August 30, 2021 edition—CNH’s exploration rules; natural gas storage needs; and Hokchi Energy’s processing plant.
Last Week in a Minute or Less
Electric Power & Renewables. GIP got Saavi Energía; and Mexico sold less power to Guatemala and Belize.
Natural Gas Mid-Downstream & LNG. AMLO’s natural gas plans must be boosted by the CRE; and Mexico needs more natural gas storage.
Liquid Fuels Mid-Downstream. Hokchi Energy cut the ribbon on a crude processing plant; IEnova keeps working on Manzanillo’s storage terminal; and BBVA Mexico believes private companies face discrimination.
Oil & Gas Upstream. The CNH changed some exploration and development plans rules; a fire on a Pemex platform killed five; and fire hits Pemex’s crude production in August.
Government & NGO. Fitch warned Pemex’s fire may hit its rating; the IMF paid and AMLO will pay the debt; and the USMCA rules may create a work crisis.
Déjà vu all over again. Last week’s readers were particularly interested in the natural gas pipeline in the isthmus (Natural Gas Intel – English); E&P companies’ future plans (Platts – English); and the Mexico-US fight over labor laws (Proceso – Spanish).
Geopolitics & Trade
The USMCA rules may create a work crisis. The new NAFTA changed Mexico’s labor legislation, but analysts expect the improvements to create labor instability (El Financiero – Spanish). The proliferation of unions could create a battle between union groups.
Mexico and the US will fight over auto rules… The Economy Ministry asked for a consult with US trade authorities regarding discrepancies in the interpretation of rules of origin for the auto sector in the USMCA (El Financiero – Spanish). Mexico would like to consider “alternative methodologies” to estimate the regional content value.
…but they agree on farm issues. According to Farm and Rural Development Minister Víctor Villalobos, the Mexican government has felt more comfortable in the last months discussing farm issues with the White House (El Financiero – Spanish). Villalobos expects mutual understanding with the Biden administration.
What will happen at the GM plant now? After the vote, the previous collective contract for 3,214 workers at the plant was terminated and a new union will be created to represent the workers (El Financiero – Spanish). Workers will not lose any rights or benefits.
Inflation hit the brakes in August. In the first half of August, consumer prices slowed down, reaching 5.58%, the lowest level since March (El Economista – Spanish). Analysts expected inflation to slow down, although their forecast was 5.80%.
Fitch warned Pemex’s fire may hit its rating. According to the rating agency, the fires at Ku-Maloob-Zaap (KMZ) could affect the growth rate of the state-owned company, affecting its credit rating (El Financiero – Spanish). A cut in Pemex production could pressure the company’s income.
The former Pemex head is under investigation. A judge cited Carlos Alberto Treviño Medina, former director of the state-owned company, to explain his participation in giving bribes to politicians to approve the energy reform (El Economista – Spanish).
The IMF paid and AMLO will pay the debt. President López Obrador is following the process to use the deposit from the International Monetary Fund to pay Mexico’s debt (El Economista – Spanish). Mexico received US$12.1bn from the international fund.
Legal & Regulatory
The CNH changed some exploration and development plans rules. The National Hydrocarbons Commission (CNH) made modifications on the rules to regulate the exploration and development plans for hydrocarbons extraction (DOF – Spanish). The Sener published the regulation for the support of scientific research, technology development, and innovation in hydrocarbons (DOF – Spanish).
AMLO’s natural gas plans must be boosted by the CRE. According to energy sector specialists, if the goal is to sell natural gas to domestic users, as President López Obrador proposed, the Energy Regulatory Commission (CRE) should speed up the distribution and sales permits (Reforma – Spanish).
BBVA Mexico believes private companies face discrimination. BBVA Mexico warned that the federal government treated private energy companies unfairly after a change in the export rules benefited the state-owned company (El Financiero – Spanish). Private companies imported 450,000 daily barrels in 2021 first quarter, 46% of the imports.
Mexico needs more natural gas storage. The National Center of Natural Gas Control (Cenagas) projects an increase of 2,060 million daily cubic feet in the natural gas offer between 2022 and 2036 for big industrial clients, a 106% increase of the current demand (El Economista – Spanish).
LP gas prices got under control. The control over LP gas prices reached its lowest level in 10 years in the first two weeks of August, a 15.06% contraction compared to the previous two weeks (El Financiero – Spanish). On August 27, the Gas Bienestar program will start delivering gas (El Economista – Spanish).
Pemex’s July production was the highest since September 2018… During July, the state-owned company’s crude production reached 1,772 million daily barrels, a 0.2% increase in a month, reaching the highest level since September 2018 (El Economista – Spanish). Considering the production of Pemex and private partners, the increase was 7.5% or 125,000 barrels per day.
…but fire hit Pemex’s crude production in August. Production from 125 wells at the Ku-Maloob-Zaap complex stopped for a few days, hitting crude oil production of 421,000 b/d because of a fire on a platform (Platts – English) (El Economista – Spanish).
Mexico sold less power to Guatemala and Belize. Mexico’s electric power exports to countries such as Belize and Guatemala to cover their demand decreased by 29.6% and 9.6%, respectively, in 2020 (Reforma – Spanish).
Strategy & Operations
GIP got Saavi Energía. The global investor sold 100% of Saavi Energía, the biggest private generator in Mexico, to Global Infrastructure Partners (El Economista – Spanish). Saavi Energía has six combined cycle plants, a wind park, and three gas compression stations.
Hokchi Energy cut the ribbon on a crude processing plant. With infrastructure investments of over US$1bn, Hokchi Energy opened a hydrocarbons processing plant in Tabasco. The plant has a crude processing capacity of 35,000 barrels per day and 13 million daily cubic feet of gas (El Economista – Spanish).
IEnova keeps working on Manzanillo’s storage terminal. Despite the cancellation of the contract with Grupo Desarrollo Industrial (GDI), the Sempra subsidiary clarified that the storage terminal in the Manzanillo port for 2.2 million fuel barrels is in progress (El Economista – Spanish). IEnova is evaluating the regulatory and market considerations for the project’s viability.
A fire on a Pemex platform killed five. Five workers were killed and six injured in a fire on an offshore platform (Reuters – English) (El Economista – Spanish). In addition, 25% of its oil production was lost (El Financiero – Spanish). Pemex re-established 35 of the 125 affected wells (El Financiero – 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.
The sun will clean Xochimilco’s channels. Mexican scientists have developed a “nanobubble” system using solar energy to improve water quality in the canals of Mexico City’s ecological zone Xochimilco, a popular tourist attraction and the last of the Aztec-era canals that the city has (Reuters – English).
Quote of the Week
“Mañana que ya no puedan encontrarse nuestros ojos, y que vivamos ausentes, muy lejos uno del otro, que te hable de mí este libro como de ti me habla todo.”
“Tomorrow that our eyes could not find each other, and that we would live absent, further away one from the other, this book will speak to you about me as everything speaks to me about you.”
– Manuel Acuña (1849-1873), Mexican writer.
We hope you have a productive week. Please send any news, comments, or solar solutions for channels to MexicoWeekly@energynarrative.com.
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