 Good afternoon everybody. Welcome here to CSIS. My name is Sarah Ladislaw. I direct the Energy and National Security Program here and we just wanted to welcome all of you for the event this afternoon, Latin American Energy and Oil and Gas Market Overview. We're very pleased to host this session with our Partners in the Americas program which is run by Carl Meacham. So for a little bit of context, we started a series here that is looking at the political and market implications of the energy price downturn. For those of you who are familiar with, at least with the energy program here at CSIS does, is we look around the world at sort of what's going on in oil and gas markets and try and evaluate it and keep it updated and sort of be a forum for discussion about what's happening. This particular year we've got a great deal of interest with the significant oil price decline in the last six plus months and great interest in whether or not we're seeing sort of structural or temporary changes in oil markets going forward. And so several weeks back we had a big public session that tried to talk about what was actually happening in the oil markets, what was happening in terms of U.S. tight oil production and what was happening just purely from a market perspective in other major oil producing countries around the world. And then we, because we're here at CSIS and we've got such great regional partners in the regional programs, decided that it would make a lot of sense to then sort of divide the world into regions and take a look at what's happening in the Middle East and Africa and Europe, Eurasia and certainly Latin America. And so when we think about good macroeconomic political and oil and gas analysis as it deals with Latin America, it doesn't take us very long to think of inviting IPD Latin America and John Padilla and David Vote here who are managing directors to come and sort of present their view on their perspective of what's happening in the region. So that's what we're going to do this afternoon. John and David are going to tag team on a presentation that will cover Argentina, Venezuela, Colombia, Mexico and Brazil. So I hope you have brought your appetite for tourism because we're going to cover a lot of countries in a short period of time. And then Carl Meacham is going to give us some perspective on how he thinks some of these energy market, oil and gas market implications might factor into some of the political landscape in the region. So I'm going to stop talking because we've got enough to cover in a short period of time. The only last thing I'll say is that David is actually going to have to leave at three o'clock. And so what we'll do is John will present some three sort of macro overview slides. And then David will start on Venezuela and Argentina. We'll take a small break for discussion, for questions, if you have any on those two countries in particular. And then we'll sort proceed with John for the rest of the presentation. So John and David, thank you very much and take it away. Fantastic. Thank you very much for the invitation, Sarah. It's fantastic to be back here in DC and probably contrary to most folks here in the room. I'm quite delighted to be back in the cold. So I've been down in Bogotá for the last four years and my parents asked about the weather. And I say, well, it's the same as it was yesterday. And it will probably be the same tomorrow. So all right. Why don't we just go ahead and get started? Just kind of as a starting point, I think what we've been doing for the last 15 years, David and I has really been based on gathering a lot of information from a lot of different sources. And so the only thing that I would point out here is simply that this is our interpretation of how we see things. There's a lot of moving hearts going on right now with a lower oil price environment. Globally, certainly Latin America is not immune. And so some of the takeaways that we have here today are very much based on on that on that premise. So I think that what we wanted to start out with is just kind of really a macro overview of what we're seeing in the marketplace. And I mean, you pick up the newspaper every day, and you're hearing about new cuts that are taking place. So the way that we kind of categorize that is that you're seeing that in in terms of capex, capex is being cut anywhere between 10 and 40%, 50%. Then you're seeing layoffs that are taking place, which are really having an impact, and that'll have a big impact in Latin America. You're also then just seeing projects being canceled or monies being shut in. So companies are pulling out of different markets, etc. And then I think the fourth element that you will will definitely see increasing amounts of is is M&A. And so in a low oil price environment, not everybody is equal. And the chances that people are then going to look to absorb different assets, whether it's on the service sector side, or it's on the operator side, I think are very, very high. And the longer this moves or stays in place, the low price environment, I think the more pressure you're going to probably see on that front. So what we did is we took a look at three Latin American energy companies that are that are publicly traded. And what's interesting, I mean, most people are quite familiar with this, but the price impact has been tremendous. And I mean, it's been for different reasons for different companies. But anywhere over the last six months, a drop of 50 to in the case of Pacifico de Rial is close to 80 percent. And stock price is having a massive, massive impact. And so that's going to have an impact in terms of capex spend, it's in terms of where they're deploying their assets. And it's just much more magnified when you're taking a look at some of the impact that you're going to have in certain countries in Latin America. So as a result, what people are doing is anybody that can go to the market is going to the market. And here we just took a look at the three NOCs that that we're going to focus on today. And what you see is that each of them is going and raising, you know, billions of dollars. And so, you know, the price differential, you know, Pemex continues to really receive some fantastic spreads in the market. They went out in January and raised $6 billion, which was one of the largest issues ever. And the price point is quite fantastic. You know, less so, obviously, for pedavessa. And that's a sit-go bond. Then when you take a look at pedavessa bonds, obviously you're looking at closer to 20% plus. So that's kind of way of background. And what we're going to do is, as Sarah said, is start out with with Venezuela and Argentina. And I'll turn it over to David. Alright, thanks, John. So we're going to try to handle a very complicated situation in just a few minutes with Venezuela. First of all, there is obviously a serious political issue in Venezuela today. There's a serious economic issue or financial issue in Venezuela. In terms of political or sociopolitical crisis, we have some drivers. The first is President Maduro's declining popularity. Obviously, if we take a look down at the lower left hand chart, it's really fascinating. Criminality or lack of security has been one of the most important factors or one of the biggest issues facing the Venezuelan people over the years. And for the first time in 2014, we saw that an economic issue or in this case, scarcity of goods has gotten right up there with criminality. And as a matter of fact, in the first two months of this year, it surpassed criminality. So the voting population is now starting to look at the economy as an issue that will reflect upon the government. The Venezuelan government has been slow thus far to respond to low oil prices by making any sort of economic adjustments. Therefore, we see a huge impact on inflation right now 65 to 70% expected at 120% this year. And what you've all been reading about in the press certainly is the potential for Venezuela to default. These issues are going to be clearly the political issues and certainly they're going to push for an eventual outcome of some sort. Right now we see sort of three potential outcomes. This is an electoral year, National Assembly elections, we estimate now will be held in September. The opposition as one scenario could win the National Assembly elections. They indicate that they would then request a revocatory referendum on the President's mandate. There could potentially be a constituent assembly which would not necessarily rewrite the Constitution in this case, but rework the country's institutions. And what I'd like to point out is that neither one of these options, number one, require a majority in the National Assembly of the opposition and neither one of the options are necessarily easy. I want to point out with regard to challenges for a referendum that in order to call the referendum, you actually