Mexico’s desperate leap forward to jumpstart oil production; offshore trouble brewing between Nicaragua and Colombia; Syria as a proxy for a looming war over Mediterranean resources; and much more from Oil & Energy Insider this week …
These past couple of months, we just can’t get enough of Mexico, and the latest in the Mexican oil turn-around story is this: State-owned Pemex is gearing up to form a new exploration and production partnership to hit up the US shale gas and deep-water oil scene.
Pemex made the announcement on Monday, and it’s a big one. Why the US? It’s simple: Pemex doesn’t have the drilling experience it needs to get at its own shale or into its own complicated deep waters. So teaming up with foreign companies is the only way forward, and US territory is perfect because the geology is similar so Pemex can apply what it learns at home.
This is just the latest plan for a Pemex make-over, prompted by the fact that Mexican oil production has fallen 25% over the past decade. The rest of the make-over plans will be game-changing, if they are actually realized. We’ve examined this extensively in our premium newsletter, including this week’s offerings, which takes a look at some new proposed breaks for foreign investors. (Read the report for free)
The whole thing rides on Mexican President Enrique Peña Nieto’s proposal to amend the Constitution to allow risk-sharing or profit-sharing contracts between Pemex and private national and foreign oil companies. There’s plenty of opposition to the plan, which still must be approved by Congress.
The proposal was unveiled last week, after some delay, to less fanfare than hoped on the part of international oil companies, who are purposefully playing hard to get—hoping for more concessions. What they really want is ownership, not just production-sharing agreements. They’re not going to get it, but they will happily settle for the Mexican president’s proposals in the end. So next year will be the year of Mexico, the year of Pemex, and the year of some interesting deals for foreign companies in Mexico, and collaboration in the US. (Please be sure to check out our analysis of the metamorphosing Mexican oil scene in our premium newsletter, if you haven’t already).
Elsewhere in Latin America, US-based Noble Energy is raising the stakes by launching drilling with Nicaragua in offshore territory disputed by Colombia, which has vowed to put a stop to oil operations. We offer you an extended view of this situation in this week’s premium executive report.
But Noble is no stranger to the geopolitics of oil. There’s another area of the world that we’ve followed closely, and where we are concerned about the medium-term developments—the Mediterranean, where Noble also plays a key role.
While the most significant natural gas discoveries of the past decade have been made in the Israeli part of the Levant Basin (courtesy of Noble), some of this natural gas is in Lebanese territorial waters, and this dispute will not go away. In fact, the conflict in Syria provides a perfect proxy scene for a war over the Levant Basin’s hydrocarbon wealth.
This week’s analysis comes from Inside Opportunities and looks at Algae and why we are willing to give this biofuel the benefit of the doubt. The Obama Administration is calling 2022 the year of Algae, which is when they believe it will reach commercial viability. This seems somewhat optimistic to me – but you can find out more for yourself in the report below.
In the meantime, be sure not to miss out on Dan Dicker’s latest report where he drops his oil expert hat and focuses his 30 years trading experience on the markets as a whole and what he sees is ugly, very ugly. Find out what Dan is suggesting investors do to protect themselves over the coming months – you can read Dan’s report and all the others for free with our 30 day free trial – click here.
That’s it from us this week.
I hope you enjoy the below report and have a great weekend.