Colombia

Hocol acquired Chevron’s stake in Chuchupa and Ballena fields  located in the department of La Guajira. The fields are operated by Chevron through the Guajira Association Contract(57% Ecopetrol and 43% Chevron). Under the terms of the agreement, Hocol will acquire Chevron’s stake and will take the position of operator. The transaction is subject to approval by the Superintendence of Industry and Commerce (SIC).

‘We are committed to continue generating value to the country and the environments where we operate, as well as contributing to the supply of gas for the Colombian north coast,’ said Rafael Guzmán, President and CEO of Hocol.

Source: Hocol

 

Amerisur Resources awarded Block PUT-36

Amerisur Resources, the oil and gas producer and explorer focused onshore Colombia, announced a portfolio update.

The ANH announced that as part of the Proceso Permanente de Asignacion de Areas 2019 roundAmerisur Resources was awarded Block PUT-36. The company holds a 100% working interest in the block that covers approx. 59,902 hectares and lies within the Putumayo basin, immediately north of the 50% owned Mecaya Block. The work commitments in the first phase (over 36 months) include acquisition of 3D seismic and two exploration wells with a minimum spend of $26m.

John Wardle, CEO of Amerisur Resources said:

‘We are pleased to secure acreage that expands our strategic position in the Putumayo Basin, onshore southern Colombia’.

Source: Amerisur Resources

Canacol  starts up LNG

Canacol Energy has begun production and sale of liquified natural gas (LNG), the first such operation in Colombia.

Canacol was also in negotiation with Galileo Technologies to form a joint venture which would install terminals at other locations in Colombia and supply end-user solutions with the objective to replace diesel, fuel oil, compressed natural gas, propane and other fuels with LNG.

Charle Gamba, president and CEO of Canacol, said: “Given the limited capacity of the gas pipeline infrastructure in Colombia, industrial, commercial, and residential consumers not located along existing pipeline routes currently use 145 MMscfpd of compressed natural gas and propane that is transported long distances via truck as an energy source.

“Compressed natural gas costs three times more to transport than LNG, resulting in the potential for significant cost savings for consumers who switch to LNG. With our joint venture partners Galileo providing the technology, our objective is to build other liquefaction terminals at other strategic sites in Colombia […].”

Canacol installed four natural gas liquefaction modules purchased from Galileo at its main gas processing facility in Jobo during the course of 2019. The modules are capable of converting 2.4 mmscfpd of gas into 29,000 gallons of LNG.

This LNG is being sold to a third party at the plant gate for distribution via trucks to their clients in Antioquia and Santander as far as 800 kilometers from Jobo.

Colombia currently consumes 65 MMscfpd of compressed natural gas and 80 MMscfpd of propane, with a significant amount of the propane being imported from the United States.

 

Colombia seeks $1 billion Ecopetrol dividend

BOGOTA (Bloomberg) – Colombia is seeking an additional payout of almost $1 billion from its oil company Ecopetrol S.A. as it faces increased spending pressure amid massive anti-government demonstrations.
The finance ministry called a meeting of shareholders to discuss its proposal for the company to distribute 3.7 trillion pesos ($1.1 billion) in a special dividend. Since the Colombian state owns 88.5% of the company, it can win any vote, and its share of the payment would total about $920 million.

President Ivan Duque pledged tax breaks for the poorest fifth of the population as part of a tax bill being discussed by lawmakers. The reform, which would replace a law overturned by a high court in Oct., needs to be approved by year-end in order for changes including corporate tax cuts to remain in place.

The government is trying to curb borrowing and defend the investment grade credit rating. It is on track to meet a fiscal target of 2.4% of gross domestic product this year, but next year is an open question, according to Alejandro Reyes of BBVA’s Colombia unit. “What the government has offered protesters has a fiscal cost,. “These funds from Ecopetrol are an insurance for what may happen next year. If the tax bill doesn’t pass or the government can’t sell state assets, it won’t find itself against the wall.”

The cash for the dividend will come from Ecopetrol’s occasional reserve, and won’t affect its financial sustainability. Ecopetrol shares jumped 1.4% to 3,265 pesos in Bogota trading, their highest level since April. The payout would be equivalent to 89 pesos per share.

“Ecopetrol has the financial capacity to make the payment,” given its strong balance sheet and cash flows, according to German Cristancho, head analyst at Corredores Davivienda brokerage.

Citigroup said that while they welcome the extraordinary dividend proposal, given Ecopetrol’s recent acquisitions in the U.S., Brazil and Colombia, the company might be near its leverage target. The finance ministry said it will use the funds for investment. The payment wouldn’t be an advance on the regular 2020 dividend. The payout is scheduled for Dec. 23 for minority shareholders and Dec. 26 for the government.

IMF – Colombia

: Technical Assistance Report-Reforming Energy Pricing

Energy Subsidy Reform is a key pillar of Colombia’s national development plan. Rising fiscal challenges in Colombia—which have been exacerbated by the adjustment costs associated with recent large migration flows from Venezuela—can risk derailing the government from their commitment to meet both its headline deficit target of 2.4 percent in 2019 and its structural deficit target by 2022, under the existing fiscal rule.

The government is committed to embark on a reform strategy that aims at safeguarding the fiscal framework. Energy subsidy reform is one element of the government’s strategy to address fiscal pressures. It is also consistent with efforts to enhance spending efficiency and free up additional fiscal resources for development needs, in line with the recommendations made by the expert commission on spending.