need 20% of registered voters. In this case, it's 3.78 million signatures. The opposition has a solid base of 4 million people. But let's remember what happened the last time a referendum was called. There was a clear witch hunt. So people are concerned about signing in this referendum. That will create one challenge. The second challenge is that 7.57 million people would have to go and vote to revoke the President's mandate. And once you get up to those numbers, you find a situation that's even more challenging. Another potential outcome to socioeconomic crisis in Venezuela could be a resignation of the President or a coup, both of which we see as being unlikely. What we are seeing is a scenario of power by force. Definitely, the military is beginning to play a more predominant role in Venezuela. And they're really keeping Maduro in power at this time. So that in a nutshell is politics. What I would like everyone here to recognize is that the oil industry in Venezuela is inseparable from politics. It drives the entire country's economy. It actually represents pretty much all of hard currency revenue. So when we look at the political situation in Venezuela, we have to understand intimately the oil industry. And what we've done is we've created a couple of different scenarios for oil production. The key issues that we want to look at here, who's in power, what's the price of oil, the government's foreign exchange policy, oil industry capex, we want to see more capex going to exploration and production. You need barrels. And that is going to be really the challenge of Venezuela's dilemma this year. Where is it going to put its money? You've seen in the press issues related to Petrocaribe and energy supply cooperation agreements, supply favorable terms to other countries. And you've also heard seen in the press a lot about the potential for default. So Venezuela has three choices. It can put its money to imports to satisfy its population. It can put its money to oil production to keep production up, which is absolutely critical, or it can pay New York. What's it going to do with a limited amount of money that has? That's the question. And we look at that with all of these are the issues that we're looking at in drawing our production pictures. We have an optimistic scenario through 2016 of 2.95 million barrels a day. And I believe yes, we have that slide and then a more pessimistic scenario of 2.54 million barrels a day. Again, in a low oil price environment, you're not necessarily going to see an immediate drop off. But you will see some impact. What is important to understand is Venezuela relying on oil production needs to put the money in. And here you can see our forecast for where oil production is going based on area. We have oil production falling in the east and falling largely in the west of Venezuela, represented by the red and blue bars. The green bar represents where we think production is going to come from new production or an Oko belt. They're putting all their eggs in one basket, essentially. This production is expensive. It requires a lot of infrastructure. It requires between 10 and $14 billion a year in in in diluent imports to blend this heavy crude and bring it to market. So it's capital intensive. Without that capital, meaning something has to give with non oil imports or debt repayment, you're going to have a pretty important fall in production. And so basically, what we assume here, if we take a look at our optimistic scenario for cash flow, is that in a $40 oil price environment, you can see $27.4 billion in revenue from Pena Vesa. Again, 96 to 97% of the country's total hard currency. They have about and this is our optimistic scenario for oil production. Okay, so they need to import $14 billion worth of hydrocarbons for their industry in order to produce more oil. And then we've got about $11.5 billion in 2015 of debt repayment, which leaves a paltry $1.7 billion for the government coffers. So the government is going to have to find different ways to achieve that to fill that gap. Maybe you can look at additional loans from China. Maybe you can look at additional Citgo bonds. Maybe you can look at taking some money from the different off balance sheet, stabilization funds like Fondain Central Bank has loaned Pena Vesa money in the past. They have gold reserves that they might look to tap into. They have some different ways, but the gap as far as we see it is between $20 and $35 to $40 billion. And we see them being able at most to get about $20 billion in additional loans, additional financing. So they're facing a real serious problem at $40 a barrel. I think the general consensus is $44 for 2015. So just with that, I'd like you to understand that the situation in Venezuela is really complex from a political perspective, understanding in understanding the oil industry in particular. Jumping to Argentina, another complicated country, but still we kind of find it somewhat optimistic. First of all, in Argentina, you're seeing a shale revolution similar to what you're seeing in the United States. If you take a look at proved reserves, Argentina actually has all the proved reserves in Latin America for shale gas of 802 TCF, 27 billion barrels of shale oil. So they've got some reserves. Those reserves are mostly located in Neocaine in the red area on the map, where you have 100 years. You have 100 year tradition of oil exploration. So you've got infrastructure. You've got human resources. You have a great deal of activity. If you take a look at what's happened, there's been 300 wells drilled in the Vaca Muerta shale play in 2014. YPF has been integrally involved. There's 40,000 barrels a day being of oil equivalent a day being produced in Vaca Muerta. And what's interesting, and we'll see it on the next slide is oil price. We'll get to that in just a minute. But on this lower right hand slide, you see demand. Energy trade balance has gone negative. And we can look at that here. So first of all, we'll talk about oil prices in Argentina. They are independent at the time from global oil prices. So you're talking about over $70 a barrel for oil in Argentina and some $7 to $10 for gas, for natural gas. So there's price incentive at the moment. And you can see that Medanito crude price has increased reasonably over the years. The government has allowed this increase to offset devaluations. So again, the government recognizes that the value needs to be there to produce. And in terms of gas prices, if you take a look at the top right, you can see that this light blue sort of line halfway through towards the bottom, this is the gas plus price. Okay, this is the $7 to $10 a barrel that the government is actually providing a certain compensation for new gas production. And when you take a look at this, you say that is nothing compared to what the cost is for importing about 30% of your gas at anywhere between $8 and $17. So there's incentive for oil producers. There's incentive for the government to keep this going. There is some concern that oil prices will fall at some point. But in general, when you take a look at the lower right hand graph, and you see that Argentina became a net importer of gas in 2008 and a net importer of oil in 2014, there's clearly demand and clearly a reason for the government to have this implemented. I think that that is all I want to say there. The political and economic environment. What I really like to do is focus on in commercial the third bullet. Argentina bonds are trading at 7. The 2015 bonds are trading at 7.9% as of February 2015, as compared to 11% as of December 2014. Basically, the market is looking favorably upon a transition, a government transition. And I think we're seeing that also in the oil sector. We're seeing tenacity in the oil sector, companies willing to invest, maybe not aggressively, but willing to be involved in Argentina at this time, looking towards the next government. You have other issues that are favorable. You have a labor, you have unions that actually understand the importance of the oil industry, and they tend to be willing to work with the oil companies. And then you've got some macroeconomic issues that are important. You've got a China currency swap, which has actually helped Argentina to improve its forex situation. Really, the resolution of the Repsol YPF issues have also helped just create a more investor-friendly environment. It's not perfect, but things are... I would take a look at Argentina as optimistic. And then finally, to kind of give you a sense of what's going on in the country, I'm not going to go into these, but I want you to see that there is activity in Argentina in terms of M&A, in terms of new project development. And one of the reasons for that is that Vaca Muertos is proving to be very prolific. You can get with vertical wells a thousand barrels a day out of a well. This, together