Banamex Analysts: Cheaper natural gas to aid Mexico's petrochemical sector

<div class="separator" style="clear: both; text-align: center;"></div><span style="clear: left; float: left; font-family: Times, Times New Roman, serif; margin-bottom: 1em; margin-right: 1em;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiO0_KPFM-c6UvomN5-SWBFh1F-45opeJcoD4aJx6LdnQJXL7bB_CQoNUIRP3k1YfjDTKDuT_XjTueuHXacw3rlg5zl4oqUrkuhRWxWOv5hfjY4PoE7CLeFUlCjX5YZ9StqzUB44-dWMV8G/s1600/mexichem_250313.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="192" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiO0_KPFM-c6UvomN5-SWBFh1F-45opeJcoD4aJx6LdnQJXL7bB_CQoNUIRP3k1YfjDTKDuT_XjTueuHXacw3rlg5zl4oqUrkuhRWxWOv5hfjY4PoE7CLeFUlCjX5YZ9StqzUB44-dWMV8G/s320/mexichem_250313.jpg" width="320" /></a>The opening of Mexico's natural gas sector to private investment will lower prices and allow local firms to increase their production capacity for petrochemical-based products, according to analysts. <span style="background-color: white; line-height: 18px;">Mexican firms such as Mexichem and Alpek will be benefited by the lower prices and be able to grow their presence in the sector, according to a report analyzing Mexico's energy reforms by Banamex Accival Casa de Bolsa. Both companies are currently investing to expand their production capacity to take advantage of the price differential between ethylene and natural gas. </span></span><span style="clear: left; float: left; font-family: Times, Times New Roman, serif; margin-bottom: 1em; margin-right: 1em;"><span style="background-color: white; font-family: Times, Times New Roman, serif; line-height: 18px;">"Mexichem is investing in the production of 550,000t of vinyl chloride monomer (VCM) in the US, while Alpek plans similar investment with a plant supplied by natural gas in Mexico," the report states. </span><span style="background-color: white; line-height: 18px;">VCM is a chemical used to produce polymer and polyvinyl chloride (PVC). </span><span style="background-color: white; line-height: 18px;">The expectation is that the energy reforms will contribute to an increase in the supply of ethane/propane, which have a high concentration of natural gas, and to a deregulation of the downstream sector, which will in turn lead to a drop in prices, the report states.</span></span><br /><div class="text-contenido" style="background-color: white; margin: 0px 10px 0px 0px;"><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">Alpek is expected to invest in the construction of plants producing monoethylene glycol (MEG) in Mexico and an ethylene plant in the short term in order to take advantage of the lower gas prices.</span></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">"The confirmed availability of gas will probably lead Alpek to build an MEG plant in Mexico, instead of in the US," the report states.</span></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">Mexichem is also likely to expand its VCM production in Mexico, after having begun to build a cracker plant in Texas in partnership with US firm Oxychem. </span><span style="font-family: Times, 'Times New Roman', serif;">Mexichem is currently building a 200MW cogeneration plant powered by natural gas in Altamira, in the northeastern state of Tamaulipas, and could approve the construction of another one in Salamanca, in the central state of Guanajuato. </span></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">"Mexico is the only country in the world where an artificial barrier was created in the petrochemical sector, and the reality is that the lack of investment in the sector by Pemex has created huge bottlenecks in the production chain, leading to more imports, which in 2013 surpassed US$23bn," according to an analysis of the reform by Mexican energy consultancy GMEC. </span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">Mexico's petrochemical imports increased by 7.7% in 2013, while the petrochemical sector's contribution to GDP dropped by 0.4% to 1.2%, according to the national association of the chemical industry (ANIQ). </span></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">A lack of natural gas transportation infrastructure has meant that Mexican firms have suffered a supply deficit from the US, GMEC added, with Pemex importing more natural gas at a higher price to satisfy local demand.</span></div></div>

Banamex Analysts: Cheaper natural gas to aid Mexico's petrochemical sector

The opening of Mexico's natural gas sector to private investment will lower prices and allow local firms to increase their production ca...

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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...

