Transcript of April 2019 Western Hemisphere Department Press Briefing
April 12, 2019

Participants:

• Alejanrdro Werner, Director, Western Hemisphere Department
• Patricia Alonso-Gamo, Deputy Director, Western Hemisphere Department
• Nigel Chalk, Deputy Director, Western Hemisphere Department
• Aasim Husain, Deputy Director, Western Hemisphere Department
• Krishna Srinivasan, Deputy Director, Western Hemisphere Department
• Raphael Anspach, Senior Communications Officer, Communications Department

Mr. SRINIVASAN: Yes, thank you for that question. So let me answer in English. So the outcome for Mexico revised down for 2019 and 2020 and that reflects a bunch of factors, not just one. Of course, the Q4 in 2018 was weaker than we expected and as a carry forward from that and if you look at high frequency indicators in 2019, early 2019, they also have been uninspiring. So that’s the reason, that’s one reason why we revised down. We have also reflected the fact that growth prospects of the U.S. were marked down. So that’s one. And the first factor reflected some tightening in the financial conditions in Mexico. And of course, there is generalized uncertainty about, you know, about when a new government comes in there is uncertainty and that’s also been factored into our growth revisions. Going forward, if any of these investments take off and if, you know, if uncertainty dissipates and investment picks up which is what one would hope, then we could see a pickup in growth much sharper than what we expected. But again, that has to be seen. You also asked a question about stabilization fund for Pemex, is that what you said? Yes. So, I think when it comes to Pemex, I think there are two issues there. One is the short-term issue and one is a long-term issue. The way we seem Pemex is what we need is a credible and comprehensive medium-term strategy business and financial plan and part of that we see a bigger role for private sector involvement and a gradual wind down of non-core assets. So that will help improve the financial position of Pemex and improve oil production. And also, in that context, (inaudible) until they seem to be a very important way to go heads with that. Now in the short run, the government has provide some support but that can only provide calm markets for some time. So, you need to have a strategy, a business plan which is well crafted, well designed and credible and that can put Pemex back in a stronger position and reassure markets.

MR. ANSPACH: Thank you, Krishna.

MR. CHALK: On the recovery, I mean, we have some confidence we will see better activity in the second quarter. We are seeing the start of real wages recovering which should help support consumption in the country. The second quarter of last year was a pretty bad quarter because of the floods and the decline in agricultural production. So that will naturally reverse, it looks like the agricultural sector is going to do relatively well. And there is some limited government support within the fiscal envelope under the program and we have been that in terms of the government increasing social assistance allowances and providing more support particularly to people who are poor and vulnerable and have a relatively high marginal propensity to consume. So those factors put together, we think should help support some improvement in activity. Just on the interest rates, yes it is true that the level of real interest rates and nominal interest rates in the country are a headwind. But at the same time that’s what we believe is needed and what the system is telling us is needed to establish macroeconomic stability and currency stability and stability in the financial markets. And I think without that stability it’s very hard to see how Argentina can sustainably grow. So I think, you know, there is some short term cost that is being paid in terms of activity to establish the economic stability. That’s very common in a case like this where you have had a big shift in capital flows and in financial markets. We don’t expect that to be a long-lived phenomenon and the alternative would be considerably worse I think.

MS. ANSPACH: Thank you. Gracias.

QUESTIONER: A few weeks ago, Larry Kudlow, the director of the National Economic Council said that the U.S. was working on a plan to basically flood Venezuela with cash after a possible fall of the Maduro government with dollars, specifically using even fintech instruments like iPhone and certain fintech apps and essentially advocating dollarization through this method. How do you respond to that? Is that a possible solution? I know that there has been contingency planning going on at the Fund.

MR. WERNER: Look, we have been working on what would be the needed set of policies to bring Venezuela back to a path of growth and obviously to rebuild the economy of Venezuela, so that he can embark on a path that will correct the huge humanitarian crisis that the economy is going through and eventually start growing back towards its potential in the medium term. That will comprise of many, many policies that will allow not only the oil sector in that economy, but the non-oil sector in that economy to start working back towards what we see in more normal economies in the rest of the region. As it’s always the case in our programs, the exchange rate regimen is a choice by the country authorities. And in that sense at this point usually we have working in the abstract among ourselves. Once we have a government that reaches out to the international community, with the view on what’s their the desired choice of exchange rate regimen. I mean, our work will be to have the consistent set of policies with that exchange rate regime, but that is clearly something that we’re going to negotiate with the country. We negotiate the conditions to make the regime that the country chooses sustainable with the rest of the economic policies. In that sense, obviously, we are working with different alternatives, but that is something that for which really having authorities on the other side will be crucial in the design of the program.

