Page 5 - LatAmOil Week 27

LatAmOil COMMENTARY LatAmOil
 (Lopez Obrador has criticised his predeces- sor’s attempts to reform the oil and gas sector, accusing Pena Nieto of following a “neo-liberal” agenda that was too deferential to corporate interests.)
They have also spurred concern in some quarters about the possibility of that Mexico will backtrack on energy reform, perhaps even going so far as to repudiate the pipeline con- tracts. Bartlett has asserted, though, that CFE is not contemplating any such move. He has also claimed that the contractors were the rst to seek arbitration of the dispute.
IENova, however, has denied ever seeking such an intervention.
Meanwhile, Pierre Alarie, Canada’s ambas- sador to Mexico, has objected to Bartlett’s char- acterisation of recent events. He told reporters last week that IENova and the other companies had not tried to bring the case to mediation or arbitration. Instead, he said, they sought legal representation and pursued legal remedies in order to guard their own interests.
Beyond words
e dispute has implications beyond quarrels over the difference between seeking arbitra- tion and seeking legal representation. at is, it is bound to a ect millions of business and
residential consumers who need gas this sum- mer in order to sustain operations at manufac- turing facilities and to help thermal power plants (TPPs) keep up with demand for air condition- ing during hot weather.
It is already expected to trigger widespread power shortages in the Yucatan states, as the national transmission system operator (TSO) Cenace said last month in a statement declaring a state of emergency on the peninsula. It could also lead to widespread stoppages of manufac- turing facilities in Nuevo Leon, Coahuila and Tamaulipas, according to Jose Luis de la Cruz, the director of the economic studies centre oper- ated by the Confederation of Industrial Cham- bers of Mexico (CONCAMIN).
Enoch Castellanos, the head of Mexico’s National Chamber of Industrial Transforma- tion, told El Economista last week that the sit- uation had become dire. He pointed out that several companies that use gas for fuel were now operating at just 30% of capacity and said he was not optimistic that supply conditions would improve.
In fact, he said that Mexico had nearly reached a tipping point. “For eight months we’ve been waiting for the [pipeline] service. At the middle of July, we won’t be able to put up with the gas shortage anymore,” he said. ™
Guyana to take firmer stance on signing bonuses
Questions about contracts awarded to virtually unknown companies in 2015 are leading of cials in Georgetown to take a stronger stand
WHAT:
Guyana will ask for larger signing bonuses in future contract negotiations.
WHY:
Critics have also pointed to problems with the country’s PSA Law and royalty rates.
WHAT NEXT:
Georgetown is likely
to examine new policy options that will protect its interests.
THE government of Guyana has yet to com- plete an investigation into the previous govern- ment’s policy of awarding o shore oil blocks to foreign investors without demanding adequate signing bonuses – and in some cases, without demanding any bonuses at all. Nevertheless, the probe has already had an impact on investment conditions.
Mark Bynoe, the director of the South Amer- ican country’s Department of Energy, said last week that Guyana intended to ask for more when negotiating new deals. e government is still examining all the details of past awards, he said, and will probably set higher rates for future contracts. He was speaking to Reuters on the sidelines of an industry conference in London.
In other words, the cost of doing business in Guyana is about to go up. e extent of the increase is not clear yet, but the shi to larger signing bonuses is likely to occur early in 2020. Bynoe said that the new policy would take e ect before the country’s rst competitive licensing
round, which is due to take place in the third quarter of next year. ese auctions will include both shallow-water and deep-water elds in the o shore zone.
Unlikely investors
The investigation that Guyana’s State Assets Recovery Agency is now conducting concerns two offshore blocks known as Kaieteur and Canje. Guyana’s previous government assigned the sites to two virtually unknown companies – Toronto-based JHI Associates and Mid-Atlantic Oil and Gas, a local rm – in 2015.
e award has raised eyebrows for several reasons. Aubrey Retemeyer, the deputy director of the State Assets Recovery Agency, recently pointed out that that both JHI and Mid-Atlantic had been established less than ve years before they won access to the blocks. Neither company had experience in oil or gas production, and nei- ther had expertise in deep-water hydrocarbon projects, he told the Associated Press.
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Week 27 10•July•2019 w w w . N E W S B A S E . c o m
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