Guaido team favoring ConocoPhillips in Citgo fight

Market: Crude oil, Oil products
19/06/20

Another senior Venezuelan opposition figure has resigned following the government's leak of a strategy that would favor ConocoPhillips in an escalating battle among creditors for shares in Venezuelan state-owned PdV's US refining unit Citgo.

Jose Ignacio Hernandez, who held the title of special attorney general in opposition leader Juan Guaido's US-backed exiled administration, announced his resignation late yesterday shortly after the government of President Nicolas Maduro leaked audio of Hernandez discussing the strategy in a meeting with the opposition-controlled National Assembly's energy commission.

In the audio, the veracity of which was confirmed by the attorney general's office yesterday, Hernandez describes an "understanding" with ConocoPhillips in which the US company would "pause" a stalled case against PdV in Portugal to focus on an ongoing case in a Delaware court, which has already ruled that Citgo shares can be sold to satisfy a debt to former Canadian mining company Crystallex, now owned by New York hedge fund Tenor Capital Management.

ConocoPhillips, which is the second creditor in line behind Crystallex in the Delaware case, will seek equal rights to Citgo shares once an embargo order is issued, according to Hernandez's account to the commission.

He said lawyers are still discussing the details of the understanding with ConocoPhillips.

"Conoco's objective is to obtain this embargo measure in order to get rights equal to that of Crystallex," says Hernandez, a former academic who led Guaido's legal team from the US since his 2019 appointment.

In the audio, which was posted on social media by Venezuela's executive vice president Delcy Rodriguez, Hernandez warns that Citgo is close to falling into creditors' hands, contradicting the Guaido team's public assertions that the asset is protected.

"I am surprised at how long these walls of defense that I built have lasted. Sooner or later…and no one knows the walls of the legal defense better than me, these walls are weak and fractured and they will collapse," Hernandez warns, adding that with a possible change of government in the US on top of political changes in Venezuela "we could be in a worse situation even than we were in January 2019" when Guaido declared his interim presidency.

Hernandez also discusses his "personal" effort to win recognition for the Guaido administration through the president of the World Bank — former US treasury official David Malpass — and its International Center for Settlement of Investment Disputes (Icsid), which issued arbitration awards for numerous companies, including ConocoPhillips, whose Venezuelan assets were expropriated under Venezuela's late president Hugo Chavez.

Legacy claims

ConocoPhillips' claims stem from the 2007 takeover of its stakes in two Venezuelan projects that were designed to upgrade Orinoco extra-heavy crude into lighter synthetic grades for export. The 120,000 b/d PetroZuata project, now known as Petro San Felix and wholly owned by PdV, has been mothballed for years. The 190,000 b/d Ameriven project became PetroPiar, which is controlled by PdV with a minority stake owned by Chevron. PetroPiar is among the few PdV ventures that continues to operate, but at a diminished level. Chevron remains in Venezuela under a US sanctions waiver that expires in December.

ConocoPhillips did not reply to a request for comment on the alleged understanding with Guaido's team.

Hernandez says he had already resigned before the audio leaked. Yesterday he released a 28 May resignation letter to Guaido in which he urges "deep institutional reforms in the State's legal defense".

Last month, two directors of an "ad hoc" PdV board of exiles resigned and they have not yet been replaced. Guaido's envoy to Chile recently departed as well.

Inside Venezuela, Maduro is tightening his grip on power ahead of National Assembly elections that would remove the constitutional basis of Guaido's claim to an interim presidency. His supreme court appointed an electoral board and is seeking to replace the leadership of opposition parties.

By Patricia Garip

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21/11/24

Pemex's lean Zama spending undercuts goals

Mexico City, 21 November (Argus) — State-owned oil company Pemex's limited budget for developing one of Mexico's most-promising new oil fields is putting Mexico's crude production and refining goals at risk through 2030. First production from the Zama field will likely not start until at least 2028 instead of late next year, as forecast earlier, based on a timeline in a recent presentation from Pemex. Pemex continues to work on the basic engineering for the Zama field because of the lack of cash, staff of hydrocarbon regulator CNH said last week. The latest delay on Zama echoes criticism from when Pemex took over operating the field in 2022 that it did not have sufficient experience or funds to carry on with the project, said industry sources. "Unfortunately, the Pemex budget is always a shadowy mystery," said a person close to the project who asked not to be named. "There is no transparency or certainty regarding when they do and do not honor payment commitments." Zama is a shallow-water field unified in 2022 between Pemex area AE-152-Uchukil and the discovery made in 2017 by a consortium led by US oil company Talos Energy. Pemex holds 50.4pc of the Zama project while Talos and Slim's subsidiary Grupo Carso have 17.4pc, German company Wintershall Dea 17.4pc and British company Harbour Energy 12.4pc. The state-owned company expects to spend $370.8mn to develop Zama in 2025, 64pc less than the original $1.05bn budget proposed by Pemex for next year, according to data from CNH. The regulator cleared the change last week, but commissioners questioned the CNH staff about the new delays. Pemex's original development plan showed that the company forecast the first crude production by December 2025, with 2,000 b/d and about 4mn cf/d of gas. The original plan forecast Zama hitting peak production of 180,000 b/d in 2029, making it Mexico's second-largest crude producer, only under the Maloob field. President Claudia Sheinbaum and Pemex's new new chief executive Victor Rodriguez flagged the importance of shallow-water field Zama and ultra deep field Trion to support Pemex's oil production target of 1.8mn b/d in the upcoming six years in a presentation last week. Pemex's new plan is focused on feeding its own refining system rather than crude exports. The company expects to increase gasoline, diesel and jet fuel production by 343,000 b/d, according to the plan, but it did not give a timeline. Pemex produced 491,000 b/d of gasoline, diesel and jet fuel in the first nine months of 2024. Mexico's proposed 2025 federal budget also shows lower spending for Zama, at Ps3.1bn ($154mn) for 2025, even less than the figure approved by CNH on 14 November. Neither Pemex not Talos responded to requests for additional comment. "Zama is the story of the triumph of ideology over practicality," said a Pemex source who asked not to be named. The state-owned company is studying how to bring in new investors to the project once congress approves secondary laws to implement recent energy reforms, the source said. But uncertainty over the legal framework and the general deterioration of Mexico's business climate will make this more difficult, the Pemex source added. The involvement of Mexican billionaire Carlos Slim, who acquired 49.9pc of Talos Energy share in Zama last year, brought new hopes that work at Zama could finally accelerate. Instead, Slim's entrance slowed the project, as the new partner had to review the project, a former regulator who asked not to be named said. Talos Energy, the lead operator when the field was discovered over seven years ago, is now "frustrated" by the poor progress of the project. "We have Mexico, a great discovery in Zama, we're seven years into it, and still have not made a final investment decision on it," said Talos Energy interim chief executive Joseph Mills, in a conference call with investors last week. "So a lot of frustration there, as you can imagine." By Édgar Sígler Pemex 2024 crude output, throughput '000 b/d Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cost of government support for fossil fuels still high

