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August 26, 2019 edition—Tres Mesas III is up and running; Pemex’s upstream plans; and the pipeline negotiation is close to an end.
Last Week in a Minute or Less
Renewables & Electricity. Engie cut the ribbon of the Tres Mesas III wind park; Soltec will help out Enel with trackers; and Mexico reached 817MW of solar panel capacity.
Natural Gas & Liquid Fuels. The Dos Bocas winners promised to be on time; the pipeline negotiations are almost over; and Morena fights Pemex’s LP gas discounts.
Oil & Gas Upstream. The CNH okayed Pemex’s upstream plans; and Pemex wants your opinion on CSIEE.
Money & Power. The US-Mexico negotiation over tomatoes is over; the interest rate cut brought different reactions; and economic growth is Mexico’s Achilles heel.
Déjà vu all over again. Last week’s readers were particularly interested in Morena’s request for investment in gas and power (El Financiero – Spanish); the Canadian ambassador’s resignation (Reuters – English); and US natural gas producer’s risks (Platts – English).
NAFTA Negotiation
AMLO expects the US USMCA ratification in September. President López Obrador expects the US to ratify the new NAFTA next month (Reuters – English). AMLO said the ratification will “help us very much.”
The US-Mexico negotiation over tomatoes is over. The US government and Mexican exporters agreed to check 92% of the trucks transporting tomatoes (El Economista – Spanish). The agreement could be a positive step towards the ratification of the new NAFTA (El Financiero – Spanish).
Companies support an energy park at the US-Mexico border. Several industry partners, such as Bechtel, General Electric, Sempra Energy, and Maeva Investments, support the development of the Future Energy, Water, Industry and Education Park. The project could boost the energy industry and bring water to the region (Climate Liability News – English).
The Road to Reform
The CRE explained the concept “diagnosis.” The Energy Regulatory Commission (CRE) explained how the concept of diagnosis is interpreted by the commission, as the concept referred only to the activity of Transporters or Distributors as the characteristics of the measuring system to determine if it fits the technical specifications (DOF – Spanish).
The Dos Bocas winners promised to be on time. The companies that won the Dos Bocas contracts pledged to complete the project on time (El Financiero – Spanish). KBR, Samsung, and ICA-Fluor said they have an ethical commitment to finish the project on schedule.
The pipeline negotiations are almost over. President López Obrador said a deal may be reached in the following days (Reuters – English) (El Financiero – Spanish). The Sur de Texas-Tuxpan pipeline could start operating later in August (Platts – English).
Morena fights Pemex’s LP gas discounts. The political party presented a plan to ban the state-owned company from giving discounts to LP gas suppliers (El Financiero – Spanish). The discounts are considered in the Hydrocarbons Law.
The CNH okayed Pemex’s upstream plans. The National Hydrocarbons Commission (CNH) approved the state-owned company’s plans to develop and produce two oil fields that contain a range of crude grades from heavy to light (Platts – English). Pemex plans to spend US$500m on the Teekit and Cibix fields.
Political Economy
AMLO pledges further investment for Pemex. President López Obrador said the government will continue investing in the state-owned company (Reuters – English) (El Financiero – Spanish). Pemex is close to losing its investment grade rating. Fitch Ratings downgraded US$80bn of bonds to junk status and a second downgrade from Moody’s is expected soon.
Inflation remains one of Mexico’s challenges. Reducing Mexico’s core inflation, currently at 3.8%, is a challenge for Banxico (Reuters – English). Mexico’s central bank pointed to slowing inflation and an economy affected by global trade tensions as the reasons for making the cut on the key interest rate.
The 2020 economic package will focus on surplus and debt. According to the Mexican Institute of Finance Executives, the 2020 economic package should prioritize the surplus and cut debt as a percentage of the GDP (El Economista – Spanish).
Economic growth is Mexico’s Achilles heel. President López Obrador said that economic growth is pending to achieve development and well-being for the Mexican population (El Financiero – Spanish). AMLO explained that the fight against corruption and austerity in the government are not enough to boost development.
Pemex wants your opinion on CSIEE. The state-owned company launched a public inquiry regarding the general characteristics of the exploration and extraction service contracts (CSIEE) (El Financiero – Spanish). The CSIEE is the main model used by Pemex for the private sector to participate in oil sector activities.
Market Trends
AMLO asked rating agencies for objectivity. President López Obrador said he hopes rating agencies will act more objectively and emphasized that Mexico pays them US$300m per year (Bloomberg – English). AMLO asked the rating agencies to be “more cautious in their analysis, more professional.”
Interest rate cut brought different reactions. Analysts said that Banxico’s surprise interest rate cut will have limited impact on increasing growth this year (Reuters – English). President López Obrador said it would stimulate Mexico’s economy (Reuters – English).
Credit Suisse and Barclays believe Mexico’s monetary policy is restrictive. Credit Suisse and Barclays said that despite Banxico’s rating cut and the possibility of further cuts, Mexico’s monetary policy is still restrictive (El Economista – Spanish). Barclays said Mexico’s neutral rate is located between 5.5% and 6%.
Banxico sees economic activity at a standstill. Mexico’s central bank said that “there is a certain stagnation in economic activity” due to a contraction in industrial activity (El Economista – Spanish). Analysts expect another cut in the key interest rate in September (El Financiero – Spanish).
Strategy & Operations
Scientists managed to transform seaweed into biofuel. Specialists from the Center of Scientific Research of Yucatán (CICY) developed a prototype system that transforms seaweed into biogas that can be used as a source of heat and to generate clean power (El Economista – Spanish). The project started in 2017.
Mexico reached 817MW of solar panel capacity. According to the Mexican Solar Energy Association, solar generation through solar roofs reached 100,000 contracts in Mexico, a 117% increase in the first half of the year (El Economista – Spanish). Solar energy represents 1% of the national capacity.
Pemex sent more crude abroad and processed less. During the first half of the year, the state-owned company exported 1,149 million barrels per day on average, which is 69% of Pemex’s production (El Economista – Spanish). Pemex left 576,939 barrels per day on average to be processed in the national refineries.
Soltec will help out Enel with trackers. Soltec Renewable Energies will supply solar trackers to the 220MW that Enel Green Power is building in Tlaxcala (English). The installation will use 6,533 SF7 bifacial solar trackers and 548,772 bifacial modules.
Engie cut the ribbon of the Tres Mesas III wind park. The French company opened the Tres Mesas III wind park in Llera de Canales municipality, in Tamaulipas, with a capacity of 50MW (El Economista – Spanish). The third phase is part of the Tres Mesas wind power complex, which will generate 593MW (Renewables Now – English).
Old School Social
Events in the world beyond your screen—go see and be seen!
The Green Expo is scheduled for September 3–5 at the World Trade Center in Mexico City.
Lateral Thinking
Iberdrola is looking for more women engineers from Oaxaca. The Spanish company and university centers in Oaxaca signed an agreement, called Impulso STEM, to increase the number of women studying engineering (El Financiero – Spanish). The goal of the project is to answer to the needs of the market and to increase productivity in the state.
Quote of the Week
“A novelist is really nothing more than an historian of a people who have no history.”
– Federico Gamboa (1864-1939), Mexican writer and diplomat.
We hope you have a productive week. Please send any news, comments, or strategies to promote engineering among women to MexicoWeekly@energynarrative.com.
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