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the huge budgetary shortfall that the country is Last week, the independent oil and gas
facing. The Kremlin will likely have to wade into firm revealed that it was looking to tender an
the dispute and thrash out a compromise. exchange of $300mn worth of senior unse-
In other news, Lukoil has reported a sharp cured bonds due to mature in 2021 for securi-
decline in oil and gas production in the first half ties that will be repaid in 2025. The move led
of the year. This is not only due to OPEC+ cuts Fitch Ratings to downgrade CGC; the agency
that came into force in April, but also a steep explained its decision by saying that the com-
drop in its Uzbek gas sales to China. pany appeared to be taking this step in the
Chinese gas demand has continued to grow hope of avoiding a default on its 2021 notes.
this year, in spite of COVID-19 lockdown In other news, Russia and Argentina are mov-
measures, but at a much slower pace. Chinese ing forward with plans for joint production
companies have prioritised purchases while of steel pipes for oil and gas projects. Ricardo
cutting imports, including from Uzbekistan, Lagorio, Argentina’s ambassador to Moscow,
where Lukoil operates the Southwest Gissar and told Sputnik earlier this week that Tenaris, an
Kandym projects. international company founded in Argentina,
Turkmen state media have reported progress and Russia’s Severstal were working together
at several refining projects being undertaken by to build a new welded pipe plant in Western
the country’s favoured contractor, US-registered Siberia. The facility is due to begin production
Westport Trading Europe. But Turkmenistan’s next year and will reach full capacity in 2024,
strict control over information flow makes it dif- Lagorio said.
ficult to determine just how much work is taking Elsewhere in Latin America, Mexico’s
place on the ground. After all, despite numerous national electricity provider CFE is under fire
reports of progress over the years, the country’s for burning residual fuel oil at a plant near the
throughput capacity does not appear to have capital that contravened regulations pertaining
changed in five years. to maximum sulphur content. Shortly after a
Reuters report brought the utility’s violations to
If you’d like to read more about the key events shaping light, a Mexican Nobel Prize winner called for
the former Soviet Union’s oil and gas sector then please a ban on the use of heavy fuel oil in power gen-
click here for NewsBase’s FSU Monitor. eration. Residual fuel oil is plentiful in Mexico,
as the country produces large amounts of heavy
Latin America: Argentina bond swap offer crude oil.
In Argentina, Compañía General de Combusti-
bles (CGC) has joined YPF, the national oil com- If you’d like to read more about the key events shaping
pany (NOC), in the ranks of companies offering the Latin American oil and gas sector then please click
a bond swap. here for NewsBase’s LatAmOil Monitor.

P14 www. NEWSBASE .com Week 32 13•August•2020