Tuesday, November 12, 2019

Oxy to Sell Permian Campus After Anadarko Acquisition


(Bloomberg) -- Occidental Petroleum Corp. plans to sell a four-story office building in the heart of the Permian Basin and move employees into a nearby one owned by Anadarko Petroleum Corp., the oil producer it bought for $37 billion three months ago.

The 213,000 square-foot complex will be vacated by April 2020 and is a “compelling” investment opportunity, according to a marketing document from CBRE Group Inc., the real-estate broker handling the sale alongside Midland-based Moriah Real Estate Co.

The property was built in 2014 and is located in Westridge Park on the west side of Midland, near the airport. It’s also close to Anadarko’s campus and directly opposite Chevron, which Occidental outbid to acquire Anadarko. EOG Resources Inc. also has an office nearby.

“We have told our employees in Midland that they will be moving into the state-of-the-art building that Anadarko began constructing prior to the acquisition,” Melissa Schoeb, a spokeswoman for Occidental, said by email. “The building is large enough to house our combined workforce and we will begin the move when it’s ready for occupancy.”

Occidental is under pressure to sell assets and pay down debt after the acquisition, which has been criticized by investors including billionaire activist Carl Icahn. The stock plunged this week after Chief Executive Officer Vicki Hollub slashed 2020 capital spending by 40%, raising concern that the company won’t pump enough oil to cover dividend payouts and debt service.

To contact the reporter on this story:
Kevin Crowley in Houston at kcrowley1@bloomberg.net
To contact the editors responsible for this story:
Simon Casey at scasey4@bloomberg.net
Mike Jeffers

Repsol Looks to Alberta to Replace Mexican and Venezuelan Oil


(Bloomberg) -- Repsol SA is looking as far away as Western Canada for oil for its European refineries amid dwindling supplies from Mexico and Venezuela.

The Spanish oil company is considering using rail to transport as much as half-a-million barrels of heavy crude a month 1,911 miles (3,075 kilometers) from Alberta to Montreal before loading it onto tankers bound for Europe, according to people familiar with the situation. The company has also considered shipping the crude to New Jersey for shipment to Europe.

The European company has typically sourced heavy crude supplies from Latin America, particularly Mexico and Venezuela. But U.S. sanctions, as well as civil strife, have crippled Venezuela’s oil production, which has fallen to less than 700,000 barrels a day from more than 2 million four years ago. Mexico’s oil production has fallen for 14 straight years to 1.83 million barrels a day in 2018. That’s left Repsol looking for alternatives.

Repsol declined to comment in an email.

Repsol’s European refineries hold about 25% of the continent’s coking capacity, according to the company. Coking units allow refineries to process heavier crude, which is typically cheaper than lighter oil, into high-value fuels such as gasoline and diesel.

Alberta’s landlocked status means it ships nearly all of its crude oil to the U.S. by pipeline or rail. The Trans Mountain pipeline to the Pacific Coast allows a tiny fraction to be shipped to Asia. The long distance to market has kept Canadian heavy crude selling for less than West Texas Intermediate futures. The discount was more than $20 a barrel on Monday.

Shipments of oil sands crude to Europe are rare. Repsol occasionally gets heavy Canadian crude via U.S. Gulf ports, where Canadian oil competes with U.S. crude for sea berths and space on pipelines.

About 400,000 barrels of Alberta crude were sent to the U.K. last year, the first significant shipment to Europe since 2014, when a tanker of Alberta crude left a terminal near Montreal for shipment to Italy, according to the Canadian International Merchandise Trade database.

Repsol produces conventional heavy crude in west-central Alberta at its Chauvin field.

