LatAmOil Week 01

7/24/2019 LatAmOil Week 01

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New year, old problems Te political scandal and low oil price will create problems for Petrobras in

2015 unless the government takes action to stabilise the companys prospects.

Reserve results Petrobras has declared two pre-salt discoveries in the Santos Basin

commercially viable with reserves potentially totalling 5 billion barrels.

Peace push A peace agreement is nally within sight, but Colombias government must act

on several fronts if it is to attract more investment in 2015.

Gas-fired growth Perus gas production was up 10% year on year in November and could grow

further as new reserves are brought on line this year.


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Have a question or comment? Contact the editor Ryan Stevenson ([email protected])

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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents

Last year was an awful one for Petrobras,

but 2015 could be even worse for

Brazils national oil company (NOC).

Federal prosecutors continue to build a

case against those they believe to beresponsible for siphoning billions of

dollars out of the state-controlled firm.

Already several dozen former employees

and contractors have been charged. The

real fireworks are expected in February,

though, when prosecutors are due to

name the politicians involved in the case.

Leaks indicate that among those facing

prosecution are former energy minister

Edison Lobao, the head of the senate and

the treasurer of Brazilian President Dilma

Rousseffs Workers Party.

This has the potential to paralyse thegovernment at a time when falling global

oil prices demand strong leadership both

in Brasilia and at Petrobras

headquarters.

The ramifications for the NOC are

ominous. At the end of last month the

company was forced to suspend 23

companies that were caught up in the

anti-graft probe from bidding for futurecontracts. Among those blacklisted were

Odebrecht, Camargo Correa, Andrade

Gutierrez and OAS, the largest

construction and civil engineering

conglomerates in Brazil and known as

the Four Brothers.

Two foreign companies that have

extensive dealings with Petrobras were

also banned Italys Techint and

Swedens Skanska as was Queiroz

Galvao, a conglomerate with an

expanding presence in Brazils energy

sector.The suspension of these companies

from bidding for future Petrobras work

calls into question the NOCs ability to

execute its corporate investment plan,

which exceeds US$200 billion and which

has already put considerable strain on

Brazils industrial base.

Dented hopesPetrobras embattled president Maria das

Gracas Silva Foster has admitted that the

loss of some of the companys main

suppliers could dent production growth

this year. This would be a blow, given

that thus far the company has remained

relatively unhindered operationally and

especially in terms of growing output.

Brazilian oil and gas production in

October, led by Petrobras, was up by

2.1% on the previous month and 17%

higher year on year. Natural gas

production is surging ahead, rising 27%year on year in October, and oil output

gains are not too far behind. The 2.393

million barrels per day lifted in October

was up 1.5% on Septembers total and

15.1% higher than in the same month in

2013. At 607,100 barrels per day, pre-salt

oil production was a key contributor to

the record total. With many local services

companies now out of the loop, Foster

said that hiring foreign suppliers could be

an option. But this approach would face

several obstacles. As most foreign

multinationals are well aware, breaking

into Brazils relatively closed economy isa laborious and time-consuming process.

Building up local capacity requires

patience.#

(Left) Tough times ahead for

Petrobras president Maria das

Gracas Silva Foster

COMMENTARY

%IM EI=DH NAO KDNPAI?QRND 0I>DNPD=QThe political scandal and low oil price will create problems for Petrobras in 2015 unless

the government takes action to stabilise the companys prospects

By Tom Hennigan

$Petrobras has suspended 23 companies caught up in an anti-graft probe from bidding for future contracts

$The suspension of the companies could create operational problems for the company and affect output

$Conditions also look likely to impinge on the governments upcoming bid rounds


4/15

3=>'?"@A :/ 4=BC=DE F:9GH 7IIJ :9 K=LI IDA peace agreement is finally within sight but will not end Colombias problems. The

government must act on several fronts if it is to attract more investment in 2015

By Jon Stibbs

$The government must address long-term security, licensing and social problems

$Low oil prices have exacerbated the need for Colombia to take action to reassure investors

$Offshore exploration offers some hope for the discovery of new reserves


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On a more positive note, he said:

Over the longer term, there will be a

gradual and sustained fall in attacks.

