LATIN AMERICA ADVISOR ENERGY ADVISOR A WEEKLY PUBLICATION OF THE DIALOGUE www.thedialogue.org June 10, 2016 BOARD OF ADVISORS FEATURED Q&A TOP NEWS Mary Rose Brusewitz Partner, OIL & GAS Strasburger & Price Can Parente Jeffrey Davidow Venezuela’s Senior Counselor, Maduro Creates The Cohen Group Nurse Petrobras Mining Ministry Ramón Espinasa Consultant, Venezuelan President Nicolás Inter-American Development Bank Back to Health? Maduro late Tuesday announced Luis Giusti the creation of a ministry devoted Senior Advisor, solely to mining, as the OPEC Center for Strategic & country attempts to diversify International Studies national revenues away from oil Jonathan C. Hamilton amid low global crude prices Partner, by exploiting untapped mineral White & Case resources. Raul Herrera Page 2 Partner, Corporate & Securities Practice, Arnold & Porter RENEWABLES James R. Jones Co-chair, Macri Seeks 20% Manatt Jones Global Strategies Renewables in Jorge Kamine Pedro Parente has promised to restore Petrobras’ fi nancial health without government assis- Counsel, tance. // File Photo: Brazilian Government. Energy Mix Skadden Arps Argentine President Mauricio Craig A. Kelly Macri is seeking as much as $20 The board of Brazilian state-run oil company Petrobras last Director, billion in investments over the Americas Int’l Gov’t Relations, month named Pedro Parente as the company’s new CEO. next decade in a push to generate Exxon Mobil Parente, who replaces Aldemir Bendine in the post, has a fi fth of Argentina’s power from Jeremy Martin Q renewable resources by 2025. Director, said that political interference in the state-run oil company Page 3 Energy Program, will come to an end and vowed to restore the fi rm’s fi nancial health, Institute of the Americas adding that Petrobras will sell assets and will not rely on a government Larry Pascal RENEWABLES Chairman, bailout. Parente was formerly the top executive at the Brazilian unit of Americas Practice Group, U.S. agribusiness company Bunge and currently chairs stock market Jamaica’s Holness Haynes & Boone Commissions 24 Charles Shapiro operator BM&FBovespa. How successful will Parente be in managing the President, company amid low oil prices and an ongoing corruption investigation? MW Windfarm World Affairs Council of Atlanta How practical is Parente’s plan to avoid government intervention while Jamaican Prime Minister Andrew R. Kirk Sherr Holness on Saturday commis- President, restoring the company’s fi nancial health? What effect will Parente’s busi- sioned the Wigton III wind energy Clearview Strategy Group ness-focused background have on the government-run oil giant? plant. Garrett Soden Page 3 Director, Etrion Corporation Clarissa Lins, founding partner of Catavento Consultancy Mark Thurber in Rio de Janeiro: “The recently appointed Petrobras CEO, Partner, Andrews Kurth Pedro Parente, is known for his leadership, managerial skills Alexandra Valderrama and ability to navigate in turbulent contexts. Among his Manager, A International Government Affairs, recognized accomplishments while he was a civil servant are a complex Chevron process of debt renegotiation with more than 20 local governments in Lisa Viscidi 1998 and the management of the energy crisis in 2001, both under former Program Director, Inter-American Dialogue President Fernando Henrique Cardoso. After a successful longstanding Max Yzaguirre career in the public sector, Parente fi rst transitioned to the private sector President and CEO, as the CEO of media conglomerate RBS and then moved to lead Bunge The Yzaguirre Group operations in Brazil. He currently chairs the Brazilian stock exchange, BM&FBovespa, and is partner of an investment boutique. His profession- Holness // File Photo: Jamaican Government. Continued on page 3 COPYRIGHT © 2016, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ENERGY ADVISOR June 10, 2016 OIL & GAS SECTOR NEWS NEWS BRIEFS Aranguren Facing Venezuela’s Confl ict of Interest Share of Renewables in Brazil’s Energy Mix Maduro Creates Investigation Jump to 41.2% in 2015 Mining Ministry Argentine energy minister Juan José Aranguren The share of renewables in Brazil’s energy mix is being investigated by a local prosecutor rose to 41.2 percent in 2015, a 4.6 percent in- Venezuelan President Nicolás Maduro late for potentially having a confl ict of interest by crease year-on-year, the Ministry of Mines and Tuesday announced the creation of a ministry continuing to own shares of Royal Dutch Shell, Energy said in its Brazilian Energy Review 2016 devoted solely to mining, as the OPEC country where he previously served as an executive of report published Monday, SeeNews reported. attempts to diversify national revenues away the local branch, the Associated Press reported The report also said that renewables supplied from oil amid low global crude prices by Thursday. Aranguren became energy minister 75.5 percent of the country’s electricity mix. exploiting untapped