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November 9, 2020 edition—French renewables; 172 oil-promising areas; and Pemex’s crude processing.
Last Week in a Minute or Less
Electric Power & Renewables. French renewables are all-in in Mexico; and the CEMDA got an end to power tariff changes.
Natural Gas Mid-Downstream & LNG. CFE paid more than expected for gas pipelines; and the CRE okayed natural gas and LP gas permits.
Liquid Fuels Mid-Downstream. A pipeline exploded in Nuevo León; and Pemex’s crude processing improved in September.
Oil & Gas Upstream. Rounds made 37% progress; the Energy Ministry identified 172 oil-promising areas; and Pemex did not do enough work in preferential fields.
Government & NGO. Canacintra evaluates the US election’s effect on trade; Mexico’s GDP grew 12% in the third quarter; and the CFE faces some internal shortcomings.
Déjà vu all over again. Last week’s readers were particularly interested in Siemens’ project financing (PV Magazine – Spanish); US natural gas exports to Mexico (World Pipelines – English); and IEnova’s second LNG terminal (Platts – English).
Geopolitics & Trade
Caxxor Group plans a Mexico-Canada trade corridor. International financial conglomerate Caxxor Group plans to build a North American shipping and trade corridor (ENR – English). The plan will be ready to go public in January with the construction and operations team.
Canacintra evaluates the US election’s effect on trade. The National Chamber of Transformation Industry (Canacintra) said Mexico may stop “shining” as the main US trade partner if Joe Biden wins the US election (El Economista – Spanish). A peaceful resolution of the US-China trade war could threaten Mexico’s position.
A US senator worries the USMCA may be in danger… Senator Ron Wyden sent President Trump a letter concerned that Mexico and Canada have not fulfilled the agreement implemented four months ago (El Financiero – Spanish). The senator said the USMCA is in danger of becoming empty promises.
…but the former Mexican ambassador believes in the US-Mexico relationship. Mexico’s former ambassador in the US, Gerónimo Gutiérrez Fernández, believes a solid relationship has been built between both countries through universities, congresses, governors, and especially the trade agreement (El Financiero – Spanish).
Political Economy
Oil hedges will cover Pemex’s income… In September, the oil income of the federal government and Pemex went down (El Financiero – Spanish). The Finance Deputy Minister assured that 80% of the fall in oil income will be compensated by oil hedges.
…but oil income keeps dropping. According to the Finance Ministry, the fall in oil income hit the federal government from January to September (El Economista – Spanish). The government lost MXN396bn in oil income, a 45.7% fall compared to the same period in the previous year.
The CFE faces some internal shortcomings. According to the Federal Audit Office (ASF), the state-owned company’s insufficient profitability levels and management failures prevent it from reaching its goals (El Financiero – Spanish). In 2019, the CFE generated profits of only 1.2%.
Mexico’s GDP grew 12% in the third quarter. In the third quarter, the Mexican economy registered 12% growth compared to the previous quarter (El Economista – Spanish). Industrial activity registered a 22% recovery from the previous quarter.
Legal & Regulatory
The CRE okayed natural gas and LP gas permits. The Energy Regulatory Commission (CRE) approved a series of permits for power, natural gas, LP gas, and hydrocarbons (El Financiero – Spanish). In LP gas, the commissioners approved four projects that include LP gas for vehicles.
CFE paid more than expected for gas pipelines. According to the federal audit office (ASF), the state-owned company will pay almost US$7bn more than expected to private developers because 2019 contract revisions achieved only short-term savings (Platts – English) (El Economista – Spanish). CFE’s liability increased 15% as a consequence.
Rounds made 37% progress. The National Hydrocarbons Commission (CNH) said concessions allocated in the oil rounds have received US$15.2bn in investments since 2016, 37% progress in the 111 contracts. The amount of approved investment in all the exploration and extraction activities reached US$40.7bn (El Economista – Spanish).
Market Trends
Pemex is slacking in its preferential fields. The National Hydrocarbons Commission (CNH) estimated that the state-owned company has spent only MXN17.7bn of the MXN50.8bn allocated for the development of the 17 preferential fields (El Financiero – Spanish).
The CEMDA got an end to power tariff changes. The Mexican Center of Environmental Law (CEMDA) received the final suspension for general effects in the writ of amparo presented against the resolution published by the state-owned company (El Financiero – Spanish).
Pemex’s crude processing improved in September. The state-owned company’s refineries registered their best level since May 2018 in September, reaching 680,097 barrels per day, with a 4% increase in annual terms (El Economista – Spanish). In the first nine months of the year, crude processing has averaged 592,365 barrels per day.
US energy exports to Mexico reached US$34bn. The US exported crude oil, petroleum products, and natural gas to the Southern neighbor worth close to US$34bn in 2019 (Oil Price – English). The US imported energy products from Mexico worth US$13bn in 2019 (Opportimes – Spanish).
Strategy & Operations
The Energy Ministry identified 172 oil-promising areas. According to the Hydrocarbons Exploration and Extraction Plan (2020-2024), the Energy Ministry identified 172 areas to exploit and extract oil (El Financiero – Spanish). In the plan, Pemex is expected to produce 1.9 million barrels of oil per day in 2021.
French renewables are all-in in Mexico. Despite the changes in operating rules and the increase in tariffs for renewables, French companies will continue their long-term investments as planned in Mexico (El Economista – Spanish). Mexico is considered among the four most important countries for future energy development.
An illegal tap makes a leak in Puebla… While trying to seal an illegal tap in San Miguel de Amozoc, an LP gas leak surged in Pemex’s pipeline (Excelsior – Spanish). Homes located in a 500-meter radius of the leak were evacuated.
…and a pipeline exploded in Nuevo León. Pemex registered an explosion in its pipeline in China, Nuevo León. No injured people have been reported, and the National Defense Ministry inspected the site (Excelsior – Spanish).
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!)
Solar Power Mexico was postponed from March 24-26 to November 18-20 at Centro Citibanamex.
The Mexican Energy Forum is rescheduled for November 17-18 in Mexico City.
2nd Edition of Shallow and Deepwater Mexico was postponed to February 16-18, 2021, at Ciudad del Carmen, Campeche.
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
Mexicans feel distanced from science. Approximately 85% of Mexicans believe science to be important, but they feel scientific development to be something complicated and far off (Forbes – Spanish). One out of four Mexicans has abandoned the idea of studying sciences and technologies.
Quote of the Week
“Ya es tiempo de que los prejuicios acaben, de que la sociedad se establezca sobre bases más sólidas, más naturales, más sabias, más justas y más nobles.”
“It is time for prejudices to die, for society to be established on more solid, more natural, wiser, more just, and more noble ground.”
– Francisco Villa (1878-1923), Mexican revolutionary general.
We hope you have a productive week. Please send any news, comments, or feelings towards science to MexicoWeekly@energynarrative.com.
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