Energy

BNDES, IDB set up US$2.4 billion line of credit, offer US$750 million for clean energy projects

The Brazilian National Development Bank (BNDES) and the Inter-American Development Bank (IDB) announced a US$2.4 billion joint line of credit to finance sustainability projects in Brazil on 16 December 2016 (Valor, BNDES). The first operation will be a sustainable energy financing program of US$750 million from BNDES to Brazilian companies, with the Brazilian federal government as a guarantor. These energy infrastructure funds will focus on increasing the share of alternative renewable energy in the national energy matrix and energy efficiency. The funds will have a four-year term and an interest rate determined by the IDB’s ordinary loans. BNDES emphasized that the energy projects stemming from this financing will help Brazil to reach its greenhouse gas reduction goals laid out by the U.N.'s Paris Accord on Climate Change. Between January and October 2016, BNDES had already disbursed US$20.6 billion in financing.

Petrobras confirms US$5 billion loan from China Development Bank

The state oil firm Petrobras reported on 16 December 2016 that it signed a financing agreement with the China Development Bank (CDB) for a ten year loan of US$5 billion (Valor, Globo G1). The financing is the result of a US$10 billion agreement announced on 26 February 2016 between Petrobras and CDB. Per the agreement, Petrobras will provide a total volume of 100,000 barrels of oil per day to China National United Oil Corporation, China Zhenhua Oil, and Chemchina Petrochemical over the term of the loan, in lieu of making interest and principal payments. The company also signed agreements with these three firms.

 

The agreement is questionable on Petrobras’ end. At an average price of US$50 per barrel of crude oil, Petrobras would effectively pay a 36.5 percent interest rate based on economic cost. However, Petrobras is the most indebted company in the world, with over US$100 billion in long-term debt as of 30 September 2016 and scaling efforts to shed non-core assets to reduce its leverage (Globo G1). As such, their credit options were limited in February 2016, and the US$10 billion agreement with CDB enabled them to raise funds in February without issuing equity, when their stock price was at its nadir (Globo G1). Shares of the firm rebounded in 2016, increasing 266 percent from a low of US$2.71 in February to US$9.91 on 20 December 2016, as the Brazilian stock market rallied in anticipation of Dilma Rousseff’s impeachment and the price of Brent crude oil rebounded from a low of around US$35 in February to the mid-US$50s in December 2016 (Google Finance).

Pemex gasoline production reaches lowest level since 1992

El Economista reported on 19 December 2016 gasoline production from Pemex has reached its lowest levels since 1992. Gasoline production reached an average of 341,023 barrels per day (bpd) from January to October 2016 (El Economista). Production of premium gasoline from January to October 2016 stood at an average of just 9,700 bpd, a 45.8 percent decrease from the same period of 2015 when the company produced 17,900 bpd (América Economía). Gas shortages across Mexico have recently caused concern and Pemex clarified the shortages were due to bad weather issues which have prevented ships from unloading supplies in Tuxpan, Veracruz. Although Mexican refineries have experienced operational issues which have led to decreased production, Pemex insisted it was not the cause of gasoline any shortages (América Economía).

El Salvador's first photovolcaic energy plant to open in April 2017

A solar energy project worth US$151 million in investment is due to begin operations in April 2017 (El Diario de Hoy, 14 December 2016). The project, Providencia Solar 1, includes the Antares plant, awarded through a public bidding process, and the Spica plant, negotiated privately with energy distribution company DelSur (La Prensa Gráfica). French company Neoen developed and financed US$33 million of the project, and other investors included the Inter-American Development Bank with US$88 million and the Agence Française de Développement (AFD) subsidiary Proparco with US$30 million (El Diario de Hoy). The complex will produce 101 megawatts of energy, which can power 200,000 homes. The energy produced by Antares will be sold to DelSur, Edesal, B&D and four of AES El Salvador's distributors, while Sica will sell exclusively to DelSur (El Diario de Hoy). According to Neoen, Providencia Solar 1 will be the largest solar plant in Central America and a spokesperson cited El Salvador as a growing market for the development and construction of solar panel systems.

