The Weekly Brief: Mexico


January 29, 2018 edition—CELs in February; Round 3.2 with 37 areas; and an uncertain sixth NAFTA round.




Last Week in a Minute or Less


Renewables & Electricity. Enel began building the Salitrillos wind park; GE will update a power plant; and CELs will be out in February.


Natural Gas & Liquid Fuels. Drug cartels hamper refineries and pipelines and the CFE plans to clarify natural gas transportation prices.


Oil & Gas Upstream. Sener expects big things from Round 2.4; Round 3.2 will include 37 areas; and shale may be included in the next rounds.


Money & Power. Uncertainty surrounds NAFTA’s sixth round of negotiations; the IMF trusts Mexico; and inflation paced itself.


Déjà vu all over again. Last week’s readers were particularly interested in NAFTA’s threat on US gas exports (English); the four pipelines under construction to import fuel (Spanish); and Cofece’s suggestions for power competence (Spanish).



NAFTA Negotiation


Doubts surround the sixth round… Private Canadian groups are convinced the US will abandon the agreement and discuss when it will happen (Spanish). Mexico arrived very well prepared with counterproposals after 250 meetings with different US congressmen, White House personnel, and private sector representatives (Spanish).


… but Mexico has not lost hope. Mexico is certain differences will narrow in the talks to modernize NAFTA (English). The US negotiators, however, said they are losing patience with Canada and Mexico’s resistance to their proposals to rework the trade agreement (English).


The peso suffered from NAFTA uncertainty. The peso experienced losses due to the uncertainty surrounding the sixth round of negotiations (English). The week before the negotiations the Mexican peso reported a 5.38% advance, becoming one of the world’s better performing currencies (Spanish).


The end of NAFTA could hit chicken exports. With a possible US withdrawal from NAFTA, Mexico could add a 75% tariff on US chicken following WTO rules, compared to the 20% tax on imports it could apply to pork (English). The US poultry sector exports products to Mexico worth more than US$1bn per year.



The Road to Reform


Sener has high hopes for Rounds 2.4 and 3. Mexico’s Energy Ministry (Sener) will declare success if it assigns a quarter of the 29 blocks offered to investors (Spanish). Sener and the National Hydrocarbons Commission (CNH) will launch Round 3.2 for hydrocarbons exploration and extraction in 37 land areas (Spanish).


CELs will be out in February. In February, the first Clean Energy Certificates (CELs) will be handed out, and the deadline for the 2018 annual declaration will come in May 2019 (Spanish) (Spanish). There are 40,000 businesses generating their own clean energy.


Shale may join future rounds. The deputy ministry of Hydrocarbons, Aldo Flores, said non-conventional oil and gas blocks may be included in the coming rounds (Spanish). Such a tender would require the application of a different tax system.


The CFE plans to clarify natural gas transportation prices. CFE Energía is working to launch a webpage to show the costs of natural gas and its transportation (Spanish). The webpage will be ready in the first quarter and will be a tool for users to know what is being paid.



Political Economy


Banxico and the Finance Ministry shuffled personnel. The current Treasurer of the Federation, Irene Espinosa Castellano, was named deputy governor of the Bank of Mexico (Spanish). Miguel Messmacher Linartas, former deputy secretary of revenue, was named to occupy the deputy Finance Ministry.


Mexico’s states and towns owe CFE a lot of money. Most states, 31 in total, and 1,265 municipalities owe MXN14.2bn to the CFE since 2015 (Spanish). Chiapas is at the head of the list of debtor states, at MXN2.4bn in the hole, while Ixtapaluca is the municipality which owes the most to CFE, at MXN447.4m.


The ASF keeps a close eye on Pemex’s contractors. The Superior Federal Auditor (ASF) is investigating the Industrial Services Company (CSI), which left the state-owned company with millions of pesos in losses. CSI failed to fulfill a contract for MXN608m (Spanish).


Drug cartels hamper refineries and pipelines. Drug cartels and fuel thieves pay and threaten refinery employees to obtain information about how the refinery works and the pipelines used (Spanish). Fuel robberies cost the government over US$1bn per year and scare off private investment in refineries.



