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SOUTH AMERICAN ENERGY DAILY ROUNDUP (March 26, 2009): Low global oil prices hit PdVSA of Venezuela

March 26, 2009

South America Energy Markets (SAEM) will begin a daily roundup of the top-five stories affecting energy markets in the region with links. The roundup includes all the major web dailies of South America and other websites that write about the region’s energy markets. I aim to publish SAEM Daily Roundup from Monday through Friday by noon London time.

March 26, 2009

VENEZUELA – FINANCIAL CRISIS

Owing to a plunge in global oil prices, which have impacted PdVSA’s finances, Tulsa-based contract drilling group Helmerich & Payne (H&P) announced it had suspended the use of an additional two drilling rigs in Venezuela due to back payments  owed to it by the state-owned energy company, according to AP. H&P had suspended in January the use of two drilling rigs leased to PdVSA due to the same problem.  In a quarterly financial report published in January, H&P said that PdVSA owed the company almost $100 million. As long as oil prices continue at present levels, PdVSA’s problems will get worse. Believing that oil prices would remain at then record levels of the 1970s, Venezuela entered into a deep crisis after energy prices had plummeted in the 1980s.

BOLIVIA – ENERGY CRISIS

Hydrocrabons superintendent, Guillermo Aruquipa, told the local media after meeting with industry representatives in Cochabamba that there will be more gas available and no need to import gasoline nor LPG. The announcement comes after industrial association CNI warned last month that industries in the departments of Cochabamba, La Paz and Oruro had to reduce output due to gas rationing.  Owing to plummeting energy investments, some analysts were scratching their heads after Aruquipa said that gas output would rise to 46 from 42 million cu m/d.

BOLIVIA – YPFB WOES

The interim president of Yacimientos Petroliferos Fiscales Bolivianos (YPFB), Carlos Villegas, was quoted as saying in ABI that the restructuring of the troubled state-owned energy company had kicked off on Wednesday with the help of Holland, Norway, Canada, World Bank and Inter-American Development Bank (see South American Energy Daily Roundup, March 20, 2009).  Villegas, who is the sixth YPFB president since President Evo Morales’ government took power in January 2006, said that the company’s situation has been exacerbated by low global energy prices. Villegas’ predecessor, Santos Ramirez, was forced to resign at the end of January after he was linked to a corruption scandal that involved the murder of an energy executive.

PERU – WIND POWER

The Peruvian renewable energy association, APER, said that it has asked the government to speed up a new tariff scheme for the wind power sector, reports state-owned news agency Andina. The association said that a tariff scheme, which should come into force before the auction for 500MW, is vital for investments to begin in the sector. APER said that some ministry of energy and mines officials believe that wind-power generated electricity is not competitive in Peru.

PERU-CHILE-BOLIVIA – MARITIME DISPUTE

Peru’s President Alan Garcia was quoted as saying in La Paz daily La Opinion that landlocked Bolivia had renounced “a while ago” plans to get an outlet to the Pacific Ocean.  The head of state said that Peru has never been against Bolivia gaining an outlet to the Pacific Ocean after it became landlocked after losing the War of the Pacific (1879-84) against Chile. It is highly doubtful that Peru and Bolivia, blessed with large gas reserves, will ever sell piped dry gas to Chile’s northern mining-rich region as long as the pending border disputes are not resolved.

These briefs can be reprinted as long as as the source is cited.

If you have any feedback on today’s articles, or if there are energy industry stories you think should be covered, or need research assistance, please contact etessieri@latamreport.com.

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