August 16, 2021 edition—BHP’s Trión field; ECA’s start date; and the new LP gas market.
Last Week in a Minute or Less
Electric Power & Renewables. Four wind companies got writs of amparo; the CRE set the power tariffs for July; and the Cenace has a new leader.
Natural Gas Mid-Downstream & LNG. Sempra’s ECA will start in 2024; Mexico’s natural gas production is up; and the new LPG rules may help the natural gas market.
Liquid Fuels Mid-Downstream. Fuel prices have been growing the past five months; Amexgas has a grim forecast for the LP gas market; and a court gave Novum México permission to import fuel.
Oil & Gas Upstream. BHP will bet US$258m on the Trión field; Fieldwood and Petrobal will start working in Ichalkil and Pokoch; and Talos may be looking beyond Zama.
Government & NGO. Analysts expect Banxico’s rate to reach 4.5%; AMLO wanted to use FMI’s funds for Mexico’s debt; and Clouthier doubts Mexico’s GDP recovery.
Déjà vu all over again. Last week’s readers were particularly interested in investments in batteries (El Economista – Spanish); CFE and TransCanada’s partnership (El Economista – Spanish); and Pemex’s production data (El Financiero – Spanish).
Geopolitics & Trade
AMLO and Kamala Harris had a chat on COVID-19 vaccines. President López Obrador had a phone call with Vice President Kamala Harris to discuss the donation of COVID-19 vaccines (Forbes – Spanish) (El Financiero – Spanish). Harris and Obrador discussed migration, the battle against COVID-19, and the need to strengthen Central American economies (VOA – English).
Mexico is the US’ top trade partner in 2021. In the first half of 2021, Mexico was the first US trade partner with US$320bn in trade flow, greater than Canada’s US$317.1bn and China’s US$300.7bn (El Financiero – Spanish). Last year, in the same period, Canada was leading the list.
Mexico’s exports skyrocketed to pre-COVID-19 levels. Exports during the first half of 2021 went over the level registered before the pandemic (El Financiero – Spanish). Banxico estimates that Mexico’s export volume reached US$236.1bn, above the US$277.3bn in registered exports in the first half of 2019.
The US infrastructure plan will help out Mexico. According to analysts, the US infrastructure plan approved by the US Senate will have a positive impact on the Mexican economy. Mexican exports could double if the administration takes advantage of the new plan’s opportunities (El Financiero – Spanish).
The US Senate okays Salazar as Mexico’s new ambassador. The US Senate ratified Ken Salazar as the first of President Joe Biden’s ambassadors (El Economista – Spanish). Salazar’s confirmation broke the obstruction established by Senator Ted Cruz.
Analysts expect Banxico’s rate to reach 4.5%. According to Citibanamex’s survey to analysts, Mexico’s central bank will increase the interest rate by 25 points, reaching 4.5% (El Financiero – Spanish). At least two more increases are expected this year.
Pemex owes MXN57bn to contractors and suppliers. The state-owned company has a debt of MXN57.1bn with suppliers and contractors, but in four months, Pemex cut the debt from MXN60.3bn, a 5.2% reduction (Oil and Gas Magazine – Spanish). During 2020 and 2021, due to the pandemic, Pemex was hit by a MXN40bn cut.
AMLO wanted to use IMF funds for Mexico’s debt. President López Obrador said public debt could be paid with the International Monetary Fund’s resources (El Economista – Spanish). Mexico’s central bank deputy governor clarified that the IMF’s funds cannot be used to pay the debt (El Economista – Spanish).
Clouthier doubts Mexico’s GDP recovery. According to Mexico’s Economy Minister, Tatiana Clouthier, the country’s economy may not reach 6.3% growth this year due to the COVID-19 third wave (El Economista – Spanish). Clouthier expects GDP growth to reach at least 5.5%.
Legal & Regulatory
The Cenace has a new leader. The Energy Minister said Ricardo Octavio Mota Palomino was named by President López Obrador as the new general director of the National Center of Energy Control (Cenace) (El Financiero – Spanish). He will replace Carlos Gonzalo Meléndez Román, who quit for personal reasons on August 5.
