The Weekly Brief: Greater Caribbean

October 30, 2017 edition— BHP found natural gas in T&T; GeoPark had a great week in Colombia; and controversy surrounded Puerto Rico’s Whitefish Energy hire.




Last Week in a Minute or Less


Central America. S&P lowered Guatemala’s rating while Moody’s maintained El Salvador’s; El Salvador will offer a renewable energy auction; and Guatemala is controlling gas stations.


Greater Antilles. Puerto Rico hired and fired Whitefish Energy and the IMF is happy with Jamaica’s SBA.


Lesser Antilles.  BHP discovered natural gas off Trinidad and Tobago and CDB okayed US$325,500 to benefit St. Kitts and Nevis’s geothermal energy.


Northern South America. GeoPark announced a new project in Colombia; Ecopetrol and Petronas signed an agreement; and Guyana and Suriname discuss sharing an oil facility.


Déjà vu all over again. Last week’s readers were particularly interested in the Dominican Republic’s electricity subsidy (English); Grenada’s natural gas discovery (English); and the Dominican Republic’s new fuel extraction rules (Spanish).



Political Economy


Moody’s will not change El Salvador’s rating without tax agreements… The international rating agency maintained at Caa1 El Salvador’s issuer and senior unsecured debt rating (Spanish). Moody’s felt there is no certainty that the political agreements necessary to cover the government’s financing needs could be achieved.


…and S&P reduced Guatemala’s rating. The international rating agency Standard & Poors lowered the risk rating for Guatemala to BB- from BB (Spanish). The rating was reduced considering the forecast of weak economic growth.


El Salvador, Guatemala, and Honduras opened their borders. The presidents from El Salvador, Guatemala, and Honduras signed an agreement to integrate customs, allowing people and goods to transit freely (Spanish). The Amatillo declaration would create a block that will become the area’s largest economy.


The IMF is happy with Jamaica’s SBA. The executive board of the International Monetary Fund (IMF) finished the second review of Jamaica’s performance under the Stand-By Arrangement’s economic program (English). The 36-month SBA, with access to US$1.68bn, was approved on November 11, 2016.



Oil & Gas Upstream


GeoPark announced a win in Colombia. GeoPark Limited announced a joint venture agreement with CEPSA Colombia for exploration activities in a new high-potential exploration area in Colombia’s Llanos Basin (English). The Tiple Block Acreage is adjacent to GeoPark’s prolific Llanos 34 block.


Ecopetrol and Petronas signed an agreement to develop America’s oil and gas. The Colombian state-owned oil giant Ecopetrol signed a memorandum of understanding with Malaysian Petronas (English). The goal is to further their exploration efforts in the Americas, pursuing oil and gas projects.


Venezuelan oil may be in trouble. NuStar stopped PDVSA from using its 14.4 million barrel storage terminal on the Caribbean island of St. Eustatius (English). Venezuelan oil shipments to the US fell to 56% of their 2016 average as sanctions against Caracas affect PDVSA’s oil sales (English).


BHP found natural gas off Trinidad and Tobago. BHP discovered 4-5 trillion cf of natural gas in the deepwater LeClerc well off the east coast of Trinidad (English). BP chose Rowan EXL II to drill a nine well project in Trinidad and Tobago (English).



Oil & Gas Downstream


Guyana and Suriname may share an oil processing facility. Guyana and Suriname are considering a joint industrial center to service both countries (English). Guyana’s Natural Resources Minister, Raphael Trotman confirmed that Chevron has made “a very good proposal” to work in Guyana.


The Dominican Republic’s fuel prices went up. The Industry and Commerce Ministry announced that from October 21 to 27, all fuel prices except for natural gas increased (English). Premium gasoline went up by RD$1.5 and regular gasoline was up RD$1.00.


Guatemala is keeping an eye on fuel. Guatemala’s Energy and Mines Ministry (MEM) intensified its monitoring activities in gas stations since September (Spanish). The goal is to “protect the economy of the Guatemalan families” and determine the locations where fuel is cheaper.



Renewables & Electricity


El Salvador is planning a renewable energy auction. The National Energy Board announced it is preparing an auction to supply solar and biogas energy (Spanish). The goal is to direct the auction to generation companies already connected to the distribution grid, but are not participants in the wholesale market.


Puerto Rico hired Whitefish Energy and all hell broke loose. The Puerto Rico Electric Power Authority (Prepa) awarded a US$300m contract to Whitefish Energy to restore the island’s electric power system (English). The company’s experience and Prepa’s justification to contract it have been questioned (English), prompting a cancellation of the contract (English).


The Dominican Republic will have a new power tariff. In less than a year the Dominican Cooperation of Power State Companies will be restructured, while by June 2018 power tariffs will be adjusted biannually (Spanish). The subsidy will be reduced to represent 12% of the tariff.


CDB and the EU back geothermal energy. The Caribbean Development Bank (CDB) received EUR 12m in funding to develop geothermal exploration in the Eastern Caribbean (English). The CDB okayed US$325,500 for the government of St. Kitts and Nevis to study the design of a geothermal energy drilling project (English).


The CDB okayed funding to modernize Caribbean electricity grids. The Caribbean Development Bank (CDB) approved a US$350,000 grant to plan and design energy storage and grid modernization solutions (English). The technical assistance will support six individual grid modernization and energy storage proposals from the Bank’s Borrowing Member Countries.



Old School Social


Events in the world beyond your screen – go see and be seen!


The Platts 18th Annual Caribbean Energy Conference is January 25-26 at the Grand Hyatt Baha Mar, Nassau, The Bahamas. This conference provides an excellent venue to learn what is happening in energy around the Caribbean, and to discuss key opportunities and challenges with industry leaders and colleagues.



Lateral Thinking


Knowing more about past hurricanes may help us predict future storms. The documentary “Killer Hurricanes” describes how researchers examine both human and geologic records to track past cyclones (English). The data revealed that the frequency of strong hurricanes increase when ocean temperatures are warmer, a tendency we are seeing with global warming.



Quote of the Week


“I was thinking that if what distinguishes us as humans is our stupidity, what may redeem us is our grace.”


-Earl Lovelace (1935), Trinidadian novelist, journalist, and playwright.



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