with the relatively solid domestic pricing scenario, is creating better economics. Also the new hydrocarbons law allows for a percentage of your production to be exported. So you're starting to see a little bit more flexibility there. And production costs have come down now to basically, you're at a break-even point. And as you can see in the United States, where the learning curve has been very quick, the same kind of thing is happening in Argentina. Obviously not as efficient. Shale is a very difficult sort of factory oriented play. But they are learning very quickly in Argentina how to bring down costs, which make all of this viable. And I will, actually what we want to do is, if you have any questions on Venezuela and Argentina, I can handle Venezuela really well. I'm not our Argentina expert, but unfortunately I have to run. So we can take some questions on Venezuela and Argentina if there are any quickly, or we can kind of proceed through to the rest of the presentation, if you'd like. Any burning? Okay. One out there. Yep. Can you just wait for the mic and just state your name and affiliation and your question in the form of a question, please? For those two countries, what is the prospect for offshore activity and reservoirs? So I'm not, to be honest, real clear about what the prospect is for Argentina. For Venezuela, there's a good deal of offshore activity happening all at this point, natural gas. You've got Plata Forma del Tana, which is a project with Chevron south of Trinidad. I think it's, if I'm not mistaken, seven TCF of reserves, I believe. And then you've got Cardone Four, which is in the Gulf of Venezuela, about 13 TCF. It's one of the larger natural gas finds in the hemisphere over the last couple of years. That's with Repsol and ENI. And then you've got a pedavesa-driven project called Mariscal Sucre. All of these projects are going to be looking to bring on, well, Mariscal Sucre and Cardone Four should bring on 450 million cubic feet a day in the next couple of years. Most of that will go to the Venezuelan domestic market, which is undersupplied at the moment. Some of it will go to Colombia to meet contractual terms with Colombia. Hi, Mike Darum, no responses. Good to see you guys. Dave, wanted you to explore a little more this idea of power by force, what exactly you mean by that, and what the kind of the pressure points are that will push that towards an unplanned transition, so to speak. Well, by power by force and in an on-the-record environment, we are basically seeing the greater involvement of the military at all levels of government and more recently an increased involvement of the military inside pedavesa. We are seeing signs that the Maduro administration is, you know, looking more consistently towards the military to keep order. Let's try to keep it as simple as that. Walter Errol, National Defense University. I came in late. I apologize. I may have missed something in the beginning, but I'm wondering if you could comment on management strategies at pedavesa. Great question. Pedavesa has a new board of directors. Elojio Del Pino is now the president of the company. The directors that are working with him are all industry people, or for the most part industry people, at least the key directors. We're seeing that Del Pino has an interest in earmarking more of pedavesa's budget towards exploration and production. Del Pino and the vice president of exploration and production at the time, Orlando Chassin, are two people that have worked consistently and effectively with the private sector for years now. They've actually been the two go-to people for resolution of problems that the private sector's had, pedavesa's joint venture partners. So from that perspective, we're looking at it very optimistically. Pedavesa and the Venezuelan government are offering options to the private sector to gain more managerial control over their projects. Basically, this is something called the remediation plan where the private sector is offering loans to the mixed companies to those joint venture initiatives in exchange for some contract adjustments that allow them to move cash flow offshore, that allow them greater management of procurement, for example. That's a very big issue. So we're seeing some progress. As a matter of fact, it's really almost disheartening because we're seeing probably more progress inside pedavesa towards efficiency than we've seen in many years. But this is coming at a time where the government is having a hard time keeping up on top of things. So pedavesa, even though they're making efforts, they're going to be hard pressed to have the necessary government support to bring those efforts through to fruition. Hi, Nacky Mendoza, Energy Intelligence. Questions about production costs? I'm wondering if you have a rough assessment of per barrel production costs for Vakomort the Shale and Orienoko heavy oil projects. I'd rather get your card and send you to my expert, my technical expert at the company. In Venezuela, production costs vary dramatically depending on the type of crude and the basin. And production costs in Argentina right now for Shale. Last year, they were about 80. And now if we take a look at the fact that they're at break-even, I guess that's mid-70s. Give me your card later and I'll get my smart guys in touch with you. OK, we've got one more question in the back there. Brian Ventrot from Bechtel. I've read that the Venezuelan internal policy for subsidizing oil has led to a big problem with smuggling. What's your view kind of on the future of those internal subsidies and how that could impact future oil revenues? We had that question this morning, too. It's obviously a subsidization of domestic gasoline prices is a huge issue. You're talking about less than six cents a gallon at the pump in Venezuela. You're talking about four dollars a gallon on the border of Colombia. So the huge disparity creates a perfect opportunity for smuggling. There's there's been a couple of high profile corruption checks. I would guess you could call them in Venezuela dealing with that particular issue. They're not going to resolve it by trying to stop smuggling. The only way to resolve it is by increasing the price of gasoline in Venezuela. And you are never going to increase the price of gasoline to four dollars a gallon from roughly six cents. So it's going to continue to be a problem. And there are plans. The government is very publicly announcing its interest to raise gasoline prices. It is sensitizing the population to this. The fact that this is going to happen. We don't know where they're going to put the price, but it will still be insufficient to discourage smuggling. That's for sure. OK, David, one more. And then I think we can move on. You you sort of characterize the competition for dollars within Venezuela as being, you know, paying for imports, paying for production or paying New York. And you have an optimistic and a pessimistic scenario in those two scenarios. How does that money get divided? In the in the optimistic scenario, you've got about an extra four billion for oil imports, which is the pretty much the diluent that's needed. There are some products involved, too, with gasoline production, given the situation with the refineries in Venezuela. So we're throwing we're throwing four billion into into oil imports. You have CapEx, probably an additional five billion worth of CapEx going to actual EMP in our optimistic scenario. In both scenarios, you are cutting by 60 percent the budget for social spending. Both scenarios consider inflation at about 120 percent. And and and our optimistic scenario also considers cutting GDG exports by 50 percent. So and and both scenarios also have some exchange rate modifications, although they're completely counterintuitive due to the fact that right now the GDG exports can be the revenue can be sold at the new rate of 170 boulevards per dollar. And so that actually improves the situation, even though it's not a solution, improves the investment situation, even though it's not a solution to actually getting commercial dollars for those barrels. OK, so we will switch over to Mexico, which finds itself in an interesting position as it relates to the bid rounds that are that are coming up. But I think what I would say at the beginning is that as it relates to the bid rounds, these are long term investments. So oil prices move up and down and over a 30 year plus horizon, they're always going to move. So slightly inconvenient, yes, but I think it's it's much more important to kind of take a look at the macro and the macro what you've seen is I mean, this is the impetus of why energy reform finally gelled. We along with many, many others have been working and waiting for energy reform to happen over the last 14 years. And you see the the gray line there of contrail production, which everybody I think is pretty