Wednesday, April 16, 2008
Repsol YPF Production Falls 20%
Repsol YPF, the largest hydrocarbon producer in Argentina, has announced that its proven reserves have fallen by 20.3% since December 2005. It also announced that its total 2007 hydrocarbon production(oil, gas and gas liquids) fell by 4.1% compared to 2006. This reduction in both production and proven reserves means that new discoveries, both in existing fields and new areas, have not been sufficient to replace the depletion of existing reserves.
Local energy experts attribute this situation directly to the government's energy policy or lack thereof. Because of a lack of clear and consistent long-term policies and laws, most companies invest in short-term measures to increase current production. They do not tend to invest in long-term high-risk ventures such as offshore exploration, because there is no way to know what the government's policies and actions may be five years from now.
Brasil, in contrast, with a middle of the road government and stable energy policies, is experiencing a boom offshore, with some of the largest discoveries in the last 30 years in South America.
Local energy experts attribute this situation directly to the government's energy policy or lack thereof. Because of a lack of clear and consistent long-term policies and laws, most companies invest in short-term measures to increase current production. They do not tend to invest in long-term high-risk ventures such as offshore exploration, because there is no way to know what the government's policies and actions may be five years from now.
Brasil, in contrast, with a middle of the road government and stable energy policies, is experiencing a boom offshore, with some of the largest discoveries in the last 30 years in South America.
Monday, April 14, 2008
Argentina In Ecuador
The President of Ecuador, Rafael Correa, announced today that ENARSA, the Argentine state energy company, will build the largest hydroelectric plant in the history of the country, with generating capacity greater than the total installed hydroelectric capacity to date. Why ENARSA is doing this is a mystery. ENARSA was formed during Nestor Kirchner's administration, which continues through the presidency of his wife, as a mechanism for the government to participate in any energy projects which seem attractive to the Kirchners, with no down side and plenty of up side. ENARSA has no experience in this type of project, which means that it will subcontract everything to companies which do.
The president of ENARSA is currently under a cloud because he chartered the Gulfstream jet which carried a bag full of illicit money destined for Cristina Kirchner's presidential campaign. The plane also carried executives of PDVSA. An Argentine judge is currently considering whether or not to issue an international arrest warrant for them; don't bet on the warrant. Odds are nothing will happen with any of this and business will go on as usual. The question is how much money will be available to be skimmed in Argentina and Ecuador. Will the project cost 25% more than it should, 50%, 100%?
The cornerstone of the project will be laid April 25 during Cristina Kirchner's visit to Ecuador.
The president of ENARSA is currently under a cloud because he chartered the Gulfstream jet which carried a bag full of illicit money destined for Cristina Kirchner's presidential campaign. The plane also carried executives of PDVSA. An Argentine judge is currently considering whether or not to issue an international arrest warrant for them; don't bet on the warrant. Odds are nothing will happen with any of this and business will go on as usual. The question is how much money will be available to be skimmed in Argentina and Ecuador. Will the project cost 25% more than it should, 50%, 100%?
The cornerstone of the project will be laid April 25 during Cristina Kirchner's visit to Ecuador.
