BETWEEN MENACE AND HOPE

El Taladro Azul  Published  originally in Spanish in  LA GRAN ALDEA

M. Juan Szabo and Luis A. Pacheco 

The recent upward trend in oil prices, driven by geopolitical risks, was tempered by announcements from Tehran that its response to the attack on its consulate in Damascus would be limited to avoid escalation and US intervention. This news, along with rising US crude oil inventories and concerns that the Federal Reserve (FED) and the European Central Bank (ECB) could delay interest rate cuts, took the strength out of the rally. rise in oil prices, at least until the markets close on Friday the 13th.

The detente was the result of comments by Iranian Foreign Minister Hossein Amir-Abdollahian to his German counterpart that Iran is determined to respond to the Israeli attack on its consular headquarters in Damascus, but that it would do so in a “appropriate” and limited manner. On the other hand, Hezbollah, probably in coordination with Tehran, attacked Israel's northern region on Friday afternoon, launching around 50 missiles, presumably to overload Israel's defensive system.

Continuous monitoring of the region by the US indicated that preparations were in motion for the launch of a considerable number of missiles of different types. In preparation, the US moved “additional assets” to the region to bolster regional deterrence efforts and increase protection of US forces exposed to potential attack. On April 13, the observations became reality and in several batches, apparently designed to overwhelm the functional capacity of the Israeli “ Iron Dome “, 181 drones, 30 cruise missiles and 120 ballistic missiles, a total of 331 armed devices, were launched from Iran. Around 2 a.m. (Israel time) they began to approach Israel. Israel, Jordan and Egypt closed their airspace to avoid possible incidents with civil aviation.

The US and UK air forces intercepted several dozen drones before they entered Israeli airspace, and the “Iron Dome” and Israeli aviation were responsible for neutralizing the rest. As a result, and without official confirmation until now, more than 90% of the missiles and drones were intercepted, more than 170 before reaching Israel. Some  managed to penetrate the “Iron Dome” and  fell in and near the Nevatim military base , in the northeast of the country, without affecting the continuity of operation of the facilities, according to the Israeli government. 

As part of the Iranian escalation against Israel, the Revolutionary Guard captured this Saturday the MSC Aries ship, Portuguese flag and operated by the Zodiac company of Israeli magnate Eyal Oferde, while it was navigating the Strait of Hormuz in the Persian Gulf. Iran, through the official Iranian news agency IRNA, confirmed the incident. We have to remember that on Thursday the 12th the commander of the Iranian naval forces warned that he could close the Strait of Hormuz if he considered it necessary – a double-edged sword for the Iranians.

The big question now is how Israel will respond to this direct and massive attack from Iran on Israel. The war cabinet was meeting and deciding next steps, while President Biden asked Netanyahu to avoid a counterattack. The fact is that the conflict between Palestinians and Israelis has spread beyond the area surrounding Gaza, and the years-long “Cold War” between Iran and Israel appears on the verge of heating up; although there is much speculation that the attack was purely nominal and only signaled Iran's willingness to defend its interests. In fact, Iran's Foreign Minister Hossein Amir Abdollahian stated that he had notified neighboring countries, including the United States' main allies, 72 hours in advance.

At the time of closing this column, market activities were beginning in Asia: oil prices reacted very moderately, although without a doubt the actors are watching the events with understandable anxiety.

Regarding the world economy, we find a mix of news, negative and encouraging, that induces central banks to rethink their plans to reduce interest rates. Thus, we see a rebound in inflation in some regions, signs of an increase in manufacturing activity in Germany, and an increase in job creation in the US. While in China, the economy is not reacting to government stimuli as expected , and India is taking over from China in terms of its growth rate.

In the US, the consumer price index rose 0.4% monthly in March, and 3.5% annually. Federal Reserve officials expressed concern that inflation was not falling fast enough, as FOMC (Federal Open Market Committee) meeting notes from the March meeting revealed. However, monetary authorities are confident they can cut interest rates at some point this year. Europe kept interest rates unchanged, but opened the door to a first reduction in June this year.

In the hydrocarbon sector, the US crude oil production, published by the EIA , continued at a plateau of around 13.0 MMbpd, although that figure tends to be revised over time, depending on adjustment factors applied by that agency. Our calculations point to production of 12.9 MMbpd, which is still the highest production of all countries. The relative stagnation is closely linked to the relative low level of drilling activity, which has been falling since the end of 2022. This week was no exception, the Baker Hughes weekly report shows a reduction of 3 units over the last week.