QUESTIONER: I was looking at the Fund’s forecast this year. They expect a contraction and next year they will be low as well. So, I’d like to know why since when the IMF agreement was signed you are forecasting negative growth. And does Ecuador need to get used to these low rates of growth. Since we are having a tax reform, what does the fund expect of the structural and tax reforms for Ecuador to begin in the path of growth and do you think we need to increase the VAT to do this?

MR. CHALK: So, the contraction in Ecuador. I mean, Ecuador also is going through an important macroeconomic adjustment. In our sense the combination of those forces that the policies will create including the adjustment on the fiscal side will be a short-term headwind to the economy. However, this is sort of a necessary shift in policies given the way the debt dynamics have been evolving of late in Ecuador that they were on an unsustainable path and there needed to be a correction in the direction of policies. Now, I think you’ll see in the program documents, we actually gave a range of growth from +.5 to -.5. In any situation like this where you’re doing a pretty significant shift in policies, there’s a lot of uncertainty about exactly how quickly those policies will feed into the economy. Here in the WEO forecast, we take the conservative end of that range, but we think it could be anywhere within that range is feasible for this year. So, I wouldn’t focus too much on the point estimates. I mean, I we think there will be some drag to the economic growth. It may be a little bit negative, a little bit positive, but somewhere in that range. We think this is relatively short-lived as well. The economy will, as the system stabilize, as the greater confidence returns in the fiscal policies of the government and the structural policies of the government. We think we will see a recovery in Ecuador and we’re already starting to see some benefits from the announcements of these policies. Financing costs for the country have declined. The risk spreads for the country have declined. So, that’s going to help I think provide a greater openness to capital inflows and support credit and growth in the economy. On the tax reform, I think there’s going to be a discussion — there will be a review mission in May to discuss the first review of the program and I think we’ll be working with the government on the technical details of the tax reform. I don’t think anything is being decided yet of what the content. I think there’s some broad principles outlined in the staff report that we would like to see a more efficient tax system to support growth. We would like to see a simpler tax system and a more equitable tax system. As to the individual measures, those will be decided by the government and they have the full ownership of deciding how that tax reform will be designed and legislated. The Fund’s role is to provide technical advice and then ultimately just to make sure that the whole fiscal system adds up so that there is enough revenues being generated by that tax reform to fill the need of financing in the budget.

QUESTIONER: To what do you attribute the very low to negative growth in the Caribbean? I ask against about growing that some countries are currently under an IMF program. And what steps would you advise that’s needed to spur growth given that these economies are very small and open and are susceptible to external shocks? And to what extent do you see the trade tension in the U.S. and China imparting on the Caribbean given that we depend on the U.S. specially to carry out trade?

MR. WERNER: Maybe my colleagues can jump in afterwards with more specific answers. But, we’re expecting positive growth in the Caribbean and most of the countries in the Caribbean will be experiencing a positive growth next year. Asim maybe can talk a little bit more about Barbados that is maybe the only country that would have a very slight negative growth, but also mainly it will be growing at zero. I think the Caribbean has been having an acceleration in growth in the last three years on the back of an important resumption of tourism. Also, investment. And in the commodity-dependent Caribbean, I mean, we have seen that most of these countries have already absorbed the significant declining income coming from commodities after the declining commodity prices and now all of them are coming back to growth. Obviously, the Caribbean continues to be a region within Latin America that is also exhibiting, not sufficient growth to satisfy the amount of the population and the needed increases in social indicators. Also, we have seen many countries in the Caribbean struggling on managing high levels of debt and finally, the Caribbean it is obvious, it’s a region that is heavy exposed to natural disasters that has a very heavy humanitarian toll when these countries are hit with them, but then, after some years, it leaves these countries with an important financial burden that needs to be worked out in the future. So, we are developing financial frameworks for countries to manage financial implications of natural disasters in a much more effective way. We’re also trying to advocate for much more ex ante financial support for these countries instead of ex- post after the natural disaster has hit so that these countries are better able to manage the risk and are in a better position to invest in natural disaster resilient infrastructure. That is what our teams are working with many countries in the region, but obviously, it’s work in progress. In terms of our programs in the region, I will highlight that we are on the last stages of the Jamaica program. It’s leaving the country with a significantly lower level of debt then the one that the country had when we started this program. The country is also experiencing I think a decent acceleration of growth, historically low unemployment rates, but obviously, we still have, significant financially economic and social challenges, but the last six years have been years in which Jamaica I think has shown it or the different Jamaican governments has shown the Jamaican people that you can deliver on financial discipline without significant cost in activity. That the benefits in activity and employment take time to materialize, but when they materialize, they do it in such a fashion that it’s much more sustainable and it lends itself the foundations for an inclusive and sustainable growth process. And maybe, Aasim can say something Barbados that it’s just started its engagement with an IMF program.

