Institute of the Americas XXVIII La Jolla Energy Conference – Institutions, Resources, Sustainability


In the world of instant communications, in locus conferences tend toward the arcane and sometimes even extinction. Still in the high tech world, the La Jolla Conference stands out for its relevance, durability and because it successfully attracts decision makers, equity fund executives, energy company honchos and institutions with deep knowledge and very significant investments in Latin America’s energy sector. Face to face interaction and debate uniquely allow the validation of perceptions and interpretations on a level that cannot be matched by web and other virtual contact. The now three day event includes a start off with team building hikes at Torrey Pines, kayaking at La Jolla Cove and ends with beers and competitive corn hole matches, where multinationals may wish to throttle consultants, academics and journalists.

I have attended the conference for over 10 years and the most remarkable shift, in my opinion, is the recognition by the majors such as BP, Shell, and state run oil companies that the days of the fossil fuel based economy are indeed limited. Different from the fears of “peak oil” the 70’s and 80’s, the awareness today is that climate change is indeed real and impacted by oil and gas production and use. The general outlook is that there is enough oil and gas in the ground for the next 20 to 30 years with the likelihood of finding more and processing previously non-viable fields. However, the limitation that exists relates to Co2 and climate change. This, in turn, demands the development of alternative and sustainable energy sources. The 16-year-old Swedish climate blogger Greta Thunberg was held up as example of the future energy conscious consumer. If she is truly representative of her generation, the world will use much less non-renewable energy.

Absolutely aware of this shift, Jeremy Martin, the able VP of Energy and Sustainability at the Institute, is forging new alliances in Spain and Europe with companies, funds and institutions vested in Latin American. Jeremy’s program will join the Madrid Initiative building toward a future where the energy industry transitions to clean with limited climate impact by minimizing and mitigating Co2 emissions. It will theoretically avoid “green washing” and promote sustainable growth. The millennial generation does not see the future of energy in oil and the energy companies need to know their customers or fail in the market place. Interestingly, all this is to take place with the blessing of big oil.   Thirty billion dollars have been set aside by majors like Shell, Chevron and 30 other companies to stoke this effort.

While including sustainability, the conference also focused on specific countries and in each case the basic questions were the perpetual ones. How can my company enter in or continue given Latin America’s precarious institutions? Where and what are the major obstacles that energy companies face when they mobilize massive financial resources?   Can investors expect transparency, predictability, integrity and honesty in contractual relationships?

The answers varied. Venezuela represents the current worst-case scenario with the unresolved struggle between the Cuban supported and very corrupt Maduro regime and the questionable legitimacy of upstart Juan Guaido. In spite of the break down and conflict in the country, eyes are still on Venezuela’s massive oil reserves. The feeling is that once Maduro departs, there will be a rush of companies to restart the once productive fields and that Venezuela can gradually recover. There are no guarantees but, with its resources, the industry feels confident in its role.

In the case of Brazil speakers wondered if the energy sector might be more stable than the erratic moves of the Bolsonaro government. Brazil seems to be forging ahead with liberalization, privatization and opening of upstream and downstream sectors but at the same time, it was remembered that the new right wing President Bolsonaro, like leftist Dilma Rousseff before him, recently intervened in the market at a critical point to control fuel price in order to meet special interest demands. This move immediately raised doubts about his liberal market commitment.   So the question remains: can Petrobras really sell a 60% stake in its refineries if the government threatens to control pricing? Can new and old companies participate in the development of the massive pre-salt fields without undue government interference? There are rules but can the institutions actually enforce them or will ad hoc political pressures triumph?

Similar doubts exist in Argentina. President Macri’s government is running out of steam and out of time as new presidential elections approach. Former President Christina Fernandez has decided to run for Vice-President with her former chief of staff leading their populist and left leaning ticket. His more pragmatic views pose a serious threat to Macri’s reelection and the continued market driven movement in oil and gas. In the past, the Fernandez with their Peronist supporters expropriated the holdings of the Spanish oil company Repsol. With inflation running above 40% per year, foreign energy investments are often seen as the low hanging fruits for hard currency income. Again institutional stability and opaque rules of the game come into conflict with companies that have resources and investments.

