The Weekly Brief: Mexico


May 17, 2020 edition—Mexico’s power infrastructure; US natural gas exports; and the Hydrocarbons Law’s stop.




Last Week in a Minute or Less


Electric Power & Renewables. Grupo México plans to invest in refining and power; the DENA recommends private funds for power infrastructure; and the CFE forgot about Nuevo León’s suppliers.


Natural Gas Mid-Downstream & LNG. US natural gas exports went up in 2020; and Naturgy will raise prices.


Liquid Fuels Mid-Downstream. A court suspended the new Hydrocarbons Law temporarily; Nahle said Dos Bocas will be ready by 2022; and Minatitlán’s refinery is up and running.


Oil & Gas Upstream. Pemex delayed payments to oil partners; the API complained about Mexico’s new energy rules; and the ICC expects 50 writs of amparo against the new Hydrocarbons Law.


Government & NGO. The Finance Ministry is happy with the rating agencies; Moody’s warned local governments over limited income; and inflation reached 6.08% in April.


Déjà vu all over again. Last week’s readers were particularly interested in the Hydrocarbons Law’s effect on the gas sector (Natural Gas Intel – English); Pemex’s natural gas flaring (Natural Gas Intel – English); and US remittances (El Economista – Spanish).



Geopolitics & Trade


The US and Mexico will fight corruption and violence together. Kamala Harris said the US and Mexico should fight together against violence and corruption, the main causes of Central American migration (El Economista – Spanish). President López Obrador proposed a program to plant trees in Central America.


AMLO asked the US for an explanation on MCCI’s funding. The Mexican government sent a diplomatic note to the US complaining about the funding given to a not-for-profit civic association devoted to fighting corruption (El Economista – Spanish) (Sunday Vision – English).


The API complained about Mexico’s new energy rules. The American Petroleum Institute (API) complained about the unfair treatment of US energy companies with Mexico’s new rules (Natural Gas Intel – English) (El Economista – Spanish). The API argued the new rules may violate Mexico’s commitments under the USMCA.


The AFL-CIO filed the first Mexico labor grievance under USMCA. The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) filed a petition under USCMA stating that workers at Tridonex were blocked from electing a union of their choice (Reuters – English) (El Economista – Spanish).



Political Economy


Inflation reached 6.08% in April. In April, inflation increased by 0.33%, reaching 6.08% from the previous 4.67% in March (El Economista – Spanish) (Proceso – Spanish). The increase is related to the comparison with the previous year of COVID-19 pandemic effect and related confinements.


The Finance Ministry is happy with the rating agencies. The Finance Ministry said Mexico’s rating was confirmed by HR, Kroll Bond Rating, and DBRS Morningstar at BBB+ with a negative outlook, BBB with negative outlook, and BBB with a stable outlook, respectively (El Economista – Spanish).


Pemex delayed payments to oil partners. The state-owned company is delaying payments to contractors and deferring reimbursement to some partner companies to postpone spending money (Bloomberg – English). Pemex owed US$60m for crude and natural gas to Cheiron Petroleum Corp. and US$4m to Hokchi Energy.


Moody’s warned local governments over limited income. The international rating agency warned the recovery of federal transfers will be slow considering the administration’s conservative management of the budget  (Proceso – Spanish). In municipalities, short-term debt increased by 92%.



Legal & Regulatory


Cofece is looking into electric power monopolistic practices. The Mexican antitrust watchdog (Cofece) is investigating possible monopolistic practices in the generation market, sales, and power supply (El Financiero – Spanish).


The ICC expects 50 writs of amparo against the new Hydrocarbons Law. The head of the International Chamber of Commerce Mexico (ICC) expects at least 50 writs of amparo against the new Hydrocarbons Law to be initiated (El Economista – Spanish). The ICC is concerned with illegal fuel taps.


A court temporarily suspended the new Hydrocarbons Law. A federal judge temporarily suspended parts of the Hydrocarbons Law pertaining to enabling the government to suspend fuel permits (Bloomberg – English). At least 17 suspensions have been presented against the new law (Proceso – Spanish).


The Supreme Court said no to suspending the power law. The Supreme Court accepted the constitutional controversy promoted by the Mexican antitrust watchdog (Cofece) against the new power law but said no to the requested cancellation (El Financiero – Spanish). The Cofece said the new rules are unconstitutional.



Market Trends


Mexico will receive USGC refined products. Mexico is an external outlet for US Gulf coast refiners seeking buyers for fuel stranded by the Colonial pipeline shutdown (Argus Media – English). Mexico expects discounts and only limited volumes of fuel from the USGC.


US natural gas exports went up in 2020. US natural gas exports via pipeline and LNG increased by 13.4% in 2020 despite the pandemic. US gas exports to Mexico increased by 6.7% to 1.99 Tcf or 5.4 Bcf/d in 2020 from 1.86 Tcf or 5.1 Bcf/d in 2019 (Natural Gas Intel – English).


The DENA recommends private funds for power infrastructure. The German Energy Agency said the Mexican government should consider opening to private investment to modernize and develop the power sector (El Financiero – Spanish). Guaranteeing the power system security is necessary to decentralize local energy sources.


Naturgy will raise prices. The company expects to adjust tariffs in Mexico by the end of 2021, hitting homes and stores (El Financiero – Spanish). According to Naturgy, the tariff increases have to do with exchange variations.



Strategy & Operations


AMLO criticized Pemex and Shell’s partnership. President López Obrador criticized the partnership between the state-owned company and the oil giant in a Texas refinery (El Economista – Spanish). AMLO said that since the signing of the partnership in 1993, Pemex has not received any gross profit.


Minatitlán’s refinery is up and running. The General Lázaro Cárdenas del Río refinery in Minatitlán restarted gasoline production after a fire started in the plant a month ago (El Economista – Spanish). The plant has a processing capacity of 285,000 barrels per day.


The CFE forgot about Nuevo León’s suppliers. The state-owned company (CFE) is prioritizing foreign companies in the construction of six combined-cycle generation plants, ignoring Nuevo León’s and Mexico’s suppliers (El Financiero – Spanish). The six plants will require mechanical systems, diverse controls, and gas and steam turbines.


Nahle said Dos Bocas will be ready by 2022. Energy Minister Rocío Nahle said the construction of the Dos Bocas refinery will finish by 2022, as promised by the federal government (El Norte – Spanish).


Grupo México plans to invest in refining and power. The mining company is considering new investment of US$3.1bn to refine metals in Sonora and build power infrastructure in Baja California (El Economista – Spanish). The new power lines will receive US$815m.



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!)


30th La Jolla Energy Virtual Conference will be held on Wednesdays and Fridays throughout May, 2021.


Mexico Assembly is rescheduled for May 26-27, 2021, at Hyatt Regency, in Mexico City.


The Mexican Petroleum Congress is rescheduled for June 23-26, 2021, in Monterrey.



Lateral Thinking


Mexico needs more transmission lines: Concamin. According to the head of the Energy Commission of the Concamin, the greater challenge in the Mexican power system is the energy transition, and the private sector is ready to invest in it (El Financiero – Spanish).



Quote of the Week


“Ahí te van las hojas, mándame más tamales.”


“Here you got the leaves, sent me more tamales.”



– Pascual Orozco (1882-1915), Mexican revolutionary leader, referring to soldiers’ uniforms and bodies in a note to Porfirio Díaz.



We hope you have a productive week. Please send any news, comments, or transmission lines plans to


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