Series:Country Report No. 19/344

Subject:Energy prices Oil prices Producer prices

Purchasing power Social safety nets

GeoPark 2020 work program and investment

GeoPark, a leading independent Latin American oil and gas explorer, operator and consolidator with operations and growth platforms in Colombia, Peru, Argentina, Brazil, Chile and Ecuador, announced its work program and investment guidelines for 2020. (All figures are expressed in US Dollars).

2020 Work Program: Main Principles and Approach

Technical

• Increase oil and gas production and reserves
• Effective development and production growth in the Llanos 34 block (GeoPark operated, 45% WI)
• Define new plays, leads and prospects
• Initiate exploration studies in the recently acquired exploration acreage adjacent and nearby to GeoPark’s core Llanos 34 block, targeting to start drilling in 2021
• Initiate exploration drilling in the prolific Oriente basin in Ecuador
• Test oil prospects in the Tierra del Fuego blocks in Chile

Economic

• Allocate investment capital to best shareholder value-adding projects
• Capital expenditure program fully funded within cashflow
• Grow adjusted EBITDA and operating cashflow
• Develop and add new projects with break evens below $40-50/bbl oil price
• Ongoing cost reduction efforts to become lowest cost operator
• Maximize net present value per share for existing assets
• Continue returning value to shareholders through dividends and buybacks

Strategic

• Proven flexible program, adaptable to lower oil price scenarios
• Achieve scale
• Continue developing long-term strategy in the Marañon-Oriente-Putumayo petroleum system
• Testing high-potential unconventional projects
• Develop and grow strategic partnerships with Ecopetrol/Hocol and ONGC
• Continue strengthening ESG metrics with GeoPark’s proven internal SPEED program
• Promote innovation and the adoption of best practices across the portfolio

2020 Guidance ($60-65/bbl Brent)

The 2020 production guidance reflects 5-10% growth over 2019 average production and excludes potential production from the 2020 exploration drilling program.

The 2020 work program of $130-145 million includes drilling of 36+ gross wells, with approximately 75% of the total amount expected to be allocated to development capital and 25% to exploration activities.

Using the base case price assumption of $60-65/bbl Brent, GeoPark can execute a risk-balanced work program to continue growing its business by producing, developing and exploring its portfolio of assets, fully funded within cashflow, and maintaining a strong balance sheet.

The table below provides main highlights of the 2020 work  program:

• Production target: 5-10% increase over 2019 average production
• Capital expenditure program: $130-145 million fully funded by cashflow, to be allocated as follows:
  • Colombia – $110-115 million: Continue developing the Llanos 34 block and delineating new leads and prospects in the recently acquired blocks in the Llanos basin. The work program in Colombia includes:
    • • 30-32 development and appraisal wells and 1-2 exploration wells in the Llanos 34 block
      • One exploration well in the Llanos 32 block (GeoPark non-operated, 12.5% WI)
      • Seismic reprocessing and other preliminary activities in the Llanos 86,
      • Llanos 87 and Llanos 104 blocks (GeoPark operated, 50% WI)
      • Construction of additional facilities to support production growth and to continue optimizing operating and transportation costs. These activities include investments to evacuate production from the Tigana oil field using existing infrastructure connecting the Llanos 34 block to the Oleoducto de los Llanos (ODL) pipeline
    • Chile – $10-15 million: Focus on exploration drilling in the Flamenco (GeoPark operated, 100% WI), Isla Norte (GeoPark operated, 60% WI) and Campanario (GeoPark operated, 50% WI) blocks in Tierra del Fuego. The work program in Chile includes:
      • Four exploration wells with a focus on oil prospects
      • Continue testing high-potential unconventional projects including a large shale oil project in the Estratos con Favrella formation in the Fell block (220-600 mmboe potential)
    • Ecuador – $7-10 million: Initiate exploration activities in the Oriente basin. The work program in Ecuador includes:
      • One exploration well in the Perico block (GeoPark non-operated, 50% WI)
      • Seismic and other preliminary studies in the Espejo block (GeoPark operated, 50% WI)
    • Argentina – $2-5 million: Well intervention activities and facilities revamping in the Aguada Baguales, El Porvenir and Puesto Touquet blocks (GeoPark operated, 100% WI) in the Neuquen basin. Explore strategic opportunities within existing acreage position in the Vaca Muerta formation in the Aguada Baguales block
    • Brazil – $0.5-1.5 million: Maintenance works in the Manati gas field (GeoPark non-operated, 10% WI) plus testing activities for the recent Praia dos Castelhanos oil field discovery in the REC-T-128 block (GeoPark operated, 70% WI)
    • Peru – $0.5-1.5 million: Social and environmental activities in the Morona block (GeoPark operated, 75% WI)
      Work Program Flexible at Different Oil Price Scenarios

Consistent with the Company’s approach in prior years, GeoPark’s 2020 work program can be rapidly adapted to different oil price scenarios, which illustrates the high quality of its assets and strong financial performance in lower or volatile oil price environments.

Above $70/bbl Brent oil price: Capital expenditures can be expanded to $170-200 million – by adding incremental projects, targeting production growth of 10+%
Below $50/bbl Brent oil price: Capital expenditures can be reduced to $80-95 million – focusing on the lowest-risk projects that produce the fastest cashflow, and targeting 0-5% production growth compared to 2019.
GeoPark currently has commodity risk management contracts in place covering a portion of its production for 2020 with floors of $55/bbl Brent. GeoPark monitors market conditions on a continuous basis and may enter into new commodity risk management contracts to secure minimum oil prices for its 2020 production and beyond.

