Archive for the ‘energy’ Category

Last-minute shopping: The Moral Case for Fossil Fuels

Wednesday, December 24th, 2014

It’s Christmas eve, you hate, hate, going to the mall, and you have readers on your list who don’t like fiction. I strongly recommend you buy them The Moral Case for Fossil Fuels on Kindle edition, which they can also read on line and in their tablets and cell phone apps.

Epstein created the Center for Industrial Progress (emphasis added),

Center for Industrial Progress (CIP) is a for-profit think-tank seeking to bring about a new industrial revolution. We believe that human beings have the untapped potential to radically improve our lives by using technology to improve the planet across a multitude of industries: mining, manufacturing, agriculture, chemistry, and energy. Every individual has the potential for a longer, happier, healthier, safer, more comfortable, more meaningful, more opportunity-filled life.

The keys to a new industrial revolution are a new industrial philosophy, a new industrial policy, and a new approach to communication.

The emphasis on using technology for an anti-pollution but pro-development approach to improve our lives is key to The Moral Case for Fossil Fuels.

Read my review at Da Tech Guy Blog.

Mexico: PRD lobbying Washington

Friday, May 30th, 2014

Well, isn’t this precious?

Mexican Leftists Warn Investors About Energy Sector
Delegation in Washington Says Energy Reform Isn’t Complete

Leaders of Mexico’s main leftist party trekked to Washington this week with a warning for U.S. power brokers—investors could lose their shirts if they put their money in the country’s energy industry.

Jesus Zambrano, leader of the Party of the Democratic Revolution, or PRD, the main party of Mexico’s splintered left, and other leftist politicians are in the middle of an unprecedented pilgrimage to Washington. They are meeting with U.S. officials, legislators and businessman to explain that a referendum being pushed by the PRD could undo a historic constitutional change passed late last year that opens the country’s oil and gas industries to private companies and foreign investors for the first time in 75 years.

Their message: Mexico’s energy reform is not a done deal. Until the fine print is dry, the country’s oil and gas fields are no place to bet a bundle.

Zambrano, a former communist guerrilla who has referred to D.C. as an enemy, didn’t get the turnout he expected last year when protesting the energy reforms.

Since it’s unlikely that the PRD would gather at least 1.6 million signatures, and get the Mexican Supreme Court to approve a referendum, they tried the next best thing: a junket to Washington, D.C.

BREAKING NEWS Ecuador: Chevron wins

Tuesday, March 4th, 2014

WSJ: Judge: $9.5B Environmental Judgment Against Chevron ‘Obtained by Corrupt Means’

A federal judge ruled in favor of Chevron Corp. on Tuesday in a civil racketeering case, saying a record $9.5 billion environmental judgment in Ecuador against the oil giant was “obtained by corrupt means.”

U.S. District Judge Lewis Kaplan found that New York lawyer Steven Donziger and his litigation team engaged in coercion, bribery, money laundering and other criminal conduct in pursuit of the 2011 verdict.

Bloomberg: Chevron Wins U.S. Ruling Calling Ecuador Judgment Fraud

“It is distressing that the course of justice was perverted,” Kaplan wrote in a nearly 500-page ruling that followed a trial last year.

Will Legendary Law Firm Patton Boggs Be Swallowed or Evaporate? and How the Chevron Case Helped Wreck a Big Law Merger

Last month Locke Lord managing partner Jerry Clements told The Am Law Daily that the potential liabilities and “reputational aspects” of the Chevron matter were a key part of her firm’s due diligence efforts in evaluating a merger with Patton Boggs.

At Chevron’s blog: What You Won’t Learn on Ecuador’s Toxic Tour

Mexico: No more Pact

Saturday, November 30th, 2013

The leftist Partido de la Revolución Democrática (Party of the Democratic Revolution, or PRD) has pulled out of the Pact for Mexico, creating an acute crisis (link in Spanish), according to Mexican daily El País.

But how much of a crisis is it?

