Monthly Archives: May 2011

The literally open veins of Latin America

This is one of the most horrible and sad news stories I have ever read. It’s about a new commodity being taken from Latin America. Just go read it.

And while you do, maybe wonder a little bit: Why didn’t poor Peruvians vote for the status quo in the presidential election? And why do business reporters spend 90% of their time writing meaningless market stories about crack spreads and treasury bills, when they could be writing stories like this one? And no matter how bad my life may feel at times, am I lucky, or what?

OK, enough. Go read. Really.

FARC links to GW Bush campaign? Hmmm

The Raul Reyes files are exactly like the Wikileaks files. There may be edits, inaccuracies and fabrications in there, but it can’t all be fake. And most likely, none of it is fake. And yet, there are tidbits in there that are almost too weird to be true.

There are probably lots of interesting political stories in there. But all we care about around here is oil. So I’ll leave the political hand-wringing to others (see this and this) and cut to the oily mess. Continue reading

Argentina oil find mostly hype for now (Updated)

Rrraaargh

Better than shale oil. Click for original.

(Special bonus update at end of story.) Argentine President Cristina Fernandez went on TV yesterday to announce a major new oil discovery, with various outlets reporting that the discovery would boost the country’s oil reserves by 150 million barrels, or 8 percent. Not so fast.

Repsol subsidiary YPF did say it found 150 million barrels of shale oil. But the company has carefully avoided calling these reserves, which would indicate that they could actually pump the oil at a profit. In fact, in its securities filing to the Buenos Aires exchange (nicely posted at Ambito.com), it says:

[The initial results] allow us to estimate technically recoverable resources of 150 million barrels of oil equivalent in this area. These resources do not to date constitute proved reserves and will be recognized under that category when they fulfill the formal criteria required by the Comisión Nacional de Valores [Argentina] and the Securities and Exchange Commission.

Continue reading

Will Japan’s new no-nukes stance affect South America?

This is big news from Associated Press:

Japan to scrap nuclear power for renewables and conservation

The prime minister says Japan must ‘start from scratch’ and abandon its plan to obtain half its energy from atomic power

Meanwhile, back at the ranch, Chile, Argentina, Brazil and Venezuela are among countries that are planning nuclear programs — with Chile signing a nuclear cooperation agreement with the USA after the Fukushima disaster. And in Peru, the Macusani mining district is growing in part on uranium speculation.

It will be interesting to watch for local effects from the Japanese policy shift. (I was going to write “fallout” rather than “effects” but that would be in bad taste. Nuclear science is here to stay, in the language, anyway.)

Venezuela gold: “Altamente estratégico”

Gold and strategy -- two odd concepts that taste golf together.

When Venezuela declares that something is “strategic,” that has normally meant the state is about to take over an industry. This was the case with iron and steel. With oil, and later oilfield services. Terrestrial telecom. Electricity.

Today, Hugo Chavez said gold was “highly strategic.” Roll the tape, Venezolana de Television. I’m going to give a lengthy translation so you can see how these things go:

Last night I was studying the topic of gold, Jorge. [Camera focus on Finance Minister Jorge Giordani.] Gold. We need to be conscious of what we have. Not many people know, hey [Communications Minister Andres] Izarra, I am sure you don’t know. Almost nobody knows in Venezuela, what are our gold reserves. They are there in Guayana. Elias, write a decree-law to declare gold “highly strategic for national development.” We’ll start there, with a framework law, decreed. So, it turns out we are one of the first countries in the world in gold reserves. And number one in, that’s gold underground, Jorge. And also one of the first in reserves of gold as part of the international reserves. It keeps growing.

Now this doesn’t necessarily mean that the law will be written or decreed, and a decree doesn’t mean that people with gold claims in Venezuela should run straight to their lawyers. But it can’t be pleasing to the ears of the friendly folks at Rusoro Mining (RML.v), the only active publicly traded gold miner, or the various other holders of concessions.

Also noting: the $100 an ounce that gold has lost in the past couple days is going to do interesting things to Venezuela’s foreign reserves. If the reserves are indeed 60% gold bullion (as I heard recently), and gold falls by 5%, that entails a 3% drop in foreign reserves. Ouch. And while some goldbugs are hedged by US dollar holdings, Pres. Chavez ordered Venezuela to get rid of that dying currency years ago. Ouch. Oh but don’t worry, gold goes up in both inflation and deflation.

Hearty hat tip for sending the link: Kepler.

PDVSA Pension Ponzi: Venezuelan accountant pleads guilty

Just in from US Attorney in Connecticut:

VENEZUELAN ACCOUNTANT ADMITS CONSPIRING TO OBSTRUCT

SEC INVESTIGATION OF CONNECTICUT HEDGE FUND ADVISOR

David B. Fein, United States Attorney for the District of Connecticut, announced that JUAN CARLOS GUILLEN ZERPA, 44, a citizen of Venezuela, pleaded guilty today before United States District Judge Stefan R. Underhill in Bridgeport to one count of conspiracy to obstruct an official proceeding of the U.S. Securities and Exchange Commission. Continue reading

Leave your fruit at home

Click for full size

First of all, you should never travel with bananas. They get squished in your bag, and trust me on this one, laptops don’t respond well to banana pulp in the monitor port. More importantly, if you forget to declare your banana when you come to visit Chile, you can be fined $250. Just ask the delightful singer Julieta Venegas, who was detained for failure to declare her banana upon arrival here.

