July 24, 2017 edition— Round 2.4 postponed; Reynosa will be powered by wind; and S&P backs Mexico.
Last Week in a Minute or Less
Renewables & Electricity. Vestas will open a wind park in Reynosa and FIDE backed renewable projects.
Natural Gas & Liquid Fuels. Pemex and Tesoro will share pipelines; Gas Natural will develop a supply network; and BP opened a fourth gas station.
Oil & Gas Upstream. Round 2.4 was postponed for a month; the Renaissance Oil contract was put on hold; and Round 1.3 oil production goes slow.
Money & Power. S&P issued an improved outlook for Mexico’s credit rating; the U.S. NAFTA renegotiation objectives are out; and Moody’s maintained Pemex’s Baa3 rating.
Déjà vu all over again. Last week’s readers were particularly interested in the possible 20% increase in natural gas prices (Spanish); the IEnova terminal in Veracruz (Spanish); and CFE’s gas pipeline auction (English).
The Road to Reform
Mexico postponed the next upstream round. Mexico wants to give international participants enough time to study the new data on deep-water discoveries before presenting their offers for Round 2.4 (Spanish). The next round was postponed one month, to January 2018, and information on its fields was announced “a few days” after (Spanish).
Pemex shares pipelines with Tesoro. The state-owned company undersigned contracts with the US company, Tesoro, to allow the use of Pemex’s pipeline transportation and storage system in Baja California and Sonora (English) (Spanish). Tesoro won Pemex Logística’s first open season auction, gaining access to the assigned capacity for three years.
The CNH put the Renaissance Oil contract on hold. The National Hydrocarbons Commission (CNH) granted the Canadian company’s force majeure request to suspend activities in the Pontón area (Spanish). The CNH admitted work cannot continue due to environmental damage caused by an oil leak there when Pemex worked in the area.
Round 1.3 contractors progress slowly. Oil production by the contractors awarded concessions by the National Hydrocarbons Commission (CNH) in Round 1.3 was 1,542 barrels per day in May, 0.07% of the national production (Spanish). Production fell 25.9% in a year since the four companies started operations at seven wells.
Sener considers awarding bonus time to Pemex. The Energy Ministry is considering extending the deadline for Pemex to develop 108 oil fields it was assigned in 2014 (Spanish). Pemex agreed to invest a minimum amount in each field within three years or the government could recuperate the fields.
A dream team will renegotiate NAFTA with Mexico… The Businessmen’s Coordinating Council (CCE) and the Mexican government will be advised by the US’s most profitable lobbying firm –Akin, Gump, Strauss, Hauer, and Feld- in the NAFTA renegotiation (Spanish). The company’s client list includes Amazon, American Airlines, Anheuser Busch InBev, AT&T, Boeing, and Chevron.
…and the U.S. NAFTA renegotiation objectives were published. US Trade Representative Robert Lighthizer released the objectives for the NAFTA renegotiation including reducing the US trade deficit and improving market access for US goods (English). The objectives also include adding a digital economy chapter and tightening labor and environmental obligations.
FIDE invests in renewables. The Trust for Saving Electric Energy financed 2,044 generation projects with renewable energy (Spanish). Among the projects, 1,226 were assigned to small and medium businesses and 818 to residential users. Michoacán had the most projects (168), followed by Yucatán (154), Chihuahua (148), Morelos (112), and Jalisco (111).
Javier Duarte is behind bars in Mexico. The former governor of Veracruz, Javier Duarte de Ochoa, arrived at Mexico City’s Northern prison to appear before a judge and face charges of organized crime and money laundering (Spanish). Duarte accepted extradition on July 4 in Guatemala where he was held in a military barracks.
Carstens said Mexico is nearing peak inflation. Mexico’s central bank governor Agustin Carstens said Mexico is close to reaching a peak in inflation (English). Carstens says the central bank has not seen signs of widespread price manipulation of government bonds, an issue under investigation by the Cofece anti-trust commission (English).
Moody’s maintained Pemex rating as Baa3. The rating agency ratified Pemex’s Baa3 rating due to credit strength and a strong reserve position (Spanish). Moody’s warned about the high tax burden and the company’s high financial leverage could negatively affect Pemex’s outlook.
S&P confident about Mexico and its debt. The rating agency raised its outlook for Mexico’s credit rating to stable from negative, citing government steps that will slow accrual of new debt (English) (Spanish). The Deputy Minister of Finance announced that, even after the S&P action, further cuts could be made in the 2018 budget (Spanish).
IMF’s Lipton backs Mexico’s economy. David Lipton, First Deputy Managing Director of the International Monetary Fund (IMF), visited Mexico and pointed out that Mexico’s economy is growing despite the rise in inflation and the uncertainty over trade relations (English). Improving governance and transparency are key to promoting growth of the economy.
Strategy & Operations
Vestas will ride Reynosa’s wind. The Danish company will install a plant to produce blades and turbines in Reynosa between August and December 2017, with a US$81m investment (English) (Spanish). In 2014, Vestas installed the first wind turbine in Tamaulipas, and in record time has installed 300MW in the state.
BP cut the red ribbon for its fourth gas station. The British company opened a new gas station in Estado de México, north of Mexico City. So far, BP has signed more than 100 contracts in nine states and will continue expanding in the next five years (Spanish).
Gas Natural will create a supply grid. Gas Natural will develop a natural gas supply network to serve industries which will connect the municipalities of Campeche, Carmen, Champotón, and Escárcega (Spanish). The goal is to install a fuel terminal through the Houston-Seybaplaya commercial link to lower costs and supply the Riviera Maya region.
ENI ready to start crude production in 2019. The Italian company presented a production development plan for Round 1 fields and will start production at the light oil Amoca field by 2019 (English) (Spanish). The eventual output will range between 30,000 and 50,000 barrels per day.
Old School Social
Events in the world beyond your screen – go see and be seen!
The US-Mex Natural Gas Forum is August 14-16 at the Hyatt Regency Riverwalk, San Antonio, Texas.
The Expo Energía is August 15-17 at the Centro de Convenciones Puebla, in Puebla.
Ancient Mexico is now a strategy game. Aztez, a strategy and brutally bloody 2D game, will be released on August 1. The game is based on 16th century pre-Conquest Mexico and Central America. The goal is to build and maintain a great Aztec empire through diplomacy and the use of special forces (English).
Quote of the Week
“La responsabilidad de mis actos vivirá lo que vivan sus consecuencias.”
“Responsibility for my acts will live as long as their consequences.”
-Álvaro Obregón (1880-1928), general in the Mexican Revolution and President from 1920 to 1924
We hope you have a productive week. Please send any news, comments, or new videogames based on the XVI century to MexicoWeekly@energynarrative.com.
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