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Petrobras platforms inflate Brazil trade surplus

<h1 class="border-none titulo_sector" style="background-color: white; border-bottom-style: none; border-bottom-width: 0px; color: #666666; font-family: Arial, Helvetica, sans-serif; font-size: 25px; margin: 0px; position: relative;"></h1><div class="text-contenido" style="background-color: white; font-family: Arial, Helvetica, 'Helvetica Neue'; font-size: 1.1em; margin: 0px 10px 0px 0px;"><div class="p1" style="line-height: 18px; margin-bottom: 20px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOMFt19TN4uyqh8yVDLAjKESuHYZDUrHFKUqZmLlJUCs-jyOrxqosU1ocqLON1LtEe6fUg0zSo0msZ63mOtIvIWGo1kcdr7l-lGM25qz0lo3TfSF89bZbKLBVAYP6XclWTShqSiE_Ib5SM/s1600/brazil_oil.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOMFt19TN4uyqh8yVDLAjKESuHYZDUrHFKUqZmLlJUCs-jyOrxqosU1ocqLON1LtEe6fUg0zSo0msZ63mOtIvIWGo1kcdr7l-lGM25qz0lo3TfSF89bZbKLBVAYP6XclWTShqSiE_Ib5SM/s320/brazil_oil.jpg" width="320" /></a></div><span style="font-size: 1.1em;">Brazil's federal government has been accused of artificially inflating the country's 2013 trade surplus by including the delivery of locally made oil platforms in outbound accounts.</span></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div class="p2" style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div class="p1" style="line-height: 18px; margin-bottom: 20px;">According to national daily Folha de S. Paulo, Brazil exported seven production units this year worth US$7.4bn to the country's balance sheet.</div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div class="p2" style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div class="p1" style="line-height: 18px; margin-bottom: 20px;">"This is despite the platforms not having left Brazilian shores," the newspaper said.</div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div class="p2" style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div class="p1" style="line-height: 18px; margin-bottom: 20px;">The units are acquired by state-run oil company Petrobras (NYSE: PBR) and its subsidiaries in the Netherlands, Panamá, Mexico and Switzerland.</div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div class="p2" style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div class="p3" style="line-height: 18px; margin-bottom: 20px;">"Thereafter they are used in Brazil by local firms as if they were under a lease contract," the report added.</div><div class="p3" style="line-height: 18px; margin-bottom: 20px;"><br /></div></div>

Petrobras platforms inflate Brazil trade surplus

Brazil's federal government has been accused of artificially inflating the country's 2013 trade surplus by including the delivery of...

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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...

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Mexico Earns Upgrade, Outlook Could Support Bonds