Source: GeoPark

Colombia bidders for second round

Country offered 59 blocks, including four new offshore tracts

 

IMF XVI Regional Conference on Central America,  Panama and the Dominican Republic

Central bank governors, finance ministers, and bank superintendents of Central America, Panama, and the Dominican Republic, and IMF officials met in Punta Cana on November 14-15 to review the regional economic outlook and discuss policy measures needed to tackle key structural issues facing the region. The Constitutional President of the Dominican Republic, Danilo Medina; the Governor of the Central Bank of the Dominican Republic and host of the conference, Héctor Valdez; and the Deputy Managing Director of the IMF, Mitsuhiro Furusawa, inaugurated the conference.

The following statement was released by the Director of the Western Hemisphere Department of the IMF, Alejandro Werner; the President of the Central American Monetary Council, Carlos Paredes; and Governor Héctor Valdez.

“Participants concurred that the global economy is now in a synchronized slowdown and acknowledged the downward revisions to global growth for 2019 to 3 percent, its slowest pace since the global financial crisis. Uncertainties—driven by trade, but also by Brexit and other geopolitical tensions—are holding back growth. Participants expressed concern that trade tensions could have a significant impact on the level of global growth. A modest improvement is projected in global growth to 3.4 percent in 2020. However, this recovery is not broad-based and remains precarious, as growth is also being weighed down by country-specific factors in several emerging market economies, and by structural forces, such as low productivity growth and aging in advanced economies.

“Mirroring global conditions, the outlook for Central America, Panama, and the Dominican Republic (CAPDR) is marked by increased uncertainty. Regional growth was revised downwards to 3.3 percent in 2019 (from 3.8 percent earlier this year), as growth momentum decelerated in the first half of 2019, reflecting the synchronized global slowdown and several idiosyncratic factors. Participants agreed that the key downside external risks to the outlook for CAPDR are a tightening of global financial conditions and a further escalation in global trade tensions. Moreover, since the region is highly integrated with the United States given trade and financial flows, CAPDR remains vulnerable to U.S. economic and political developments. In terms of policy responses, participants agreed on the importance of institutional strength and clear communication to legitimize envisaged reforms.

“Turning to the thematic sessions, participants tackled the impact of dollarization and policy implications. Several countries in the region have adopted or are transitioning towards inflation targeting, yet financial dollarization remains relatively high. Participants explored lessons from successful de-dollarization and monetary policy framework transitions, especially against the current backdrop of a synchronized global slowdown and policy uncertainty. Participants also debated the need for buffers to maintain financial and fiscal stability in fully dollarized economies. Participants concluded that a coherent policy mix could support economies in reducing partial financial dollarization and increase the effectiveness of monetary policy.

“In the second thematic session, participants looked at the efficiency of tax incentives from a multi-country perspective, especially in terms of promoting investment. Poorly targeted and inefficient tax incentives can lead to rent-seeking behavior, corruption, tax avoidance, distorting tax rates and a complex tax system that is difficult to administer. There was consensus among participants, however, that tax incentives have a role to play in attracting FDI that promotes innovation and technology transfer, R&D, high-quality employment, and the use of clean energy. For this to materialize, best practice in operating a system of tax incentives involves accountability and transparency, an emphasis on rules over discretion, and effective monitoring and evaluation. Participants agreed that despite demands for business tax incentives, more important drivers of investment decisions include: the availability and quality of workers; the legal and regulatory environment; infrastructure; and security and public safety.

“Finally, participants analyzed the role Fintech can play in facilitating cross-border transfers, especially remittances. Remittances are an important source of foreign currency income in the CAPDR region, exceeding tourism receipts and foreign direct investment in several countries. Alliances between traditional and Fintech players are helping develop cutting-edge initiatives to reduce the cost of remittances and improve their transparency, reliability and accessibility. In this regard, fintech solutions can promote financial inclusion. Participants highlighted the importance of a regulatory framework that favors the entry of new actors; the role of Fintech and regulation in facilitating “know your customer” requirements; enhancing interoperability; and appropriate risk management.

“Participants thanked the IMF for the support provided in the organization of the event and stressed the importance of maintaining a frank and fluid policy dialogue between the region and the IMF. Participants expressed their deep appreciation to the Dominican authorities for their hospitality and superb organization of the conference.”

IMF Communications Department
MEDIA RELATIONS
PRESS OFFICER: RAPHAEL ANSPACH

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

 

Dominican Republic

Apache wins block
The Dominican Republic concluded its inaugural licensing round by awarding Apache Corporation offshore block SP2, in the San Pedro de Macoris basin. The US company will be entitled to take a share of up to 60% in future production in a commercially viable project.

The Dominican Republic’s First Oil and Gas Licensing Round was concluded November 27 with the award to Apache Dominican Republic Corp, a subsidiary of Apache Corp, of the SP2 block offshore in the San Pedro de Macorís basin.

The other areas proposed by the MEM in this first round were declared void and will be available for the next round. The terms and conditions, as well as the Round 2 schedule will be published in the days following the conclusion of this first process. The areas to be auctioned in Round 2 will be the areas not assigned in Round 1 as well as those that are proposed by stakeholders and approved by the MEM within the process schedule of Round 2.

Round 2.              Source: Dominican Republic Licensing Round

Cuba

Largest Business Fair Opens as Economy Sinks

The Havana International Fair (FIHAV), Cuba’s largest multisector business fair, drew business leaders from over 55 countries as the island hopes to attract foreign investment amid difficult economic times. Delegates explored investment opportunities at Expocuba, located about 25 kilometers (some 16 miles) southeast of the capital The 37th FIHAV took place when Cuba is dealing with shortages of hard currencies and fuel and tougher trade sanctions imposed by the United States.

