Energy Watchblog: INTL

2013 REVIEW : Vaca Muerta shale deals

<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_EIYR2a6Y7q4M1fDs6JZ-SK3LSr8kjT7aQ9-kG5dhPqFHislREYfMR6DmGRYrp7pCCePNep542Wb6SNGWrZiUUxbiYCDpUHybv-PTY6lcByu_vIq_lt_RxxROKI3R_L7mEIU37jmoLPM3/s1600/vaca_muerta_basin.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="237" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_EIYR2a6Y7q4M1fDs6JZ-SK3LSr8kjT7aQ9-kG5dhPqFHislREYfMR6DmGRYrp7pCCePNep542Wb6SNGWrZiUUxbiYCDpUHybv-PTY6lcByu_vIq_lt_RxxROKI3R_L7mEIU37jmoLPM3/s320/vaca_muerta_basin.jpg" width="320" /></a></div><i><span style="font-family: Arial, Helvetica, sans-serif;">Partnerships with foreign players that have the know-how and funding are seen as key to unlocking the shale riches that Argentina's Vaca Muerta play holds.</span></i><br /><br /><div class="text-contenido" style="background-color: white; margin: 0px 10px 0px 0px;"><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">After signing a deal with nationalized YPF in June, US super major Chevron has invested US$1.24bn to develop the Loma Campana subsection of Vaca Muerta. The 132-well shale oil pilot program is on schedule to be completed in March 2014. More than 1,500 wells would be drilled during a second US$16bn phase of development, with production expected to reach 50,000b/d oil and 3Mm3/d gas.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">In September the local unit of Dow Chemical signed a deal with YPF develop shale gas on the El Orejano block of Vaca Muerta. The chemical company has adopted an innovative vertically integrated way to secure gas supply for its plants in Argentina.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">Neuquén provincial oil and gas company GyP signed a letter of intent (LOI) with German firm Wintershall in September to invest US$108mn in Vaca Muerta shale exploration. Over the next two years Wintershall-led exploration will focus on the Aguada Federal block of the Aguada del Chañar area. GyP is expected to sign an E&P deal for the same play with Brazil's Petrobras in the near future.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">In December Azabache Energy and Rio Bravo Commercial Enterprises (RBE) entered into an agreement whereby RBE will pay US$5mn for a 23.76% interest in the Covunco Norte-Sur block in Argentina's Neuquén basin. Proceeds will be used for fracking on the block, according to Azabache.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">At the beginning of December Argentine President Cristina Fernández met with the head of China's CNOOC Li Fanrong and Carlos Bulgheroni, head of Grupo Bridas, CNOOC's Argentine JV partner. This presidential meeting could signal an impending deal after a US$1.5bn MOU between Bridas and YPF for Vaca Muerta expired earlier this year as Repsol threatened legal action against partnerships with YPF in the wake of the expropriation of its stake in the firm.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">Repsol is expected to halt legal action over the expropriation if a definitive agreement is reached with Argentine authorities, which could pave the way for more partnerships with YPF.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">Over US$1.5bn worth of Vaca Muerta partnerships have been announced in 2013. With the entrance of new players, the development of untapped areas and signs of an end to the conflict with Repsol, this figure should continue to grow.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;"><span style="line-height: 1.6em;">Argentina continues to cast a keen eye on progress in the US, where the rapid emergence of shale and tight oil has spawned job growth </span><span style="line-height: 1.6em;">while reducing fuel imports.</span></span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;"><span style="line-height: 1.6em;">Given</span><span style="line-height: 1.6em;"> the lack of unconventional technology and </span>know-how among local firms, and their difficulty in <span style="line-height: 1.6em;">accessing competitive financing, joint ventures are key to Vaca Muerta's development.</span></span></div></div>

2013 REVIEW : Vaca Muerta shale deals

Partnerships with foreign players that have the know-how and funding are seen as key to unlocking the shale riches that Argentina's Vaca...

Ukraine Russia Gas Dispute Infographic

Kiev and Moscow have been locked in a bitter dispute over gas supplies that has prompted fears of a return to the winters of 2006 and 2009, when Russia temporarily halted gas deliveries to Ukraine and some European countries. Last week Ukraine said it was suspending the purchase of gas from Russia, and relying on supplies from its own storage facilities. But it backtracked on the announcement within days. Russia has said that Naftogaz, Ukraine’s state-owned oil and gas company, owes over $1 billion in unpaid gas bills. Ukraine maintains that Russia charges it more for gas than other European nations.<br /><br />Click the image below for larger version infographic<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj34ur8Z8pGkk6YXye20sRnOzqI86_R2EPmabsTqaMKHRT8tljsZ_8shPDZHiAABR-jClfzQ7nQ18f9UCicETBA2O3DeRycUxvFmfsznNsaC_bUHkWjNVm_ONly5vE31qjwjqaUrkppXe68/s1600/infographicUkraingasdispute.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj34ur8Z8pGkk6YXye20sRnOzqI86_R2EPmabsTqaMKHRT8tljsZ_8shPDZHiAABR-jClfzQ7nQ18f9UCicETBA2O3DeRycUxvFmfsznNsaC_bUHkWjNVm_ONly5vE31qjwjqaUrkppXe68/s640/infographicUkraingasdispute.jpg" width="349" /></a></div><br />

Ukraine Russia Gas Dispute Infographic

Kiev and Moscow have been locked in a bitter dispute over gas supplies that has prompted fears of a return to the winters of 2006 and 2009, ...

