The Weekly Brief: Mexico


January 6, 2020 edition—CFE’s transmission charges; LNG expansion; and USMCA ratified.





Last Week in a Minute or Less


Electric Power & Renewables. CFE has “threatening” suggestions for the power sector; solar power went big over the break; and Iberdrola will power up Deacero.


Natural Gas Mid-Downstream & LNG. TC Energy may help a Mexican LNG export project; and Stabilis Energy expanded its Mexican LNG business.


Liquid Fuels Mid-Downstream. The CRE freed up Pemex’s sales; and Pemex keeps fighting illegal taps.


Oil & Gas Upstream. No auctions or rounds, no money, according to specialists; Pemex’s production fell again in November; and the CRE postponed the clean diesel rule for five years.


Government & NGO. S&P maintained Pemex’s ratings; Mexico expects USMCA to boost investment; and Mexico’s risk level is going down like it’s 2014.


Déjà vu all over again. Last edition’s readers were particularly interested in CFE’s new rules for contracts (Forbes – Spanish); a possible increase in nuclear energy (Reforma – Spanish); and Engie’s new project (Renewables Now – English)



Editorial Interlude


Happy New Year! The Weekly Brief: Mexico team is kicking off the new year with a small tweak to our section headings. Now that the US House of Representatives has passed USMCA, our NAFTA Negotiation section is evolving to cover geopolitics and trade more broadly. Likewise, the Road to Reform was feeling a bit anachronistic in Mexico’s current political scene, so we have renamed it the more accurate, if less alluring, title of Legal & Regulatory.


We hope you enjoy the update to the format of The Weekly Brief: Mexico. As always, we’d love to hear your thoughts and suggestions – drop us a line at


– The Weekly Brief: Mexico team



Geopolitics & Trade


Mexico’s Senate approved the USMCA modifications. The Mexican Senate approved the modification protocol for the USMCA deal (Forbes – Spanish) (Reuters – English). The modification includes tougher enforcement of workers’ rights and eliminates the patent provision for biologic drugs.


The US House of Representatives passed the USMCA modification… A day after President Trump’s impeachment, the House of Representatives passed the revised USMCA (CNN – English). Three dozen Democrats voted against the deal along with two Republicans. The Senate is expected to vote on the agreement in 2020, after the impeachment trial.


…but Pelosi delayed the USMCA ratification in the Senate. US Speaker Nancy Pelosi will not send the impeachment process to the Senate until she is sure it would be a fair process, delaying the USMCA ratification in the Senate (El Economista – Spanish). The new deal would be ratified after the trial against the President.


Mexico expects USMCA to boost investment. Mexican Foreign Minister Marcelo Ebrard said that the new NAFTA will increase investment and growth for Mexico, ending a period of uncertainty (Reuters – English). The new deal was approved by the US House of Representatives and was sent to the Senate for consideration in 2020.


US and Mexico work on improving customs controls. The US is looking at ways to cooperate with Mexico to stop the flow of illicit arms, drugs, and money crossing the border (Reuters – English). US Attorney General William Barr will visit Mexico to discuss this cooperation.



Political Economy


Mexico’s minimum wage increase could affect inflation. Mexico will increase the daily minimum wage by 20% and experts expect the increase to complicate Mexico’s central bank’s control over inflation (Reuters – English). The daily minimum wage will be 123.22 pesos in 2020 and, in the northern border region, 185.56 pesos.


Banxico cut rates again before 2020… Mexico’s central bank cut its interest rate to 7.25% due to inflation and slack in the economy (Reuters – English) (El Economista – Spanish). Banxico explained that in 2020, the increase in minimum wage could push inflation to higher levels.


…and Banxico’s interest rate could go as low as 6%. Economists expect Mexico’s central bank to maintain the interest rate cuts in 2020. Experts estimate that Banxico’s interest rate could end 2020 between 6% and 6.75% (El Financiero – Spanish).



Legal & Regulatory


Pemex keeps fighting illegal taps. A pipeline from Pemex exploded in Michoacán due to an illegal tap (Excelsior – Spanish). The National Guard also secured 66,000 liters of diesel from a driver who could not prove the origin of the fuel (Excelsior – Spanish).


The CRE postponed the clean diesel rule for five years. The Energy Regulatory Commission (CRE) deferred for five more years the rule that requires Pemex to produce and distribute ultra-low sulfur diesel in Mexico (Reuters – English) (El Economista – Spanish). Pemex can continue selling ultra-low sulfur diesel in the Mexican valley, Guadalajara, and Monterrey.


