Geopolitics / South America

• BRAZIL: Round 11 in Rio, Hot and Getting Hotter

  Bottom Line: Rio’s 11th round of bidding for new concessions went down in an atmosphere of heavy competition, with Brazilian offshore acreage fast becoming some of the hottest oil and gas blocks out there thanks to some impressive pre-salt finds and developments.   Analysis: The National Petroleum Agency hosted the 11th round of oil concession bids in Rio de Janeiro, Brazil on 14 and 15 May. There was some very stiff competition for blocks in the Foz do Amazonas basin off the coast of Amapá state in northeastern Brazil. One deep-water concession here (FZA-M-57) garnered the single-highest bid of the…

• BRAZIL: Another Discovery for Karoon

  Bottom Line: Karoon Gas Australia Ltd. (KAR) was already ripe for takeover last month, and a secondary discovery in Brazil last week adds some significantly unexpected value. Analysis: Last week, Karoon found oil at its Bilby-1 well in Brazil’s prolific Santos Basin. Earlier this year, it made another discovery at its Kangaroo-1 well. On the second discovery, the company’s stocks shot up 28% on the Sydney stock exchange, hitting their highest point in four years. In late 2010, Karoon was toying with a public offering for its South American assets, but then had a change of heart and stepped up…

• Paraguay: Positioned for the Long Game, 2 Picks

  Looking six months to a year down the road, there are two companies we’re watching closely because we think they’re about to hit pay oil in Paraguay. They’ve honed in on this unexplored, onshore gem that looks set to join the Latin American big boys club and become and a net exporter. The first is UK-based President Energy LLC (PPC), which has a majority stake in some major acreage (16,000 sq km) in the Chaco region, and is estimating that its holdings could have up to 159 million barrels of gross risked recoverable resources. This alone could be enough to…

• ARGENTINA: Massive Potential, Bad Politics

  Bottom Line: Argentina has one of the largest gas and oil deposits in the world, but politics makes this a conundrum for foreign investors. Political mismanagement, especially on the part of President Cristina Fernandez de Kirchner, is damaging the economy and ruining the investment appeal of Argentina, leading investors to de-risk their assets by taking on concessions in neighboring countries. Analysis: Despite the 2010 discovery of the Vaca Muerta formation in Neuquén, a deposit that reportedly holds up to 774 trillion cubic meters of shale gas and 23 billion barrels of oil equivalent, Argentine production is slowing, forcing a spike…

• PARAGUAY: Cartes Election Victory Good for Business

  Bottom Line: The victory of Colorado Party candidate Horacio Cartes in Paraguay’s presidential elections on 21 April sets the stage for a strengthening of the oil and gas industry and a more attractive atmosphere for foreign investors. Analysis: Cartes is a consummate businessman. His dossier is an impressive one: He founded Banco Amambay, one of the country’s largest financial institutions, as well as tobacco and food and beverage companies including Tabacos del Paraguay, Compañía Agrotabacalera del Paraguay, Bebidas del Paraguay, Agrocitrus del Paraguay, Ganadera Sofia, Ganadera Chajha and Ganadera Las Pampas. While he says he has divested himself of any…

• Colombian Insurgencies Continue to Target Foreign Energy, Mining Companies

  Nowhere else in the world is the disparity between rich and poor so extreme as in Latin America.Beginning in the late 1950s with the triumph of Fidel Castro’s revolution in Cuba, Central and Latin America have simmered ever since with various ongoing militant struggles against fiscal and social injustice.The best known of these is Colombia’s Marxist Fuerzas Armadas Revolucionarias de Colombia, more commonly known by the acronym FARC.Colombia has Latin America’s fourth largest economy, but the distribution of wealth is highly unequal, with a 2006 report by the National University of Colombia reporting that only 13.8 percent of total national…

• Foreign Oil & Gas Companies Look to Status Quo in Venezuela

  Now that Nicolas Maduro—the late Hugo Chavez’s choice for successor—has narrowly won Sunday’s presidential elections in Venezuela, oil and gas investors can expect a perpetuation of the status quo. In Sunday’s vote, Maduro won with a very narrow 50.7% and a vow to continue with Chavez’s “revolution,” which has seen the oil industry nationalized and the state-run PDVSA oil company funding social programs and voraciously courting China and Russia. The narrow vote will not be without its challenges. Opposition rival candidate Henrique Capriles has refused to recognize the results and is demanding a recount, though the electoral commission is standing…

• Maduro May Open Oil Doors, But For Who?

  The apparent victory for Nicolos Maduro in the Venezuelan presidential election may give the United States a sense of hope for improved ties with the Latin American oil giant. His service as a diplomat could make him at least tepid toward Washington, a sentiment backed by outreach efforts before the election. U.S. supermajor Chevron, meanwhile, is among the major players expressing interest in the vast oil deposits that lie off Venezuela's coast. Caracas, for its part, is eager to bring more foreign investors into the country. With U.S. oil production in a boom cycle, however, it's unclear if U.S. eyes…

• Peru and Colombia: Two Opportunities Devoid of Resource Nationalism

  While resource nationalism initiatives have scared away investors in Argentina, Bolivia, Ecuador and Venezuela, Peru and Colombia are two Latin America venues that offer relatively hassle-free investment and have plenty of new acreage openings. In Peru, we think LNG is the hot track to follow, while in Colombia, it’s all about shale oil—if you can stomach the improving but lingering security threat. PERU: All about LNGAgainst the backdrop of increasing resource nationalism in Latin America, Peru stands out because of its untapped natural gas reserves, a new LNG plant, new investor-friendly policies and an independent licensing regime.   While Peru is…

• FALKLAND ISLANDS: The Real Threat—Disappointing Drilling

  Bottom Line: As 99.8% of Falkland Islanders vote ‘yes’ in a referendum to remain a self-governing British overseas territory, Argentina rejects the referendum as meaningless. The rhetoric is likely to remain just that. Oil and gas exploration will continue unabated and for now unthreatened. Argentine President Cristina Kirchner’s popularity is declining, and the Falkland Islands issue is an easy target for raising nationalist sentiments—a tried-and-true strategy for bolstering support.Analysis: On 11 March 2013, Falkland Islanders voted in a referendum on their status, with a 92% voter turnout and a near unanimous “yes” vote. It was a vote that the five…