The Pact for Mexico, created in 2012 by then-new president Enrique Peña Nieto’s Partido Revolucionario Institucional (PRI), the PRD, and the Partido Acción Nacional (National Action Party, or PAN) ended 15 years of gridlock in the fractious congress,

allowing Mr. Peña’s administration to secure passage of wide-ranging bills on telecommunications, tax increases and education.

Congress is taking up the issue next week. But lawmakers from the PAN and the ruling Institutional Revolutionary Party, or PRI, are expected to rewrite the president’s bill to give private oil companies a bigger role in the state energy sector, including contracts that allow them to share oil production. The president’s August initiative called only for sharing the profits from the oil, but not the oil itself.

“If they insist on an energy reform that privatizes Mexico’s oil income, the government is going to generate a situation of enormous social and political instability,” said PRD president Jesús Zambrano in an interview. “We’ll have a very hot Christmas, we’ll launch protests on all fronts.”

Together, the PAN and PRI have the two-thirds majority in Congress required to pass the proposed constitutional changes for the energy overhaul. And the president has already passed most of his major initiatives under the pact.

Mr. Peña Nieto regretted the PRD’s decision to leave the Pact for Mexico, but vowed to press on with reforms.

From the PRI’s point of view,

The ruling Institutional Revolutionary Party, or PRI, is hoping its energy reform will spur faster economic growth, and the departure of the Party of the Democratic Revolution (PRD) from the accord is likely to push the debate closer to a more business-friendly proposal backed by the center-right.

The Senate is expected to vote on the political overhaul as early as Tuesday, with a vote on the energy bill soon to follow.

Mexico: The failed auction, the oil reform, and US shale

Tuesday, August 20th, 2013

Last week the WSJ wrote about Mexico’s Petro Flop
A failed auction shows the need to reform the Pemex monopoly.

What if you held an auction and there were no bidders for half of the assets? That’s what happened to Mexico’s state-owned oil monopoly—Pemex—last week when it opened the bidding for production at six exploration sites in the Chicontepec basin.

This is bad news for Mexico’s oil and gas industry, which suffers from declining production. Pemex crude output in 2012 was 2.5 million barrels a day, down from three million in 2007 and 3.4 million in 2003. Mexico needs private investors with the incentive to get oil out of the ground. President Enrique Peña Nieto couldn’t have asked for a better demonstration of the need for Pemex reform.

Pemex may think it scored big in the three blocks that were sold. The long-time monopoly was offering to pay “all the costs of production in the first ten years plus a fee-per-barrel to the [winning bidders], providing oil is produced in sufficient quantities to cover those costs,” according to Houston-based oil analyst George Baker. Pemex was ready to pay bidders $6-$7 per barrel. But the winning bids ranged from one cent to 98 cents a barrel, making Pemex officials look like geniuses—but only at first glance.

What if the companies bid so low because they aim to make their money by what they charge the Mexican monopoly for supplies, service and technology? In that case their profit depends only on producing enough oil to meet the costs as required by Pemex in the contract. They won’t focus on producing more because they will be paid very little for the effort. As Mr. Baker wrote in the Mexico Energy Intelligence newsletter, “There is little incentive for the contractor to increase production beyond the level at which profit margins are met through intra-firm commerce.”

Which is hardly surprising, considering that the PRI, which is now back in power, had been telling the Mexican people that oil is their birthright; now the Mexican Leftist Party Urges Energy Referendum
Move Likely Will Add Uncertainty to President’s Proposal to Let Private Firms Participate

The proposal by the Party of the Democratic Revolution, or PRD, comes as a reaction to an energy overhaul presented last week by Mr. Peña Nieto that seeks to increase private sector involvement in the state-run oil sector. Mr. Peña Nieto seeks to let private firms participate in the oil and gas sectors by sharing the risk and profit from exploration and production.

“The government’s initiative is a privatization, no doubt about it,” said Cuauhtémoc Cárdenas, the founder of the PRD and son of former President Lázaro Cárdenas, who nationalized the oil industry in 1938 by expropriating the private oil firms. Mr. Cárdenas said the government’s proposal opens the door to the selling of state-oil firm Petróleos Mexicanos, or Pemex.

