Home' Trinidad and Tobago Guardian : August 24th 2017 Contents BG8 | ENERGY
BUSINESS GUARDIAN guardian.co.tt AUGUST 24 • 2017
A US-led "financial
blockade" has hurt
Venezuelan state oil
company PDVSA's ca-
pacity to collect pay-
ment for crude cargoes,
and forced it to rely
on political allies like
China and Russia, the
said on Friday.
our payments," said
PDVSA's Eulogio Del
Pino in a televised
"We have to do fi-
nancial tourism, we
have to go to China,
we have to do financial
they're already apply-
ing a financial blockade
on our country."
Details were not im-
mediately available and
PDVSA did not respond
to a request for further
Venezuela and cash-
strapped PDVSA are
facing increasing dif-
ficulties to get financ-
ing from banks worried
about reputational risk
and providers who fear
they will not be paid.
Nicolas Maduro claims
cy is seeking to sabo-
tage his government by
curtailing its financing
during a bitter reces-
sion and low oil prices.
Oil holds steady as
OPEC meets to talk
Two weeks ago, OPEC held a meeting
with some of the producers and cited
its members Iraq and the UAE, as well
as non-OPEC signatories to the deal
Kazakhstan and Malaysia, as laggards
The market is now awaiting any news, hints, or
comments that are expected to follow today's meeting
in Vienna to discuss compliance and the results of the
extraordinary meeting in Abu Dhabi two weeks ago.
In its latest Monthly Oil Market Report, OPEC said
that its production increased in July, by 172,600 bpd
compared to June, to reach 32.869 million barrels.
Libya, Nigeria, and Saudi Arabia were the main drivers
behind the OPEC production increase.
While Libya and Nigeria are exempt from the deal,
the other OPEC members are not doing "whatever it
takes" to clear the glut.
The latest monthly oil market report by the IEA
showed that OPEC compliance slipped to 75 per cent
in July, from 77 percent in June. Compliance within
the non-OPEC group of producers party to the cuts
was 67 per cent. Combined, the 22 producers that
have pledged to cut production are overproducing a
total of 470,000 bpd, according to the IEA.
Saudi Arabia's Oil Minister Khalid al-Falih hinted
(again) earlier this month that deeper cuts are not
entirely off the table, but the market and analysts do
not expect the cartel to be willing to cut more and lose
more market share and oil revenues at these oil prices.
Inventory draws in the US have been sustained for
a few weeks now, but oil prices have been depressed
by the continuously rising US output. The market
would be expecting to see if the large inventory draws
continue in the coming weeks, and if the draws were
mostly the result of the driving season in the US.
According to Giovanni Staunovo, a commodities
analyst at UBS Wealth Management, as quoted by
MarketWatch: "There is the risk that inventories
start to increase again" if the draws were only due
to seasonal factors.
Brazil extends customs
perks through 2040
Brazil on Friday extended through 2040 a prefer-
ential customs regime for the oil and gas industry
called Repetro, which was set to expire in 2019, as
it seeks to entice investment ahead of key auctions
later this year.
The move was accompanied by another decree cre-
ating a special tax regime to bolster local suppliers
for the oil and gas sector.
The Repetro system, which was put in place in 2009,
suspends the payment of federal taxes on imports
and exports of goods used in research and mining of
oil and natural gas deposits.
The extension is a boon for oil companies ahead
of three auctions of oil and gas exploration blocks
planned for this year, one for concessions in Sep-
tember and two for pre-salt prospects under sharing
schemes in October. Reuters
Ecuador to cap
output at higher level
in deal with OPEC
A month after dealing a blow to OPEC, Ecuador
says it will cap output at a more comfortable level
than it had initially pledged.
The South American country will limit its pro-
duction at its current 541,000 bpd to avoid under-
mining the group's output-curbs deal, Ecuadorian
Oil Minister Carlos Perez said Tuesday. While that
breaches the 26,000-bpd cut to 522,000 that Ec-
uador had committed to, it's less than the country's
potential at a time the government needs to boost
revenues, he said.
"Even though there is greater potential, we have a
commitment with OPEC to maintain this production
until there are new guidelines," Perez, a career pri-
vate-sector oilman, said after touring the 110,000-
bpd Esmeraldas refinery together with President
Recently inaugurated Moreno has broken with his
former mentor Rafael Correa, ending the country's
position as an OPEC hawk, canceling his support for
Venezuela and stripping Vice President Jorge Glas, a
close associate of Correa, of a role in the government.
Perez, who got a call from Saudi Energy Minister
Khalid Al-Falih last month when he abandoned the
OPEC deal because of the nation's troubled fiscal and
economic situation, signaled Ecuador wants to keep
increasing production as soon as possible.
After touring the Esmeraldas plant, Perez and
Moreno said oil companies would be welcome to invest
under production-sharing agreements scrapped by
Correa in 2010.
BHP to quit US shale business as annual profit surges
BHP Billiton, the world's largest miner, re-
ported a surge in underlying full-year profits
on Tuesday and said it would exit its under-
performing US shale oil and gas business,
pleasing disgruntled shareholders who had
called for a sale.
The Anglo-Australian mining giant, which
is under pressure from US hedge fund Elliott
Management to rethink its investment in oil
and boost shareholder returns, was buoyed by
a recovery in industrial commodities markets.
It generated more cash than even in some
years of the mining boom, slashed net debt
by nearly US$10 billion to US$16.3 billion and
tripled its final dividend to US$0.43 a share.
Underlying profit of US$6.7 billion was be-
low expectations for US$7.4 billion, according
to Thomson Reuters I/B/E/S, but the market
focused on the lower debt and the company's
determination to exit US shale, pushing its
shares up 1.2 per cent.
"Net debt looks very impressive... so the cash
looks like it was applied to deleveraging versus
extra dividends," Shaw and Partners analyst
Peter O'Connor said.
BHP joined other miners who have boosted
payouts in the current earnings season to re-
ward shareholders amid a resurgence in com-
modity prices. Rio Tinto and iron ore miner
Fortescue Metals both paid record dividends,
while Anglo American reinstated its dividend.
Facing calls from some shareholders to dis-
pose of the shale business it acquired at the
height of the oil boom, the miner said it was
"actively pursuing options to exit."
Chief executive Andrew Mackenzie said the
preference would be a small number of trade
sales, but refused to give a timetable for quit-
ting the business.
Fund managers including Elliott and Tribe-
ca have been agitating for shale's divestment,
along with higher shareholder returns and the
elimination of dual-structured Australia and
London stock listings.
Tribeca welcomed BHP's comments that
shale was no longer core to the company.
"That was our approach. We didn't see it
fitting strategically in BHP. We think they can
realise value ahead of market expectations for
the US onshore business," Tribeca analyst
James Eginton said.
BHP Chairman Jac Nasser, who retires this
year, has conceded the US$20 billion invest-
ment in shale six years ago was a mistake. An-
alysts have suggested the business could sell
for about half that today. Reuters
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