The Weekly Brief: Mexico


November 4, 2019 edition—Engie’s plans; Pemex’s 20 fields; and Dos Bocas’ troubles.





Last Week in a Minute or Less


Renewables & Electricity. Engie goes after Mexico’s renewables and gas distribution; much debate surrounds the CELs’ changes; and Jalisco and Nuevo León enjoy their sun.


Natural Gas & Liquid Fuels. Dos Bocas faced some trouble; and IEnova will decide about its Costa Azul LNG export plant in 2020.


Oil & Gas Upstream. Pemex will work on 20 new fields during this administration; the CNH changed some of its own rules; and Pemex announced with fanfare its first quarterly production increase.


Money & Power. The Trump administration wants to rule over the car industry; Eclac lowered Mexico’s growth outlook; and Banxico is expected to continue cutting interest rates.


Déjà vu all over again. Last week’s readers were particularly interested in Orión’s Fibra E (El Economista – Spanish); Sener’s cancellation of fuel imports (Forbes – Spanish); and FEMSA’s renewables (El Financiero – Spanish).



NAFTA Negotiation


The Trump administration wants to rule over the car industry. The White House is pushing to control how car companies manage their supply chains within the terms of the new NAFTA (Bloomberg – English). The Trump administration wants specific language that would allow it to unilaterally manage the production rules for companies (Los Angeles Times – English).


Mexico expects a fast USMCA ratification… A senior Mexican official said that after President López Obrador’s promise to increase wages and promote labor reforms, Mexico expects US lawmakers to begin the process of approving a new trade deal (Reuters – English). Trump attacked Democrats for failing to pass the trade agreement.


…and Canada is still waiting on the US. Canada said it will ratify the USMCA deal when the US Congress ratifies it (The Star – English). Observers agree that if the new NAFTA is not ratified this year, it is unlikely it will happen in 2020, during an election season.


Lighthizer met Democratic lawmakers to discuss USMCA. US Trade Representative Robert Lighthizer met with Democratic lawmakers to solve their concerns about the USMCA deal. Republicans increased pressure to ratify the agreement before the end of the year (Reuters – English).



The Road to Reform


Pemex will work on 20 new fields during this administration. Pemex’s 2019 strategy, which is focused on the development of 20 new fields, will continue in the next five years. The head of the state-owned company assured that each year Pemex will develop at least 20 new fields (El Financiero – Spanish).


Dos Bocas faced some trouble. The jobs that building the Dos Bocas refinery was supposed to bring have not yet materialized (El Financiero – Spanish). Activities at the site stopped due to heavy rains, but the Energy Minister denied any damage to the platform where the refinery will be located (El Financiero – Spanish).


The CNH changed some of its own rules. The National Hydrocarbon Commission (CNH) modified some of its units to allow better performance solving issues (DOF – Spanish). The CNH modified the faculties of certain directorates and repealed certain subsections.


Much debate surrounds the CELs changes. The private sector believes the modification of the rules to obtain CELs is “unacceptable” and warned that the change could hurt US$9bn in investments (Reforma – Spanish) (El Financiero – Spanish). The Sener believes the project will not affect electricity market participants and that it would increase competition (El Financiero – Spanish).




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Political Economy


Eclac lowered Mexico’s growth outlook. The Economic Commission for Latin America and the Caribbean (Eclac) again lowered Mexico’s growth outlook for 2019, from 1% to 0.2% (El Financiero – Spanish) (El Economista – Spanish). The reason is global deceleration and a delay in government expenditures.


Mexico’s GDP growth dropped to 0.1%. In the third quarter, the Mexican economy was paralyzed, growing 0.1% from the previous quarter (El Economista – Spanish). On an annual basis, Mexico’s third-quarter GDP was 0.4% below 2018 levels, the first contraction since the economic crisis of 2009 (El Financiero – Spanish).


CFE gained 73% less than in 2018… CFE’s profits in the third quarter were MXN5bn, 73% less than in the previous year (El Financiero – Spanish) (Forbes – Spanish). From July to August, the company’s sales increased 3% to MXN149.6bn.


…while Pemex lost big. The state-owned company lost US$4.4bn during the third quarter (Reuters – English) (El Financiero – Spanish) (El Economista – Spanish). The reason is the fall in fuel prices and lower oil exports.



Market Trends


Banxico is expected to continue cutting interest rates. Mexico’s central bank believes the fact that inflation is within Banxico’s goal range allows a new cut in the interest rate (Forbes – Spanish) (El Economista – Spanish). Specialists expect Banxico to cut interest rates.


Pemex announced with fanfare its first quarterly production increase. The state-owned company announced its first quarterly production increase in 14 years (Platts – English). Pemex produced 1,705,000 barrels per day of crude in the third quarter, a 22,000-barrel increase in production compared to the previous quarter (El Financiero – Spanish).


Mexican exports fell 1.3%, dragged by oil. Mexico exported products with a total value of US$37.2bn in September, a 1.3% drop and its worst result since November 2016 (El Economista – Spanish). The fall is explained by lower prices and oil shipments.


Mexico pays US$300,000 each year to rating agencies. The presidency said there are contracts for US$2.7m with Moody’s, Fitch, and S&P to evaluate the government’s economic performance from 2017 to 2022 (Forbes – Spanish). Agencies are contracted annually.



Strategy & Operations


Femsa will power Oxxo stores with wind. Femsa expects to end 2019 with 80% of its Oxxo stores using wind energy (El Financiero – Spanish). Femsa spends less on power, as more than half of its stores are already powered by wind energy.


IEnova will decide about its Costa Azul LNG export plant in 2020. IEnova will make a final investment decision to build its Costa Azul LNG export plant in 2020 (Reuters – English). The company planned to start a bid process by the end of 2019.


Jalisco and Nuevo León enjoy their sun. Jalisco is the national leader in solar panel installations with the highest number of contracts in businesses and homes (El Financiero – Spanish). In two years, the installed capacity of power generation with solar panels in Nuevo León has tripled (El Financiero – Spanish).


Engie goes after Mexico’s renewables and gas distribution. The French company will invest US$1bn in the construction of renewable energy generation plants in Mexico (El Financiero – Spanish). Engie also plans to connect to the pipeline network of the country to deliver gas in the Southeast region (Reforma – Spanish).



Old School Social


Events in the world beyond your screen—go see and be seen!


Summit Petroleum & Energy is scheduled for November 15-17 at Hotel Moon Palace in Cancún, Quintana Roo.


Encuentro Internacional de Energía México 2019 will be held November 20-21 at Espacio Virreyes in Mexico City.



Lateral Thinking


An archaeologist found 27 Mayan sites. Thanks to a free online map, a researcher from the University of Arizona found 27 Mayan sites covering 11,400 square kilometers in the Tabasco and Chiapas states (RT – Spanish). The map was published in 2011 and is based on a remote sensing system known as LIDAR.



Quote of the Week


“El mar dará a cada hombre una nueva esperanza, como el dormir le da sueños.”


“The sea will give each man new hope, as sleeping gives dreams.”



– Cristóbal Colón (1451-1506), Italian explorer and colonizer.



We hope you have a productive week. Please send any news, comments, or undiscovered ancient cities to


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