November 30, 2020 edition—CRE’s fast natural gas; Talos Energy’s work; and SPIC’s sale.
Last Week in a Minute or Less
Electric Power & Renewables. The Huexca natural gas power plant will be working in September; China goes all-in on Mexico’s energy sector; and Solarever will produce 500MW of solar panels in Colima.
Natural Gas Mid-Downstream & LNG. The CRE will respond to natural gas procedures faster; and MPL may go for a second LNG export project.
Liquid Fuels Mid-Downstream. LOC Mexico will provide MWS for two submarine pipelines; experts plan to improve the gas station sector; and AMLO blamed the IMF and World Bank for the rising fuel prices.
Oil & Gas Upstream. The CNH okayed Talos Energy’s work on Zama; Pemex will spend more in Jiliapa; and a CNH commissioner believes it is the time to explore.
Government & NGO. Mexico’s GDP may only fall by 9.3%; inflation reached 3.43% in the first half of November; and the IMF renewed Mexico’s credit line.
Déjà vu all over again. Last week’s readers were particularly interested in Sistrangas’ expansion (Natural Gas Intel – English); Sempra’s decision (El Economista – Spanish); and AMLO’s condition for Sempra’s permit (Reuters – English).
Geopolitics & Trade
The sugar industry will not celebrate a Biden administration. The sugar industry in Mexico has lost since 2012, as both President Obama and President Trump limited Mexican sugar exports to the US market (El Financiero – Spanish). The sector does not expect any policy changes with the new Biden administration.
AMLO suggested the G20 should forgive debt. President López Obrador presented a proposal to eliminate poor nations’ debt (El Financiero – Spanish) to the chiefs of state. AMLO also proposed offering access to credit with interest rates similar to those in developed countries.
The MZT AeroSpace park will be part of the USMCA Corridor. The MZT AeroSpace Park signed an agreement with the Caxxor Group to work on the development of the USMCA Corridor to ease trade between Mexico, the US, and Canada (El Financiero – Spanish).
The USMCA helped out DFI. Mexico received US$23.4bn, 39.2% from the US and 13.7% from Canada (El Economista – Spanish). Both countries increased their direct foreign investments by 13%.
Mexico’s GDP may “only” fall by 9.3%. According to the Citibanamex survey, the GDP could contract 9.3% in 2020 (El Financiero – Spanish). The forecast is an improvement compared to the previous prediction of 9.5%. For 2021, experts expect a recovery of 3.5%.
Inflation reached 3.43% in the first half of November. Thanks to the “Good Weekend,” a weekend of offers before Thanksgiving, Mexico’s inflation in the first half of November reached 3.43%, its lowest level since the first two weeks of June (El Economista – Spanish).
HR Ratings warned Mexico about Pemex’s losses. The international rating agency clarified that Pemex’s financial deficit has become a net loss for the government and increased its debt (El Financiero – Spanish). The third quarter results showed an important increase in the financial deficit.
The IMF renewed Mexico’s credit line. The International Monetary Fund approved Mexico to maintain its flexible credit line of US$61bn in the middle of the COVID-19 pandemic, canceling the cuts approved in previous years (El Financiero – Spanish). In the last renewal, President López Obrador was planning to reduce the credit line by 20%.
Legal & Regulatory
The Supreme Court ruled in favor of Greenpeace. The court again decided against the Energy Ministry’s and the Cenace’s new rules, and Greenpeace won the writ of amparo (El Economista – Spanish). The court decided that the new rules attack the energy transition and the fulfillment of international commitments.
Observers believe Mexico’s power market reform was killed. The Energy Regulatory Commission (CRE) voted to remove regulations that forced CFE to buy power through public tenders, mandated by laws created with the reform (Platts – English). The CRE also extended the useful life of old and dirty CFE plants.
A CNH commissioner believes it is the time to explore. Sergio Pimentel, commissioner at the National Hydrocarbons Commission (CNH), said the country still has “a window of time to explore and develop” natural riches, but it needs to be done now (Natural Gas Intel – English).
MCCI evaluated Pemex’s biddings. Mexicans Against Corruption and Impunity (MCCI) found that the state-owned company handed out contracts directly, simulated biddings, contracted ghost companies, and favored new companies (El Financiero – Spanish). Between December 2018 and October 2020, Pemex awarded MXN84bn in direct contracts.