Chances of Mr. Peña Nieto’s bill seem good in Congress. It is expected to have the support of the ruling Institutional Revolutionary Party, or PRI, and the right-wing National Action Party, or PAN, which between them can muster the two-thirds majority in both houses to change the Constitution. But the PRD, along with nationalist leader and former presidential candidate Andrés Manuel López Obrador, hope to stop the changes by mobilizing the Mexican people.

The leftist opposition seems to have most Mexicans on its side. In a survey published in July by the lower house, 54% of Mexicans disagreed with the idea of opening the state-oil monopoly to private investment. Other surveys show even bigger numbers against the overhaul.

In all, while Peña Nieto has certainly worked on getting his party’s support, reform in Mexico, from the foreign investor’s point of view, remains a roll of the dice.

Pemex still needs revenues, though, so now Mexico’s Pemex Looks to Tap U.S. Shale
Rookie CEO Lozoya Seeks to Reverse Production Slump at State-Run Firm

Petroleos Mexicanos, Mexico’s state oil monopoly, will set up a new company to explore and produce shale gas and deep-water oil in the U.S. as part of an ambitious plan by its rookie CEO to turn around years of falling production.

The proposal, outlined by Chief Executive Emilio Lozoya in an interview, would push Pemex into complicated drilling techniques where it has no experience. It is a bold move abroad for the inward-looking company, which is the world’s fifth-largest crude producer but has never faced competition nor ventured far beyond its borders.

They’ll need a foreign partner,

especially in deep-water exploration and production where Pemex has no experience,

the CEO has no oil industry experience, and their unions are famous for featherbedding.

Any takers?

Mexico: Will the proposed energy reform be enough?

Wednesday, August 14th, 2013

Mexico’s oil monopoly has been in place for nearly eight decades. With the proposed reform, will it be enough?

The WSJ is optimistic:
Mexico’s Energy Breakthrough
The country bids adios to 75 years of oil nationalism.
, even when

Mr. Peña Nieto’s proposal doesn’t go as far as it might to solve Mexico’s oil woes, and it certainly doesn’t privatize Pemex. It doesn’t even give investors ownership of a drop of Mexican oil.

Instead, the bill allows foreign and domestic investors to become partners with Pemex in exploration and production. Those partners would take their profits not in oil but in the cash equivalent of what they pump. Whether that’s enough of an incentive to entice a Chevron or a Shell will then depend on secondary legislation, particularly on contract terms and taxes. It would be a shame if Mr. Peña Nieto and his allies in Congress fail to follow through here, but at least their political incentive is to make the reform a success.

Juan Carlos Hidalgo at CATO is not as sanguine: Mexico’s Timid Energy Reform

Peña Nieto’s energy reform contemplates changing three articles of the constitution to allow private companies to pump oil, not through concessions as in most other Latin American countries, but via profit-sharing agreements. That is, the Mexican government will pay private companies for the oil they produce, but the companies won’t have outright ownership of the oil.

Unfortunately, the reform doesn’t contemplate allowing the sale of Pemex shares, as proposed by Mexico’s conservative opposition party PAN. Not allowing the sale of Pemex shares will significantly limit the chances of improvement in corporate governance of that white elephant. As The Economist points out, Pemex is plagued by mismanagement and political meddling. Energy reforms in Brazil in 1997 and Colombia in 2003-2006—which the Mexican government is pointing to as successful examples—involved not only allowing concessions for private companies, but also limited private ownership in Petrobrás and Ecopetrol, respectively. These moves have been credited with improving the corporate governance of these oil companies.

Hidalgo concludes (emphasis added),

Peña Nieto’s efforts to bring more private investment to Mexico’s oil industry should be commended. However, even if his energy reform is approved, Mexico will still have the most tightly state-run energy sector in the Americas (even more than Cuba and Venezuela). That, in itself, should indicate how much room for further reform will be needed.

