and any other distributors

accept the funds, they must pledge not to

run up debts with producers again, the

secretariat said.

This is the governments latest effort to

address flagging gas production, which

has dropped to 115 million cubic metres

per day this year from a record 143 mcm

per day in 2004.

PERFORMANCE

Skanska exits LatAm following

losses, corruption scandals

POLICY

Argentina helps gas utilitiesin bid to lift output


10/19






The drop has forced the country to halt

most gas exports and turn to Bolivia and

the global market for supplies, which

now meet about 20% of its 126 mcm per

day demand.

The government wants to return the

country to the energy self-sufficiency of

the late 1990s and early 2000s by

developing huge unconventional

resources in plays such as Vaca Muerta,

and distributor debts have been weighing

on investments in this area.

YPF is the countrys biggest producer,

with a 30% share, followed closely by

Frances Total and then BP-backed Pan

American Energy and Argentinas

Tecpetrol.

The secretariat added that it had

allowed the two main transporters,

Transportadora de Gas del Norte and

Transportadora de Gas del Sur, to raise

their rates by 44% and 69% respectively.

The transporters said this would push up

consumer gas rates by about 3%.

Argentina froze gas and other utility

rates after a 2001-02 economic crisis,

with the aim of limiting inflation. While

the low rates helped fuel an economic

recovery, they soon brought shortages as

companies scaled back spending on

declining profits.

In another bid to encourage drilling,

the government has raised wellhead rates

to US$7.50 per million British thermal

units (US$207.45 per 1,000 cubic

metres) for supplies from new

developments, up from US$2.50 per

mmBtu (US$69.15 per 1,000 cubic

metres) for output from older wells.

Despite heavy pressure from oil

companies, Brazils energy regulator has

maintained the onerous local content

requirement for companies bidding for

new exploration blocks in October.

The oil sector had been lobbying for a

change from the government, arguing

that the inability of Brazils industry to

deliver infrastructure on time and its

competitiveness on price demanded a

change in light of the plunge in the oil

price.

But in publishing details

of the 13th auction round in

non-subsalt assets ANL, the

energy regulator, maintained

the content requirement

despite growing sounds from

within the government that

changes could be made in

light of changes in the

sector.The regulator indicated to

the industry that because the

blocks on offer later this

year lie chiefly in shallow

waters or onshore, the local

content requirement would

not be as onerous as if they

were in deep waters.

Brazilian President Dilma

Rousseff is believed to have

argued that oil companies

are taking advantage of the

corruption scandal in Petrobras and the

drop in the oil price to argue for a rule

change they have always opposed and

which her government believes is crucial

to the revival of Brazil shipbuilding and

oil services industries.

In May, her new energy minister,

Eduardo Braga, said he was going to

perfect the local content requirement in

a clear signal to the sector that authorities

were ready to relax the requirements but

he was later slapped down by the

president, who said the policy was here

to stay.

The industry has warned that the

policy, coupled with the global

retrenchment in investment, will

diminish interest in the 13th round,

which the government hopes will be part

of its policy of stimulating investment in

order to counter the deep recession the

economy is suffering.

The previous two auction rounds

including the first of a subsalt asset under

new oil legislationwere both

quiet affairs blamed in part on

the diminishing attraction of

Brazil owing to onerous

government interference.

If anything, rather than

preparing to relax the local

content requirement, Brazils

government looks to be

hardening its enforcement of thepolicy.

The regulator has issued 15

fines this year to companies for

failing to comply with the

requirement, compared with just

two during the same period last

year.

Recent Royal Dutch Shell

acquisition BG Group alone

was fined US$275 million, the

same value as all the fines

imposed in 2014.

POLICY

Brazil local content rulemaintained for next auction


11/19






An early entrant in Vaca Muerta,

Chevron said last week that more

competition was needed to put

Argentinas biggest shale play into mass

production.

Argentina already has skilled labour

along with pipelines, hydrocarbon

treatment plants and other infrastructure

in place, what is needed now is more

companies to ramp up drilling in the

play, said Chevrons general manager of

business development for exploration

and production in Africa and Latin

America, Carlos Aguilera.

Argentina has an opportunity not to

be wasted, Argentine daily LM

Neuquen quoted Aguilera as saying at an

industry event in Houston.