Before an agreement is reached, the

situation will remain confused. FARC

began a unilateral ceasefire last month.

Unlike previous declarations of a halt toattacks, this one was not accompanied by

an end date. It remains to be seen how

long this hiatus in hostilities will hold

and whether it reduces attacks on

Colombias oil pipelines.

Bureaucratic bottlenecks

Although security is the headline-grabber

when it comes to Colombian news, for

operators on the ground there are more

banal problems to contend with.

The oil industry has been held back by

delays in the award of environmentallicences as bureaucracy has struggled to

keep pace with rapid growth. The

government has frequently promised to

react to complaints by streamlining the

process, but progress has been slow.

Colombian President Juan Manuel

Santos has brought in new ministers to

make improvements to the existing

structure and this should ease the pain for

explorers.

It will not be an overhaul of the

framework, however, as has taken place

in Peru. So the structural problems will

remain, Wack noted.Colombias Association of Oil

Producing Companies (ACP) has also

complained about the growth in

community activism for holding back

growth. State-controlled Ecopetrol has

moved to restructure itself in order to be

closer to local communities and diffuse

problems.

Wack identified a growing awareness

among local communities of their ability

to influence government and companies.

Over time, there will be a reduction of

security as an issue and it will bereplaced by problems in dealing with

communities, he said.

Critics say Santos has been too

reactive and has failed to implement an

effective strategy to address the issue.

The result is that communities recognise

that if they are disruptive, they are more

likely to be rewarded with subsidies as a

form of pay-off.

Recently communities in oil-producing

areas have reacted angrily to a new

royalty distribution structure that goes

through central government. This has

been a cause of conflict with theindustry.

The government has been slow to

implement the system, so communities

that are used to receiving large royalties

have not received them, said Wack.

The new system ought to be an

improvement, assuming the government

ramps up the implementation. There is a

danger it will move corruption from a

local to a regional level, however.

Action points

The government knows it must act if it isto make Colombia more attractive as an

investment destination.

The precipitous fall in the oil price

since June has affected appetite for

investment in risky projects. The timing

for Bogota is poor because good will

towards Colombia amongst investors is

also being stretched by the governments

consistent failure to deal with its long-

term security, bureaucratic and

community problems.

Colombia has come to the end of a

golden period of growth. Inward

investment soared and pushed up oilproduction from 546,000 barrels per day

in 2007 to over 1 million bpd in 2013.

Last year, however, production dipped

back below 1m bpd.

The state has called on operators to

step up investment in a bid to increase

reserves. The government expects

investment of US$8 billion this year,

with 1,086 development wells due to be

drilled in existing fields. Yet whilst the

Santos administration pushes for more

capital expenditure on the search for new

reserves, the ACP has reported that half

of its members intend to cut back their

exploration investment this year.

Colombias offshore territory couldhold the key to discovering new reserves

and is the area that could see growth in

investment. The government has

identified the need to develop offshore

resources and has exempted them from a

new royalty scheme that increased the

governments income by 5% to 75%.

This has had an impact. In the last

bidding round, companies coming to

Colombia for the first time targeted

offshore, said Wack. There is an

assumption that it carries fewer of the

risks identified onshore.The government in the past has also

talked up the positive potential of

Colombias shale formations but this did

not translate into interest from explorers

at the last licensing round.

Unconventional resources are onshore

and subject to the same problems as

those that face the conventional industry.

It will take time for the government to

reassure investors of the security of their

investment in the conventional sector, so

any boom in the unconventional is far

off, said Wack. A lot will depend on

the oil price anyway. I would be verysurprised if anyone ventured into the

unconventional sector under present

circumstances.

