Oil and gas in the capitals

The economic-financial situation of Brazil and Argentina remains complicated, that of Venezuela even worse, with a political crisis that generates a deeper uncertainty despite having the largest oil reserves in the world. However, Bolivia, Colombia, Ecuador and Peru confirmed their investment plans.

The increase in Colombia’s exports, in order to compensate part of the decline of those of PDVSA, and the arrival of a new producer, thanks to the latest discoveries offshore Guyana, are the other highlights of Latin America.

Peru. Since the inauguration last year of Peruvian President Martin Vizcarra, the hydrocarbons sector has been boosted. In recent times, it had stagnated, due to the extreme bureaucracy of tenders and the lack of a stable political climate.

State firm Perupetro has set goals for the 2019-2023 period, including an increase in oil production to 100,000 bpd, plus a boost in natural gas output to 1.5 Bcfd. According to the new 2019/2020 plan, presented by Perupetro, the Ministry of Foreign Affairs, the Ministry of Energy and Mining, Peru’s portfolio of gas and oil projects between 2019 and the 2020 will increase to $9.735 billion, of which $8.165 billion will be allocated to E&P projects.

Among the most important developments are the signing of the reapproved contract for shallow-water Block Z-64 with Tullow Peru; and the successful drilling of the second well on Block 95 by Petrotal, with a third well now spudded. In addition, Peruvian officials have approved a change in the license for onshore Block 39 in the Marañón basin. India’s Reliance has ceded its 10% interest in the block to Perenco (now 65%), while Petrovietnam holds the other 35%. Finally, Australia’s Karoon has been tendering for a rig to drill the Marina-1 well during 2020 on offshore Block Z-38.

Bolivia. This second Andean country also confirmed a series of important investments in its hydrocarbons sector, although they may depend on the October general elections.

However, the agreement of Intentions for the Exploration of Well Yapucaiti-X1 was signed by state-run YPFB and Shell Bolivia. An investment of $2.6 billion in exploration and exploitation is slated for the Yapucaiti Project, where recoverable resources are estimated at 3 Tcf.

According to recent exploration studies, the Chiuquisaca region, in the southwestern portion of Bolivia, is confirmed to hold 20 Tcf of natural gas, This equals 20% of Bolivia’s current proven gas reserves.

Colombia. Due to the political-economic crisis in Venezuela, Colombian oil exports to the U.S. registered 25% increase during first-quarter 2019. This reflects an increase in Colombian production, and lower supplies from Venezuela.

In the first quarter, crude sales to the U.S. increased to 195,600 bpd, up from 157,100 bpd during the same quarter of 2018. Meanwhile, Ecopetrol’s product sales to the U.S., such as gasoline and diesel, increased 25.8% in the first quarter of 2019, to 49.700 bpd.

Ecopetrol reported in early May 2019 that its net profits for the first quarter rose 5%, to $847 million, due to an increase in production, sales and greater operating efficiencies.

Regarding capital spending for 2019, the Ecopetrol Group (GEE) confirmed that it will invest $3.5 billion, representing a significant increase compared to 2018.The plan is focused on growth of the E&P segment, to which 81% of total investment will be allocated.

This will allow production to reach a level between 720,000 and 730,000 boed (oil and gas), and the replacement of proved reserves equivalent to 100% of oil and gas production.

The plan calls for drilling more than 700 development wells in Colombia, plus at least 12 exploratory wells, and the acquisition of more than 50,000 km of seismic.

Ecuador. The recent tender of seven of eight blocks in the XII Intracampos Round was very successful, generating investment of $1.17 billion. Exploration activities affiliated with 27 wells will require $370 million. Another $800 million will be required for exploitation. According to Petroamazonas calculations, production on Block 43 ITT would go from 58,100 bopd this year to 114,127 bopd during 2020.

The government’s target for oil production during 2019 is 565,000 bpd, of which 464,000 bpd will come from Petroamazonas EP and 101,000 bpd from private companies. Except for ITT, the rest of the blocks under Petroamazonas operation’ will see more modest growths. Accordingly, as a whole, production is expected to grow 14% this year, compared to 2018’s level.

Additionally, among the government’s targets for the next four years, the highest point of production from ITT will be in 2020, because the three fields in the block will all be operative and in production jointly. This is how the government expects to reach 589,000 bopd in 2020.

Guyana. According to Wood Mackenzie, Guyana is on track to become an oil power after 13 discoveries of large offshore hydrocarbon reserves. To date, the recoverable resource discovered in the Stabroek Block would exceed more than 5 Bbbl of high-quality crude oil.

The magnitude of the resources makes it absolutely necessary to install at least five floating vessels (FSPOs) capable of producing more than 750,000 bopd, combined. ExxonMobil and its partners, Hess Corporation and China National Offshore Oil Co., began the first phase of Liza field project development last year, anticipating that by 2020, production could reach at least 120,000 bopd. Currently, the companies are in the planning stage of two other projects that will begin this year. Phase 2 of the Liza project should increase production to 220,000 bopd by mid-2022. This will be followed by a third phase at the beginning of 2023.