familiar with, and the very, very steep production decline that happened with respect to nitrogen injection. So now down at about 400,000 barrels per day, what I really want to kind of take a look at is, is that decline rate that you see taking place at the bottom. And so between 2010 and 2013, they were able to kind of maintain production, so to speak, or keep it relatively in check. And then this past year, production dropped by by 3.7 percent. Some of that, in large part, is is reform related. And I think that that becomes a big, big question as we kind of go forward because one of the one of the big questions and what's different about the market opening in Mexico is that it's really being undertaken in a very, very different kind of way as it relates to its NOC than what you've seen in many, many other market openings. So the and the government hasn't really defined what it exactly wants Pemex to be on a go forward basis. And I think Pemex, in many respects, is having to kind of pick up that burden and define for itself as in the context of the energy form and what the energy form allows it to do to define where it's headed itself. So what we did is we just we've taken some moving averages of production and and and then projected that out for forward. And I think, you know, the important part to take a look at is that you see cumulubzap, which helped offset some of the production declines of contrail and now is producing in excess of eight hundred, eight hundred and fifty thousand barrels per day. But that, too, will now start to decline. It has been it's also had nitrogen injection and those declines are going to happen. So if you if you go back to the previous slide and you say, well, those decline rates, then really two thousand six through two thousand eight really started to drop. Clearly, you don't have as much production with cumulubzap, but you could have some you could have some drops that are more significant before they kind of smooth themselves out, which leads us then to on a go forward basis. What is what are we looking at? And the top line there is what is included in what's called the prospective. These are the the official national figures in terms of what production is is going to be. We separated out or decided to take out the the difference between how much is going to come from Pemex production itself, plus farm downs, which are allowed under under the energy reform and then the tenders, the bid rounds that that are going to to come out just to really kind of see what we're talking about in terms of context. This is the natural decline rate that that is taking place. So it's it's a little bit of a different take than what we saw on the previous slides. But what you have there is is you have a million barrels per day that you have to fill by 2020 and it goes up to two two million by 2028. So some of this, you know, this is not all doom and gloom. Some of this will will happen simply through CapEx investment. But again, I would I would go back to the the the fact that what exactly is Pemex's role going to be going forward? And I think that really becomes a central theme as we're looking at the kind of macro outlook for for production out of Mexico. The two takeaways that are glaringly clear to us is that you're going to have to provide a much more flexible regime for farm downs at Pemex. Right now, the the way that farm downs can take place is that Pemex has to demonstrate to Acienda or the Secretary of Finance that the money that it will receive through the farm down will be equal or greater than the amount that it is currently receiving. And what you have to understand is that once it goes to a farm down, it is going to be subject to a much lower tax regime than it currently is. So the quick takeaway that you immediately conclude is the only way that you can prove that up, that Pemex can prove that up, is that you're going to try to convince Acienda that you're going to have increased production. Well, how do you do that? That becomes a very, very difficult benchmark to really achieve. And particularly as oil prices have gone down, that becomes even much more sensitive within the context of the Secretary of Finance. There's a political element here. And this is where I think we're going to have to we'll see some type of accord. The the other side of the coin here is that the bid rounds are going to have to be wildly successful, not mildly successful. We've gone through the the multiple service contracts. We've gone through the integrated exploration and production contracts where you had a handful of bitters. That's not going to cut it. I mean, if we don't see bids that number in the range of ten per the attractive blocks, that would be a failure in my view. And so that means that you have to have an extremely robust, very market normal contract that that is that is going out. We'll we'll talk a little bit about where we stand with the reform right now. But I think just as from a conceptual standpoint, those are the two factors that absolutely have to happen for them to get anywhere near the production levels that they're projecting. If not, the government is going to have to look for alternatives. So Mexico is most people are probably where interned into a hedge. They've done hedges for a number of years just because for a trillion dollar market it is heavily dependent on on oil revenues. So that is started to decline as there's been fiscal reforms over the over the years. But what they put in place was a hedge for seventy six dollars and forty cents. And for the budget, they used a budgetary price of seventy nine dollars per barrel. What's interesting is that the difference is going to be used through this income stabilization fund. What they have allocated to that fund is five hundred and thirty million dollars. Well, if you do the math very quickly, that takes you out for about a quarter. It doesn't take you out for the entire year. And I think the point to be made there is that is exactly the reason why if you take a look down in the lower right hand corner, the government announced budgetary cuts of eight point four billion dollars. And on top of it, as we'll see on the next slide, they they did a dividend grab from Pemex of three and a half billion dollars. So in other words, they're still quite concerned, even though they they're in much better, much better position than a lot of other Latin American countries, given the fact that they have these hedges that they're not that they're not fully covered. And it's also a reflection that the economy continues to be quite stagnant. So it's no surprise that what you've seen is that the the economic growth GDP that was in the budget was estimated at three point seven percent has the central bank has come out and now lower those projections. So, you know, the promises of this administration was is that we're going to get back to the Mexico miracle years, the 1940s to 1980 of six percent kind of average growth. This is still not happening. We have a reform agenda that's that's on the table. The question is, is now can you really kind of implement that and energy is absolutely core to that strategy. So making making this work has to happen. There is really no plan B that that is meaningful enough to to to make those kind of changes. So as I mentioned, there was a three and a half billion dollar kind of dividend grab at the end of the year that kind of caught everybody by surprise. And what we wanted to do was we wanted to take a look at what that how did the market react? And what's interesting is that you saw essentially a doubling of of spread between the sovereign and Pemex from last year to the issuances that that took place this year. If you remember back on those initial slides that that I said, they're still getting very, very attractive money. So even on the I think the 30 year tronch, it's treasuries plus three hundred and thirty thereabouts. And so that's still extremely attractive money. But what you are seeing is that there is a there there has been a widening of of of spread that's taken place. Here's part of the crux of of of the reform and some of the things that I would I would point out that certainly are concerning to us. So of the eight point four billion dollars of the budgetary cut, essentially half of that is to be made by Pemex. And then you can see on on the on the top of the graph there, the different areas of where other budgetary cuts were to be made. There's two things that I would point out as it relates to Pemex itself. So Pemex, this is this is a problem in terms of the four billion dollars that its budget is is being decreased. And that raises questions when you have one hundred and fifty five thousand employees of making payroll of of doing your your your your your daily operating type of expenses. Under the reform, Pemex now has discretion over its capex. So capex and your