PDVSA President: Venezuelan oil could reach US$60 per barrel after crude production cuts

Eulogio del Pino, President of state oil company Petróleos de Venezuela (PDVSA), said on 10 December 2016 that due to global crude oil production cuts, the price of Venezuelan oil could reach from US$50 to US$60 per barrel within six to nine months (La Patilla). Del Pino made the statement following the 10 December meeting of non-OPEC members in Vienna, at which eleven oil-producing nations agreed to cut their crude production by 558,000 barrels per day to stabilize global oil prices (Globovisión). The majority of OPEC members agreed to cut production of crude oil by 1.2 million barrels per day on 30 November, and the cuts from OPEC members and non-members are set to begin on 1 January 2017. Del Pino also noted Venezuela, along with Russia, Azerbaijan, Oman, and Kuwait, will form part of a monitoring committee to supervise the implementation of the agreement (El Nacional).

Chilean state energy company purchases AMEC-Foster Wheeler subsidiary

Chile's state-owned oil company, ENAP, on 9 December 2016 announced a deal to purchase Petropower, an electricity generation company owned by U.S. company AMEC-Foster Wheeler. Petropower's main asset is an electricity and steam-generation plant in Chile's Biobío region. ENAP previously held a 15 percent stake in the Petropower, and will now own 100 percent (Emol). ENAP's General Manager, Marcelo Tokman, explained the purchase will allow ENAP to ensure the survival of the Biobío refinery and supply excess electricity to the country's central power grid. The amount paid by ENAP for the purchase of Petropower has not yet been confirmed (La Vanguardia).

Mexico agrees to reduce oil production

Mexico reached an agreement with OPEC and several other oil-producing nations on 10 December 2016 to decrease crude oil production by 100,000 barrels per day (bpd) (El Financiero). According to Pemex’s business plan, Mexico will join the global agreement to help alleviate the excess supply of oil, which has been blamed for low prices (El Financiero). Sources from the Mexican Energy Secretariat stated the agreement would restore balance to the oil market and ensure international energy security for both oil producing and consuming nations (Milenio). Altogether, non-OPEC producing countries agreed to cut their crude oil production by a total of 558,000 bpd, adding to the 1.2 million bpd reduction announced by OPEC on 30 November 2016 (Milenio, El Financiero).

Shell to invest US$400 million in PDVSA Lake Maracaibo joint venture

State oil company Petróleos de Venezuela (PDVSA) President Eulogio del Pino announced on 6 December 2016 that Royal Dutch Shell would invest US$400 million to increase crude production at a joint venture with PDVSA in Lake Maracaibo. The Corporación Venezolana del Petróleo, a subsidiary of PDVSA, controls 60 percent of joint venture Petroregional del Lago S.A. and Shell owns the remaining 40 percent (La Patilla). According to Del Pino, Shell's investment will allow production at the joint venture to increase by 344 million barrels of crude between 2017 and 2035, or by 52,400 barrels per day on average. In a statement, PDVSA noted the total investment required for the project is US$2.8 billion (Panorama). 

BHC Billiton wins bid to partner with Pemex in Trion field

Australian oil firm BHC Billiton won the right to team up with Pemex in the offshore Trion oilfield after placing the highest bid on 5 December 2016 (Aristegui). BHP Billiton and BP Exploration both presented bids featuring the maximum 4 percent royalty, however Billiton offered US$624 million for investment, higher than the US$605.9 million figure proposed by BP (Aristegui). Pemex Director José Antonio González Anaya revealed oil production from Trion was set to begin in 2023 and would reach a 120,000 barrel per day capacity by 2025. BHC Billiton will hold 60 percent of the joint venture while Pemex will be responsible for 40 percent (El Universal). Trion is one of the largest fields in Pemex’s portfolio with estimates calculating the equivalent 485 million barrels of potential oil resources (Aristegui).

