Archive for August, 2015

Headlines August 24th through 30th

There is a lot to know about oil and gas, its future,current situation, and here’s is where you will find the most valuable news.

Minimal guerrilla activity

Guerrilla-initiated incidents by both groups stayed down this week and the Armed Forces also cut back their activities, at least in oil-and-gas areas. As a result, total incidents fell to 22.

MinMinas approves Agreement 03

The Ministry of Mines and Energy (MinMinas) has approved three more measures to promote exploration and production and confront the fall in oil prices. The Agreement 03 is part of its “PIPE” stimulus for the industry.

Caño Limón Coveñas hit hard by past attacks

Even though the Farc has backed off and not attacked any pipelines since the start of its July 20 truce, the Coveñas/Caño Limón Pipeline (CCL) has suffered in the month of August due to the attacks over the last two months.
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USO says monitoring Reficar

The USO says it has been observing the Cartagena Refinery (Reficar) project to make sure it has been meeting quality and labor standards as the process to finish the plant winds down.

Without oil there will be no peace

‘The Mad Economist’ is the nom-de-plume of Camilo Vega Barbosa, Director of the economic blog El Mal Economista (EME). (See his coordinates at the end of the article.) We thought his observations were spot-on for a topic we find concerning: paying the bill for the post-conflict when low-oil prices and lack of government support have pushed government oil revenues into a tailspin.

(Almost) everything peaked in 2012

Clients ask us for quick graphs from our statistical databases for their presentations or other studies. (You can too!) Having done a number of these lately, it struck our Analyst that the peaks all occurred at the same time (roughly) 2012. But sometimes our eyes and minds can play tricks on us so we decided to index a number of key indicators for the industry and pu them all on the same graph. We started in 2006 because we like to start looking at things before the economic crisis which started in about 2007 and to span the commodity price spike in 2008.

By 2017 production could fall to 750,000bd

Considering a fall of 70% and 80% in seismic work and exploratory wells and declining mature fields, Colombia’s daily production could fall as low as 750,000bd in just two years, says the executive director of Colombian Association of Oil Engineers (ACIPET), Carlos Leal.

Barrancabermeja sees improved results despite problems

Record production from nearby fields, along with optimized contracts, processes and operations have helped the Barrancabermeja Refinery report operational profits, despite facing a rocky labor scenario within.

Transportation costs hurting competivness

Issues like the lack of adequate roads and poor advancement of infrastructure safety mechanisms have caused some to consider Colombia the most expensive country for oil operations in the region.

Peace Process: Debate continues over agreements, “Congresito” 

Havana chief negotiator Humberto de la Calle announced some of the options being considered for the development of agreements with the Farc and defended the “sovereign powers” of the executive to submit agreement proposals.

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Headlines August 17th through 23rd

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Guerrilla definitely backing off

Guerrilla-initiated incidents by both groups went way down this week, but the Armed Forces picked up the slack driving total incidents up to 28.

ECP trumpeting cost cutting

A local paper published a document from Caquetá professionals in the field of social research who see the region’s unique environmental riches and the impact on the social conflict as the main reasons why the region is not suited for oil production.

The argument against oil in Caquetá

A local paper published a document from Caquetá professionals in the field of social research who see the region’s unique environmental riches and the impact on the social conflict as the main reasons why the region is not suited for oil production.

CSR Summary: GeoPark, Gran Tierra promote health and safety

GeoPark trains high altitude workers on safety procedures, meanwhile Gran Tierra Energy (TSX:GTE) implements a preventative health and safety campaign. These and other stories on Corporate Social Responsibility (CSR) in our periodic summary.

Why does it feel like things are moving sideways?

The Northern Europeans are probably jubilant with the events of the last couple of weeks and editorial cartoonists have started once again to lampoon President Juan Manuel Santos’ alleged Nobel Peace Prize ambitions. But I read the tea-leaves a bit less optimistically. Production will probably be up for the next four months – assuming the latest truce holds – but no one should be planning to cut back on security budgets in 2016.

Ecopetrol becoming a transportation company?

We doubt that CEO Juan Carlos Echeverry would agree with the statement in our title and it is admittedly, more than a little exaggerated for effect. But the company’s profits at least are shifting towards the hydrocarbons transportation line-of-business. It can be seen in the above graph (we scaled 1H15 results by days-remaining-in-the-year to get our 2015e) but perhaps more dramatically in some of the charts we show below.

