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Vol. 224 No. 10 |
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| MAYRA RODRÍGUEZ VALLADARES, CONTRIBUTING EDITOR, SOUTH AMERICA |
Politics plague Venezuelan E&P. Local businessmen accuse President Hugo Chávez of retaliating against companies and individuals at PDVSA who participated in last year’s strikes. Reportedly, PDVSA is denying new contracts to these firms and refusing to extend existing deals. PDVSA even denied its own gas compressor company, Energy Dynamics de Venezuela, contracts during August.
Political uncertainty has not deterred investors from the gas sector. Local firm Vinncler and 12 multinationals have agreed to bid on developing Blocks 3 and 5 of the offshore Deltana Platform. The energy ministry will set each block’s base amount and then issue licenses to the highest bidders.
After a feasibility study is completed next month, PDVSA hopes to sign a 35-year venture with Mitsubishi and Shell by the end of November for the $2.7-billion Mariscal Sucre LNG project. PDVSA holds 60% of a preliminary development pact that each firm signed at the end of 2002. PDVSA plans to sell 9% of its stake to Qatar Petroleum, which has substantial LNG experience. The project should produce up to 5.0 million t of LNG annually, all of which will be exported to the US.
Ecuador re-opens bidding. After a half-year transition, President Lucio Gutierrez’s regime is ready to re-open bidding on four blocks in southwestern Ecuador. According to local media, bidding rules have been published; bids will be accepted until Nov. 21. The tracts are Blocks 39 and 40 in the Gulf of Guayaquil, and onshore Blocks 4 and 5 in Guayas province. They may hold combined reserves of 270 million bbl of light crude. Additionally, Oriente basin Blocks 20 and 29 may go on sale later this year, having been withdrawn from the Ninth Round in 2002.
Officials also plan to auction marginal fields. Petroecuador’s Special Concessions Committee has approved “pre-concessions” for five fields. An ongoing dispute remains with foreign operators about whether the government will pay $200 million in sales tax (IVA) refunds. At press time, officials hoped to resolve the problem shortly.
To revitalize E&P, Gutierrez signed a decree appointing the Central Bank president and the Minister of Finance to a committee that advises him on how to boost crude output and attract foreign investors. Ecuador needs to increase production in tandem with this year’s opening of the new, 450,000-bpd, OCP heavy oil pipeline. OCP will more than double transport capacity to 850,000 bopd. Officials estimate that an average oil price of just $18/bbl could generate 17% of Ecuador’s budget. Thus far, however, Gutierrez’s few steps taken to attract private funds have not succeeded.
Despite economy, Argentine investments remain. Officials are very concerned about Argentina’s oil production. Output has grown slightly in the last few months, but cumulative production remains well below last year’s level. President Nestor Kirchner welcomes investment but will not allow foreign firms to become too influential.
Nonetheless, good attendance is expected at the Argentina Oil and Gas Show in Buenos Aires on Oct. 6 – 10. Despite the economic crisis that began in 2002, important E&P projects are still on track. Repsol-YPF will invest $800 million this year. Also, the firm will export gas and other products to Brazil.
Petrobrás still plans to invest $133 million up to year 2005 in assets it obtained in a swap with Repsol-YPF in 2001. Moreover, it recently announced a $1 billion-plus acquisition of Perez Companc/Pecom Energia. Pan American Energy reportedly plans to invest $300 million to $400 million in its oil fields and gas plants in Chubut and Neuquen provinces, and offshore oil fields in Cuenca Austral (with Total).
Brazil looks outside. Brazil’s oil industry hopes to participate in Mexican tenders. National organization ONIP met with Pemex last month to examine investment opportunities. Brazil would capitalize on Pemex plans to invest about $15 billion annually for the next eight years across the entire hydrocarbon sector.
ONIP has been very focused on working with the Brazilian and Mexican governments to create a bilateral free trade agreement for oil and gas. An appetite for foreign ventures is seen in Petrobrás’ intention to increase investments outside Brazil to $5.1 billion by 2007 from $800 million in 2003.
In August, Petrobrás returned to the National Petroleum Agency (ANP) six of 22 blocks that were awarded during the Zero Round in 1998. Petrobrás had found oil in 16 of the blocks. Per the hopes of some foreign operators that these tracts would be re-tendered, ANP opened up bidding in mid-August. Yet, only 11 independent, mid-sized companies participated, and most multinationals did not. Overall, the majors say that Brazil’s acreage is less appealing than other regions. Additionally, the mid-August round was less interesting because of the powerful environmental lobby, taxes and the implications of Petrobrás as the predominant upstream player.
Peruvian work set for Camisea. A Pluspetrol-led group will invest about $650 million on four producing wells and two injectors in the San Martin and Cashiriari structures by the time the giant Camisea gas project goes onstream next August. Potentially, the wells could produce about 30 MMcfgd, each, for 30 years. Pluspetrol had a serious setback recently, when the US Export-Import Bank failed to approve a $200-million loan. However, most of the project’s equipment is already in Peru and being paid for in installments.
Fortunately, the Inter-American Developement Bank approved $135 million in financing for Camisea early last month. Meanwhile, environmentalists want to halt the project. Market observers consider this battle a litmus test for other large Latin American projects.
President Alejandro Toledo vetoed a congressional bill that would have restricted Petroperu’s privatization. The bill has gone back to Congress, which may draft a new version or incorporate Toledo’s comments. The president is attempting to attract private investment to stem a production decline. In first-half 2003, Peruvian oil output fell to 93,500 bpd, or 4.3% lower than first-half 2002. 
Mayra Rodríguez Valladares is president of New York-based MRV Associates Inc. (www.MRVAssociates.com). She is a regular contributor to this column.
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