Argentina hasa great advantage that

other countries do not have, both in the

quality of human resources and in the

infrastructure for energy distribution, he

said at the event organised by the

American Chamber of Commerce inArgentina, the Argentine Oil and Gas

Institute and the University of Rio de la

Plata Foundation.

We are committed to the country, but

we need more companies to join,

Aguilera added. Competition is vital as

a factor for generating a true shale

revolution that will accelerate the

development of the play.

Chevron, in partnership with

Argentinasstate-run YPF, was the first

company to begin factory mode

production in the Vaca Muerta play.

In the first quarter of this year, the two

were producing 42,000 barrels per day of

oil equivalent, mostly of the light crude

in demand at the countrysrefineries. It

is the first shale oil to be produced

outside North America.

Other companies such as ExxonMobil,

Total and Royal Dutch Shell entered the

market later and are still working toward

their first production pilots.

To attract more companies and speed

up drilling, Aguilera said: [The]

economic, social and legal conditions

must be created to ensure the

sustainability of the business over the

long term.

Argentinas government has started to

adapt and has increased wellhead prices,

offered fiscal and financial incentives for

increasing production and exports as well

as for importing rigs and other

equipment.

But one major hurdle that remains is

companiesability to send profits out of

the country, which is still difficult.

Currency stability is also needed, so too a

reduction in the countrys 30% inflation

rate, which boosts labour and input costs.

There also needs to be more credit at

lower interest rates, which requires

Argentina to settle fully a US$100 billion

default that has locked the country out offinancial markets.

By most estimates, US$5-12 billion

per year must be invested to develop

Vaca Muerta and the countrys other

unconventional resources.

Argentinas state-run energy company

YPF said last week it had hit gas in Vaca

Muerta, as it continues to develop the

countrys biggest shale play.

The company found the resources on

La Ribera, a block in the southwestern

Neuquen Basin.

The first tests showed that the La

Ribera x-1 well was highly productive,

with initial output flowing at a 43,000

cubic metres per day, YPF said.

The company is investing a large

chunk of its US$7 billion in annual

investment to bring Vaca Muerta to

production, part of a wider plan to

rebuild output after it slid by 6% per year

in 2002-12. With the drilling on La

Ribera, YPF said it had found the

resources in a thickness of 258 metres

that it expected to be productive.

Another advantage of the find is that

La Ribera is located next to Loma

Campana, where the company is already

producing shale oil and gas with

Chevron, the first factory mode

development in the play. (See previous

story)

This discovery increases the

expectation of the wealth and

productivity of the Vaca Muerta

formation in areas close to those

currently in mass development, YPF

said.

PROJECTS & COMPANIES

Chevron calls for more

Vaca Muerta competition

YPF makes Vaca Muerta

gas discovery


12/19






YPF and Chevron are producing about

42,000 barrels per day of oil equivalent

from Loma Campana, mostly light crude.

La Ribera also is 25 km from Anelo, a

town that is becoming a hub for the shale

industry in Neuquen, and is also 90 km

from the provincial capital, also called

Neuquen.

This means there are ample services

and labour available, as well as

infrastructure from pipelines to treatment

plants.

YPF has said it plans to build an oil

treatment plant in Anelo.

YPF aims to increase its hydrocarbon

production by 5% this year by

developing shale resources as well as

tight formations and by wringing more

from maturing conventional reserves.

Its exploration efforts for

unconventionaland conventional

resources are paying off, with two

discoveries made so far this year. The

first was of an estimated 40 million

barrels of conventional oil on Los

Caldenes, another block in the Neuquen

Basin.

Brazils energy regulator believes it has

found a giant new subsalt field that has

similar characteristics to the Lula field,

which has 5-8 billion barrels of estimatedreserves.

The evaluation is based on seismic

studies and no well has yet targeted the

prospect, which lies off the coast of Sao

Paulo in the Santos Basin. No official

announcement about the prospect

which has no name as yethas been

made by authorities but according to the

Estado de S.Paulo newspaper the

regulator wanted to include the block in

the 13th bid round in October.

That plan was vetoed by the federalgovernment, which restricted the round

to non-subsalt assets. Bidding for a giant

new subsalt field could risk further

burdening financially troubled Petrobras,

which by law would have to bid for the

block as operator with a minimum 30%stake.

Quoting government sources the paper

said officials described the prospect as of

great dimensions, though there is no

firm estimate of the volume the find

might contain. The government is

reportedly keeping the prospect back

waiting for a more opportune moment to

auction it off.