In his opening address, Foreign Trade and Foreign Investment Minister Rodrigo Malmierca used terms like “difficult situation” and “complex circumstances” to describe the economy. He thanked over 4,000 executives of foreign corporations, Cuban officials and other participants for having “confidence” in the island and taking an interest in the “potential” of the Cuban economy.
Cuba offers investors an opportunity to do business despite having “limited financial resources.”
Financial constraints “have caused delays” in paying suppliers – Spanish companies alone are owed some $333.8 million (300 million euros – but he promised that like last year, the government was “determined” to fulfill its obligations.
Cuba has been dealing with fuel shortages for over a month and the government implemented an emergency plan to prevent currency outflows and retain hard currencies. Malmierca blamed the economy’s problems on tougher financial and trade restrictions under President Donald Trump.

In the past year, Trump imposed a series of sanctions on Cuba, such as banning visits by cruise ships and allowing lawsuits to be filed over properties seized following the 1959 Cuban Revolution led by Fidel Castro.

In April, the Trump administration decided to activate Title III of the Helms-Burton Act, a 1996 law that tightened the long-standing US embargo on Cuba. Trump allowed waivers to Title III of Helms-Burton to expire in May as part of efforts to bring about political change on the Communist-ruled island.
Title III, which allows US citizens (mainly Cuban-Americans) and corporations to sue entities that have been “trafficking” in property that was seized by the Castro government on or after Jan. 1, 1959, had not gone into effect until May 2 due to rolling six-month waivers. That provision of Helms-Burton had not been enforced because Trump’s predecessors wanted to avoid a diplomatic outcry from foreign countries whose companies would be the target of lawsuits.

Malmierca told potential investors that the government would “guarantee” that their capital and properties in Cuba would not be affected by Washington’s actions.
President Miguel Diaz-Canel joined Malmierca and other high-level officials at the opening ceremony, but the head of state did not address the audience. Diaz-Canel also did not speak at the 2018 FIHAV.

 

IDB Facing Challenges of Complicated Latin American Economic Future

Dominican Republic – The Inter-American Development Bank   brought together prominent Western Hemisphere experts in digital identity and economic inclusion to discuss the challenges facing the economy of Latin America in those areas, the region having some of the worst near-term growth prospects, according to recent global forecasts.

Those efforts were analyzed at the Inter-American Microenterprise Forum (Foromic) with the aim of holding a broad discussion and finding solutions in three areas important for the region’s future: new finance, businesses in transformation and better lives.

“At Foromic, we’re focused on the great challenge … of inclusion, since we can no longer fail to recognize that our region nowadays is experiencing a rather complicated period,” said IDB president Luis Alberto Moreno at the inaugural session of Foromic 2019.

Moreno said that it is important to find solutions that “improve people’s lives” in the region in these “turbulent times” marked by the lack of equality in economic opportunities. “In recent months, we’ve observed social phenomena that are manifesting themselves in different ways in different countries, but with the same theme: the enormous frustration that millions of people feel with the economic and social system, which it not giving them opportunities equal to those enjoyed by the privileged classes.”

In the socio-political crisis in Chile , massive protests against inequality and the Sebastian Piñera government have resulted in some 20 deaths.
After citizen mobilizations over the current economic situation, Argentina and Ecuador have turned to multilateral institutions to rescue their weak economies and try to redirect their plans for the future.

Moreno warned that this type of situation could create “a huge social breakdown” in the region.
“Here is where a social breakdown begins to occur, and if we don’t correct it right away, difficult times will come. Reinventing inclusion at a forum like this could not be more timely and urgent.”

Host for the first day of the event, Dominican Finance Minister Donald Guerrero, emphasized the need for the countries of Latin America to develop plans for economic inclusion. “All the countries of the region have broad challenges in the areas of inclusion, which is understood to be each family and all people having the necessary resources and opportunities to be able to socially integrate themselves.”
To attain that objective, the IDB’s innovation laboratory – IDB Lab – has been working to create a network known as LACChain, which is a free blockchain platform for Latin America and the Caribbean, with en eye toward providing and guaranteeing security for Internet operations in the region.

“The objective of LACChain is to open up access to blockchain technology much more, with the idea that it can be an enormous facilitator for attaining objectives of social impact, such as improvements in financial and educational services and … in productivity,” the general manager of IDB Lab, Irene Arias, said. “We’re seeing such rapid growth that it’s already enabled us today to launch this initiative as something real, which a year ago was just an idea and now there are real cases, infrastructure, agreed-to standards and protocols and a plan for the future.”

Dozens of companies, like Oiko Credit and Triple Jump, presented their ideas for financial inclusion and opportunities for digital transformation in the event’s exposition section.

One of the representatives of Oiko Credit in Latin America, Karina Vasquez, told EFE that this global cooperation “is promoting sustainable development via investments in inclusive finances, agriculture and renewable energy with the objective of empowering people with low incomes.”

Foromic is an annual event organized by the IDB Group. It focuses on reinventing inclusion with creative initiatives – based on digital solutions and new business models – that have the potential to improve lives. The event provides a unique opportunity to learn about new trends, develop connections and do business in the field of inclusion.

 

IDB – Lower trade barriers for growth

Trade liberalization did not turn out to be the silver bullet that put us in the same growth leagues as some Asian economies,” said IDB Chief Economist Eric Parrado
Latin America and Caribbean region saw faster economic and wage growth thanks to a lowering of trade barriers, a new report by the Inter-American Development Bank shows. The study also provides policy recommendations to ensure the region is better positioned to take advantage of trade liberalization and make its benefits more tangible to citizens.

