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Saturday, January 9, 2010
Today's News Headlines
* Experts doubt CNH ability to oblige gas flaring reductions - Mexico
* Cosan loses BNDES financing after slave work scandal - Brazil
* Pemex extends Hercules 205 jackup contract through February - Mexico
* Petroamerica farms in on Balay block - Colombia
* Roundup: Biofuels, fuel use, gas exports, environmental planning - Regional
* CAF greenlights US$65mn for Maple ethanol, biomass project - Peru
* Petroindustrial launches bidding to study Shushufindi revamp - Ecuador
* Norse natural gas production at Manati field up 7% - Brazil
* Cosan to start construction at ethanol terminal in 1H10 - Brazil
* Teresina subway trains to run on biodiesel - Brazil
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* Experts doubt CNH ability to oblige gas flaring reductions - Mexico
Pemex watchers are not convinced that Mexico's upstream watchdog CNH will be able to successfully oblige the state oil company to comply with its natural gas flaring reduction requirements published in November.
CNH, which was established under the energy reform passed in May 2008, published regulations that require Pemex to reduce natural gas flaring to 2% of production by 2012 from the current level of some 17%. Natural gas flaring should be further reduced to 0.6% by 2024.
Pemex's E&P subsidiary PEP produced 6.99Bf3/d (197Mm3/d) of natural gas in November. Pemex has been saying for years that it will reduce flaring, but progress has been marginal.
"People at [energy ministry] Sener say they can make Pemex comply, and that Pemex has to comply. That's like saying you have to comply with producing so much oil. If [Pemex] doesn't do it, they just say, 'We couldn't do it. Sorry,'" independent energy analyst David Shields told BNamericas.
"I don't think this can be enforced," Shields added.
In 2008, Pemex flared natural gas worth 40bn pesos (US$3.13bn), Sener said previously.
Pemex's flaring problems stem from the production of nitrogen-rich associated gas in the northeast marine basin - primarily the prolific Cantarell field - that exceeds processing capacity. The high nitrogen content results from the gas injections conducted over past years in an attempt to keep oil production levels up at Cantarell, which is in its phase of natural decline.
"Mexico is the land of great bureaucrats and great bureaucratic processes. To say we're going to do anything in Cantarell requires someone to approve the budget," Houston-based consultant George Baker told BNamericas.
"The budgetary process starts in PEP itself. It goes to the finance ministry, and then it goes to congress. Are the wishes of the commission going to be respected through this entire process? It would be nice if they would," Baker said.
The objective of the new CNH regulation is for Pemex to re-inject the flared gas to boost well pressure and increase oil production, Sener said previously.
"[CNH] has a platform to argue for better efficiency and they're doing it, and that's all for the good. That's not exactly a promise that what they're doing will be institutionally incorporated," Baker said.
The regulator's mandate is still largely unproven. However, when one of its members sparked controversy with comments regarding the disappointing results of Pemex's Chicontepec field, it raised the question of whether Pemex may finally be facing real oversight that is long overdue.
"I don't think most people have great expectations for CNH, and CNH is going to try hard to prove us wrong. If Pemex does not comply with certain things, such as this, that will probably confirm our expectations rather than make us lose faith in CNH," Shields said.
"The starting point is that we don't have that much faith in CNH, but we'll see what happens," Shields added.
CNH declined to comment when contacted by BNamericas. Pemex had not returned a BNamericas request for information on its plans to reduce flaring as of publication.
By David Biller
Business News Americas
* Cosan loses BNDES financing after slave work scandal - Brazil
Brazil's federal development bank BNDES has cut off all loan operations with Brazilian sugar and ethanol major Cosan (NYSE: CZZ) after the company was included on the labor ministry's slave work blacklist.
"New contracts with Cosan will be reviewed once the group is excluded from the list," a spokesperson for BNDES told BNamericas, confirming earlier reports.
Companies on the list are not entitled to loans from BNDES or federal banks Banco do Brasil and Caixa Econômica Federal (CEF).
According to BNDES, approved loans will be frozen and only disbursed after Cosan addresses the issue.
Brazil's federal energy company Petrobras will review its existing business relationships with Cosan because of the scandal, a Petrobras spokesperson told BNamericas.
Brazil's labor ministry said on its website that 42 Cosan workers were found and liberated from conditions similar to slavery.