That same report, which shows the movements of active drills in the rest of the world, on a monthly basis, indicates that about 15 units were incorporated during March. These increases correspond to Saudi Arabia, Nigeria, Algeria, Brazil and Indonesia; and five additional in Canada.

For its part, OPEC maintained its bullish outlook on global oil demand, while cutting its supply forecasts for 2024, which would push the market further into deficit for the next quarter. The cartel forecasts oil demand growth of 2.25 million bpd by 2024 and 1.85 million bpd in 2025. 

Almost in response to OPEC's position, the International Energy Agency (IEA) on Friday cut its 2024 oil demand forecast by 130 MBPD, followed by another slowdown next year and a return to baseline "normalization." . The agency now forecasts oil demand growth in 2024 of 1.2 MMbpd, slowing for the second consecutive year to 1.1 MMbpd in 2025.

So, as a reflection of these economic and geopolitical news, prices fluctuated during the week within a narrow band, depending on the order in which the news was known: for Brent crude, between $90/bbl and $91/BBL. At the close of the markets, on Friday, April 12, the Brent and WTI crude markers were trading at $90.45/bbl and $85.66/bbl respectively.

In other news.

• Natural gas in the US will be cheaper to burn than coal in 2024 for the first time in history, EIA said on Tuesday in its Short-Term Energy Outlook (STEO). It must be remembered that the very low gas prices in the US are related to the limitations imposed by the government on the export of liquefied gas and obviously to a surplus supply. In some regions, associated gas producers have paid customers to receive gas deliveries so as not to have their production operations affected.
• Brazil's state oil company Petrobras said on Tuesday it had discovered oil deposits in the ultra-deep waters of the Potiguar basin. This is the second well in Potiguar where the oil company finds hydrocarbons. Both findings are still subject to further study, Petrobras said. Potiguar is located on the so-called Equatorial Margin, a large area in northern Brazil that is considered the most promising frontier for Petrobras' oil and gas exploration. The discovery is located in waters with a water depth of more than 2,000 meters and could be related to the Guyana/Suriname basin from a geological point of view.

VENEZUELA

The US still seeks efficient pragmatism

Just two days before what we call “L Day”, April 18, that is, the expiration of the validity of OFAC License #44, uncertainty increases regarding the actions of the White House authorities. Indeed, when everything indicated that the United States would be forced to enforce its warning to suspend the license due to the regime's repeated lack of knowledge of the Barbados agreement, it was learned that the negotiators of Venezuela and the United States maintained “secret” meetings in Mexico; Jorge Rodríguez for the regime and a delegation from the White House headed by Daniel Erikson.

Each side gave an interpretation to the meeting according to their particular interests. The US representative indicated that the purpose was “to express our concerns about the electoral process in Venezuela,” while those close to the regime have said that it was demonstrated to the Americans “that the electoral process complied with the Barbados agreements.” . The regime alleged that a number of candidates identified with the opposition were registered to participate in the race, which according to them shows that the process is competitive; obviously without emphasizing that the PUD, which probably gathers 70% of the electorate behind María Corina Machado or Corina Yoris, has not been allowed to participate, simply blocking their access to the CNE. During the weekend it became known that there were negotiations in the opposition to find a solution that would effectively unify them.

In a maneuver with obvious electoral connotations, and under an avalanche of international accusations, the regime announced the arrest of former minister Tareck El Aissami and his closest figureheads. They are accused, among other things, of treason and money laundering. Everything looks like an attempt to whitewash a regime in which, of the last 5 presidents of PDVSA and Ministers of Hydrocarbons, one is on the run in Italy, two are in prison, one died while in prison and another was dismissed. Added to this is the conviction of General(r) Clíver Alcalá, the soldier closest to Chávez, and the trial of General(r) Hugo “pollo” Carvajal; In Europe, a number of assets were frozen belonging to high-level officials of the regime accused of money laundering and drug trafficking.

Another international scandal that could have repercussions on the image of the regime are the statements of the Chilean prosecutor, Héctor Barrios, who assured that the kidnapping and murder of Venezuelan lieutenant Ronald Ojeda was a crime with political motives and that it was requested from Venezuela.

As expected, public spending has increased, in part to expand the CLAP program. On the other hand, the injection of foreign currency into the exchange market was used to avoid the devaluation of the Bolívar and try to control inflation. To a large extent, this achievement is related to foreign exchange from Chevron's operations and more recently to better prices for hydrocarbon exports.

