Latin America Advisor

Energy Advisor

A Publication of The Dialogue

Editor’s Picks: Top Content from the Energy Advisor 2019

The Latin America Advisor’s editorial team has produced more than 50 editions of the weekly Energy Advisor this year for subscribers at many of the world’s most respected companies, as well as leading universities and government agencies on four continents.

I am delighted to share ten issues our team felt covered especially important developments during 2019, a year that brought dashed hopes for a significant energy auction in Brazil, uncertainty over the future of Argentina’s massive Vaca Muerta formation, as well as confusion in Mexico’s energy sector under first-year President Andrés Manuel López Obrador.

As always, we’d welcome your feedback and wish all our readers a happy new year.

Erik Brand,
Publisher

 

Were Brazil’s Latest Pre-Salt Oil Auctions a Failure?

Nov 15  |  Energy Advisor

Brazil’s auction of drilling rights to four deep-water oil fields in the so-called “transfer of rights” area raised a disappointing $17 billion on Nov. 6, well below the $26 billion the government had forecast. Two of the four blocks in the tender did not receive a bid. Why did fewer companies than expected participate in the highly anticipated auction, and what happens next? Does the lower revenue affect the government’s budget and fiscal plans? What consequences does the disappointing tender have on oil production in the South American country, which hoped the sale would turn it into the world’s fifth-largest producer in the next 10 years?

Will Venezuela’s Opposition Retain Control of Citgo? 

Oct 11  |  Energy Advisor

A U.S. appeals court last month lifted an impediment that had frozen efforts by defunct Canadian gold miner Crystallex to take control of Citgo, Venezuelan state oil company PDVSA’s U.S.-based refiner. The ruling marks a defeat for opposition leader Juan Guaidó and his allies, who have been fighting to prevent creditors from seizing Citgo since taking effective control of the company from President Nicolás Maduro’s government. Moreover, if the opposition fails to make a $913 million payment on a 2020 PDVSA bond due on Oct. 27, creditors reportedly could attempt to seize the company. What does the court’s ruling mean for Citgo and for Venezuela? How likely is Crystallex to successfully take control of the U.S.-based refiner, and is it expected to put the Citgo shares up for sale, as it has stated it would do? Is the opposition likely to complete the upcoming payment, and what would happen if it fails to do so?

Is Colombia Likely to Allow Fracking in the Near Future? 

Oct 4  |  Energy Advisor

Colombia’s top administrative court last month maintained a temporary suspension on the use of fracking techniques to extract oil and gas. The moratorium on the regulation for the development of unconventional deposits has been in place since November as part of an ongoing lawsuit that an environmental lawyer filed against the energy ministry. What does the decision mean for the case and for companies hoping to start using fracking techniques in Colombia? What’s next in the legal process, and can regulation for fracking be expected anytime soon? Where does public opinion on the fracking debate stand, and what steps should Colombia take to ensure responsible use of the technique?

Will Election Results in Argentina Upend its Energy Policy?

Aug 23  |  Energy Advisor

Peronist opposition candidate Alberto Fernández, whose running mate is former President Cristina Fernández de Kirchner, trounced incumbent President Mauricio Macri by a wider-than-expected margin in the country’s Aug. 11 primary vote. What’s at stake for Argentina’s energy sector in the upcoming October election? Which candidates have the best or worst energy proposals? How big of a challenge is Macri facing, and to what extent can continuity in energy policy be expected in the case of a potential Macri loss?

How Will New IMO Rules Transform Oil Market Dynamics?

Aug 2  |  Energy Advisor

New rules established by the U.N. International Maritime Organization, or IMO, that mandate ships to use fuel with less sulfur are set to come into effect on Jan. 1, 2020. The IMO regulations ban ships from using fuels with a sulfur content above 0.5 percent, compared with 3.5 percent currently, in an attempt to improve human health by reducing air pollution. What implications do the new regulations have for the global fuel market? How will the tougher rules affect Latin America’s fuel production, and which countries are set to gain or lose the most? How are governments and companies in the region preparing for the change, and what else should they do in anticipation of the new rules? Will the IMO regulations have the desired results?

How Much Have U.S. Sanctions Harmed Venezuela’s Oil Sector?

Jul 26  |  Energy Advisor

Nearly six months after the administration of U.S. President Donald Trump slapped sanctions on Venezuelan state oil company PDVSA, the South American country continues to struggle to find new buyers, with PDVSA’s exports plummeting by more than a fifth since January. What are the most important ways in which U.S. sanctions have affected Venezuela’s oil sector, and what other indirect consequences have they had for the country and for global oil dynamics? To what extent have the U.S. sanctions succeeded at advancing the Trump administration’s objectives in Venezuela, and how much are they responsible for the oil sector’s decline? What are the prospects for PDVSA’s production and sales in the months ahead, and what measures can the company take to boost its performance?

How Is Technology Changing How Utilities Operate?

Dec 13  |  Energy Advisor

Google and Virginia-based AES Corporation, a significant electricity producer in Latin America and the Caribbean, in November announced they were undertaking a 10-year alliance to accelerate the growth and adoption of clean energy. The companies plan to use cloud-based tools, artificial intelligence and data analytics to modernize electric grids and support new renewables projects in the United States and Latin America. How is technology changing the way utilities in Latin America and the Caribbean operate, plan and invest? What are some of the ways partnerships such as this will play out in the region? What will it take to make electric grids in Latin America and the Caribbean reliable enough to handle widespread electric transit and other modern innovations that would replace fossil fuels?

Is López Obrador Changing Course on His Energy Policies?

Sep 27  |  Energy Advisor

Mexican state oil company Pemex in the months ahead will launch a bidding process for 15 public-private contracts for integrated exploration and extraction, Finance Minister Arturo Herrera said this month. Days earlier, Herrera unveiled President Andrés Manuel López Obrador’s 2020 budget, which includes 86 billion pesos ($4.4 billion) earmarked for Pemex in the form of a capital injection as well as tax breaks. Will the announced tender attract international and national companies, and what benefits would such public-private partnerships bring for Pemex? To what extent is López Obrador’s government signaling a more pro-business approach in the energy sector, and what implications would such a move have on the country’s investment environment? How significant is the financing included for Pemex in the budget, and is it enough for the company to avoid a downgrade to “junk” status?

Will Social Unrest Derail Bolivia’s Oil and Gas Sector?

Nov 22  |  Energy Advisor

International oil companies have reportedly halted natural gas exploration in Bolivia after President Evo Morales’ resignation this month, which came after weeks of protests following the country’s contested Oct. 20 election. Meanwhile, state oil company YPFB reportedly informed Argentine authorities that the political crisis may affect normal supplies of natural gas from Bolivia. To what extent will the uncertain politics and social unrest in Bolivia affect the country’s oil and gas production and exports, and how disruptive could this become? What is the state of the country’s oil and gas sector in general? What are the most important challenges the sector will face in the coming year?

Will Internal Politics Hamper Investment in Guyana’s Oil?

May 10  |  Energy Advisor

Legal disputes continue in Guyana over the invalidation of the National Assembly’s no-confidence vote against the ruling coalition government in December, with former lawmaker Charandass Persaud bringing the case to the Caribbean Court of Justice. Will the dispute be resolved soon, and what potential implications could the outcome have on the country’s stability amid efforts to craft new laws governing its oil and gas sectors? To what extent is the situation and the health of President David Granger, who is battling cancer, affecting political risk in Guyana? Have these developments dampened Guyana’s energy investment climate?

The Latin America Advisor features Q&A from leaders in politics, economics, and finance every business day. It is available to members of the Dialogue’s Corporate Program and others by subscription.