To contact the reporters on this story: Robert Tuttle in Calgary at rtuttle@bloomberg.net;Lucia Kassai in Houston at lkassai@bloomberg.net;Rodrigo Orihuela in Madrid at rorihuela@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Mike Jeffers, Kevin Orland

For more articles like this, please visit us at bloomberg.com

Monday, November 11, 2019

Venezuela's mass migration poses a danger to the Western Hemisphere

Venezuela's mass migration poses a danger to the Western Hemisphere

Latin America is erupting in one political crisis after the other. The chaos follows ongoing protests and instability in Haiti, Ecuador, Peru, Argentina, Honduras and, lately, Chile, a stable country that generally tops the rankings in economic freedom. After a trip to Pyongyang to expand ties with North Korea, one of Venezuela’s most powerful men, Diosdado Cabello, sanctioned by the U.S. government for narco-trafficking, recently said: “What is happening in Peru, Chile, Ecuador, Argentina [and] Honduras is a gentle Bolivarian breeze, and a hurricane is coming,” when referring to the role of the Bolivarian revolution in the recent conflicts and its ability to undermine the region’s stability.
The regional chaos is exacerbated by Venezuela’s mass migration, which beyond a humanitarian crisis poses a dangerous threat to the Western Hemisphere because it’s weaponized by the Maduro regime.
The majority of the 4.3 million Venezuelans who have fled their country — driven by hyperinflation, crime and food and medicine shortages, which all stem from the Bolivarian revolution — have stayed within the region. An estimated 1.4 million Venezuelans have settled in Colombia; nearly 860,000 in Peru; 288,000 in Chile; 330,000 in Ecuador; 130,000 in Argentina; and 178,000 in Brazil. About 300,000 Venezuelans are in the United States and more than 255,000 in Spain, according to the U.N. International Organization on Migration.
A small percentage of these Venezuelan migrants appear to be undercover subversive agents embedded by the Maduro regime and his regional and extra-regional allies. Ecuadorian President Lenin Moreno has blamed Venezuela directly over the protests in the country last month. Furthermore, Defense Minister Oswaldo Jarrin said “criminal elements” were using the marches as cover to loot, destroy property and commit acts of “terrorism” aimed at weakening the country. Julio Borges, commissioner for Foreign Relations of Venezuelan Interim President Juan Guaidó, recently stated that 41 of the 57 foreigners arrested in Ecuador’s protests last month were Venezuelan nationals.  

Kelly M. Greenhill, a researcher at Harvard University, focuses on “new security challenges,” including civil wars and the use of forced migration as a weapon, and argues that “strategic engineered migration refers to in- or out-migration that is deliberately induced or manipulated by state or non-state actors.” This description aptly fits the crisis in Venezuela, which goes beyond the result of an incompetent government or grave socio-economic conditions. The Venezuelan refugee crisis is the product of a wicked revolution built on a political-military strategy that converges armed groups and criminal elements in Venezuela and beyond.

In 1999, Hugo Chavez, a former lieutenant colonel who led a failed coup d’état, took power and started the Bolivarian revolution. Chavez’s lust for power used an insurgency-style, revolutionary model with external support to implement profound changes within Venezuelan society and its institutions. This turned a once prosperous country into a brutal tyranny. In 2013, after Chavez’s death, Nicolas Maduro rose to power and doubled down on this strategy — not only to disrupt anti-regime protests through intimidation and violent repression in Venezuela but to converge criminal and terrorist networks.

The two most prominent crime-terror groups in Venezuela are the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN). According to the Colombian Foreign Ministry, the ELN has a presence in at least 12 states within Venezuela, and FARC leaders who abandoned the peace accord, such as Iván Márquez and Jesús Santrich, appeared in August in a video inside Venezuela announcing a return to the armed struggle.

This is combined with at least eight major armed criminal groups in Venezuela that engage in various forms of illicit activity under the protection of the Venezuelan Armed Forces. Pro-government militias (“Colectivos”), paramilitaries such as the “Rastrojos,” criminal gangs such as the “Pranes,” and even Islamist terrorists, namely Hezbollah, use the Maduro regime as a protective shield, which cedes the monopoly on violence.

In short, Venezuela has become what some have called a “Mafia state” with organized crime and terrorist groups controlling vast swaths of Venezuelan territory through transnational illicit networks involved in drug trafficking, money laundering, illegal mining, kidnapping, etc. that spills across borders. The Center for a Secure Free Society, a national security think tank based in Washington, has gone a step further and labeled Venezuela a “parallel state” that combines a “criminalized state” with a revolutionary framework that draws its source of support from external state actors: Russia, Iran and China, or the VRIC.