Hydrocarbon Sector 

One element has gone under the table, since it has not been mentioned by the media or by related companies, is the dredging of the Maracaibo Lake canal,  evidenced by the passage of tankers with greater draft in that important maritime route.

This week the electrical problems continued but without affecting oil activities. While Baker Hughes reported that drilling rigs in operations increased to 3 units, a figure seen for the first time since April 2020.

Crude oil production averaged 777 Mbpd during the last 7 days, the same as the previous week, distributed throughout the national geography, as follows:

• West              151 (Chevron 58)

• East              147

• Orinoco Belt              479 (Chevron 87)

• TOTAL 777 (Chevron 145)

Refining returned to pre-accident processing levels and averaged 186 Mbpd, with a gasoline yield of 49 Mbpd. So the internal market continues to depend on imports through barter.

Exports during the first 12 days of the month have been conducted as scheduled, but it is difficult to predict so early in the month, especially with the risk of reactivation of sanctions that would affect purchases from India and potentially other customers. One element to note is that there have been no crude oil exports to Cuba, presumably to increase revenue from crude oil sales.

In the continuing saga of the PDVSA 2020 bonds, the Southern District of New York court in VR Global Partners LP v. Petróleos de Venezuela SA Ad Hoc, No. 23-cv-05604, granted PDVSA Ad Hoc's motion to dismiss the claims filed by VR Global Partners, LP, regarding the bonds. This decision eliminates, for now, an additional complication to the general case of the invalidity of the PDVSA 2020 operation, which continues its legal process in another court in the same jurisdiction, while reaffirming that the actions of PDVSA Ad Hoc in defense of Venezuela's interests have been conducted with total transparency and legality.

MISSILES AND FUNDAMENTALS ADD TO OIL PRICES

 El Taladro Azul  Published  originally in Spanish in  LA GRAN ALDEA

M. Juan Szabo and Luis A. Pacheco 

 

The fundamentals of the oil market (demand/production) have been suggesting the consolidation of a deficit gap, which has been mitigated by the draining of inventories and the expectation that the economic recovery would be short-lived: something that can still happen. In addition, to this dynamic, the geopolitical events in Central Europe and the Middle East appear to be escalating. 

·      Ukrainian military actions against a significant number of Russian refineries and air bases

·      The imminent Israeli offensive in Rafah, Gaza

·      Iran's promised retaliation against Israel; and

·      The continued siege by Yemen's Houthis against marine shipping in the Red Sea.

All of these elements contribute to increasing the probability of expansion of conflicts, which, since they are areas closely linked to the production and trade of hydrocarbons, translate into a substantial increase in the risk premium in the energy market. For example, one NATO official estimates that more than 15% of Russian refining capacity is affected by Ukrainian attacks. The oil market has reacted accordingly.

The weekly US inventory report, the release of employment indices, and the possible delay of the Federal Reserve (FED) in initiating interest rate cuts and other traditional market variables are being displaced by the developments in these conflicts.

The eyes of the world are focused on Iran and its potential for revenge for the attack on its embassy in Damascus, for which it blames the state of Israel, although it has not claimed responsibility for the attack. A senior Iranian official indicated that Iran has warned the US that it should not “be dragged into the trap set by Israel” and that it should stay out of the conflict. The official added that in response to the message, the US asked Iran not to attack US facilities. Seven Iranians were killed in the attack, including two experienced commanders of Iran's Islamic Revolution Guards Corps.

Meanwhile, the growing humanitarian crisis in Gaza has led Washington to consider changing its policy on the war if “Israel does not implement a series of concrete measures to address the impact on the civilian population, including measures for a ceasefire.” Warnings that many observers consider nominal.

Pemex, the Mexican state company, announced a reduction of more than 400,000 bpd in its crude oil exports, apparently because President López Obrador is trying to reduce its dependence on imported fuel. The Mexican cut adds to the discipline in OPEC+ production cuts, consolidating a bullish environment on the supply side.

If that were not enough, Pemex announced this Saturday an explosion that occurred on the Akal-B marine platform, owned by Petróleos Mexicanos (Pemex), in the Cantarell production complex, in the Campeche probe. At least one person was killed, and 13 workers were injured. The effect on production has not been reported.