The CRE will complete natural gas regulatory processes faster. The Energy Regulatory Commission (CRE) will reduce the time to answer procedures regarding tariff settings and prices for regulated activities in natural gas (DOF – Spanish). The new period would be 30 days, instead of three months.
The second infrastructure package could be out this week. The head of the Business Coordinator Board (CCE) said that the second infrastructure package will boost private investments and could be presented this week (El Financiero – Spanish).
Mexico’s DFI dropped 9.9% due to the COVID-19 pandemic… The Finance Ministry said direct foreign investment from January to September reached US$23.4bn, a 9.9% fall compared to the same period in the previous year (El Financiero – Spanish). This fall is the highest since 2014.
…including DFI in the energy sector. Mexico received US$905.7m in direct foreign investment in generation, transmission, and distribution in the first three quarters of 2020, a 32.2% interannual reduction (El Economista – Spanish). This is the second consecutive fall since the 65.4% fall compared to the same periods of 2019 and 2018.
AMLO blamed the IMF and World Bank for the increase in fuel and power tariffs. President López Obrador said the “recipes” of the International Monetary Fund (IMF) and the World Bank included the increase in power tariffs and fuel prices (El Financiero – Spanish). As a consequence, AMLO accused them of causing Mexico’s crisis.
Strategy & Operations
Pemex will spend more in Jiliapa. The National Hydrocarbons Commission (CNH) approved the state-owned company’s increase in spending at the onshore field Jiliapa (Platts – English) (El Economista – Spanish). The plan will require an investment of US$77m through 2034.
China goes all-in on Mexico’s energy sector. State Power Investment Corp (SPIC) of China acquired Zuma Energía without disclosing the purchase price (Oil Price – English) (El Economista – Spanish). Zuma Energía has an installed capacity of 818MW.
LOC Mexico will provide MWS for two submarine pipelines. Protexa contracted LOC Mexico to provide marine warranty survey (MWS) services for two submarine pipelines, KMZ-101 and KMZ-103, at the Maloob field in the Bay of Campeche (Offshore Mag – English).
The Huexca natural gas power plant will be working in September. The state-owned company expects to start producing power in early December at the Huexca combined-cycle thermal power plant in Morelos (Natural Gas Intel – English) (Jornada – Spanish). CFE invested MXN25bn or US$1.25bn in the plant and adjoining infrastructure.
Solarever will produce 500MW of solar panels in Colima. Solarever de América cut the ribbon on its third manufacturing center in the country, located in Tecomán, Colima (PV Magazine – Spanish). Between the three plants located in Guanajuato, Hidalgo, and Colima, the company will produce up to 650MW of solar panels per year.
Experts plan to improve the gas station sector. Experts recommended the creation of a state-owned company to distribute fuel and compete in the open market (El Economista – Spanish). Experts also asked for a plan to develop small projects to bring gas stations to villages that need it.
The CNH okayed Talos Energy’s work on Zama. The National Hydrocarbon Commission (CNH) approved Talos Energy’s work program and 2021 budget for the Zama field despite negotiations with Pemex to unify the field (Oil and Gas Magazine – Spanish). Next year, US$900,000 in investments are planned.
MPL may go for a second LNG export project. Mexico Pacific Limited plans to make a final investment decision on its LNG export project in Puerto Libertad by the end of 2021 (Natural Gas Intel – English). The first LNG shipment is expected in 2025 and a second plant is being considered.
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.
Nuevo León’s energy cluster boosts national energy innovation. The National Prize for Energy Innovation received 13 projects from different federal institutions and universities in Nuevo León, Mexico City, Aguascalientes, Durango, Puebla, and Michoacán (El Financiero – Spanish). The prize is in the second evaluation phase.
Quote of the Week
“Para mí, las rejas del apando son las rejas de mi vida, del mundo, de la existencia.”
“In my opinion, the bars of the punishment cell are the bars of my life, of the world, of existence.”
– José Revueltas (1914-1976), Mexican writer and political activist.
We hope you have a productive week. Please send any news, comments, or energy innovations to MexicoWeekly@energynarrative.com.
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