Has anything changed regarding environmental licensing?

Repeatedly cited as one of the drawbacks for the industry, the government announced a new framework for environmental licensing, and the Chamber of Oil Goods and Services (Campetrol) found that the proportion of licenses approved versus those filed has changed since the last year.

Crude oil prices have little influence in fuel formula

Much has been said about the formula used to determine monthly gasoline and diesel prices, especially since the fall of international crude prices. But it is becoming clearer that the Brent and WTI have only a small impact in the Ministry of Mines and Energy (MinMinas) calculations.

MinMinas kicks off 2015 regional strategy in Arauca

Following up on actions in 2014, the Ministry of Mines and Energy (MinMinas) has extended a series of workshops to facilitate better relations between regional authorities, companies and communities, choosing Arauca as the first host for the meetings this year.

Royalties Roundup: A look at Maparregalías

A monitoring tool for the general public Maparregalías has been unveiled, and offers a window into CoP$16.8T (US$5.5B) in royalty resources that have been approved for projects in the first half of 2015, meanwhile a report reveals inefficiency in royalty project execution. These and other stories in our periodic roundup.

Why does it feel like things are moving sideways?

The Northern Europeans are probably jubilant with the events of the last couple of weeks and editorial cartoonists have started once again to lampoon President Juan Manuel Santos’ alleged Nobel Peace Prize ambitions. But I read the tea-leaves a bit less optimistically. Production will probably be up for the next four months – assuming the latest truce holds – but no one should be planning to cut back on security budgets in 2016.

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Headlines August 10th through 16th

Learn the day to day of the oil and gas industry.

GTE Q2 production flat, loss continues

Gran Tierra Energy (TSX:GTE) issued its results for the second quarter, the first full earnings period since a new management team took the helm of the firm and redirected its strategic focus to Colombia, posting steady but flat production and a narrowed net loss.

Exploration goal continues to drop

Falling exploration activity remains one of the biggest concerns for the industry’s long term potential in Colombia, and the reduced goals set out by the National Hydrocarbons Agency (ANH) and the Colombian Petroleum Association (ACP) confirm this.

Puerto Gaitán: From bust to boom, back to bust

In ten years Meta’s Puerto Gaitán, located next to the Rubiales field, went from the department’s poorest community to oil boom town, and with the price drop the bubble has apparently burst once again for the local economy.

USO raises red flag on Reficar labor conditions

As the Cartagena Refinery (Reficar) advances, the USO has taken aim at labor conditions and says it has formed a delegation which along with the Labor Ministry will visit the refinery to confirm its accusations.

Why does it feel like things are moving sideways?

The Northern Europeans are probably jubilant with the events of the last couple of weeks and editorial cartoonists have started once again to lampoon President Juan Manuel Santos’ alleged Nobel Peace Prize ambitions. But I read the tea-leaves a bit less optimistically. Production will probably be up for the next four months – assuming the latest truce holds – but no one should be planning to cut back on security budgets in 2016.

Ecopetrol becoming a transportation company?

We doubt that CEO Juan Carlos Echeverry would agree with the statement in our title and it is admittedly, more than a little exaggerated for effect. But the company’s profits at least are shifting towards the hydrocarbons transportation line-of-business. It can be seen in the above graph (we scaled 1H15 results by days-remaining-in-the-year to get our 2015e) but perhaps more dramatically in some of the charts we show below.

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Headlines August 3rd through 9th.

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Holdovers and the ELN

Guerilla-initiated incidents dropped close to the average experienced during the previous Farc unilateral truce. Half were attributed to the ELN but it would be difficult to unequivocally call the rest ‘truce violations by the Farc’.

MinMinas says PIPE2 addressing problems

The Minister of Mines and Energy (MinMinas) Tomas González said that its PIPE2 plan is already keeping investment in Colombia and production above a million barrels a day.

Conflict on prior consultation after court decision

The Superior Tribunal of Pasto (Nariño) has ruled in favor of a Putumayo based indigenous association (ACIMVIO) and ruled against a prior decision from Interior Ministry to not certify the presence of the Inga group in an area of influence for a Gran Tierra Energy (TSX:GTE) exploration project.

USO takes PRE fight to the international stage

The USO claims workers have been pressured by anti-union forces in its attempt to negotiate entry to Pacific Rubiales Energy (TSX:PRE) through blackmail, and has taken to the international community to up pressure on authorities.