The paper said the prospect, despite

being under the salt layer, lies outside the

region that Brazils oil legislation decreesas governed by the production-sharing

model. That could mean it is up to the

government to decide how to develop the

prospect when it decides the time is right.

The regulators push to include it in

this years auction round could indicatethat officials believe the block may be

able to be developed under the old

concessionary regime. The government

has also reserved the right to award

blocks in their entirety to Petrobras if it

feels that is in the national interest.

Brazil has become increasingly

worried that the fall in oil prices

threatens the financial attractiveness of

its subsalt fields, which are costly to

develop. This has led to the decision to

restrict the offer of large subsalt blocksafter the Libra auction in 2013 attracted

one bid offering the minimum price.

COMPANIES

Total plans US$980minvestment in Bolivia

Frances Total plans to invest close toUS$980 million in the second phase of

exploration at the Incahuasi block in

Santa Cruz, Bolivia, UCOM news

service reported. Bolivias Minister of

Hydrocarbons and Mines Luis Alberto

Sanchez Fernandez made the

announcement after meeting in Belgium

with Totals executive director, Patrick

Pouyanne.

Sanchez Fernandez said that the second

phase will allow the company to expand

the blocks production, which is due to

start next year at 6.5 mcm per day. Total

is investing US$1.2 billion in the first

phase of the project.

UCOM, Ju ne 11, 2015

Petrobras close tosuspending work ontwo platformsPetrobras is close to suspending a

contract for the construction of two

production platforms in Rio Grande, a

coastal town in southern Brazil, the

towns mayor said. QGI, the consortium

formed by local engineering firms

Queiroz Galvao and Iesa Oleo e Gas,

holds the contract to build the P-75 and

P-77 production platforms for Petrobras

in the local shipyard. Rio Grande Mayor

Alexandre Lindenmeyer, who was in

meetings with Petrobras and the

consortium, said the contract may fall

apart over a roughly 10% increase in its

value, estimated at US$1.6 billion, that

QGI is attempting to convince Petrobras

to pay due to contract modifications it

requested.

If confirmed, the contract cancellation

would slow Petrobras future growth in

oil production and affect its revenues.

The platforms are intended to begin

production in 2016 and 2017 from pre-

salt deposits in the Buzios field in the

Santos basin. Jobs could be at stake as

well if the contract falls through, at a

time when Brazils economy is most

likely entering its worst recession in over

a decade.

PROJECTS & COMPANIES

Brazil announces new subsalt giant

NEWS IN BRIEF


13/19






Lindenmeyer said Petrobras did not agree

with the consortiums estimated increase

in the value of the contract and would

likely take a decision on it when the two

sides are due to meet.

REUTERS, Jun e 8, 2015

Gazprom has sightson BrazilRussias Gazprom is considering

investments in oil and natural gas in

Brazil and may bid for exploration rights

in the countrys 13th-Round concession

auction in October, director for Brazil

and Latin America Shakarbek Osmonov

said. Gazprom, the worlds largest

natural gas producer, is also consideringoffers for stakes in fields and exploration

areas being put up for sale by Brazils

state-run oil company Petrobras,

Osmonov said on the sidelines of an

event in Rio de Janeiro.

Petrobras is trying to sell US$13.7 billion

of assets to boost cash for investment and

to pay debt.

REUTERS, Jun e 8, 2015

Petrobras did notbenefit fromcorruptionTwo Brazilian prosecutors probing a

scandal at Petrobras that rocked the

nations political establishment say it

would be hard to consider the company a

perpetrator in the multibillion-dollar

kickback scheme. Carlos Lima and

Deltan Dallagnol lead a group of nine

federal prosecutors in South Brazil who,

with five police officials and a judge, are

investigating a network of contractors

who allegedly paid bribes to winbusiness from the state-run energy

company.

While shareholders and bondholders may

have good reason to complain about

faulty internal controls at Petrobras,

especially after the scandal helped knock

billions off the stock price, the

prosecutors said the company itself is

nevertheless a victim.

I totally understand that stockholders

look at Petrobras and say, You could

have done more to avoid all this, Lima

said. The company has responsibility

for the acts, of course, of its agents and

employees. I dont doubt that. In

retrospect, you see red flags everywhere

but it is easier to say so after its

happened, he said.

