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November 23, 2020 edition—Hydro changes; Hokchi’s work; and Sempra’s final decision.
Last Week in a Minute or Less
Electric Power & Renewables.
AMLO will change how hydroelectric is managed in December; the Supreme Court backed Tamaulipas’ clean energies; and private companies launched a platform to boost renewables.
Natural Gas Mid-Downstream & LNG. Sistrangas plans to connect the South and Southeast; Sempra will go ahead with its LNG plant; and politics is hitting the natural gas market.
Liquid Fuels Mid-Downstream. Gas station owners are fighting NOM 005; and Jalisco was advised to use ethanol.
Oil & Gas Upstream. Oil majors are after Mexico’s deepwater sector; Hokchi Energy broke ground in Mexico’s shallow waters; and hurricanes hit oil production in the Gulf of Mexico.
Government & NGO. AMLO announced a new labor justice system to follow USMCA; Banxico hit the brakes on cuts; and IMEF forecasts a 9% GDP contraction.
Déjà vu all over again. Last week’s readers were particularly interested in CFE’s natural gas plans (El Financiero – Spanish); future private-public partnerships for CFE (El Financiero – Spanish); and Sempra’s decision (Reuters – English).
Geopolitics & Trade
Economists expect Biden to bring certainty to Mexico. The Mexican financial market has reacted positively to Joe Biden’s win, and analysts forecast greater economic stability in relations with other countries (El Economista – Spanish). The victory could bring greater certainty in the observance of treaties.
Cancham Mexico evaluated the USMCA’s energy commitments. The Canadian Chamber of Commerce in Mexico reflected on Mexico’s energy commitments in the new NAFTA, including not being able to change laws that go against what was agreed in the trade deals (PV Magazine – Spanish).
AMLO announced a new labor justice process to follow USMCA. President López Obrador launched the first stage of the new system of labor justice in eight states, answering to President Trump’s and Prime Minister Trudeau’s demands to implement the new NAFTA (El Financiero – Spanish).
Political Economy
Banxico hit the brakes on cuts. Mexico’s central bank announced a halt in its cycle of interest rate cuts that gives policymakers options depending on inflation trends (Reuters – English). Banxico decided to halt the cuts as the bank is more optimistic about the country’s economic recovery.
The Finance Ministry refinanced a US$6.6bn debt. The Finance Ministry developed a debt refinancing operation for US$6.6bn in international markets, reducing by 75% the programmed repayments for 2022 (Proceso – Spanish). The operation included the issuing of two new bonds of reference.
Pemex asked for money back from its employees…or not. A subsidiary of the state-owned company, PMI Comercio Internacional, asked its employees to return almost US$1m of profit sharing handed out in May and then changed its mind (El Financiero – Spanish). The company will ask for a written explanation for not returning the money.
IMEF forecasts a 9% GDP contraction. The Mexican Institute of Finance Executives (IMEF) modified its forecast for Mexico’s economic contraction, from a previous 10% prediction (El Economista – Spanish). The IME explained that the most optimistic forecast for the GDP is -8.1%.
Legal & Regulatory
The government prepares the second infrastructure package. The Finance Minister and President López Obrador met with the private sector to discuss the second infrastructure project, which would include more energy content (El Financiero – Spanish). The goal is to benefit from the USMCA with good infrastructure.
Former head of the CRE and the government are at each other’s throats. Guillermo García Alcoder, former director of the Energy Regulatory Commission (CRE), is accused of having a conflict of interest. Alcocer refutes the accusation and emphasizes that he is innocent (Proceso – Spanish).
Jalisco was advised to use ethanol. The head of the Scientific and Technical Committee of the Mexican Association for Sustainable Mobility (AMMS) recommended the use of ethanol in gasolines in the metropolitan areas of Guadalajara, Monterrey, and Mexico City (El Economista – Spanish).
The Supreme Court backed Tamaulipas’ clean energies. The Supreme Court suspended the Energy Ministry’s new rules in favor of the Tamaulipas state. The decision will favor clean and renewable energies against carbon, fuel oil, and other fossil fuel sources (Excelsior – Spanish).
Sistrangas plans to connect the South and Southeast. Sistrangas’s expansion plan over the next five years includes improved connectivity between different pipeline systems and the expansion of access to gas in Mexico’s south and southeast regions (Natural Gas Intel – English).
AMLO will change the way hydroelectric plants are managed in December. President López Obrador will present a project to modify the management of the Southeast hydroelectric power plants and avoid floods (El Financiero – Spanish). The announcement will be made on December 2, and the resources devoted to solving the situation were not disclosed.
Market Trends
Politics is hitting the natural gas market. Pipeline imports from the US have risen but the CFE has made slow progress developing new gas-fired power plants, and the government has discouraged the development of new power plants by the private sector (Natural Gas Intel – English).
Hurricanes hit oil production in the Gulf of Mexico. Crude oil production in the region dropped to the lowest levels since September 2008 due to closing down operations because of Hurricanes Marco and Laura (Oil Price – English). Oil production recovered in September, but fell to 1.29 million bdp in October because of Hurricanes Delta and Zeta.
Oil majors are after Mexico’s deepwater sector. Deepwater exploration appears to be the focus of major investments in Mexico in the third quarter. International companies are seizing the opportunity to explore Mexico’s reserves despite the fluctuation of oil and gas prices and Mexico’s political environment (Oil Price – English).
Strategy & Operations
Sempra will go ahead with its LNG plant. The US company confirmed the construction of a plant to export LNG from Mexico (El Economista – Spanish). President López Obrador offered to grant the export permit for the facility if Sempra Energy helps address excess supply in the area (Reuters – English).
Hokchi Energy came online in Mexico’s shallow waters. Hokchi Energy started producing oil in shallow waters in the Gulf of Mexico (Global Energy – Spanish). It is the second private company to start production. The company expects production to increase to 14,000 daily barrels by the end of 2021 (El Economista – Spanish).
Gas station owners are fighting NOM 005. The Federal Prosecutor for Consumers (Profeco) is closing gas stations for not complying with NOM 005 due to the lack of dispatchers in the market (El Economista – Spanish). The Security, Energy, and Environmental Agency (ASEA) is also closing gas stations.
Experts back renewables for Mexico’s future. Analysts believe the energy policy centered around the state, without the technological and economic resources to transition to renewable power generation, could make Mexico fall behind in all industry sectors and the well-being of its population (El Economista – Spanish).
AkzoNobel finished installing solar panels in its manufacturing plants. AkzoNobel finished installing 1,650 solar panels in García, México, at an industrial coatings site (Chemeng Online – English). The Garcia installation will generate 82% of its energy requirements.
Private companies launched a platform to boost renewables. The private sector launched Renovables x México, a platform to share information and better practices (Forbes – Spanish). The goal is to boost the growth of renewables in the country in spite of the government’s actions.
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!)
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
The Maya Train has its first solar plant. The federal government is preparing the development of the first solar plant that will serve the Maya Train (Luces del Siglo – Spanish). The location could be Tulum, Cozumel, Quintana Roo, or any place in Yucatán.
Quote of the Week
“I need, therefore I imagine.”
– Carlos Fuentes (1928-2012), Mexican writer and diplomat.
We hope you have a productive week. Please send any news, comments, or solar solutions to MexicoWeekly@energynarrative.com.
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