ANALYST TIP: Royal Dutch Shell to drop stake in Woodside

<div class="widget storyContent article widget-editable viziwyg-section-12 inpage-widget-1000057 " style="border: 0px; color: #1a1a1a; font-family: Arial, sans-serif; font-size: 12px; line-height: 15px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div class="lead_text" style="border: 0px; clear: left; color: #1b1b1b; font-size: 14px; font-weight: bold; line-height: 1.25em; margin: 0px 0px 15px; outline: 0px; padding: 0px; vertical-align: baseline;">Royal Dutch Shell's 23.1% stake in Australia-based Woodside Petroleum is seen as more likely to be split up and/or sold to institutional shareholders than to go in one piece to a strategic buyer, bankers said.</div></div><div class="widget storyContent article widget-editable viziwyg-section-12 inpage-widget-1000056 " style="border: 0px; color: #1a1a1a; font-family: Arial, sans-serif; font-size: 12px; line-height: 15px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div class="body" style="border: 0px; color: #474747; margin: 0px; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihhITwGsObBQQU7P4an6fbHaeFdXl7bBfeskLalEpX24HI5rr6Ow9-XgJ5Ll0RL4eqtml_Ukz31OomK8SrXS2OAo_RjwmaA_zTEpNaVXTzHSt7f4HM-2-OdaLSp2UOsUhTure23WP1r06G/s1600/shell.jpeg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="216" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihhITwGsObBQQU7P4an6fbHaeFdXl7bBfeskLalEpX24HI5rr6Ow9-XgJ5Ll0RL4eqtml_Ukz31OomK8SrXS2OAo_RjwmaA_zTEpNaVXTzHSt7f4HM-2-OdaLSp2UOsUhTure23WP1r06G/s400/shell.jpeg" width="400" /></a><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">Media speculation has tipped Shell would move to sell down its interest in Woodside as part of a wider asset sell-down.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">According to Reuters, the holding, worth about $6.4 billion and left over from Shell's abortive attempt to acquire Woodside in 2001, has long been viewed as non-core to Shell.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">This year, the Anglo-Dutch company promised to accelerate asset sales to reflate a narrowing cushion between cash inflow and investment spending.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">Reuters was unable to verify Shell's intentions for the stake. Shell and Woodside declined to comment on its future.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">Bankers say the holding is an obvious sell-off candidate for incoming chief executive<a href="" style="border: 0px; color: #192273; margin: 0px; outline: 0px; padding: 0px; text-decoration: underline; vertical-align: baseline;">Ben van Beurden</a>, who takes the job on 1 January and will offer strategy pointers on 30 January along with fourth-quarter results.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">However, they say, other investor-owned international oil companies big enough to buy it are also in sell-off mode.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">Meanwhile, a strategic buyer such as one of China's top oil companies or the national oil companies of gas-hungry countries such as India or Thailand might be put off by Shell's experience with the Australian government when it tried to take full control of Woodside in 2001.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">"Bidder-wise, it's a tricky one," one banker told Reuters.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">"The deal is big enough to require a review by the government, and although Woodside is not as important as it was at the time when Shell's bid was blocked, it is still the largest independent oil company in Australia, so I don't think the Chinese NOCs would be welcome."</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">The banker suggested Middle Eastern or Southeast Asian sovereign wealth funds might be interested, but said Shell probably would not find a buyer among them for the entire stake and would have to sell in small blocks.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">The banker predicted Shell would exit via a combination of strategic sales, market placements and probably a share buyback by Woodside.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">A second banker said the stake as a single block had been "shopped" to a number of potential strategic buyers without result, and predicted the shares would be spread in the market among institutional investors.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">Shell's interest in the plentiful offshore gas under Australia's northwest shelf dates back decades and remains strong through its Prelude floating liquefied natural gas project, which will draw gas from below the seabed and process it on board the world's largest vessel.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">The company built a 34% holding in Woodside as part of that interest. Shell also became, and remains, a partner in the Woodside-operated Browse LNG project, which is set to use Prelude FLNG technology.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">In 2001, Shell's attempt to increase its Woodside holding to a majority was blocked by the Australian government on the grounds that the move might slow gas development in Australia.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">The country is set to become the world's biggest LNG exporter later in the decade, overtaking Qatar, as a number of major LNG projects come to fruition.</div><div style="border: 0px; margin-bottom: 15px; outline: 0px; padding: 0px; vertical-align: baseline;">Shell sold a third of its Woodside holding in 2010, reducing that 34% stake to the 23.1% it holds now.</div></div></div>

ANALYST TIP: Royal Dutch Shell to drop stake in Woodside

Royal Dutch Shell's 23.1% stake in Australia-based Woodside Petroleum is seen as more likely to be split up and/or sold to institutional...

Altenesol completes study, acquires land for Colombia LNG project

<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTgfxnhtnQt0DEge4Sdge9y8JHaoC5VeCsGW5BmeuPHmQ7EQANQeE1D7eyfYWjKn5Z_rS0vUyOLVmYKulxdv0au1WI3-FLMaj9mgDp34mP6ooqG7UpabeWWtXOBBGL_7HSr40vj9-MzHHx/s1600/Altenesol-LNG-Colombia-Inks-Contract-with-BYR-and-MVC.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="214" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTgfxnhtnQt0DEge4Sdge9y8JHaoC5VeCsGW5BmeuPHmQ7EQANQeE1D7eyfYWjKn5Z_rS0vUyOLVmYKulxdv0au1WI3-FLMaj9mgDp34mP6ooqG7UpabeWWtXOBBGL_7HSr40vj9-MzHHx/s320/Altenesol-LNG-Colombia-Inks-Contract-with-BYR-and-MVC.jpg" width="320" /></a></div><span style="font-size: small; line-height: 1.6em;">Natural gas firm </span><span style="font-size: small;">Altenesol<span style="line-height: 1.6em;"> and its local subsidiary completed a front end engineering design (FEED) study and finalized a land purchase for its </span>Nataly<span style="line-height: 1.6em;"> I LNG plant project in </span>Córdoba<span style="line-height: 1.6em;">, Colombia.</span> </span><br /><br /><span style="font-size: small;">"The FEED study brings all aspects of the logistical, design, material, permitting and contingencies and cost estimates under a 3% margin," an Altenesol press release said. Local subsidiary Altenesol Colombia also completed the soil analysis, topographical, LNG plant placement and road access studies. </span><br /><br /><span style="font-size: small;">"We will announce the winner of the engineering, procurement and construction (EPC) contract in January of 2014," Altenesol said. </span><br /><br /><span style="font-size: small;">Nataly I has received commercial and financial support from <a document-type="company" href="http://www.bnamericas.com/company-profile/en/Banco_BTG_Pactual_S,A,-BTG_Pactual" style="color: #001b96; text-decoration: none;">BTG Pactual</a> and Mountain View Capital and is backed by an alliance which includes Canadian oil and gas firm<a document-type="company" href="http://www.bnamericas.com/company-profile/en/canacol-energy-ltd-canacol-energy" style="color: #001b96; text-decoration: none;">Canacol Energy</a> (TSX: CNE).</span>

