Archive for July, 2015

Headlines July 19th – 26th

With our oil and gas journal, you will be up to date with the latest industry news daily.

HASTA LUEGO SENATOR NAME

Monday, July 20th, 2015 was not only the first day of the Farc’s unilateral truce but the last day of Senator David Name’s reign as president of the Colombian Congress. We can hope that the CREG can now get on with setting natural gas prices based on reason and not politics.

Colombian sessions of Congress run from July 20th of one year to July 19th of the following. The day is one of the county’s seemingly innumerable holidays but it importantly celebrates the first declaration of independence from Spain….

WHAT’s NEXT FOR MEXICO’s ROUND?

With a lackluster result in Mexico’s Round One, the focus now turns to the next four rounds as observers comment on how the first results can be interpreted and impact the rest of the process.

To recap, despite heightened expectations for the round, only two of the 14 blocks on the table were assigned, and both to the same company. We took a look at some of the comments from Mexico, where authorities took a, and we paraphrase here, ‘hey, at least it happened and someone showed up’ argument. A ‘lesson’ that is the first step in a large process. The next two rounds remain scheduled, and the remaining blocks, 12 of them, will be offered in the future and not revert back to Pemex.

Revised or even just public minimum bids would have led to a different outcome. Perhaps four more blocks could have been assigned (because they received bids that were too low) and the whole round would have been viewed in a completely different light…

TAKING A DEEPER LOOK

We took the opportunity to analyze a number of sector elements this week in our daily graphs. For starters, an offhand comment from a multinational oil company got us thinking about the difference between E&P companies that are top-of-mind because they have a lot of production and companies that are top-of-mind because they are responsible for a lot of operations.

Another repeating theme is the growing skepticism from the Colombian public and several political sectors, as it is becoming harder to explain to why they are supposed to tighten their belts fiscally because of lower crude oil prices but they do not see associated relief at the pump. The main ‘villain’ behind the disconnect between what consumers / voters and politicians hear on the nightly news (crude oil prices in US dollars have gone down) and what they experience at the pump, is the rapid devaluation of the Colombian peso against the greenback…

OTHER NEWS

In company news, Ecopetrol (NYSE:EC) has dropped another 45 places in the Fortune Global to number 346, which is hardly surprising but another blow to national pride…

Gran Tierra (TSX:GTE) announced share buy-back program lasting up to 1 year which foresees purchasing up to 5% of outstanding shares at market rates, and Denham Capital acquisition of Platino (TSX:PZE) received its shareholder approval...

Sign up to our free trial to learn more

Headlines July 12th – 19th

What to expect when investing in oil and gas in Colombia

ALFA DROPS PRE BID, ECP DROPS FROM MEXICO ROUND 1

Mexican investment group Alfa and Harbour Energy have terminated an agreement to purchase all of the remaining shares of Pacific Rubiales Energy (TSX:PRE), setting off a flurry of speculation and a deep dive in the share price of Colombia’s largest private oil operator. The company did not address why, and there was speculation on whether the actions of O´Hara Investment, the Venezuelan run group with nearly a 20% share, had influenced this…

FARC DELCARES NEW CEASE FIRE AFTER A VIOLENT JUNE

The Farc announced that it would put in place a new unilateral cease fire for one month, starting on July 20, after an escalation in violence in the weeks following the termination of its prior unilateral cease fire on May 22…

REVENUES AND 2015 PRODUTION

The National Hydrocarbons Agency (ANH) released its detailed crude oil production results for April 2015 and we continue to look for the reasons behind the country’s gravity-defying achievements.

The preliminary production number was 1,025mbd but the final result for April was nearly 1,028mbd. The 4Q14 number was 1,005mbd. As crude oil prices slid off a cliff there were pundits saying Colombia would struggle to make 1mmbd. Assuming June comes in above 1mmbd despite increased guerrilla attacks on pipelines and tanker-truck convoys, then it would take a disastrous second half NOT to make 1mmbd.

But despite these gains in production, the picture for revenues is not as pretty, in fact according to our calculations the industry as a whole will produce only at levels similar to six years ago, in 2009…

Sign up to our free trial to learn more

Headlines July 1st – 12th

Latest news of Colombia’s oil and gas industry.

Industry oil revenues roll back 6 years or more

Considering that production is up over 3.5% so far this year but crude oil prices are way down, we decide to see how total industry revenues might be tracking. 

Master Transport Plan advances

The Transport Ministry’s Intermodal Master Transport Plan looks to consolidate the transport and logistical infrastructure in Colombia, and held its third socialization ahead of its next national meeting in August of this year. 

Filling the royalty gap

The National Planning Department (DNP) says that it will dip into resources from the Regional Development and Stabilization Fund and use past surpluses so that the 2015-16 royalty budget can be implemented despite a CoP$6T gap in funding due to the fall in world oil prices. 

CSR Summary: Parex, Ecopetrol active in Casanare

Parex Resources (TSX:PXT) and Cepcolsa are working with local suppliers in Aguazul in an initiative led by a Casanare assembly representative, while Ecopetrol (NYSE:EC) also signs four agreements for Corporate Social Responsibility (CSR) projects in Casanare. These and other stories in our periodic summary.  

Industry heavyweights to discuss the state of the industry

The Colombia-Canada Chamber of Commerce (CCCC) is a protagonist in the oil and gas industry, considering the importance of Canadian investors in the sector. Last week, the CCCC organized a breakfast with an ‘all-star’ cast: National Hydrocarbons Agency (ANH) head Mauricio de la Mora, Colombian Petroleum Association (ACP) leader Francisco José Lloreda, Campetrol president Rubén Dario Lizarralde and acting head of the petroleum engineers’ association (ACIPET) Carlos Leal Niño. The moderator was ex-Vice Minister of Mines and Energy and current president of Vitol Colombia, Henry Medina. The standing-room-only crowd at Bogotá’s Metropolitan Club was not disappointed by the debate. 

Alfa drops Pacific Rubiales purchase

Mexican investment group Alfa and Harbour Energy have terminated an agreement to purchase all of the remaining shares of Pacific Rubiales Energy (TSX:PRE), setting off a flurry of speculation and a deep dive in the share price of Colombia’s largest private oil operator. 

June most violent month in last three years

The Resource Center for Conflict Analysis (Cerac) says that June of this year was the most violent month since the peace process begun three years ago. 

Colombia losing appeal to foreign oil professionals

The fall in oil prices and resulting drop in investment has led to more competition between Colombian citizens and foreign oil professionals, thus making the country less attractive for these expat workers, a recent report found. 

Peace Process week of July 6: Farc announce new unilateral cease fire

The Farc announced that it would put in place a new unilateral cease fire for one month, starting on July 20, after an escalation in violence in the weeks following the termination of its prior unilateral cease fire on May 22. 

Industry heavyweights to discuss the state of the industry

The Colombia-Canada Chamber of Commerce (CCCC) is a protagonist in the oil and gas industry, considering the importance of Canadian investors in the sector. Last week, the CCCC organized a breakfast with an ‘all-star’ cast: National Hydrocarbons Agency (ANH) head Mauricio de la Mora, Colombian Petroleum Association (ACP) leader Francisco José Lloreda, Campetrol president Rubén Dario Lizarralde and acting head of the petroleum engineers’ association (ACIPET) Carlos Leal Niño. The moderator was ex-Vice Minister of Mines and Energy and current president of Vitol Colombia, Henry Medina. The standing-room-only crowd at Bogotá’s Metropolitan Club was not disappointed by the debate. 

Sign up to our free trial to learn more