ENERGY ADVISOR a WEEKLY PUBLICATION of the DIALOGUE April 23, 2021
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LATIN AMERICA ADVISOR ENERGY ADVISOR A WEEKLY PUBLICATION OF THE DIALOGUE www.thedialogue.org April 23, 2021 BOARD OF ADVISORS FEATURED Q&A TOP NEWS Nigel Blackaby Global Head, RENEWABLES NEWS International Arbitration Group, Freshfields Bruckhaus Deringer Will the New CEO Engie to Power Jeffrey Davidow Anglo American Senior Counselor, The Cohen Group of Brazil’s Eletrobras Mine in Peru Jonathan C. Hamilton Engie Energía is set to power An- Partner, glo American’s Quellaveco copper White & Case Privatize the Firm? mine in Peru with 100 percent Raul Herrera renewable energy. Partner, Page 2 Corporate & Securities Practice, Arnold & Porter James R. Jones RENEWABLES NEWS Chairman, Monarch Global Strategies Brazil, U.S. in Jorge Kamine Talks for Biofuels Partner, Corporate & Financial Services, Treaty: Minister Willkie Farr & Gallagher Brazil’s energy and mining Craig A. Kelly minister said the two countries Senior Director, are working on a cooperation Americas Int’l Gov’t Relations, Rodrigo Limp Nascimento, a former energy secretary, was tapped to head Brazilian state utility Exxon Mobil treaty to develop “the biofuels of Eletrobras amid the company’s privatization plans. // File Photo: Brazilian Government. the world.” Jorge León Page 4 Energy Economist, BP Brazil’s government has named Rodrigo Limp Nascimento Jeremy Martin as the new chief executive officer of state utility Eletrobras. OIL & GAS Vice President, Energy & Sustainability, Institute of the Americas He replaces Wilson Ferreira, who resigned in January over Guyana Expects Q what he referred to as a lack of political backing in Congress Mayya Novakovskiy Oil Output to Manager, Western Hemisphere, for the company’s privatization plans. Limp’s appointment sparked some Chevron Reach One Mn criticism, as the government reportedly ignored a recommendation by a Larry Pascal BPD by 2027 Chairman, headhunter firm that was hired to pick Eletrobras’ new CEO, prompting Guyana expects crude oil output Americas Practice Group, at least one company board member to resign in protest. Is Limp the Haynes & Boone to reach one million barrels per best person to lead Eletrobras, and what issues can he be expected to day by 2027, which would position R. Kirk Sherr President, prioritize? What is the state of Eletrobras’ privatization plans, and what the South American nation as a potential leading supplier of Clearview Strategy Group are the major benefits and drawbacks of such a move? Can progress in Mark Thurber oil in the Western Hemisphere, Partner, the company’s privatization efforts be expected soon, and what are the said Natural Resources Minister Hunton Andrews Kurth most important obstacles standing in the way? Vickram Bharrat. Jose L. Valera Page 2 Partner, Mayer Brown LLP Erich Decat, political analyst at XP Investments: “On its Lisa Viscidi Program Director, search for its next CEO, Brazilian state electricity company Inter-American Dialogue Eletrobras hired a specialized headhunter firm, but the gov- Vanessa Wottrich ernment decided to bypass it and appoint its own candidate. Principal Analyst for Latin America, A Equinor That decision did not negatively affect Eletrobras’ share price in the slightest—because investors welcomed the choice. Rodrigo Limp is a for- mer secretary of energy, with strong congressional relationships, which is why investors like him. In fact, Limp, as a congressional advisor, par- ticipated in the 2017 negotiation of a failed bill aimed at privatizing the company. At the time, different political interests derailed the attempt. However, legislators are currently debating a provisional measure based Continued on page 3 Bharrat // File Photo: Guyanese Government. COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ENERGY ADVISOR April 23, 2021 OIL AND GAS NEWS because its intent is to make sure the oil NEWS BRIEFS sector develops quickly, and with it see an Guyana Expects Oil increase in oil revenues for the government,” Engie Peru to Power Raúl Gallegos, director of Control Risks, told Anglo American Mine Output to Reach One the Energy Advisor in a Q&A published Nov. 27. “The ability of the government to manage oil With Renewable Energy Million BPD by 2027 revenue responsibility and transparently is an- South Africa-based and British-listed mine other matter,” he added. In the current structure Anglo American announced last week that Guyana expects crude oil output to reach one of Guyana’s natural resources fund, which the it has signed a deal with Engie Energía Perú million barrels per day by 2027, positioning the central bank manages, the president has the to provide 100 percent renewable energy to South American nation as a potential leading ultimate say over how resources are spent and the company’s Quellaveco copper mine in the supplier of oil in the Western Hemisphere, invested, Gallegos said. Andean nation, which is expected to begin