Mr. HUSAIN: So, as you know, the Barbados program started late last year. And we will shortly be conducting our first review mission of the program, next month, I believe. So, Barbados has had building very large external and fiscal imbalances. And that has resulted in very high vulnerabilities building up over the years. Growth actually had already been negative for the last couple of years. And our forecast for the moment for this year is just slightly negative growth of .01. So, basically, flat. But that marks a recovery from the past. And I think part of that is the start of new policies that are putting the economy on a sounder footing. The big, headline going in to the program had been the very high level of public debt, 160 percent of GDP and very low level of reserves. Those two issues are being addressed under the program. That is in the process of being restructured. The bulk of public debt, which is the domestic part, has already been restructured, and negotiations with external creditors are underway. With this in process, fiscal consolidation underway as well and deep structural reforms also being undertaken, the economy is on sounder footing. Reserves have almost doubled already since the start of the program. And public debt is on a downward trajectory. So, we hope that in future years, growth will also return.

QUESTIONER: I’d like to ask as regard to Brazil. Why did you diminish the growth forecast for 2019, whereas, at the same time, increasing the prospects for next year? And also, there are news today about Brazil’s government’s decision to postpone fuel price adjustments in Petrobras. I would like to ask if this kind of policy will impact your next forecast?

MR. SRINIVASAN: So, in terms of why we lowered the forecast for this year, again, like I said in the case of Mexico, the Q4 numbers for Brazil were weak and expected. And that carried forward. And going forward, we expect once uncertainty dissipates on policies and so on, we expect investment to pick up, and that should lead to better growth prospects. What was the second question?

QUESTIONER: Today, the government of Brazil announced that will postpone fuel price adjustments in Petrobras. So, I’d like to know, if this type of policy will impact your next forecast?

MR. SRINIVASAN: Well, we have to see how that policy in itself affects the forecast. But clearly, the prospects of Petrobras were improving, so any kind of change in that will undermine the prospects Petrobras going forward. How that factors into our growth forecast, we’ll have to see. And so, it’s very hard for me to tell you at this point whether we’ll adjust our forecast one way or the other. There are many factors which go into building a forecast.

IMF Communications Department
MEDIA RELATIONS
PRESS OFFICER: RAPHAEL ANSPACH

PHONE: +1 202 623-7100EMAIL: MEDIA@IMF.ORG

LAC Forum

Discusses Positive and Negative Trends on SDGs

STORY HIGHLIGHTS

The 2019 Forum included peer learning sessions that addressed specific challenges of implementing the 2030 Agenda in the Caribbean, and a dialogue between Europe and the Latin American and Caribbean region regarding implementation of the 2030 Agenda.

ECLAC presented a quadrennial report on regional progress and challenges in relation to the 2030 Agenda.

26 April 2019: Representatives from Latin America and the Caribbean reviewed progress and challenges regarding implementation of the 2030 Agenda for Sustainable Development and the SDGs in the region, during the third meeting of the Forum of the Countries of LAC on Sustainable Development.

The Forum was established in May 2016 as a regional mechanism for implementation and follow-up of the 2030 Agenda and the SDGs. The Forum is convened annually under the auspices of the UN Economic Commission for Latin America and the Caribbean (ECLAC).

The 2019 Forum convened from 22-26 April, in Santiago, Chile. It included peer learning sessions that addressed specific challenges of implementing the 2030 Agenda in the Caribbean, and a dialogue between Europe and LAC regarding implementation of the 2030 Agenda. Also during the meeting, ECLAC presented a quadrennial report on regional progress and challenges in relation to the 2030 Agenda.