Altenesol completes study, acquires land for Colombia LNG project

Natural gas firm Altenesol and its local subsidiary completed a front end engineering design (FEED) study and finalized a land purchase fo...

Brazil's Wilson Sons in US$140mn emergency vessel deal

<div id="text_print" style="background-color: white; background-repeat: no-repeat no-repeat; border: none; color: #1e2228; font-family: Verdana, Geneva, sans-serif, Arial, Helvetica; font-size: 16px; line-height: 22.390625px; list-style-type: none; margin: 0px; padding: 0px;"><div style="background-repeat: no-repeat no-repeat; border: medium none; font-size: 22px; line-height: 25px; list-style-type: none; margin: 0px; padding: 5px 10px;"></div><div class="p1" style="background-repeat: no-repeat no-repeat; border: none; font-size: 1em; list-style-type: none; padding: 0px 0px 7px 12px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7MIaJphEQbJ54RzGnfldOBeMpvMBaVb3Sbizb1YlyLlbMchE7TupLGBOa9zvMHvtpACEh2DkFubHJIQYSAFtHD072jo_sxk1hdCD7OWCPn_OJ0idcyrsI-1TZtMUgwuE4BGtb3YgpFHaj/s1600/544f9ef4c1a3a17c5485baa3307b6929.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="219" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7MIaJphEQbJ54RzGnfldOBeMpvMBaVb3Sbizb1YlyLlbMchE7TupLGBOa9zvMHvtpACEh2DkFubHJIQYSAFtHD072jo_sxk1hdCD7OWCPn_OJ0idcyrsI-1TZtMUgwuE4BGtb3YgpFHaj/s320/544f9ef4c1a3a17c5485baa3307b6929.jpg" width="320" /></a></div><span style="color: black;"><span style="font-family: Verdana,sans-serif;">Brazilian oil and gas logistics firm Wilson Sons will build four spill recovery vessels in a 333mn-real (US$140mn) deal with local emergency services provider Oceanpact.</span></span></div><div class="p1" style="background-repeat: no-repeat no-repeat; border: none; font-size: 1em; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="color: black;"><span style="font-family: Verdana,sans-serif;">The units will be built at Wilson Sons' Guarujá shipyard in São Paulo state and are due for delivery by 2016, the Rio de Janeiro-based firm said in a statement.</span></span></div><div class="p1" style="background-repeat: no-repeat no-repeat; border: none; font-size: 1em; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="color: black;"><span style="font-family: Verdana,sans-serif;">Each 67m vessel will have an oil storage capacity of 1,050m3.</span></span></div><div class="p1" style="background-repeat: no-repeat no-repeat; border: none; font-size: 1em; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="color: black;"><span style="font-family: Verdana,sans-serif;">The deal takes Wilson Sons' vessel backlog to 20 units. They comprise of<span style="background-repeat: no-repeat no-repeat; border: none; font-size: 1em; line-height: 1.6em; list-style-type: none; margin: 0px 0px 10px; padding: 0px 0px 7px 12px;"> 12 tugboats, two platform supply ships, a remotely operated vehicle support vessel and an additional spill recovery unit.</span></span></span></div><div><span style="background-repeat: no-repeat no-repeat; border: none; color: #606a82; font-size: 1em; line-height: 1.6em; list-style-type: none; margin: 0px 0px 10px; padding: 0px 0px 7px 12px;"><br /></span></div></div>

Brazil's Wilson Sons in US$140mn emergency vessel deal

Brazilian oil and gas logistics firm Wilson Sons will build four spill recovery vessels in a 333mn-real (US$140mn) deal with local emergency...