Meanwhile, and with no measurable effect on oil prices, Colorado State University (CSU) predicted a very active Atlantic hurricane season for 2024, driven by the La Niña weather system. CSU forecasts 23 named storms, including 11 that are expected to become hurricanes and five that could reach major hurricane status. This is never good news for oil operations in the Gulf of Mexico, which are always affected by these storms, both offshore and onshore.

Thus, oil prices advanced to levels not seen since September of last year. The crude oil markers Brent and WTI were quoted, at the close of the markets, on Friday, April 5, at $90.86/BBL and $86.73/BBL respectively. As always, in these circumstances, some analysts are beginning to predict $100 per barrel for the summer in the Northern Hemisphere.

In other news.

·      The Biden administration has announced it will not move forward with its latest plans to purchase oil for the Strategic Petroleum Reserve (SPR) amid rising prices. The Energy Department said it was “We will not award current bids for the Bayou Choctaw SPR site and will solicit available capacity as market conditions permit,” in its decision not to purchase up to 3 million barrels of oil for the Strategic Petroleum Reserve in the state of Louisiana.

·      The Dutch parliament has delayed a vote on the permanent closure of the Groningen gas field in the north of the country, scheduled for October, 1 due to recurring earthquakes in the area. Several political parties have asked for guarantees that the closure will not threaten the country's energy security. The closure was scheduled for October 1, 2023, and will close permanently next October, the Dutch government said last summer. The fields were expected to remain in operational status for another year in case the country found itself on the back foot with an exceptionally cold winter in 2023/2024. For some time in January 2024, the field was needed, and the Netherlands activated two sites in Groningen to extract trace amounts of natural gas, as a frost approached northwest Europe earlier in the year, boosting heating and electricity demand.

·      The US continues its efforts to increase pressure on Iran and the trade in its oil, citing the use of money from oil sales to support military efforts, including the war in Ukraine. The US Treasury Department has blocked 13 oil tankers and a Dubai-based shipping company that it says have been actively involved in the trade of sanctioned Iranian crude oil. The latest action centers on a Dubai-based company called Oceanlink Maritime DMCC.

·      Brazil's government is weighing names to replace Petrobras CEO Jean-Paul Prates in the coming days, two government sources told Reuters on Thursday, but it is not a fait accompli. Prates has been pressured from parts of Brazil's ruling coalition, demanding that he lowers fuel prices and increase job-creating investments. Last month, he clashed with members of President Lula's cabinet over dividends withheld by Petrobras. State companies, as the case of Ecopetrol also exemplifies, are still vulnerable to politics even if they are listed on the stock market.

 

VENEZUELA

Politics – Elections

More and more voices are being heard demanding free and verifiable elections in Venezuela. The Norwegian delegation returned to Venezuela with its role as facilitator. The Norwegians sent their chancellor, Andreas Motzfeldt Kravik, to try to rescue their reputation — by the way, quite battered by repeated failures.

One of the most relevant voices is that of the US government, which demands compliance with what was agreed in Barbados. The US, having in its hand the most forceful way to pressure the regime, the non-renewal of OFAC License 44, has not shed light on what it is going to do. With just 10 days left until L-Day, April 18, the White House is either still playing a behind-the-scenes negotiation or they simply don't know what to do: white smoke and black smoke simultaneously. Some insist that the US will follow through on its repeated threat to suspend the licenses, as different spokespersons for the Biden administration have warned since the regime decided to abandon its Barbados commitments. Others argue that being so close to the presidential elections, and with relatively low popularity, Biden is not going to rock the bottom of relations with Venezuela due to its potential impact on oil prices, immigration, and other geopolitical variables; an explanation that in light of today's oil prices seems credible, although quite unfounded in the short term.

Meanwhile, the regime has received incremental income of nearly $700 million from sales of crude oil and products at better prices, especially to India. It has also managed to prevent the gasoline and diluent shortage from getting out of hand, something relevant when trying to captivate lost followers. Moreover, the renewal of license 44, or some version of it, presents the possibility of attracting additional oil activity to Venezuela, which would only have post-election material benefits, if any.  But would be seen by the regime as another political victory, something that the White House should also be pondering.

For now, the regime is limited to increasing public spending, especially the coverage of the CLAP Funds and their content, and meddling with the electoral process, avoiding the participation of the true opposition concentrated in the PUD. Very limited access to new registrations in the electoral registry is maintained, especially abroad, torpedoing the participation of Venezuelans living abroad. Furthermore, the regime keeps trying to divide the opposition and push it to abstain in the forthcoming elections.

