South-South Cooperation: Venezuela's PDVSA begins drilling in Bolivia's Vibora Field

Petroleos de Venezuela SA (PDVSA), announced today one of its oil rigs began operations in Bolivia. Drilling is reported to have begun in the Vibora field, roughly 170 km north of the city of Santa Cruz.


Not a bad headline for Morales and his supporters who voted "yes" for a new constitution just days ago which allows for Morales to run beyond his term limits and which is partly designed to empower indiginous rights.

South-South Cooperation in focus: Venezuela & Argentina

Argentine President Cristina Fernandez signed 21 agreements on Thursday with the country of Venezuela. The agreements are meant to lay the foundation for future cooperation between the two South American nations in such fields as energy, industry and transportation.

Argentinian President Cristina Fernandez (L) and Venezuelan President Hugo Chavez
attend the signing ceremony in Caracas, the Capital of Venezuela, Jan. 22, 2009.

The two presidents agreed to set up a joint venture between Petroleos de Venezuela (PDVSA) and Argentina's state-operated Enarsa energy company to develop oil fields in Venezuela.

"Our strategic cooperation is increasing," Chavez said when referring to the commercial and diplomatic ties between Venezuela and Argentina.

Click here to read further details from this article, courtesy of Xinhua

Souh-South Cooperation: Ecuador and Chile join forces to explore for gas in Guayaguil Gulf

“The board of Petroecuador has accepted the proposal for a new joint company with ENAP”, said Mines and Petroleum minister Galo Chiriboga in Quito.

The minister added that the new joint company will “boost gas exploration in the gulf of Guayaquil”, to the southwest of Ecuador where primary surveys have indicated the possibility of significant natural gas deposits.

Petroecuador is also involved in a similar undertaking with Venezuela’s PDVSA, with the purpose of searching for gas in an adjacent area in the gulf.

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Click here to access the full story from MercoPress

South South Cooperation in focus: Venezuela and Bolivia: energy joint venture

Petroandina, a joint enterprise formed by the Bolivian and Venezuelan state energy companies, plans to invest $883 million to finance oil and natural gas exploration and production in Bolivia, a top official said.

Energy Minister Carlos Villegas announced the figure Tuesday during a press conference to discuss Petroandina's operating contracts, which the Bolivian Congress is set to vote on shortly.

According to Villegas, Petroandina will invest $242.2 million in the western Andean province of La Paz and another $646.1 million in central and southern Bolivia...................

Click here to access the full article from Rigzone

Chavez to expand Venezuela's oil pact

Venezuelan President Hugo Chavez is flexing the country's petroleum muscle once again, stating he seeks to expand Venezuela's oil pact to poor nations in the Caribbean.

Chavez stated "Nations taking part in Petrocaribe initiative will now be required to pay just 40% of the bill within 90 days - down from the current 50%. The rest can be paid over the next 25 years at a fixed rate of 1% percent as long as oil prices are above US$100 a barrel.

"That could compensate for the horrible curve of the jump in oil prices," Chavez said. He added that 70 percent of payments may be deferred if oil reaches US$150 a barrel.

AP Photo

In this photo released by Miraflores Press Office, Venezuela's President Hugo Chavez speaks during the opening ceremony of the Petrocaribe Summit in Maracaibo, Venezuela, Sunday, July 13, 2008. President Hugo Chavez sought to expand an oil-supply pact that is delivering fuel to 17 nations, calling it a tool against poverty and dismissing opponents' accusations that he is giving away Venezuela's oil wealth.

Sounds really generous to me... Venezuela is unarguably of the wealthier Caribbean nations in the Caribbean, however it does remain a country with many economic problems. Calculating if such a long-term donation is even feasible is difficult to do. So many variables could arise in the next 25 years which could cause the cash flow from its oil accounts receivable ledger simply stop...

New government could come into power who don't honor the repayment. Alternative energy could leap frog and bring the price of oil down substantially. A new government could come into power in Venezuela and re-arrange the terms, leaving small Caribbean contries with little bargaining power against Venezuela: their provider of energy and also regional political and economic power.

