Massive demonstrations take over Mexico City. The 77th Anniversary of the Oil Expropriation was marked by numerous protests (Spanish) from peasant groups, oil and electricity unions, and the Energy Users National Assembly. The protests focused on the energy reform’s impact (English) on unionized labor, hydrocarbons state-ownership, subsidized power tariffs, and arable land use.
Mexico has an oil cartel problem (and it’s not OPEC…) Since 2004, the US Treasury’s Office of Foreign Assets Control has blacklisted 19 fuel service stations in Mexico for their financial ties to organized crime groups (English). Nearly half of them continue to operate (Spanish) under franchise and first-hand sales agreements with Pemex.
The Road to Reform
First upstream bidding round sets sail with 39 firms on board. CNH has closed the first round of tenders for 14 shallow-water E&P blocks with 39 oil companies participating (English). The hydrocarbons commission will open submitted proposals and declare bid winners on July 15 (Spanish) (English).
A helpful compass. Feeling a bit lost amid all the institutions reinforced or created under Mexico’s energy reform? The Wilson Center offers this little map (English) to illustrate how autonomous agencies interact with ministries in the evolving national energy sector.
Lower house puts the brake on law against “oil terrorism”. The Chamber of Deputies will submit the Senate’s draft law on hydrocarbons-related crime to deeper legal scrutiny (Spanish). Lower house members want to make sure that the bill is bulletproof against any constitutional challenge stemming from the prosecution of “oil terrorism”.
Can Mexico avoid the Petrobras effect? Pemex and CFE maintain business ties with Brazilian energy and construction companies (Spanish) that are currently immersed in the Petrobras corruption scandal. No major irregularities have been identified yet, but some public officials suggest that state productive enterprise contracting should be included in the debate on Mexico’s proposed new anti-corruption system.
Energy-related brands are piling up. Between 2013 and 2014, the number of registered trademarks for energy-related products or services more than doubled in Mexico, going from 78 to 203 (Spanish).
There is a growing imbalance in Mexico’s and Latin America’s fuels trade. During the first quarter of this year, Mexico’s gasoline imports grew 8.3% while domestic refinery output dipped 12.7% y-o-y (Spanish). Many Latin American countries face a growing refining gap as they absorb half of US oil product exports (English).
CNH confirms lower oil and gas production targets for this year. It’s official, Pemex’s 2015 output goals have been adjusted downward (Spanish) to average 2.29 million barrels per day of oil and 6.36 billion cubic feet per day of natural gas. These volumes represent respective decreases of 5.8% and 2.6% (English) relative to last year’s production.
Strategy & Operations
Pemex enters the biofuels game. Pemex will start a new business by selling Magna gasoline blended with 5.8% ethanol (Spanish). The state oil company will purchase up to 123m liters (English) of anhydrous ethanol per year from local biofuels producers (Spanish) under 10-year supply contracts worth between US$524m and US$750m.
Local mining firms seek to monetize coal bed methane. Around 32 coal mining companies have requested permits from SENER to exploit associated gas within their licensed areas. The AHMSA, MINSA and MISMO groups (Spanish), which extract coal from the Burgos Basin in Coahuila, represent seven of the companies.
From garbage dump to city lights. Mexico City will inaugurate the country’s first biogas project next year. Located in the Bordo Poniente landfill (Spanish), the MXN1.12bn power plant will generate up to 80 MWh of energy for public lighting.
IPPs are getting more expensive. Over the next three years, CFE will have to pay almost MXN199bn to independent power producers (Spanish) to honor contractual obligations. Costs are expected to grow by almost 67% to hit the MXN63bn-mark by 2018.
Here comes the sun! CRE has signed off on 37 solar photovoltaic energy projects (Spanish) worth US$3bn, to be located in Mexico’s northwest region. Altogether, these projects will represent an additional 1.2 GW of installed capacity.
The royal side of Mexico City. Constructed in 1725, the Chapultepec Castle is the only palace to ever house monarchs in North America (English). Under the short-lived Second Mexican Empire (1864-1867), the castle became the official residence of Maximilian I, former Archduke of Austria, and his wife, Carlota of Belgium.
Quote of the Week
“Entre los individuos, como entre las naciones, el respeto al derecho ajeno es la paz.”
“Among individuals, as among nations, respect for the rights of others is peace.”
- Benito Juárez
We hope you have a productive week. Please send any news, comments, biogas feedstock or suggestions for royal residences to MexicoWeekly@energynarrative.com.
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