Big Oil sits out lobbying on Iran as Congress stands firm

<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbu90f_IOaC9WRzLghYgI5ivuj007DcazP3evMVw94pjLmvWxoxFyejZPY_L9Na32h3mMLKdro2j-CvwTm8rPCSEIAWJB2vWqjEofkkq9rHWwxHwDtldVqlfXnTeCK_rAHpOAsnnD8oOT2/s1600/download+(1).jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbu90f_IOaC9WRzLghYgI5ivuj007DcazP3evMVw94pjLmvWxoxFyejZPY_L9Na32h3mMLKdro2j-CvwTm8rPCSEIAWJB2vWqjEofkkq9rHWwxHwDtldVqlfXnTeCK_rAHpOAsnnD8oOT2/s1600/download+(1).jpeg" /></a></div><span style="color: #666666; font-size: xx-small;">The U.S. Capitol dome is pictured in the pre-dawn darkness in this general view taken in Washington, October 18, 2013. REUTERS/Jonathan Ernst</span><br /><br />(Reuters) - As debate rises in Washington over the first thaw in relations between Iran and the United States in decades, powerful oil companies are opting for an unusual tactic: silence.<br />Oil companies such as Exxon Mobil Corp and ConocoPhillips could earn huge profits if the United States loosened economic sanctions on Iran, allowing access to its oil and natural gas fields, some of the world's largest and least costly to produce.<br /><br />But through September, at least, U.S. energy companies have largely opted to stand back even as Congress considers whether to further limit new oil exports from the Islamic republic.<br /><br />It is an unusual tack for an industry known for its strong Capitol Hill presence on every issue from taxes to pollution rules to international trade.<br /><br />But this particular issue may be too hot to touch.<br /><br />"You are unlikely to flip any lawmaker, but you could offend them," said one lobbyist familiar with sanctions issues, who spoke on condition of anonymity to avoid being seen as speaking for clients. He said his company had received no client requests this year to lobby on Iran sanctions.<br /><br />The oil and gas industry spent $105 million on lobbying in the first nine months of this year, behind only the insurance and pharmaceutical industries, according to the Center for Responsive Politics, a Washington watchdog group. Companies in the sector, and their employees, also donated a total of $20.5 million to candidates in last year's elections, ranking ninth overall.<br /><br />It is uncertain whether the six-month deal with Iran struck last month in Geneva will lead to comprehensive restrictions on its nuclear capabilities, which could bring a full rollback of sanctions. Under the interim deal, Iran will limit uranium enrichment in return for limited access to funds frozen by U.S. law.<br /><br />The June election of moderate President Hassan Rouhani offered a clear sign that 2013 could be the best year for relations between Washington and Tehran since Iran's 1979 revolution.<br /><br />Yet the U.S. Congress has been firm in its backing of further action against Iran. The House of Representatives voted 400-20 in July to choke funding to Iran's disputed nuclear program by slashing its oil exports further than sanctions enacted in 2010.<br /><br />The Senate also widely supports being tough on Iran, though President Barack Obama has pushed it to delay introduction of its version of the bill to give the Geneva agreement a chance.<br /><br />DEAF EARS<br /><br />For its part, Iran's oil ministry is hopeful a full deal could one day spur new investment by U.S. energy companies. Oil Minister Bijan Zanganeh this month named seven Western energy companies it wants back to develop reservoirs if sanctions are lifted, including Exxon and Conoco.<br /><br />Exxon spokesman Alan Jeffers said that his company always looks for development opportunities, but that current U.S. laws prevent work in Iran.<br /><br />A Conoco spokesman said his company is not engaged in business discussions with Iran.<br /><br />Both companies have not lobbied Congress this year on Iran sanctions, records show. Neither has U.S.-based companies Chevron Corp or Halliburton Co.<br /><br />All four companies lobbied Congress in 2010 on the initial sanctions bill that targeted the OPEC member's oil exports.<br /><br />Conoco lobbied that year, the spokesman said, as part of a coalition called USA Engage. The coalition was concerned about the impact of sanctions on joint venture projects in foreign countries.<br /><br />"The 2013 legislation did not appear to have this impact, and no lobbying activity was required," the Conoco spokesman said.<br /><br />The other three U.S. companies declined to comment.<br /><br />Congressional aides agreed oil companies would be wasting their time if they attempted to persuade lawmakers to turn back existing sanctions or prevent enactment of new ones.<br /><br />The effort "would likely fall on deaf ears at a minimum and at worst create serious political repercussions" if oil companies were seen as undermining the resolve by the countries that reached the interim agreement with Iran, the United States, Britain, Russia, China, France and Germany, one Democratic House aide said on condition of anonymity.<br /><br />The companies that have lobbied Congress this year have largely been U.S. divisions of larger international oil companies, such as BP America, part of London-based BP Plc and Shell Oil Co, the U.S. unit of Royal Dutch Shell Plc.<br /><br />BP lobbied Congress between April and September of this year on the House Iran bill, while Shell weighed in on "general issues related to Iran" between January and March, records show.<br /><br />"It is not unusual for BP to discuss proposed new legislation with lawmakers in order to understand its purpose and scope so that, among other things, we can remain compliant in the event it is enacted," said BP spokesman Scott Dean.<br /><br />Shell did not respond to questions.<br /><br />The American Petroleum Institute, the main oil industry trade association, lobbied on a provision in the bill that threatened U.S. shipping lanes, but not on the sanctions themselves, an oil industry expert said. The trade group declined to comment.<br /><br />(Additional reporting by Patricia Zengerle; Editing by Marilyn Thompson, Martin Howell and Lisa Shumaker)

Big Oil sits out lobbying on Iran as Congress stands firm

The U.S. Capitol dome is pictured in the pre-dawn darkness in this general view taken in Washington, October 18, 2013. REUTERS/Jonathan Erns...