ECLAC Executive Secretary Alicia Bárcena identified positive trends in the region on targets of the SDGs, including achievement of SDG target 3.2 (reducing the mortality rate of children under five to fewer than 25 for every 1,000 live births), and good progress on SDG target 17.8 (percentage of people using the internet). However, she reported that two targets will not be reached: SDG target 6.1 (achieving universal and equitable access to drinking water at an affordable price), and SDG target 4.1 (universal access to secondary education by 2030). In addition, positive progress came to a halt on SDG target 2.1 (ensure access to safe, nutritious and sufficient food year round).

The outcome document from the Forum calls for, inter alia:

• Addressing the specific development needs of middle-income countries (MICs) by accounting for criteria other than per capita income;
• Increasing implementation and awareness-raising regarding the SDGs;
• Improving the environmental quality of cities; and
• Adopting a broader and more people-centered and inclusive preventive approach to disaster risk reduction (DRR).

It also: recognizes the need to enhance the means of implementation of the 2030 Agenda, including through SDG 17 (partnerships for the Goals); underscores the critical role of science, technology and innovation (STI) in achieving the SDGs; invites the Forum to discuss the impact of rapid technological changes, such as artificial intelligence (AI), on achieving the SDGs; reiterates the importance of South-South and triangular cooperation; and underscores the commitment to address statistical challenges and advance the generation of quality data for the SDGs.

During a dialogue with the EU on revitalizing multilateral cooperation with a focus on achieving the SDGs, participants: called for moving from current foreign direct investment schemes to public-private partnerships that focus on realizing the 2030 Agenda; and, highlighting SDG 14 (life below water), noted the work of Norway, Chile, Jamaica, Mexico and others to build a “sustainable ocean economy.”

Luis Alfonso de Alba, Special Envoy of the Secretary-General for the 2019 Climate Summit, briefed participants during a special session looking towards the UN General Assembly’s (UNGA) high-level events in September 2019. Stressing that countries can grow and fight climate change at the same time, he said the climate agenda must be an integral part of national development plans. He also urged the private sector and civil society to get more involved in climate issues.

The LAC regional forum was one of five that convened as part of preparations for the July 2019 session of the UN High-level Political Forum on Sustainable Development (HLPF). [ECLAC Press Release at Conclusion of Meeting] [Press Release in Advance of Meeting] [Press Release Announcing Meeting] [Press Release on Closing Session] [Statement of the UN Deputy Secretary-General] [Press Release on Ratifying the Escazú Agreement on Access to Information, Public Participation and Justice in Environmental Matters] [Press Release on Challenges Faced by Caribbean Countries] [Press Release on Meeting of Social Development Authorities]

LAC Forum Highlights Need for Private Sector to Help Implement SDGs

STORY HIGHLIGHTS
At the third edition of the LAC Business Forum for the SDGs, participants underscored the importance of VNRs as a guide for corporate action.

A Global Compact representative noted efforts to engage corporate stakeholders in addressing the shortfall in SDG financing.

22 April 2019: Companies investing in the SDGs can be more profitable and sustainable in both the medium and long terms, and the private sector is needed for mobilizing resources and mechanisms to implement the 2030 Agenda in Latin America and the Caribbean (LAC), according to participants at the Business Forum for the SDGs in LAC 2019.

The Forum was organized by the UN Economic Commission for Latin America and the Caribbean (ECLAC) and the UN Global Compact, on 22 April 2019, in Santiago, Chile. It took place on the sidelines of the third meeting of the Forum of the Countries of LAC on Sustainable Development, which is meeting through 26 April 2019.

ECLAC Executive Secretary Alicia Bárcena cited difficulties in financing the 2030 Agenda in LAC given that it is a middle-income region. She urged more private sector actors to play an active role in achieving the SDGs, and she called for “changing the conversation” between governments, the private sector and civil society.

Daniel Titelman, ECLAC, said transformative public-private compacts and implementation of the 2030 Agenda in the region depend on the joint capacity of ECLAC and the Global Compact to mobilize the necessary financial resources.

Margarita Ducci, Global Compact Network Chile, noted 73 cases of alliances between companies, civil society, NGOs and other actors, which she said will be included in Chile’s voluntary national review (VNR) to be presented during the July 2019 session of the UN High-level Political Forum on Sustainable Development (HLPF). She highlighted the need for a shared methodology for making better decisions regarding social investment.