Please don’t tell me I am getting off topic. International phytosanitary regimes are all that stand between us and the abyss. You let people can enter Chile with undeclared seedless supermarket fruit and next thing we’ll all have to marry box turtles. There are few natural resource issues so important as avoiding the unregistered entry of platanos into Julieta Venegas’s laptop.

I include for your pleasure the list of fruits that can’t be taken to the Moquegua region of Peru. Click the picture for a big version. Keep out of there with your foreign caquis, anonas, tumbos serranos and falso almendros. Got it? I thank Peru’s Agriculture Ministry for making such a cool little learning aid for those of us interested in tropical fruits.

In all seriousness, though — this is how Chile protects its agriculture industry. Meanwhile, ask people why there is so much salmon-industry trash floating in the southern Chile fjords, and they all say the inspectors lack manpower. Go figure.

Colombia goes after FARC who went after Ecopetrol-Talisman (EC, TLM), misnames operation

Marulanda's cousin?

I don’t track the back and forth of FARC & Friends pipeline bombings and Santos & Co. manhunts very closely. Suffice to say that pipeline bombings are back with a total of six in the past month, according to Notimex. The latest was on the Petronorte pipeline and polluted the Tibú River, for those keeping track at home. Now, there’s news that the Colombian military is pursuing the guerrillas who were apparently responsible for the kidnapping of contractors for Talisman Energy and Ecopetrol (TLM, EC) March 7. It has a little detail that calls out for a firm hand-face.

Handing the mic to EFE (my translation):

A joint operation of the army and air force allowed the destruction of 32 encampments of Front 16 of the FARC, used by the guerrillas to plan terrorist acts in an oil-producing area of Vichada department, official sources said.

The operation, named “Avatar,” took place over the last days in a sector between the villages of Guerima, Puerto Principe and Chupave, in Vichada, according to a statement from the Colombian Armed Forces.

For those who somehow missed the biggest-grossing motion picture of all time, the movie Avatar portrays a heartless military full of redneck gringos who lay a blitzkrieg on innocent forest-dwellers in order to secure access to natural resources.

Just to be clear, this is a serious story. 23 workers were kidnapped (PDF of company statement) from the Talisman-Ecopetrol crew, and although 22 were released, one surveyor remains missing. But that makes me even more mystified: if this is Operation Avatar, who exactly are the Navi?

Alange (ALE.v) owns up to errors

Alange Energy has finished its internal review and says it found problems. Here’s a bit of the key stuff, but if you’re really into this story, you would do well to block out a half hour in a quiet room and read the whole, epic, thing:

the Internal Review found that:

1. the Company did not maintain effective operational control to determine its production;

2. the Company did not maintain adequate controls over lines of communication between operational staff and management to assist in managing cash flow and to obtain a full understanding of the Company’s current working capital position;

3. the Company did not maintain adequate controls for the reliable sharing of information between the operational staff and finance staff;

4. the Company did not maintain effective controls to ensure that material sales of assets of the Company are subject to a formal approval process;

5. the Company did not maintain effective procedures with respect to competitive awarding of contracts to ensure the proper approval and documentation of significant contracts; and

6. the Company did not maintain adequate controls over the timely communication between departments of information relating to issues that may impact the Company’s financial reporting.

Continue reading

Carbon emissions: A dirty job, but someone’s got to do it

A very interesting graphic, explained below.

When developing countries got themselves exempted from the Kyoto protocol, the idea was to help them catch up to rich nations, which had benefited from centuries of extractive industrialization and carbon emissions, rather than penalizing them for coming late to the party. But what’s ended up happening (predictably) is that Kyoto-abiding developed countries are outsourcing their carbon emissions to the developing world — basically China and India.

The Centre for International Environment and Climate Research-Oslo just published a paper in PNAS (via The Economist) that quantifies what countries are exporting their carbon footprint, and which ones are importing. That is, which countries hire China et. al. to do the emitting, and which, like China, take on that task.

When you look at the original data, Latin America does not turn out the way you probably expect. Sure, Venezuela has heavy-oil upgraders that burn off tens of thousands of barrels a day of fuel on behalf of customers in the USA and elsewhere. Argentina has steel mills that turn ore into blocks of embedded energy for export. But neither of them makes the list of the biggest outsource carbon emitters, while Mexico, surprisingly, is up there on the list of the countries doing the outsourcing.

Hey look, some video I took of constant flaring at the heavy-oil upgraders in Jose, Venezuela, in April 2010. Sorry for the quality, I took it from a bus on the highway. Still a decent illustration of what this study is talking about.

Continue reading