The average tariff cut of 56 per cent that took place in the region between 1990 and 2010 accelerated the region’s average annual per capita GDP growth by 0.6 percentage points. While the results are positive, the region harbors skepticism on the benefits of more openness, in part because initial expectations were so high, according to ‘Trading Promises for Results: What Global Integration Can do for Latin America and the Caribbean’.

“Trade liberalization did not turn out to be the silver bullet that put us in the same growth leagues as some top performing Asian economies,” said IDB Chief Economist Eric Parrado. “However, trade has clearly been a positive contribution for the region’s wellbeing and development, and we should resist temptations to return to our closed economic policies of decades past.”

Edited by IDB researchers Ernesto Stein and Mauricio Moreira, Trading Promises for Results is part of the annual Development in the Americas (DIA) flagship research publications series that provides analysis and advice to policymakers on key development topics.

The report also examined the level of support for free trade. Latin Americans back more trade by big margins though support drops sharply when presented with information emphasizing negative consequences such as job losses in vulnerable sectors. The IDB commissioned Latinobarometro to undertake a survey and carry out an experiment to better understand how framing affects perceptions about trade.

Almost three out of every four of those surveyed said they favored increasing trade with other countries, with support running highest in Venezuela, Honduras and Uruguay.

While liberalization is positive for the economy, it does have winners and losers, with special interest groups linked to import competing sectors often blocking trade reforms. The report provides an in-depth look at trade policymaking processes in the region, and the type of institutional architecture that is more likely to lead to good policy outcomes.

To make the most of the opportunities afforded by globalization while mitigating risks, governments need to look beyond the traditional agenda of trade agreements, trade facilitation and foreign investment attraction. Policymakers should work on ensuring labor markets are not only more flexible but also provide help for those who lose out to trade to transition to competitive firms and sectors. Policies should be consistent with global integration rather than bolster uncompetitive sectors and firms, and governments should seek successful strategies in sectors such as modern agriculture and services-two sectors with considerable technological progress in which the region has comparative advantages – and not just in manufacturing.

“We are moving into a world where competitiveness is determined not just by tariffs but by overcoming regulatory, logistics and information costs, as well as by incorporating new technologies,” said Fabrizio Opertti, manager of the Trade and Integration Sector in the IDB. “We are confident that governments can move into these new frontiers in order to facilitate access to more affordable goods and services, as well as to create new economic opportunities and well-being for more citizens.”

 

Repsol looks to Alberta to replace Mexican and Venezuelan oil

CALGARY (Bloomberg) – Repsol SA is looking to Western Canada for oil for its European refineries amid dwindling supplies from Mexico and Venezuela.

The Spanish oil company is considering using rail to transport as much as 500,000 bbl of heavy crude a month 1,911 miles (3,075 kilometers) from Alberta to Montreal before loading it onto tankers bound for Europe. The company has also considered shipping the crude to New Jersey for shipment to Europe.

The European company has typically sourced heavy crude supplies from Latin America, particularly Mexico and Venezuela. t U.S. sanctions and civil strife, crippled Venezuela’s oil production, which has fallen to less than 700,000 bpd from more than 2 MMbpd four years ago. Mexico’s oil production has fallen for 14 straight years to 1.83 MMbpd in 2018. That left Repsol looking for alternatives.

Repsol’s European refineries hold about 25% of the continent’s coking capacity. Coking units allow refineries to process heavier crude, which is typically cheaper than lighter oil, into high-value fuels such as gasoline and diesel.

Landlocked Alberta ships nearly all of its crude oil to the U.S. by pipeline or rail. The Trans Mountain pipeline to the Pacific Coast allows a fraction to be shipped to Asia. The long distance to market has kept Canadian heavy crude selling for less than West Texas Intermediate futures. The discount was more than $20/bbl.

Shipments of oil sands crude to Europe are rare. Repsol occasionally gets heavy Canadian crude via U.S. Gulf ports, where Canadian oil competes with U.S. crude for sea berths and space on pipelines.

About 400,000 bbl of Alberta crude were sent to the UK last year, the first significant shipment to Europe since 2014, when a tanker of Alberta crude left a terminal near Montreal for shipment to Italy, according to the Canadian International Merchandise Trade database.

Repsol produces conventional heavy crude in west-central Alberta at its Chauvin field.

 

Venezuela using ‘dark ships’ to secretly export oil

(Bloomberg) – The Dragon, a massive oil tanker flying the Liberian flag, is supposed to be floating somewhere off the coast of France, according to its last GPS signal.

Instead, it is in Venezuela where, under contract for the Russian state-oil giant Rosneft Oil Co PJSC, it loaded 2 MMbbl of oil, according to data compiled by Bloomberg and shipping reports. The ship’s transponders were turned off before it entered Venezuelan waters, the data shows.

The practice of oil tankers turning off their location signals has increased in the past month, according to shipping data, after the U.S. pursued a Chinese-owned shipping company it said was moving crude for sanctioned Iran. The U.S. aims to squeeze the government in Venezuela by starving it of oil revenue. More tankers appear to be using the technique to avoid penalties, giving a boost to Venezuelan crude output that has plummeted since the U.S. imposed sanctions.

Venezuela loaded 10.86 MMbbl of crude oil in the first 11 days of November, more than double the volume in the same period last month. About half of those barrels were loaded onto ships that turned off their transponders, which later delivered cargoes to China and India, data by Bloomberg show.

Dynacom Tankers Management Ltd., manager for the Dragon, said that “since January 2019 none of the vessels under our management ever entered into any contract with any U.S. sanctioned entity, nor have they ever violated any U.S sanction either related to Venezuela or otherwise.” The company didn’t comment on why the signal for the Dragon was off for three weeks or confirm if the vessel was docked in the South American country.