Angus Rennie, UN Global Compact, described his work with corporate stakeholders to address the shortfall in SDG financing. He said the Compact is focused on: calling on companies to consider issuing SDG Bonds when raising debt; applying an SDG lens to corporate pension fund investments; and taking an SDG approach with foreign direct investments (FDI).

During the meeting, participants underscored: the importance of VNRs as a guide for corporate action; the need for the VNRs to include the private sector’s contributions; and that the SDGs must be part of companies’ strategies to have a real impact on people’s lives.

This was the third edition of the Business Forum. [ECLAC Press Release] [Agenda (in Spanish)]

Cuba

Melbana Energy terminates Cuba Block 9 farmout with China’s AMEC

26 Apr 2019

Highlights:

• Melbana elected to terminate the current farmout agreement for Block 9 due to lack of progress by the farminee towards satisfying the Conditions Precedent
• Melbana will pursue an alternative farmout transaction with a number of other potential counter parties who have continued to express an interest in the world class potential of Block 9
• A suitable rig for the drilling of Block 9 is expected to be available in country in 2H 2019
• Melbana Energy advised that the Cuba Block 9 PSC farminee Anhui Modestinner Energy Co (‘AMEC’), a wholly owned and guaranteed subsidiary of Anhui Guangda
• Mining Investment Co (‘AGMI’), has not satisfied the Conditions Precedent in the Farmout Agreement (see ASX Release 2 January 2019) within the time allowed.
• The Conditions Precedent included Cuban and Chinese regulatory approvals and a milestone related term with respect to any required guarantees.

As a result of AMEC’s failure to satisfy the Conditions Precedent within the required timelines Melbana has terminated the Farmout Agreement to enable it to progress discussions with other potential farminees interested in gaining exposure to Melbana’s portfolio of exploration and development opportunities in Cuba. Melbana have indicated to AGMI that they would welcome the opportunity tore-examine a partnership with them in Cuba in the future if the circumstances that precluded them from satisfying the Conditions Precedent change, given their experience drilling and operating oilfields.

Melbana Energy’s CEO, Robert Zammit, said:

‘Melbana elected to terminate the Farmin Agreement as there was insufficient progress in therequired timeframeand we wished to progress discussions with other parties that were previously interested in partnering with us as well as some new parties. We remain open to working with AGMI again in the future should their circumstances change. We are maintaining an ongoing dialogue with CubaPetroleo to seek to find a mutually acceptable way forward for Block 9that will allow us totest the significant potential of this block.’

Source: Melbana Energy

Latin America: New Network Launched to Respond Seafarers under Threat

Unions from across Latin America have committed to jointly providing assistance and solidarity to seafarers in distress in Central and South American ports, the International Transport Workers’ Federation (ITF) said.

A meeting in Cartagena held last week culminated with the launch of the ITF Latin American Contact Network.

The ITF Latin American Contact Network follows the establishment of the Arab World network launched in January 2017 with the aim of developing a stronger structure of union contracts to handle calls for help and the coordination of cases where seafarers face exploitation.

Representatives from ITF affiliated unions in Colombia, Costa Rica, El Salvador, Guatemala, Peru and Uruguay participated in a two-day training course on April 4-5. The course focused on seafarers’ labor rights under the Maritime Labour Convention (MLC), ITF Agreements and the Flag of Convenience (FoC) system, and the role of the ITF Inspectorate in protecting seafarers’ working and living conditions.

As explained, the network would bolster the ITF’s capacity to enforce standards for employment conditions in the Latin American region and ensure that shipowners are complying with their obligations to provide decent pay, working conditions and living conditions on board.

“Our goal is to increase our capacity to provide credible support to seafarers who request assistance in these countries and also to assist with organising and intelligence gathering for all ITF maritime campaigns,” Steve Trowsdale, ITF Inspectorate Coordinator, commented.

“Across Latin America seafarers and dockers have been subject to attacks on their rights to safe and decent work, we will mobilise this network to respond to any worker under threat. We’re committed to defending the rights of exploited international seafarers, protecting seafarers working in their domestic trade and dockers doing the heavy lifting on the shoreside,” he added.

Colombia

Exxon Mobil, Ecopetrol partner with Repsol for exploration offshore

Exxon Mobil and Ecopetrol have each signed 50-50 joint contracts with Spain’s Repsol to explore for oil in offshore blocks in the Caribbean. The two contracts will generate a combined $700M in investment.

