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Monday, January 18, 2010
Today's News Headlines
* Devaluation likely to give PDVSA short-term relief - Venezuela
* Government to form new negotiation team for Yasuní-ITT initiative - Ecuador
* Export basket down to US$73.29/b - Venezuela
* Angola's Sonangol interested in Starfish - Brazil
* Petrobras starts construction at premium refinery - Brazil
* Petrobras denies talks to buy stake in Galp - Brazil
* Petrobras proven reserves fall to 14.9Bboe - Brazil
* Petroperú submits EIS for Talara refinery expansion - Peru
* YPFB Transporte to invest US$141mn in 2010 - Bolivia
* National production to reach 2.7Mb/d in 2010 - IEA - Brazil
* Bidding rules for new blocks to be published next week, says Colom - Guatemala
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* Devaluation likely to give PDVSA short-term relief - Venezuela
Venezuela's recent decision to devalue its currency by half will likely give state oil company PDVSA some short-term relief, as the company's revenues in bolívares are set to double. PDVSA, however, could face new challenges if the Venezuelan government tries to extract all of the gains from the company to pay for increased spending.
"It's going to improve the financial flexibility of the company until inflation catches up. The only thing to bear in mind is that the government could increase spending during this election year. And they may try to transfer more revenues from PDVSA to the government through taxes," Jose Luis Villanueva, a director at Fitch Ratings in New York and PDVSA analyst, told BNamericas.
"So, in all, I would say that it's positive for the company. But at the end of the day, it's going to depend on how much money stays in the company and on how much is transferred to the state," he added.
International service providers could come out as losers after the devaluation, as debts denominated in bolívares will be cut in half when converted into dollars. Tulsa-based service firm Helmerich & Payne (NYSE: HP) last week said that its second fiscal quarter of 2010 would take a US$20mn hit because of the devaluation.
If PDVSA sees increased revenues, however, it may be able to start paying back some debts.
"Once you have higher financial flexibility, the company is going to be able to pay back service companies in domestic currencies," Villanueva said.
Rising prices in Venezuela because of inflation and its import-dependent economy, meanwhile, could reignite labor issues within PDVSA.
"In as much as it exacerbates inflation, it could trigger renewed labor demands reviving an issue that appeared to be on the wane," RoseAnne Franco, a senior analyst with PFC Energy, told BNamericas.
Local Venezuelan service providers may likely have the most to gain, and the Venezuelan oil chamber, an industry group for private oil firms and service providers, welcomed the devaluation.
"The measures implemented that have to do with the readjustment of the dollar could give the local service industry a needed push as there will now be more resources to pay back debt and take on new E&P projects," Juan Ignacio Rodríguez, president of the chamber, said in a statement.
"With these changes, it's now time to incentivize the purchase of service items produced in Venezuela," he added.
While some local service firms may face higher prices to import goods, companies will be able to keep more funds outside of Venezuela which could give them greater flexibility to expand business, according to the chamber.
By Nathan Crooks
Business News Americas
* Government to form new negotiation team for Yasuní-ITT initiative - Ecuador
Ecuador's government will form a new negotiation team for the program designed to protect the Yasuni ITT oilfield from E&P work, according to a report from state news agency El Ciudadano.
The program entails a fund made up of contributions from environmental organizations and governments in order to compensate the state for not developing ITT, which holds some 900Mb of heavy crude.
In June 2009, Ecuador announced that Germany would make the first donation to the fund.
As a part of the strategy, the government would raise money to protect ITT by issuing carbon credits for the voluntary market. The carbon credits, which would be issued for preventing CO2 emissions, would include a guarantee that the state will never produce oil at ITT.
If the initiative fails, ITT development will be carried out by Ecuador's state E&P company Petroamazonas, President Rafael Correa said, according to a separate El Ciudadano report.
By Business News Americas staff reporters
* Export basket down to US$73.29/b - Venezuela
Venezuela's average oil export basket price fell US$1.16 in the week of January 11-15 to US$73.29/b, the energy and oil ministry (Menpet) reported.
The average price for 2009 was US$57.02/b versus US$86.49/b in 2008 and US$64.74/b in 2007.
