January 23, 2017 edition— Transmission rates are published; solar energy shines; and drilling is down 60%.
Last Week in a Minute or Less
Renewables & Electricity. The commercial sector goes after solar panels; solar energy will attract MXN200bn; and CFE published its 2017 transmission rates.
Natural Gas & Liquid Fuels. Natural gas prices will rise 40%; US diesel on rails; and IEnova will invest US$800m in eight projects.
Oil & Gas Upstream. Drilling fell 60%; production was cut at Round 1.3 fields; and a power outage stopped the Tula refinery.
Money & Power. The IMF reduced Mexico’s economic growth outlook; Pemex is thinking about selling its fertilizer unit; and Profeco denies a general price rise.
Déjà vu all over again. Last week’s readers were particularly interested in the 10 pre-qualified companies for Round 2 (Spanish); five renewable energy projects in the north of Mexico (Spanish); and the rise in production thanks to Round 1 (Spanish).
The Road to Reform
Border gasoline prices won’t be brought into alignment. The Finance Ministry, Pemex, and the national organization of gasoline vendors agreed to provide support to border retailers who cannot finance gasoline special taxes (Spanish). Their petition to equate prices along the border was denied, and drivers will keep crossing to fill up (English).
Gasoapp will help consumers choose the best gas station. The Energy Regulatory Commission (CRE) and Mexico’s consumer protection agency (Profeco) launched an app to help users locate the gas station with the lowest price (Spanish). The app is available for iOS and Android, although it is still in beta.
Drilling is down 60%. The state-owned company drilled 105 wells between January and November 2016, a 58.5% drop compared to the same period in 2015 (Spanish). By comparison, in 2009 Pemex drilled 1,337 wells in 11 months.
Production fell at Round 1.3 fields. The hydrocarbon production in Round 1.3 onshore fields that private companies are now operating fell by 33% in crude extraction and 38% in gas (Spanish). The 15 fields operated by 10 companies saw production drop to 1,388 barrels per day from 2,082 barrels per day.
CCE says people are sick and tired of corruption, so they protest. The business leaders’ association said that demonstrators protesting gasoline prices are sick of corruption and misuse of public resources (Spanish). Protests continue and drew more than 10,000 participants in cities including Hermosillo, Sonora, and Tijuana and Mexicali in Baja California (Spanish).
Profeco denied a general jump in prices from the gasoline price hike. Mexico’s consumer protection agency (Profeco) identified price increases in certain basic products such as beans, chicken, eggs, gasoline, meat, and tortillas (Spanish). Profeco denied that the rise in gasoline prices has triggered a generalized increase in prices.
The OECD advises Pemex on foreign suppliers and new contracts. The state-owned company saved MXN24bn – nearly one-fourth of the mandated budget cut – by following 72 of the 106 recommendations made by the international organization (Spanish) (English). The OECD suggested Pemex open procurement to foreign suppliers to improve efficiency and avoid corruption (Spanish).
Desperate for cash, Pemex considers selling its fertilizer unit. Three years ago, the state-owned company bet on fertilizers, paying US$730m for several plants in Chihuahua and Veracruz, a strategy questioned due to the oversupply of fertilizers (Spanish). Now, Pemex has hired UBS Group AG to analyze selling its fertilizer unit (English).
Energy Mexico Oil Gas and Power 2017 Expo & Congress
Energy Mexico Oil Gas Power 2017 Expo & Congress is the main energy sector event that includes a conference with the most prestigious local and international speakers, covering all activities within the energy industry (oil, gas, power and renewable energies) from different angles like technology, financing, services and human resources. Additionally, includes an international scale B2B exhibit. www.energymexico.mx.
The IMF lowered Mexico’s economic growth to 1.7% in 2017. The international organization lowered Mexico’s economic growth projection for 2017 to 1.7% from 2.3% (English) (Spanish). The IMF argued that the “tighter financing conditions ” and market concerns about the “uncertainty” related to future US trade policies justify the decision.