XOM and Repsol will split participation in the COL-4 block, located ~60 miles north of Bolivar province. Repsol also will split the GUA-OFF-1 block north of La Guajira province, evenly with EC. The Spanish company will be the operator.

The contract for GUA-OFF-1 is the second new offshore deal EC has signed with the government this year and its fifth offshore block in the country.

Hocol gas discovery in Pozo Arrecife 1 ST

The Arrecife 1ST well proved the presence of gas in the Municipality of Pueblo Nuevo, Córdoba.

The Arrecife well is part of the Exploration and Production contract signed between HOCOL and the National Hydrocarbons Agency (ANH) VIM-8, where Hocol has a 100% interest.

HOCOL, a company of the Ecopetrol Group, announced a new gas discovery in the Arrecife-1STwell, located 70 kms south-east of Montería, in the department of Córdoba. The well was successfully drilled between August 20 and September 20, 2018. The well reached a final depth of 10,050 feet (3,020 meters) reaching the Upper Oro Ciénaga formation at a depth of 7,173 feet (2,186 meters).

The records and information taken during the drilling indicate that the well found sandstones with natural gas at several intervals of the Ciénaga de Oro Superior Formation of Miocene geological age. The presence of gas was checked by initial tests and is distributed in several intervals. During the initial tests, gas production took place between 3 and 10 MMCFD (millions of cubic feet per day), with very low condensate content and no formation water production.

Hocol is advancing the corresponding analyzes to determine the plan of extensive tests to be followed in the coming months.

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

Source: HOCOL

Colombia

Amerisur Resources announces final results for Y/E 31 December 2018

09 Apr 2019

Highlights:

Financial

• Strong financial performance in 2018 driven by production growth and higher oil prices, with netbacks of $43/bbl (average realised oil price of $64.8/bbl)
• Significant revenue growth of 28% to $108.2m (2017: $84.7m)
• Adjusted EBITDA increased by 72% to $34.0m (2017: $19.8m)
• Robust cash position of $44.1m* and zero debt (2017: $41.3m)
• Strong growth in operating profit to $11.0m (2017: $0.3m)
  …

Offshore E&P activities heat up across Latin America

04/01/2019

Guyana, Brazil leading the way
Jessica Stump, Assistant Editor
Operators have ramped up exploration and production activities across Latin America. The region’s offshore plays will account for one-third of the large prospects due to be drilled globally this year, according to analyst Wood Mackenzie. Potentially giant reservoirs offshore Brazil, Guyana, and Mexico will attract the highest investment.

Dr. Andrew Latham, vice president, Global Exploration at Wood Mackenzie, said: “We expect billion-barrel scale volumes from these emerging and newly-proven plays, as has been the case in the last couple of years.”

The Stabroek block offshore Guyana continues to deliver for Exxon Mobil Corp. and its partners Hess Corp. and CNOOC Ltd. Earlier this year, the partners made two more deepwater discoveries on the 10,348-sq mi (26,800-sq km) block, bringing the total number to 12 and the gross recoverable resource estimate to about 5.5 Bboe.

The Tilapia-1 well is the fourth discovery in the Turbot area that includes the Turbot, Longtail, and Pluma discoveries. Tilapia-1 encountered about 305 ft (93 m) of high-quality oil-bearing sandstone reservoir and was drilled by the drillship Noble Tom Madden to a depth of 18,786 ft (5,726 m) in 5,850 ft (1,783 m) of water. The well is about 3.4 mi (5.5 km) west of the Longtail-1 well.

“We see a lot of development potential in the Turbot area and continue to prioritize exploration of high-potential prospects here,” said Steve Greenlee, president of ExxonMobil Exploration Co. “We expect this area to progress to a major development hub providing substantial value to Guyana, our partners, and ExxonMobil.”

The other discovery was at the Haimara-1 well, which encountered about 207 ft (63 m) of high-quality, gas-condensate bearing sandstone reservoir. The well was drilled by the drillship Stena Carron to a depth of 18,289 ft (5,575 m) in 4,590 ft (1,399 m) of water. It is about 19 mi (31 km) east of the Pluma-1 discovery and is a potential new area for development.
ExxonMobil affiliate Esso Exploration and Production Guyana Ltd. is the operator and holds 45% interest in the block, Hess Guyana Exploration Ltd. holds 30% interest, and CNOOC Petroleum Guyana Ltd. holds 25% interest.