Lima and Dallagnol argued that the bribe

money was taken from the company in

the form of overcharges on contracts, and

Rio de Janeiro-based Petrobras did not

benefit in any way.

BLOOMB ERG, June 10, 2015

Ecopetrol strategyfocuses onefficiency,

profitabilityEcopetrol has defined a new strategy to

2030 that prioritises profitability and

generating value, said head of the board

of directors Gonzalo Restrepo. The

strategy is focused on producing efficient

barrels and exploration that will make it

possible to incorporate 1.7 billion barrels

of proven reserves by 2020 and therefore

guarantee the sustainability of the

company, he said. All of this will be

accompanied by an aggressive efficient,

austerity and cost reduction plan, withstructural saves close to US$1 billion per

year between 2015 and 2020, added

Restrepo.

Ecopetrol will concentrate on basins with

high potential, both in Colombia and

abroad, he added. Key for this are

offshore areas in our country and the

Gulf of Mexico, he said. In Mexico,

Ecopetrol was prequalified in the so-

called Round 1 and is analysing different

options, according to Restrepo. The

biggest challenge facing the oil industry

is efficiency, being profitable with prices

close or below US$60 per barrel for

Brent, he noted.

DINERO, Jun e 10, 2015

Ecopetrol to reviewlogistics afterattacks spikeEcopetrol CEO Juan Carlos Echeverry

said that the company will review its

logistics to combat a spike in attacks on

oil infrastructure. The company has been

victim to 20 infrastructure attacks so far

this year, with 16 of those taking place

since May 27.

Echeverry said the company will review

its road transportation and consider re-

routing tankers to avoid commonly

targeted areas. The company is to spend

10 billion pesos from its 2015 budget on

environmental damage caused by an

attack on June 8, which saw Vetra

Exploration drivers forced to spill

thousands of gallons of oil.

REUTERS, Ju ne 10, 2015

Latest Colombianattack targets BPBP was the latest company to fall victim

to an attack by Colombian guerrillas,

who have been intensely targeting oil and

energy infrastructure since May 27. The

attack took place in Piamonte, where two

company wells were targeted with

explosives. BP is awaiting permission

from the national army to begin repair

work. Local government secretary

Amarildo Correa said the attack caused

serious environmental damage, but the

location of the wells makes it difficult to

assess the extent of the damage.The Colombian police force is now

offering 50 million pesos for information

about the recent attacks, to prevent future

assaults.

LA FM, Jun e 10, 2015

Ecopetrol sharesrallyShares in Colombias state oil company

Ecopetrol rallied 2.6% last week,

although they are still down 12.88% on

the previous month. The companys

shares have dropped 63% in the last year,

from highs of US$38.96 to the current

price of US$14.21. The lowest price so

far was seen on March 10 this year, when

shares fell to US$13.29.

The company announced in April that it

will issue a quarterly dividend of

US$1.03 on June 30, a dividend yield of

28.72%.

AMERICAN TRADE JOURNAL,

Ju ne 14, 2015

NEWS IN BRIEF


14/19






Pemex to openlogistics to privatescompanies

Mexicos state oil company Pemex plansto gradually shift its logistics, storage and

transport businesses to the private sector,

Excelsior newspaper reported. There are

companies focused on the value chain,

from oil companies to service station

operators, contractors and port

operators, said director general of the

companys international division, PMI

Internacional, and corporate director of

alliances and new businesses Jose

Manuel Carrera Panizzo.

He said these businesses requireresources that Pemex would rather funnel

into oil exploration and production. Until

now, Pemex has brought on private

companies as partners in upstream

projects, but gradually they will be given

room to operate on their own, he said.

EXCELSIOR, Jun e 8, 2015

Sabre delaysParaguay drillingSabre Internacional de Energia, an oil

company controlled by Brazils GrupoGeoradar, and its Paraguayan unit

Bohemia, said they have pushed back

drilling plans in Paraguay, Ultima Hora

newspaper reported. The companies had

planned to drill in the first half of this

year, but now will do so toward the end

of the year, said company representative

Carlos Ruffinelli.

He said the company has yet to find the

best location for the first well, but added

that work is focused in the departments

of Alto Parana and Canindeyu followingseismic studies. Investment in the

exploration is expected to run at US$60

million, he said.

