January 14, 2019 edition—Alpek’s sale; fuel robbery fight hits supply; and controversy resolution mechanisms weakened.
Last Week in a Minute or Less
Renewables & Electricity. Engie has Mina’s sun in sight; Alpek sold its cogeneration plants to ContourGlobal; and high power tariffs will boost solar.
Natural Gas & Liquid Fuels. AMLO’s fight against fuel robbery saved MXN2.5bn; an accident in the Tuxpan-Azcapotzalco pipeline hit Mexico City’s fuel supply; and the military will protect Tamaulipas’ refinery.
Oil & Gas Upstream. Pemex’s product production improved in November.
Money & Power. The talks on metal tariffs are pending; the USMCA weakened Canada’s controversy resolution mechanisms; and inflation was a small Christmas gift.
Déjà vu all over again. Last edition’s readers were particularly interested in Yucatán’s natural gas supply (El Financiero – Spanish); Tamaulipas’ energy projects (El Financiero – Spanish); and CRE’s rules on power sale (DOF – Spanish).
Talks on US metals tariffs are still pending. The leaders of Canada and the US discussed US tariffs on steel and aluminum, but they planned no talks on lifting the sanctions (Reuters – English). There are no specific negotiations taking place or specific negotiations scheduled.
Mexico will not pay for the wall through the new NAFTA. President Donald Trump said Mexico will pay for the wall through the new USMCA trade deal. Trade experts disagree, as the new agreement has not yet been approved and does not specify any direct money flow from Mexico to the US to pay for the wall (Politifact – English).
Trump insisted on a steel wall in his prime-time speech. President Donald Trump insisted on demanding US$5.7bn for a steel wall in his prime-time address to stop illegal migration and drug trafficking (AFP – English). Trump was expected to announce a national emergency to authorize the wall without the approval of the Congress.
The USMCA weakens controversy resolution mechanisms in Canada. The USMCA will eliminate the resolution of controversies between investors and states (ISDS) for Canada. The ISDS will be maintained between the US and Mexico for complaints in governmental contracts in the oil, natural gas, energy generation, and infrastructure sectors (El Economista – Spanish).
The US touts exports to Mexico. The US Trade Department explained five reasons to consider exporting to Mexico: the size of its economy; most products can be sold with success; stable economic growth; the energy reform; and the strong economic ties between both countries (El Economista – Spanish).
The Road to Reform
Pemex canceled the contracts of 103 gas station owners. The Energy Regulatory Commission (CRE) said the state-owned company canceled contracts with 103 gas station owners (El Financiero – Spanish). The CRE does not know the reasons for the cancellation, but a possible connection with fuel robbery is suspected.
AMLO’s fight against fuel robbery saved MXN2.5bn. President López Obrador announced that the new plan to fight fuel thefts reduced the number of robbed tanker trucks from 787 to 177 (El Financiero – Spanish). AMLO said that the military found an illegal pipeline inside the Salamanca refinery that allowed fuel robbery (Reuters – English).
Continuity in renewables is to be expected… Analysts expect the new administration to continue Peña Nieto’s support for renewables (CN – English). Mexico’s solar power is growing at 110%, from nine parks in 2015 to 23 in 2017, and is expected to reach 68 by 2021 (Energía Limpia – Spanish).
…and high power tariffs will boost solar. According to Enlight, solar energy will keep growing thanks to high power tariffs and new financial programs to be offered in 2019 (El Financiero – Spanish). The banking sector’s doubts have been the only limitation for solar energy’s growth.
Pemex admitted the fuel shortage was due to its plan to fight fuel theft… Pemex accepted that there is a delay in fuel supply as the new plan to fight fuel robbery affected the normal delivery processes (El Financiero – Spanish). In fifteen days of the new plan, 261,000 liters of hydrocarbons were secured and 34 illegal taps in five states were located (El Financiero – Spanish).
…and Nahle assured it will be restored. Energy Minister Rocío Nahle assured the delay in fuel supply is focused in the Bajío region, rejecting the idea of closing pipelines (El Financiero – Spanish). The governor of Jalisco announced Pemex will provide 14.9 million liters of hydrocarbons to meet the state’s demand (El Financiero – Spanish).