<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYwLb_K26AmXNKcJtoyCbUfhUsgtn2Td-1HxmllGSuoRYLstROxefCE06vkgKtIaRrM9uAGO0YfoMb9A4yhgLE_IYgPC4NG6tc0IRg_J9hw2x54S9tYXukTjEuC0CfriQOAL7TR33Cjk_8/s1600/arrow-graph-by-flickr-user-ndeviltv-find-link-to-pic.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYwLb_K26AmXNKcJtoyCbUfhUsgtn2Td-1HxmllGSuoRYLstROxefCE06vkgKtIaRrM9uAGO0YfoMb9A4yhgLE_IYgPC4NG6tc0IRg_J9hw2x54S9tYXukTjEuC0CfriQOAL7TR33Cjk_8/s320/arrow-graph-by-flickr-user-ndeviltv-find-link-to-pic.jpg" width="320" /></a></div><div><br /></div><span style="background-color: white;">Mexico earned a higher debt rating from Standard & Poor's on Thursday and expectations of more upgrades to come could help support Mexican assets in the coming months even as the government borrows more.</span><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://s1.reutersmedia.net/resources/r/?m=02&d=20131220&t=2&i=822923868&w=580&fh=&fw=&ll=&pl=&r=CBRE9BJ06MF00" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="237" src="http://s1.reutersmedia.net/resources/r/?m=02&d=20131220&t=2&i=822923868&w=580&fh=&fw=&ll=&pl=&r=CBRE9BJ06MF00" width="320" /></a></div><span style="background-color: white;"><br /></span>Standard & Poor's raised its main credit rating for Mexico by one notch in the latest sign of growing confidence in this month's move by the government to open the state-run energy sector to private investment.<br /><br />S&P had lagged the other two main agencies, Moody's Investors Service and Fitch Ratings, which both have Mexico just one notch shy of an "A" rating. Chile is the only Latin American nation that has an "A."<br /><br />Analysts, fund managers and Mexico's government think the country could earn another upgrade by at least one of the agencies as soon as early next year.<br />"We are closer today than we have ever been to an 'A' category," Alejandro Diaz de Leon, head of Mexico's debt office, told Reuters in a telephone interview.<br /><br />"There is a lot of upside in the near future if the implementation of the energy reform continues as planned."<br /><br />The approval of President Enrique Pena Nieto's energy reform bill by a divided Congress this month caps a year of major economic legislation, including bills to boost lending, lower telecommunications costs and improve tax collection.<br />But lawmakers still need to flesh out the energy overhaul with legislation that will determine whether Mexico will offer tax rates that are lucrative enough to spur an investment boom.<br /><br /><b>MEXICO BONDS</b><br />S&P's upgrade was largely expected by the market, and the country's peso only briefly pared losses amid concerns that less U.S. monetary stimulus will sap demand for emerging market assets in the coming year.<br /><br />Expectations the U.S. Federal Reserve could keep cutting back its monthly bond purchases are seen driving yields on emerging market debt higher next year. But Mexico's peso and its local-currency bonds have already suffered less than other emerging markets and optimism about Mexico could help bond yields continue to perform better than other riskier assets.<br /><br />Analysts said strong progress once Mexican lawmakers resume work in February on the energy reform's secondary legislation could spur the next ratings upgrade.<br /><br />Alonso Cervera, an economist at Credit Suisse in Mexico City, said Moody's would likely put Mexico into the "A" category next year and that bond yields would likely fall.<br /><br />"I think the curve is way too steep and we are likely to see a flattening trend in the next few months, even if the Fed continues to taper," Cervera said in an emailed response to questions.<br /><br />The yield on Mexico's benchmark 10-year peso bond has spiked more than 80 basis points higher since late October to 6.40 on Thursday, near a three-month high.<br /><br />The flurry of reforms this year has made Mexico stand out from other emerging markets, such as Brazil, which have been raising concerns among investors for more interventionist and protectionist economic policies.<br />"It is very important that an economy like ours, which is a small open economy, does what we can to improve the perception about the resilience of the economy," Diaz de Leon said.<br /><br />Meanwhile, Pena Nieto's government is milking international optimism by boosting the amount of debt it will issue next year. On Thursday, the finance ministry released its latest capital market issuance plan, which foresees increasing shorter-term debt sales in the first quarter of next year.<br />After originally promising to stick to a balanced budget this year, the government got lawmakers to support a deficit of 0.4 percent of gross domestic product this year and an even wider 1.5 percent deficit next year.<br />The government is seeking more debt to help fuel stronger growth. Mexico's economy slumped this year to around a 1.3 percent annual expansion from a 3.8 percent rate in 2012.<br /><br />Analysts in a central bank poll issued on Thursday lifted their outlook for growth next year to 3.41 percent, up 7 basis points from a poll late last month before the energy reform bill was approved.<br /><br />In the latest sign of stronger growth, a separate report on Thursday showed Mexican retail sales rose in October at the fastest pace in nine months, following two months of declines.

Mexico Earns Upgrade, Outlook Could Support Bonds

Mexico earned a higher debt rating from Standard & Poor's on Thursday and expectations of more upgrades to come could help support M...

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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...

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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...

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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...

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I’m Waiting For the Crude – Crude Price Differentials at The Gulf Coast