Security is top of the pile in Santos in

tray. Indeed, his re-election last year was

secured on the back of a pledge to secure

a peace agreement soon. But the

president must also act to slash

bureaucracy and take the heat out of

community relations to reassure oil

companies that Colombia remains a

good place to do business. Failure to

do so in the current bearish oil priceenvironment could prove to be a

critical misstep and have serious

long-term repercussions for the

countrys oil production.$

(Left) Peace within his grasp:

Juan Manuel Santos

COMMENTARY


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A judge has required Argentinas state-

controlled oil and gas company, YPF, to

pass over details of its Vaca Muerta shale

exploration contract with Chevron. Judge

Maria Jose Sarmiento called on YPF to

reveal whether there are secret clauses in

the agreement, which was signed in

2013.

Sarmiento gave YPF 10 days from

December 30 to pass on the information

to Radical (UCR) party politician Manuel

Garrido, according to Argentinas legal

systems news agency.

Opposition politicians have allegedthat that the contract, which was agreed

by the Argentine government as well as

YPF, infringes on the countrys national

interests. They also claim that it was

drawn up without following due process

and that it represents an abuse of

authority.

The secret clauses allegedly included a

requirement for Argentinas law to be

changed before Chevron committed to

invest in the Loma Campana section of

the Vaca Muerta.

YPF denied that there were any

undisclosed inducements. Everything

done by YPF is within the law, it stated

in reference to the obligations placed

upon it as a company listed in both

Buenos Aires and New York.

YPF will appeal against the decision. It

has successfully halted a similar demand

in the past. The government hasacknowledged there are confidentiality

clauses in the agreement. However, it

has denied that there were any secret

clauses, reported Latino Fox News.

Buenos Aires nationalised Repsols

controlling share in YPF shortly after the

discovery of the Vaca Muertas potential

had been announced.

Without the backing of Repsol, YPF

lacked the finance and expertise to tap

the Vaca Muerta. The deal with Chevron

came as YPF sought investors with deep

pockets and unconventional experience

to develop Argentinas shale resources.

Chevron and YPF have announced

they will invest US$2.8 billion in the

initial two phases of the exploration

programme for the Vaca Muerta. The

deal could bring investment of up to

US$16 billion into 3% of the plays

production area. Argentina has offeredsweeteners through a new law in order to

encourage further investment in its

unconventional resources. The country is

hoping that the new law, passed in

October, could bring in up to US$200

billion of investment into shale

exploration.$

Bolivia has agreed to pay Argentina-

based Pan American Energy (PAE)

compensation totalling US$357 million

for the nationalisation of its subsidiary

Chaco in 2009.

Today an agreement was signed for

US$357 million, including a cash

payment of US$324 million, which

means we are only paying 21% of the

amount sought by PAE, said Bolivias

attorney general, Hector Arce, as quoted

by Reuters. Last August, PAE agreed toaccept less than 30% of the US$1.49

billion it originally demanded from

Bolivia as compensation. In 2009,

Bolivia seized control of the firms

subsidiary Chaco following the

breakdown of talks over a share transfer.

Chaco is currently owned by Bolivias

state-owned YPFB. Before the

expropriation, YPFB already had a 49%

share in the company.

Pan American is controlled by British

oil major BP, and Argentinas Bridas

Holdings holds a minority stake in the

company. In 2010, Pan American took

the dispute to the International Centre for

Settlement of Investment Disputes, part

of the World Bank. However,

proceedings were suspended in June last

year. Pan American has been present in

Bolivias Tarija Basin since 2000, as wellas being a member of a consortium that

produces hydrocarbons at the Caipipendi

block.

Bolivian President Evo Morales

secured a landslide re-election victory in

October. The president, who has

governed since 2006, will now lead the

country until January 2020.

Morales wave of nationalisations in

the oil and gas business has earned him

widespread support with the Bolivian

people. Since nationalising the oil and

gas industry in 2006, he has reportedly

ploughed funds into anti-poverty

programmes. However, Bolivias

tendency towards resource nationalism

has isolated foreign investors in the

country in recent years.