Additionally, the question remains on whether future Mexican government administrations wouldn’t nationalize whatever the foreign companies have.

Puerto Rico: Wind farm fiasco

Tuesday, July 23rd, 2013

Last week Bill Clinton was in PR saying that PR could lead the entire Caribbean toward a green future.

But not quite yet.

The Santa Isabel wind farm was shut down for a month and a half due to equipment modifications Siemens Energy had to make following malfunctions in the B53 blades at wind farms in Iowa and California. The blades are 170 feet long and weigh 10 tons apiece. 36 out of 44 aerogenerators are now functional.

Pattern Energy, which owns the wind farm, loses $1.5 million each month it can not sell electricity to the local utility, Autoridad de Energía Eléctrica (AEE).

The project has disappointed expectations. In addition to the above equipment problems and monetary loss, it is located in an area that is not windy, and it is serving 10,000 fewer customers than the 63,000 originally projected.

Linked by Dustbury. Thank you!

Mexico develops cheap energy; USA not quite

Thursday, February 14th, 2013

Mexico Moves on Energy in Economic Reset
In Interview, Pemex Chief Says Overhaul to Broadly Cut Costs

For decades, Mexico’s energy policy has largely boiled down to exporting oil for cash to fund state spending. Now the new government is negotiating with rival political parties to curb that practice and instead use state monopoly Petróleos Mexicanos to a different end: cheaper energy, said Pemex CEO Emilio Lozoya.

In an interview with The Wall Street Journal, the 38-year-old chief said the administration of President Enrique Peña Nieto was striving to overhaul tax and energy laws this year that Mr. Lozoya said would result in cheaper energy for consumers and companies that could drive a more competitive economy.

There’s also shale, too:

Mexico may hold the world’s fourth-biggest reserves of shale gas, according to the U.S. government. But Pemex has drilled only a few wells and not produced any gas. “Mexico ought to be producing more of its own gas, and eventually exporting it,” Mr. Lozoya, a lawyer and economist who got his master’s degree in public policy at Harvard said. “Clearly the geology that you have in some parts of the U.S. extends into Mexican territory. So it’s a matter of just investing and getting it done.”

Here in the USA, the government is holding up the Keystone pipeline, bans itself from off-shore drilling, and Obama pours money on “green” failures like Solyndra and other duds. Case in point:

President Barack Obama used his fifth State of the Union address to extol the virtue and job-creating power of federal investment in solar, wind and advanced battery development. Maybe he should have consulted his Department of Energy first.

In a scathing report issued Wednesday, the department’s Office of Inspector General said LG Chem Michigan Inc. misused most of $150 million in federal grants to build its battery cell manufacturing plant in Holland. The company used taxpayer dollars to pay employees to volunteer at local nonprofits, play games and watch movies.

Obama does not see how high-technology, industrialized economies run, grow, and thrive on cheap energy.

But hey, we’re talking about someone who said in the SOTU

“As long as countries like China keep going all in on clean energy, so must we.”

As IBD points out (h/t Instapundit)

All in? Sixteen of the world’s top 20 most polluted cities are in China. The New York Times reported just a couple weeks ago that Beijing’s air quality ranked a “crazy bad” 755 on a scale of 0 to 500.
The country has been building a new coal plant almost every week and plans 363 more, and China now emits almost twice as much CO2 as the U.S.

Mexico has a long way to go to a de-nationalization of the oil industry sector, which would solve many of its problems. The US, however, is set on taking the wrong path.

The Carnival of Latin America and the Caribbean

Monday, October 15th, 2012

Argentine Death Spiral Watch

Argentine leader defies her critics

Cristina Fernandez ruffling feathers with the Falklands to mask domestic failings
Several British newspapers have turned their eyes on Argentina arguing that the challenging situation faced by President Cristina Fernandez both domestically and internationally is making her increasingly take advantage of the Falkland Islands dispute as a smokescreen to mask domestic failings.

