February 12, 2018 edition—Pemex’s partners on Round 2.4; Acciona’s biggest plant; and NAFTA’s harsh future.
Last Week in a Minute or Less
Renewables & Electricity. Acciona plans its biggest solar plant in Mexico; and CRE changed the industry electricity tariff methodology.
Natural Gas & Liquid Fuels. Total will have 100 gas stations in 2018; Mexico propelled US refined product exports; and Mexico will multiply its gasoline storage.
Oil & Gas Upstream. Pemex will look for partners to develop Round 2.4 contracts; rounds will bring US$153bn in investment; and Pemex will begin shale gas exploration.
Money & Power. Trudeau put his foot down on NAFTA; Banxico will push rates to 7.5%; and Mexico and the EU will finalize a trade agreement.
Déjà vu all over again. Last week’s readers were particularly interested in the Nuevo Era pipeline’s delay (Spanish); 45 companies focused on Baja California (Spanish); and Next Energy’s wind and solar projects (Spanish).
Trudeau took a harsh stand on NAFTA… Canada’s Prime Minister Justin Trudeau declared he will leave NAFTA rather than take “any old deal” (English). Trudeau assured he “will not be pushed around” on trade negotiations and remains “confident about NAFTA” (English).
… and Freeland remains optimistic. Canada’s Foreign Minister Chrystia Freeland says the parties are making progress, despite gaps. Freeland believes Canada, Mexico, and the US can rework NAFTA to benefit the three countries (English).
AMLO’s team would keep NAFTA. AMLO’s putative NAFTA negotiator said the deal is a valuable part of Mexico’s economy, and she would not start all over again to modernize it (English).
Mexico and the US are closer than in previous administrations. Mexico’s foreign relations secretary says that Mexico’s relationship with the US is “more fluid” and “closer” than with previous administrations (English). Secretary of State Rex Tillerson started his Latin American tour in Mexico to discuss drug trafficking (English).
The Road to Reform
The CRE will fight fuel robbery tooth and nail. The Energy Regulatory Commission (CRE) will check retail sales from gas stations and LP and natural gas companies in March in order to detect fuel robbery (Spanish). There were 10,363 illegal taps in 2017, a 50% increase from the previous year (Spanish) (English).
Mexico will double gasoline storage. The Energy Regulatory Commission (CRE) is evaluating 23 new projects to store diesel and gasoline in Mexico with US$1.8bn in investment (Spanish). The new capacity will reach 17.7 million additional barrels, 80% of Pemex Logística’s current capacity.
Upstream rounds will bring US$153bn in investment. In two rounds totaling eight tenders, Mexico has attracted US$153bn in investment from 20 countries (Spanish). Energy analysts estimate Mexico needs 14 more rounds as successful as the first two to reach the estimated $640bn of investment needed through 2040 (Spanish).
Pemex will partner up on Round 2.4 contracts. The state-owned company will look for partners to exploit and develop two fields obtained in Round 2.4 (Spanish). Pemex will invest between US$150m and US$200m in the two deepwater blocks (Spanish).
Pemex starts looking for shale gas. Pemex will devote US$100m to drill between six and 10 wells to develop shale gas in Round zero fields (Spanish). The National Hydrocarbons Commission has already okayed the first drilling in the Tampico-Mizantla area.
In its seventh edition, Mexico WindPower 2018 consolidates its position as Mexico’s most important Congress and Exhibition event in the wind power sector. It is the only event organized by the Global Wind Energy Council (GWEC) and the Mexican Wind Energy Association (AMDEE), together with E. J. Krause of Mexico. In addition, you can network with key industry personalities.
Mexico’s debt to GDP ratio shrank. By the end of 2017, the level of public debt as a percentage of GDP decreased (Spanish). The Finance Ministry announced that it was the first time in 10 years that the level of public debt as a percentage of GDP went down.
Banxico will push interest rates to 7.5%. According to analysts, Mexico’s central bank will increase the interest rate to its highest level in nine years to contain inflation (Spanish). Banxico will increase the rate to 7.5% from the 7.25% rate set on December 14.