“We are fulfilling the plan, you understand me,” Maduro recently said, hinting at the well-orchestrated plan behind the Bolivarian revolution, which functions less as a hierarchy and more as a regional network. It is a network that grows stronger as it gains territory; therefore, the goal of the revolution is to expand its territory by destabilizing all of Latin America. Mass migration and increasing refugee outflows from Venezuela is the method.

According to the Organization of American States, the man-made humanitarian crisis in Venezuela could push refugee outflows to as high as 8.2 million next year.

The math is simple. The more refugees that flow out of Venezuela, the easier it is for these transnational and transregional threat networks to spread north, south, east and west. The only way to prevent the Bolivarian “hurricane” from destroying the Western Hemisphere is to stop the Bolivarian revolution that gave life to this threat network and has figured out how to weaponize mass migration.
José Gustavo Arocha is a research fellow for the Center for a Secure Free Society. He is a retired lieutenant colonel from the Venezuelan Army and former political prisoner (2014-2015). Follow him on Twitter @ArochaJG.

God Bless Our Military

God bless our military happy Veterans Day

Thursday, November 7, 2019

Feds order Keystone pipeline to remain shut down in North Dakota

Keystone Pipeline Breach


BISMARCK, N.D. (AP) – Federal regulators have ordered the Keystone pipeline to remain shut down until its Canadian owner takes corrective action aimed at determining the cause of a breach that leaked an estimated 383,000 gallons of oil in northeastern North Dakota.

The Pipeline and Hazardous Materials Safety Administration issued the order Tuesday to TC Energy. The action comes one week after the pipeline leak was discovered and affected about 22,500 square feet of land near Edinburg, North Dakota.

The order requires the company to send the affected portion of the pipe to an independent laboratory for testing.

TC Energy says it has about 200 people are at the site “focused on clean-up and remediation activities.”

Regulators say about 252,000 gallons of crude oil has been recovered.

Tuesday, November 5, 2019

Oxy slashes spending, reports nearly $1B loss after Anadarko deal

 Vicki Hollub, chief executive officer of Occidental Petroleum Corp, is pictured.
NEXT: See recent earnings from area energy companies. Photo: Kyle Grillot, Bloomberg / Bloomberg / © 2019 Bloomberg Finance LP


Occidental Petroleum said it would dramatically slash its spending by nearly 40 percent next year after reporting a nearly $1 billion quarterly loss in the aftermath of its $38 billion acquisition of Anadarko Petroleum.

Houston-based Oxy said it estimates $5.4 billion in capital spending next year after the combined Oxy-Anadarko will spend an estimated $8.6 billion this year. The megadeal to absorb The Woodlands-based Anadarko and its crown jewel Permian Basin acreage closed in the middle of the third quarter on Aug. 8.

Oxy on its own had planned to spend just less than $5 billion this year before the Anadarko deal, but the cutbacks are still much larger than anticipated. The biggest cost-cutting is coming in the Permian as Oxy combines their operations in West Texas. But Oxy will remain the Permian's largest producer and arguably the second-most-active driller after Exxon Mobil.

Oxy's estimated oil and gas production in 2020 is still projected to rise 2 percent from both Oxy and Anadarko this year, Chief Executive Vicki Hollub, but that's a smaller growth projection than previously anticipated. Oxy plans to resume faster growth in 2021 with a 5 percent leap in production volumes.

Oxy's $912 million loss in the third quarter is almost entirely from the Anadarko deal as Oxy reported $969 million in merger-related transaction costs and fees from debt financing. Oxy also recorded $325 million in quarterly write downs, primarily on the loss of value in unproven acreage where Oxy no longer plans to explore.

Oxy's stock is down 37 percent since the bidding war against Chevron to buy Anadarko went public in April, including another 4 percent dip on Tuesday.

Hollub said the company is making good progress on the Anadarko integration.