GeoPark makes 5th oil discovery in Colombia's Llanos 34 block

<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3jlegv3B8U2PYADHrPH3nGeBEcj9I-t8n7yTmo-3DvAWW38kRw3mLhR81qBgHfiLeGpqGzekWmWZyynZOwURGCOuho3vW57VcntopQOxXfe97rO4R4xlYaJcBZfn24q6aXRzEsXnesr0P/s1600/141119_83107740c77348b390b2.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3jlegv3B8U2PYADHrPH3nGeBEcj9I-t8n7yTmo-3DvAWW38kRw3mLhR81qBgHfiLeGpqGzekWmWZyynZOwURGCOuho3vW57VcntopQOxXfe97rO4R4xlYaJcBZfn24q6aXRzEsXnesr0P/s320/141119_83107740c77348b390b2.jpg" width="241" /></a></div><span style="font-size: small;">Oil & Gas - <a href="http://web6.bnamericas.com/country-profile/colombia" style="color: #58595b; text-decoration: none;">Colombia</a><span itemprop="image"></span></span><span style="color: #414042; font-family: Arial, Helvetica, 'Helvetica Neue'; font-size: small; line-height: 1.6em;"> </span><br /><header class="clearfix" style="position: relative;"><span style="color: #414042; font-family: Arial, Helvetica, 'Helvetica Neue'; font-size: small; line-height: 1.6em;">Latin America-focused </span><span style="font-size: small;">GeoPark<span style="color: #414042; font-family: Arial, Helvetica, 'Helvetica Neue'; line-height: 1.6em;"> (AIM: </span><span style="background-color: white; color: #414042; font-family: Arial, Helvetica, 'Helvetica Neue';">GPK</span><span style="color: #414042; font-family: Arial, Helvetica, 'Helvetica Neue'; line-height: 1.6em;">) made its fifth oil discovery at the </span>Llanos 34<span style="color: #414042; font-family: Arial, Helvetica, 'Helvetica Neue'; line-height: 1.6em;"> block in Colombia's </span><span style="background-color: white; color: #414042; font-family: Arial, Helvetica, 'Helvetica Neue';">Llanos</span><span style="color: #414042; font-family: Arial, Helvetica, 'Helvetica Neue'; line-height: 1.6em;"> basin, a </span><span style="background-color: white; color: #414042; font-family: Arial, Helvetica, 'Helvetica Neue';">GeoPark</span><span style="color: #414042; font-family: Arial, Helvetica, 'Helvetica Neue'; line-height: 1.6em;"> press release said.</span></span></header><div class="content" itemprop="articleBody"><div style="background-color: white; color: #414042; font-family: Arial,Helvetica,'Helvetica Neue'; margin-bottom: 13px; margin-top: 0.5em;"><span style="font-size: small;">The firm discovered oil in the Tigana Sur 1 exploration well. The well was drilled to a total depth of 3,692m and produced 15.3 degree API oil, with a 0.2% water cut, at a 1,597b/d rate using a submersible pump.</span></div><div style="background-color: white; color: #414042; font-family: Arial,Helvetica,'Helvetica Neue'; margin-bottom: 13px; margin-top: 0.5em;"><span style="font-size: small;">"Further production history will be required to determine stabilized flow rates and the extent of the reservoir," GeoPark said.</span></div><div style="background-color: white; color: #414042; font-family: Arial,Helvetica,'Helvetica Neue'; margin-bottom: 13px; margin-top: 0.5em;"><span style="font-size: small;">GeoPark has a 45% operating interest in Llanos 34. The firm also has assets in Chile, Brazil and Argentina.</span></div><div><span style="font-size: small;"><br /></span></div><div style="background-color: white; color: #414042; font-family: Arial,Helvetica,'Helvetica Neue'; margin-bottom: 13px; margin-top: 0.5em;"></div></div>

GeoPark makes 5th oil discovery in Colombia's Llanos 34 block

Oil & Gas - Colombia Latin America-focused GeoPark (AIM: GPK ) made its fifth oil discovery at the Llanos 34 block in Colombia...

Ecopetrol details US$10.6bn 2014 investment plan

<br /><br /><header class="clearfix" style="background-color: white; color: #222222; font-family: Arial, Helvetica, 'Helvetica Neue'; font-size: 12px; line-height: 16px; position: relative;"><h3 class="top-sector" style="color: #58595b; font-size: 16px; margin: 7px 0px 0.5em;"><div class="separator" style="clear: both; text-align: center;"></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRYsq49ylRQy2irYKSpoka3LkN9VNUDnjXbxpLYanqvk0A07hdLAOxM0GAbooPObfl53spbgpX8giAQK3Tmu6TO6KhIxImROdqx5YtWf1FomXsR6_sBEYgdbQLBOu5JiNYioQXzF-L4Hya/s1600/earth_lights-bw.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="161" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRYsq49ylRQy2irYKSpoka3LkN9VNUDnjXbxpLYanqvk0A07hdLAOxM0GAbooPObfl53spbgpX8giAQK3Tmu6TO6KhIxImROdqx5YtWf1FomXsR6_sBEYgdbQLBOu5JiNYioQXzF-L4Hya/s320/earth_lights-bw.jpg" width="320" /></a></div>Oil & Gas - <a href="http://web6.bnamericas.com/country-profile/colombia" style="color: #58595b; text-decoration: none;">Colombia</a></h3><span itemprop="image"></span><b><span style="color: #414042; font-size: 13px; line-height: 16px;">Colombia state oil firm </span>Ecopetrol<span style="color: #414042; font-size: 13px; line-height: 16px;"> </span><span style="color: #414042; font-size: 13px; line-height: 16px;">(NYSE: EC) approved US$10.6bn of investment for next year, with 61% (US$6.46bn) to be directly invested by Ecopetrol and 39% (US$4.13bn) through its affiliates and subsidiaries, the company said in a press release.</span></b><br /> </header><br /><div class="content" itemprop="articleBody" style="background-color: white; color: #222222; font-family: Arial, Helvetica, 'Helvetica Neue'; font-size: 12px; line-height: 16px;"><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"><strong>DIRECT INVESTMENT</strong></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;">The majority (US$4.65bn) of Ecopetrol's direct investment next year is marked for crude and natural gas production development. The firm's East Llanos project is slated to receive 64% of direct production development investment, with 17% going to the Middle Magdalena project and 11% to the Orinoquía project.</div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;">Ecopetrol also expects to invest US$928mn in exploration next year. In Colombia the firm plans to drill 20 exploration wells, six delineation wells and eight stratigraphic wells. The East Llanos project is marked for 13 exploration wells, with another two planned in offshore Colombia, two in southern Huila province and three in northern departments Cesar, Antioquia and Norte de Santander.</div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;">The firm also plans to spend US$240mn on developing nonconventional resources. Activity will include nine stratigraphic wells, three exploration wells and three pilot production tests - mainly on blocks in the Catatumbo and Middle Magdalena projects, Ecopetrol said.</div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;">Next year's direct investment plan includes US$339mn for refining and petrochemical spending, with 26% slated for modernizing the Barrancabermeja-PMRB refinery.</div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"><strong>AFFILIATE AND SUBSIDIARY INVESTMENT</strong></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;">Through its affiliates and subsidiaries Ecopetrol plans to invest US$1.76bn in refining and petrochemical projects, including US$1.63bn to modernize the Cartagena refinery, Ecopetrol said.</div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;">Next year's subunit spending includes US$1.34bn in transport investment. Ecopetrol expects crude oil pipeline capacity to increase by an additional 40,000b/d in 2014 and total crude and natural gas pipeline capacity to grow by another 70,000boe/d.</div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;">Affiliate and subsidiary 2014 exploration investment is set at US$632mn and includes five exploration wells on the US-side of the Gulf of Mexico and six in Colombia, Ecopetrol said.</div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;">The firm also plans to spend US$392mn on developing affiliate and subsidiary oil and gas production in 2014.</div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;"></div><div style="color: #414042; font-size: 13px; margin-bottom: 13px; margin-top: 0.5em;">Ecopetrol forecasts total group oil and gas production at 819,000boe/d next year.</div></div>

