January 25, 2020 edition—Iberdrola’s solar; fuel imports; and Pemex’s exploratory assignments.
Last Week in a Minute or Less
Electric Power & Renewables. Iberdrola cut the ribbon on its third solar plant; PepsiCo plans to reach 100% renewable power in Mexico; and regulatory uncertainty has hit energy projects.
Natural Gas Mid-Downstream & LNG. Natural gas players asked for more connectivity and independent price indexes.
Liquid Fuels Mid-Downstream. Sener’s new rules may bring fuel shortages; and private companies are all about fuel imports.
Oil & Gas Upstream. Pemex asked the Sener for 15 new exploratory assignments; and former CRE workers asked to protect energy investments.
Government & NGO. The IMEF and Amcham expects Mexico’s economy to recover; Biden has to face foreign trade issues; and Clouthier promised to respect autonomous regulators protected by the USMCA.
Déjà vu all over again. Last week’s readers were particularly interested in Mexico’s LNG hub (Platts – English); Braskem Idesa’s operations (Mexico Business – English); and the USMCA’s farm trade concerns (Reuters – English).
Geopolitics & Trade
Experts said regulators are protected by USMCA. Former NAFTA negotiator and USMCA panelist Gustavo Uruchirtu assured that Mexican regulators were ironclad protected by the USMCA (El Financiero – Spanish). The goal was to secure the independence and impartiality of regulators.
Bilateral relations with the US could be the hardest in decades. The head of the Wilson Center explained how the relationship between the US and Mexican government is restarting with the new administration (El Economista – Spanish). The Wilson Center expects both countries to focus on migration policy.
The energy regulatory debate could become an USMCA panel… According to the Comce, Mexico may face a controversy solution panel in the USMCA if the Biden administration ratifies the claim made by the Trump administration regarding the energy reform changes (El Economista – Spanish).
…and Tatiana Clouthier promised to respect autonomous regulators protected by the USMCA. Economy Secretary Tatiana Clouthier said Mexico’s government will maintain the autonomous regulator protected by the new NAFTA, as the country’s intention is to fulfill what was agreed with its trade partners (El Financiero – Spanish).
Biden has to face foreign trade issues. The new US president Joe Biden will have to oversee the US-China agreement compliance, the implementation of the new labor rules in Mexico with the USMCA, and renewal of fast-track authority to negotiate trade deals (El Economista – Spanish).
US fiscal aid will help Mexico out. According to analysts, the Mexican economy will receive a direct boost in growth thanks to the US GDP in 2021 (El Economista – Spanish). The recovery in oil prices would also help Mexico.
The IMEF and Amcham expects Mexico’s economy to recover. The American Chamber of Commerce in Mexico estimated that Mexico’s economic recovery would be only 3% (El Financiero – Spanish). The IMEF expects Mexico’s economy to recover by 3.5% in 2021 (El Financiero – Spanish), and FocusEconomics, by 3.95% (El Economista – Spanish).
Fitch warns Mexico’s decisions could hurt recovery. The international rating company said that certain political decisions taken by the government could affect the work of the trade agreement with the US and Canada (El Economista – Spanish). Fitch expects Mexico’s economy to improve in the second half of the year due to export growth and remittances.
Legal & Regulatory
The CRE suspended processes for COVID-19. The Energy Regulatory Commission (CRE) suspended periods of document handing and legal terms as a prevention measure to reduce propagation of the COVID-19 pandemic (DOF – English). The CRE will establish working days and hours to deal with necessary issues.
Former CRE workers asked to protect energy investments. Former representatives of the Energy Regulatory Commission (CRE) recommended the regulator provide legal certainty to private investment (El Financiero – Spanish). The former regulators assured that rules are applied in all cases.
The ICC is concerned with the pressure on Mexico’s regulators. The International Chamber of Commerce (ICC) is concerned with President López Obrador’s suggestion to remove regulators (El Economista – Spanish). The ICC said such a move would have a negative impact on Mexican consumers.