Bolivia has proven oil reserves of 209

million barrels, as well as estimates of upto 391 million barrels of probable

reserves and 255 million barrels of

possible reserves. Overall, the Andean

country has the sixth largest oil reserves

in South America.$

INVESTMENT

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Perus gas production increased to 1.34

billion cubic feet (38 million cubic

metres) per day in November. Outputwas up by 10.8% from the 1.21 bcf (34

mcm) per day that was lifted in the same

month of last year, according to the

National Oil and Mining Society

(SNMPE). Gas production in November

was 0.1% higher month on month.

Growth was driven by a 15% increase

in production from Block 31-C,

equivalent to a rise of 2 million cubic

feet (56,000 cubic metres) per day,

Peruvian daily El Comercio said citing

SNMPE statistics.

Aguaytia Energys Block 31-C covers

an area of 166 square km and has

reserves totalling 440 bcf (12.5 billion

cubic metres) of gas.

Block ZZ2B and Block 56 also saw

rises in production of 2.3% and 0.1%

respectively.

Meanwhile, the countrys oil

production in November climbed by

9.2% year on year to 69,900 barrels per

day.Pluspetrol Norte, a Peruvian subsidiary

of Argentine oil group Pluspetrol, was

the countrys main oil producer in

November, providing 29.1% of the total

daily oil output.

Pluspetrol, along with Spains Repsol

and US independent Hunt Oil, are

expected to begin exploring for gas at

Perus highly prospective Block 76 in the

near future.

State-run PeruPetro believes that the

jungle block could have reserves similar

to the giant Camisea fields, which could

potentially double Perus current

reserves. The agency estimated the

blocks gas reserves at 311 bcm of gas in

2010. Recent speculation in the Peruvian

media has suggested reserves could

actually be triple the level of those at

Camisea.

In the first exploration stage, the

partners in Block 76 are predicted to

invest a total of US$745 million to drilleight wells. Hunt Oil and Repsol both

have 35% stakes in the block, while

Pluspetrol owns a 30% stake.

In 2009, the partners were forced to

postpone exploration at the block owing

to legal challenges from local

communities. The blocks location it is

partially in the Amarakaeri Communal

Reserve has caused complications.

In addition to Block 76, Pluspetrol has

indicated it intends to beef up investment

in Perus biggest gas asset, Block 88.

Combined reserves at Block 88 and

another Pluspetrol block, Block 56, could

amount to 13.1 trillion cubic feet (371

bcm) of gas.

Pluspetrol has said it plans to invest

US$480 million in developing new

reserves at Block 88.$

Tax reforms aimed at cutting the

Colombian governments US$6.5 billion

budget deficit came into force on January

1. The reforms include a wealth tax

aimed at companies or people with over

1 billion pesos (US$421,000) in the bank

(based on total income minus debts) and

a surcharge tax on profits over 800

million pesos (US$337,000). This charge

will be levied at 4% in 2015 and rise to

9% by 2018.

Details of the tax tweaks will come as

a relief to oil and gas operators. It hadbeen thought that reforms to the royalties

system under which exploration and

production (E&P) companies have to

give a percentage of their profits to the

government could have been amended as

part of the new tax regime. No such

reforms were tabled, however.

The shortfall in the Colombian budget

has been caused by declining oil

production allied to the sharp fall in the

price of oil from US$90 per barrel in

October to the current price of around

US$52 per barrel, for West Texas

Intermediate (WTI).

Colombias economy is heavily

dependent on receipts from the oil

industry. After several years of poor

exploration results, the country

desperately needs the discovery of amajor new oilfield to reinvigorate

confidence in the industry. But the low

oil price and ongoing security issues

make exploration work less palatable to

operators.

There is optimism that a peace deal

could be struck between the government

and leftist guerrilla groups this year. This

could prove to be a windfall for the oil

industry if it were to open up new

swathes of the country to E&P. The

government has said an accord has been

close at the start of each year since the

latest round of peace talks began in 2012,

however, so there is no guarantee that

this year will be different and herald the

emergence of a lasting peace.