budget are not necessarily the same. I think it'll be very interesting to see how capex will be impacted as we as we move forward through the year. So the the I think the the conference call that Pemex will have on Friday will be something that, you know, should should attract some attention specifically on that point. The the other part of energy form that's very, very critical is the implementation. So you you need institutional framework. You're creating a number of new entities that are going to be playing a very significant role, including the SEA, which is the environmental regulator. And then you need a ramping ramping up of CNH, which is has already started to happen. But as you can see up there, they were looking to to get to two hundred and fifty people this year. They're right now at about one hundred and twenty. And then the Cray, which will be actually a very important component, they've been the downstream regulator. They will now be responsible for oil pipelines and all oil infrastructure related or infrastructure related oil infrastructure related activity. So they're an established regulator, but they don't necessarily have the manpower for all of this. There is a hiring freeze across the government. So when you take a look at these numbers and the only one that we've not been able to categorize is is is the Secretary of Energy, you're already looking at probably close to a thousand people that they needed to add for two thousand fifteen, which have been completely frozen. That doesn't bode well for reform implementation leading up to the bids, nor when you actually have to administer them. So this is this is a big problem that hasn't really been hasn't surfaced and is something that is is of significant concern to us. And then what I would say, just kind of wrapping up on Mexico, is is putting all of this in context. I mean, the energy reform has what has been achieved to date has been monumental and it really should not be understated. There's been years of work that has that has been put in place to get to this point. But I think the the spirit of the constitutional energy reform, the secondary laws was was fantastic. And that is clearly what motivated tremendous amounts of interest. What we have right now is is the in December, it was the launching of the of the 14 exploration shell of water blocks. And so there was a draft contract that that has gone out. I think, you know, widely, widely stated industry's reaction has been somewhat lackluster and for good reason. It's it is it's a it's a first step, but it still needs a lot of work. And what we what we don't have is we don't have a true production sharing agreement on the table. It really is kind of an amalgamation of many different parts. Much of its base that that starts with the service contract. So I think the good news is is from where I stand, they have to get there. The question is how quickly can you get there with the manpower shortage that you have? And these people have been working at an exhausting pace. I did 10 years of Wall Street myself. And I can tell you when you're in your 20s, you might be able to do this. But when you're in your 40s, 50s, this gets a lot more complicated. And these and and and the the impact is being felt. You have a lot of folks that are that are absolutely suffering as a result of this. And that's not good for for what needs to be done. So there's just a tremendous amount of work. The question is, is how is it going to get done? And can you can you make it happen in an expedited fashion? I think, you know, the chances that you have further delays are real. That's not necessarily a bad thing. I think it's actually part of the process that that that needs to take place. And I think that we'll just have to wait and see what comes out with the the second draft of the contract this next month and then really how how how the negotiations and the discussions really proceed. So I'll leave it at that in terms of Mexico. So turning to Colombia, Colombia, I think is is a country that is what I would what I would say is is much more kind of on the cusp. You know, they've had a fantastic run over the last decade and production hit a million barrels. And so that was the goal. And I think there was there was widespread applause for that. And but the question then became now what? And so oil price declines only are magnifying some of the issues that you that you really have in in Colombia today. So if you take a look at we just put out three three of the larger or well known producers in Colombia and you you can take a look at the the CapEx reductions that that each of them are making and without ongoing CapEx in Colombia, you probably have a natural decline rate of about 30 percent. And so I think the the interesting thing is is that the ACP had come out. They they put a letter to the government saying what kind of impact. And I'll show you some of the numbers that that we have in terms of production outlooks. But I think one of the things that was said was is that production would actually stay stable in 2015. We don't agree. I think that the chances that production declines occur in Colombia are very, very real. And what you're seeing is is that people, anybody that has the ability to reduce their CapEx or delay it, defer it, that's absolutely happening. And in fact, what you're also seeing is you're seeing a cancellation of contracts. So contracts are being there are operators out there that are and remember there's there in Colombia, you have such a wide array of different operators, so very, very tiny operators to larger companies that are that are operating in the country, which creates a whole different kind of dynamic. But what what's happening is is there are operators out there that are absolutely finding it at this stage much more economic to simply pay the penalties and turn that contract back over to the N.H. Then then operate. There's there's very high operating costs in in a number of these regions. The Yanos, in particular, where a large percentage of production is is coming from, you're seeing that production is starting to become less economically viable. So and I think one of the the bigger areas to kind of focus on is unconventionals. So there had been a big push over the the last two bid rounds to secure activity in unconventionals. The environmental permitting and licensing in in Colombia is is really the the element that has really stifled off a tremendous amount of activity. There's been progress that has been made, but it's been very slow and it's been too slow for the pace of what needs to happen in the context of the global market and where people are going to deploy their their their capital. So the question really becomes is what's going to happen with some of those unconventional that unconventional activity? So there's there's some drilling that is that is taking place while their stratigraphic wells, et cetera, that that people are drilling while they wait for for permitting, et cetera. If that doesn't come back as robust as as they're hoping, I think we'll probably see some pull out on the unconventional front in Colombia. So what we did here is we took a look at projections and we took a look at so the ACP is is is the association, the Petroleum Association of private sector companies operating in in Colombia. And then the government, you can see what their projections were in last year and then what they've been revised. This year. So all across the board, which you're seeing is is that the everybody is anticipating that the impact certainly over the next few years will be will be downward. I think the one bright spot is absolutely offshore and there's some very significant drilling that's coming coming up this year. And that that will certainly help foreign direct investment, but it won't necessarily have an impact on oil production in the short term. The onshore production is just increasingly complicated because of, as I mentioned, the permitting and environmental permitting communities, social issues and then security. And so what we've seen is is that in the month of January, there was in excess of a million barrels produced. We would say that that's probably going to be as good as it gets this year. A lot of that there were there were no pipeline bombings and we have we have elections here in the fall. So the chances that you you have pipeline bombings later on in the year are certainly there. Kind of incremental weather is going to be an issue. It always is in in Colombia. So it's hard to see how and there's no new production that's that's coming online of that's of any significance that's going to really kind of change those figures. So again, what we would say is that that's going it's going to be very, very difficult to to see that those production figures are maintained. And so despite the fact that the the government is saying that they're