August 10, 2020 edition—The CNH’s oil decisions; private companies’ imports; and a 90MW wind farm.
Last Week in a Minute or Less
Electric Power & Renewables. Envision cut the ribbon on a 90MW wind farm; AMLO made his case for the new energy policy in the Supreme Court; and the Maya train will have an electric-powered section.
Natural Gas Mid-Downstream & LNG. Mexico’s natural gas pipeline imports increased.
Liquid Fuels Mid-Downstream. Salina Cruz produces both jobs and pollution; and private companies import more fuel than Pemex.
Oil & Gas Upstream. The CNH is boosting oil activities; and Mexico’s proven oil reserves will last 10 years.
Government & NGO. Analysts expect a 7.6% GDP recovery in the third quarter; the IMF advises Mexico to provide support policies; and the USMCA will boost tourism investments.
Déjà vu all over again. Last week’s readers were particularly interested in Siemens and GIZ’s agreement (El Financiero – Spanish); CFE’s new plants announcement (El Financiero – Spanish); and Mexico’s energy reform risk (Bloomberg – English).
Geopolitics & Trade
The USMCA will boost tourism investments. The Tourism Secretary assured that the new NAFTA will help to provide favorable conditions for the economy to recover its dynamism (El Economista – Spanish). US and Canadian investments added US$318bn through March and represent more than 50% of the total foreign direct investment.
Remittances improved in the first half of the year. Remittances during the first half of 2020 increased 10.55%, the highest increase for the same period since 2018 (El Financiero – Spanish). Remittances reached US$19.7bn through June, compared to US$17.2bn in the first half of 2019.
Export companies will lose benefits with new rules. Textile factory export companies will lose 17 benefits in 2020, including not receiving VAT returns in preferential periods (El Financiero – Spanish). The National Association of Export-Import Companies of the Mexican Republic (ANIERM) said it could affect the liquidity of the companies.
Mexico-US trade fell 21.3% in the first quarter. The trade between Mexico and the US reached US$243.9bn during the first half of the year (El Financiero – Spanish). The amount is a 21.3% fall compared to the same period in 2019.
AMLO explained the increase in debt. According to President López Obrador, Mexico’s debt will increase due to the effect of the COVID-19 crisis. AMLO pointed to the peso depreciation as a reason for the debt increase (El Financiero – Spanish).
The IMEF expects a slow recovery. According to the Mexican Institute of Finance Executives (IMEF), the Mexican economy reached its lowest level after the COVID-19 crisis (El Economista – Spanish). The IMEF expects a fragile, slow, and prolonged recovery (El Financiero – Spanish).
Specialists expect a 10.02% fall in Mexico’s GDP. The fall in the Mexican economy in 2020 will be 10.2% according to the GDP forecasts of Mexico’s central bank survey of 36 private and foreign specialists (El Economista – Spanish).
Analysts expect a 7.6% GDP recovery in the third quarter. The Mexican economy started its recovery after the end of the lockdown and analysts expect a recovery of 7.6% between July and September (El Financiero – Spanish).
The IMF advises Mexico to provide support policies. The International Monetary Fund (IMF) said Mexico should focus on providing enough support policies to face the COVID-19 pandemic and fiscal reforms (El Financiero – Spanish). The IMF also recommended the government revitalize structural reforms.
Legal & Regulatory
AMLO will name Montoya as head of Conamer. President López Obrador will name Alberto Montoya Martín del Campo, the current deputy minister of Planning and Energy Transition of the Energy Ministry (Sener), as the new director of the National Commission of Regulatory Improvement (Conamer) (El Financiero – Spanish).
AMLO made his case for the new energy policy in the Supreme Court. President López Obrador presented two appeals before the Supreme Court to refute the suspension of the new rules published in May by the Energy Ministry (El Financiero – Spanish). The new rules would impact the development of the renewable energy sector.
