Page 7 - NorthAmOil Week 19

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regasification side. On May 8, BNamericas reported that Generacion e Interconexion Ele had filed preliminary documents for a gas-to- power hub with Colombian regulators. The project would include an offshore LNG import terminal and an associated power generation complex that would comprise multiple com- bined-cycle power plants.
If you’d like to read more about the key events shaping the global LNG sector then please click here for NewsBase’s GLNG Monitor.
Latin American vulnerabilities
Pemex has unveiled details of its hedging pro- gramme for 2020, and its revelations indicate that the national oil company (NOC) is more vulnerable to market fluctuations than its parent entity, the Mexican government.
In its annual report, which was released on May 5, Pemex stated that its hedge had a floor of $44 per barrel. The company “contracted cover- age instruments that protect against declines in reference prices in the range of $49 per barrel to $44 per barrel,” it explained.
This fixed lower limit leaves the NOC exposed when crude markets drop below the floor, as they have done in recent months, Argus Media noted. The company based its budget for 2020 on the assumption that the Mexican export basket prices would average $49 per barrel this year, but it has little chance of reaching this target. Average basket prices came to $40.90 per barrel in the first quarter, and Pemex does not expect them to go higher than $32 for the rest of the year. As a result,
the company may suffer substantial losses on all of its projected oil production of 1.75mn bpd in 2020.
By contrast, the Mexican government secured more favourable terms for its annual Hacienda Hedge. Its hedging programme locks in a significant share of Pemex’s projected out- put at a rate of $49 per barrel – enough to cover budget spending, according to officials. The gov- ernment reportedly spent $1.37bn on the hedge, and this appears to have been a fortunate move, given that Mexican export basket prices recently bottomed out below zero, closing at $2.37 per barrel on April 20.
If you’d like to read more about the key events shaping the Latin American oil and gas sector then please click here for NewsBase’s LatAmOil Monitor.
Middle Eastern dance
The inevitable ripples of the recent oil price crash feature strongly in this week’s MEOG – and will for the foreseeable future. After the heady days of the collapse of the OPEC+ agreement and the resulting free for all, the oil market has come up for air and the aftermath is being played out amid the same grim economic news. In the past few weeks MEOG has covered the global story; it has continued to cover country-specific issues and these come to the fore in this week’s edition.
Saudi Arabia showed fast footwork in cut- ting oil prices in April to capture a larger slice of the oil market. This was mainly at the expense of Iraq, whose share fell by a similar amount. A ray of good news came in the appointment of a new Iraqi prime minister – at last – whose in-tray
Mexico’ hedging programme locks in a significant share of Pemex’s projected output at a rate of $49 per barrel.
Week 19 14•May•2020 w w w . N E W S B A S E . c o m P7