Page 11 - LatAmOil Week 41

LatAmOil MEXICO LatAmOil

Mexico may be carrying

out low-profile oil hedge

THE Mexican government appears to be carry- both sides of the deal said around that time that
ing out this year’s oil hedge, which is usually the they were expecting a smaller hedge, since the
largest deal of its kind to hit Wall Street, but is options used to protect oil profits had become
doing so in a discreet manner. The Finance Min- more expensive.
istry has declared the operation a state secret, The 2020 hedge, arranged last year, locked
Bloomberg reported last week. Mexican crude prices in at $49 a barrel.
Time is running out to finalise the deal for Mexican President Andres Manuel Lopez
2021, and there is no concrete evidence that Obrador has said that this year’s oil-hedging
Mexican authorities have initiated the process. programme will help protect government oil
Nevertheless, many traders and brokers suspect revenues, which have been battered by falling
the hedge is already underway, arguing that crude prices caused by lower demand. Prices
recent crude price shifts stem partly from activ- for Maya crude, the country’s main export
ity in Mexico, the news agency said. “Last week’s grade, dropped to historic lows earlier this year,
market plunge began when Mexico started its owing to the coronavirus (COVID-19) pan-
annual hedge,” it quoted Amrita Sen, chief oil demic and conflict between leading producing
analyst at consultant Energy Aspects, as saying nations Saudi Arabia and Russia. The Mexican
in a note to clients. Finance Ministry estimates that Maya will aver-
Bloomberg also noted that Gary Ross, an oil age around $24 per barrel for the remainder of
consultant-turned-investor, had suggested that the year. ™
Mexico has been in the market very recently.
Meanwhile, at least one brokerage has quoted a
deal for the Mexican flagship crude blend Maya
for 2021 on the over-the-counter (OTC) deriva-
tives market, it said.
Mexico’s government asked banks to submit
quotes for the oil-hedging programme, which
it typically finances by a mixture of purchasing
options from North American banks and oil
majors and reserving part of a special fund, in
April. At the time, it indicated that it expected to
pay a larger price for less coverage because of the
higher volatility the oil market has experienced
this year.
It also signalled that the 2021 programme
would be worth less than the usual amount of
around $1bn per year. Bankers and officials on Prices for Maya crude are likely to average $24/bbl in 2020 (Image: Mercopress)

TRINIDAD AND TOBAGO
BP subsidiary begins drilling

work at Matapal gas field

A subsidiary of BP has begun drilling the first undertaken by the Maersk Discoverer, a
of three new wells at Matapal, a natural gas field semi-submersible rig [that] arrived in Trinidad
offshore Trinidad and Tobago. on September 3, 2020,” it said.
In a statement, bp Trinidad and Tobago The company and its partner Repsol (Spain)
(bpTT) confirmed the start of development intend to drill three new wells at the field in
drilling. “The drilling operations for Mata- order to tap into the Savannah gas reservoir dis-
pal commenced on October 8 and are being covered in 2017, the statement noted.

Week 41 15•October•2020 www. NEWSBASE .com P11