<br /><div class="tabs"></div><div class="meta submitted"><span content="2013-12-15T20:00:00-06:00"></span>The bases are loaded for another 2 MMb/d of pipeline capacity to bring additional crude supplies to the Texas Gulf Coast by the end of 2014. The majority of that payload will likely be light sweet crude from tight oil formations, a.k.a., shale. As the flood of crude headed to Texas passed through the Midwest over the past two years, prices at Cushing and points north were heavily discounted versus coastal markets. Now the discount action has moved to the Gulf Coast where light sweet crude imports have been pushed out. Today we look at the impact of the changing supply position on crude price differentials.</div><br />This is Part 1 of a two-part review of Gulf Coast crude price differentials that extends a series on the topic that we started back in November (2013). The first episode in the series described 4 MMb/d of current and planned expansions to crude transportation capacity into the Texas Gulf Coast region (see Handling The Texas Gulf Coast Crude Flood). Our analysis showed that the new incoming light crude capacity will exceed Texas Gulf Coast demand by somewhere north of 0.5 MMb/d by the end of 2015. In episode two we described how some of these excess crude supplies would move east on the reversed Ho-Ho pipeline (see Gulf Coast Crude West to East Flows). In episode three we looked at how shippers could divert supplies away from Texas Gulf Coast congestion (see Texas Gulf Coast Bypass Options). Episode four looked at progress bringing TransCanada’s Keystone XL Gulf Coast extension (a.k.a, Cushing Marketlink Pipeline (CMP)) online (see Keystone Marketlink Comes to Texas). Episode five looked at the impact of the twin Seaway Pipeline from Cushing to Freeport expected online during the second quarter of 2014 (see Impact of the Seaway Expansion). Now we’ll get into what happens to price differentials as new crude supplies come flooding into Texas in the next six months.<br /><br />Forecasting prices for tomorrow is like gambling – only fun if you don’t mind losing money. And the odds of being right get worse the further out the predictions go. So our intent here is to concentrate on price differentials – the spread between key crude benchmarks rather than getting into absolute price levels. We start with a review of what has happened since 2012 and then offer some scenarios for how things might turn out next year (2014). Buckle up.<br /><br /><b>Recap 2012</b><br />Figure 1 below shows average differentials for key benchmark light sweet crude grades at the Gulf Coast during 2012. The prices are averages for the year versus the West Texas Intermediate (WTI) NYMEX benchmark price at Cushing - set to $0/Bbl.  Recall that during 2012 surging crude production in North Dakota and Canada exceeded demand in the Midwest and supplies started backing up at Cushing, OK because there was very little pipeline capacity from the Midwest to the Gulf Coast (where 50 percent of US refining capacity resides). Because of this logjam a stockpile of crude built up at Cushing and inland domestic prices based on WTI were discounted heavily versus Gulf Coast supplies priced against the international benchmark Brent crude (see The Seven Gates of Hell for WTI Traders). Domestic light sweet crude grades sold at the Gulf Coast – represented by Light Louisiana Sweet (LLS) in our diagram - traded at the higher international levels. In 2012 both Brent and LLS averaged $18/Bbl above the discounted WTI “stranded” at Cushing. The dotted yellow line on the chart indicates the pipeline ‘capacity constraint’ boundary that split Cushing and Gulf Coast pricing markets at that time.  You can think of that yellow line as separating zones of domestic and international pricing along the Gulf Coast region.<br /><br /><div style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-gV1vtrH7ax6BACQlmkOV1RnF0WCAUHabBRJd1W6Op7M5QK0IQ_Wa8ZXktaqVlEO8wCPbrl52dcYjuuhNaqGjbg1Xq4VJ3ViIt03GI3ISWHjB7kJTUjlRAKcmb8t62hB2fQTE4jQ_aHzd/s1600/figure1_5.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="267" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-gV1vtrH7ax6BACQlmkOV1RnF0WCAUHabBRJd1W6Op7M5QK0IQ_Wa8ZXktaqVlEO8wCPbrl52dcYjuuhNaqGjbg1Xq4VJ3ViIt03GI3ISWHjB7kJTUjlRAKcmb8t62hB2fQTE4jQ_aHzd/s400/figure1_5.png" width="400" /></a></div><br /></div><div style="text-align: center;">Figure 1 - Source: RBN Energy</div><div style="text-align: left;">Prices for WTI are set both at Cushing, OK – the gateway to Midwest refineries – as well as at Midland, TX, closer to the Permian Basin production region. During 2012, Midland prices for WTI were discounted by an average of $4/Bbl to WTI at Cushing because of capacity constraints on the pipelines between Midland and Cushing (caused by surging crude production in the Permian Basin). Until new pipelines opened up from the Permian direct to Houston in 2013, WTI had to travel to market from Midland to Cushing - into an already oversupplied Midwest market (see New Adventures of Good Ole Boy Permian). </div><div style="text-align: left;"><br /></div>Next we move to Figure 2 below – which shows average price differentials to WTI during the past three months – between September 20 and December 10, 2013.