21/11/24

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21/11/24

Cost of government support for fossil fuels still high

London, 21 November (Argus) — The cost of government measures to support the consumption and production of fossil fuels dropped by almost third last year as energy prices declined from record highs in 2022, according to a new report published today by the OECD. But the level of fiscal support remained higher than the historical average despite government pledges to reduce carbon emissions. In an analysis of 82 economies, data from the OECD and the IEA found that government support for fossil fuels fell to an estimated $1.1 trillion in 2023 from $1.6 trillion a year earlier. Although energy prices were lower last year than in 2022, countries maintained various fiscal measures to both stimulate fossil fuel production and reduce the burden of high energy costs for consumers, the OECD said. The measures are in the form of direct payments by governments to individual recipients, tax concessions and price support. The latter includes "direct price regulation, pricing formulas, border controls or taxes, and domestic purchase or supply mandates", the OECD said. These government interventions come at a large financial cost and increase carbon emissions, undermining the net-zero transition, the report said. Of the estimated $1.1 trillion of support, direct transfers and tax concessions accounted for $514.1bn, up from $503.7bn in 2022. Transfers amounted to $269.8bn, making them more costly than tax concessions of $244.3bn. Some 90pc of the transfers were to support consumption by households and companies, the rest was to support producers. The residential sector benefited from a 22pc increase from a year earlier, and support to manufacturers and industry increased by 14pc. But the majority of fuel consumption measures are untargeted, and support largely does not land where it is needed, the OECD said. The "under-pricing" of fossil fuels amounted to $616.4bn last year, around half of the 2022 level, the report said. "Benchmark prices (based on energy supply costs) eased, particularly for natural gas, thereby decreasing the difference between the subsidised end-user prices and the benchmark prices," it said. In terms of individual fossil fuels, the fiscal cost of support for coal fell the most, to $27.7bn in 2023 from $43.5bn a year earlier. The cost of support for natural gas has grown steadily in recent years, amounting to $343bn last year compared with $144bn in 2018. The upward trend is explained by its characterisation as a transition fuel and the disruption of Russian pipeline supplies to Europe, the report said. By Alejandro Moreano and Tim van Gardingen Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop: Talks in Baku torn between mitigation and finance

21/11/24

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21/11/24

Cop: Talks in Baku torn between mitigation and finance

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Cop: EU, four countries commit to 1.5°C climate plans

21/11/24

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21/11/24

Cop: EU, four countries commit to 1.5°C climate plans

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Cop: EU says finance draft text not acceptable

21/11/24

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21/11/24

Cop: EU says finance draft text not acceptable

Baku, 21 November (Argus) — The latest draft of the text on climate financing presented at the UN Cop 29 climate summit is not ambitious enough on mitigation — reducing emissions — and "clearly unacceptable," EU energy commissioner Wopke Hoekstra said today. Parties must agree at Cop 29, in Baku, Azerbaijan, on a new collective quantified goal (NCQG) — a new climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. The text is the main outcome for the summit. "What we had on our agenda was not just to restate the [Cop 28] consensus but actually to enhance that and to operationalise that," but the text goes in the opposite direction, Hoekstra said. Parties to last year's Cop 28 summit in Dubai made an historic pledge to "transition away" from all fossil fuels. The EU has warned against any backsliding on this pledge . "We cannot accept the view that the previous Cop did not happen," Hoekstra said. A draft text on the mitigation work programme — a process that focuses on emissions reduction — was released by the Cop 29 presidency in the early hours of this morning. It does not mention phasing out or reducing fossil fuels in energy systems, or reference the agreement reached on the latter point at Cop 28 last year. Hoekstra indicated today's text does not provide enough clarity to allow the EU to put a concrete number on the amount of climate finance that should be available. The bloc has insisted the final number for climate financing can come only when other elements, including the structure and contributor base, are settled. But recipient country groups such as the G77 and Like-Minded Developing Countries (LMDC) groups have expressed impatience at the lack of a concrete number. Minor bright spots in the numerous draft texts released overnight include those on Article 6, which governs international carbon credits, Hoekstra said. But the commissioner is "sure there is not a single ambitious country who thinks this is nearly good enough." By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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