Page 8 - LatAmOil Week 16 2020
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As a result, Pemex had to cancel seven joint ven- ture deals that were due to be finalised next year. The cancellation left Pemex with only three joint ventures in operation. All three were given the green light by the previous government, which brought Pemex’s decades-long monopoly on production to an end and launched Mexico’s
first-ever oilfield auctions.
Pemex has said it intends to prioritise the
most profitable projects going forward and make all necessary adjustments to make itself
financially stable and capable of weathering the economic impact of the coronavirus (COVID- 19) pandemic. It has also pledged to reduce administrative expenses and contracts this year in order to help counter the impact of falling crude oil prices.
Hernandez reiterated those points last week, adding that he believed the NOC would survive intact. “Right now, what’s happening are reac- tions to coronavirus. But coronavirus will pass,” he commented.
COLOMBIA
Coronavirus a concern for Colombia’s public and private-sector oil producers
CONCERNS about the financial and opera- tional impact of the coronavirus (COVID-19) outbreak, which has helped drive global energy demand and crude prices down, appear to be widespread among Colombian oil and gas producers.
According to Reuters, both the national oil company (NOC) Ecopetrol and private-sec- tor firms are looking for ways to bolster their positions.
Ecopetrol’s debt ledger
Last week, the news agency reported that Eco- petrol intended to borrow $1.08bn to improve its cash situation in the face of the pandemic. Citing a company statement, it said that the NOC had requested permission to draw down on its $430mn credit facility from Scotiabank, as well as its $235mn facility from Mizuho Bank.
Additionally, the statement said, Ecopetrol hopes to obtain another $410mn under short- term financing deals with domestic and foreign lenders. Altogether, it added, these arrange- ments will allow the firm to secure a cash posi- tion of $3.7bn.
“These financing arrangements ... [will] strengthen the liquidity position of the com- pany, in an environment of high uncertainty where protecting cash is a fundamental objec- tive,” Ecopetrol said.
The company went on to say that it would continue to look into other types of competitive financing arrangements this year. It said it was doing so in the expectation that the pandemic might have more effects on financial markets and on the oil and gas sector in the medium to long term.
ACP’s warning
The news agency quoted Francisco Lloreda, the head of the Colombia Petroleum Association (known by its Spanish acronym ACP), as saying
that private companies might have to shut in production and curtail exploration if oil prices stayed low while production costs remained high. Some operators may end up having to close altogether, he said.
Lloreda urged Colombia’s government to take action, saying: “If measures like reducing pipeline tariffs are not taken, we will see many private-sector projects and some private com- panies closing in Colombia ... if prices remain under $30 a barrel.”
If crude prices drop below $25 per barrel, ACP’s member companies may have to shut in wells that typically yield about 85,000 barrels per day (bpd), he added. (He was speaking before world oil markets cratered, with the main US benchmark WTI and several other grades trad- ing in negative territory on April 20-21.)
Ecopetrol accounts for the majority of Colombia’s oil production. ANP data show, though, that private operators extracted some 342,700 bpd in January of this year.
ACP head Francisco Lloreda (Photo: El Colombiano)
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Week 16 23•April•2020
