The Weekly Brief: Mexico


July 5, 2020 edition—Pemex’s production; Sempra’s priorities; and the hydrogen future.




Last Week in a Minute or Less


Electric Power & Renewables. CFE cut its direct power generation; Mexico has a bright future in hydrogen; and the CRE published CFE Suministrador de Servicios Básicos’ tariffs.


Natural Gas Mid-Downstream & LNG. Sempra will prioritize Mexico.


Liquid Fuels Mid-Downstream. The Supreme Court does not consider the Hydrocarbons Law unconstitutional; and Mexican fuel reached its highest levels since September 2018.


Oil & Gas Upstream. Pemex’s crude production went up in May; Mexico’s natural gas flaring is out of control; and the Zama oil field became a battlefield.


Government & NGO. The Finance Ministry trusts vaccinations to boost the economy; Banxico increased the interest rate to 4.25%; and the CIEP expects big growth for Mexico.


Déjà vu all over again. Last week’s readers were particularly interested in Baja California Sur LNG plans (Natural Gas Intel – English); the CFEi position (Natural Gas Intel – English); and IEnova’s storage plans (El Economista – Spanish).



Geopolitics & Trade                            


Mexico will check US complaints in the GM plant. The Mexican government is ready to work with the Biden administration to develop a plan to secure workers’ rights in the GM plant in Silao (El Economista – Spanish). The AMLO administration sent the answer within the 45-day period, following the USMCA agreement.


Mexican exports skyrocketed 125% in May. The value of Mexican exports was US$40.7bn in May 2021, an increase of 125.21% due to the previous exports affected by the COVID-19 pandemic (El Financiero – Spanish). Oil exports were US$2.2bn, a 137.9% increase.


The WTO expects big from North America. According to the World Trade Organization, North America will lead imports in 2021 and 2022 at a global level (El Economista – Spanish). North American imports will grow 11.4% in 2021 and 4.9% in 2022.


Mexico and California will boost trans-border infrastructure. Both governments signed an agreement to boost trans-border infrastructure projects to expand their trade capacity (El Financiero – Spanish). The agreement includes the Otay II-Otay Mesa East project, the construction of a new border crossing.



Political Economy


Mexico’s economic activity slowed down in April. The General Index of Economic Activity (IGAE) decreased 0.2% in April compared to the previous month (El Economista – Spanish). The IGAE recovered 21.4% compared to the same month in the previous year.


Banxico increased the interest rate to 4.25%. Mexico’s central bank increased the interest rate by 25 points, which was not what was expected by the market (El Financiero – Spanish). Analysts expect Banxico’s rate to reach 5.25% by the end of the year (El Financiero – Spanish).


The CIEP expects big growth for Mexico. According to the Center of Economic and Budget Research (CIEP), Mexico could collect 5.17% more of the GDP if certain efforts are made regarding tax collection, women’s contributions in the work market, and the VAT generalization (El Economista – Spanish).


The Finance Ministry trusts vaccinations to boost the economy. According to the Finance Ministry, vaccination progress and the fight against tax evasion have increased income for the public sector (El Economista – Spanish). From January until May, the budget income amounted to MXN2.4bn, a 6.7% growth.



Legal & Regulatory


The CRE clarified the terms to update permits. The Energy Regulatory Commission (CRE) established the cases that require an update of permits for self-supply permitted activities, except for natural gas pipeline transportation, permits for hydrocarbons, and bio-fuels (DOF – Spanish).


The Supreme Court does not consider the Hydrocarbons Law unconstitutional. The Supreme Court rejected the action of unconstitutionality against the Hydrocarbons Law due to the lack of signatures in the documents submitted (El Financiero – Spanish). The Supreme Court said lawmakers can contest the decision.


Mexico has a bright future in hydrogen. The president of the Mexican Hydrogen Association trusts Mexico’s large potential for green hydrogen development considering the country’s geographic location and access to renewable energy sources (Natural Gas intel – English). Industry members are looking at green hydrogen as a substitute for or complement to natural gas.


The CRE published CFE Suministrador de Servicios Básicos’ tariffs. The Energy Regulatory Commission (CRE) published the methodology to determine the calculation and adjustment of the final tariffs for CFE Suministrador de Servicios Básicos (DOF – Spanish). The methodology includes expected power purchases, fuel prices, and the expected generation costs in its estimations.



Market Trends


Mexican fuel reached its highest levels since September 2018. Mexican export crude reached US$70.2 per barrel, something that happened last in September 2018 (El Financiero – Spanish). Mexican crude mix has gained 51.9% to date in 2021. Brent crude reached US$76.21, not seen since October 31, 2018.


Pemex’s crude production went up in May. The state-owned company reached production of 1,755 million barrels per day in May, a 0.2% increase compared to the previous month and an increase of 4.7% compared to May 2020 (El Economista – Spanish).


Pemex will not capitalize on the oil price rise. According to independent energy analyst Rosanety Barrios, the state-owned company is poorly positioned to capitalize on the oil price increase compared to its peers (Natural Gas Intel – English). Pemex imports most of the petroleum products it sells, and the prices of these products move together with those of crude.



Strategy & Operations


Mexico’s natural gas flaring is out of control. Pemex’s natural gas flaring and production of high-sulfur fuel oil (HSFO) have both increased in recent years, causing concern among local experts (Natural Gas Intel – English). Pemex flared 712MMcf per day of natural gas in the first quarter of 2021.


Mexico wants Vitol to point fingers in Pemex bribes. President López Obrador said Mexico wants the Dutch energy giant to reveal the name of the state-owned company’s official to whom Vitol paid bribes (Reuters – English).


CFE cut its direct power generation. The state-owned company reduced its direct power generation by 28% since 2014 (El Economista – Spanish). Private generators increased production by 14% compared to the same period.


Sempra will prioritize Mexico. The company said the first phase of its Energía Costa Azul LNG project on the west coast of Mexico will be its top priority (Natural Gas Intel – English). Sempra scaled back plans to expand the Cameron LNG export facility in Louisiana.


The Zama oil field became a battlefield. After the state-owned company’s announcement canceling the drilling of an appraisal well, Pemex still has no wells in the field while the Block 7 consortium (Talos Energy, Wintershall Dea, and Premier Oil) have drilled one exploratory well and three appraisal wells. The field could be a test of the USMCA (WSJ – English).



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!)


Mexico Infrastructure & Sustainability Summit is scheduled for October 27-28.


Mexico Assembly will be held on May 22 in Mexico City.



Lateral Thinking


Puebla is powering up. The state Energy Agency published a new report stating that Puebla’s CFE power capacity represents 28% of the total power generated in the state, approximately 715MW. Puebla has 1,205MW of capacity in operation and 1,311MW is expected to be developed (PV Magazine – Spanish).



Quote of the Week


“Yo no pinto recuerdos, pinto lo que está sucediendo.”


“I don’t paint memories, I paint what is happening.”



– Rufino Tamayo (1899-1991), Mexican painter.




We hope you have a productive week. Please send any news, comments, or Puebla’s power capacity to


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