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January 13, 2020 edition—Green energy subsidies reviewed; Talos’ good news; and Tuxpan-Tula pipeline rerouted.
Last Week in a Minute or Less
Electric Power & Renewables. AMLO will review green energy subsidies; and Vestas secured a 30MW turbine order in Mexico.
Natural Gas Mid-Downstream & LNG. Mexico needs natural gas and the US exporters to sell it; and natural gas production in Nuevo León is down again.
Liquid Fuels Mid-Downstream. AMLO pledged to reroute the Tuxpan-Tula pipeline; Mexico’s oil hedges average US$49 per barrel; and Pemex said illegal taps went down by 91%.
Oil & Gas Upstream. Talos got great news from the Zama resource evaluation; a new year but still no rounds; and three workers injured in a Pemex platform fire.
Government & NGO. US Senate panel boosted USMCA; the OECD warns over a weak economy and legal uncertainty; and the World Bank cut Mexico’s growth outlook to 1.2%.
Déjà vu all over again. Last week’s readers were particularly interested in Iberdrola’s agreement with Deacero (El Financiero – Spanish); Engie’s solar project (Renewables Now – English); and CFE’s plans for transmission tariffs (El Financiero – Spanish).
Geopolitics & Trade
US Senate panel boosted USMCA… The US Senate Finance Committee approved the USMCA, moving the new NAFTA one step closer to a final Senate vote (Reuters – English). The committee passed the USMCA-implementing legislation in a 25-3 vote, with the opposition of two Republican and one Democratic Senators.
…but its final passage may take some time. Due to President Donald Trump’s impeachment trial, a final date for the vote in favor of the USMCA is unclear (Market Watch – English). Senate Majority Leader Mitch McConnell said that a USMCA vote will not happen until after the trial, but some Republicans are pushing for a vote.
Mexico and the US discussed Central American development. Mexican Foreign Minister Marcelo Ebrard said that Mexico and the US are increasingly in agreement over the need to boost the economic development of Central America to reduce illegal immigration from the region (Reuters – English).
Political Economy
The OECD warns over a weak economy and legal uncertainty. According to the Organization for Economic Cooperation and Development (OECD), Mexico’s economic activity will gain strength slowly during 2020 with 1.6% GDP growth (Forbes – Spanish). The OECD urged the government to clarify internal rules to attract investment with legal certainty (El Financiero – Spanish).
The World Bank cut Mexico’s growth outlook to 1.2%. The World Bank reduced the economic growth forecast for 2020 in Mexico from 2% to 1.2% (Forbes – Spanish) (El Economista – Spanish). The World Bank expects 2.5% global growth for this year.
Mexico placed US$2.3bn in bonds. According to the Finance Ministry, the Mexican government placed bonds for US$2.3bn (El Financiero – Spanish). The operation had a maximum demand of US$14.7bn, six times the amount placed, and investors from all over the world participated.
The energy sector investment plan will be published in February. President López Obrador will present a public-private investment plan for the energy sector in February. The plan will define in which fields investments would be allowed (El Financiero – Spanish).
Legal & Regulatory
AMLO pledged to reroute the Tuxpan-Tula pipeline. President López Obrador promised to ask TC Energy Corp to reroute a natural gas pipeline to avoid lands considered sacred by communities in Puebla (Reuters – English) (El Economista – Spanish). AMLO said that the gas pipeline will not cross those hills “even if we have to pay.”
AMLO will review green energy subsidies. President López Obrador said that wind and solar contracts will be reviewed to determine if private companies are being subsidized (World Oil – English) (Bloomberg – English) (El Financiero – Spanish). The decision would be a blow to the emerging renewable energy market.
New year, but still no rounds. President López Obrador said that the government does not plan to reopen oil and gas auctions this year (Reuters – English). AMLO insisted on the need of the already awarded 110 contracts to show results through investment and production.
Market Trends
Mexico’s oil hedges average US$49 per barrel. Mexico completed its oil hedging program for 2020 at US$49 per barrel (Reuters – English) (Bloomberg – English) (El Financiero – Spanish). The program’s goal is to protect Mexico’s economy against oil price crashes.
Mexico needs natural gas and the US exporters to sell it. President López Obrador said that Mexico will continue to rely on natural gas imports from US exporters (Reuters – English). US gas pipeline exports to Mexico reached their highest level in four weeks (Platts – English).
Natural gas production in Nuevo León is down again. Natural gas production in Mexico’s northern region averages 984 million cubic feet per day, a 49% drop compared to the 1,929 million cubic feet per day that were produced in 2014 (El Financiero – Spanish). US natural gas imports broke all records in October with 177,202 million cubic feet.
Strategy & Operations
Talos got great news from the Zama resource evaluation. After the Netherland Sewell’s (NSAI) resource evaluation, Talos Energy said that the Zama results were above the company’s expectations, with 60% of the total resources on Block 7 in the 2C case (OGJ – English) (El Financiero – Spanish).
Vestas secured a 30MW turbine order in Mexico. Vestas received a 30MW order for a project in Mexico that includes the installation of 15 V110-2.0 MW model turbines and a 20-year service agreement (Renewables Now – English). The equipment will be delivered by the final quarter of 2020.
Three workers injured in a Pemex platform fire. Three people were injured in a fire on the Akal-C6 platform (run by Pemex), leading to the evacuation of the rig (Reuters – English). The incident was confined to the first level of the platform.
Pemex said illegal taps went down by 91%. The head of the state-owned company announced a reduction of 91% in fuel robbery and savings of MXN56bn to avoid illegal taps in Pemex’s pipelines (El Economista – Spanish). Today, losses average roughly 5,000 barrels per day.
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
Archaeologists have found a 1,000-year-old Maya palace. Archaeologists found a Maya stone palace that dates more than 1,000 years ago for the enjoyment of the Maya elite. The palace is located at the archaeological site of Kulubá, 100 miles west of Cancún (Lives Science – English).
Quote of the Week
“Hacía tanto que no alzaba la cara, que me olvidé del cielo.”
“It was so long since I had raised my face, that I forgot about the sky.”
– Juan Rulfo Mexican writer (1917-1986), screenwriter, and photographer.
We hope you have a productive week. Please send any news, comments, or new palaces to MexicoWeekly@energynarrative.com.
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