<br /><br />But before we get to those numbers we need to fill in the gap in our analysis covering the first 9 months of 2013 – since Figure 1 only covered 2012. That nine-months was a transition period during which new pipeline capacity opened up between Cushing and Houston (Seaway Phase 2 expansion) and between the Permian Basin in West Texas and Houston (Longhorn Reversal). Crude-by-rail shipments also increased the flow of light sweet Bakken crude from North Dakota to the Gulf Coast during this period (hence the rail track shown on Figure 2). As a result more light sweet crude by-passed the Cushing logjam and reached Gulf Coast refineries - reducing the need for waterborne imports. The crude stockpile in Cushing declined from its record high levels and Gulf Coast crude stocks began to increase. The net effect was that the Brent premium to WTI, which reached $23/Bbl in February 2013 evaporated to less than $1/Bbl by July (see Strangers in the Night). Between July and September 2013, Brent, WTI and LLS traded in a narrow range of about $5/Bbl with Brent “in the middle” at a discount to LLS and a $3/Bbl premium to WTI.<br /><br />Since the middle of September, however, Brent prices have taken off on their own track, leaving LLS trading at a narrow $3/Bbl premium over WTI that is roughly equivalent to the pipeline tariff between Cushing and the Gulf Coast (see Goodbye Stranger). And that situation has prevailed ever since – as depicted in Figure 2 below. Over this period the Gulf Coast has been oversupplied with light sweet crude, leaving no need for imports – allowing Brent prices to effectively disconnect from LLS and take their own path – reaching as high as a $17/Bbl premium over WTI but averaging $10/Bbl over the period. The yellow dotted capacity constraint line separating international and domestic markets at the Gulf Coast moved offshore. Behind that imaginary yellow line, LLS prices tracked more closely with WTI and traded at a discount to Brent that averaged $7/Bbl. Prices for WTI in Houston and LLS in Louisiana tracked closely together – indicating that both markets were equally well supplied. The WTI prices at Midland continued to trade at a discount to Cushing over this past three month period because although new capacity opened up from the Permian to Houston, surging production in West Texas continues to overwhelm pipeline capacity.<br /><br /><div style="text-align: center;"><img alt="" class="image-large" src="http://www.rbnenergy.com/sites/default/files/styles/large/public/field/image/figure2_7.png?itok=UY0CQejf" /></div><div style="text-align: center;">Figure 2 - Source: RBN Energy </div><div style="text-align: center;"><br /></div><div style="text-align: left;">And one argument for next year is that price differential relationships at the Gulf Coast will stay basically the same as they have been for the past three months. A December 11 “This Week in Petroleum” report from the Energy Information Administration (EIA) notes that its short term forecast for US domestic crude production - 7.5 MMb/d in 2013 rising to 8.5 MMb/d in 2014 will place continued downward pressure on crude oil prices such as WTI and LLS.  EIA expects the WTI discount to Brent to average $12/Bbl during the fourth quarter of 2013 and $9/Bbl during 2014. EIA also expect the price for LLS to continue to move in step with the WTI price plus the pipeline tariff.</div>So we will use that scenario as our base case – holding steady. In the next episode in this series we will revisit the pipeline events that will impact the differentials in 2014 and examine alternatives to our base case price scenario for 2014.<br />------------ <br /><br /><table class="views-table sticky-enabled cols-4 tableheader-processed sticky-table"><tbody><tr class="even"><td class="views-field views-field-name"><a class="username" href="http://www.rbnenergy.com/user/28" title="View user profile.">Sandy Fielden</a> </td> <td class="views-field views-field-picture"><div class="user-picture"><a href="http://www.rbnenergy.com/user/28" title="View user profile."><img alt="Sandy Fielden's picture" height="150" src="http://www.rbnenergy.com/sites/default/files/styles/user_profile/public/pictures/picture-28-1331334672.jpg?itok=cCGRUjKw" title="Sandy Fielden's picture" width="125" /></a> </div></td> <td class="views-field views-field-field-expertise">Energy market pricing and fundamental data, Data Integration with ETRM, writer on Energy Markets, Consultant, Conference Speaker </td></tr></tbody></table>