going to maintain the million barrels, I think that you probably have at least 50 to 75,000 barrels today. That's kind of in jeopardy for 2015. From from the government side, unlike Mexico, they had no hedge. And over the years, if you if you took a look at a chart of the the increased dependence on oil revenues, it's been increasing. So it's now roughly at about 27 percent and by the government's own estimates, they're saying that a decrease of $1 has an impact of about $190 million of of annual revenues. So you can quickly do the math on that. And what that really kind of comes up to is about nine and a half billion dollars of shortfall if you stay at these kind of prices throughout 2015. The the number of tools that I think the the the Colombian government has are somewhat limited and you could see asset sales. You could what they will try to to use is increased taxation, which isn't necessarily going to spur economic activity. And then the other tool that they have in in in their war trust is devaluation. And so we've already seen devaluation in 2014 of 24 percent. And in in February this year of five and a half percent. So could we be moving, you know, much closer to kind of 2,800, 3,000? Yeah, I think that's a that's a real possibility as we move through the year, particularly if oil prices stay at these kind of levels. So lastly, I'm going to wrap up just with Brazil. Brazil is certainly a a massive market. And pre salt is is is the name of the game. I think what's interesting from a macro perspective is is that Brazil only exports about 20 percent of its of its production. And so the impact in in a certain sense is softened on that front. And then, you know, as a as a fuel net importer, those those prices are subsidized from Petrobras. So as prices are lower in theory, that should not have as as big of an impact. Obviously, that's not exactly what's happening in Brazil. And there's other economic kind of fallout that's taking place for a whole host of reasons. But in one of those is is absolutely the the potential of devaluation kind of offsetting much of the the positives from from that front. And it will certainly have an impact on pre salt investment. There's going to be a lot of pressure on on Petrobras to continue that investment. The question is, is with some of its partners, etc. You know, how that how that really kind of plays out. So, you know, the goal continues to be the four million. We have beat that's oil, but it really should be B.O.E. And, you know, they want to be a top five global oil producer by the end of the decade. I think, you know, the the the cliff notes version of this is that the chances that a lot of this gets delayed are, you know, are increasingly quite high. In the case of Petrobras, you have one hundred and seventy billion dollars in debt. So in Mexico, we thought things were were quite grim with eighty billion dollars of debt. They've got the pension liabilities, which is a which is another big animal. But one hundred and seventy billion dollars of debt. I mean, that's exactly why its stock prices has has taken the kind of hit. Its leverages is increased quite significantly. The thing that is that is the focal point to kind of be on the watch out of is their ratings. And so the the potential of losing investment grade rating would have just a dramatic impact on their needs in terms of funding. And that will be something that you will need to kind of take a keep a very close eye on. So everybody is quite aware of the corruption scandal. And I think that you have a new CEO clearly politically driven. You know, markets have not necessarily reacted very well, which is a takeaway, I think, also for for Columbia for different reasons as Javier Yuteras is is is on his way out as well. And how this all kind of plays out, I think, is is is still very much in the mix from from a macro perspective. The the the economy has is completely stagnated. And so the projections for for 2015 are essentially anywhere between negative point five to zero point five percent on the positive. And much of this is just a a lack of credibility that is being lost by by the administration and an increased amount of opposition power that is coming into play. And so the the question is is how is that all going to kind of impact the economy and impact Petrobras very directly. And I think again, what we really kind of see is is that the potential for not hitting those targets becomes increasingly clear as we move forward. And just to kind of put in context, I mean, you have about 15 percent of total production today of the 2.35 million thereabouts of production coming from pre salt. And the expectation is is that 50 percent of total production will be coming from pre salt when they when they look to hit their their goal by 2020. So these are massively ambitious goals and clearly the low oil price environment will will impact Brazil quite significantly. And with that, I'll conclude my remarks. Thank you very much, John. There's a lot a lot there. Maybe what I'll do is ask Carl to maybe think about some of the ways from your political analysis or your look at the region, how some of these oil and gas issues in particular feed into the broader economic issues, but also fit into the political landscape as you see it. Yeah, well, I think that David and John did a really great job of providing a sort of a comprehensive analysis of a lot of the economic side and how oil touches on that. I don't want to get too stuck because I think that the Q&A probably is a good place to tease some of these things out as well. But I would just say, you know, persistently high prices created a set of convoluted incentives. And what we're seeing now is that, you know, the region is sort of the countries that were better insulated and better prepared to deal with some of those things are faring better than others. The political issues and the economic issues are going to sort of complicate the outcome. I mean, particularly in places like Venezuela with really high inflation rates, with scarcity, with a lot of political upheaval. You know, if you just look at it through the eyes of I think oil analysis, I think it's it's one side of the discussion. And I think it needs to be sort of complemented. So that's one thing. And I would draw your attention to things like Venezuela's not not just its ability to maintain its commitments because they've been able to do that, but countries themselves and their ability to pay and how much Venezuela needs that money and where it's getting money in order to make up for that. That's one sort of big issue. You taught you touched on the Brazil issue. That's a big deal because a lot of the sort of reforms that they were pushing forth had to do with all the money that was coming in. And the scandals that you're seeing now with regards to corruption, I think would be less if you had oil prices at where they were before. And they're definitely going to have an effect and an impact on the political environment with the president having been the head of Petrobras and of being the minister of energy. So you definitely have a development there. And so far as Columbia and Argentina, you know, on the Columbia side, the implications of this is fairly limited, even though I think oil revenues are an important part of government spending, in particular in the places where the oil rich areas in particular that they've they're going to take a pretty big hit. And if you look at that with regards to, you know, how Columbia sort of making itself out of this very challenging period with narco terrorism, with the Ries, I think it could influence some of these things. Hopefully it doesn't because, you know, issues like the peace process and where that goes might give a boost, improve things. With regards to Argentina, that's complicated. Big sigh. That's a complicated situation. And the only area I'd say in Argentina where you had a sort of clear regulatory framework where people were interested was an energy. And the issues that you have now with Nisman, with a lot of the outstanding political issues are really going to take away from the discussions and from the orientation of the government. And I don't know about investors, but I think it's a significant distraction away from a lot of the things that could have happened there. Regarding Mexico, the benefits that they were hoping to get out of oil and the way that the reforms are sold to the Mexican public were that they would be able to attract a lot of money to do social reform. That's not going to happen. And I wouldn't even dare to say, and I think you touched on it a little bit, that it's basically a buyer's market now. As far as these contracts are concerned, the sellers aren't determining the criteria of these contracts. And I think that's going to be a tough one for Mexicans to deal with. Again, the Venezuela issue, I think we're