Independent producers emerge in Latin America, IHS Forum told

Latin American independent producers are following strategies similar to their US counterparts as they try to penetrate previously closed exploration and production arenas, two company executives said during the 2012 IHS Forum in Washington, DC.

They’re identifying niches where they can work more efficiently than multinationals or state oil companies and playing to their strengths, the executives explained during a Nov. 13 session at IHS Herold’s 21st Annual Pacesetters Energy Conference, which was part of the 2-day forum.

Renato T. Bertani, chief executive of Barra Energia in Rio de Janeiro, said the Brazilian company positioned itself as a midsized independent able to go beyond near-shore acreage where smaller producers are confined toward larger deepwater operations. “Honesty and transparency are essential,” he said. “So is capital discipline.”

Meanwhile, Andrew P. Kitts, chief executive of Petro Caribbean Resources Ltd., a privately held company based in Bogota, said, “We specifically focus on smaller plays the larger boys aren’t interested in. Our intention is to be a lean, motivated company that’s best in class.”

Independents are able to do this as former national oil companies become more commercial as they become partially publicly traded. Ecopetrol SA in Bogota has transformed itself from Colombia’s national oil company to one that is 85% held by investors, according to Juan Carlos Mesa, the company’s mergers and acquisitions director.

In the top 15

Its strategy of expanding upstream, revamping downstream, and partly rationalizing its midstream has made it one of the world’s 15 biggest oil companies with a goal of producing 1.3 million b/d safely with environmental responsibility and good labor relations by 2020, he said.

“The main challenge will be to develop more unconventional resources,” Mesa continued. “They will need to be part of our production by then. We’re in a good position. As a private company, we hear what investors want. As a public company, we can talk to the government directly.”

Bertani said Brazil hasn’t had an offshore licensing round for years and investors could start moving their money to other countries. The federal government is committed to passing a royalty sharing law by yearend, but its proposal has already drawn protests from Brazil’s two biggest producing states. “I hope there’s a bid round in May 2013, but in the meantime we’re consolidating the assets we have,” the Barra executive said.

Petro Caribbean also plans to consolidate and keep growing gradually, Kitts said. It also is working hard to reach agreements with indigenous communities through a consortium it formed and operates in the Putamayo Basin as 10% owner, with Optima Oil, which holds a 70% stake, and Range Resources Ltd., which has 20%.

“While we weren’t looking for elephants, there are some large resource deposits there that would make our investors happy,” Kitts said. “Our expertise is onshore. That’s where we plan to stay.”

Contact Nick Snow at [email protected].