“We’re as excited today as we have anytime in the last two years about the opportunities in front of us,” Hollub said. “Now that we’ve had a chance to work together - the two teams - we’re coming up with more synergies.”

She described Oxy's Permian acreage in New Mexico as its "1A" top production area and she said the Anadarko Permian acreage in West Texas is "1B."

Oxy is focusing heavily on cost cutting and debt reduction in part so it can maintain healthy dividend payouts to skeptical investors, many of whom feared the company bit off more than it could chew with the hefty Anadarko deal. Oxy is still facing an ongoing proxy war and litigation from shareholder and famed corporate raider Carl Icahn. Hollub said Oxy is going to be much more attentive to shareholders' concerns moving forward, including lowering the bar for investors calling special board meetings as shareholders voted on earlier this year.

Already, at the end of September, Oxy closed on the $3.9 billion sale of Anadarko's Mozambique liquefied natural gas export project to the French energy major Total. Oxy is selling all of Anadarko's Africa assets to Total for a combined $8.8 billion, but the sales of the remaining Africa transactions in Algeria, Ghana and South Africa are yet to close.

“We are very focused, very intense on getting the asset sales done," Hollub said, including additional sales.

“We are approaching asset sales very aggressively and intently,” she said, while refusing to compromise on the values of the assets.

Hollub reiterated her interest in selling a stake in Anadarko's pipeline business, Western Midstream. But she refused to speculate on other potential asset sales.

“There will be some creativity," she said. "There will be some things you might not expect."

Monday, November 4, 2019

Venezuela's Maduro pledges funds for Argentine shipyard to finish PDVSA tankers

With President of Venezuela Nicolas Maduro.
With President of Venezuela Nicolas Madur


(Reuters) - Venezuelan President Nicolas Maduro on Sunday pledged funds for a state-owned Argentine shipyard to finish building two long- overdue tankers for state oil company Petroleos de Venezuela[PDVSA.UL], which is struggling with a diminished tanker fleet.

Maduro, a socialist who has overseen a drastic economic collapse in the once-prosperous OPEC nation and stands accused of corruption and human rights violations, did not say how much money Venezuela would provide or when it would be disbursed. 

But the statement suggests he sees left-leaning Alberto Fernandez’ victory in last month’s Argentine presidential election as an opening to revive the construction. He accused current President Mauricio Macri, an outspoken Maduro critic, of “sabotage” to delay the tankers’ completion, without evidence.
“Macri, who hates us and fears us at the same time, stopped everything,” Maduro told a gathering of leftist organizations in Cuba. “There’s a new president. I’ll tell you: Venezuela has the resources and is ready to invest and finish those two ships.”

Maduro added that he had not been aware of the situation until union leaders from the Rio Santiago shipyard building the tankers - who also attended the Havana summit - approached him in a restaurant this weekend. 

Representatives for Macri and Fernandez did not immediately respond to requests for comment. Maria Eugenia Vidal, a close Macri ally and outgoing governor of Buenos Aires province, which owns the shipyard, has said she would rather spend money on schools than subsidize it. 

Fernandez is set to be inaugurated next month. 

Delivery of the ships was delayed long before Macri took office in late 2015. Maduro’s late predecessor Hugo Chavez and late Argentine President Nestor Kirchner first signed a pact to build them in 2005. 

One tanker, the medium-sized Eva Peron Aframax, was officially launched in 2012, but construction delays and a lack of funds have meant neither has yet been delivered. 

PDVSA, hit by a freefall in its crude output and U.S. sanctions intended to force out Maduro, is in desperate need of new tankers, after losing control of part of its fleet due to mounting unpaid bills to operators. 

Many shipping firms are no longer calling at Venezuela’s ports or carrying its oil due to sanctions, say maritime sources, leading to a scarcity of tankers for exports and a consequent accumulation of unsold oil stocks, which has forced PDVSA to further cut back output. 

Reporting by Luc Cohen; additional reporting by Hugh Bronstein and Maximilian Heath in Buenos Aires; editing by Richard Pullin