Rosneft said that it and its subsidiary RTSA “didn’t charter vessels in this logistic chain.” Its operations involving Venezuela “are based on contracts reached long before sanctions and fully comply with all the rules of international law.” The statement didn’t specifically address the use of transponders.

Transponders, known as Automatic Identification Systems, can go offline, but are typically not out for long. The practice of hiding ships carrying oil can be done for competitive purposes or for other reasons. Iran, another OPEC member sanctioned by the U.S. government, also uses dark ships to export its oil.

The U.S. targeted Chinese oil-importers and shippers such as Zhuhai Zhenrong Co. and a unit of COSCO Shipping Corp. for allegedly handling Iranian crude. Zhuhai and COSCO routinely operate their vessels with the signal turned on, ship-tracking data shows.

Venezuelan oil production — crippled by U.S. sanctions that limited its buyers and curtailed access to oil tankers — slumped to a fresh 16-year low of 644,000 bpd in September, halting funds needed by the Maduro regime. Unsold oil filled storage tanks and vessels, forcing operators to shut-in production at oil-producing frontier Faja.

Earlier this year Venezuela masked deliveries to Cuba by renaming sanctioned vessels and turning off the satellite tracking system, according to shipping data. The Trump administration wants to cut off the supply of oil to the OPEC country because it helps to pay for intelligence, defense and security assistance to Maduro, the U.S. Treasury Department said.

Going dark became more common after companies including Unipec, the trading arm of China’s state-owned oil giant Sinopec, banned the use of oil tankers that operated in Venezuelan ports over the previous 12 months. While Unipec made an official addendum to its charter contracts, others informally avoid ships that have Venezuela as the last port of call.

Demand for Venezuelan oil ticked up this month as state oil company Petroleos de Venezuela SA won back customers, including the Indian refiner Reliance Industries Ltd. Tipco Asphalt Public Co. Ltd., a refiner from Thailand, is also lifting Venezuelan oil in November after a two-month absence.

The Bolivar

Venezuela’s currency, the bolivar, has depreciated by 97.36 percent so far in 2019. The bolivar stood at 24,228.33 bolivars per dollar, compared to 638.18 bolivars to the US currency on Jan. 2, according to the Central Bank of Venezuela (BCV).

For the second time in two weeks, the price of the dollar drew close to the 25,000 bolivars, although on Oct. 30, after closing at 24,415.07 local units, it fell to 22,493.91 local units.
As a result the government’s minimum wage was set at $6.19 per month, which implies that the income of three million public employees and five million pensioners was below $1.25 per day. According to the United Nations, those living on below $1.25 a day are believed to be living in extreme poverty.

Venezuela’s income has been affected by the contraction of oil production, its main source of revenue. A control on the foreign currency exchange rate had been in place since 2003, but since May, the government led by President Maduro has allowed some flexibilization in an attempt to secure currency for the public coffers, affected by decline in oil production, its main source of income.

However, many people continue to patronize the black market to trade their currencies; on the unofficial market, the dollar is usually traded above the BCV rates. The dollar was traded at above 25,000 bolivars on the black market.
In the midst of Venezuela’s economic crisis, the dollar has become the preferred currency for small traders, service providers and individuals, either through cash payment or electronic transfers.

According to a study by the Venezuelan firm Ecoanalitica “53.8 percent of transactions in the country are made with foreign currency,” a marked increase from the 40 percent recorded in April.

The price of the dollar against the bolivar increased by 6,381,800 times in 2018, from the 10 bolivars per unit in the official market in January to 638.18 – or 63,818,000 before the currency reconversion that wiped off five zeros from the local currency – at the end of that year.

5TH GECF Summit Launches Declaration of Malabo

30-Nov-2019

https://africaoilandpower.com/2019/11/29/5th-gecf-…

The Declaration of Malabo was published as the outcome of the Gas Exporting Countries Forum (GECF) 5th Heads of State Summit on Friday.
The declaration was presented by H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea, and H.E. Yury Senturyin, Secretary-General of the GECF.
The Declaration outlines the way in which GECF member countries can cooperate to secure a long-term and sustainable energy transition.
Malabo, Equatorial Guinea, November 29, 2019 – The official Declaration of Malabo was submitted as the result of the Gas Exporting Countries Forum (GECF) 5th Heads of State Summit held in Malabo (November 26-29).

Drafted during a week of Ministerial and High-Level Ad Hoc Working Group meetings, the document reaffirms the importance of retaining sovereign rights of member countries over natural gas resources; securing an energy transition and meeting sustainable development goals; attracting investment to gas infrastructure projects; fostering coordination among GECF member countries; and establishing pricing mechanisms, among other key objectives.

“One of the positions of the GECF is to specifically designate the terms and conditions of the contracts between producers and consumers. Our community insists that pricing connected to oil indexation should serve in favor of our member countries,” said H.E. Yury Sentyurin. “Producers need to have a reliable flow of revenue to be able to ensure investment. With the connection between pricing and indexation, we try to ensure comfortable conditions for producers to ensure that their projects are implemented.”

The 5th Heads of State Summit represents the first time that the event was held on the African continent, reflecting increased efforts to attract African gas-producing countries to the organization.

“Mozambique and Tanzania have huge gas discoveries…So many African countries have their own resources and .. need to learn to manage them by themselves,” said Minister Lima. “The objective of this summit is to attract more African countries. This increases our numbers. The future is gas.”

The Declaration of Malabo builds on existing frameworks for cooperation outlined by declarations of GECF Summits in Qatar (2011), Russia (2013), Iran (2015) and , Bolivia (2017).