I’m Waiting For the Crude – Crude Price Differentials at The Gulf Coast

The bases are loaded for another 2 MMb/d of pipeline capacity to bring additional crude supplies to the Texas Gulf Coast by the end of 201...

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Private equity sees growing investment opportunities in oil and gas

In the post-financial crisis era, private equity firms are once again looking for the most promising opportunities, and oil and gas is proving to be fertile ground, according to a recent industry survey.<br /><br />Nearly two-thirds of global private equity executives responding to a survey said they plan to actively raise funds aimed at specific oil and gas subsectors next year, seeking to benefit from an industry ripe with opportunity and hungry for capital. The survey results were released Tuesday by EY, the international accounting and consulting firm.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeSuU-HiMjaRPnjx2xfTSkYQ73NNlHHikJS__ajfVBBu8Z9z7PJH2domFn2TH6DNwwG2x5HDr2rzjkyT1b5d5B5uLqwIDPlM3ANqQvY_eA5uMKdDpEpDe0He-UlJ6XDI8o3wX17nSdfuLw/s1600/6551534889_9c8ae52997_z-306x306.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/AVvXsEgeSuU-HiMjaRPnjx2xfTSkYQ73NNlHHikJS__ajfVBBu8Z9z7PJH2domFn2TH6DNwwG2x5HDr2rzjkyT1b5d5B5uLqwIDPlM3ANqQvY_eA5uMKdDpEpDe0He-UlJ6XDI8o3wX17nSdfuLw/s1600/6551534889_9c8ae52997_z-306x306.jpg" /></a></div>The oil and gas industry is capital intensive, with projects that run into the billions of dollars, making it an attractive investment for private equity firms, EY noted.<br /><span style="font-size: 13px; line-height: 19px;">Mergermarket, a national survey firm, conducted the survey on behalf of EY, interviewing 100 private equity leaders on the relationship between private equity and the oil and gas industry.</span><br />“The easy or cheap barrels have been produced,” EY wrote in the report. “There are now more players going after the more difficult areas of oil production, creating opportunities for PE firms with different risk appetites.”<br /><br /><br /><b>Energy executives: <a href="http://fuelfix.com/blog/2013/12/03/access-to-capital-funds-will-improve-in-2014-energy-execs-say/?cmpid=eefl" target="_blank" title="Access to capital will improve in 2014, energy execs say">Access to capital will improve in 2014</a></b><br />The survey provides an encouraging view of investment, <b><a href="http://fuelfix.com/blog/2013/07/29/deloitte-ma-energy-deals-down-30-percent-from-2012/?cmpid=eefl" target="_blank">even as deal making in the sector has slowed down</a></b>, with energy executives saying they want to focus on more efficient operations rather than expanding their reach.<br /><br />But private equity is bringing more than money to the table. The firms increasingly are offering their expertise in oil and gas, combined with financial discipline strategies, to increase returns, EY said in the report.<br /><br />Nearly two-thirds of private equity leaders believe that the main way they add value to oil and gas companies is by providing access to growth capital. But nearly 20 percent noted that they increasingly are allowing companies to expand geographically. And one in ten felt that the operational expertise provided by private equity also added value.<br />Private equity firms continue to see North America as the most attractive market for oil and gas investment, but expect investments in Latin America and in Asia to increase in the next two years, especially in China and Brazil.<br /><br />“We are seeing an influx of capital investment into the emerging markets,” said Andy Brogan, EY’s Global Oil and Gas Transaction Advisory Services Leader, in a written statement, explaining that the risk profiles of emerging markets typically varies with that of developed countries, allowing for investment diversification. “Companies are exercising caution, but optimism around the potential returns from acquisitions remains high.”

Private equity sees growing investment opportunities in oil and gas

In the post-financial crisis era, private equity firms are once again looking for the most promising opportunities, and oil and gas is pro...