That said,NewsBaseis confident that

recent momentum can be maintained anda peace deal be signed this year. Indeed,

the biggest threat to the countrys oil

sector in 2015 is more likely to be the

subdued oil price rather than the security

threat posed to energy infrastructure by

rebel groups. (See commentary)$

PERFORMANCE

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POLICY

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Venezuelan President Nicolas Maduro

said his government would overhaul the

countrys foreign exchange system

within days. The move is designed to

drag the countrys economy out of

recession and end shortages of basic

foodstuffs, medicines and spare parts.

Maduro said that the countrys Central

Bank and Finance Ministry would release

details of the changes later this month.

He gave no information about the

possible changes but said they were

geared toward providing enough hard

currency to productive sectors of theeconomy. As part of the overhaul,

Maduro named a new board of directors

for the countrys foreign exchange

agency.

Members of the presidents United

Socialist Party of Venezuela (PSUV) said

the changes could entail the abolition of

one of the countrys three official

exchange rates. The system has been

criticised for encouraging corruption and

graft while not providing enough dollars

to importers.

Maduro promised last year to perfect

the SICAD II auction mechanism. The

system offers buyers, both companies

and individuals, dollars at about 51

bolivars apiece.

There are two other official exchange

rates. The first offers dollars at 6.30

bolivars, and is used for priority imports

such as some foods and medicines. This

is also the rate at which PDVSA receives

bolivars for the dollars it sells the Central

Bank from oil sales.

The SICAD I rate, which is also an

auction for specific industries, is about

12 bolivars to the dollar. Neither theSICAD I nor the SICAD II auctions are

transparent, with the rates being set by

the government.

The black market rate is about 185

bolivars to the dollar. That rate has

soared from 100 since November after

the government ruled out a devaluation.

Changes to the system are often

mooted, butNewsBase is sceptical about

any meaningful tweaks being applied to

the forex system. The simple problem is

that the government is not providing

enough dollars to importers, which has

resulted in significant shortages.

Venezuela imports about 80% of the

products it consumes.

Any changes to the system are unlikely

to increase dollar allocations, especially

as oil prices fall. Sales from oil make up

95% of the dollars the government

receives.

Instead, the government seems likely

to put in more controls in an effort to

target where dollars will be directed or

sold. The government could attempt a

stealth devaluation by moving more of

the dollars to the higher SICAD II ratefrom the two other rates. But such a

move would drive up inflation, which

ended last year at more than 60%, the

highest in the world. It would also dent

Maduros diminishing popularity.

According to the latest Datanalisis

poll, only 22% of Venezuelans continue

to support the president and his

government, which suggests the new

changes will be more cosmetic rather

than substantive.$

Bolivias state-controlled YPFB has won

the right to explore at three contracts in

the eastern Santa Cruz area of thecountry through two of its subsidiaries.

YPFB-Andina has gained the

Carohuaicho 8B and Oriental areas.

YPFB has a majority share in the

company, which is 48.92% owned by

Spains Repsol.

YPFB-Chaco won the rights to

Carohuaicho 8A, and will also explore in

the other two areas, reported Latino Fox

News. There is a 20% chance of

successful exploration at the blocks,according to YPFB. The firm and its

Venezuelan counterpart, PDVSA, have

begun drilling for oil in western La Paz

Province. The Petroandina joint venture

inaugurated its first well last month at the

Lliquimuni Centro X1 facility. We hope

that in December [2015], we all are

celebrating the discovery of oil in

Lliquimuni. If the result is positive, as we

expect, we will continue with the

investments, said YPFBs chief CarlosVillegas, who is currently on a leave of

absence for health reasons. Frances

Beicip-Franlap has been hired to improve

YPFBs exploration success. Villegas

said the three-year deal covered

technical and economic studies in

exploration areas under the Immediate

Exploration Plan.#

POLICY

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In addition, Beicip-Franlab has been

charged to find new exploration areas

and provide an overview of the potential

of the countrys hydrocarbons.

Bolivia has set out to develop its oil

and gas resources with an investment of

US$12.08 billion over the next fiveyears. The Andean state has sufficient

reserves to meet current production rates

for ten years.