No less the gesture as it stands is a nice one, and in reality there is just so much domestic investment that is possible given Venezuela's limited FDI and internal domestic capacities. Oil drills may be in shortage, but so is the industry as a whole since the PDVSA strikes. Given the set backs, PDVSA remains a relatively vibrant operation, turns a profit and even manages to give Chavez some diplomatic barganing chips by making Venezuela into a gracious, oil rich country which cares about its region and the poor of world... unlike the United States, which is a underlying point Chavez hopes to make through such efforts.

Venezuela and Colombia make up and begin discussing Orinoco Oil Projects

Venezuela and Colombia are set to discuss possible joint development projects in the oil rich Orinoco belt when the presidents of both countries meet Friday, the Colombian ambassador to Venezuela,
Fernando Marin, said.

"The Venezuelan government has told us that it's important for them to have Colombian presence in the Orinoco belt. It's something that we're eager to talk about," Marin told Dow Jones Newswires.

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Allowing for Colombia's presence in the Orinoco belt would be a surprising gesture by Venezuela, given the recent diplomatic disputes between both countries, which escalated to threats of war in March. Chavez has threatened on several occasions to shut imports from Colombia.

Orinoco Heavy Oil Belt, Venezuela

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Click here access the full article. Provided by Rigzone and Copyright (c) 2008 Dow Jones & company, Inc.

Oil and Gas in focus: PDVSA Q1 profit rises 80% to usd $3.5 billion

PDVSA 1st quarter net profit shot up 80%, to usd $3.5 billion, up from usd $ 1.92 billion in the same quarter of 2007.

Although PDVSA's actual real performance might be difficult to predict due to various news agencies and the respective bias they carry when reporting on anything Venezuelan, PDVSA hard figures suggest some hope that Chavez is re-building Venezuela's delapidated and crumbling oil sector.

I am not down on the ground in Venezuela, but from the different Venezuelan-American's i've met, most claim any news they hear from their family and friends in Venezuela is highly bais depending on the individuals political ideology (pro-Chavez or anti-Chavez).

With this in mind I will include te major figures released by PDVSA today, and reported by Business News Americas (BNAmericas). To access the full article from BNAmericas click here.

-- Net profit: rose 80% ---> usd $3.5 billion from 1.92 bilion in 1Q07
-- Total revenue: rose 52% ---> usd $31.4 billion from 20.7 billion in 1Q07
-- Ebitda: rose 85% ---> usd $ 33.3 billion from 19.7 billion in 1Q07

-- Total costs: rose 38% to usd $24.3 billion from 17.6 billion in 1Q07

-- Revenues dedicated to social spending: up a whopping 376% to usd $2.68 billion from $565 million in 1Q07
-- PDVSA total contribtion to Venezuelan state: rose 112% to usd $7.39 billion from 3.48 billion in 1Q07

-- PDVSA oil production: rose 2% to 3.21 mb/d compared with 3.11 mb/d in 1Q07
-- PDVSA natural gas production: fell by 5% to 6.41Bf3/ d (181mm3/ d) compared with 6.73Bf3/ d in 1Q07

***NOTE *** the International Energy Association estimates Venezuela's production is actually close to 2.5 mb/d. Chavez did fire large numbers of workers in the oil sector whom he felt where not supporting his "Boliviaran Revolution." He also soon came to see them as a potential threat, lush with power and money from working in the oil sector, international connections, etc. He fired them all when he took a tough position during the country wide protests which paralyzed the country for about a year. When it was over, 1000's of PDVSA and other workers from the oil the sector found their traditional economic and political power was not able to dictate terms in Venezuela, and as they continued to push they found themselves jobless. 100's of Venezuelan's left to Texas, Miami, the Middle East in search of work in the oil sector abroad.

-- PSVSA recieved an average of usd $87.89/ barrel for exported crude, up 81% from $48.65/ barrel in 1Q07

-- PDVSA exploraton activities: focused on 23 exploration projects with the principle objective of investigation and confirming new reserves.

Peruvian miners begin nation wide strike June 30---- Petrobas to set Orinco Policy---- Brazil and Venezuela hold fourth bilateral meeting

Apologies work and assignments have kept me busy today. Little time or brain power to give you my analysis today of articles I think relevant to discuss. I will however include some pieces which grabbed my attention from the news I read through today.

