August 13, 2018 edition—Pemex and Diavaz migrate; the Texas-Tuxpan pipeline’s pollution problem; and a sunset over NAFTA.
Last Week in a Minute or Less
Renewables & Electricity. Uncertainty surrounds the Oaxaca-Mexico line; Quintana Roo and Baja California Sur have new renewable projects; and the IDB will finance Mexico’s geothermal energy.
Natural Gas & Liquid Fuels. The Texas-Tuxpan pipeline is under the microscope over pollution; the CRE okayed new jet fuel storage tariffs; and experts doubt AMLO’s budget will cover refineries.
Oil & Gas Upstream. Pemex and Diavaz migrated a field to farmout; Capricorn and Citla gave up a field; and BHP Billiton will bet big in Trion.
Money & Power. NAFTA’S cars and sunset clause are under discussion; Banxico left interest rates unchanged; and Goldman and Morgan Stanley disagree over the peso’s future.
Déjà vu all over again. Last week’s readers were particularly interested in AMLO’s choice for CFE (Reforma – Spanish); Mexico’s hydropower future (Platts – English); and Pemex’s plans for its infrastructure (Platts – English).
Mexico and the US are considering proposals for NAFTA’s rules of origin. Mexico’s economy minister said Mexico presented a proposal to update NAFTA’s rules of origin and is studying the US position (Reuters – English) (El Economista– Spanish). Guajardo returned to Washington to attend bilateral meetings that have brought important progress.
In the third week of NAFTA talks, cars and a sunset clause are the focus. The US and Mexico are close to an agreement on content and salaries for auto manufacturing, while attention turns to the sunset clause pushed by US Trade Representative Lighthizer (Bloomberg – English).
Canada rejoined the NAFTA talks. Canada returned to the NAFTA negotiations with Mexico and the US (El Economista – Spanish). Canada’s foreign affairs minister downplayed the idea that Canada was excluded and said the country is ready to move forward on an agreement (Bloomberg – English) (El Economista – Spanish).
The Road to Reform
Pemex and Diavaz migrated a field to farmout. The National Hydrocarbons Commission (CNH) signed the exploration and extraction contract in the Ébano field, the eighth migration of an assigned contract (El Economista – Spanish). Pemex and DS Servicios Petroleros signed the exploration and production contract in 2013 and its current production is 7,600 barrels per day.
The CRE okayed new jet fuel storage tariffs and 25 power companies asked for permits. The Energy Regulatory Commission (CRE) approved the new tariffs that Aeropuertos y Servicios Auxiliares (ASA) could charge to use 60 storage terminals (El Economista – Spanish). The CRE announced 25 companies requested permits to offer power generation (El Universal – Spanish).
Uncertainty surrounds the Oaxaca-Mexico line. CFE pushed the ruling for the tender of the Oaxaca-Mexico line to September 14 (Spanish). The tender was postponed for more than a year since the announcement of the project due to the lack of agreement on the currency used to calculate costs.
The Huasteca will be fracking-free. The Energy Minister pledged no fracking activities will be authorized to extract hydrocarbons at the Ébano field in San Luis Potosí (El Financiero – Spanish). The Energy Minister added that Rounds 3.2 and 3.3 do not include areas from the state of San Luis.
Capricorn and Citla gave up a field. The National Hydrocarbons Commission (CNH) authorized the resolution to terminate the Round 3 contract that Capricorn Energy and Citla Energy had to explore and extract in the G-TMV-01 area (Milenio – Spanish). The area has a 961 square kilometer extension in front of the Tamiahua coast in Veracruz.
Fuel thieves and the Army clashed. The Army and alleged fuel thieves quarreled in Santa Ana Xalmimilulco, hurting and detaining the fuel thief leader (El Financiero – Spanish). An armed group of fuel thieves blocked the Mexico-Puebla highway for 40 minutes (El Universal – Spanish).
Experts doubt the refineries budget. Analysts estimate that the MXN208bn secured to “rescue” the refining sector will not be enough (El Financiero – Spanish). The plan is to build two new refineries and six will be rehabilitated.