The potential participants in the “mini opening” that may follow the continuity of License 44 appear to be quietly expectant in the face of uncertainty. For example, Shell is seeking a long-term license from the US before making a final investment decision in the Dragon natural gas project with the state-owned Trinidad company.

Although no one focuses on it, the electoral campaign is very of its kind. There are no mass acts, massive propaganda, or use of traditional media, which the regime reserves for its messages. Part of what international observers will surely report as democratic deficits.

 Hydrocarbon Sector

Several shipments left during the last days of March, pushing exports to values comparable to February. Power outages continued in the west and center of the country, but in the east, the week's operations were not largely affected.

Production for March closed with an average of 772 Mbpd and last week it reached 777 Mbpd, distributed throughout the national geography, as follows:

 

•          West                            150 (Chevron 58)

•          East                             147

•          Orinoco Belt                480 (Chevron 86)

•          TOTAL                         777 (Chevron 144)

Development drilling activities continue with a second well at PetroIndependencia, which in the context of the industry's investment debacle looks and is reported as big news.

Refining managed to process 165 Mbpd, after a disastrous month in fuel production, saved only by the import of gasoline. Considering a gasoline demand of about 130 Mbpd, the production of 26 Mbpd, and the import of 65 Mbpd, they still leave a gap that will necessarily have to be managed with rationing. This is carefully designed to avoid impacting the holders of the “Carnet de la Patria” and the electoral mobilization of the state apparatus.

The average crude oil export for March, after a rocky start due to electrical problems at the Jose terminal, averaged 598 Mbpd, including a Corocoro segregation cargo, unloaded from the Nabarima FSO in the Gulf of Paria, complemented by the export of 84 MBPD of products, mainly residual fuel, 60 Mbpd destined for Singapore and 24 Mbpd for Cuba.

The crude oil export destinations were China with 300 Mbpd, the US with 164 Mbpd, India with 92 Mbpd, and Spain with 42 Mbpd.

 

Energy Transition

Electric Vehicles – In need of recharging.

 

The British weekly “The Economist” dedicates an interesting article to analyzing the challenges that new electric vehicle (EV) companies face when competing with Tesla. The article, titled “Think Tesla is in trouble? Pity even more its wannabe EV rivals”[1], highlights how investors in the electric mobility sector have become more cautious due to unfulfilled promises and the recent slowdown in electric vehicle sales; starting from the disappointing numbers of TESLA, the patron saint of the electric car industry.

 

According to work by The Economist, several factors contribute to the low survival chances of electric car startups.

 

1. Production and launch challenges: Many electric car startups have faced difficulties in starting production and launching new models. Delays in production and launch can hamper your growth and survival in the competitive market.

 

2. High costs and capital requirements: Electric car startups often require significant capital investments to build manufacturing facilities, develop new technologies, and compete with established manufacturers. The high costs associated with market entry and the need for a continuous injection of capital can deplete new companies' financial resources.

 

3. Lack of scale and manufacturing capabilities: Scale and manufacturing capabilities are crucial in the automotive industry. Startups typically lack the scale and infrastructure to compete effectively with established automakers. The ability to produce vehicles on a large scale and efficiently manage the manufacturing process is essential for cost competitiveness and profitability.

 

4. Lack of differentiation: Many electric car startups struggle to differentiate themselves in the market. They may lack unique selling features or technological advancements that distinguish them from their competitors. This lack of differentiation makes it difficult for new companies to attract customers and gain a competitive advantage.

 

5. Intense competition: Established players like Tesla dominate the electric vehicle market. Players such as China's BYD are also beginning to gain a solid brand reputation and have a track record of success. Intense competition from these established players makes it difficult for newcomers to gain market share and compete effectively.

 

6. Market uncertainties: The electric vehicle market is subject to uncertainties, including changes in government policies, regulations, and consumer preferences. The recent slowdown in electric vehicle sales growth in some countries has increased market uncertainties. These uncertainties can make investors and consumers more cautious, affecting the survival prospects of startups.

 

Traditional companies, such as Ford, GM, and Stellantis, have the advantage of long manufacturing experience but are technological followers in this market sector. New players continue to emerge despite the difficulties, this is as expected as the certainty that not all will survive when the market consolidates. An example was Apple's recent announcement of abandoning its electric car initiative.