Bolivias economy is heavily reliant on

exports of natural gas, which is sold to

Brazil and Argentina. The price of the

countrys exported gas is linked to the

price of crude in a system that is adjustedquarterly. As a result, Villegas warned

that Bolivias budgetary plans would be

affected if oil prices did not recover

rapidly. The situation could turn more

delicate if the price [of oil] continues

falling, Villegas said. He added,

however, that Bolivia would benefit from

the fall in the price of the diesel andpetrol it imports.$

Petrobras last week declared the Iara and

Entorno de Iara pre-salt discoveries in

the Santos Basin commercially viable

with reserves totalling 5 billion barrels.

Exploratory work on the finds led to

the delimitation of three distinct

accumulations. The declaration wascomplicated by the fact that the Iara

block was obtained by Petrobras under

the countrys old concession regime. But

one of the accumulations extended into

the concession area received by the firm

from the state in the 2010 oil-for-shares

swap that operates under the new

production-sharing agreement (PSA)

regime.

In a proposal to the energy regulator,

Petrobras advocated slicing up the

accumulations into eight fields spread

between the original BM-S-11

concessionary block and the rights area.The accumulation identified by

exploratory well 3-BRSA-1032-RJS will

be split into three fields Berbigao,

Norte de Berbigao and Sul de Berbigao

with the last two in the rights area. The

accumulation at well 1-BRSA-618-RJS

will be divided up into three fields

Sururu, Norte de Sururu and Sul de

Sururu. Again the last two are in the

rights area. The accumulation identified

by exploratory well 1-BRSA-1146-RJS

will be split into two fields Atapu in

Block BM-S-11 and Oeste de Atapu in

the rights area.

This division will now be

subject to Production

Individualisation Agreements,

said Petrobras. The consortiumwith the BM-S-11 block is made

up of operator Petrobras with

65% of the concession, BG

Group with 25% and Petrogal

with the remaining 10%.

Petrobras has 100% of the

rights in the Transfer of Rights

Area it received in 2010.

The fields are located 230 km

off the coast of Rio de Janeiro in

the Santos Basin, where the main

pre-salt finds have been made in

the last decade. The Iara cluster is

close to the Lula and Iracemaareas, which will have ten

FPSOs.

Petrobras said initial

development of the new fields

would require three further

FPSOs. The oil present there is of

a high quality with an API of

between 24-30 degrees.$

Colombias state-run Ecopetrol has

launched a new technology to separate

oil from sand at the fields it operates. JP

Consulting SAS has been contracted to

provide the technology, in conjunction

with the Colombian Petroleum Institute

(ICP).

The process of separation eventually

takes place naturally but using a machine

is faster and saves on storage, the

national oil company (NOC) said. It

added that the application of the

equipment was part of a strategy of

open innovation and interest in

transferring technology to the productive

sector.

In a related development, in late

December the company said it had

installed a new gas compression system

at the offshore Chucupa natural gas

field.#


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The new equipment should boost the

recovery factor from the field to over

90%. At the beginning of 2014, recovery

stood at 50%.

As the Colombian oil and gas industry

falls behind on production targets,

technology is becoming more important.With reserves falling, the focus is now

not only on new discoveries but on

boosting output from existing wells.

Ecopetrol is especially supportive of

the application of new technology to

increase recovery rates, as the company

has already been forced to revise its

output goal for 2015. It now anticipates

production to be 7.2% below its original

target of 760,000 barrels per day of crude

this year.It will be a critical year for Ecopetrol

after the companys share price took a

battering in 2014 on the back of lower

than forecast production and the sinking

oil price. The NOC is expected to

appoint a new CEO at its next general

shareholders meeting in March, after

announcing in December that current

chief Javier Gutierrez, who has been in

the job since 2007, will be stepping

down. He is thought to have come underpressure from the government to resign

owing to falling production and missed

targets.$

Range Resources is concluding its plans

to waterflood its Trinidad licences at

Morne Diablo, South Quarry and Beach

Marcelle. The exploration and production

(E&P) company has teamed up with

LandOcean Energy Services for the

project, which has already successfully

completed subsurface studies.

