ENERGY ADVISOR a WEEKLY PUBLICATION of the DIALOGUE July 9, 2021
Total Page:16
File Type:pdf, Size:1020Kb
LATIN AMERICA ADVISOR ENERGY ADVISOR A WEEKLY PUBLICATION OF THE DIALOGUE www.thedialogue.org July 9, 2021 BOARD OF ADVISORS FEATURED Q&A TOP NEWS Nigel Blackaby Global Head, OIL & GAS International Arbitration Group, Freshfields Bruckhaus Deringer What Does the Mexican Gov’t Jeffrey Davidow Senior Counselor, Grants Pemex The Cohen Group Future Hold for Control of Jonathan C. Hamilton Disputed Deposit Partner, White & Case Peru’s Oil & Gas? The Mexican Energy Secretariat Raul Herrera granted state oil company Pemex Partner, control of a major shared oil find Corporate & Securities Practice, over the private consortium that Arnold & Porter made the discovery in 2017. James R. Jones Page 2 Chairman, Monarch Global Strategies OIL & GAS Jorge Kamine Partner, Corporate & Financial Services, Argentina Natural Willkie Farr & Gallagher Gas Output Craig A. Kelly Risks Deficit Senior Director, Americas Int’l Gov’t Relations, Socialist Pedro Castillo, whose party has called for nationalizing mining and hydrocarbon Argentina’s natural gas output Exxon Mobil assets as well as power plants, is expected to be Peru’s next president. // File Photo: TV Perú. might sink into a deficit that Jorge León could reach $1 billion due to local Energy Economist, natural gas shortfalls. BP Socialist Pedro Castillo is expected to win Peru’s presiden- Page 3 Jeremy Martin tial election following a tight-knit race against right-wing Vice President, Energy & Sustainability, Institute of the Americas rival Keiko Fujimori and a delay in the official announcement OIL & GAS Larry Pascal Q over Fujimori’s fraud allegations. The platform of Castillo’s Major Firms to Chairman, Americas Practice Group, Perú Libre party calls for nationalizing mining and hydrocarbon assets, Start Drilling in Haynes & Boone as well as power plants, although Castillo has recently tempered that Colombia: Mesa R. Kirk Sherr position, saying he is not planning nationalizations or expropriations. President, Colombian Energy Minister Diego Clearview Strategy Group What can Peru’s energy sector expect of a Castillo presidency? To what Mesa said in an interview that Mark Thurber extent will Perú Libre’s more radical proposals become policy, and what international oil companies includ- Partner, role will Congress and courts play in balancing the party’s more radical ing Royal Dutch Shell, ExxonMobil Hunton Andrews Kurth and Repsol are focusing on the positions? What are the major implications of Castillo’s energy priorities, Alexandra Valderrama Andean nation’s offshore poten- Director, not only for Peru’s economy and for businesses operating there, but also tial. The firms are set to start International Government Affairs, drilling there this and next year. Chevron for the country’s progress away from fossil fuels as energy sources? Page 2 Jose L. Valera Partner, Pedro Francke, economic advisor to Pedro Castillo, and Mayer Brown LLP Lisa Viscidi Humberto Campodónico, professor at Universidad Nacional Program Director, Mayor de San Marcos: “Candidate Pedro Castillo has said Inter-American Dialogue that there will be no nationalizations or expropriations of Vanessa Wottrich A Principal Analyst for Latin America, companies, including in the mining and hydrocarbons sectors, during his Equinor time in office. In the mining sector, which is seeing a significant rise in metal prices, he has proposed that the Peruvian state participate in this extraordinary income, either through a royalty, an extraordinary tax or an income tax. In the hydrocarbons sector, the recovery of sovereignty over the destination of natural resources is important. The gas export contract for Block 56 will be renegotiated, as will the mechanisms for the export Mesa // File Photo: Colombian Continued on page 3 Government. COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ENERGY ADVISOR July 9, 2021 OIL AND GAS NEWS earlier last week Mesa announced that Colom- NEWS BRIEFS bia is planning to launch a plan to develop the Major Firms to Start production and use of hydrogen as an energy Brazil’s Northeast Region source, Mesa told Reuters in an interview. The Hits Records for Wind, Drilling in Colombia government in September is set to publish a road map for the next 30 years establishing the Solar Power Generation This, Next Year: Mesa production, use and export of hydrogen, Mesa Brazil’s northeast region last week registered said. Colombia has the sixth-largest quantity of new records of wind and solar power gen- Some of the world’s largest oil companies renewable water resources in the world, which eration of 10,856 megawatt peak and 681 have plans to start drilling in Colombia this Mesa said would put it in an ideal position average megawatts, respectively, Renewables and next year, Energy Minister Diego Mesa told to produce green hydrogen, which