The CNH is boosting oil activities. The National Commission of Hydrocarbons (CNH) established different measures to promote oil activities (DOF – Spanish). The exploration and evaluation periods and the transition programs’ effect were canceled.
AMLO is officially working against the energy reform. President López Obrador urged energy sector regulators to undo changes made during the previous administration while strengthening Pemex and CFE (Natural Gas Intel – English) (El Economista – Spanish). The government assured the previous contracts will be respected (El Economista – Spanish).
Environmentalists worry over the refining increase. The executive director of Climate Initiative of Mexico warned that President López Obrador’s decision to increase oil refining could have negative impacts on ecological terms (El Economista – Spanish). Refineries emit pollutants that affect the near populations and the environment.
Mexico’s proven oil reserves will last 10 years. Mexico has proven oil reserves for the next 10.2 years (El Financiero – Spanish). The country’s total proven oil reserves amount to 8.062 billion barrels of oil equivalent (boe), up 2.1% from the previous year (OE Digital – English).
Private companies import more fuel than Pemex. Private companies imported more fuel products than the state-owned company (El Financiero – Spanish). In June, the volume of fuels acquired by private companies reached 51.5% of the total, importing 707,718 barrels of fuels.
Mexico’s natural gas pipeline imports increased. According to the Energy Regulatory Commission (CRE), natural gas prices in Mexico averaged US$2.33/MMBtu in June 2020 compared to US$2.78/MMBtu in June 2019 (Natural Gas Intel – English). Mexico increased its pipeline gas imports from the US, which averaged an all-time high of 6.4Bcf/d for the July 20-24 period.
Strategy & Operations
Salina Cruz produces both jobs and pollution. Although it has being operating at less than half of its capacity, NASA’s IMO found that the refinery is one of the critical points in the world for sulfur dioxide emissions (El Economista – Spanish).
Tula violated environmental laws for years. According to CFE, one of Mexico’s largest power plants violated the legal limit for the amount of sulfur in the fuel oil it burned between 2016 and 2019 (Canada – English) (El Economista – Spanish). The sulfur content during those four years was at least 3.9%, almost doubling the 2% cap.
Envision cut the ribbon on a 90MW wind farm. The Chinese firm announced the start of operation of the Peninsula wind farm in Yucatán (Renewables Now – English). The plant is expected to supply more than 300GWh annually to the Mexican grid.
The Maya train will have an electric-powered section. The cost of the Maya train in the second quarter is MXN156bn, 12% more than the amount registered in April, due to the incorporation of the Mérida-Cancún and Cancún-Chetumal roads (El Economista – Spanish). A section of the train will be electrified, requiring an extra investment of MXN25bn.
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!)
The 2nd Edition of The Madrid Energy Virtual Conference will be held September 28-October 2.
MIREC Week has been postponed from June 2-4 to October 8-10 at Centro Citibanamex.
Solar Power Mexico was postponed from March 24-26 to November 18-20 at Centro Citibanamex.
The Mexican Energy Forum is rescheduled for November 17-18 in Mexico City.
2nd Edition of Shallow and Deepwater Mexico was postponed to February 16-18, 2021, at Ciudad del Carmen, Campeche.
Mexico Assembly is rescheduled for May 26-27, 2021, at Hyatt Regency, in Mexico City.
The Mexican Petroleum Congress is rescheduled for June 23-26, 2021, in Monterrey.
The Guajirío keep fighting the Bicentenario-Los Pilares dam. The Guajirío community keep fighting the start of a dam that would displace the group and flood ancestral graves (The Guardian – English). Although President López Obrador initially showed support for the Guajiríos, opponents to the project have received threats and the government approved the necessary licenses and provided funding.
Quote of the Week
“Luciérnagas en un árbol… ¿Navidad en verano?”
“Fireflies in a tree… Christmas in the summer?”
– José Juan Tablada (1871-1945), Mexican poet and art critic.
We hope you have a productive week. Please send any news, comments, or disputed lands to MexicoWeekly@energynarrative.com.
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