Itaipú dam close to its objective of breaking world record for hydroelectric power generation

On 1 December 2016, the Paraguayan director for the Itaipú hydroelectric damn (jointly managed by Brazil and Paraguay), James Spalding, stated the dam aimed to break the world record for hydroelectric power generation (La Nación). During the week of 5 December 2016, it was confirmed that the dam generated an accumulated amount of 94,207 GWh (Gigawatts per hour) of energy so far in 2016, which represents a new all-time high. According to forecasts, by the end of 2016 the dam could reach an annual production of over 98,800 GWh, which would break the current world record held by Chinese company Tres Gargantas (Crónica). Four key factors have been cited as drivers of this historic performance: demand for energy has been high; increased efficiency of machinery; favorable hydrological conditions; and the use of highly qualified human resources (La Nación).

Venezuelan oil prices rise following OPEC production freeze3

The Venezuelan Ministry of Petroleum and Mining reported on 2 December 2016 that the price of Venezuelan oil closed the week of 28 November to 2 December at US$40.47 per barrel, up from US$39.83 per barrel between 21 and 25 November. Taking the most recent figures into account, the average price of Venezuelan oil in 2016 registered US$34.32 per barrel, compared to an average of US$44.65 per barrel in 2015 (Globovisión). The Ministry attributed the rise in the price of oil to the 30 November decision from the Organization of the Petroleum Exporting Countries (OPEC) to cut production by 1.2 million barrels per day beginning in 2017 (La Patilla).

Venezuela to reduce crude production by 95,000 barrels per day

President of state oil company Petróleos de Venezuela (PDVSA) Eulogio del Pino announced on 30 November 2016 that Venezuela will reduce its crude oil production by 95,000 barrels per day (bpd). The cuts will place the country's daily production below 2 million bpd for the first time in 30 years (Efecto Cocuyo). Venezuela's production cuts are part of a 30 November agreement by the Organization of the Petroleum of Exporting Countries (OPEC) to reduce the majority of member states' crude production by an average of 4.7 percent, limiting their output by 1.2 million bpd beginning on 1 January 2017 (Tal Cual).

Pemex and Chevron team up to bid on deepwater contracts

Mexican National Hydrocarbons Commission (CNH) President Juan Carlos Zepeda announced on 28 November 2016 Pemex and Chevron will partner up in an auction for deepwater contracts in the Gulf of Mexico (SDP Noticias). The CNH released a complete list of bidders for ten deepwater block featuring fifteen participants from ten countries in bidding for the right to explore and exploit deepwater hydrocarbons in the Trion field (Economía Hoy). Pemex also registered to participate as a singular entity along with other major companies including Exxon Mobile, Statoil, and BP, among others. The awarded blocks will be announced on 5 December 2016 (El Financiero).

Ecuador in favor of oil production reduction

In the next OPEC meeting on 30 November 2016 in Vienna, Austria, Ecuador will support and advocate for mechanisms that lower and freeze oil production to stabilize the declining prices (El Universo, 25 November 2017). Ecuador’s Hydrocarbons Minister Jose Icaza Romero revealed there are internal discussions between OPEC members to reduce production between 4 to 4.5 percent. Icaza explained Ecuador’s concept is to reasonably reduce production, and eventually freeze it. He added Ecuadorian technicians are presently in Vienna, looking to find consensus between OPEC nation members (America Economia). 

State oil companies PDVSA and Rosneft meet in Caracas

Representatives from the state oil companies of Venezuela, Petróleos de Venezuela (PDVSA), and of Russia, Rosneft, met in Caracas on 20 November 2016 to strengthen their cooperation agenda and develop their joint ventures. Rosneft has a minority stake in five joint ventures with PDVSA that involve crude oil located in the Orinoco Oil Belt and the western coast of Lake Maracaibo, including Petro Miranda, Petro Victoria, Petro Perijá, Petro Monagas, and Boquerón (Panorama). Following the meeting, the Venezuelan government stated in a communiqué the companies analyzed petrochemical projects in Venezuela and explored new areas for cooperation in the trade and delivery of crude and other products, without offering specific details (La Patilla). Venezuelan President Nicolás Maduro stated that PDVSA is seeking to increase oil production with Russia, while simultaneously calling on all oil exporting nations to reduce their production levels to stabilize the global price of oil (El Nacional).

