Title: An Entry Strategy for Latin America
1Latin American Upstream Overview Selected
Countries Overview
Houston, November 2006
2RESERVES ARE LIKE FISH
- The fish is on the boat. You have weighed him
you can smell him and you will eat him. - The fish is on your hook in the water by the boat
and you are ready to net him. You can tell how
big he looks (they always look bigger in the
water) - There are fish in the lake. You may have caught
some yesterday. You may be able to see them, but
you have not caught any today. - There is water in the lake. Someone may have
told you there are fish in the lake. You have
your boat on the trailer but you may go play golf
instead.
- PROVED DEVELOPED
- PROVED UNDEVELOPED
- PROBABLE
- POSSIBLE
3Argentina
National name República Argentina President
Néstor Kirchner (2003) Land area 1,056,636 sq
mi (2,736,690 sq km) Population 39,921,833
Capital and largest city Buenos Aires,
13,349,000 Total exploratory wells drilled 7,648
(Onshore) / 188 (Offshore) Current Production
Mbo/d 665 MMcf/d 5,042 bc/d
35,466 Cumulative Production MMbo 9,536 Bcfg
33,467 Remaining Proven and probable Reserves
MMbo 3,269 Bcfg 27,230
4Production Consumption
Source EIA
5Operating Companies
6- Five mayor prospective basins currently producing
in the country. Activity heavily concentrated in
Neuquén and San Jorge basins - Policy downturn may have reached bottom. Good
long term stability prospect - Struggle to maintain hydrocarbon self-sufficiency
may bring some new incentives - Strong economic recovery underway, giving room
to gradual increase of domestic gas prices - Expansion of TGN and TGS pipelines easy
restrictions in the gas market - Comparatively high MA activity. Still room for
consolidation due to a substantial number of
smaller operators
7Brazil
National name República Federativa do
Brasil President Luiz Inácio Lula da Silva
(2003) Land area 3,265,059 sq mi (8,456,511 sq
km) Population 188,078,227 Capital Brasília,
2,160,100 Largest cities São Paulo, 18,333,000
Rio de Janeiro, 11,469,000 Total exploratory
wells drilled 3,754 (Onshore) / 2,216
(Offshore) Current Production Bo/d 1,630,384
Mcf/d 1,711,216 Cumulative Production MMbo
8,477 Bcf 8,616 Remaining Reserves MMbo
11,77 Bcf 10,813
8Oil Production Consumption
Despite market liberalization, Petrobras still
controls over 90 percent of Brazils crude oil
production.
Source EIA
9Exploration Area under Concession
Source ANP
10(No Transcript)
11Operating Companies
12- Political stability secured with recent
reelection of Lula da Silva - Regional success story, reaching self-sufficiency
in spite of growing consumption - Shelf to ultra-deepwater off-shore believed to
offer a number of giant discoveries - ANP taking measures to reduce Petrobras
disproportionate presence. - Limiting number of bids per operator in recent
round - Requesting relinquishment of up to 200 mature
fields - Expanding market and distribution infrastructure
generates good gas price scenario
13Colombia
National name República de Colombia President
Alvaro Uribe (2006) Land area 401,042 sq mi
(1,038,699 sq km) Population (2006 est.)
43,593,035 Capital and largest city Bogotá,
7,594,000 Total exploratory wells drilled 2323
(Onshore) / 55 (Offshore) Current Production
Mbo/d 525.3 MMcf/d 3,521 Cumulative Production
MMbo 6,441 Bcf 15,416 Remaining Reserves
MMbo 1,453 Bcf 6,711
14Oil Production Consumption
Source IEA
15Source IHS
Source ANH
16Source ANH
17Source ANH
18Operating Companies
19- Alvaro Uribes pro-business policies to be
enhanced under new mandate - ANHs aggressively working to revert production
decline. Bidding activity second only to Brazil - Number of local players and small independents in
the EP sector creates MA opportunities - Mixed system of bidding rounds and open acreage
makes possible to enter low exposure TEAs - Best economic terms in the region, and great
prospectivity (dont believe PEPS!) - Improved security, but still a concern in the
Llanos and Putumayo
20Ecuador
National name República del Ecuador President
Alfredo Palacio (2005) Land area 106,888 sq mi
(276,840 sq km Population 13,547,510 Capital
Quito 1,780,700 Largest cities Guayaquil,
2,597,600 Total exploratory wells drilled 513
(Onshore) / 93 (Offshore) Current Production Bo/d
531,817 Mcf/d 25,383 Cumulative Production
MMbo 3,836 Bcf 771 Remaining Reserves MMbo
4,600 Bcf 345
21Production Consumption
Source EIA
22Production by Sector
Source IEA
23Operating Companies
24- Substantial increase in exploration and
production due to the OCP oil pipeline 2003
completion - Good prospectivity. Abundant exploration and
rehabilitation opportunities if a future
government brings some stability - Marginal fields round failed to attract
established operators. ITT will likely be
different. Offshore, who knows? - Actions to capture a portion of the
high-oil-price driven windfall profits shouldnt
scare investors (Cmon, its happening in
Louisiana!) - French IFP working with Ecuadorian government on
new model contract and fiscal regime - Finding your way in the bureaucratic jungle can
be a burden, but it can be done. Security, on
the other hand, is good
25Mexico
Official name Estados Unidos Mexicanos President
Felipe Calderon (2006) Land area 742,485 sq mi
(1,923,039 sq km) total area 761,606 sq mi
(1,972,550 sq km) Population (2006 est.)