going to see how that develops. Again, we try to predict Venezuela. I don't know what Venezuela is going to look like to tell you the truth. I think it's a very good friend of mine, makes sort of this description that it's a bus without brakes going down a hill and all the Venezuelans are in it and nobody really wants to grab hold of the steering wheel. I don't think that people make, they allude to or they try to say that, oh, we're going to have a transition of this or that. I really don't think that we have clarity with regards to how things are going. It's a country that's facing a lot of challenges and has the potential to drag other countries with it because of the issues with Petrocaribe, the commitments in Central America and in the Caribbean. So those are things that I would note that sort of have that interface of political and oil. I think that you guys have done a great job of explaining a lot of the oil side of it. And I hope that the side that I explained contributes to that. And I think in the Q&A we can delve even further into it. Sure. So we can open up for questions and answers. Same in a bit of a discussion, same sort of ground rules as before. Please identify yourself and wait for the mic and please put your question in the form of a question if you can. We'll start for Fernando and then go to the second one. I'm Fernando Freira with Repp and Group, great presentation. Two questions with regards to Brazil. First, with the crisis going on. Do you see any possibility of pre-salt legislation or reform going on this year? I know that they're 2016 is the year they're expecting to do more bid rounds in there. And the second question is Moody's actually revised the rating for Petrobras yesterday, so they lost the investment grade, Fitch and the other, not yet. But what are the consequences if they lose that investment rate with all three rating agencies in terms of bondholders and stock prices? Can you give some color on that please? Thank you. I think I'll touch on the second item first, because I think that the impact in terms of the cost of raising funds becomes a very, very significant issue. And so I think that, you know, the chances that you much is going to be an issue of confidence, I think, to a large extent in how the markets perceive the new Petrobras administration and what exactly is the government doing with respect to the corruption scandal? And I think, as Carl pointed out, it probably would have been a lot less of an issue under a higher oil price environment than it is today. So all of these things are much more magnified and that's going to have a much bigger kind of impact. Given the fact that it's just such a large investment program, I mean, you have to kind of appreciate the fact that this will have wide spread implications. And so I think that, you know, this is very much a moving target. You know, in terms of pre-salt legislation, I think that, you know, that would be a question that I, you know, we would, I would defer to some of my other colleagues. But I think that, you know, in general terms, the government is going to have to be extremely focused and sensitive to what's happening in terms of oil prices and the impact that it's having on the country. So I think that the challenge is just that the political situation right now is in such kind of disarray that finding consensus is going to be the challenging piece. Dave Halliday from the Speckling Group. I'm tracking the oil and the gas issue. I understand that. And thank you so much for the information. What I'm wondering about is we keep reading about it exploding energy demands in Latin America. And how is that going to be met? I lived in Chile for three years and I can hardly recognize the country when I go back and visit it now. We were getting our natural gas at my home from, from Argentina. And that was very, very irregular even then. And with this explosion, are we going to be seeing brownouts, blackouts like we see in Africa and parts of Europe in Latin America? Yeah, very interesting question. I think actually that from a macro perspective, you've had massive gas finds around the world. And our view is, is that you're going to start seeing stranded gas in, in, in different parts of the globe. And what it really means to Latin America specifically is that they need to develop local markets. And many of these countries, you just, you don't have it. So everybody has had a philosophy of, of exporting to the extent that you can. I made a presentation in Rio de Janeiro back in September. And my opening comment was for all of you out there that are looking to export your gas, think again. And I think that size and scale is absolutely going to matter. And so to the extent that you don't have size and scale, you better start looking at domestic markets. And so Columbia, where, where I'm based, I think is a perfect example of that, where it has signed free trade agreements with the US, etc. And it's, it was touted as kind of the gateway to the Pacific. Fantastic, very good. But have you seen tremendous amounts of manufacturing activity, you know, move in? Not, not yet. And I think in Columbia specifically, you have a situation now with lower oil prices where Cusiana production has been continuing to, to go down. And the re-injection of gas is not, is now not going to be viable. What are you going to do with that gas? Exporting that gas is, is, is not a viable option in and of itself. And you're going to start, you're going to need to start looking for domestic markets, all the offshore exploration activity in, in Columbia. You know, the, the hope is that you're going to find significant volumes of oil, but the reality is, is that you're probably also going to find at a minimum significant volumes of gas. So what are you going to do with that gas? Well, if it's on the scale of Mozambique, okay, fantastic. Now you can export, but if it's not, you better start figuring out what it is, you need domestic policy. And domestic policy I think across the region is something that has been lacking and something that economics are going to force the reality of some of those things to, to kind of occur. So one of the questions that I had sort of grouping all of this together is, you know, we, if you think back, you know, to a whole different era about nine months ago, before we were thinking about low oil prices, we were thinking about sort of the geostrategic implications of the tidal revolution and the shale gas revolution in the United States. And a lot of people were asking us, so what does this mean for other countries and, and, and other producing countries in particular? And we had sort of basketted them into a few key categories. One was sort of the big producers of the world. And then another couple categories were the re-entrance, those who were hoping to get back into the market in a big way, right? And we sort of put Mexico and, and to an extent, Brazil and Colombia in that basket, folks that were focusing on reform and focusing on getting back into the market. And then the other category was sort of the revenue dependents, right? And the revenue dependents were the ones that were sort of, you know, already not well living within their means based on sort of their fiscal rate of return on other break-even price. And, and so what's been interesting for us is that you've seen sort of an oil price decline and you know that it won't stay like this forever, but you, you find that countries were at various inflection points in terms of their own concept of the reform, both in terms of the domestic political economy, but, but in terms of how they're managing their oil and gas sector. You've been doing this for a long period of time. These periods of, of, of shock, of low oil price shock in some of these places have their ability to, to sort of bring about their own reforms and adjustments. Some of them are to near term weather through a situation and just kind of make it through. And some of them bring about sort of longer term approaches to these issues. If you were to think about it from that context, of the countries we've sort of talked about today, would you, do you have anything definitive you would say about any of them? You, you had mentioned sort of on the Mexico perspective. It's not the first time I've heard it is a delay is not a bad thing. A delay is not the worst thing ever. It's difficult for the domestic political situation, but in terms of the energy reform agenda overall, maybe it's not so terrible. David had sort of mentioned in a Venezuelan context, you know, for the first time in a long time, you've got agreement between sort of, you know, the government and the opposition that more production is needed, right? So do you see sort of these coalescing points in some of these, these countries that sort of at least give you a direction to look at in terms of longer term impacts