Pemex makes a profit: Mexico’s state oil company Pemex reported a net profit of MX$87.94bn (US$4.69bn) in the first quarter, citing lower financial costs and a recovery in the international prices of crude oil and other fuels. This was the second consecutive quarter in the black, after years of losses. The company’s finance director, Juan Pablo Newman, said that it was the first time in six years that the company had reported net profits for two consecutive quarters. Revenues surged by 54.9% to MX$348.5bn (US$18.33bn), lifted by exports, which were up by 85.8% in value terms, despite a 3.6% fall in volume.
Crude output averaged 2.018m barrels per day (bpd), down by 9.5% on a year-on-year basis. Gas production was down 15.6% to 4.36bn cubic feet per day. Company officials stressed that as Pemex finances improve they will be seeking to reverse the declining production trend. The firm is focusing on private sector partnerships and farm-outs in up to 52 selected areas, along the lines of the Trion block agreement reached last year with Australia’s BHP Billiton.
A further three Pemex-owned fields – Ogarrio and Cárdenas-Mora (both onshore) and Ayin Batsil (offshore, shallow waters) are due for competitive auction in October.
Meanwhile, however, efforts by Pemex to attract up to US$5bn worth of investment to modernise its two refineries are being less successful. Sources say that attempts to attract private sector partners to overhaul the Salina Cruz and Tula refineries are not going well. Pemex “categorically rejects” the idea that it is struggling to find investors.
Movement on UPM plant in Uruguay: Plans for Finnish pulp and paper company UPM to build a second plant in Uruguay, as part of a project that could be worth US$5bn in total, appear to be moving ahead. On 3 May, after months of talks with the Uruguayan government, UPM said it was going ahead with the plant in Paso de los Toros, following agreement on 16 of 17 points on the agenda. These reportedly include government commitments to build the necessary road, rail, and port infrastructure (according to some reports worth up to US$1bn). But UPM’s request that it be exempt from capital asset taxes appears not to have been accepted.
Construction of the pulp plant is due to start next year, with cellulose paste exports starting in 2020. Total capacity at the plant will be 2m tonnes/year; it will employ a staff of 8,000.
Days earlier, during a visit to Montevideo, Spain’s prime minister, Mariano Rajoy, said that a consortium of Spanish and Uruguayan companies (which he did not name) had won a US$200m contract to upgrade the highway linking Paso de los Toros to Montevideo.
Brookfield warning on Brazilian recovery: The emerging recovery in the Brazilian economy is generally seen as a good thing by corporates, but Canada-based Brookfield Infrastructure Partners has a slightly different view. Presenting Q117 results, in which its Brazilian operations figured prominently, Chief Executive San Pollock said the recovery meant that the window of opportunity for “really high” rates of return was beginning to close “pretty quickly”.
In the last two power line transmission auctions in which Brookfield had taken part the cost of capital had fallen, making them much more competitive. In the auction of 31 transmission lines in April, some had received more than 10 competing offers, while in comparable auctions 6-9 months earlier, Brookfield had been the only bidder for some lines.
Recent asset acquisitions in Brazil had been made at prices that were now beginning to move up. Brookfield has invested in the natural gas pipeline Nova Transportadora do Sudeste (NTS) and recently acquired the water and wastewater business Odebrecht Ambiental.
Along with Abertis of Spain, it also has a stake in the toll road operator Arteris, which in April won a US$381m 30-year concession to run the Rodovia dos Calçados highway in São Paulo. Pollack said that as the window of opportunity for high rates of return in Brazil began to close, so the company was examining opportunities in Mexico more closely.
YPF faces possible legal entanglement in US: For over a decade, Argentina faced complicated legal proceedings in US courts, as creditors sued it in the wake of the 2001/2002 foreign debt default. President Mauricio Macri’s government finally settled the dispute last year. But a new legal entanglement could be looming.
This concerns the highly-polluted Passaic River in New Jersey, currently undergoing one of the most expensive environmental clean-ups in US history. Hundreds of companies that operated in the area accused of dumping metals, pesticides and toxins.
Attention has focused on one, Maxus Energy, which produced Agent Orange, a toxic defoliant used during the Vietnam war. Maxus was acquired by Yacimientos Petrolíferos Fiscales (YPF), Argentina’s state oil company, in 1995, but was declared bankrupt last year. Two New Jersey democrats, Senator Bob Smith and Representative Tim Eustace, are now claiming that the bankruptcy was contrived by the parent company to avoid contributing to the US$1.4bn river clean-up cost. In a recent article they claimed, “Unbeknownst to most Americans, YPF is trying to stick the US government with its share of cleaning up one of America’s most polluted rivers, while at the same time raising billions of dollars on Wall Street.”
End of preview - This article contains approximately 895 words.
Subscribers: Log in now to read the full article
Not a Subscriber?
Choose from one of the following options