The CRE freed up Pemex’s sales. The Energy Regulatory Commission (CRE) left without effect the agreement with which the commission determined Pemex fuel and storage prices (El Economista – Spanish). The Business Coordinator Board criticized the decision as it could affect free competition in the fuel market and generate uncertainty (Forbes – Spanish).


No auctions or rounds, no money, according to specialists. According to analysts, Mexico will lose its position on the list of most attractive nations to invest in the oil and power sector while power auctions and oil rounds remain suspended (El Financiero – Spanish).


CFE has “threatening” suggestions for the power sector. The state-owned company prepared a working plan to increase transmission costs for the private companies that participate in the power market (El Financiero – Spanish). The private sector said that the measures would affect its participation in the industry (El Financiero – Spanish).



Market Trends


S&P maintained Pemex’s ratings. The international rating agency said that the state-owned company’s ratings would remain unchanged after affirming Mexico’s sovereign foreign currency rating and outlook (Reuters – English).


Mexico’s risk level is going down like it’s 2014. Thanks to low inflation, controlled public spending, and a reduction in Pemex’s debt, Mexico’s risk level has reached its best level since 2014 (Reuters – English). The drop came even despite business and investor concerns about the economic management of President López Obrador.


Pemex’s production fell again in November. From January until November, the state-owned company’s crude production fell 8.4% compared with the same period in 2018 (El Financiero – Spanish). Pemex’s average production per day was 1,659,000 barrels, while in 2018 the average production was 1,812,000.



Strategy & Operations


Solar power went big over the break. Aguascalientes and Coahuila expected to add 144MW of solar power capacity by the end of 2019 (Energía Limpia – Spanish), while Prodiel and Power China will boost a 296MW solar park in Jalisco (Energía Limpia – Spanish). Enel started operations at the Magdalena II solar plant in Tlaxcala (Go Eco Green 21 – English).


TC Energy may help Mexican LNG export project. TC Energy is considering increasing compression on its North Baja Pipeline in Arizona to add 495,000 Dt/d of firm delivery to serve an LNG export terminal project for Mexico’s Pacific Coast (Platts – English).


CFE will work on transmission lines in 2020. The state-owned company will invest MXN602m in maintenance work for transmission lines next year (El Financiero – Spanish). The focus would be on efficient costs, power flow performance, and grid reliability and modernization.


AMLO has a new plan for the Manzanillo thermoelectric complex. President López Obrador visited the Manzanillo Thermoelectric Complex where the Manzanillo II Center is being developed to increase power generation (El Economista – Spanish). The plant would go from generating power for 9.8 million people to 11 million with the development plan.


Stabilis Energy expanded its Mexican LNG business. Stabilis Energy opened an LNG transportation hub in Colombia, Nuevo León, to deliver the Northeastern region with up to 50,000 gallons of LNG per day (Oil and Gas 360 – English). LNG will be supplied by the Stabilis liquefaction facility in George West.


Iberdrola will power up Deacero. The Spanish company and Deacero signed the first wholesale market power contract for 17 years (EL Financiero – Spanish). The new contract is the result of Iberdrola’s focus on selling power to industry.


Organizations fight Baja California’s and Jalisco’s power projects. Non-governmental organizations are fighting the project that CFE plans to build in Baja California Sur (El Financiero – Spanish). An environmental group backed the government of Jalisco’s decision to ban the construction of the thermoelectric plant “La Charrería” (El Financiero – Spanish).



Old School Social


Events in the world beyond your screen—go see and be seen!


Mexico WindPower will be held March 4-5 at Centro Citibanamex in Mexico City. Mexico WindPower is the premier wind energy event in Mexico with nine consecutive years showcasing the latest in innovations and technology for leading national and international decision-makers.



Lateral Thinking


Mexican students won big in a world robotic tournament. Mexican students from primary school and high school achieved first, second, and third positions in different categories in the World Tournament of Educational Robotics (Spanish).



Quote of the Week


“La revolución beneficia al pobre, al ignorante, al que toda su vida ha sido esclavo, a los infelices que ni siquiera saben que si lo son es porque el rico convierte en oro las lágrimas, el sudor y la sangre de los pobres.”


“The revolution benefits the poor, the ignorant, the person who has always been a slave, the unhappy people that do not know that they are sad because the rich people turn poor people’s tears, sweat, and blood into gold.”


– Mariano Azuela (1873-1952), Mexican author and physician.



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