 

Lord Browne: Engage on climate or face regulation

Former BP CEO calls on oil & gas industry to start constructive dialogue with governments over environmental concerns—or risk misguided and ineffective legislation
The rise of environmental concerns in mainstream political debate could result in governments passing legislation that may be “extreme” and “not thought through”,

Lord Browne, executive chairman of Russian oil investment vehicle L1 Energy and a former CEO of BP., told a meeting on the fringes of the Adipec conference in Abu Dhabi. The industry must do more to engage with governments and environmentalists to understand their concerns and propose effective solutions based on science, . “The industry has to understand that it has a clear obligation to plan things in an engineering way, and an economic way. We have a clear obligation to listen very carefully...”

 

New York Vs. Exxon

( STOP PRESS – See Page GUYANA 3 for latest )

New York (December 6, 2019, 2:02 PM EST) — A New York state court judge told Exxon and the New York attorney general Friday that he would rule within days on both the investor fraud claims against the energy giant and a bid to punish the government for dropping claims during closings.

(Bloomberg) –It’s rare for a current or former leader of one of the world’s largest energy producers to testify under oath about climate change. The New York courtroom was packed to see ex-Exxon Mobil Corp. CEO Rex Tillerson take the witness stand and explain that the company knew for years how it was a significant threat to the world.

T. Rex , the most high-profile witness said “We knew… it was a real issue…. a serious issue … one that’s going to be with us now, forevermore, and it’s not something that was just suddenly going to disappear off of our concern list because it is going to be with us for certainly well beyond my lifetime.”

Tillerson, who resigned in 2016 to become President Donald Trump’s first Secretary of State, was testifying in a trial over a securities fraud lawsuit by the New York attorney general. The state alleges Exxon intentionally misled investors about the way the company accounted for the financial risk of climate change. Tillerson rejected the claim, but took the opportunity to weigh in on the existential threat of global warming.

During 3 1/2 hours of testimony, he cast Exxon in a favorable light, in contrast to claims by environmentalists and some government officials that the company helped trigger climate change and exacerbated the crisis by hiding it from the public.

Tillerson didn’t deny Exxon’s role in creating the problem — which wasn’t what the trial was about — but in his nuanced view, the company had done its best to address the issue once it became apparent. There may be plenty of blame to share, given that Exxon was providing products demanded by society. Humanity has a hard time making changes to address the impacts of climate change because of the world’s never-ending demand for economic development and improved standards of living, which is tied directly to fossil fuels.

‘Keep Growing’. “If the economies are going to continue to not just perform, but grow, if people are going to continue to want to improve their quality of life, sustain their quality of life, they’re going to have to have energy, a lot of it, and the demand is going to keep growing. So there’s this natural tension” between that desire for growth and fixing climate change, “and that’s really the challenge that policymakers and legislators are confronted with.”

One example of that challenge may be in, Canada, where Exxon has multibillion dollar oil sands projects. It may not be unrealistic to assume that those projects will operate for decades without an increase in provincial taxes on greenhouse gas emissions.

“We have been through many changes in Alberta provincial government. What I do know is the Alberta government doesn’t want to put the oil sands out of business. It’s important to them from a jobs, economic, tax revenue. And they always — in Alberta, the industry has always had a very kind of healthy dialogue with them, and they listened.”

The Alberta projects were part of the case brought by New York, which claimed Exxon was deceiving investors by predicting the province’s tax on greenhouse gas would remain steady, even as the company predicted rising levies on other projects through 2040.

Estimating Cost. The longtime oil baron was also asked to explain why Exxon put in place proxy costs for carbon to estimate demand and greenhouse gas costs for expenses when it wasn’t required to do so. (Those costs are at the center of the New York lawsuit. The state claims they were a sham.)

“We would have been irresponsible in our positions if we didn’t think about the strategic implications of this. But such costs weren’t the same everywhere Exxon operates, .“It may be emissions are so de minimis that they’re inconsequential, or you may be in a business environment where the government is just not likely to do anything, You know, if you’re in a third-world developing country.”

When he was CEO, the company had sought to promote the idea of a carbon tax to help ease society off fossil fuels.

“We had watched the European emission-trading system evolve and, in fact, we were a participant in it because of our operations there. We had to be part of the trading system, and we saw a number of flaws with that system. In fact, if you look at what it has accomplished over its existence, it never has accomplished what it was intended to do. It hasn’t reduced any emissions. We looked at what are other alternative mechanisms to influence people’s choices. And we felt a carbon tax was the most simplistic. It is transparent. You can’t game a carbon tax.”

New York struggles to show Exxon misled investors

New York rested its securities-fraud case against Exxon Mobil after nine days of trial testimony without appearing to produce any definitive evidence that the company intentionally misled investors about how it accounted for climate-change risks. Exxon called employees, accountants and experts to the stand to stave off claims that it lied to the public about the way it plans for future climate regulations. During the trial, climate protesters picketed outside the Manhattan courthouse, outnumbered by police. Signs reading #ExxonKnew with variations on claims the company lied about climate change are not what the case is about.

It hinges on Exxon’s use of a “proxy cost” for carbon to account for decreasing demand for fossil fuels and a separate greenhouse gas (GHG) cost applied to specific project proposals based on local taxes. New York claims Exxon publicized a conservative proxy cost as high as $80 per ton by 2040 to appease investors while secretly using a lower GHG cost to analyze its carbon-intensive oil sands projects and other investment opportunities. Exxon says the state is trying to show a false discrepancy by conflating two carbon metrics that serve different purposes.