In a statement, Cosan said it will appeal the decision and said a contracted sugarcane crusher was responsible for the alleged conditions. The firm also said it has already cancelled contracts with the involved contractor.
Cosan had 715mn reais (US$411mn) in financing from BNDES at the end of its fiscal second quarter, ending September 30, according to the company's website.
By João Carvalho
Business News Americas
* Pemex extends Hercules 205 jackup contract through February - Mexico
Mexico's state oil company Pemex has extended the contract for one of Houston-based drilling contractor Hercules Offshore's (NYSE: HERO) jackup rigs, Hercules president and CEO John Rand told a webcast.
The contract for the Hercules 205 jackup rig was extended through late February. With the return of the Hercules 206 jackup rig to the US Gulf of Mexico at the end of November, the 205 rig is Hercules' only remaining jackup in Mexico.
Rand said there is potential for another short-term extension of the 205 rig's contract.
Pemex has 20 rigs rolling off contract through 2010 and tenders forthcoming for an eight rigs, Rand said, adding that he does not expect surplus rigs to come flooding back to the US Gulf of Mexico.
"Their production is challenged, and rates are off from their highs in Mexico by 30-60%. They can almost get two rigs for one. Their budget dollars are going almost twice as far from the rig expenditures they were in 2008 and 2009, so it's hard to see a total collapse in that market," Rand said.
"Through the years we've all either worked with or paid attention to Pemex. It's never as good as it appears it's going to get, nor does it get as bad as everybody thinks it's going to be," he said.
Hercules also has one platform rig operating in Mexico, which he said has "a very good chance of staying with Pemex for the remainder of 2010."
Rand spoke at the Energize 2010 Conference in San Francisco, hosted by Pritchard Capital partners.
By David Biller
Business News Americas
* Petroamerica farms in on Balay block - Colombia
Canadian oil startup Petroamerica has entered into a formal farm-in agreement with Petrobras Colombia on the Balay block in Colombia's Llanos basin.
The company will earn a 15% stake in the block, Petroamerica said in a statement.
Petroamerica will pay 25% of the first well, Balay-1, and 15% in back costs for a recently acquired 3D seismic program.
The Balay-1 well was spud on November 28 and is expected to reach TD in February 2010, according to the statement.
"Of course we are very excited about this opportunity with Petrobras in an area where our technical team has had so much success in the past," CEO Paul Kroshko told BNamericas. "We very much look forward to further success with them in this project and others given the opportunity."
Petrobras Colombia is a subsidiary of Brazil's Petrobras (NYSE: PBR).
By Christopher Lenton
Business News Americas
* Roundup: Biofuels, fuel use, gas exports, environmental planning - Regional
Peru's agriculture ministry has established a permanent, multi-sector bioenergy commission to advance development of the country's biofuels market.
The commission's creation was approved in November through supreme decree 075-2009-PCM.
Technical workgroups will be set up in 10 days to tackle biofuels production and R&D that will include the participation of other government entities and the private sector, the ministry said in a statement.
***
Fuel sales last year in Costa Rica fell 2.6% to 17.7Mb compared to 2008, according to state refiner Recope.
The company attributed the decrease to lower demand for 91 octane gasoline, reduced diesel use by state power company ICE and a drop in consumption of jet fuel, IFO and bunker.
In 2009, the country imported 18.1Mb at a cost of US$1.24bn versus 19.2Mb and US$2.09bn the previous year.
***
Bolivia's statistics bureau INE reported natural gas exports in January-November 2009 to Argentina and Brazil totaled US$366mn and US$1.46bn, respectively.
Fuel shipments in the period reached US$47.5mn to the US. Total exports in the first 11 months of 2009 totaled US$4.91bn.
For the full year 2008 (INE did not provide January-November 2008 figures), gas exports to Argentina and Brazil reached US$281mn and US$2.85bn, respectively and fuel shipments totaled US$125mn to the US and US$92.6mn to Brazil.
***
Bolivia's hydrocarbons and energy ministry announced it signed an agreement with the Netherlands development corporation to carry out strategic environmental evaluations.
The initiative aims to help Bolivian authorities with contingency planning in the execution of hydrocarbons activities, according to a ministry release.
The work will target departments Tarija and La Paz, and be carried out in coordination with the Andean country's environment and water ministry.
