lunes, 22 de agosto de 2016

CUBA OIL Venezuela Situation...Cuba JORGE PIÑON

Dear All:  Just some brief observations on Venezuela as OPEC just released
today its July 2016 Report.  Link below:

The situation continues to get worse for Venezuela…According to OPEC own figures. 

1-    Crude oil production down again from 2.115 mmbd in June to 2.095 mmbd in July.  About to break the 2.000 mmbd mark!?

2-    Price for Venezuelan Basket continuous to fall from $39.73 bll in June to $37.67 bll in July.

3-    A figure buried in the report that I certainly failed to look at in the past; but it reflects the critical situation in Venezuela:  The Rig Count!
In 2012 Venezuela had 562 rigs in operation, this figure in July according to OPEC is 92!! No wonder the Mesa 30 and other mature light and medium crudes are disappearing. 

On the other hand OPEC as a whole produced a record volume of just over 33.1 million barrels of oil per day in July, up 46,400 barrels compared to June, that's over a million barrels a day more than it produced on average in 2015 and 2 million more than in 2014. This in my opinion will continue to keep oil prices down below the $45.00 bll threshold.  Most of the production increase comes from Iran and Iraq, both pumping at maximum capacity reflecting the need for cash. Venezuela and Nigeria the only two OPEC members reflecting falling production.  

The situation could get worse for Cuba; but low oil prices could help the cash flow impact on its economy if it had to buy its own crude in the international oil markets. I continue to propose that one of the preferred alternatives for Cuba is to import Fuel Oil for its electric power sector rather than crude oil to refine.  The price of HSFO in the Gulf Coast is around $31.61 bll compared with $44.86 bll for Urals.  Export revenues of excess gasoline and jet fuel would be impacted as Cienfuegos reduces its crude oil processing volume.    

Some of you have asked me about Australia’s MEO recent announcement of over 8 billion blls of undiscovered oil reserves in Cuba’s onshore Block 9. I have more questions than answers.  This block was just granted to MEO a year ago and it has been in CUPET’s hands for over 50 years; it is in this block where Motembo Cuba’s first 1898 oil discovery was made.  How come a small, with very little experience and undercapitalized oil company is able to make this monumental discovery and not CUPET?  All that I have seen is MEO’s press release, I have not seen any official and or confirmation announcement from CUPET or Cuba’s official media, maybe I missed it.  In any event, if this is correct, CUPET should be moving ASAP some of its rigs from Block 7 to Block 9; these new finds are supposed to be shallow light oil reservoirs.  If real a short term Bonanza as they could be quickly monetized. 

Saludos from a very Hot Austin, Texas.  Piñon.

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