a government official said last week, Argus production in 2022, Reuters reported. Anglo Media reported. “By 2027, we are hoping that American already has renewable energy com- there will be at least seven floating production, Petrobras’ New CEO mitments in Brazil and Chile. storage and offloading (FPSO) vessels in the country, and that we will be producing either Signals Continuity close [to] or even over one million barrels per at Swearing-in day,” said National Resources Minister Vickram Canada’s Conservative Joaquim Silva e Luna, the new CEO of Brazilian Party Backs Carbon Tax state oil company Petrobras, will respect the Canada’s Conservative Party last week The Guyanese government company’s current pricing policy and continue reversed its climate change stance by backing investments in deepwater assets, he said at his carbon pricing and adopting the fee on also expects oil income swearing-in ceremony on Monday, Reuters re- emissions and fuels in a move that may upset to surpass $1 billion per ported. His speech signaled some form of con- many of its supporters, Reuters reported. year by 2025. tinuity of the previous management’s policies, Under leader Erin O’Toole, the party plans to which the market generally viewed as positive. scrap Prime Minister Justin Trudeau’s national Brazil-listed preferred shares in Petrobras rose carbon tax, which is set to increase to 170 about 2.6 over the course of his brief com- Canadian dollars ($135.64) a ton by 2030, and Bharrat. Currently, the Liza 1 well, which oil ments on Monday, and they were among the instead cap prices at 50 Canadian dollars a ton major ExxonMobil operates on the country’s largest gainers on Brazil’s benchmark Bovespa for taxpayers. Some analysts say this may lead deepwater Stabroek block, is producing index by mid-day, trading up 3.9 percent. to higher fuel bills. 120,000 barrels per day (bpd). Exxon forecasts output will reach 750,000 bpd by 2026, the same year by which it expects to have five FP- Venezuela’s Maduro SOs operating in Guyana. The company’s vice Full Repairs to Mexico’s president for deepwater projects, Jayme Meier, Vows to Resolve Minatitlán Refinery to said last year that Exxon also sees potential for Diesel Shortages Take 90 Days: Pemex as many as 10 FPS0s soon after 2026. Bharrat Full repairment of the Minatitlán refinery in said Guyana expects oil income to exceed $1 Venezuelan President Nicolás Maduro on billion per year by 2025, though he did not de- Mexico’s Veracruz state will likely take 90 days, Wednesday vowed to resolve widespread although some production could resume as tail price assumptions. “That would augur well diesel shortages that farmers say are compli- for Guyana,” he said, Argus Media reported. “It soon as April 30, state oil company Pemex said cating the planting and harvesting of crops, last week, Argus Media reported. The refinery, means more direct proceeds from the oil and Reuters reported. Maduro also called on the gas industry will be coming in.” The adminis- which can process as many as 285,000 barrels oil minister to increase domestic production of per day, was shuttered earlier this month tration of President Irfaan Ali, who took office fuel, blaming U.S. sanctions on state oil com- last August, is currently preparing a request for following a major fire that started in a pump pany PDVSA for the shortages. The adminis- house. The country’s environmental and work- company proposals to market its share of oil tration of former U.S. President Donald Trump from the Liza 1 well. “The Ali government will place safety agency, ASEA, has initiated an last year declined to renew an exemption from inspection of the refinery to determine whether continue to take a business-friendly approach sanctions for diesel supplied to Venezuela to dealing with oil companies, particularly the fire was caused by a result of violations to by non-U.S. companies, a measure that had safety protocols. COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ENERGY ADVISOR April 23, 2021 been in place on humanitarian grounds. There FEATURED Q&A / Continued from page 1 had been some speculation that the diesel exemption from sanctions could be reinstated on the 2017 bill, with the same content. Due dent Bolsonaro’s correct perception, despite under U.S. President Joe Biden, but his admin- to his background, Limp knows how to over- his initially liberal rhetoric, that privatization istration so far has signaled continuity of all come congressional opposition. Currently, could lead to higher electricity prices, as oc- sanctions against the Andean nation. “We must investors are focused on the sponsor of the curred in the late 1990s. Throughout history, regularize the issue of diesel with national bill, which is in the lower house of Congress. successive governments repeatedly used production,” Maduro said, urging Oil Minister The changes he has signaled to the original Tareck El Aissami to resume normal supply proposal have made some funds and banks within 60 days.