Crude prices on world markets fell during the week because of renewed fears about the state of the global economy and increasing inventories in the US, Menpet said.
By comparison, the OPEC basket fell US$0.03 to US$78.81/b, WTI decreased US$0.68 to US$81.02/b and North Sea Brent was down US$0.86 to US$79.55/b.
By Business News Americas staff reporters
* Angola's Sonangol interested in Starfish - Brazil
Angolan state oil company Sonangol is preparing to acquire control of Brazilian independent oil company Starfish and include the country in its expansion plan.
The plan should be consolidated between 2010 and 2011, and involve up to US$1bn in the first year alone.
"We don't want only Africa. We want to gain ground in other countries, in South America, the US Gulf of Mexico, the Middle East, and even in the European market," said Sonangol's concessions manager Antonio Camilo Costa in an interview.
Costa said Sonangol is taking care of the last details before acquiring control of Starfish, a company created in 1999 by former executives of state-run oil giant Petrobras. He didn't mention figures, but according to market rumors the Angolan company could invest US$200mn in the deal.
In Brazil, negotiations for the control of Starfish have been under way since mid-2009. Currently, Starfish has 16 projects, 12 drilled wells and investments of US$90mn.
http://www.aebrazil.comAgência Estado
* Petrobras starts construction at premium refinery - Brazil
Brazil's state-run oil company Petrobras (NYSE: PBR) inaugurated construction of a premium refinery to be built in the northeastern state of Maranhão, according to a Petrobras statement.
The unit, known as Refinaria Premium I, will have the capacity to process up to 600,000b/d, corresponding to around one third of Petrobras' domestic production.
The refinery is slated to come online by September 2013, with an initial capacity of 300,000b/d. Two years later, the unit should be operating at full capacity.
http://www.aebrazil.comAgência Estado
* Petrobras denies talks to buy stake in Galp - Brazil
Brazil's state-run oil company Petrobras (NYSE: PBR) denied that it is in talks to buy a stake in Portuguese oil firm Galp.
Brazilian mines and energy minister Edison Lobão earlier in the week said that Petrobras was in talks for an eventual partnership with Galp.
Prior to that, a report last week in Brazilian business daily Brasil Econômico said that Petrobras was interested in buying the 33.3% stake Italian oil major Eni holds in Galp.
In a statement, Petrobras said it is "constantly analyzing investment opportunities in Brazil and abroad that are in line with the strategies established in its business plan, but that in this case there is no negotiation in progress."
http://www.aebrazil.comAgência Estado
* Petrobras proven reserves fall to 14.9Bboe - Brazil
Brazil's state-run oil company Petrobras (NYSE: PBR) reported that its proven oil and natural gas reserves fell by 220Mboe in 2009 to 14.9Bboe, according to criteria by the Society of Petroleum Engineers.
Reserves in Brazil accounted for 95% of the total at 14.2Bboe, while reserves in other countries represented 5% or 696Mboe.
In a statement, Petrobras attributed the decline to the exclusion of Bolivian reserves in 2009.
Petrobras' reserve replacement index last year was 75%, with 652Mboe added to the company's reserves and 8.72Mboe produced, resulting in the reduction of 220Mboe, or 1.5%, from 15.1Bboe at the end of 2008.
Based on criteria of the Securities and Exchange Commission (SEC), the US capital market regulator, Petrobras' reserves grew by 952Mboe last year to 12.1Bboe.
The main difference between the SPE and SEC criteria is that the latter only considers as proven reserves gas volumes covered by existing contracts.
http://www.aebrazil.comAgência Estado
* Petroperú submits EIS for Talara refinery expansion - Peru
Peru's state oil company Petroperú has submitted the EIS for its Talara refinery expansion project to Peru's mining and energy ministry (MEM), state news agency Andina reported.
The project is slated to cost between US$1.2bn and US$1.3bn and will expand the refinery's capacity from 65,000b/d to 95,000b/d.
Once the expansion program is complete, the refinery, located in Piura, will also be capable of producing higher quality fuels that meet international air quality standards, Andina reported.
Works are expected to be completed in 2015.
Petroperú and local development bank Cofide last month signed an agreement for financial advisory services for the project.