ULTIMA HORA, Jun e 8, 2015

Kosmos Energyincreases borrowingcapacityKosmos Energy, a Texas-based company

that operates in Ghana and Suriname, has

announced amendments to its credit

facility, including the increase of

borrowing capacity to US$400 million

from US$300 million and the extension

of the maturity date on debt. The

company now has debt facilities of

US$1.9 billion. As of June 1, 2015, only

US$300 million of this has been drawn.

The companys CFO Thomas Chambers

said the amendment enhances the

companys already strong liquidity

position and that Kosmos has the

financial strength and flexibility to

continue growing profitably through the

cycle.

KOSMOS ENERGY, Jun e 9, 2015

Shares in RangeResources downShares in Trinidad-focused Range

Resources have fallen 3.4% in the past

week, and have seen a total loss in value

of 13.6% in the past month. The

company shares have fallen over 40% in

the past year, but still have a consensus

rating of buy as they continue to

outperform the index. Shares in the

company closed at US$52.84 on June 12,

down from highs US$89.03 but up from

the one year low of US$42.88 on March

13 this year.

The company recently received US$7.9million from a share sale to Sibo.

NEWS WA TCH INTERNATIONAL,

Ju ne 14, 2015

VenezuelareconsideringPetrojam saleAccording to a source, Venezuela is

reconsidering the sale of its minority

stake in the Kingston-based Petrojam

refinery, due to a proposed expansion.The countrys state oil company PDVSA

currently owns a 49% stake in the

refinery and said last year that it was

looking for a buyer, when oil prices were

low.

Jamaica, who owns the rest of the stake,

is currently looking at bids to finance an

expansion of the refinery. Both bids

under consideration are from China,

according to reports.

JAMAICA GLEANER, June 10,

2015

Pacific Rubialesamends creditfacilities

Canadian major Pacific Rubiales hasgained 100% support from creditors to

amend credit facilities and pursue a

takeover offer by Alfa and Harbour

Energy. The company said the

amendments were an important step in

proceeding with the offer, as they satisfy

the debt conditions attached to the

agreement. They added that the

overwhelming support of creditors

shows that the transaction is in the best

interest of shareholders.

Shareholders of the company alreadygave more than 90% approval for similar

amendments to senior notes.

PACIFIC RUBIALES, June 11,

2015

Pacific Rubialesnegotiates offerAs the company opens voting for a

takeover offer by Alfa and Habour

Energy, more information has been

provided about the offer, including that

the company successfully negotiated theprice from C$5 to C$6.50. Pacific

Rubiales has opened voting on their

website on the offer, which needs two-

thirds of shareholder consent to pass.

In a section on the website entitled why

now?, the company also mentioned the

challenges the company would face

financing its entry into Mexico

independently and the capital markets

risk facing the company in terms of

obtaining debt and financing.

PACIFIC RUBIALES, June 15,

2015

Sparrows Groupappoints AmericasdirectorThe US-based Sparrows Group has

appointed Steve Bertone as director of its

operations in the Americas. The

executive joins the company, which

provides products and services to the

offshore oil and gas industry, after 33

years at McDermott International.

NEWS IN BRIEF


15/19






Bertone will be in charge of the groups

operations in the US, Brazil, Mexico and

the Caribbean. Bertone says: The

Americas is a region that presents a

wealth of exciting opportunities for a

well-respected business like Sparrows

Group. The company has been operating

here for many years and the specialist

knowledge and excellent reputation for

quality and value will provide a good

foundation for further growth.

FTSE GLOBA L MARK ETS, June

15, 2015

OIL

Wintershall saysArgentina shaleneeds long-terminvestmentTo develop Argentinas huge shale oil

potential, the country must provide stable

business conditions to encourage long-

term investment, said new chief

executive of Germanys Wintershall

Mario Mehren. He also called for easier

conditions, such as a stable exchange

rate, to pay for equipment and rigs under

dollar contracts. Wintershall has investedUS$400 million over the past two years

in drilling in Vaca Muerta, the countrys

largest shale play.

Mehren said the government has started

to make conditions better, including by

raising natural gas prices. A next step is

to allow companies to send profits out of

the country, now not totally possible.

Other challenges are to improve roads,

make more trucks available and cut costs.