Amexgas has a grim forecast for the LP gas market. The LP Gas Distributors Association estimates that sales losses were close to 20,000 tons of the fuel due to the partial taking of 104 LP gas plants (El Economista – Spanish). The association keeps a close dialogue with regulators.
The government pointed fingers at four LP gas companies. The consumer watchdog said most companies followed the new LP gas prices set by the regulator, but four gas companies did not follow the rules on maximum gas prices: Extra Gas, Ecogas, Gas Express Nieto, and GG Gas (El Financiero – Spanish).
A court gave Novum México permission to import fuel. A specialized court on environmental issues handed the company a permit to continue its gasoline and diesel import activities due to the Energy Ministry’s decision to stop granting new import permits (El Economista – Spanish). The Sener did not answer Novum’s request for new permits.
The CRE set the power tariffs for July. The Energy Regulatory Commission (CRE) published the basic supply power tariffs for July (DOF – Spanish). Home power tariffs grew 9.1% during President López Obrador’s administration (El Financiero – Spanish).
Fuel prices have been growing the past five months. Fuel prices registered an increase of 14.4% to their annual rate in July, increasing during the last five months (El Financiero – Spanish). In 2020, the prices of energy products decreased during the COVID-19 pandemic and the confinement measures.
Sempra’s ECA will start in 2024. The first phase of the Energía Costa Azul (ECA) liquefied natural gas (LNG) export project is expected to be online in 2024 (Natural Gas Intel – English). A proposed second phase would add 12 mtpa of liquefaction capacity.
The new LPG rules may help the natural gas market. Analysts expect the LPG sector to see shortages and a decrease in service quality with the new price limits (Natural Gas Intel – English). Pipeline distributors of natural gas should be able to exhibit the benefits of reliability and superior services to LPG.
Mexico’s natural gas production is up. As US prices keep increasing this summer, Mexico’s natural gas production is contributing to the national gas demand (Natural Gas Intel – English). Dry gas production has averaged nearly 2.5 Bcf/d, up 0.24 Bcf/d above average levels seen for the past two months.
Strategy & Operations
Talos may be looking beyond Zama. After the authorities granted operatorship to Pemex, Talos Energy will not renounce its Zama discovery, but it is already looking for other opportunities (Platts – English). Talos said it was very disappointed with SENER’s decision, considering its significant investments in Zama during six years of ownership.
BHP will bet US$258m on the Trión field. The Australian company approved an investment of US$258m for the Trión project (El Economista – Spanish). BHP has a 60% share in the operation of the AE-0092 and AE-0093 blocks located in deep waters, and Pemex has a 40% share of those fields.
Fieldwood and Petrobal will start working in Ichalkil and Pokoch. The Mexican Association of Hydrocarbons Companies said Hokchi Energy is increasing extraction, Eni and Lukoil made a new discovery, and Fieldwood and Petrobal announced commercial production will start in August (El Economista – Spanish).
Four wind companies got writs of amparo. Energía y Proyectos Eólicos, Fuerza y Energía de Naco Nogales, Fuerza y Energía BII Hioxo, and Fuerza Eólica San Matías received four writs of amparo as the judge said the power industry reform distorts free competition in the generation market, impacting other participants (PV Magazine – Spanish).
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 Infrastructure & Sustainability Summit is scheduled for October 27-28.
Mexico Assembly will be held in May, 2022 in Mexico City.
Mexico will turn to electric vehicles. The Foreign Relations Ministry said both the US and Mexican presidents are planning to speed up the transition to electric vehicles from fuel fossil vehicles (PV Magazine – Spanish). Mexico’s EV plant and the general auto industry will have to adapt to it.
Quote of the Week
“Matamos lo que amamos. Lo demás no ha estado vivo nunca.”
“We kill what we love. The rest was never alive.”
– Rosario Castellanos (1925-1974), Mexican poet and author.
We hope you have a productive week. Please send any news, comments, or EV projects to MexicoWeekly@energynarrative.com.
Tell your friends and colleagues about the Weekly Brief! They can sign up for a free one-month trial here.[/vc_column_text][/vc_column][/vc_row]