Peru Mine Workers Begin National Strike for More Pay (Update2) -- Bloomberg LP

By Alex Emery

June 30 (Bloomberg) -- Peruvian mine workers began their third national strike for better pay and benefits in less than 14 months, adding to protests from Mexico to Chile that have disrupted copper supplies and sent prices to records this year.

Miners walked off the job at more than a dozen sites to pressure Congress to pass laws to increase their share of profit and improve pensions, said Luis Castillo, general secretary of the Mining Federation. The group represents about 28,000 mine workers and 70 unions.

``The strike is on across the country and will take several days to solve,'' Castillo said today in an interview from Lima. ``Talks with the congressional committee should get under way tomorrow.''

Strikes have cut copper output in Peru, Chile and Mexico, helping fuel a 28 percent rally in the price of the metal this year. Copper has climbed fivefold in the past five years as rising demand outpaced production, eroding global stockpiles. Peru is the world's largest silver producer and the third-biggest source of copper, zinc and tin.

Also joining the strike were unions representing workers at mines run by Barrick Gold Corp., Southern Copper Corp., Renco Group Inc.'s Doe Run Peru unit, Shougang Corp.'s Hierroperu iron unit, Cia. de Minas Buenaventura SA, Cia. Minera Antamina and Volcan Cia. Minera SA, the Mining Federation said.

``The strike has had a visible impact at the mine,'' Shougang Deputy Manager Raul Vera said in a telephone interview. ``But the strike isn't 100 percent, as some employees have gone to work.''

Legislation

Southern Copper's Ilo smelter and Cuajone mine are operating with subcontracted workers and have not had any ``significant'' output losses, Southern Copper spokesman Alberto Giles said in an e-mail. Toquepala mine workers didn't join the strike, he said.

Doe Run Peru's La Oroya zinc and lead smelter is operating normally, spokesman Victor Belaunde said in by telephone. Employees at Barrick's Alto Chicama and Pierina gold mines also turned up to work ``as normal,'' spokesman Vincent Borg said in a telephone interview.

Antamina spokesman Jose Salazar declined to comment.

Congress will vote this week on a law that seeks to eliminate a ceiling on workers' share of profit, Peru's Labor Minister Mario Pasco said. Workers' bonuses based on profit currently can't exceed 18 times their monthly salary.

``There's no reason for this strike,'' Pasco told reporters in Lima today. ``In a week, more or less, this law will pass.''

Futures

Copper futures for September delivery rose 0.45 cent, or 0.1 percent, to $3.8825 a pound on the Comex division of the New York Mercantile Exchange.

Gold futures for August delivery fell $3, or 0.3 percent, to $928.30 an ounce, while zinc rose $2, or 0.1 percent, to $1,932 a metric ton on the London Metal Exchange.

Peru's Mining Federation held five-day national strikes in November and May of last year. In Chile, contract workers on May 5 called off an almost three-week strike that cost Codelco, the world's biggest producer, an estimated $400 million in lost output and damages.

Mexico's largest mining union is scheduled to vote today on whether to strike to protest the labor secretary's refusal to recognize the re-election of Napoleon Gomez Urrutia as the group's general secretary.

A strike has shut down Grupo Mexico's Cananea copper mine in Mexico since July 30. Grupo Mexico is seeking to buy the workers out and reopen the mine in 2009.

Government Solution

Congress, not the companies, will have to act to solve the dispute in Peru, Buenaventura Chief Financial Officer Carlos Galvez said.

``This is a political issue that has made the federation more visible,'' Galvez said in a telephone interview. ``It's likely there will be more mining operations on strike this time than last year.''

Peruvian lawmakers have been debating legislation since 2006 that would boost profit-sharing and pensions for miners. Peruvian President Alan Garcia last week enacted a law granting more rights to employees of contractors.

To contact the reporter on the story: Alex Emery in Lima at aemery1@bloomberg.net.