Market Trends


Power tariffs are under discussion. The CFE denied accusations of general power tariff increases across the whole country (Spanish) and the CRE assured that prices will be lowered by the end of the year, thanks to renewable projects (Spanish). Tamaulipas’ businessmen claimed mistakes in the pricing methodology caused power bills to increase between 50% to 400% (Spanish).


The IMF trusts Mexico’s economy. The International Monetary Fund (IMF) forecast Mexico’s GDP to grow 2.3% in 2018, up from October’s 1.9% estimate (Spanish). In 2019, the IMF expects Mexico to grow 3%, up 0.7% compared to the previous 2.3% forecast.


Inflation hit the brakes in January. The National Index of Consumer Prices (INPC) registered a 5.51% annualized increase during the first two weeks of January (Spanish). Inflation has reached its lowest level since March 2017.


Trump’s tariff on solar panels may hit renewable energy goals. President Trump added tariffs on solar panels and washing machines (English). Mexico’s solar association said the tariff will hit Mexico’s production chains and the regional goal to reach 50% of clean energy generation by 2050 (Spanish), while solar project developers denied the impact (Spanish).



Strategy & Operations


GE will update and operate a power plant. General Electric signed a long-term agreement with Macquarie Capital and Techint to maintain and operate the 907MW Norte III power plant in Ciudad Juárez (Spanish). The company explained the agreement includes two 25-year contracts valued at US$330m.


Alfa has an eye set on the next rounds. The company will participate in the next rounds to bet on onshore and shallow water fields (Spanish). Alfa is considering partnerships and has no definite number of projects in mind.


Suppliers worry over Mexico’s power troubles. New suppliers are concerned that a lack of available firm capacity could hold up the growth of their operations (English). The amount of power plants and combined-cycle plants is limited and Mexico needs suppliers to hedge a part of their supply ahead to protect users.


Enel began the Salitrillos wind park construction. The Enel subsidiary started building its first wind park in Tamaulipas with an investment of US$120m (Spanish). The Salitrillos park will generate 400GWh per year and will be in operation by 2019.


Everybody wants a piece of Eólica Golfo 1. The Eólica Golfo 1 park sold the 72MW capacity that it will produce annually to national and international companies (Spanish). The park will start operations in April with 28 wind generators and 400 workers.



Old School Social


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


The United States and Mexico in the Trump Era conference will be held February 6 at the Inter-American Dialogue, in Washington, DC.


Solar Summit Mexico is scheduled for February 13-14 at the Hyatt Regency Mexico City, Mexico City.


The panel on Political Uncertainty and Mexico’s Energy Reform will be held February 15 at the James A. Baker III Hall, Rice University, in Houston, Texas.


The 4th Natural Gas Power Plant Construction Summit, Mexico 2018 will be held February 28-March 1. The meeting is the most influential summit and the only tailor-made forum focusing on stimulating opportunities amongst natural gas power plant owners, developers, and EPCs in Mexico’s booming natural gas power market.


Mexico WindPower is scheduled for February 28-March 1 at Centro Citibanamex in Mexico City. In its seventh edition, Mexico WindPower 2018 consolidates its position as Mexico’s most important congress and exhibition event in the wind power sector. In addition, you can network with key personalities in the industry and meet real buyers face-to-face.



Lateral Thinking


A Mormon lawyer changed Mexico’s archaeology. Thomas Stuart Ferguson arrived in the Isthmus of Tehuantepec suspecting the Book of Mormon took place there. In the process of exploring the area, he lost his faith but discovered important Mesoamerican archeological sites (English).



Quote of the Week


“Cuando el hombre deja de creer en sus fetiches, deja de crear (convirtiéndose) en un repetidor automático de (…) curiosidades.”


“When man stops believing in his fetishes, he stops creating (converting himself) in an automatic repetition of curiosities.”


-Juan O’Gorman (1905-1982), Mexican painter and architect.




We hope you have a productive week. Please send any news, comments, or locations of archeological sites to


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