According to ExxonMobil, there is potential for at least five FPSOs on the Stabroek block producing more than 750,000 b/d of oil by 2025. The Liza Phase 1 development is progressing on schedule and is expected to begin producing up to 120,000 b/d of oil in early 1Q 2020, using the FPSO Liza Destiny. This summer the FPSO is due to depart Keppel Shipyard in Singapore and arrive in Guyana in 3Q.

Liza Phase 1 is about 118 mi (190 km) offshore in water depths of 4,921-6,234 ft (1,500-1,900 m). Pending government and regulatory approvals, ExxonMobil expected to sanction Liza Phase 2 in 1Q 2019. This phase will use a second FPSO, with start-up targeted in 2022. The company has contracted SBM Offshore to perform front-end engineering and design (FEED) for the FPSO. The second Liza FPSO design is based on SBM’s Fast4Ward concept, a newbuild, multi-purpose hull combined with various standardized topsides modules. It will be designed to produce 220,000 b/d of oil with associated gas treatment capacity of 400 MMcf/d and water injection of 250,000 b/d. It will be spread moored in a water depth of around 5,249 ft (1,600 m) and will be able to store around 2 MMbbl of crude oil.

LATIN AMERICA
Reserves
Remaining Reserves (Million bbl)	143,918
Production
Current Production levels	4,387
Liquids (kbbl/d)	3,087
Gas (kbbl/d)	1,300
Production platforms
# Producing fields Total	187
# Tie backs	28
# Floating production	47
# Fixed production	112
Drilling Rigs
# Floaters Demand 2019	24
# Jackups Demand 2019	5
Infrastrcture
# Active Wells	4,268
# Active XMTs	1,163
# Installed XMTs (2019)	46
Active SURF lines (km)	12,178
Field sanctioning 2019-2021
# Fields to be sanctioned	33
Subsea tie back	10
Floater	19
Fixed	4
Oilfield Service Purchases 2019 (MUSD)
Maintenance and Operations	11,122
Well Services and Commodities	1,974
Drilling Contractors	2,369
Subsea	3,608
EPCI	4,639
Seismic	640
Source: Rystad Energy UCube, DCube, WellCube

TechnipFMC won the contract to engineer the subsea system, which is expected to include 30 enhanced vertical deepwater trees and associated tooling, as well as eight manifolds and associated controls and tie-in equipment. ExxonMobil has contracted Saipem to perform detailed engineering, procurement, construction, and installation of the risers, flowlines, and associated structures and jumpers, and will also transport and install umbilicals, manifolds, and associated foundations for the production, and water and gas injection systems.

Sanctioning of a third development, Payara, is also expected in 2019, and startup is expected as early as 2023 through a 180,000-b/d capacity FPSO.

In 2018, Petrobras brought four new production systems online: the FPSOs P-74 and P-75 over the Búzios field in the presalt Santos basin; the FPSO P-69 at the Lula field in the same sector; and the FPSO Cidade de Campos dos Goytacazes over the Tartaruga Verde field in the post-salt Campos basin.

So far this year, Petrobras has brought online the P-76 and P-77, the third and fourth FPSOs installed over the Búzios field, as well as the FPSO P-67 in the Lula Norte area of the presalt Santos basin. According to company, the Lula field, covering the Lula and Cernambi reservoirs, is now the largest producer in Brazil and should eventually deliver 1 MMb/d this year. Commercial production started in October 2010.

As for the Mero 1 project in the presalt Santos basin, Petrobras has contracted Aker Solutions to provide a subsea production system and associated services. The equipment will comprise 12 vertical subsea trees tailored to Brazil’s presalt, four subsea distribution units, three topsides master control stations for the FPSO, and spare parts. In addition, Aker Solutions will provide installation and commissioning support services. Equipment deliveries are scheduled for 2020, with installations spread between 2020 and 2023.

The subsea production system will be hooked up to the FPSO Guanabara MV31, which is due to come onstream in 2021. MODEC is constructing the FPSO which is expected to have the capacity to process up to 180,000 b/d of oil and 12 MMcm/d of gas. TechnipFMC is responsible for all rigid lines and the infield riser and flowline system for interconnecting 13 wells (six producers and seven water alternate gas injectors) to the FPSO. It will also install rigid pipelines (including corrosion-resistant alloy and steel lazy wave risers), flexible risers and flowlines, steel tube umbilicals, and other subsea equipment.