LM NEUQUEN, Jun e 10, 2015

Bolivian indigenouspeople protest oilexploration in parksIndigenous communities in Bolivia said

they will resist the governments plans to

allow oil drilling in national parks and

reserves, EFE newswire reported. The

government has opened these regions for

exploration, in a bid to build oil and gas

production as a main source of jobs and

tax revenue. President of the

Confederation of Indigenous

Communities of Bolivia Adolfo Chavez

said the protest could extend beyond the

countrys borders, with a demonstration

proposed at a global climate change

conference in Paris at the end of the year.

We consider ourselves guardians of

nature, of our own home, Chavez said.

EFE, Jun e 10, 2015

Bolivian presidentslightly more upbeaton oil pricesBolivian President Evo Morales forecasts

that oil prices will hit US$70 per barrel

before the end of the year and natural gas

prices will begin to increase. Morales

said that from the outset he was not toofearful of the fall in crude oil prices as

the country had already weathered

problems in 2008 due to crisis in the US.

Bolivias economy continued to expand

despite the situation. In early May,

Energy and Hydrocarbons Minister Luis

Sanchez was even more optimistic,

forecasting oil would reach US$80 per

barrel by the end of this year and

US$100 per barrel in 2016.

LA RAZON, Jun e 10, 2015

Colombia oil outputabove 1m bpd in MayColombia produced 1.025 million bpd of

crude in May, the countrys Mines and

Energy Ministry announced. The figure

is above the government target of 1

million bpd and the same quantity as in

April. Production is up 70,000 barrels on

May last year.

Natural gas production was up 4.1% in

May on April, with an average of 1.05

bcf per day produced. This was a drop of3% on last May, when 1.084 bcf per day

were produced. State-run Ecopetrol and

private company Pacific Rubiales are the

two biggest producers of oil in the

country.


Oil prices drive upColombian pesoThe Colombian peso had its biggest

gains in almost eight weeks thanks to

higher oil prices. The country, which

relies heavily on oil as a source of

revenue, has seen its currency weaken

about 39% over the last 12 months as oil

prices have fallen.

The jump in price was due to higher

seasonal demand in developed

economies, along with the expectation

that US shale production will decrease in

the near future. Other Latin American

currencies did not see such sharp gains,

but the MSCI Latin American stock

index was up 1.2%, making a second

straight day of gains.


Colombian oil spill atragedySeveral thousand barrels of crude oil

have spilled into a river in southwest

Colombia after insurgents bombed a

pipeline, state-run oil company Ecopetrol

said, describing the damage as an

environmental tragedy, according to

Reuters. The bomb attack occurred June

8, but was not previously disclosed. It

was one of spate of attacls targeting oil

installations this month and will affect

several thousand families, Ecopetrols

CEO Juan Carlos Echeverry said.

As many as 4,000 barrels of spilled oilhave contaminated rivers used for fishing

and fresh water supplies. Its a social

and environmental tragedy, Echeverry

said, describing the spill as senseless.

The financial cost to Ecopetrol will be

minimal compared with the harm done to

the environment and affected

communities, he said.

Echeverry said there have been 20 rebel

attacks against Ecopetrols infrastructure

this year, affecting an estimated 84,000

people.REUTERS, Ju ne 10, 2015

Pemex finds oil inthe GulfMexicos state oil company Pemex made

its first discoveries of hydrocarbons since

a reform of the energy sector in 2014,

CNNExpansion newspaper reported.

Pemex CEO Emilio Lozoya said four

new fields were found in shallow waters

in an area known as the Litoral de

Tabasco.

NEWS IN BRIEF


16/19






He said the company wants to put the

area into production within 16 months,

adding that it is similar in geography to

Cantarell, one of the countrys biggest oil

fields. Daily production could reach

200,000 bpd and 170 mcf, he said.

CNNEXPANSION, June 11, 2015

Mexicos new oildiscovery seen inright spotThe discovery of four oil fields in

Mexico has raised cheers from analysts,

El Financiero newspaper reported.

Director of the energy consultancy

GMEC Gonzalo Monroy said that

infrastructure is already in place near thediscoveries, meaning that it may take less

time than expected to put them into

production. Pemex said this week that the

fields are in shallow waters in an area

known as the Litoral de Tabasco, and

could take 16 months to put them into

production. Output is expected to reach

200,000 bpd of crude and 170 mcf of

gas. What is more, the discovery should

encourage bidding in an upcoming

licensing round, Round One, for 14

shallow water blocks. The timing is

impeccable, said oil analyst at Marcos y

Asociados Luis Miguel Labardini.