Venezuela and China sign US$2.2 billion energy deals

Venezuelan President Nicolás Maduro met with a delegation from the state-owned China National Petroleum Corporation (CNPC) in Caracas on 17 November 2016 to sign energy deals worth US$2.2 billion. The agreements cover investments in joint ventures with Venezuelan state oil company Petróleos de Venezuela (PDVSA) where CNPC has a minority holding, such as a deal to increase production by around 277,000 barrels per day in the Orinoco Oil Belt (América Economía). CNPC and PDVSA also agreed to construct an oil refinery in Jienyang, China, that will process over 400,000 barrels of oil per day (Globovisión). According to Maduro, the projects to increase oil production are backed by a Chinese credit line of up to US$9 billion (América Economía).

AES El Salvador launches rural solar energy project

AES El Salvador launched a US$80,000 project on 16 November 2016 to bring electricity to rural communities via solar energy through their company CLESA (Estrategia y Negocios). The launch is a pilot project in a small community in the department of Ahuachapán and gives members access to electricity through photovoltaic cells, including storage batteries (El Diario de Hoy). Another component of the project includes turbo-stoves that use 10 percent as much wood as the community’s current stoves and would result in less smoke, both a health and environmental hazard. According to AES President Abraham Bichara, he hopes to emulate this project in other rural areas to move El Salvador from 95 percent to 100 percent in terms of population access to electricity (La Prensa Grafica). Around 60,000 Salvadorans, or 5 percent of households, do not currently have access to electricity. Internal AES data reported by El Diario de Hoy showed that the company has helped move this percentage from 70 to 95 since 2001. 

Mexican federal police and Pemex find hidden oil taps in Tamaulipas

The Mexican National Security Commission (CNS) reported Federal Police, together with Pemex personnel, detected several illegal oil taps in Tamaulipas on 12 November 2016 (Proceso). A total of nine clandestine oil taps were found in different points in the areas of Altamira and Ciudad Madero in southern Tamaulipas. Federal Police carrying out surveillance work along the Madero-Cadereyta pipeline were alerted to the presence of armed people guarding a pipe near a vehicle parked on the side of the Tampico-Mante highway (El Financiero). The CNS confirmed the seizure of six vehicles, including several trucks with drums for holding fuel (La Jornada). In the first eight months of 2016, Tamaulipas has recorded 547 instances of illegal oil tapping, third among Mexican states, behind Puebla and Guanajuato (El Financiero).

Mexican energy secretary announces auction for oil blocks

The Mexican Energy Secretariat (SENER) announced on 14 November 2016 it plans to generate an investment of US$1 billion through an offering of fourteen licensing agreements for the exploration and extraction of hydrocarbons (Forbes Mexico). The third auction of Ronda 2, which is set to be decided on 12 July 2017, will feature 25 fields and areas up for bidding, organized under 14 blocks. The National Hydrocarbons Commission (CNH) indicated that four of the blocks in the Burgos Basin only contain gas, while the remaining blocks in Tampico-Misantla basin along with others in Veracruz and Cuencas del Sureste contained both gas and oil (La Jornada and Forbes Mexico). 

PDVSA signs US$1.45 billion oil deals with Indian and local firms

State oil company Petróleos de Venezuela (PDVSA) signed US$1.45 billion in oil deals with Indian and Venezuelan firms on 4 November 2016. PDVSA finalized a deal with Indian state oil company ONGC Videsh Limited to invest US$318 million in the Indovenezolana joint venture in the Orinoco Oil Belt to double crude production from 20,000 to 40,000 barrels per day (Tal Cual). The second deal, worth US$1.13 billion, was signed with Venezuelan firm Delta Finance BV to increase production from 420,000 to 855,000 barrels of crude per day at the joint venture PetroDelta (Efecto Cocuyo). At the signing, PDVSA President Eulogio del Pino stated Venezuela has committed US$10.7 billion in financing for its energy-related joint ventures over the past two years (Panorama).