July 26, 2020 edition—Sempra’s LNG cargo; 82 fuel import cancellations; and 265 writs of amparo pending.
Last Week in a Minute or Less
Electric Power & Renewables.
CFE plans a new debt issue; and there are still 265 writs of amparo against the new power law.
Natural Gas Mid-Downstream & LNG. The Sur de Texas-Tuxpan pipeline is Mexico’s star; BP will hand the first LNG cargo to Energía Costa Azul; and CFE and WhiteWater fight over natural gas contracts.
Liquid Fuels Mid-Downstream. The suspension will hit fuel imports against Pemex; Total said it has the fuel import permits; and Pemex could hit the LPG market.
Oil & Gas Upstream. Biden was asked to help US energy companies in Mexico; and Borr Drilling will work hard in Mexico.
Government & NGO. The Citibanamex survey expects good things from Mexico’s economy; BBVA expects a 6.3% growth in 2021; and US fights Mexico and Canada over car rules.
Déjà vu all over again. Last week’s readers were particularly interested in Mexico’s fuel imports market (Platts – English); Mexico’s natural gas demand (Natural Gas Intel – English); and Sonora’s solar project (Platts – English).
Geopolitics & Trade
SNITIS sued Tridonex. The National Independent Union of Industry and Services Workers (SNITIS) sued the company established in Matamoros, Tamaulipas (El Financiero – Spanish). Tridonex has 3,800 textile workers.
GM needs more chips to maintain North American production. General Motors will stop production at four of its North American plants for two weeks as the industry is hit by the global shortage of semiconductor chips (Platts – English). The San Luis Potosi assembly plant and the Ramos assembly plant are taking two weeks’ downtime.
Biden was asked to help US energy companies in Mexico. Twenty US Congress members requested that President Biden address the concerns of US energy companies in Mexico, arguing the Mexican administration is limiting competition to strengthen the state-owned companies (Platts – English).
The US is fighting Mexico and Canada over car rules. The US is fighting Mexico and Canada over rules for cars shipped across regional borders, with automakers telling the US administration that it is imperiling the success of their new trade pact (Bloomberg – English).
The US maintained the land borders closure. The US government extended the closure of land borders with Canada and Mexico for non-essential travel such as tourism through August 21 (Reuters – English). Officials are debating whether to require visitors to have received a COVID-19 vaccine.
The Citibanamex survey expects good things from Mexico’s economy… According to the analysts consulted by Citibanamex, Mexico’s GDP will reach 6% in 2020 (El Financiero – Spanish). Most analysts expect the interest rate to increase by 0.25% in Banxico’s next meeting.
…and the IMEF expects 5.9% growth in 2022. According to the Mexican Institute of Finance Executives (IMEF), fiscal strategies to promote economic recovery after the pandemic and a change in the government’s attitude toward private investment could boost economic recovery to 5.9% in 2022 (El Financiero – Spanish).
BBVA expects 6.3% growth in 2021. BBVA increased its 2021 growth forecast for Mexico’s GDP, from 4.7% to 6.3% (El Economista – Spanish). For 2022, the forecast was moved from 2.8% to 3.0%.
Legal & Regulatory
The SAT and the Sener stopped 82 energy companies. The tax authority and the Energy Ministry suspended 82 energy companies as part of their move to combat tax evasion (El Economista – Spanish) (Platts – English). Among the companies are Ferromex and Kansas City Southern, banned from importing chemicals and refined products into the country.
There are still 265 writs of amparo against the new power law. Despite ruling three times in favor of the Sener, until the new rules and secondary legislation are published reflecting the impact on the changes, there are 265 writs of amparo against the new law (El Economista – Spanish).
Total said it has the fuel import permits it needs. The French oil giant clarified to the tax authority that the company has the permits needed to import fuel (El Economista – Spanish). The clarification was made after the company Total Propane, from Nuevo León, was included in the list of suspended companies.
Pemex could hit the LPG market. According to local energy sector stakeholders, the plans for the state-owned company to enter the LPG market could harm competition (Natural Gas Intel – English). The residential segment accounts for 55.5% of LPG demand in Mexico.
CFE plans a new debt issue… The state-owned company plans to issue up to US$1bn in 12-year debt (El Financiero – Spanish). The companies are trying to get lower interest rates when the economic recovery is worried about inflation.
…and Moody’s and Fitch trust CFE’s debt. The international ratings agency Fitch affirmed CFE’s ratings, including its local currency issuer default ratings, at BBB- (Fitch – English). Moody’s assigned a Baa1 Global Scale rating to CFE’s proposed senior unsecured global notes (Moody’s – English).
Mexico pushed US natural gas prices. US natural gas demand and prices are increasing due to a convergence of supply and demand-related factors as the world emerges from COVID-19. Pipeline exports to Mexico and capital discipline by upstream producers have contributed to a boost in prices from below US$2.00/MMBtu to well above US$3.00 (Natural Gas Intel – English).
The Sur de Texas-Tuxpan pipeline is Mexico’s star. The Sur de Texas-Tuxpan marine pipeline is becoming the main source of supply into Mexico (Natural Gas Intel – English). The Tula-Villa de Reyes pipeline, which will enter service this year, will add additional demand to the marine pipeline.
Strategy & Operations
BP will hand the first LNG cargo to Energía Costa Azul. The oil giant delivered its first carbon-offset LNG cargo to Sempra’s terminal on Mexico’s Pacific Coast (Platts – English). The estimated carbon dioxide and methane emissions associated with the LNG cargo will be offset by retiring a corresponding amount of carbon credits.
Pemex temporarily banned new business with Trafigura. The state-owned company has temporarily banned new business with Trafigura as investigations into the energy company’s conduct in several countries deepen (Reuters – English). The announcement did not give a reason for the ban.
The suspension will hit fuel imports against Pemex. The suspension on 45% of the fuel import companies (82 companies in the sector) will paralyze competition for at least a month and a half (El Economista – Spanish). According to the legal advisor of ARSE, permits are difficult to obtain from the Energy Ministry during the pandemic.
CFE and WhiteWater fight over natural gas contracts. The state-owned company said it is investigating corruption related to natural gas contracts with WhiteWater Midstream LLC (Natural Gas Intel – English). Two contracts with CFE subsidiary CFE International (CFEi) are seen as being “unfavorable and unequal” to the Mexican state.
Borr Drilling will work hard in Mexico. The Bermuda company was awarded an additional jack-up drilling rig work in Mexico (Royal Gazette – English). The company is expected to commence in the second quarter of 2022 for 150 days, adding revenues of US$15.7m.
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 in May, 2022 in Mexico City.
Some Mexican villages are saying no to the COVID-19 vaccine. Indigenous towns in the state of Chiapas were unaffected by the COVID-19 pandemic and are refusing the vaccines, influenced by lies and rumors passing around on WhatsApp (BBC – English). The messages said the vaccine will kill people after two years as part of a government plot to reduce the population.
Quote of the Week
“Los efectos de la fuerza son rápidos, pero pasajeros; los de la persuasión lentos, pero seguros.”
“The effects of force are quick, but temporary; the effects of persuasion are slow, but reliable.”
– José María Luis Mora (1794-1850), Mexican priest, lawyer, historian, politician and liberal ideologist.
We hope you have a productive week. Please send any news, comments, or vaccination experiences to MexicoWeekly@energynarrative.com.
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