Ghana court refuses to free Argentine warship Libertad
A Ghanaian court has refused to free an Argentine warship seized in a debt dispute involving the South American nation’s creditors.
At The Economist, Argentina’s debt default
Caught napping
Hold-out creditors seize an Argentine ship in Ghana
. WSJ: Chasing Deadbeat Argentina
A U.S. investor tries to get its money back from Buenos Aires.

Barbosa made first black head of Brazil’s Supreme Court

Massive Corruption Scandal Is Victory for Brazilian Courts, via Instapundit.

Brazilian politics
Local action
Voters ignore the Workers’ Party’s troubles

Shots fired as police swoop 10 minutes before 100 followers of Brazilian doomsday cult were due to commit mass suicide over end of the world
Authorities believed the group were preparing to drink soup laced with poison
They had barricaded themselves inside house after leader convinced them apocalypse would happen at 8pm yesterday
Luis Pereira dos Santos held as ‘toxic’ fruit tub is found… he claimed angel told him when the world would end
Police removed 19 children after ‘credible’ information about suicide pact
(h/t GoV)

Is Cayman committing economic suicide? (H/T Instapundit)

Entrepreneurs in Latin America
The lure of Chilecon Valley
As America shuts out immigrant entrepreneurs, Chile welcomes them

Colombia’s Military to Play Crucial Role in Peace Talks

Cuba Almost Became a Nuclear Power in 1962
The scariest moment in history was even scarier than we thought.

Three Elections, One Country

Dominicans march against proposed tax hikes

High Court Rejects Chevron Challenge in Ecuador Case

Which Biofuels Hold the Most Promise for the Future – Interview with Jim Lane, along with US Imports from Venezuela of Crude Oil and Petroleum Products, from K.

Gini back in the bottle
An unequal continent is becoming less so

Nicaraguan businessman sentenced to 30 years on drug charges

Message for US Citizens – US Ambassador to hold Town Hall in Panama City

Journalist working for human rights commission in Peru is threatened and extorted

Puerto Rico drops plan to build natural gas pipeline that was opposed by many islanders

Jack Warner bans Trinidad and Tobago murder figures
Police in Trinidad and Tobago have been ordered to stop releasing murder statistics.

Hugo Chávez accused of spying on rival in runup to presidential election

Impacts of the Venezuelan Crude Oil Production Loss

Venezuela’s presidential election
Stuck with him
After a surprisingly comfortable re-election, Hugo Chávez will have to surmount a shaky economy and the risk his cancer will return

Venezuela’s Chavez hails ‘perfect’ democracy, mocks tyrant image
* Socialist leader re-elected with 55 pct of vote
* Opposition’s Henrique Capriles contemplates future
* Bonds fall on investor gloom at Chavez victory

Venezuela’s Farce Election

Chavez’s Win Proves ‘Elected Autocrat’ Isn’t an Oxymoron

El club de admiradores de Chávez
Las elecciones en Venezuela tendrán repercusiones en toda América Latina y aun más allá

Chávez Taps His Possible Successor

The Devil, The Future, The Past and The Present

Otto Reich: What Happened in Venezuela?

NORIEGA: Chavez victory may be short-lived
Democratic base motivated against ailing dictator

Jaime Bayly’s take (in Spanish),

The week’s posts and podcast,
Sin Zeta*

Venezuela: How Chavez won

Venezuela: Election aftermath

Podcast: Silvio Canto‘s

Meanwhile, over at Gawker…

Friday, August 24th, 2012

… they came up with a worthless report on the “Bain Files”, which Dan Primack had already studied,

Let me save you some time: There is nothing in there that will inform your opinion of Mitt Romney.

How do I know? Because I saw many of the exact same documents months ago, after requesting them from a Bain Capital investor. What I quickly learned was that there was little of interest, except perhaps for private equity geeks who want to know exactly how much Bain paid for a particular company back in 2006. Sure I would have loved the pageviews, but not at the expense of tricking readers into clicking on something of so little value.