The initiative is hoped to recover at

least 15% of the oil in place (OIP)

remaining after traditional extraction

processes have been used. Filtered water

will be injected into the reservoir in order

to displace oil.

The C, NE, and SE blocks in BeachMarcelle, and Blocks II and III in South

Quarry, have been identified for the

project. The company has forecast

production of 3,000 barrels per day as a

result of the Beach Marcelle waterflood

project.

The company has approval from the

government for the Morne Diablo

expansion project. The next step will be

to study the surface with well integrity

surveys and to source injection water. A

decision will be made this quarter about

whether new wells are required as part of

the waterflooding project.

The company has arranged US$50

million credit with Sinosure to fund the

development. The deal was set up last

month.

Trinidad-focused Range has reviewed

its business plan and has decided to focus

on upstream activities. As a result, it is tosell its Range Resources Drilling

Services (RRDS) company to

LandOcean for US$7.2 million.

In line with the company's strategic

focus on its core assets in Trinidad,

Range will use the proceeds from this

transaction to fund the ongoing

operations at these flagship assets, the

company said.

Range has also sold its interests in

Texas to Citation Resources. The two

companies have joint interests in

Guatemala and the deal in Texas will

release Range from spending

commitments in the Central American

country.

Ranges management has been through

a period of upheaval. Rory Scott Russell

recently failed in his bid to be re-elected

as CEO, with executives Graham Lyon

and Christian Bukovics also leaving thecompany. As a result, Ranges shares

were suspended from trading on AIM

and ASX listings last month.

Yan Lui has taken on the role of CEO

in a non-board capacity.$

The following news items are sourced

from local and international news

sources. NewsBase is not responsible for

the contents of the stories and gives no

warranty for their factual accuracy.

0"3,!)

"@A KD@SI SD=QT RNDSIQ$SC=OND >N QA=QTPCOLI>Ecuadors government has slashed the

general budget by US$1.42 billion

considering the reduction in crude

prices in the international market, said

the Finance Minister. In a statement,

Minister Fausto Herrera said the sharp

drop meant it was cutting US$839.8

million in investment expenses and

US$580 million in current expenses;

salaries, goods and services.

The 2015 budget is now US$34.897

billion. According to El Universo,

Ecuador received US$77.53 billion from

crude oil exports between 2007 and 2013

at an average price of US$74.09.#


(=BLI (IQNCDSIQ KA=BQM=>IDRANNO@BL @B &D@B@O=O

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The number, according to government

figures, is three times what it was in the

previous seven years.

RPP NOTICIAS, January 6, 2015

1NDI@LB I[ST=BLI

=@O RND 0]-.'Venezuelan state oil company PDVSA

will be allowed to sell dollars from oil

exports to regional allies at the most

advantageous of three official exchange

rates, a move that should help the cash-

strapped companys coffers. The central

bank decision allows PDVSA to sell

greenbacks from PetroCaribe member

countries at the Sicad II rate of around 51

bolivars per dollar.

This increases the proportion of dollars

PDVSA can sell at the (most

advantageous) exchange rate, said

economist at Sintesis Financiera Tamara

Herrera. But the bulk of hard currency

PDVSA receives from oil exports is still

sold at the (least advantageous) exchange

rate.

REUTERS, January 5, 2015

!"#0'%,$.

'ST= >=JIQ >TI>I?KND=DE TIA? NR)108Yacimientos Petroliferos Fiscales

Bolivianos (YPFB) Deputy President

Guillermo Acha will take over the

presidency of YPFB during the

temporary absence of Carlos Villegas,

who is traveling abroad for health

reasons, said President Evo Morales.

The interim president of YPFB will be

Guillermo Acha, he said. He denied

rumours that Villegas was leaving to

avoid allegations of corruption. Morales

said that the interim YPFB president

would hold meetings in order to

accelerate planned investment and

projects.