By Business News Americas staff reporters
* CAF greenlights US$65mn for Maple ethanol, biomass project - Peru
The Andean Development Corporation (CAF) has approved a US$65mn loan for Maple Energy's (AIM: MPLE) US$246mn, 35Mg/y (133Ml/y) ethanol and biomass project in northern Peru.
The financing is part of CAF's strategy to promote alternative clean energies and energy efficiency, said the lender's executive president Enrique García.
Additional financing will come from IDB (US$25mn), the Entrepreneurial Development Bank of the Netherlands (US$25mn) and Peru's Interbank (US$25mn).
A 37MW bagasse-fired plant will sell 17MW of surplus power to the grid via a 36km line.
Commercial operations are due to begin next year.
By Business News Americas staff reporters
* Petroindustrial launches bidding to study Shushufindi revamp - Ecuador
Ecuadorian state oil company Petroecuador's refining subsidiary Petroindustrial has launched an international call for bids to carry out studies for a planned expansion and modernization of the Shushufindi industrial complex.
The complex is in Sucumbíos province and is made up of the 20,000b/d Amazonas refinery and the Shushufindi gas plant which can process up to 25Mf3 (707,921m3) to produce up to 500t/d of LPG and 2,800b/d of gasoline.
Work will include an analysis of supply and demand of products from the complex, and alternative processing systems, a financial and economic evaluation and a look at financing options, according to bidding rules.
Depending on study results, the project would proceed to the basic engineering design and detailed engineering and EPC phases, according to bidding rules.
Offers for the 125-day contract are due February 8 with a decision expected in March.
By Business News Americas staff reporters
* Norse natural gas production at Manati field up 7% - Brazil
Oslo-based Norse Energy report natural gas production from its Manati field in Brazil averaged 5.85Mm3/d in the fourth quarter of 2009.
The volume represents a 7% increase from the third quarter last year, the company said in a statement.
Production from the field reached an all time high of 7.71Mm3/d on December 13, Norse said.
The offshore Manati field is located in the Camamu-Almada basin's BCAM-40 block. Norse has a 10% stake in the field.
By Business News Americas staff reporters
* Cosan to start construction at ethanol terminal in 1H10 - Brazil
Brazilian sugar and ethanol major Cosan (NYSE: CZZ) is planning to start construction at an ethanol distribution terminal in the southeastern state of São Paulo in the first half of the year, the company said in a statement.
Cosan is investing 20mn reais (US$11.5mn) in the project.
The terminal will have the capacity to receive almost all the 420,000m3/y of ethanol the company produces in nearby refineries.
Cosan said the facility will facilitate ethanol distribution to markets in southern Brazil.
By Business News Americas staff reporters
* Teresina subway trains to run on biodiesel - Brazil
Subway system trains in Teresina, the capital of Brazil's northeastern state of Piauí, will run on biodiesel this year, the local government said in a statement.
Piauí officials said it will be the first time ever that a metro train will be operating on biodiesel.
Piauí Federal University (UFPI) will supply the fuel. The university's renewables department has a current production capacity of 1,500l/d of biodiesel, according to the statement.
The biodiesel will be produced from different sources including soy and castor beans.
The state government did not specify an exact date when trains begin operating on biodiesel.
By Business News Americas staff reporters
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In-deph interview
* PDVSA to face challenging 2010
Thomas O'Donnell
Fulbright scholar/analyst
New School University
Venezuela
http://www.bnamericas.com/interviews/oilandgas/Thomas_O*Donnell_,New_School_University,1/169252693
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Main companies covered in today's news
* Noble Energy, Inc.
http://www.bnamericas.com/company-profile/en/Noble_Energy,_Inc,-Noble/169252693
* Banco Internacional del Perú S.A.A.
http://www.bnamericas.com/company-profile/en/Banco_Internacional_del_Peru_S,A,A,-Interbank_Peru/169252693
* Caixa Econômica Federal
http://www.bnamericas.com/company-profile/en/Caixa_Economica_Federal-CAIXA/169252693
* Cosan S.A. Indústria e Comércio
http://www.bnamericas.com/company-profile/en/Cosan_S,A,_Industria_e_Comercio-Cosan/169252693
* Petroecuador
http://www.bnamericas.com/company-profile/en/Petroecuador-Petroecuador/169252693
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