Ecopetrol details US$10.6bn 2014 investment plan

Oil & Gas - Colombia Colombia state oil firm Ecopetrol (NYSE: EC) approved US$10.6bn of investment for next year, with 61% (US$6.46b...

Mexico poised to enter major leagues as oil producer - analysts

<div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEggXCtknpQWHTU_9hV1wZrf8NlKbJ81nszsD_qKWKjknB7ukDmHdo2jUjnop7EAU7kFMaVrlat0DXboq9HNj5Yb4bYkJBXScuaXqrShzw_T0k_9LFCXDtZsstS6l4SoKdoRuSGpsZbgHKeX/s1600/Mexico-Oil-Petroleo.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEggXCtknpQWHTU_9hV1wZrf8NlKbJ81nszsD_qKWKjknB7ukDmHdo2jUjnop7EAU7kFMaVrlat0DXboq9HNj5Yb4bYkJBXScuaXqrShzw_T0k_9LFCXDtZsstS6l4SoKdoRuSGpsZbgHKeX/s1600/Mexico-Oil-Petroleo.jpg" /></a></div><span style="font-size: small;">Having reformed its energy sector to allow for greater private investment, Mexico is poised to become a global oil producer by 2025 and take "pole position" in energy investment in the Americas, according to analysts.</span></div><div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="font-size: small;">"By 2025, Mexico will have gone from being a major supplier to a strategic supplier," according to David Goldwyn, a former US special envoy and coordinator for international energy affairs.</span></div><div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="font-size: small;">"If International Energy Agency predictions of non-OPEC oil peaking around 2020 are true, Mexico will be a big producer and hugely important for global oil markets."</span></div><div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="font-size: small;">Mexico has the chance to be in pole position for investment in the sector in the hemisphere, he told the press.</span></div><div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="font-size: small;">However, with pressure on international oil prices, Mexico will have to ensure that the terms it offers oil companies are attractive enough to lure them to the country amid attractive prospects worldwide, he said.</span></div><div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="font-size: small;">The Energy Information Administration (EIA) predicts oil prices of around US$109/b in 2015, with a worst-case scenario of US$70/b</span></div><div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="font-size: small;">But with oil from Mexico's vast deep-water potential unlikely to start flowing for a decade, "we could be dealing in a world with US$80 [a barrel] oil," Goldwyn said.</span></div><div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="font-size: small;">Oil prices will dictate worldwide investment choices, he said, pointing out that Britain and Norway have offered tax breaks to attract investors to marginal fields.</span></div><div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="font-size: small;">Mexico has estimated resources of 160Bb of oil equivalent, which includes a potential 55Bb in deep waters and about 60Bb in shale.</span></div><div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="font-size: small;">Mexico's undersecretary for oil Enrique Ochoa forecasts that the country's oil output, which has dropped by almost 1Mb/d since 2004, will increase from the current 2.5Mb/d to 3Mb/d by 2018 and to 3.5Mb/d by 2025. Mexico is the world's 10th largest crude producer but imports a third of its natural gas and half of its gasoline.</span></div><div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="font-size: small;">In the wake of Mexico's energy reforms, annual investment in the sector is expected to rise to up to US$50bn a year, according to analysts.</span></div><div style="background-color: white; background-repeat: no-repeat no-repeat; border: medium none; font-family: Verdana,Geneva,sans-serif,Arial,Helvetica; line-height: 22.3906px; list-style-type: none; padding: 0px 0px 7px 12px;"><span style="background-repeat: no-repeat no-repeat; border: medium none; font-size: small; line-height: 1.6em; list-style-type: none; margin: 0px 0px 10px; padding: 0px 0px 7px 12px;">"Mexico has the potential to become a serious player. Very few countries can produce more than </span><span style="font-size: small;">3Mb/d<span style="background-repeat: no-repeat no-repeat; border: medium none; line-height: 1.6em; list-style-type: none; margin: 0px 0px 10px; padding: 0px 0px 7px 12px;">, and Mexico is one. If they add another </span>1Mb/d<span style="background-repeat: no-repeat no-repeat; border: medium none; line-height: 1.6em; list-style-type: none; margin: 0px 0px 10px; padding: 0px 0px 7px 12px;"> of oil production or even double output, that may put them among the top five or six in the world," according to Jed Bailey at consultancy Energy Narrative in a report on Mexico's energy reforms.</span></span></div>

Mexico poised to enter major leagues as oil producer - analysts

Having reformed its energy sector to allow for greater private investment, Mexico is poised to become a global oil producer by 2025 and take...

