One wonders if Venezuela’s energy minister Nelson Martinez has packed extra underwear on his new tour of Opec and non-Opec oil producers. The streets of Caracas are ablaze with protests, and Opec’s traditional price hawk has become a crippled bird.
It is a rich irony that the accelerating downfall of Venezuela´s once-thriving oil industry isn´t enough to realize the country´s ambitious oil price aspirations. The Orinoco oil belt is still mostly an undeveloped wasteland, and grand schemes for offshore gas have given way to gruesome images of spiraling canisters of tear gas.
If Shell were a knight, the Dragon natural gas field offshore Venezuela might be a quivering beast, Trinidad and Tobago the damsel in distress. But the setting for this medieval tale isn’t anywhere near Avalon. It’s Caracas, and there rules a capricious monarch on a three-legged throne.
We’re learning day by day that the wrecking ball of corruption piloted by Odebrecht and other Brazilian contractors swung far and wide across Latin America in the 2000s. Projects to build pipelines, highways and other strategic infrastructure are stalled, and senior politicians are quivering.
Latin American prosecutors gathered in Brasilia yesterday to coordinate their investigative efforts. Spurred by Brazil’s Car Wash probe of state-controlled Petrobras and Odebrecht’s December 2016 international plea deal, the prosecutors want to find out who took bribes, and how much of the loot from overpriced projects their governments might recover.
The rot may have gone straight to the top. Peru is after former president Alejandro Toledo. Colombia, Panama and Chile are scrutinizing how their sitting presidents financed their electoral campaigns. Continue reading
US President Donald Trump’s immigration wall and nebulous border tax plans are sparking a Mexican backlash likely to find expression in the country’s oil patch. US companies have a lot at stake.
The abrupt souring of bilateral relations coincides with Mexico’s historic opening of upstream, midstream and downstream sectors that had long been the exclusive domain of state-run Pemex. The dismantling of the company’s monopoly was already a lot to swallow for Mexicans nurtured on resource nationalism that was embodied by their much-diminished national champion. Trump’s blunt words threaten to persuade Mexicans that this sweeping reform path, quietly encouraged by Washington, is a misguided route to submission, as interpreted by the country’s emboldened political parties on the left.
US oil companies and providers of oil services and supplies are invested in the Mexican reform process, imperfect as it is. A whole host of opportunities from pipelines to product imports suddenly became available after the landmark reform was passed in 2014, and US firms were among the best placed to compete.
Trump’s confrontational approach will not directly short-circuit the energy reform. But it is compounding pressure on Mexico’s unpopular president Enrique Pena Nieto to defend his country with short-term measures, and unleashing emotions that will color the way the process is rolled out as his opponents position themselves ahead of 2018 elections.
It may be too late to expect that Trump’s constituents in the US business community will soften the new president’s approach toward Mexico. Even if they do, Trump’s harsh words are already uniting Mexicans in a way that could haunt Washington long after the mercurial real estate tycoon returns to his gilded tower.
Big Oil is roaring back into Latin America, sweeping past the detritus of resource nationalism to scoop up acreage once reserved for national oil companies. Ho hum shifts the pendulum, but with a twist: most of the focus is now offshore.
Witness Mexico’s historic auction this week. ExxonMobil, Chevron, BP, Statoil, and Total, plus a smattering of independents, were awarded deepwater acreage in the Gulf of Mexico, some tantalizingly close to prolific developments on the US side of the maritime border. That includes Trion, the Perdido fold belt field that state-owned Pemex will develop with its new farm-in partner BHP Billiton. This wasn’t just a private-sector affair. China’s state-owned CNOOC picked up two blocks, the only bidder to go it alone.
Shell was conspicuously absent from the Mexican winner’s circle, even though it presented an offer for one of the blocks. The European major already has a full plate of offshore assets in Brazil, where it is the largest private-sector producer after state-controlled Petrobras, thanks to its BG acquisition early this year. Expect the gap to narrow as Petrobras’ legacy Campos basin fields decline and foreign firms prepare to operate sub-salt projects, a role that had been, until recently, the exclusive domain of Petrobras. A series of upstream tenders are scheduled for 2017. Oil companies like Shell, Statoil, and Chevron are keeping a close eye on Brazil’s evolving regulations and still-tumultuous politics. Continue reading