Natural gas prices will skyrocket by 40% in 2017. According to the US Energy Information Administration, the international price of natural gas will increase by 40% in 2017 compared to the 2016 average, rising to $3.55 per million British thermal units (MMBtu) from $2.51/MMBtu (English). The increase will affect Mexico’s manufacturing industry and electricity tariffs (Spanish).
US diesel was brought into Mexico on rails. The state-owned company imported the first diesel shipment by train in a terminal managed by private companies (Spanish). The 60,000-barrel shipment travelled from Port Arthur, Texas, to San José Iturbide terminal, a route normally traversed with pipelines and ports for imports. The shipment will supply Mexico City.
CFE published its 2017 transmission rates. The state-owned company (CFE) published official rates for consumers and power generators. Every participant in the Wholesale Electricity Market (MEM) will pay 0.0961 pesos per kilowatt for transmission at 220 kilowatt or less voltage and 0.0531 pesos per kilowatt for higher voltages (Spanish).
Doubts surround the durability of the OPEC agreement. Increasing US production and Saudi Arabia’s view that further cuts as unnecessary to maintain market equilibrium will kill OPEC’s agreement by June (Spanish) (English). The US Energy Information Administration forecasts a slight increase in oil prices in 2017 and 2018 (English).
Strategy & Operations
Tula’s refinery took a break. On Jan. 14, the Pemex refinery located in Hidalgo stopped operations due to a power outage (English) (Spanish). By Jan. 16, the refinery was still under partial stoppage and the state-owned company affirmed that the interruption was within the normal period needed for a total reboot (Spanish).
The commercial sector went green in 2016. In 2015, the residential sector accounted for 95% of sales of Galt Energy, a supplier of solar panels, while in 2016, the commercial sector covered 40% of the sales (Spanish). Last year, the company expanded to La Paz, León, Mexico City, Querétaro, and Tijuana.
Solar energy will draw attention…and MXN200bn. The new rules for power transmission will attract MXN200bn in investments in the next five years (Spanish). The goal is to extend this type of generation to 155,000 consumers, the equivalent of 5% of Mexican homes, creating 24,000 new jobs and installing 6,000MW of capacity.
FIMM will go big in energy projects. The Macquarie Mexico Infrastructure Fund (FIMM) plans to invest in energy projects after the second quarter, raising between MXN7bn and MXN10bn of capital (Spanish). The projects planned include three wind farms and two solar parks targeted to high-use consumers.
IEnova starts off 2017 on the right foot, injecting US$800m into eight projects. The Sempra subsidiary will diversify its portfolio and invest US$800m in infrastructure development for storage and transportation projects (English) (Spanish). The biggest project is the TransCanada’s underwater pipeline between Texas and Tuxpan in which IEnova will invest US$500m.
Gas Natural Fenosa will bet MXN1.5bn on Mexico City. The Spanish company will invest MXN1.5bn between 2016 and 2018 to expand its natural gas grid in Mexico City (Spanish). The goal is to increase the number of clients to reach 190,000 customers, looking for new areas of distribution.
Old School Social
Events in the world beyond your screen – go see and be seen!
The Solar Summit: Mexico is January 27-28 at the Presidente Intercontinental Mexico City.
The ExpoManufactura 2017 is February 7-9 in Monterrey, Mexico.
Mexico WindPower 2017 is the most important exhibition and congress for the country’s wind power industry and the only event organized by GWEC and AMDEE together with E.J.Krause de México.
Protesters went to the “virtual” streets and changed their names. Protesters hacked Google Maps changing the name of locations such as the congress, the senate, and the president’s residence (English). The Congress building was renamed “Rat Chamber”, the Senate, “Deplorable Congress”, and the President’s residence, “The Official Residence of Corruption”.
Quote of the Week
“Entre tu aurora y mi ocaso, el tiempo desaparecía y era nuestra y era mía sangre, labio, vino y vaso.”
“Between your daybreak and my sunset, time disappeared and blood, lip, wine, and glass were ours and mine.”
– Salvador Novo (1904-1974), Mexican writer, poet, and playwright
We hope you have a productive week. Please send any news, comments, or virtual collections for virtual protests to MexicoWeekly@energynarrative.com.
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