April 10, 2017 edition— Pemex looks for hydrogen partners; CELs will multiply; Enel and Iberdrola start solar construction.
Last Week in a Minute or Less
Renewables & Electricity. CELs will double in two years; Enel will start the construction of a solar farm in Coahuila, and Iberdrola, in Sonora
Natural Gas & Liquid Fuels. Hydrocarbons reserves dropped; CRE approved a natural gas price increase for suppliers and announced 10 private companies can import gasoline
Oil & Gas Upstream. Sener recommends consulting indigenous communities; Pemex will partner up at refineries’ hydrogen plants; and Pemex will follow up on the Yucatán pipeline project.
Money &Power. Banxico increased rates; Mexico has the European Union in sight; and Kelly, Tillerson, and Videgaray will meet.
Déjà vu all over again. Last week’s readers were particularly interested in the investment in ports (Spanish); the readiness of the third electricity auction (Spanish); and CFE’s new investments (Spanish).
The Road to Reform
CELs will triple by 2022. The requirements of Clean Energy Certificates (CELs) for all participants at the Wholesale Electricity Market will double in 2019 reaching 5% and nearly triple again by 2022, to 13.9% (English) (Spanish). The goal is to increase the production of clean energies to reach 35% of the grid by 2024.
Sener advises dialogue with indigenous communities. The Energy Ministry emphasized the importance of consulting indigenous communities in order to develop 30 power projects with projected investments of US$6.6bn (Spanish). Establishing a dialogue with indigenous communities could take time and effort, but offers security for the projects.
CRE okayed a natural gas tariff increase for suppliers. The tariffs on natural gas sales and distribution charges increased 19% in 2017 (Spanish). The natural gas distributors’ final prices include the cost of gas set by the Energy Regulatory Commission (CRE), considering international prices, and the supply and transport tariff determined by private companies.
The CRE announced 10 private companies are gasoline importers. The Energy Regulatory Commission (CRE) announced before Congress that 10 private companies now import gasoline. The CRE forecast US$242bn of private investment in the energy sector over the next 15 years and US$131bn in the electricity sector (Spanish).
Pemex believes in Campeche… The state-owned company will invest MXN108bn to support Campeche. The amount equals 53% of Pemex’s 2017 budget for programmed investments, and will be concentrated in the Cantarell, Chuc, Ku Maloob Zaap, and Yaxchel fields to stimulate local economies and promote activities of small and medium companies (Spanish).
…and CFE, in investment projects. The state-owned company plans to allocate MXN272bn to investment projects during the next five years (Spanish). According to the Business Plan for 2017-2021, 70% of the amount will be directed to investments already underway or designated as priorities in the National Development Plan.
Public debt hit a historic high. The Finance Ministry announced that public debt has reached MXN9 trillion and Pemex’s income dropped by 16.6% in the last year, to MXN57.2bn (Spanish). The Federal Government will spend MXN86.5bn more than the approved budget for this year (Spanish).
Videgaray will meet Tillerson and Kelly. Mexico’s foreign minister Luis Videgaray will meet US Secretary of State Rex Tillerson and Secretary of Homeland Security John Kelly at the Organization of American States (OAS) (English) (Spanish). The goal of the meetings will be to advance the bilateral agenda between Mexico and the United States.
Banxico increased rates aggressively. Mexico’s central bank announced an increase of 25 basis points to the reference rate, to reach 6.5%, a level not seen since 2009 and the eighth increase in 18 months (English) (Spanish). Per analysts, Banxico will continue increasing the target rate this year, but at a slower pace than in 2016.
Hydrocarbons reserves fell in 2016. Mexico’s proven reserves dropped by 10.6% last year to 9,160.7 million barrels of crude oil (English). Natural gas reserves also dropped, declining by 17.8% to 10,402 Bcf (Spanish). The decreases are due to lower investments by Pemex and the failure to bring new projects to maturity.
Electrical tariffs hit the brake on hikes. After nine months of continual price increases, tariffs for industrial users will fall between 3.6% and 5.3%, while the commercial sector will enjoy cuts of between 1.5% and 3.1% (Spanish). CFE’s announcement came after industrial and commercial tariffs increased between 8% and 17.2% from February to March.
Mexico looks at the European Union for a new FTA. The Deputy Economy Minister considered a new free trade agreement with the European Union “essential” for Mexico (English) (Spanish). Mexico and the EU are negotiating to improve the agreement signed in 2000 and both plan to sign a new agreement in 2017.
Strategy & Operations
Enel will build its biggest solar farm in Mexico… The Italian company announced an investment of US$650m to build what will be the biggest solar power farm in Mexico so far (Spanish). The Villanueva plant in Coahuila will have a capacity of 754MW and will open by June 2018 (English).
…and cut the red ribbon at Don José construction. Enel started the construction of the 238MW solar power plant at San Luis de la Paz, Guanajuato (English) (Spanish). The plant will require an investment of US$220m and will generate annually 539GWh, equivalent to the yearly consumption of 410,000 homes.
Pemex will rekindle the peninsular pipeline project. The state-owned company will follow up on Trafigura’s contract to build a line to transport fuel from Mérida to Cancún (Spanish). The project will be revived based on the former agreement, which predates the energy reform, and the terms are being restructured.
Pemex looks for partners at refineries’ hydrogen plants. The state-owned company’s CEO plans to develop alliances in hydrogen plants at refineries, such as the agreement signed with Air Liquide to supply hydrogen to Tula’s refinery (Spanish). The goal is to reduce the number of unscheduled stoppages in the refinery and increase gasoline production.
Iberdrola began construction of the Sonora solar farm. The Spanish company started building its solar power park in Sonora, with an investment of US$135m (English) (Spanish). The 400,000-panel solar plant is located in the Pitiquito municipality, and the power will be sold at the Wholesale Electricity Market.
Old School Social
Events in the world beyond your screen – go see and be seen!
The Platts Mexican Energy Forum is April 18 at Camino Real Polanco, in Mexico City.
The Mexican Energy Forum is April 25-26 in Mexico City.
Mexico makes tequila rain. Through using ultrasonic humidifiers, Mexico’s tourism board has created a way to vaporize tequila, spray it into a cloud form and convert it into rain (English). A rainy day could include tequila falling from the sky, but a huge amount of tequila would be required to make a big enough cloud.
Quote of the Week
“En la justicia se fundan los imperios.”
“Empires are founded on justice.”
– Fernando del Paso (1935), Mexican academic, novelist, and poet
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