Finally, the recent slowdown in electric vehicle sales growth in many countries has also contributed to investor doubts. Uncertain market conditions and the possibility of declining demand for electric vehicles may make investors more cautious about investing in new entrants.

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[1]Do you think Tesla is in trouble? Feel even more sorry for those who aspire to compete.

MARCH: A BULLISH MONTH FOR OIL

 El Taladro Azul  Published  originally in Spanish in  LA GRAN ALDEA

M. Juan Szabo and Luis A. Pacheco 

The discipline of OPEC+ with its production cuts, the macroeconomic outlook, and the turn of events in Russia's war confrontations with Ukraine and between Israel and the terrorist groups that surround them at the behest of Iran. These events have generated a bullish current in the oil market. Neither these elements that strongly influence the oil market, nor the smaller ones, show evidence of change in the short term, which suggests that there is a high probability that oil prices will continue to rise.

·      OPEC+, either due to political will or due to the inability of some of its members, shows no inclination to change its policy of cuts, which has been extended throughout the second quarter.

·      Global inflation seems to begin reacting positively to the monetary policies of central banks, which has made it possible to stabilize interest rates and even begin to project eventual reductions. Consequently, the world's major economies, with some notable exceptions, appear to have taken a different path to recession.

·      The confrontation between Russia and Ukraine has expanded. Ukraine has caused significant damage to Russian refineries and energy infrastructure, as well as its naval fleet in Crimea. This is having a material effect on the distribution of petroleum products in the Russian domestic and export markets, already affected by incremental US sanctions. Russia, for its part, has intensified bombing and advances into Ukrainian territory. Meanwhile, support from the West for Ukraine is weakening, which calls into question its defense capacity in the medium term.

·      In the Middle East, not even the approval by the UN Security Council of a ceasefire in Gaza and a call for the release of Israeli hostages, with the US abstaining, managed to slow down the Israeli offensive. This, in turn, encouraged Yemen's Houthis to step up their attacks, including on US warships, creating increased demand for fuel and delays in supply chains. Despite the political differences between the US and Israel, probably due to the electoral context in North America, President Biden approved the sending of military equipment to Israel. This is vital for the country's defense and the execution of its plans against Hamas.

·      Even using a moderate annual increase of 1.3 MMBPD for global demand, our incremental supply projection would not close the gap between demand and supply, which provides strong support to the oil market during the coming months.

 

In a week shortened by the celebration of Easter Week (on Friday the markets remained closed), the oil market assimilated the increase in inventories of crude oil and products in the US, published by the EIA. The oil market continued its advance, with a gain of more than 1.5% for the week and almost 6% for the month.

In sum, at the market close on Thursday, March 28, the Brent and WTI crude markers were trading at $87/bbl and $83.17/bbl, respectively. Strong fundamentals, supported by rising geopolitical uncertainty, have combined to maintain the bullish mood in the oil market.

 

In other news.

·      Libya unexpectedly suspended the person in charge of that African country's oil management. Oil Minister Mohamed Oun was suspended pending a government investigation into alleged violations, including “circumventing the law and wasting public money.” Within hours, a replacement was named from the board of directors of the state-run National Oil Corp., which has frequently been at odds with the minister. Oun has denied any wrongdoing and said the investigation should be accelerated.

·      Iran agreed to a five-year extension of a natural gas supply agreement with Iraq. Through this agreement, Iraq will receive up to 1.7 MMMcfd (billions of cubic feet per day), a gas necessary for electricity generation in the summer months of greatest demand.

·      The oil production of the Mexican state company, Pemex, reached its lowest monthly level in 45 years, and far from the objectives established by President López Obrador at the beginning of his mandate. The latest available figures are from February, showing an average of 1.55 MMbpd.

·      The blockade of the port of Baltimore, USA, resulting from the collapse of the Francis Scott Key Bridge due to the impact of a container ship, will have serious economic consequences. The transportation of coal, automobiles and in general, the relocation of the ship traffic that is handled in one of the largest ports on the east coast of the United States will be affected.

·       Ithaca Energy (LSE: ITH), the company behind the controversial Cambo and Rosebank oilfields in the North Sea, is considering a deal with Italian giant, ENI , that would see the oil giant take almost 40% of the total of the British company. Ithaca would manage ENI's UK operations, making it the second-largest single operator in the UK. The deal would allow Ithaca to take control of ENI assets that generate between 40,000 and 45,000 barrels of oil per day. The companies have one month to decide to proceed with the operation.