The Finance Ministry charged less for gas. In January, the Finance Ministry decreased the fee charged per fuel liter by 20%, compared to December 2017 (Spanish). Nonetheless, Magna and diesel prices for consumers increased by 6.3% and 6.1%, respectively, in a month.
Mexico and the EU will finalize a trade agreement. Mexico expects to finish a new free trade agreement with the European Union before February ends (Spanish). The EU and Mexico intend to modernize a 21-year-old trade agreement covering industrial products (English).
The peso will gain if NAFTA negotiations end early. Scotiabank said the dollar could fall to 17 pesos if the NAFTA negotiations end in the first quarter (Spanish). Continuing the economic integration of the three countries would boost growth for all.
Mexico propelled US refined product exports. US exports of refined products increased by 192,000 b/d to a record high of 5.624 million b/d in November (English). The record was driven by exports of gasoline and diesel to Mexico, with 1.4 million b/d of refined products exported to Mexico in November.
LP gas prices kept rising. LP gas prices increased by 4.5%, or 84 cents more per kilogram, in the first month of the year (Spanish). Mexico City saw a 49% increase in the cost of home delivery service, from 942 pesos in November to 1,407 pesos in January.
CRE changed the industry electricity tariff methodology. The Energy Regulatory Commission (CRE) approved a change in the methodology to estimate power tariffs in the industrial sector (English). Some industrial users reported high power tariff increases since November with the previous methodology change (Spanish).
Strategy & Operations
Total will open 100 gas stations in 2018. The French oil giant plans to open between 80 and 100 gas stations in Mexico (Spanish). In the next two years, Total will open 250 gas stations in Mexico City, Guerrero, Hidalgo, México, Morelos, Puebla, Querétaro, and Tlaxcala.
Acciona will build its biggest solar plant in Mexico. Acciona will build a 404MW solar plant in Mexico that will start operations by 2019 (Spanish). The plant will be built with the local company Puerto Libertad in Sonora (English).
Pemex wants IT professionals. The state-owned company needs young IT professionals interested in the oil sector (Spanish). The goal is to elevate the conversation in the technological area and transform Pemex with young talent.
Old School Social
Events in the world beyond your screen—go see and be seen!
Solar Summit Mexico is scheduled for February 13-14 at the Hyatt Regency Mexico City, Mexico City.
The panel on Political Uncertainty and Mexico’s Energy Reform will be held February 15 at the James A. Baker III Hall, Rice University, in Houston, Texas.
The Mexico Oil & Gas Breakfast: Infrastructure Outlook & Fuels Market Development is scheduled for February 27 at the Marriott Reforma Hotel, Mexico City.
The 4th Natural Gas Power Plant Construction Summit, Mexico 2018, will be held February 28-March 1 at the Hotel Marquis Reforma. The summit is the most influential summit and the only tailored-made forum focusing on stimulating opportunities amongst Natural Gas power plant owners, developers and EPCs in Mexico’s booming natural gas power market.
Pre-Aztec remains were found in a spiral formation. In Tlalpan, south of Mexico City, a 2,400-year-old burial site was discovered under a building that housed priests, a chapel, and classrooms at the Pontifical University of Mexico (English). The ten skeletons were positioned in a spiral formation with their arm bones interlocked.
Quote of the Week
“¿Vender yo la mitad de México?, ¡Por Dios! cuando aprenderán los mexicanitos que si este barco se hundió no fue solo por los errores del timonel, sino por la desidia y la torpeza de los remeros.”
“Selling half of Mexico? Oh God! When will Mexicans learn that if this boat sank, it was not only due to the mistakes of the helmsperson, but to the indolence and the ineptitude of the rowers.”
– Antonio López de Santa Anna (1795-1876), Mexican politician, military general, and President on several occasions.
We hope you have a productive week. Please send any news, comments, or discoveries under buildings to MexicoWeekly@energynarrative.com.
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