Mexico’s energy governance was more expensive than expected. The Energy Ministry spent MXN3.7bn over the approved budget, a 215.4% increase (La Jornada – Spanish). The CRE spent MXN154m, a relative variation of 66.4%, and the CNH, 60.7% above the budget.
AMLO’s team will check oil contracts through November. The Energy Minister said that among the 105 contracts, most have not been reviewed in their original versions (Animal Político – Spanish). The review has just started and could finish by the end of November.
Calling off CFE’s customer’s debt is questioned. The new plans of President-elect López Obrador to condone debts for power tariffs could hurt Mexico’s public finances (Excelsior – Spanish). This year, the CFE has an MXN50bn budget to subsidize power tariffs, and MXN22.8bn have already been spent in the first six months.
Banxico left interest rates unchanged… Mexico’s central bank maintained the interest rate at 7.75% (Bloomberg – English). Banxico lowered its outlook for economic growth for 2018 (Reuters – English).
…and worries over Mexico’s growth. Mexico’s central bank is concerned that the balance of risks to economic growth are turning negative (El Financiero – Spanish). Banxico expects 2018 growth to be in the lower range forecasted, between 2% and 3%.
Experts said there are not enough fields to increase oil production. Experts estimate there are not enough fields in Mexico to increase oil production to 2.5m barrels per day in two years (El Financiero – Spanish), as President-elect López Obrador plans. The current fields produce 1.9 million barrels per day.
Goldman and Morgan Stanley disagree over the peso. Goldman Sachs believes there is still room for the peso to gain, even after the peso’s 7% rally (Bloomberg – English). Morgan Stanley, however, said the currency is close to a selling point, with the NAFTA deal being key.
Strategy & Operations
BHP Billiton will bet big in Trión. The Australian oil giant will invest MXN1.7bn drilling the first well in the Trión block (Reforma – Spanish). The goal of the well is to reduce the uncertainty in the field, with an original volume of 946 million barrels of crude equivalent (Oil and Gas Magazine – Spanish).
The Texas-Tuxpan pipeline is under the microscope regarding pollution. The Security, Energy, and Environment Agency (ASEA) took samples of materials allegedly polluted in the construction of the Texas-Tuxpan pipeline (El Financiero – Spanish). The El Morón, Lomas del Real, and El Barranco communities accused TransCanada of polluting the San Andrés lagoon.
US companies eye Mexico’s fuel market. The Texan company Windstar manages 10 gas stations in Chihuahua, selling imported fuel from its US fuel storage plants (El Financiero – Spanish). Two companies work to import fuels in Mexico through the Brownsville Port (El Financiero – Spanish).
The IDB will finance Mexico’s geothermal energy. The Inter-American Development Bank (IDB) approved a modification of a US$108.6m loan to increase private investment in power generation projects from geothermal sources (IADB – English). The financial mechanisms will include exploration, drilling, field preparation, construction, and operation of private geothermal projects.
Renewables shine bright in Quintana Roo and Baja California Sur. The Energy Regulatory Commission (CRE) granted the permit for a solar plant in Bacalar with a 50.75MW capacity (El Financiero – Spanish). The Coromuel Wind Plant Project was registered with the Environmental and Natural Resources Ministry to cover Baja California Sur power demands (El Financiero – Spanish).
Old School Social
Events in the world beyond your screen—go see and be seen!
Expo Energía is scheduled for August 14-16 in Puebla, Mexico.
The 2018 Deloitte Renewable Energy Seminar will be held August 15-17 at the Westin Denver Downtown in Colorado.
Expo Eficiencia Energética is scheduled for August 22-24 at Cintermex in Monterrey.
A drought killed a Mayan civilization. The end of Lowland Classic Maya civilization exemplifies how past climate may have affected ancient societies. The precipitation decreased between 41% and 54% (Science – English), with intervals of 70% rainfall reduction during peak drought. Relative humidity dropped by 2% to 7% compared to today’s conditions.
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 drought consequences to MexicoWeekly@energynarrative.com.
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