is made Now reported, citing data from the National Bloomberg News in an interview published July by splitting water. Mesa added it would also Electric System Operator. At the time of peak 1. Mesa said Royal Dutch Shell is set to start produce blue hydrogen, which is made when generation, electricity from the region’s wind drilling off the coast of the Andean nation this natural gas is split into its component parts, parks met 96 percent of demand at the time. year, while ExxonMobil and Spain’s Repsol, according to the report. “There is significant Meanwhile, solar power during peak generation in addition to Colombian state oil company interest from some companies from Germany” only reached 6.4 percent of the region’s needs. Ecopetrol, plan to do so in 2022. “Internation- in developing green hydrogen in Colombia, Mesa told Bloomberg News. “They have been very active about looking at the potential of India’s IOC Buys Crude Mesa expects oil produ- Colombia to supply green hydrogen,” he added. Mesa also told the news service that Colombia From Guyana’s Liza Field tion to rebound to 790,000 expects to award renewable energy contracts as it Diversifies Options barrels per day this year. in October for projects with at least 5 mega- India’s largest state-controlled refiner, IOC, has watts of capacity to supply industrial users acquired crude from Guyana’s Liza field as part and large companies starting in 2023. [Editor’s of a broader strategy to expand its purchase al oil companies are more focused on the note: See related Q&A on Colombia’s oil sector options, IOC Chairman Shrikant Vaidya said offshore potential,” Mesa said in the interview. in the June 11 issue of the Energy Advisor and last week, Argus Media reported. “We have “They are working on getting the rigs for next a Q&A on President Iván Duque’s renewable en- procured one Suezmax of Guyanese Liza year.” Spokespeople for Exxon and Repsol did ergy policies in the Dec. 4 issue of the Energy crude,” Vaidya said, adding that IOC is the first not immediately respond to the news service’s Advisor.] Indian state refiner to buy crude from the South request for comment. Companies including American nation. IOC is looking at buying more Brazilian state firm Petrobras have found oil Liza crude “if the economics work,” as the and gas in Colombia’s deep water, but none of Mexican Gov’t Grants company usually seeks new grades to increase the fields have begun production. Exploration the number of available crude procurement and development offshore Colombia is crucial Pemex Control of options, a source told Argus Media. for the country to reverse dwindling oil and gas Zama Discovery reserves and strengthen energy security in the near future, according to the report. Output in Mexico’s government has designated state oil the Andean nation has fallen in recent months, firm Pemex to run a major shared oil find over Petrobras Raises $2.3 Bn in part because of roadblocks set up during a private consortium led Houston-based Talos From Secondary Offering massive, nationwide anti-government protests. Energy, which first discovered the crude and in BR Distribuidora Production dropped below 700,000 barrels has largely invested in the deposit, The Wall per day (bpd) in the second week of May, the Street Journal reported Monday. The Energy Brazilian state oil company Petrobras raised lowest level since 2009. Likewise, amid the Secretariat handed Pemex management con- 11.4 billion reais ($2.3 billion) from a second- pandemic, average oil production last year fell trol of the so-called Zama joint development ary offering of its remaining 37.5 percent stake 12 percent from the previous year to 781,3000 after the two companies failed to come to an in BR Distribuidora, a move that could pave bpd. The energy minister expects production agreement. Talos, which made the oil discovery the way for more refinery sales, Argus Media to rebound in coming months and reach an in 2017, argues it should be the operator of the reported last week. Petrobras’ board of direc- average of 790,000 bpd for the year. The hike development. It was the first major oil discov- tors priced individual BR Distribuidora shares in oil prices this year has encouraged more ery by foreign companies in Mexico since the at 26 reais each, according to a securities onshore drilling, Mesa said. In related news, 2014 energy reforms that opened the sector to filing. Shares started trading on the São Paulo exchange B3 on July 2, according to the report. COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ENERGY ADVISOR July 9, 2021 foreign and private investment. The Talos-led FEATURED Q&A / Continued from page 1 consortium initially won the exploration and production contract in a 2015 oil auction. The of this gas, in which the Peruvian state does Gasoducto al Sur. Neither his political party’s deposit is believed to hold some 700 million not currently participate.