Let’s go over what Gawker believes it found:

“Mitt Romney’s $250 million fortune is largely a black hole: Aside from the meager and vague disclosures he has filed under federal and Massachusetts laws, and the two years of partial tax returns (one filed and another provisional) he has released, there is almost no data on precisely what his vast holdings consist of, or what vehicles he has used to escape taxes on his income.”

There actually is plenty of data on Romney’s Bain-related holdings. For example, Bain’s own website lists most of its active private equity portfolio companies. Then there are third-party databases operated by such organizations as Dow Jones, Thomson Reuters and CapitalIQ — each one of which includes searchable lists of past Bain Capital deals (often with detailed financial information). And, finally, Bain isn’t really in the business of doing tiny purchases of unknown family businesses. When it buys something, there is almost always a press release and/or media coverage. Perhaps Gawker hasn’t yet discovered the magic of Lexis-Nexis. Maybe it should sign up for the daily Term Sheet email.

“Today, we are publishing more than 950 pages of internal audits, financial statements, and private investor letters for 21 cryptically named entities in which Romney had invested… Many of them are offshore funds based in the Cayman Islands.”

I get it. “Cayman Islands” is supposed to be code for tax avoidance or shady dealings. But the reality is that most private equity firms form Cayman-domiciled funds to accommodate investors based outside of the United States (particularly when those funds also are making some non-U.S. investments). One private equity fund formation attorney I spoke with says that the Caymans structure usually doesn’t have real tax benefit for the non-U.S. investors, but that they nonetheless feel more comfortable. He added that, for most U.S. private equity executives, the Cayman structure has little to zero impact in terms of personal taxes.

Primack has a lot more on “the Bain Files”, but Roger L. Simon looked at Gawker and the Caiman Islands,
Owner of Liberal Outlet Attacking Romney for “Cayman Islands” Accounts Based in… Cayman Islands.

Say again?

Gawker Media has been going through a big corporate revamp over the past year or so. The ultimate parent company has never been in the U.S.: it used to be Blogwire in Hungary, but now Blogwire Hungary has become a subsidiary of a Cayman Islands entity called Gawker Media Group Inc, which also owns various U.S. operations like Gawker Media LLC, Gawker Entertainment LLC, Gawker Technology LLC, and Gawker Sales LLC.

If the above link doesn’t work, try the cache, via Rusty Weiss, who has more,

Then there’s this little tidbit of information; something regarding obscene profits, untaxed revenue, and side-stepping the IRS…

The Hungarian companies get all of Gawker’s international income, which flows in from 13 different salespeople in ten different countries and which, since it’s international income flowing to a Hungarian company owned by a Cayman Islands parent, is basically pure profit which never comes close to being taxed in the U.S. The result is a company where 130 U.S. employees eat up the lion’s share of the U.S. revenues, resulting in little if any taxable income, while the international income, the franchise value of the brands, and the value of the technology all stays permanently overseas, untouched by the IRS.

As Rusty says, “This is weapons-grade hypocrisy…” but what else can you expect?

Mitt Romney: What I Learned at Bain Capital
My business experience taught me how to help companies grow—and what to do when trouble arises. When you see a problem, run toward it before the problem gets worse

Paul Ryan was on Kudlow

President Obama turned down a chance to have Timothy Cardinal Dolan deliver a prayer at the Democratic National Convention after Dolan told Democrats he would be “grateful” to deliver a blessing in Charlotte.

Barack Obama asks eurozone to keep Greece in until after election day
US officials are worried that if Greece exits the eurozone, it will damage President’s election hopes

Obama doesn’t know his Navy from his Army or Marinesthe Daily Mail shows that Biden ‘s “gaffes” aren’t the only ones.

The Dems may try to run their convention agenda on Todd Aiken,

an issue that registers at less than 1 percent in Gallup’s poll asking about voters’ most important issues

while Anderson Cooper obliterates DNC Chair over her lies about Romney’s stance on abortion. The Right Scoop has the video. And, Oops — Looks Like That Pro-Obama Joe Soptic Ad Backfired.

Romney, however, is running on the economy, and is committed to making America energy independent by 2020. You can read his white paper below the fold,