and, and, and things to look for. Probably spend the afternoon talking about some of these things. You know, I think that Latin America, it's an interesting flexion point because there's been significant growth in many of these countries, most of which has been driven by commodities. And so that has created a kind of new level of wealth, attention, et cetera. So oil prices once again drop. And the question is, what are they going to do this time? Right. And I think that the question is, is, are you going to look to diversify your markets this time around, or are you going to continue to be dependent? I mean, I think that gets into a whole geopolitical, you know, type of, type of question. The, the dynamics that each of the countries are facing, some can be lumped together, some are quite different. The, you know, I think the, the pressure points that you have in Venezuela and Argentina, for instance, are quite, quite, those are likely to put a lot of pressure for production to attempt to be sustained, whereas you'll have different kind of pressure points in many of the other countries. So I think that does it, you know, does it have an impact on, on, on the political environment? Absolutely. So I mean, each, each of those countries, for different reasons, people are, as you have oil price drops, it, it fans the fire for opposition to, to say, well, look, they're not achieving these objectives and the economy, you know, my, my day-to-day life is, is not necessarily improving. And I think that the longer that we go through a low oil price environment, that only becomes more magnified. So you can take a look at this and everybody, most, most stable companies can all kind of weather through three months without much issue. But as we move towards six months, nine months, that's when we're going to start seeing real, real kind of pain being felt and the implications of that pain kind of manifesting themselves out. And I think we'll have to wait, right? I mean, we, you know, we don't project oil prices and I think anybody that, you know, tries, well, if you're making money at it, I think it's fantastic. But other than that, then, you know, we're all at the, at the mercy of markets and how they, how they fluctuate. I mean, if we have some other kind of geopolitical crisis, you know, that can change overnight very, very quickly as well. So I think that, you know, the jury is still out. I think that as, as we move towards kind of the middle of the year, that's when I would start, you know, really looking to see what kind of pains being felt and then how governments are really reacting and are they looking to proactively do things differently? Or is it kind of at the end of the day, more of the same status quo? Thank you. I'll try to make it a short question and three quick parts. Love to get your, Bill Berlut with the US-Columbia business partnership. Quick sense of, since you're based in Bogota, since I work on Columbia issues, a sense of the fracking debate in Columbia, where it stands, where it's going to the government, at least previously it announced or anticipated spending a lot after peace talks were concluded. What have they scaled that back in your sense now, given what we've just heard about and where prices are? What's your sense about that going forward? And that's probably also a question for Carl, too. Here. What about export of compressed natural gas from Columbia, kind of in line with US policy, and we just had the vice-presidential Western Hemisphere Energy Security export of compressed natural gas into the Caribbean from Columbia? Do you see that as a viable option into, you know, Jamaica, Dominican Republic, Haiti, other areas? Thank you. Sorry for the three parts. Okay. When you talk about fracking in Columbia, I think the first thing that you have to look at is the legislation that was passed never even mentioned the word fracking. That's a problem. And the political dynamics in Columbia are such that the local governments have much more pressure, I think, on the central government than vice versa. And that has played itself out with oil and gas activities across the board, as well as mining sector activities. So fracking has only taken that to another level, because one of the issues that you've had historic issues in Columbia is with respect to water. And as an American, being down there, you go, what are you talking about? There's ridiculous amounts of water in this country. I mean, it's, I think, top five worldwide. But because there's been a bad history of good corporate governance that's taken place, and there's a lot of illegal mining that takes place in Columbia, it's an issue that you talk to anybody on the street and everybody says, Oh, God, you know, that's horrible. And so then you start talking about fracking, and it's another four letter word. So I think that they've made progress. I don't want to be completely negative on this point, because I think from a macro perspective, there's essentially three areas where Columbia is trying to gain ground. So offshore is one of them. Second one is absolutely unconventionals. And three is heavy oil, but heavy oil is now not proving up so well. So it'll probably be EOR related activity. I don't see under this administration, that you're going to see much progress. The central government has been extremely hands off as it relates to local related issues. And this is just going to kind of fall into the heap of all of that. I think that, you know, the peace process, as you point out, is going to be extremely expensive. So there are benefits. The question is, is how fast do those benefits take hold? And I think that it's truly hard to appreciate and understand the cost of integration. So everything from integrating former FARC members, etc., back into the community, creating employment, creating, I mean, Columbia terrain, you know, for those people that have not been there is just incredibly, incredibly complex. And so the infrastructure as a result is marginal. Where are you going to get that kind of investment? Well, hopefully, you know, some folks here in Washington DC are going to help out on that front. But I think that it's a big, big question. And I think it's hard to truly estimate just what that cost is going to be. And when you have a oil price reduction and you have 30% of your budget that is being directly impacted by this, I think the simple answer is, is that it's going to be impacted. And it's, you're just not going to have the money to spend on those areas. And, you know, in terms of the export of compressed natural gas to Central America, I think, you know, Central America always, you know, is there's a lure, because there's such a need for hydrocarbons, the issue consistently is, are they going to pay? Or can you get them to pay, you know, market prices? And so they've had a history of essentially subsidized production, some of which we talked about this afternoon. As there's new realities, geopolitical realities in the market, maybe that changes. And so I think it, for different reasons, I think it becomes an interesting thing to kind of take a look at. Today, I'm not extremely optimistic. Certainly there are people that are out there, you know, trying to do some of those projects. But I think that on the gas side, you're likely to, there's been a lot of talk over the years of, will we have a global natural gas price? And I think that what we're actually seeing is we'll probably see more convergence between the Japan market and the NBP. And so in other words, countries that are importers of gas, and then those that are actually self sustained markets. So for the Americas, I mean, there's a tremendous amount of gas in the Americas. I mean, from from the US, Canada, and, you know, Venezuela still doesn't export. Peru is sitting on tremendous amounts of reserves that once it gets some of the political will to do some of those projects will absolutely move forward. And if you get an opening, very successful opening in Mexico, I mean, the chances that you're going to see increased amounts of production there are very, very high. So I think, again, it's, will you have stranded gas? I absolutely believe that you will. And so then you better be sure that you are competitive in the projects that you're that you're undertaking, and or that you've got just some lock solid contracts in place. And you know, what I would say, I started out my career doing workouts. And the one thing that you learned very, very quickly was didn't matter what was on paper, if somebody wants to get out of a contract, they're going to we've reached sort of the the end of the session for today. John, I just want to thank you. There's not very many people who cover that much ground in a short period of time and as well as you did. So thank you very much. And thanks to Carl. If you could please join me in thanking John Padilla and his colleague.