mineral resources, Reuters in December. He reported about $1.1 million For liquid transport fuels, Brazil’s ethanol reported. Nearly all of the country’s foreign in Shell’s class-A shares in a wealth statement and biodiesel had a 21.4 percent penetration, exchange comes from its oil industry. Mining released this week. The Argentine government among the highest in the world. CO2 emissions is defending Aranguren against mounting in the country have fallen to about 33.6 percent criticism, and cabinet chief Marcos Peña said less than the world’s average, which the Wednesday that “the law is very clear,” and ministry attributed to the high percentage of there is no confl ict of interest. Critics, however, renewables in the country’s energy mix. say that Aranguren could benefi t from his privi- leged information about the oil market. Correa Predicts Oil Will Odebrecht Unit Hover at $50/Barrel Through Year-End Mirabal // File Photo: Venezuelan Government. Awaiting Financing Ecuadorean President Rafael Correa on for Pipeline Project Wednesday predicted that oil prices would activities had previously been overseen by the remain around $50 per barrel through year-end, Ministry of Petroleum and Mining, and the new The credit committees for a group of 20 banks Reuters reported. He added that the predicted Ministry of Ecological Mining Development will set to provide the syndicated loan to fund an price level would not be enough to relieve the supervise state-run mining companies, such as Odebrecht natural-gas pipeline project in Peru fi nancial strain on the Andean country. Low Minerven and the Venezuelan Mining Corpo- have so far refused to sign off on the deal, oil prices have increased debt and reduced ration, among other responsibilities. Roberto citing concerns over the corruption scandal in investment in the small oil-exporting country Mirabal will head the new ministry. In Febru- Brazil that landed the company’s former CEO in and have hindered economic progress. ary, Maduro said mining “is one of the most prison and has implicated many others in Bra- immediate sources” the nation has to balance zil’s political and business sectors, Bloomberg its revenues, the Financial Times reported. The News reported Tuesday. According to two Maduro administration is seeking foreign in- Mexico Plans for Next people with direct knowledge on the matter, vestment in gold production and this year inked Odebrecht has not received a $4.1 billion loan Bidding Round of Energy an agreement with Canadian mining company for the construction of the pipeline, because Auction by End of July Gold Reserve to develop the Las Brisas and credit committees do not feel comfortable Las Cristinas mines, Reuters reported. Mirabal The next round of bidding in Mexico’s oil and lending to Odebrecht unit Gasoducto Sur will be in charge of leading negotiations with gas auctions is set for the end of July and will Peruano, or GSP, a special-purpose venture Gold Reserve, which won a $750 million award include 15 shallow water blocks for exploration of the construction conglomerate, due to the through the World Bank’s International Center and extraction in the Gulf of Mexico, Energy “Operation Carwash” corruption scandal and for Settlement of Investment Disputes over the Minister Pedro Joaquín Coldwell said Wednes- possible fi nes that the holding conglomerate 2009 termination of a mining concession. Gold day, Reuters reported. The following round may face. GSP won a 34-year license to build Reserve agreed this year to participate in a will be called by the end of the summer during and operate the 671 mile-long pipeline in June new joint venture with Venezuela as part of the which 14 onshore blocks for exploration and 2014. Spain’s Enagas holds a 25 percent stake, resolution of the dispute. production in the Burgos basin and southeast and Peru’s Grana & Montero bought a 20 per- Mexico will be up for grabs. COPYRIGHT © 2016, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ENERGY ADVISOR June 10, 2016 cent stake in September for $215 million. GSP sustainable projects. “The government has a national grid, the government said in a state- has been looking into more expensive bridge keen sense of urgency, which is a very good ment. The 24 megawatt Wigton III wind energy loans while it awaits syndicated fi nancing, the thing. They are doing lots of the right things at plant began supplying energy to the grid in people with knowledge on the matter said. a feverish speed,” he said. March at its projected output rate, generating Odebrecht controls a 55 percent stake in GSP, at a rate of 63,072 megawatts per year. The fa- and it is in talks with fi ve potential bidders to cility includes 12 wind turbines, each with two sell its stake. It has transferred GSP manage- Jamaica’s Holness megawatts generation capacity, a 9.6 kilometer ment to Enagas, said a press offi cial at the São Commissions 24 MW transmission line and a new substation.