Mero is in the northwestern part of the Libra block, 112 mi (180 km) south of Rio de Janeiro. A modified FPSO, the Pioneiro de Libra, produced first oil from the field in November 2017, under an extended test program. During the tests, the production well delivered 58,000 boe/d, which the company described as “a great result in ultra-deepwaters.” The other aims, all achieved, were to obtain high-quality data and reduce uncertainties over the reservoir, to allow accelerated deployment of up to four full-scale production systems on Libra in the next few years, each capable of producing up to 180,000 b/d of oil.

Petrobras’ partners in the Libra area are Shell, Total, CNPC, and CNOOC, with Pre-Sal Petróleo managing the production-sharing contract.

Offshore Mexico, Talos Energy has contracted McDermott to provide concept and engineering services for the Zama field development in block 7 of the Sureste basin. The scope includes concept selection and follow-on pre-front-end engineering design. McDermott will execute the program with io oil & gas consulting, the company’s joint venture with Baker Hughes, a GE company. Conceptual selection work has started and should be completed this summer.

Discovered in July 2017 in in a water depth of about 540 ft (165 m), Zama was the first exploration well drilled offshore Mexico by a private sector operator. Talos estimates recoverable resources at 400-800 MMboe.

Talos is the operator of block 7 with 35% participating interest. Its partners are Premier Oil (25% participating interest) and Sierra Oil & Gas (40% participating interest). They are targeting final investment decision in 2020 and first oil in 2022.

The semisubmersible Ensco 8503 is currently conducting the Zama discovery appraisal program, which consists of three reservoir penetrations, including two wells and one side track.

Late last year, Eni took the final investment decision to proceed with the $2-billion Area 1 development, which will feature an initial early production phase. This is due to start up in mid-2019 through a wellhead platform on the Miztón field, with production heading onshore through a 10-in. multi-phase line followed by treatment at an existing Pemex facility. Eni anticipates an early production plateau of 8,000 b/d; and full-field production is expected to start in early 2021 through an FPSO with a treatment capacity of 90,000 b/d. Two more platforms will be installed on the Amoca and Tecoalli fields. Area 1, located in the shallow waters of the Campeche Bay, is estimated to hold 2.1 Bboe in place (90% oil) in the Amoca, Miztón, and Tecoalli fields. According to the company, Area 1 oil output will eventually total 90,000 b/d and 65 MMcf/d from 2021.

In February, BP Trinidad and Tobago (BPTT) produced first gas from the Angelin development. Originally discovered by the El Diablo well in 1995, the field is 37 mi (60 km) off the southeast coast of Trinidad in a water depth of about 213 ft (65 m). Angelin includes four wells and a new platform with a production capacity of 600 MMscf/d. Gas flows from the platform to the existing Serrette hub via a new 13-mi (21-km) pipeline. This is the company’s first major project development supported by the application of ocean bottom cable seismic acquisition with advanced processing, allowing enhanced imaging of its reservoirs in the Columbus basin.

In 2018, BPTT sanctioned the Cassia Compression and Matapal gas developments, which are expected to come onstream in 2021 and 2022, respectively.

The Cassia Compression project will involve the construction of a new platform, Cassia C, the company’s 16th installation offshore Trinidad. The platform, located 35 mi (57 km) offshore southeast Trinidad, will have a throughput capacity of 1.2 bscf/d of gas. Gas production from the Greater Cassia Area will be routed to Cassia C for compression before being exported via the adjacent existing Cassia B platform. First gas from the facility is expected in 3Q 2021.

Under an EPC contract, McDermott will provide engineering, procurement, construction, hook-up, and commissioning of the 8,928-ton (8,100-metric ton) Cassia C topsides, a 3,747-ton (3,400-metric ton) jacket, and a 793-ton (720-metric ton) bridge to link Cassia C with the existing Cassia B platform that currently sits in 223 ft (68 m) of water. The scope also includes brownfield modifications at Cassia B.

The compression platform will be fabricated and constructed at McDermott’s fabrication facility in Altamira, Mexico. Trinidad Offshore Fabrication Co. will fabricate the jacket and the bridge landing frame.

The Matapal project will develop the gas resources discovered with the Savannah exploration well in 2017. The project will be a three-well subsea tieback to the existing Juniper platform. First gas from Matapal is expected in 2022.