Historic energy reform to strengthen Mexico's credit profile - Moody's

<div class="separator" style="clear: both; text-align: center;"><br /></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2CeI59PU-Lp9M2cVOcWxlFXi-lBv04glUXlzMsQtruX0eQJ6b5NZeo-sz8CWR_phNX38oloXPtHgcoKbAdYbUi1n_FL3vI9xQlqvpOZhI2xS_puoMvYqI7YGdzNKdZtqt5CkrsbLLctrN/s1600/big-data2.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="145" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2CeI59PU-Lp9M2cVOcWxlFXi-lBv04glUXlzMsQtruX0eQJ6b5NZeo-sz8CWR_phNX38oloXPtHgcoKbAdYbUi1n_FL3vI9xQlqvpOZhI2xS_puoMvYqI7YGdzNKdZtqt5CkrsbLLctrN/s320/big-data2.jpg" width="320" /></a></div>The congressional approval last week of a historic energy reform will strengthen Mexico's sovereign credit profile and could also help to boost its potential GDP growth rate, ratings agency Moody's said in a report.<br /><br /><br /><br />Moody's  said that it expects the comprehensive reform of the energy sector to  have a significant effect on state-owned oil company Pemex  and the oil industry, "attracting investment and enhancing Mexico's  growth prospects over the next three to five years, all credit positives  for the sovereign."<br /><br /><br /><br /><strong>RISKS</strong><br /><br /><br />Although  prospects appear encouraging, implementation risks will pose major  challenges to the energy reform, said Moody's. In addition, attempts to  mobilize public opinion by the left-of-center PRD party and other groups  opposed to the reform and a call for a constitutional referendum pose  further risks, the agency added.<br /><br /><br /><br /><strong>REWARDS</strong><br /><br /><br />The  extent to which the energy reform is successful will depend on how  effective it is in promoting increased private investment and oil  production, Moody's noted. "If the reform proves effective in this  respect, we expect it to lift Mexico's potential growth to 3%-4% from  its current 2%-3%, although the effect will become evident during  2016-19, the second half of President Enrique Peña Nieto's  administration."<br /><br /><br /><br />The reform of the energy sector was  the last component of the government's ambitious reform agenda. This  reform, together with other structural reforms that congress has already  passed including labor, telecommunications, fiscal, financial and  education reforms, should strengthen Mexico's sovereign credit profile,  said Moody's.

Historic energy reform to strengthen Mexico's credit profile - Moody's

The congressional approval last week of a historic energy reform will strengthen Mexico's sovereign credit profile and could also help t...

APAC 2013 Oil and Gas reality check (PDF Report)

