energy advisor - Institute of the Americas

Jul 24, 2015 - Wind Power Monthly reported July 17. The ... Brazil's national power grid, Reuters reported. .... those polled favor her impeachment, Reu-.
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LATIN AMERICA ADVISOR

ENERGY ADVISOR A PUBLICATION OF THE DIALOGUE

www.thedialogue.org BOARD OF ADVISORS Mary Rose Brusewitz Partner, Strasburger & Price Jeffrey Davidow Senior Counselor, The Cohen Group Ramon Espinasa Consultant, Inter-American Development Bank Luis Giusti Senior Adviser, Center for Strategic & International Studies

For the week ending July 24, 2015

FEATURED Q&A

TOP NEWS

Was Mexico’s First Round One Tender a Major Flop?

Jonathan C. Hamilton Partner, White & Case

Jorge Kamine Counsel, Skadden Arps

Mexico last week held the first of five public tenders in its Round One oil auction, part of the historic opening of the nation’s energy sector. // Image: Mexican Government.

Craig A. Kelly Director, Americas Int’l Gov’t Relations, Exxon Mobil

Q

Charles Shapiro President, World Affairs Council of Atlanta R. Kirk Sherr President, Clearview Strategy Group Garrett Soden Director, Etrion Corporation Mark Thurber Partner, Andrews Kurth Alexandra Valderrama Manager, International Government Affairs, Chevron Lisa Viscidi Program Director, Inter-American Dialogue Max Yzaguirre President and CEO, The Yzaguirre Group

Three executives at Brazilian construction conglomerate Camargo Corrêa were convicted Monday of money laundering, corruption and other charges, becoming the first construction industry leaders sentenced in connection with the scandal.

OIL & GAS

James R. Jones Co-chair, Manatt Jones Global Strategies

Larry Pascal Chairman, Americas Practice Group, Haynes & Boone

Three Execs Convicted in Petrobras Scandal

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Raul Herrera Partner, Corporate & Securities Practice, Arnold & Porter

Jeremy Martin Director, Energy Program, Institute of the Americas

OIL & GAS NEWS

Mexico on July 15 held the first of five public tenders as part of its Round One oil auction. Only two of 14 areas available were auctioned off, falling short of the 30 percent rate the government had said would make the auction a success and putting a damper on enthusiasm about the opening of the nation’s oil sector to foreign and private investors for the first time in decades. Was the first tender a flop, and why were so few blocks auctioned off? Will the other scheduled rounds attract more bids and investment? What needs to be done to ensure the other bid rounds go better?

A

John Padilla, managing director of IPD Latin America: “Although officials have tried to put a good face on it, Mexico’s first tender was clearly a huge disappointment. Many aver that low oil prices were to blame. That is not the case, though they may have prevented the more aggressive bids the government had hoped for—and has benefited from for decades in the energy sector space. It was not a lack of prospectivity either. Government officials appear to have concluded that it was size (one of the largest blocks, Block 7, received multiple bids—that block also benefited from 3D seismic) and the required guarantees. The government has now said that it will resize the blocks and lower required guarantees (which were indeed excessive). Though these changes may help, they still do not address all that ails Round One. The principal three variables that prevent significant round success continue to be: 1) Materiality (larger blocks will help to some extent, but size is not the only variable); 2) The contract is not a true production-sharing agreement, but rather a hybrid with a service Continued on page 3

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Bolivia Opening Protected Areas for Oil Exploration Bolivia will allow oil exploration in seven of the nation’s 22 protected reserves, President Evo Morales said Tuesday. Page 2

POWER SECTOR

China’s State Grid to Build Brazil’s Longest Power Line China’s State Grid Corp. has won a contract to build th