107,449,525 Capital and largest city Mexico
City, 19,013,000 Total exploratory wells drilled
5,034 est. Current Production b/d 3,333,953
Mcfg/d 4,817,367 Cumulative Production MMbo
33,703 Bcfg 54,948 Remaining Reserves MMbo
23,500 Bcfg 40,000
26Oil Production Consumption
Source EIA
27Proyected Oil Production Consumption(US
10bn/year Investment Scenario)
Source Pemex
28Import / ExportGas and Refined Products
29Mexico Exploration Projects
Source Pemex
30- Closed to direct foreign (or private, to that
matter) investment in the energy sector since
1938 nationalization - Pro-business PAN government was tentatively
opening spaces (Burgos MSCs). Vicente Calderon
is thought to have a better political chance to
enhance that policy - Opening should be driven by necessity. Mexicos
critically low reserve to production ratios
problem is now compounded by the production
decline. (Cantarell, the second largest field in
the world, (and producing 65 of the total
Mexican oil output) is declining at about 14 a
year) - Pemex, most highly indebted company in the world,
can not possibly undertake the needed investment - Opportunities without equal in the Western
hemisphere, where highly prospective country is
mostly unexplored - Scores of fields needing development or
reactivation since Pemex concentrated in a few
giants
31Peru
Capital Lima President Alan García
Pérez (2006) Area 1,285,216 km² Population 27,96
8,000 Total exploratory wells drilled 1541
(Onshore) 361 (Offshore) Current Production Mbo/d
111 - MMcf/d 146 Cumulative Production MMbo
2,320 - Bcfg 3,253 Remaining Proven and
probable Reserves MMbo 1726 (2P) Tcfg 16.65
(2P)
32Production Consumption
Source EIA
33Operating Companies
34- Hopes of political stability after the Ollanta
Humala scare. Alan Garcias initial steps seem
to show he has learned from past mistakes - Dramatically improved contract terms in 2003,
generating a high number of awards in 2005.
Exploration activity will be revitalized, but
probably not to the 1998 level - Blocks promoted by Perupetro are open to direct
negotiation in a first-come first-served basis.
Formal bidding rounds too - Gas potential (currently 17 TCF 2p) should be
unleashed with the construction of the Camisea
LNG plant, and domestic transportation
infrastructure - Investor-friendly environment may attract
companies willing to take exploration risk.
Limited MA opportunities
35Venezuela
National name República Bolivariana de
Venezuela President Hugo Chavez (1999) Land
area 340,560 sq mi (882,050 sq km) total area
352,144 sq mi (912,050 sq km) Population
25,730,435 Capital (2003 est.) Caracas,
3,517,300 Total exploratory wells drilled 13,215
(Onshore) / 156 (Offshore) Current Production
Mbo/pd 3,216 Mmcf/d 6,646 b Cumulative
Production Mmbo 55,610 Bcf 84,550 Remaining
Reserves Mmbo 76,560 Bcf 147,860
36Production Consumption
Source EIA
37Source PDVSA
38Operating Companies
39New bid round for marginal fields in the works
- Bidding process likely to be announced Jan Feb,
2007 - No plans to favor NOCs over IOCs.
- Independents expected to be encouraged to bid.
- 15 new mixed companies in fields throughout the
country. - Most of the fields are likely to be located in
eastern Venezuela, specifically in the Oficina
area. - Fields will range from small (reserves less than
30 MMBBL) to medium (reserves greater than 150
MMBBL).
Source IPD
40New bid round for marginal fields in the works
Source PDVSA/IPD
41- Largest proven oil reserves outside the Middle
East. (largest, period, if you count the Orinoco
Belt). Two thirds of total Latin American gas
reserves - Dont take at face value what the media (and Hugo
Chavez) are telling you. The Bolivarian
Revolutions actual effect in the oil industry
needs a second reading - Increased rate of return per working interest
point - IOCs no longer mere service contractors now
have direct title on the concession by partnering
with PDVSA in the Empresas Mixtas - The new regime gives the IOC access to price and
production upsides - IOCs may even be remunerated for performing
operator-like functions - Upper level PDVSA personnel fired after the 2003
strike, creating a technical and managerial
vacuum (and the corresponding need) - Highly prospective basins, including gas-prone
offshore. - Both direct negotiations and access through
bidding available - The perfect counter-move field?
42Oil Gas Investment Scenario
How can ChileConsult help?
- Latin America business development, including
entry strategy planning and implementation - Country risk assessment and mitigation
- Regulatory authorities relationship building
- Business opportunity screening and targeting
- Contact facilitation with international and
domestic players - Contract Negotiations
- Tax and contract analysis and evaluation
- Due diligence processes, including environmental
risk assessment - Establishing foreign branches and securing local
professional services
Why can ChileConsult help?
- Inside understanding of the cultural and economic
forces in play - Extensive contact base all throughout Latin
America - Deep knowledge of the regional oil gas industry
- Proven track record of deals closed
www.chileconsult.com
43Oil Gas Investment Scenario
ChileConsult Leading Partner
Alberto Harambour aharambour_at_chileconsult.com
An Attorney by education with extensive
experience in the fields of international
negotiations and new business development, as
well as in business opportunity screening,
project management and asset evaluation,
primarily in the energy industry. Alberto has
been exposed to a rich and varied experience
through a career of more than 25 years, working
efficiently with people from different
professional and cultural backgrounds, and enjoys
an extensive contact network in the international
oil gas business community as well as in
government and entrepreneurial circles throughout
Latin America Self-motivated and possessing a
creative problem-solving mentality, is fluent in
English and his native Spanish, and has working
knowledge of French and Portuguese. Based in
Houston, Alberto is an active member of the
Association of International Petroleum
Negotiators and the Chilean bar association. In
his spare time enjoys motorcycling, tennis and
shooting sports
Alberto Harambour 2004 Buffalo Terrace Houston,
TX 77019, USA 1 713 521 2664 1 713 922 9007
(mobile)
www.chileconsult.com
44(No Transcript)