Page 6 - LatAmOil Week 02 2020

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Mexico makes information
on annual oil hedge a state secret
MEXICO’S government has reportedly des- ignated certain information about its annual crude oil hedging programme as a state secret. The Finance Ministry outlined plans to do so in a letter sent to the state auditing agency in Feb- ruary 2019, Bloomberg reported on January 13 after viewing official documents related to the matter.
In the letter, the ministry said it would keep key data on the hedge secret for a period of five years. Making the hedge less transparent in this manner is necessary in order to guard against price rises and discourage speculation, it asserted.
This approach represents a departure from previous policy. In the past, the Mexican gov- ernment has made detailed information on the hedging programme publicly available. This year, though, it has only revealed that the total value of the hedge is about $1bn.
As of press time, the Finance Ministry had not responded publicly to Bloomberg’s report. Reporters in Mexico City did ask Deputy Finance Minister Gabriel Yorio about the mat- ter last week, but Yorio said only that disclosing additional information would put the govern- ment at a disadvantage.
If Mexico reveals more data, he said, it would have to pay higher premiums each time it arranged the yearly hedge.
The Mexican government has been con- cerned about the potential costs and benefits of transparency on this front for some time. In March 28, the central bank issued a resolution expressing concern about the possibility that
CARIBBEAN REGION
speculators might use publicly available infor- mation in a way that made the hedging pro- gramme less effective.
“Several institutions outside the hedge could use the information to speculate, buying the same financial instruments ahead of the gov- ernment, increasing considerably their price,” it said.
It added that it had evidence of the disad- vantages of transparency, saying that Mexico had been forced to pay higher premiums in past years following media coverage of the hedging programme. Under these conditions, it said, “[the] volatility in WTI and Brent increased, generating also an increase in the price offered by the counterparts to the Banco de Mexico to cover its operations.” ™
Eagle LNG Partners awards contract for small-scale LNG plant
Deputy Finance Minister Gabriel Yorio (Photo: Heraldo de Mexico)
US-BASED Eagle LNG Partners has awarded an engineering, procurement, fabrication and con- struction (EPFC) contract for a small-scale LNG project that will target buyers in the Caribbean Sea region.
In a statement dated January 13, Eagle LNG Partners said that the contract had gone
to NASDAQ-listed Matrix Service Inc., a sub- sidiary of Matrix Service Co., which is based in Tulsa, Oklahoma.
It put the value of the deal at $500mn and
said that the contractor would be responsible
for building an LNG export complex in Jack- sonville, Florida. 
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