EL FINANCIERO, Ju ne 11, 15

Venezuelan oilcloses on US$56.58per barrelVenezuelan crude ended the week on

drop on last weeks price of US$56.73

per barrel. The countrys ministry of Oil

and Mining put the fluctuations in price

down to the fluctuations of the dollar,

the wide availability of supply in major

consuming nations and the expectations

of a seasonal increase in demand for

petrol in the US.

Oil makes up more than 95% of

Venezuelas exports. Oil prices are more

than 50% lower than last year.

Venezuelan oil production was at 2.44

million bpd in April.

EL UNIVERSAL, Jun e 12, 2015

GAS

Bolivian gas exportprices plungeBolivia is selling gas to its two export

markets, Argentina and Brazil, at

between US$5 and US$6 per mBtu,

down from US$9-10 per mBtu in 2014,

El Dia newspaper reported. Oil analyst

Bernardo Prado said the reason for the

decline is the drop in global oil prices, on

which a portion of the export price is

pegged.

This will cut the countrys gas export

revenue by up to 40%, even though gas

deliveries are on the rise.

EL DIA, Ju ne 12, 2015

PDVSA to haltColombia gasimportsVenezuelas state oil company PDVSA

announced that it would not renew a gas

contract with Colombia, opting instead to

tap into local production. Colombia and

Venezuela have had an agreement since

2007, when a pipeline between the two

countries was inaugurated.

The original plan was for Colombia to

export gas to Venezuela for four to seven

years before reversing the flow. Almost

eight years have passed and Venezuela

seemed to rule out a continuing

arrangement when it criticised

Colombias management of the pipeline,

saying supply in the past months has

been completely irregular, with frequent

problems that have even at times turned

off supplies altogether.


SERVICES

Spectrum andSchlumberger startsurvey offshoreMexicoSpectrum has announced that their vessel

has arrived in Mexico and started the

acquisition of their Mexican Gulf of

Mexico 2-D campaign, in collaboration

with Schlumberger. The first phase of the

acquisition programme, named Mexico

Campeche-Yucatan 2-D Regional

comprises 12,200 km of regional linesfrom the full 44,000 km programme.

The programme will cover areas from the

Campeche Escarpment, including ties to

Round 1 blocks, the Yucatan shelf and

deepwater areas. The survey will also tie

with Spectrums BigWave programme in

the US Eastern Gulf of Mexico. Fast

Track products will be available starting

in July with final products available in

November.

SPECTRUM, Ju ne 11, 2015

NEWS IN BRIEF


17/19

Argentina ShaleSpecial Investment Report350 April 2015

Risk and reward Argentinas unconventional potential could make it a rewarding target for

investors, but the countrys poor economy and political climate are clear risks.

First-mover advantage Chevron, Petronas and Sinopec have formed partnerships with state-run YPF to develop the Vaca Muerta shale, but more investment is needed.

Independents day Andes Energia is the leading independent in Argentine shale and its

experience offers key lessons to potential investors.

20%DISCOUNT

ONLY280EX.VAT

\NewsBase

To find out more about this special report, click hereor visit shop.newsbase.com
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18/19

With the conclusion of talks between the UN P5+1 and

Tehran regarding Irans nuclear programme pending,

NewsBase has released its Iran Investment Special Report.

Topics covered in the report include:

Iran InvestmentSpecial Report

Risk

Key players

Services

Pipelines

Inuential local contact details

A breakdown of the IPC

Investment

Field proles

Export options

Projects & Tenders

Click hereto to fnd out more.
http://shop.newsbase.com/products/iran-investment-special-reporthttp://shop.newsbase.com/products/iran-investment-special-reporthttp://shop.newsbase.com/products/iran-investment-special-reportmailto:[email protected]?Subject=Register%20interest%20in%20Iran%20Investment%20Special%20Report%20&Body=Thank%20you%20for%20your%20interest%20in%20our%20Iran%20Investment%20Special%20Report.%20Please%20take%20a%20second%20to%20fill%20in%20your%20details%20below.%20%0A%0AName%3A%20%0AContact%20telephone%20number%3A%0AContact%20E-Mail%20Address%3A%0A%0AKind%20regards%2C%0ANewsBase


19/19

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