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Bolivia and US agree to improve bilateral tiesBolivian President Evo Morales has called for a complete overhaul of his country’s strained ties with the US. He urged “mutual respect” between the two nations, saying Washington should not interfere in Bolivia’s affairs. Venezuelan Bonds Sink to Six-Week Low as Chavez Takeovers Fuel `Distrust'Venezuela’s benchmark bonds fell to a six-week low after President Hugo Chavez announced the government will take over the hot-briquetted iron industry and other metal companies.Chavez Takes Control of Venezuela's Hot-Briquetted Iron, Steel IndustriesVenezuelan President Hugo Chavez announced the government will take over the hot-briquetted iron industry and other metal companies, increasing its control over the nation’s mineral-wealth industries.Venezuelan Oil Keeps Attracting Bidders in Bets That Chavez Isn't ForeverChevron Corp. and Total SA are pursuing new Venezuelan oil projects after President Hugo Chavez tore up past agreements, seized assets of contractors and expelled producers that wouldn’t accept new terms.
Cash short Venezuela negotiating loans from BrazilVenezuelan President Hugo Chavez, whose administration is facing cash shortages as oil revenues plunge, is negotiating loans from Brazil’s development bank to fund infrastructure projects, revealed the Brazilian newspaper Folha de Sao Paulo.
Brazilian Stocks Gain on Signs of Rising Demand, Commodities; Bolsa Rises Brazil’sBovespa index climbed, capping a weekly advance, on speculation domestic demand is recovering and as investors bought commodities to hedge against a weakening dollar.Brazil's Vale Lowers This Year's Planned Investments to $9 Billion From $14 Billion Cia. Vale do Rio Doce, the world’s biggest iron-ore producer, said falling costs and a stronger dollar allowed it to cut 2009 planned capital spending by 37 percent.Mexican Billionaire Salinas May Enter California to Boost Hispanic BankingBanco Azteca, controlled by Mexican billionaire Ricardo Salinas, says the financial crisis offers the bank a chance to enter the U.S. market and lure Hispanic customers.Pemex Is `Too Optimistic' About Chicontepec Development, Board Member SaysPetroleos Mexicanos, the state-owned oil company, should reconsider its $11.1 billion plan for the Chicontepec field because lower oil prices make the investment less attractive, said newly appointed board member Fluvio Ruiz.
Petroleos Mexicanos (PEMEX), Mexico's state oil conglomerate said on Friday, crude oil output fell 9.2% in January. Cantarell, one of Pemex's largest oil fields and the third largest in the world, saw output plunge at its fastest rate in over 14 years. Pemex says the field is currently producing around 772,000 barrels a day, down a whopping 38% from a year earlier.
Pemex's overall production fell to 2.885 million barrels a day, down from 2.957 million barrels a year earlier. “If the question is, what is Pemex going to do in the short-term to prevent the falling production?” George Baker, a Houston-based energy consultant who publishes the newsletter Mexico Energy Intelligence, said in an interview. “I’m afraid the answer is nothing.” On a positive note, Pemex's natural-gas output rose 8.5% to 7.091 billion cubit feet in January. Too bad natural-gas fell below $4 per million British thermal units for the first time in more than six years (see this Bloomberg article for more)All in all, Pemex and more importantly the country of Mexico need to re-align their economy away from the oil sector. This has proven rather difficult in the past, as it has as well in other Latin American country's which rely too heavily on a particular basket of commodity exports.The current global recession is once again evidence of how dangerous a commodity focused growth strategy in reality is. For Mexico, the situation is even more dire. Crude oil and natural gas, as you can see below (and have probably heard) are not selling for what they used to. Close proximity to the US, heavy reliance on money from relatives working in the US, a declining oil industry and the general erosion of their competitive edge in manufactured goods because of the rise of Asia put Mexico in a particularly difficult situation. I in no way consider myself a expert on Mexico. As a matter a fact, I have purposely left Mexico out of much of my academic writing due to the unique Macro-Economic conditions facing the country. Check out this site for a great read on Mexico (http://mexfiles.net/).
China's Sinopec Group has become the first Chinese oil company to venture into Mexico's energy industry. Sinopec is competing for two large drilling contracts in Mexico's Chicontepec oil basin according to Compranet, the procurement website of the Mexican Government.According to this article from the Dow Jones Newswires you can access via Rigzone, "Even if Sinopec loses the upcoming tenders, the Chinese heavyweight appears to be taking a long-term approach in Mexico. Next week, Sinopec executives will give a presentation to state-run Petróleos Mexicanos on the company's land and offshore drilling equipment, said an industry executive familiar with the meeting."
Sinopec has already expanded into markets in Africa, South America and Russia in order to ensure Chinese refining capacity and oil supplies. If Sinopec wins the bidding process this will be China's first major energy investments in Central America.Officially Petroleos Mexicanos (PEMEX), the state oil company of Mexico maintains a monopoly on oil sales, thus Sinopec can only be hired as a service contractor. This means, Sinopec must see winning these bids as a sound investment. PEMEX will in effect be paying the winner cash to develop and drill for oil on behalf of PEMEX. Recent reforms in the oil industry entitle PEMEX to offer incentives to contractors who finish their work ahead of schedule. All in all, Sinopec is hoping to generate a nice chunk of cash from pursuing this deal. It also doesn't hurt Sinopec's image if it can win the bidding at a fair market price for a assets that both Schlumberger and Halliburton would like to get their hands on.
