May 22, 2017 edition— Tres Mesas opened; Round 2.1 deadline extended; and Russia and Saudi Arabia keep the oil taps turned down.
Last Week in a Minute or Less
Renewables & Electricity. The first two phases of Tres Mesas open; Mitsubishi will soon start construction of the Eólica del Sur; and Siemens will bet more on local suppliers.
Natural Gas & Liquid Fuels. Pipelines are tempting for investors and the Altamira refinery is looking for partners.
Oil & Gas Upstream. Most of Pemex’s drilling equipment is on vacation and the CNH extended the Round 2.1 deadline.
Money & Power. Moody’s rating is unfazed by the 2018 election; Fibra E is an almost certain move during 2017; and Russia and Saudi Arabia agreed to keep the lid on oil production.
Déjà vu all over again. Last week’s readers were particularly interested in CRE’s design for the open season (Spanish); BMW’s solar energy project (Spanish); and the winners of the Cenegas open season (Spanish).
The Road to Reform
The CRE is onto CFE’s solar connections delays… The Energy Regulatory Commission (CRE) investigates the state-owned company after several accusations that it impeded solar project’s connection to the grid (Spanish). The CFE has been accused of refusing to receive requests for connections and failing to sign off on interconnection contracts (Spanish).
…and the CFE and the CRE fight over self-generation. The state-owned company is litigating against the Energy Regulatory Commission (CRE), protesting new distributed generation rules which, CFE claims, subsidize clients. The rules force CFE to compensate clients who sell their surplus of solar energy with payments and power (Spanish).
The CNH extended the deadline for Round 2.1. contractors. The National Hydrocarbons Commission (CNH) gave more time to the potential contractors of 15 shallow-water fields for Round 2.1 (Spanish). Following the industry’s suggestions, the period to approve exploration plans was extended from 120 to 180 days.
Pipelines and terminals are a solid investment. Telésforo Segura Lima, an officer of the Mexican Construction Industry Chamber (CMIC), said there are investment opportunities for private pipelines and terminals under the fuel liberalization (Spanish). Gasoline imports reach 50% of demand, refineries are outdated, and oil production has dropped, encouraging investments.
Mexico will count on 52 clean energy plants by 2019. In the next two years, 34 new companies will be created and Mexico will gain 52 new renewable energy plants, doubling solar and wind generation infrastructure (Spanish). The Energy Ministry expects Mexico to triple power generation with clean energies.
Moody’s said the elections won’t affect Mexico’s rating. Alberto Jones, CEO of Moody’s Mexico, will not lower Mexico’s rating for now and the 2018 general election would not affect the debt rating (English) (Spanish). Moody’s will decide on stabilizing or downgrading Mexico’s outlook, currently negative, by the end of 2017 or early 2018 (English).
Pemex’s drilling equipment is on hold. Pemex’s use of its drilling equipment, both for exploration and extraction, fell by 90% in the last seven years (Spanish). By the end of the first quarter, only 13 drilling rigs are working, 11 in exploration activities and two in development, compared to the 176 drilling rigs in use in 2009.
Pemex suffered 60 accidents—but not all at once. The state-owned company has registered 60 serious accidents—fires, leaks, or explosions— between 2012 and April, 2016 which the company reported to the Emergency Attention Center (Spanish). Pemex released the information in response to a citizen request, and said 2015 was the worst year, with 24 accidents registered.
The oil fund is coming up short. During its first two years, the Mexican Fund for Oil Stabilization and Development has not saved what was planned, according to the Finance Ministry. In the first quarter of 2017, the fund transferred more than what was programmed to the Treasury, but remains far from the goal (Spanish).
The European Energy Manager course teaches how to achieve energy efficiency and savings within your company and administer a functioning energy management system that can influence your company’s profits and losses.
The course targets technical experts and company executives as well as service providers. The face-to-face training is usually held outside working hours (160 units) and includes a final project (80 units). Learn more here.
Russia and Saudi Arabia agreed a production cut extension is needed…. Russia and Saudi Arabia announced their agreement that the oil output reduction should be prolonged until the end of March 2018 (English) (Spanish). The announcement triggered an increase of 2% in oil prices within an hour.
…but the IEA warns it will take time to reduce oil stocks. The International Energy Agency (IEA) reported that to achieve a real market rebalancing, crude stocks must fall in the coming months (English) (Spanish). The IEA warned stocks might not fall to the 5-year average by year-end.
Fibra E in Pemex’s sights. The state-owned company could launch a Fibra E investment instrument, the president of Macquarie Infrastructure said (Spanish). Members of the Latin American Oil and Gas Association want to take advantage of Fibra E financing opportunities and could make two new placements by the end of 2017 (Spanish).
The Altamira refinery is looking for a partner. Texas Intercom Oil & Gas Engineering presented the modular refinery in Altamira to local investors (Spanish). The mini-refinery will process 10,000 barrels per day and could reach 50,000 barrels per day, with an investment of US$120m.
Strategy & Operations
Tamaulipas’ governor cut the Tres Mesas ribbon. The first two phases of the Tres Mesas wind farm were opened, with GBM Infraestructura and Goldman Sachs investing US$234m (Spanish). The 45 wind generators with a 148.5MW capacity will be complemented by 51.8MW in the third phase of the project with Engie’s investment of US$80m.
Mitsubishi puts down roots in Oaxaca. Oaxaca’s governor confirmed that payments for construction permits for the biggest wind farm in Latin America have started (Spanish). A US$1.2bn in investment, Eólica del Sur will be have 132 wind generators located in Juchitán de Zaragoza and El Espinal, in the Istmo de Tehuantepec.
Siemens will increase purchases from local suppliers. The German company is replacing plastic products, resin, and steel imports for its nine factories in Mexico with products from local suppliers. Siemens plans to increase annual local purchases to MXN9.3bn by 2026, up from the current level of MXN6bn bought from 2,000 Mexican suppliers (Spanish).
Green car sales are through the roof. This year, in January and February, 348 electric and hybrid vehicles were sold in Mexico, an increase of 422% compared to 2016 (Spanish). Among the total number of green vehicles sold, 95.5% were hybrid units and 41.3% were purchased in Mexico City.
Wind turbines got dirty. Wind turbines in Juchitán spilled oil, contaminating soil around their bases, the latest such incident in wind farms in the Isthmus of Tehuantepec (English) (Spanish). Electricite de France said the affected soil and vegetation were removed and the landowner compensated. Protesters in Oaxaca demanded future developments be shelved.
Old School Social
Events in the world beyond your screen – go see and be seen!
The 3rd Mexico Gas Summit is May 24-25 in San Antonio, Texas.
30 seconds could have saved the dinosaurs. Scientists estimated that if the asteroid that hit Earth 66 million years ago struck 30 seconds earlier or later, it would have landed in the Pacific or Atlantic oceans (Spanish). The asteroid would have vaporized a lot of water and less rock and dinosaurs could have survived.
Quote of the Week
“El deber más santo de los que sobreviven es honrar la memoria de los desaparecidos.”
“The holiest duty of survivors is to honor the memory of the missing.”
– Alfonso Reyes (1889-1959), diplomat, poet, and philosopher
We hope you have a productive week. Please send any news, comments, or 30-second life-threatening events to MexicoWeekly@energynarrative.com.
Tell your friends and colleagues about the Weekly Brief! They can sign up for a free one-month trial here.