VENEZUELA

Free Elections?

The Venezuelan political situation continues to deteriorate. María Corina Machado and Corina Yoris, the opposition standard-bearers, denounced the maneuvers of the National Electoral Council (CNE) to hinder the registration of candidates, alleging that: “it eliminated any possibility of free elections.” The CNE's action seems to have occurred because the choice of Corina Yoris as an alternate candidate caught the regime off base and made it react in an evidently illegal manner.

The regime's tactic of sowing rumors to demoralize and divide, forcing the opposition down the path of abstention, does not seem to have worked for now. Late on March 25, before the deadline to register candidates expired, the governor of Zulia, Manuel Rosales, registered with the UNT party card. This registration, not entirely unexpected, has generated all kinds of rumors around Rosales' role in the upcoming elections, until now, an enigma.

MCM keeps the regime out of position with what the press has dubbed “strategic ambiguity”, in other words, maintaining a firm but enigmatic course; directionally defined by “until the end” and “we will not deviate from the electoral path” and keep all options open until the last moment.

The Western world reacted vehemently to the regime's evidently undemocratic actions. Even the ideologically related governments, Lula (Brazil) and Petro (Colombia), as well as the leftist Pepe Mujica (Uruguay), called the measures undemocratic and inconvenient, to which Jorge Rodríguez responded in his characteristic style of insulting rather than arguing: “Put your opinions where they fit.”

Just days before the expiration of OFAC License 44 (April 18), and despite the Biden administration's announcements that non-compliance with the Barbados Agreement would be responded to with sanctions, the Wall Street Journal , citing sources from the North American government, reported that the White House is unlikely to reinstate sanctions on Venezuela's oil sector in April.

This confusing behavior of the White House is due, according to the WSJ, to the administration's concern that the reinstatement of sanctions on Venezuela's oil sector could raise gasoline prices in its domestic market: an argument without any basis in fact. In addition, it is said that the extinction of the licenses would contribute to the increase in the migration of Venezuelans to the United States, in the midst of the current border crisis, something difficult to verify.

The WSJ report further indicated that US officials are also concerned that oil sanctions on Venezuela could create an opportunity for Chinese investment to fill the void in Venezuela's energy sector. The truth is that extending licenses is not a sufficient condition for the recovery of an oil industry that is inserted in a collapsed state.

It is rumored that a new version of General License 44 could establish one scheme for US investments and another for European ones. In any case, the specter of uncertainty about License 44 is already having an effect. It is reported that India has decided to suspend purchases of Venezuelan crude oil until the situation is clarified.

There are well-founded rumors of conversations with Petrobras and other Brazilian groups to assign them important oil activities in transactions largely motivated by debt repayment and political reasons: the Jv PetroSanFelix and PetroCedeño, both with blocks in the Orinoco Belt, are mentioned as possible areas of interest.

Hydrocarbon Sector

The electricity supply situation has become a central problem, not only because of the hardship it causes to the population and the losses it generates in industry and commerce, but also because of the effects it causes on oil activity. This week, the most affected was exports, as the loading capacity of the Jose terminal in the east of the country was reduced.

Production activity also did not escape the vicissitudes of the electrical system, although the effect was not material. This last week, crude oil production averaged 765 MBPD, distributed throughout the national geography, as follows:

•          West                            148 (Chevron 5 8)

•          East                             147

•          Faja del Orinoco          470 (Chevron 85)

•          TOTAL                          765 (Chevron 143)

Chevron's production increased by approximately one thousand barrels per day due to the completion of the first new well drilled at PetroIndependencia.

Refining began to recover basic processes in Paraguaná. Processing at the country level averaged 166 MBPD, but with low yields in gasoline production. The potential help expected from the production of MTBE in the east has not yet materialized, since the plant has had operating problems and a lack of raw materials.

The greatest uncertainty arises with crude oil export volumes. We had mentioned that the month was shaping up to export about 640 MBPD. However, electrical and logistical limitations in loading tankers appear to have reduced this objective significantly.

Just a few days before the end of the month, we find a concentration of tankers anchored around the Jose terminal, waiting for their cargo and paying for the delay (" demurrage "), while the export confirmed that it does not reach 500 MBPD. Even with optimal operation during the last days of the month, exports will decrease compared to recent months.

Much of Chevron's exports of around 160 MBPD are being resold to other Gulf Coast refiners, such as Valero PBF and Phillips 66.