DOWNLOAD: APAC 2013 Reality Check : Deloitte

North America to Drown in Oil as Mexico Ends Monopoly

The flood of North American crude oil is set to become a deluge as Mexico dismantles a 75-year-old barrier to foreign investment in its oil fields.<br /><div id="lead_graphic"><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgS0joW2RJFSyWduhLMGXEAisqMBNAxZ1PDVu9snPFlG4WczT4YPdcVAn0Ps5lyfK4eOqysJAF-TS-gUaXV4a_TXLBdTlzLo0ZUqULjsFPhzGqyI7AExw7P5K52ApB-0tfXYZywHLeUimL0/s1600/iRvYObLYbSOI.jpg" /></div><br /><div class="photo_caption"><span style="font-size: x-small;">The  Petroleos Mexicanos (Pemex) La Muralla IV deep sea crude oil platform  in the waters off Veracruz, Mexico, on Aug. 30, 2013. Photographer:  Susana Gonzalez/Bloomberg</span></div><div class="photo_caption"><br /></div></div><div class="page current" id="_page1"><div class=""><div id="authorial"><span class="byline"><span class="byline-text">Joe Carroll and Bradley - BB</span></span><br /><span class="byline"><span class="byline-text"><br /></span></span></div></div>Plagued by almost a decade of slumping output that has  degraded Mexico’s take from a $100-a-barrel oil market, President  Enrique Pena Nieto is seeking an end to the state monopoly over one of  the biggest crude resources in the Western Hemisphere. The doubling in  Mexican oil output that Citigroup Inc. said may result from inviting  international explorers to drill would be equivalent to adding another  Nigeria to world supply, or about 2.5 million barrels a day.<br /><br />That boom would augment a supply surge from U.S. and Canadian wells that <span class="ticker_wrap"><span itemscope="" itemtype="http://schema.org/Corporation"><span itemprop="name">Exxon Mobil Corp.</span></span> (<a class="ticker" data-symbol="XOM:US" href="http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=XOM:US">XOM:US</a>)</span> predicts will vault North American production ahead of every OPEC  member except Saudi Arabia within two years. With U.S. refineries  already choking on more oil than they can process, producers from Exxon  to ConocoPhillips are clamoring for repeal of the export restrictions  that have outlawed most overseas sales of American crude for four  decades. <br /><div class="related_item tracked" data-action-type="Feature Template" data-actions="click" data-category="Inline Related Links" data-label="Position: 1"><br /></div>“This is going to be a huge opportunity for any kind of player”  in the energy sector, said Pablo Medina, a Latin American upstream  analyst at Wood Mackenzie Ltd. in Houston. “All the companies are going  to have to turn their heads and start analyzing Mexico.” <br /><h2>Unprecedented Output </h2>An  influx of Mexican oil would contribute to a glut that is expected to  lower the price of Brent crude, the benchmark for more than half the  world’s crude that has averaged $108.62 a barrel this year, to as low as  $88 a barrel in 2017, based on estimates from analysts in a Bloomberg  survey. Five of the seven analysts who provided 2017 forecasts said  prices would be lower than this year.<br /><br />The revolution in shale  drilling that boosted U.S. oil output to a 25-year high this month will  allow North America to join the ranks of the world’s crude-exporting  continents by 2040, Exxon said in its annual global energy forecast on  Dec. 12. Europe and the Asia-Pacific region will be the sole crude  import markets by that date, the Irving, Texas-based energy producer  said. <br /><div class="related_item tracked" data-action-type="Feature Template" data-actions="click" data-category="Inline Related Links" data-label="Position: 0"><br /></div>Exxon’s forecast, compiled annually by a team of company  economists, scientists and engineers, didn’t take into account any  changes in Mexico, William Colton, the company’s vice president of  strategic planning, said during a presentation at the Center for  Strategic and International Studies in Washington on Dec. 12.<br /><br />Opening  Mexico’s oilfields to foreign investment would be “a win-win if ever  there was one,” said Colton, who described the move as “very good for  the people of Mexico and people everywhere in the world who use energy.”  <br /><h2>$15 Billion Boost </h2>The bill ending the state monopoly was approved by the Mexican  Congress Dec. 12. Before becoming law, the proposal must be ratified by  state assemblies, most of which are controlled by proponents of the  reform. Oil companies will be offered production-sharing contracts, or  licenses where they get ownership of the pumped oil and authority to  book crude reserves for accounting purposes. The contracts will be  overseen by government regulators.<br /><br />Though some foreign companies  already operate in Mexico under service contracts with Petroleos  Mexicanos, or Pemex, the reform could increase foreign investment by as  much as $15 billion annually and boost potential economic growth by half  a percentage point, JPMorgan Chase & Co. said in a Nov. 28 report. <br /><h2>Potential Delays </h2>A  doubling in production as suggested by Citigroup’s Ed Morse would put  Mexican output at 5 million barrels a day, an unprecedented level for  Pemex, the state oil company created during nationalization in 1938.<br />  <br />U.S. crude production will expand to 9.5 million barrels a day  in 2016, the highest since the nation’s peak in 1970, the U.S. Energy  Information Administration said today. That contrasts with last year’s  EIA forecast that production would reach 7.5 million in 2019 before  gradually declining to 6.1 million in 2040. U.S. output reached an  all-time high 9.6 million in 1970.<br /><br />A doubling of Mexico’s output  maybe be slower to realize than the most bullish predictions as  companies confront barriers in accessing capital and human resources  needed for development, Riccardo Bertocco, a partner at Bain & Co.  in Dallas.<br /><br /><div class="">An increase of 1 million barrels a day in  output is the most realistic upper limit of what Mexico could achieve by  2025 based on the cost for new infrastructure, competition for new  fields and opportunities all over the U.S., Bertocco said in a telephone  interview Dec. 12. </div><div class="related_item tracked" data-action-type="Feature Template" data-actions="click" data-category="Inline Related Links" data-label="Position: 0"><br /></div><div class="">“The opportunities are there, but they are still far from being materialized,” he said.<br /><br /><h2 class="">Regulator Inexperience </h2>Drilling in Mexico will be  held back by a lack of infrastructure, such as pipelines, in some of the  potential shale developments. The government will need to decide on  details for development such as tax rates, royalty structures and  standards for booking reserves, Kurt Hallead, an analyst at RBC Capital  Markets, wrote in a Dec. 12 note to clients.<br /><br />It will take time to  organize and conduct bidding rounds for licenses, and additional  exploration, such as seismic tests, will need to be done, Hallead said.<br /><br />“We are not expecting any significant impact from the reform to be felt in the next two years,” he wrote.<br /><br />Foreign  oil companies will face a backlash from Mexicans opposed to sharing the  nation’s oil wealth, said Ricardo Monreal Avila of Movimiento Ciudadano  Party, who sees the reform as violating Mexico’s constitution. <br /><h2>Local Opposition </h2>“We  are going to see serious problems in the operations of these reforms.  Indigenous communities and places chosen by foreign companies for  extraction will not allow them on their property. There are going to be  serious operational problems.”<br /><br />Brent crude futures, the benchmark  for more than half the world’s oil, rose as much as 1.8 percent to  $110.80 a barrel in London today, the biggest intraday gain in two  weeks, after Libyan rebels refused to relinquish control over oil ports  to the central government. Libya, home to Africa’s largest proven  reserves, has seen output tumble to the lowest since 2011 amid civil  strife.<br /><br />The first assets that will attract foreign investment  will be mature oil fields drilled decades ago and reservoirs that need  injections of steam or carbon dioxide to coax more crude out of the  ground, Medina said. Deep-water prospects, shale and other technically  challenging endeavors will follow later, he said.<br /><br />The level of  investor interest will be partly determined by which assets Pemex  chooses to keep and which it will put up for auction, Medina said. <br /><h2>Chicontepec Price </h2>The  Chicontepec field northeast of Mexico City may be among the richest  prizes Pemex surrenders after its problems overcoming low pressure and  disconnected crude deposits that have limited output, Medina said.  Production that has averaged about 60,000 barrels a day may be increased  to more than 100,000 by an international producer experienced in  handling such fields, he said. <br />Chicontepec is just one of the  over-budget, long-delayed projects for which Pemex will be eager to find  partners, said Jose Antonio Prado, a former general counsel of Mexico’s  energy ministry and Pemex official.<br /><br />“The Mexican state will be  able to incorporate private participants in projects that are already in  force as well as new opportunities,” said Prado, now a partner at the  law firm Holland & Knight LLP in Mexico City. <br /><h2>Deep Water </h2>The  reforms are especially important to open up exploration in Mexico’s  deep-water fields, where additional capital, as well as better  technology and expertise are needed, Carlos Solé, a Houston-based  partner at Baker Botts LLP, said in a telephone interview. Pemex  estimated the country’s deep-water Gulf of Mexico prospects may hold the  equivalent of 26.6 billion barrels of crude.<br /><br />Onshore, the  potential is even greater with more than 60 billion untapped barrels,  according to a Pemex presentation last month.<br /><br />Some of the  potential shale production sits across the border from Texas’s prolific  Eagle Ford formation. The most resource-rich area studied so far is  around the city of Tampico, a coastal city about 300 miles (480  kilometers) south of the bottom tip of the Texas border.<br /><br />“I can’t  tell you the amount of banks and investment funds coming from the U.S.  and Europe that have been talking to us and are trying to have an  expectation of what’s going to happen with the energy reform,” Prado  said. “All those guys are going to be in Mexico next year in various  forms trying to seek new opportunities.” </div></div>

North America to Drown in Oil as Mexico Ends Monopoly

The flood of North American crude oil is set to become a deluge as Mexico dismantles a 75-year-old barrier to foreign investment in its oil ...