The bank will help identify and evaluate different financing sources and structure financing for the project's FEED and EPC phases, Petroperú said in a previous statement.
Petroperú and Spain's Técnicas Reunidas are expected to sign the FEED-EPC contract for project this month.
By Business News Americas staff reporters
* YPFB Transporte to invest US$141mn in 2010 - Bolivia
The transport subsidiary of Bolivia's state hydrocarbons company YPFB is planning to invest at least US$141mn in new projects in 2010 to guarantee internal demand and exports, state news agency ABI reported.
YPFB Transporte invested about US$90mn in 2009 on projects mostly directed towards meeting internal demand.
Works on the Carrasco-Cochabamba (GCC) pipeline are continuing, and total investment in the project is expected to hit US$172mn. Once complete, the pipeline will transport 120Mf3/d (3.4Mm3/d) from Carrasco to western parts of the country.
YPFB is expecting to invest more than US$11bn in 2011 on E&P projects across Bolivia.
By Business News Americas staff reporters
* National production to reach 2.7Mb/d in 2010 - IEA - Brazil
Brazil is the country that will most contribute to boosting global oil production in 2010 among non-members of the OPEC cartel, the Paris-based International Energy Agency (IEA) said in its monthly report.
The IEA forecasts that Brazilian production will increase by 160,000b/d this year to 2.7Mb/d.
According to the agency, oil output from Brazil's promising subsalt areas in offshore deep water will ramp up significantly from 2010, with production at the Tupi prospect to reach around 100,000b/d by the end of the year.
Reserves in Tupi, located in Brazil's Santos basin, are estimated at 5B-8Bboe.
The IEA noted, however, that Brazil's congress approved only one out of four subsalt-related bills before its December recess, thus missing its end-of-year deadline.
"The outcome of the proposed framework is crucial in determining the pace at which these reserves will be developed," the report says.
http://www.aebrazil.comAgência Estado
* Bidding rules for new blocks to be published next week, says Colom - Guatemala
Guatemala plans to publish bidding rules for new hydrocarbons blocks by January 22, news agency Bloomberg cited President Álvaro Colom as saying.
The country hopes to see production reach up to 60,000b/d by 2011, up from a current 16,000b/d, he said.
The winners of E&P contracts for the blocks will be announced 60 days after the bidding rules are published.
The blocks could ultimately increase national production by 85,000b/d, Colom said without providing a specific timeframe.
Colom said that Guatemala will wait until production reaches some 80,000b/d before considering construction of its first refinery.
The country had plans to build a 350,000b/d refinery, but last year canceled the project after the energy and mines ministry received no bids. Further complicating plans was Mexican President Felipe Calderón's pledge of 80,000b/d of crude for the refinery, which was well below his predecessor Vicente Fox's 230,000b/d commitment, BNamericas reported previously.
Guatemala currently receives oil and refined products from Venezuela under the Petrocaribe initiative.
By Business News Americas staff reporters
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In-deph interview
* Devaluation likely to benefit PDVSA in short term
José Luis Villanueva
Director
Fitch Ratings
Venezuela
http://www.bnamericas.com/interviews/oilandgas/Jose_Luis_Villanueva_,Fitch_Ratings,2/170324261
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Main companies covered in today's news
* Starfish Oil & Gas S.A.
http://www.bnamericas.com/company-profile/en/Starfish_Oil_*_Gas_S,A,-Starfish/170324261
* Pacific Rubiales Energy Corp.
http://www.bnamericas.com/company-profile/en/Pacific_Rubiales_Energy_Corp,-Pacific_Rubiales/170324261
* Corporación Financiera de Desarrollo S.A.
http://www.bnamericas.com/company-profile/en/Corporacion_Financiera_de_Desarrollo_S,A,-COFIDE/170324261
* Yacimientos Petrolíferos Fiscales Bolivianos
http://www.bnamericas.com/company-profile/en/Yacimientos_Petroliferos_Fiscales_Bolivianos-YPFB/170324261
* Ministerio del Poder Popular para la Energía y Petróleo
http://www.bnamericas.com/company-profile/en/Ministerio_del_Poder_Popular_para_la_Energia_y_Petroleo-Menpet/170324261
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