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GE to build technology hub in Oklahoma City - Oil & Gas Financial Journal

<div class="PromoBoxHeadLeft" style="background-color: white; border: 0px; color: #37302b; font-family: Arial, Helvetica, sans-serif; font-size: 12px; height: auto; margin: 0px; outline: 0px; padding: 0px;"><div class="PromoBoxHeadRight" style="background-color: transparent; border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; height: auto; margin: 0px; outline: 0px; padding: 0px;"><div class="separator" style="clear: both; text-align: center;"><br /></div><br /><div class="separator" style="clear: both; text-align: left;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCNhKT65Xxnb96bYAuM4H4Th7UBemYsWWdbIAkP7c4Ur2-p9f5QAGyrx507gHSMCw5S41ySs1T1pdYlemaarIbg62nCl3luPFECt8kGrLsEZB_fKqqqelaqYDpEb33E8zEmrE2d06hykbx/s1600/big-data2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="145" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCNhKT65Xxnb96bYAuM4H4Th7UBemYsWWdbIAkP7c4Ur2-p9f5QAGyrx507gHSMCw5S41ySs1T1pdYlemaarIbg62nCl3luPFECt8kGrLsEZB_fKqqqelaqYDpEb33E8zEmrE2d06hykbx/s320/big-data2.jpg" width="320" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><h1 class="compTitle" itemprop="headline" style="background-color: transparent; border: 0px; color: black; font-size: 20px; font-style: inherit; height: auto; line-height: 25px; margin-bottom: 0px !important; margin-left: 0px; margin-right: 0px !important; margin-top: 0px !important; outline: 0px; padding: 5px 0px;">GE to build technology hub in Oklahoma City</h1></div></div><div class="compBody" style="background-color: white; border: 0px; color: #37302b; font-family: Arial, Helvetica, sans-serif; font-size: 12px; margin: 0px; outline: 0px; padding: 5px 0px;"><div class="articlepublicationdate" itemprop="datePublished" style="border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; margin: 0px; outline: 0px; padding: 0px;"><span class="articlepublicationdatecnt" style="border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; margin: 0px; outline: 0px; padding: 0px;">December 6, 2013</span></div><div class="articlebyline" style="border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; margin: 0px; outline: 0px; padding: 0px;"><span class="articlebylinecnt" style="border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; margin: 0px; outline: 0px; padding: 0px;">GE</span></div><div class="article-content-wrapper" itemprop="articleBody" style="border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; margin: 0px; outline: 0px; padding: 0px;"><div class="clicktoenlargeimage parbase image headerimage" style="border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; margin: 0px 0px 20px; outline: 0px; overflow: hidden; padding: 0px;"><img alt="" class="cq-dd-image cq-image-placeholder" src="http://www.ogfj.com/etc/designs/default/0.gif" style="border: 0px; display: block; font-family: inherit; font-style: inherit; font-weight: inherit; margin: 0px; outline: 0px; padding: 0px;" title="" /></div><div id="ContentBody" style="border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; margin: 0px; outline: 0px; padding: 0px;"><div class="gigya-article-share-bar-right" id="gigya-article-share-bar" style="border: 0px; float: right; font-family: inherit; font-style: inherit; font-weight: inherit; margin: 0px; outline: 0px; padding: 0px;"><div class="sharebar gigyashare" style="border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; margin: 0px; outline: 0px; padding: 0px;"></div></div><div style="border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; outline: 0px; padding: 10px 0px;"><a adhocenable="false" href="http://www.ogfj.com/articles/2013/04/ge-accelerates-artificial-lift-business-with-lufkin-acquisition-.html" style="border: 0px; color: #1370ac; font-style: inherit; font-weight: inherit; margin: 0px; outline: 0px; padding: 0px; text-decoration: none;">GE</a> has selected downtown Oklahoma City, Oklahoma, for its first-ever global research center dedicated to oil and gas technology. </div><div style="border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; outline: 0px; padding: 10px 0px;">The center will focus on accelerating mid- to later-stage oil and gas technologies developed in GE’s global research labs, including production systems, well construction, water use optimization, carbon-dioxide solutions, and energy systems<b>.</b> </div><div style="border: 0px; font-family: inherit; font-style: inherit; font-weight: inherit; outline: 0px; padding: 10px 0px;">Construction on the 95,000-sq-ft (8,826-sq-m) facility will begin in the spring of 2014, with the building expected to be completed and operational in 2015.</div></div></div></div><br /><a href="http://www.ogfj.com/articles/2013/12/ge-to-build-technology-hub-in-oklahoma-city.html">GE to build technology hub in Oklahoma City - Oil & Gas Financial Journal</a>

GE to build technology hub in Oklahoma City - Oil & Gas Financial Journal

GE to build technology hub in Oklahoma City December 6, 2013 GE GE  has selected downtown Oklahoma City, Oklahoma, for its first-ever global...

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