February 19, 2018 edition—Panama’s change in power auctions; Guyana’s oil refinery; and Puerto Rico’s LNG supply.
Last Week in a Minute or Less
Central America. Trelec opened the Escuintla substation in Guatemala and Panamá plans to transform its power auctions.
Greater Antilles. Puerto Rico regained power after an explosion; and Crowley and Pivotal extended LNG services in Puerto Rico.
Lesser Antilles. Saint Lucia and Finland continued cooperating on clean energies; and Barbados and Guyana may strengthen their trade.
South America’s Caribbean Coast. Colombia is considering crude hedges; Venezuela turned to Russia for crude oil; and Guyana announced the location of its oil refinery.
Barbados and Guyana may do business together. The Barbados Investment & Development Corporation (BIDC) is working with Go-Invest in Guyana (English) to explore market opportunities, collaboration between the agencies, and exchange. Between 2013 and 2017, Guyana received an average of US$23m in exports from Barbados per year, with 7% export growth.
Brazil will back Guyana against Venezuelan threats. Brazil sent a high-level delegation to Guyana and Suriname to assure military support to defend Guyana if Venezuela invades the Essequibo area. Brazil shared information from its intelligence services about Venezuela’s consideration of a military incursion (English) into Guyana.
The US will support Puerto Rico’s and the USVI’s recovery. President Trump signed a US$89.3bn supplemental disaster recovery spending bill (English) into law, including US$11bn for the Community Development Block Grant Disaster Recovery. The resources will help rebuild schools, hospitals, the power system, roads, and ports.
El Salvador started the year with higher inflation. El Salvador started 2018 with year-over-year 1.42% inflation (Spanish), according to the Central Bank of Reserves. In January, inflation increased by 0.13% compared to December.
Guatemala’s remittances grew in January. Guatemalan citizens in the US sent US$634.58m in family remittances in January (Spanish). Remittances increased by 7.98% compared to the same month in 2017.
Oil & Gas Upstream
Colombia has an eye on hedges. According to the Finance Minister, Colombia is planning to hedge against declines in crude prices (English), following Mexico’s path. The country would have to reshape its legal framework to allow the government to enter into such financial transactions.
Ecopetrol closed three oil fields due to protests. Ecopetrol temporarily shut down its Chichimene, Castilla, and CPO-9 oil fields (English) due to protests. The reason for the protests was a 2016 hiring policy, and four protesters were injured. The Chichimene and Castilla oil fields are Colombia’s second and third highest-producing fields, respectively.
South America’s upstream will get lucky in eight years. Investment in South America’s conventional and heavy oil projects will total US$82.7bn and US$16.3bn (English), respectively, over the next eight years. Guyana has an 8% share of South America’s planned capex, more than Venezuela’s 5.6% share.
Analysts recommend excluding political managers from Guyana’s oil and gas sector. The President’s Petroleum Advisor and the director of the Guyana Oil and Gas Association urged Guyana to ensure that few or no politically appointed decision-makers are included (English) in the oil and gas sector.
Oil & Gas Downstream
El Salvador has no fuel fever. El Salvador’s 2017 fuel products demand grew only 0.27% (Spanish), or 1.54 million gallons, over 2016 demand. The president of the association of gas station distributors pointed to the increase in fuel prices at an international level.
Venezuela resorted to importing Russian crude oil. Venezuela imported 3 million barrels of Russian Urals crude oil (English) so far this year for its 335,000 b/d Isla refinery to offset the dramatic fall in its crude output. The US is studying how to help Caribbean countries if the US decides to sanction Venezuela’s oil (English).
Guyana announced the site of its first oil refinery with fanfare. The modular oil refinery will start construction at the end of 2018 in Linden (English). The refinery will cost an estimated US$100m, with a capacity of 30,000 barrels per day (Spanish).
Crowley and Pivotal extended their LNG services in Puerto Rico. Crowley Fuels signed a multi-year supply contract with Pivotal LNG (English) to satisfy the energy needs of a major pharmaceutical company in Puerto Rico. Pivotal expects to provide LNG volumes from the JAX LNG plant under construction in Jacksonville.
Renewables & Electricity
Trelec cut the ribbon on Escuintla’s substation. Guatemala’s Transportista Eléctrica Centroamericana (Trelec) opened the Costa Linda power substation in Escuintla. With an investment of Q53m, the project will generate 275 jobs (Spanish) and will receive power from the 130MW San José thermoelectric plant.
Panamá plans to change its power auctions. The state power company is considering an end to special auctions (Spanish) for renewable energy generators. The change will force renewable power companies to compete with all types of power generation.
Puerto Rico regained power after an explosion. Puerto Rico Electric Power Authority (Prepa) restored power service to thousands of users (Spanish) left without electricity after a 115kv switch exploded (English) at the Monacillo Energy Control Center in San Juan. The accident affected 400MW of generation that Prepa restored gradually.
Hydropower is still the lowest-cost renewable energy source. The global average levelized cost of electricity from new projects commissioned in 2017 was US$0.05/kWh from hydropower and US$0.06 for onshore wind. The results varied regionally, with 2016-2017 values being US$0.10 in Central America and the Caribbean (English) and US$0.05 in South America.
Saint Lucia and Finland continued the dialogue on clean energies. Finland will continue to cooperate in the energy sector with Saint Lucia (English), especially in the field of renewable energy, including waste to energy solutions. Saint Lucia and Finland established diplomatic relations in 2009.
Old School Social
Events in the world beyond your screen—go see and be seen!
The dialogue “After Raul: What Next for Cuba’s Political Economy?” will be held February 22, at Inter-American Dialogue, Washington, DC.
Recam is scheduled for March 6-8 at the Hilton Hotel in Panama City.
Costa Rica has a dangerous mega fault off its coast. Researchers at the University of California, Santa Cruz, designed a survey with detailed 3D images of the Costa Rican subduction zone. Scientists found large variability in the conditions along the megathrust (English) that can be linked to earthquake phenomena.
Quote of the Week
“Los espejos son como la conciencia. Uno se ve allí como es, y como no es, pues quien se ve en lo profundo del espejo trata de disimular sus fealdades y arreglarlas para parecer a gusto.”
“Mirrors are like conscience. One sees himself as he is, and how he is not, because the person who sees himself in the depth of the mirror tries to hide his faults and fix them to look better.”
– Miguel Ángel Asturias (1899-1974), Nobel prize-winning Guatemalan writer, diplomat, and journalist.
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