Colombia has also discovered new fossil fuel sources both on shore and off. Moreover, since the peace agreement with the FARC guerrillas, the country has gone through two presidential cycles with a recently elected conservative government led by Ivan Duque. Still, all is not rosy as Colombia struggles between left and right and is currently taking the brunt of the Venezuelan exodus.   Presenters touted Colombia’s relative advantages but onshore the oil fields are small and offshore other sites such as the Guyana may be more attractive with fewer competitive disadvantages.

Mexico under Andres Manuel Lopes Obrador (AMLO) is also a big question mark. While AMLO has to date respected contracts and agreements of the previous administration which made unprecedented moves toward denationalizing Mexico’s energy sector, AMLO philosophically looks back to the past when PEMEX the national oil company provided a major share of the government budget as well as being a useful niche for providing employment, as well as sinecures. Basically, the business sector lacks trust and Mexico’s economy has reverted to a path of slow growth. In spite of AMLO’s nationalism, San Diego’s Sempra continue to expand and promote its billion-dollar investment in Ensenada as an export terminal for U.S. LNG to the growing Asian market.

Aside from institutional analysis for risks and opportunities, panelists noted that resources and new technologies are more readily available now then even in the recent past. Private Equity funds are apparently ready to cut checks in Latin America starting at 500 million dollars for the right projects with the proper guarantees. New technologies such as the use of DNA in tracking oil flows in fracking promise to recover billions in additional resources. The times are exciting even with Latin America’s uneven institutional progress.

Once again congratulations to the Institute of the Americas and Jeremy Martin for bringing experts, funding and opportunities to the lovely and unbeatable La Jolla setting.

Here is the link to the full conference program:


De Volta (Ao Passado)


Faz um pouco mais de uma semana que cheguei do Brasil.  Passei 3 semanas viajando entre São Paulo, Rio de Janeiro, Belo Horizonte e Campinas.  Enfim as cidades do Sudeste do pais e a região, em principio, mais rica.

Quem me lê com certa freqüência, sabe que sou normalmente bem otimista com relação ao Brasil, suas cidades, seu dinamismo e seu potencial.  Entretanto em abril e maio de 2019, a impressão que tive me lembrou exatamente de 1990.  Collor havia assumido a presidência com a promessa de caça aos “marajás” e com um projeto para “consertar” o Brasil de suas deficiências promovendo uma abertura no comercio internacional para melhorar as “carroças” fabricados na época com novos modelos de veículos.  Collor implantou o confisco de marco de 1990 como tentativa fracassada de controlar a inflação e cumprir suas promessas.  Infelizmente, o Brasil continuou com a hiperinflação e o Presidente sofreu “impeachment” por motivos de corrupção.

A grande diferença de hoje é que a inflação ainda está sob controle e há uma consciência, um conhecimento, vontade política e mecanismos disponíveis no Banco Central e no Ministério da Economia que vem evitando um novo ciclo de hiperinflação.

Mas a economia não recupera e hoje existe o perigo de voltar para um crescimento negativo.  A expansão pífia desde o final de 2016 vem apesar da derrocada da Dilma e do final do governo tampão do Temer.

A falta de crescimento vem basicamente da falta de confiança.  Quem investe ou quer investir ou quem produz ou quer produzir está basicamente desconfiado sentindo a falta de previsibilidade.  Há talvez uma certa confiança que a reforma da previdência vai passar.  Mas ninguém sabe o tamanho e o impacto real.  Enquanto isso as outras reformas, por exemplo, das leis trabalhistas, e a simplificação dos impostos não saem do chão ou ficam sem impacto maior.

