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December 20, 2021 edition— Sonora’s sun; natural gas’ future; and Eni’s plans.
Last Week in a Minute or Less
Electric Power & Renewables. The solar plant in Sonora will cost MXN34.5bn; the power reform will have an open parliament; and CFE will give Mexico City’s subway a makeover.
Liquid Fuels Mid-Downstream. MC activists want to stop Dos Bocas; gas station owners are concerned with the new rules; and the Finance Ministry cut gasoline subsidies.
Natural Gas Mid-Downstream & LNG. CFE will deal with the extra natural gas.
Oil & Gas Upstream. CNH okayed Pemex’s plans in Ek-Balam; oil production fell in the third quarter; and Mexico rejected Eni’s plans.
Government & NGO. Canada threatened the US with tariffs; AMLO ratified the new Banxico governor; and the deputy Finance Minister believes the economic recovery continues.
Déjà vu all over again. Last week’s readers were particularly interested in natural gas prices (Natural Gas Intel – English); and the cost of Pemex’s refinery (Bloomberg – English).
Editorial Interlude
The Weekly Brief team and I extend our wishes for a happy holiday season to all of our readers as we near the end of 2021. After such a tumultuous year, we hope everyone will be able to make time to renew and reconnect with friends and family.
This is our last edition for 2021. Our next edition will be delivered on January 10, 2022 so that our team can also take some well-deserved time off over the holidays.
I look forward to 2022 bringing many positive changes. Within the Weekly Brief team, I am pleased to announce that in the New Year, Lola Ballesteros, our current Associate Editor, will be taking over as the Weekly Brief’s publisher and Editor-in-Chief.
Lola has been with the Weekly Brief since it began and has been responsible for managing the editorial and production team for the past four years. I am excited for Lola as she takes this next step in her career. I know that I am leaving the Weekly Brief in good hands as I step back from my previous role.
Thank you for your loyal readership. I look forward to crossing paths again in the near future.
- Jed Bailey, Editor-in-Chief emeritus, The Weekly Brief
Geopolitics & Trade
Canada threatens the US with tariffs… Canada threatened to slap tariffs on a range of American goods unless the proposed US credits for electric vehicles are resolved (Reuters – English) (El Economista – Spanish). Finance Minister Chrystia Freeland and Trade Minister Mary Ng also said Canada was ready to launch a dispute settlement process.
…and the Concamin will back it up. The Mexican Confederation of Industrial Chambers will back the proposal to launch an international panel against the US tax breaks for electric vehicles (Forbes – Spanish). The option of adding tariffs to US products was considered as a last resource.
The US and Canada are fighting over the digital services tax. Canada still plans to impose a tax on corporations providing digital services if necessary (CTV News – English) (El Financiero – Spanish). The decision would affect US giants such as Google and Facebook.
Political Economy
AMLO ratified the new Banxico governor. President López Obrador formalized the appointment of Victoria Rodríguez Ceja as governor of the central bank (El Financiero – Spanish). Rodríguez Ceja will become the first female governor of Banxico.
The deputy Finance Minister believes the economic recovery continues. According to Gabriel Yorio, deputy minister of Finance, the Mexican economy’s recovery has not stopped despite the slight fall in the third quarter (El Economista – Spanish). The fall in the third quarter was explained by the third wave of the COVID-19 pandemic.
The Finance Ministry helped Pemex with MXN284bn. The Finance Ministry has offered MXN284bn to Pemex in transfers and tax cuts (El Financiero – Spanish). The transfers include payments to build the new refinery and debt refinancing.
Legal & Regulatory
AMLO and businessmen discussed the power reform. President López Obrador discussed the power reform effect with the Mexican Board of Businesses (CMN) (El Economista – Spanish). They agreed to prioritize the dialogue to reach agreements.
Gas station owners are concerned with the new rules. The House of Representatives is expected to approve the volume controls bill, and gas stations will have six months to comply or face fines and jail time (El Financiero – Spanish).
The power reform will have an open parliament. The House of Representatives approved an open parliament for the power reform to take place between January 17 and February 15, in 19 days (Excelsior – Spanish). The open parliament was divided into five themes in hybrid format (face-to-face and online).
The Finance Ministry cut gasoline subsidies. The Finance Ministry published the subsidies for fuel, which were reduced (El Financiero – Spanish). The premium gasoline subsidy was lowered by 17.11%, and the special tax on fuels was left at 14.74%.
Market Trends
CFE clean energy generation dropped. Clean energy generation increased from less than 20% to more than 25% in a decade, of which 55% is produced by hydroelectric, geothermal, and nuclear energy plants that CFE operates (El Economista – Spanish). In 2011, CFE offered 100% of the clean energy.
Oil production fell in the third quarter. The National Hydrocarbons Commission (CNH) presented the report of drilling equipment and wells, showing a 37.5% decrease compared to 2020 (Oil and Gas Magazine – Spanish). Between April and June, 23 drilling rigs operated in Mexico.
CFE will deal with the extra natural gas. The state-owned company will promote the development of the Veracruz-Oaxaca pipeline, the maritime terminal, and the LNG plant in Salina Cruz, guaranteeing natural gas supply in the south-southeast and the LNG export market (Aristegui Noticias – Spanish).
Strategy & Operations
CNH okayed Pemex’s plans in Ek-Balam. The National Hydrocarbons Commission (CNH) approved Pemex’s workplan and budget of US$828.7m for Ek-Balam (Forbes – Spanish). Ek-Balam will reach peak production in April 2022 (El Economista – Spanish).
MC activists want to stop Dos Bocas. Movimiento Ciudadano activists presented a lawsuit to stop the construction of the Dos Bocas refinery, as it is being built on land reserved to protect the environment (El Financiero – Spanish). The writ of amparo states Pemex is building in an area that it promised to protect.
CFE will give Mexico City’s subway a makeover. The state-owned company will be in charge of getting CFE’s electrical system up-to-date (Forbes – Spanish). In three years, the CFE will receive MXN4.5bn for different projects.
CFE suffers vandalism in Querétaro. The state-owned company suffered 59 acts of vandalism in substations in Querétaro (El Economista – Spanish). The acts occurred in September, October, and November, affecting the power supply in the state.
Mexico rejected Eni’s plans. The National Hydrocarbons Commission (CNH) rejected the updated work program sent by the Italian company for its Area 1 contract (Upstream Online – English). Eni achieved first oil in Mexico in June 2019 on a fast-track basis from the Mizton field.
The solar plant in Sonora will cost MXN34.5bn. The new solar plant of the state-owned company will receive an investment of MXN34.5bn and a capacity of 1,000MW (El Economista – Spanish). The plant will benefit 1,593,339 users.
Old School Social Goes Viral
(Editor’s note: For the duration of the COVID-19 outbreak, this section will refocus on announcements of event delays or cancellations, events that are moved online, and scheduled webinars and public conference calls. Stay safe!)
Mexico Assembly will be held in May 2022 in Mexico City.
Lateral Thinking
Gas stations hit the brakes. Due to the lack of permits granted by the Energy Regulatory Commission (CRE), the construction of gas stations fell 76% on average (Forbes – Spanish). Between 2020 and 2021, 100 gas stations have been built; before there were around 400.
Quote of the Week
“Deserve your dream.”
– Octavio Paz (1914-1998), Mexican poet and diplomat.
We hope you have a productive week. Please send any news, comments, or gas station plans to MexicoWeekly@energynarrative.com.
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