Page 5 - LatAmOil Week 25

LatAmOil COMMENTARY LatAmOil
 How to get there
Gaining access to those underused facilities might not be easy, though.
Antero Alvarado of the Gas Energy Latin America consultancy told Bloomberg last week that moving gas from Venezuela to Trinidad and Tobago would not be a simple a air for Rosne . e Russian company cannot produce LNG in Venezuela, as that country does not have any gas liquefaction plants, he explained.
Alvarado also pointed out that Russia did not have extensive ties to or a close relationship with Trinidad and Tobago. This could complicate e orts to gain access to the latter country’s LNG export facilities, he indicated.
So if Rosne is truly keen to use Venezuela’s eastern coast as a starting point for LNG exports from the Caribbean, it will likely try to convince the Russian government to establish closer links to Trinidad and Tobago. If it does so, all of the
parties involved may be at risk of running afoul of the US sanctions regime.
ey may also raise eyebrows among indus- try observers concerned about Russia’s position on international gas markets. Russia is a relative latecomer to the global gas trade, but it does possess the world’s largest gas reserves and is the largest individual producer.
At the same time, both Gazprom and Ros- ne are eager to expand their foreign trading operations.
As the Caracas Capital Markets brokerage said in a note sent to its clients last week, “Deep- ened Russian involvement with regional energy producer Trinidad is a cause for concern.” e note pointed to the pivotal role Russia already plays in the gas trade, saying: “The Russians already dominate gas production in Asia and Europe and are developing further massive capacity in Siberia and the Arctic.” ™
MEXICO
Pemex CFO talks about financial stabilisation plan
ALBERTO Velasquez, the chief nancial o cer of Pemex, said last week that the Mexican national oil company (NOC) would take steps this year to improve its nancial position.
One of Pemex’s rst e orts will involve the re nancing of $2.5bn worth of debt, most of it in the form of outstanding bonds, Velasquez said in an interview with Reuters. He indicated that the company had not yet made arrangements for re nancing but said Pemex intended to negoti- ate with domestic and foreign lenders.
e CFO also stated that Pemex was ready to consider “bilateral contracts with banks” as part of the re nancing campaign. He conceded, though, that such contracts were likely to incur higher borrowing costs because of the Fitch ratings agency’s recent decision to downgrade its securities to junk status. He also said he was willing to accept this state of a airs.
“It is not what you would want in terms of interest rates, but that’s the market,” he was quoted as saying by Reuters. He was speaking on the sidelines of an industry conference in Leon, Mexico.
Pemex stands to lose from the Fitch down- grade, as some of its minority shareholders are funds that do not allow speculative-grade securities to remain in their portfolios. It may lose even more if, as expected, the Moody’s rat- ings agency follows Fitch’s lead and announces another change.
Fitch cited concerns about Pemex’s nan- cial security and stability when it announced the downgrade. e NOC was carrying a total of $106.5bn worth of debts as of the end of last year, and it has said it intends to stabilise this g- ure over the next two years and then work on reducing the gure in 2021 and beyond.
According to Velasquez, part of this nancial recovery campaign will involve economising on exploration and development projects. More speci cally, he said, Pemex hopes to save money by making onshore elds and shallow-water o - shore projects the focus of its upstream invest- ment programme. Deepwater schemes are less attractive for the company now, he explained, because they tend to be very expensive and tech- nologically complex. ™
Week 25 26•June•2019 w w w . N E W S B A S E . c o m P5