Embora o Presidente Bolsonaro tem sua legitimidade com seu 58% do votos validos, ele e sua administração vem desperdiçando tempo e recursos.  Medidas inócuas como acabar com o horário de verão passam enquanto as manobras políticas e cortes mal explicados em outras áreas como educação acabam criando problemas e solapando a capacidade administrativa.  É muito curioso observar a briga interna entre os militares e ministros e administradores nomeados.  Pior ainda, parece que o Presidente não tem o gosto e nem a capacidade política para apaziguar os ânimos e fazer progredir um projeto positivo.

Haviam dois super ministros: Paulo Guedes e Sergio Moro.  Moro já perdeu o seu status de “super” e hoje está longe do prestigio que tinha como o “juizão” da Lava-Jato.  Paulo Guedes destaca ainda mas sua atuação acaba sendo prejudicado e limitado pelas atrapalhadas da administração como demonstrou muito bem o caso do aumento dos combustíveis em abril.

Sem coesão e articulação política no Congresso, o Presidente é incapaz de cuidar melhor da imagem do Brasil no exterior.  Assim fica muito difícil o Brasil organizar seus recursos internos e ainda conseguir um fluxo de investimentos estrangeiros que são necessários, ainda mais, num pais que não consegue fazer poupança interna.  Guedes está apostando suas fichas nas economias da reforma mas isso só vira a longo prazo.  Ele também espera arrancar recursos do setor energético através das privatizações e da exploração de óleo e gás.  As duas alternativas podem dar um alento mas a economia do Brasil é e bem complexa não pode depender de um só setor ou produto.  O motor do Brasil é de 8 cilindros mas no passado recente apenas um ou dois pistões estão funcionando.  As tarefas da equipe econômica são complexas e de difícil solução mas o trabalho político é ainda mais importante. Mas no quadro de hoje as divisões e brigas impedem a recuperação normal.  A previsão normal que o pais cresça a 3 % ao ano e na realidade ele mal supera 1%.

Vejo em conversas com empresários e investidores a vontade de progredir.  Com a lentidão interna, muitos estão olhando para o mercado externo mas também pensando na emigração.  E aí reside um grande perigo porque o Brasil perde talento e a situação interna não está favorecendo porque só existe a iminencia de cortes e dificuldades.  Os desafios são imensos e há setores governamentais e empresariais avançando apesar dos pesares.  Veja por exemplo o caso do Ministério de Infra-estrutura que pratica uma boa cooperação entre o privado e o publico.  Entretanto, é pouco.

Atualmente, a economia mundial avança com muitas oportunidades nos EUA, na Europa e ate na Ásia.  Algumas empresas como a Gerdau, a WEG, Klabin e outras avançam mas no geral os empresarios estão confiança e animo apesar do reconhecimento do caminho.

Minha expectativa é que empresas com nichos e com quadros pensantes vão sobreviver e progredir no mercado interno e externo.  O progresso seria maior se houvesse maior confiança no esquema político.  Paciência!  Vem eleições municipais em 2020 e com a lenta construção institucional e quem sabe o surgimento de novas e mais competentes lideranças políticas desvinculadas dos interesses que travam o desenvolvimento.

Talvez seja mais um sonho de um otimista do que expectativa real.


All Abroad Consulting and Talk 2 Brazil Interview

I recently returned from a three week sojourn to Brazil and while there I was interviewed by Tom Reaoch on his Talk2Brazil Program.

Here is the link:

The interview is in English and last about 25 minutes.

Also below is the introduction from the Talk2Brazil site:

Steve Scheibe, Brazil Expert, President at All Abroad Consulting.

 Steve Scheibe, President at All Abroad Consulting

All Abroad, based in Southern California, specializes in consulting, match-making, export management, sales and follow up for customers in Brazil, Mexico and the United States. Additionally, provides services such as virtual office, customer service, basic research and translations.

Specialties: Assist Brazilian and Mexican companies with export management, distribution and sales and market research. Working with US companies doing set up, sourcing and location analysis in Mexico and Brazil. All Abroad has excellent contacts in the food and beverage, reclaimed wood, furniture, pulp, paper and industrial packaging industries.

All Abroad also provides services to US companies interested in selling to or manufacturing in Brazil and have also expanded activities to include franchising.