Mexico’s inflation was a small Christmas gift. Mexican consumer price inflation increased slightly in December, to 4.83% from 4.72% in November (Reuters – English) (El Economista – Spanish). Reuters forecasted a 4.89% rate for the month, but the headline inflation rate was the highest since November.
The Energy Minister may be questioned in the Senate. The opposition party PRI plans to request the presence of Energy Minister Rocío Nahle and Pemex General Director Octavio Romero before the Chamber of Senators to explain the strategy developed against fuel robbery that has produced a fuel shortage in different regions (El Economista – Spanish).
Pemex’s BTX production improved in November. Mexico’s Pemex produced 25,631 mt of benzene, toluene, and xylene in November, down 0.7% from October but a significant increase year-on-year (Platts – English). The November total was the second-highest combined monthly output of BTX posted by Pemex.
US gasoline prices dropped near the border following Mexico’s mandate. US gasoline prices near the border dropped in the past three weeks, in step with a Mexican government mandate for lower prices (Platts – English). The Mexico government cut the value-added tax in the northern states.
Morelos really needs LP gas. The LP gas shortage started in December in Cuernavaca, Morelos. Citizens reported that gas companies prioritized restaurants, hotels… and clients giving bribes (El Financiero – Spanish).
Pemex and the Finance Ministry met with investors in NY. The state-owned company and the Finance Ministry met with investors and rating agencies in New York. The goal was to explain the strategies to strengthen Pemex’s finances and profitability (El Economista – Spanish).
Strategy & Operations
Engie has Mina’s sun in sight. Engie Mexico plans to construct a solar park in Mina with a generation capacity of 149 megawatts (MW) and production of 379 gigawatt-hours (GWh) per year (El Financiero – Spanish). The project includes the construction, installation, operation, and maintenance of the park.
BHP Billiton readies a terminal in Tamaulipas. The company will install a terminal in Pueblo Viejo and the goal is to start generating important investments in the medium term (El Financiero – Spanish). The south of Tamaulipas will count on three hydrocarbons terminals, increasing its fuel inventories (El Financiero – Spanish).
Alpek sold its cogeneration plants to ContourGlobal. Alfa’s sale of two cogeneration plants for US$801m to ContourGlobal was well-received by the market (El Financiero – Spanish) (Reuters – English) due to the cut in Alfa’s debt (El Financiero – Spanish). Alpek shares increased 3.71% (El Financiero – Spanish).
An accident in the Tuxpan-Azcapotzalco pipeline hit Mexico City’s fuel supply. President López Obrador said the lack of fuel in Mexico City was due to an illegal tap in the Tuxpan-Azcapotzalco pipeline (El Economista – Spanish). AMLO did not offer an exact date for re-establishing the distribution.
The military will protect Tamaulipas’ refinery. Navy officers will protect the Francisco Madero refinery in Tamaulipas and the military will control fuel facilities in Ciudad Madero, Reynosa, Victoria, Zaragoza, and González (El Financiero – Spanish). The military will not allow workers to use cellphones in certain areas and must carry their credentials at all times.
Old School Social
Events in the world beyond your screen—go see and be seen!
OMC 2019 is scheduled for January 28 at the NH Collection Mexico City Airport T2 in Mexico City.
Energy Mexico 2019 will be held January 29-31 at Centro Cultural Banamex in Mexico City.
Mexican archaeologists discovered a temple devoted to the Flayed Lord. Archaeologists found the first temple dedicated to the Flayed Lord, or the god Xipe Tótec. The two-altar temple was built between 1000 and 1260 by the Popoloca people (Science – English).
Quote of the Week
“Para servir a la patria nunca sobra el que llega ni hace falta el que se va.”
“To serve the nation if someone arrives will always be needed and the one that leaves will not.”
– Venustiano Carranza (1859-1920), one of the main leaders of the Mexican revolution.
We hope you have a productive week. Please send any news, comments, or undiscovered temple maps to MexicoWeekly@energynarrative.com.
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