This week we find ourselves back in Latin America, but in Paraguay, where an estimated 4 billion barrels of oil in one basin alone could turn the country into a net fuel exporter. But what we really like is the outcome of last week’s presidential elections, which could very likely set up foreign investors to take full advantage of this opportunity.
As we mentioned in last week’s Intel Notes, on 21 April, Horacio Cartes, a member of the Colorado Party, won Paraguay’s presidential elections, and he’s a businessman first and foremost who understands what it means to turn his country into a net fuel exporter. Cartes has no resource nationalism tendencies such as are sweeping across the region, and the general consensus is that he will govern from a pro-investment perspective that will benefit the oil and gas industry.
According to Southern Pulse, Paraguay’s hydrocarbons regulations are already appealing, and Cartes’ ascendancy to the presidency can only render the atmosphere more attractive to foreign investors. Law 779 includes a royalty on production that ranges from 10-15% of per-barrel revenue. Hydrocarbon licenses are granted and guaranteed by Congress, and tax laws for foreigners include benefits that are conducive to the high-risk nature of exploration and development.
For now, landlocked Paraguay hasn’t made that one big find that will put it on the map, but the potential is there and it’s a particularly…