Last Updated: June 30, 2008 17:23 EDT

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Petrobras to set Orinoco policy in September - Brazil, Venezuela

Click here to view full article -- BNAmericas

Brazil's federal energy company Petrobras (NYSE: PBR) will define its role in Venezuela's Orinoco heavy crude belt at the September meeting between the two countries, Venezuela's state oil company PDVSA said in a statement.

Brazil's President Luiz Inacio Lula da Silva met his Venezuelan counterpart Hugo Chávez in June in Caracas for the fourth bilateral meeting.

Lula said that both PDVSA and Petrobras would take their time to cement any joint participation.

"These are both large and very powerful oil companies that are currently establishing common denominators that will guarantee a strong participation between the two companies," Lula said.

"The more oil we find, the more powerful we will become," he said in the statement.

Venezuela's PDVSA and China's CNPC to cooperate in the production of 8 new oil rigs -- annually

I am intrigued, as usual, by the fact I am only able to find a few sources in English which have covered the recent development in Sino-Venezuelan cooperation. I suppose this is one of the main reasons I started this site-- to share developments in the works between China and South America, which go largely unnoticed in the West.

As described in a recent article published by BNAmericas, Venezuela's state oil company PDVSA (Petroleos de Venezuela S.A) and China's state oil company CNPC (China National Petroleum), have entered into a joint venture in which the two government owned oil conglomerates will work together in order to produce 8 new oil rigs by years end in Venezuela.

This adds to the two oil rigs delivered by CNPC in November 2007, and three more to come in 2009, bringing the total number of "made in China" oil rigs operating in Venezuela to 13. This will also allow Venezuela's PDVSA, for the first time in the country's history to construct their own oil rigs domestically... without North American or European assistance.

Don't get too excited... This it is not major sign of political or economic unity between the two nations. At least, not on the level Venezuelan state media is reporting it to be. Want proof?

Chinese media has virtually ignored this development, as they usually do with most things concerning Venezuela. China does not want to attract the attention of the US or Europe by dealing too closely with Chavez.

The most recent article published by China's state media, Xinhua, I can find on this subject (in either Chinese or English), is dated May 13, 2008.

Granted my reading ability in Chinese is far from perfect, however searching the words "petrol," and "Venezuela" can usually lead me in the right direction and allow me to find a story pertaining to the topic I am searching for. From what I am able to comprehend in this Chinese article from May, I personally do not feel it is directly related to the deal discussed on June 23, 2008 on BNAmerica's website.

Chavez would like to consider China a strategic ally, both on a political and economic level. As the world's second largest consumer of energy, the match seems to fit... Too bad for Chavez its quite costly to ship Venezuela's heavy, dirty crude oil all the way to China.

Second, Chavez has unrealistically already raised China's economic position and importance for his country right next to the spot the US still occupies. This is hardly feasible to imagine considering Venezuela and China's geographic locations.

Third, Venezuela's trade with China is inconsequential compared with Venezuela's trade with the US.

Fourth, when you compare China's trade with other Latin American nations, Venezuela's trade is insignificant when compared with China's current trade with other nations such as Brazil, Chile or Argentina.

Last, and perhaps Hugo's biggest mistake, is thinking China would be willing to extend it self to a country which is not only in the "back yard" of the US, but also a country which currently is not on good terms with US. Chinese culture, tradition and history have shown the Chinese have a tendency to avoid potential problems that could threaten "peace" or "stability," and a more significant relationship with with Venezuela would therefore be risky.

China has no interest in antagonizing the US, which remains China's major trading partner in the global economy. For now, China's outbound investments will be focused in projects such as the one discussed above. PDVSA will retain a 85% stake in the project, leaving 15% to CNPC. Total investment is projected to be roughly $430 million usd.

Quite small, when you consider for China's new sovereign wealth fund has about $300 billion usd sitting in reserve, waiting to be invested.

**Useful hint for readers **

It is easy to translate English words into Chinese characters without a pinyin input system using this great Chinese-English online dictionary / translator (dict.cn). After you find the characters for the key words you're looking for use "ctrl + f" or "apple key + f (for mac os)," to search for them in a article. Petrol = 汽油 (qi you) , Venezuela = 委内瑞拉 (wei nei rui la).