A guide or a warning on the Amazon?

The Amazon region represents both an area with interesting prospects for the hydrocarbons industry but also immense complexities. This has led the Ministry of Mines and Energy (MinMinas) to reach out to the Organization of the Colombian Amazon Communities (OPIAC) and a subsequent line up of eight workshops designed to bring these indigenous groups into a closer dialogue with authorities and the hydrocarbons industry. We read the document with interest but have comments on its practicality.

Crude prices moving in the wrong direction

At one time in late May, there was a hope that oil prices were rebounding, that somewhat like 2008/2009 there would be a rapid so-called ‘V-shaped’ recovery. After hitting bottom in January 2015, and a separate slightly higher bottom in late March, WTI rose for 11 straight weeks. Back in 2008, the bottom was WTI/Brent at US$33 (there was no gap at the time) in December but by August of 2009, both were back up over US$70. However mid-2015 has, so far, turned out quite different from 2009: both benchmark prices have fallen for 7 of the last 9 weeks.

ECP profits rise sequentially but production falls

Ecopetrol (NYSE:EC) grew its profit for the second straight quarter since its first loss as a listed company in the 4Q14, with refining posting a profit and adding a boost. Production has grown yearly, but fell off slightly compared to the previous quarter.

MinMinas budget cuts spark concern

Comments that the Ministry of Mines and Energy (MinMinas) will face a readjustment of its budget has led to concern from observers who say this could further impact a sector that is already suffering and combines poorly with the fall in exploration.

Governors vs Finance Ministry on royalties

A decision to freeze royalty funds after the fall in oil prices has the Finance Ministry at odds with departmental leaders, who want the funds to move forward with regional projects.

Peace Process: A glimmer of hope for the final stretch

The Colombian government’s chief negotiator in Havana Humberto de la Calle came forward with a strong statement that the talks are moving forward in Havana, and even put a time-frame on an agreement.

A guide or a warning on the Amazon?

The Amazon region represents both an area with interesting prospects for the hydrocarbons industry but also immense complexities. This has led the Ministry of Mines and Energy (MinMinas) to reach out to the Organization of the Colombian Amazon Communities (OPIAC) and a subsequent line up of eight workshops designed to bring these indigenous groups into a closer dialogue with authorities and the hydrocarbons industry. We read the document with interest but have comments on its practicality.

Crude prices moving in the wrong direction

At one time in late May, there was a hope that oil prices were rebounding, that somewhat like 2008/2009 there would be a rapid so-called ‘V-shaped’ recovery. After hitting bottom in January 2015, and a separate slightly higher bottom in late March, WTI rose for 11 straight weeks. Back in 2008, the bottom was WTI/Brent at US$33 (there was no gap at the time) in December but by August of 2009, both were back up over US$70. However mid-2015 has, so far, turned out quite different from 2009: both benchmark prices have fallen for 7 of the last 9 weeks.

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Headlines July 27th – August 2nd

Where is the gas consumption trend heading?

Nothing seems to be 100% sure in the natural gas industry. Will a recent call for comments from the Ministry of Mines and Energy (MinMinas) on a planned resolution regarding planning for future gas consumption trends help clear things up?

Find out what is going on with the Colombian oil and gas markets.

MinMinas presents 10 benefits for mining, hydrocarbons

The Minister of Mines and Energy Tomás González formally presented 10 measures designed to improve the competitiveness of the mining and hydrocarbons industry, pointing to their strategic role in the Colombian economy.

CREG ties propane prices to natural gas

The Energy and Gas Regulation Commission (CREG) has approved a change that allows Ecopetrol (NYSE:EC) to fix propane cylinder prices based on the internal price of natural gas, a move which the propane distribution association Gasnova says will hurt Colombia’s poorest.

Peace Process week of June 29: Farc attacks wear at support for talks

The toll of the latest Farc offensive, one with grave environmental consequences, has shown itself in a recent Gallup poll which found that 46% of Colombians support a military-led approach to defeating the Farc, one percentage point above those who favor negotiations.

Trust Consulting’s Ernesto Borda: Can Colombia’s pipelines be kept safe?

We think Ernesto Borda is one of the clearest observers of the social and security challenges in Colombia’s countryside. His firm, Trust Consulting, helps companies in the extractive sector manage the complex political, social and security environment where they operate. With both guerrilla groups stepping up their actions against pipeline infrastructure we wanted to hear what he thought about the drivers and what might be done.

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