The CCE announced 30 infrastructure projects would start in 2021. The private sector is working with the investment unit of the Finance Ministry to include energy projects in the third package of infrastructure works in the coming months (El Financiero – Spanish). A total of 200 projects will start this year.
Pemex asked the Sener for 15 new exploratory assignments. The National Hydrocarbons Commission (CNH) issued a favorable recommendation for the Energy Ministry to hand Pemex 15 new exploratory assignments in non-conventional areas, where 80% are shale resources (El Economista – Spanish).
Regulatory problems have hit energy projects. According to the Business Coordinator Board (CCE), approximately 200 energy projects are paused due to the stop in permits or regulatory instability (El Vigia – Spanish). The CCE is concerned with the US pointing to blockages in energy projects.
Private companies are all about fuel imports. In October 2020, private companies imported a total volume of 126,400 daily barrels of gasoline, 26% of the total foreign purchases made by Mexico, including Pemex’s (El Financiero – Spanish). Private fuel imports for diesel reached 93,800 barrels per day, the second-highest amount in recent history.
Natural gas players asked for more connectivity and independent price indexes. According to Mexico’s pipeline operators and trading houses, Mexico’s natural gas market made tremendous strides in recent years, but more connectivity and independent price indexes are needed (Natural Gas Intel – English).
Sener’s new rules may bring fuel shortages. The new rules issued by the Energy Ministry in December for fuel import companies threaten to produce a shortage of up to 30% in gasoline and LP gas supply by June (Reforma – Spanish).
Strategy & Operations
Iberdrola cut the ribbon on its third solar plant. Iberdrola opened its third solar park located in the Cuyoaco and Ocotepec municipalities. The installation includes 720,000 panels on 703 hectares (PV Magazine – Spanish).
AHMSA agreed to pay US$200m to the government. Altos Hornos de México (AHMSA) will pay US$200m to the government of Andrés Manuel López Obrador as part of economic reparation after the sale and purchase of the petrochemical complex Agro Nitrogenados, focused on fertilizer production (Proceso – Spanish).
Nuevo León’s energy sector feels menaced by US oil import companies. The energy sector of the northern state is concerned with international oil companies such as Exxon, Valero, Shell, Tesoro, and Trafigura keeping all the US fuel import business with their 20-year permits, while Mexican companies have expired or almost expired permits (El Economista – Spanish).
PepsiCo plans to reach 100% renewable power in Mexico. The US food and beverage giant expects to achieve 100% renewable electricity in Australia and Mexico in 2021 (Renewables Now – English). The company will reduce its greenhouse gas emissions across its direct operations by 75% and its indirect value chain by 40% by 2030.
Pemex workers are in the news. President López Obrador said there is no reason for Pemex’s union to accuse the government of breach of the collective contract (El Financiero – Spanish). The Department of Civil Services asked Pemex’s workers to submit their declaration of assets (El Financiero – Spanish).
Old School Social Goes Viral
(Editor’s note: For the duration of the COVID-19 outbreak, this section will refocus on announcements of event delays or cancellations, events that are moved online, and scheduled webinars and public conference calls. Stay safe!)
2nd Edition of Shallow and Deepwater Mexico was postponed to February 16-18, 2021, at Ciudad del Carmen, Campeche.
Mexico Assembly is rescheduled for May 26-27, 2021, at Hyatt Regency, in Mexico City.
The Mexican Petroleum Congress is rescheduled for June 23-26, 2021, in Monterrey.
Bill Gates plans to boost renewables. Some in Mexico want the CFE’s CEO to notice Breakthrough Energy Ventures’ plan to invest in clean technology companies (El Financiero – Spanish). The risk capital fund is led by Bill Gates, and interest in the sector is skyrocketing.
Quote of the Week
“El bien para todos, el mayor bien para la patria.”
“Good for everyone, the best for the nation.”
– Vicente Guerrero (1782-1831), Mexican politician, military and president from April 1, 1829 until December 17, 1829.
We hope you have a productive week. Please send any news, comments, or financing for clean technology to MexicoWeekly@energynarrative.com.
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