ABI, December 31, 2014

8D=Z@A ?=DJI>DILCA=>ND M@OIBQ0I>DNPD=Q KDNPIBrazils securities-market regulator CVM

said it is investigating whether Petrobrasexecutives failed in their legal duties to

protect the state-run oil company and its

investors from losses related to a giant

corruption scandal. The regulator said it

was seeking to ascertain any

irregularities related to the possible

breach of fiduciary duties of company

administrators. The CVM did not name

the executives of Petrobras that were

being investigated.

Company administrators with fiduciary

duties in Brazil normally refer to top

executives, such as the chief executive

officer, chief financial officer and other

heads of the Rio de Janeiro-based

companys principal operating units. In

the case of Petrobras, those officials

would include the heads of exploration

and production, services and engineering

and refining and supply. Administrators

with fiduciary duties also include

members of the board of directors.

Brazilian President Dilma Rousseff, who

is scheduled to begin a second four-year

term on January 1, was chairwoman of

Petrobras board of directors from 2003

to 2010, a period when much of thealleged corruption took place. During her

term as Petrobras most senior official,

Rousseff was first Brazils Energy

Minister and then Chief of Staff to

former President Luiz Inacio Lula da

Silva.

REUTERS, December 30, 2014

0I>DNPD=Q QIIQQT=DIQ QAC?K =?@OKDNPIBrazils stock index, the Ibovespa, fell

the most among global stock benchmarksas Brazils securities regulator opened a

probe into state-controlled Petrobras and

the real weakened after the central bank

said it would pare support. Petrobras

contributed the most to the indexs

decline as officials opened an inquiry

into management at the oil producer,

which is at the centre of the biggest

corruption investigation in the countrys

history.

The Ibovespa retreated 3% to 48,512.22

at the close of trading in Sao Paulo as 67

of its 70 stocks declined. The gauge lost

4.6% in dollar terms, the most in theworld, after the real weakened 1.4% to

2.6942 per dollar. Petrobrass situation

is only getting worse, and we see more

losses for the company while the

corruption allegations linger, analyst at

brokerage firm Clear Corretora Raphael

Figueredo said. Petrobras said this week

that it is banning 23 contractors including

Brazils top builders from taking part in

bidding after prosecutors expanded an

investigation into companies that

allegedly bribed Petrobras officials to

win infrastructure contracts. Thecompany has twice delayed releasing its

third-quarter financial results because of

the probe.

BLOOMBERG, January 2, 2015

0I>DNPD=Q KA=BQ >T@DO^C=D>ID I=DB@BLQ=BBNCBSI?IB>Brazilian state-owned oil firm Petrobras

recently announced that it plans to

disclose its 2014 third-quarter earnings

this month, Trefis reported. The company

had initially planned to announce theresults in the first week of November but

postponed the announcement to mid-

December. However, it failed to comply

with the set date as well and now expects

to publish its unaudited financial

statements by the end of this month.

The company has been delaying the

disclosure of the financial statements due

to the ongoing investigations into the

alleged bribery and corruption scandal

that has hit the company last year.

However, there are concerns that the

company will have to accelerate the

repayment of some of its outstanding

long-term debt if it is not able to publish

its annual audited financial statement by

April this year, which could significantly

impact the companys prospects for

future growth.

NEWSBASE, January 6, 2015

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0I>DNPD=Q R=SIQ>TDI=> NR OIR=CA>Petrobras could be declared in technical

default on some of its foreign debt if

bondholders force it to speed up itsassessment of losses in the massive

corruption scandal. The push, led by US-

based Aurelius Capital, applies to US$54

billion of Petrobras bonds governed by

US law in the New York state, Financial

Post reported. Aurelius is asking

investors to put the company into default

as a precautionary step according to a

letter from the firm.

Under the terms of the bonds, Petrobras

is required to provide third-quarter

financial statements within 90 days of the

end of a quarter, which has not happened

so far. For the default declaration to take

effect on any of the more than 20 US law

bonds outstanding, investors holding at

least 25% of any one series must request

the action, Aurelius said.

NEWSBASE, January 6, 2015

0I?I[ PNBOTNAOIDQPI?N=B V.W+_

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