New York Justice Barry Ostrage will decide the case without a jury. He showed impatience with the state, calling the questioning of a witness repetitive and “agonizing.” He could still find that New York prevailed, even without hard evidence of an intentional scheme, since intent isn’t required to show a violation of its powerful Martin Act.

Richard Auter, a director at PricewaterhouseCoopers who performed audits of Exxon for 13 years, was the energy producer’s first witness. Auter testified that he wasn’t aware of any attempt by Exxon to conceal or manipulate the two costs. He also said proxy costs don’t have a material impact on Exxon’s financial health and aren’t required by law. “They were part of management’s planning and budgeting process, but they do not reflect real costs in many situations.”

New York’s attorney general alleges that Exxon and Rex Tillerson intentionally crafted a scheme to defraud investors. But no hard evidence of such a plan was presented at trial. Instead, the state showed internal documents demonstrating a few instances of potential confusion about the higher proxy cost and the lower GHG cost, and whether they were supposed to be the same.Auter admitted he accidentally used the two costs interchangeably himself for an internal memo in 2017 that was part of PwC’s audit workpapers.

“You used them interchangeably after two separate conversations with Guy Powell” on the topic, said Jonathan Zweig, a lawyer for New York, referring to Exxon’s corporate greenhouse gas manager. “That is correct,” Auter said. He said he “did not appreciate the distinction” until later.

In 2016, Exxon had tried unsuccessfully to block PwC’s audit documents from being admitted as evidence by arguing that its communications with its accountant were protected as confidential under the law. New York presented documents that Exxon prepared for activist investors in 2014 that the state claims were used to falsely suggest the company was using the higher proxy cost to analyze investment decisions. Its two expert witnesses claimed, among other things, that one of Exxon’s assets would have been impaired if the company had used the proper GHG cost.

Exxon calls New York climate case a ‘joke’ on last day of trial

NEW YORK (Bloomberg) – A lawyer for Exxon Mobil said New York’s fraud lawsuit against the oil giant was a “joke” and that the state falsely accused engineers and scientists of cooking up a scheme to mislead investors about the financial risks of climate change.

“It’s a cruel joke, your honor, because the reputations of a lot of good people have been disparaged by the bringing of this complaint,” attorney Theodore Wells told the judge during his closing statement after a trial that spanned three weeks.

New York sued , Texas-based Exxon in 2018 after a three-year probe, claiming it found evidence that the company sought to trick investors into thinking the company was planning properly for a low-carbon future and inflating its stock by as much as $1.6 billion starting in 2014.

Wells said the state failed to prove Exxon made a material misstatement when it revealed to activist investors in 2014 that it was using a “proxy cost” to account for the future impact of climate change on the business. New York failed to prove the claims led to a drop in the company’s stock,

“There was “no impact on the price of the company’s stock. What that shows is that nothing happened and that nobody cared. And the reason nobody cared is because nothing happened.”

Among witnesses were activist investors who accused Exxon of misleading them, employees who defended the company’s practices and expert witnesses who dueled over whether the allegations had any impact on the company’s shares. The case hinges on whether Exxon’s proxy cost — meant to account for the expected decrease in demand for fossil fuels — was supposed to be the same as another internal metric Exxon used, a greenhouse gas (GHG) cost applied to specific project proposals based on existing local taxes. Exxon says the state is trying to show a false discrepancy by conflating two carbon metrics that serve different purposes.

A lawyer for New York Attorney General gave the state’s closing statement but the closing arguments were narrower than it once hoped they would be and it dropped two claims that Exxon Mobil intentionally misled investors, causing “a stir,”

Exxon filed a motion asking Judge Barry Ostrager to force the AG to clear Exxon of intending to defraud investors. Both sides will appear before Ostrager on Dec. 6..

After over three years of investigation, during which ExxonMobil turned over four million pages of documents, the New York Attorney General’s office settled on bringing charges against ExxonMobil, unrelated to what the company knew about climate change but obscure questions around ExxonMobil’s economic modeling and accounting practices, under New York’s controversial Martin Act statute.

ExxonMobil continues to take action through research into technological innovation and by participating in constructive dialogue on policy options. It “pioneered research in advanced carbon capture and storage, cogeneration, methane emissions reduction and algae-based biofuels, all with a goal of reducing greenhouse gas emissions. ExxonMobil supports a revenue-neutral tax on carbon and urged the United States to remain in the Paris Climate Agreement. These actions demonstrate commitment to reducing the risks of climate change by the company with the largest and most diverse resource base in the industry,” with 92 billion barrels of elemental materials under its control — 25 billion in proven reserves, 28 billion in the design or development stage and 39 billion in the evaluation stage.

 

US Debt Exceeds $23 Trillion for First Time in History

WASHINGTON – The United States government’s public debt has surpassed $23 trillion for the first time in history, according to data released by the Department of Treasury. As on Oct. 31, 2019, the total public debt stood at over $23 trilliont.

The national debt has grown by about 16 percent since President Donald Trump came to power in January 2017 when it stood at $19.9 trillion. T US debt exceeded $22 trillion for the first time 10 months ago.

The State Department said the US budget deficit had skyrocketed 26 percent this fiscal, just under $1 trillion, at $984 billion, the highest in seven years. The fiscal imbalance as a percentage of gross domestic product (GDP) increased from 3.8 percent in 2018 to 4.6 percent this year.
In 2017, the budgetary imbalance was $666,000 million, and last year it amounted to $779,000 million.
During the election campaign, the president had repeatedly criticized the fiscal deficit during his predecessor, Barack Obama’s administration.
However, after the first three years of Trump’s term, the US deficit has already risen by almost 50 percent.