The Weekly Brief: Mexico


October 4, 2021 edition—Pemex’s Coyula plan; renewables investment; and high natural gas prices.




Last Week in a Minute or Less


Electric Power & Renewables. EDF is not worried about a Mexican court ruling; Mexico is not as attractive for renewables; and Iberdrola trusts renewables to reduce social inequality.


Natural Gas Mid-Downstream & LNG. Natural gas prices will remain up until 2022; and the government will have to pay for CFE’s gas.


Liquid Fuels Mid-Downstream. Pemex exported less crude and earned more; Querétaro awaits fuel permits; and AMLO invested MXN32bn in refineries.


Oil & Gas Upstream. The CNH okayed Pemex’s Coyula plan.


Government & NGO. Mexico’s economic activity grew 0.5% in July; Banxico is expected to raise the interest rate; and BBVA believes foreign trade will boost economy.


Déjà vu all over again. Last week’s readers were particularly interested in natural gas prices (Natural Gas Intel – English); data centers’ power needs (El Economista – Spanish); and the UK’s interest in the USMCA (El Financiero – Spanish).



Geopolitics & Trade                            


Mexico’s imports skyrocketed in August. Mexico’s imports kept their strength at US$44.2bn, with a 43.3% growth during August (El Economista – Spanish). Mexican exports had less dynamism, with a 9% increase, reaching US$40.3bn.


BBVA believes foreign trade will boost the economy. According to the bank, Mexico’s economic recovery will arrive through foreign trade. The GDP of the manufacturing industry, trade, and transportation are growing at 15.2%, 13.8%, and 13.4%, respectively (Forbes – Spanish).


Mexico reached a trade deficit of US$3.9bn in August. Mexico registered a trade deficit of US$3.9bn in August, the second consecutive deficit and building up to US$6.8bn in 2021 (Forbes – Spanish). The amount is similar to the US$6.1bn surplus of August 2020.



Political Economy


Mexico’s economic activity grew 0.5% in July. Mexico’s economic activity recovered 7.1% in July 2021, compared to the same month in 2020, due to the increase in industrial activity and services (Forbes – Spanish). Leaving aside the COVID-19 effect, economic activity recovered by 0.5% compared to the previous month.


AMLO cut resources to the climate change fight. The government of President López Obrador will cut by 8.7% the resources to fight climate change, devoting MXN66.5bn (El Economista – Spanish). The amount represents 0.9% of budget expenses.


Inflation reached 5.87% in September. Inflation increased 0.42% in the first two weeks of September, reaching 5.87%, its highest level since the first two weeks of June, when it reached 6.02% (El Economista – Spanish).


Banxico is expected to raise the interest rate. According to a Reuters survey, Mexico’s central bank is expected to increase interest rates for the third time, to 4.75% (Forbes – Spanish). Inflation levels are way above Banxico’s goal.



Legal & Regulatory


AMLO sent the constitutional power reform. President López Obrador sent a constitutional proposal to congress to restore CFE’s market dominance (Argus Media – English). Experts believe the reform could menace investment and competition in the sector (El Financiero – Spanish).


Querétaro awaits fuel permits. The Union of Gas Stations in Querétaro (Uesqro) said between six and eight investment projects are paralyzed in the state, awaiting the Energy Regulatory Commission’s permits (El Economista – Spanish). The delays discourage investments in the sector.


AMLO invested MXN32bn in refineries. President López Obrador explained that the administration has invested MXN32bn to renovate six refineries (El Economista – Spanish). The goal is to make Mexico independent in fuel production.


The CNH okayed Pemex’s Coyula plan. The National Hydrocarbons Commission (CNH) approved a development plan presented by Pemex to drill 1,420 wells at Coyula (Platts – English). Multiple concerns regarding the plan include doubts about the project’s profitability and the company’s track record in dealing with the asset.



Market Trends


The government will have to pay for CFE’s gas. Analysts expect natural gas prices to reach double digits, and the government would have to allocate more resources for the state-owned company’s plants (El Financiero – Spanish). Natural gas prices are expected to increase from US$5 per million BTU to US$9.


LP gas prices keep climbing. LP gas prices set by the Energy Regulatory Commission reached 25.13 pesos per kilogram, only 6 cents per kilogram under the last market-determined price (El Economista – Spanish). The reason is price increases in the US market.


Natural gas prices will remain up until 2022. Moody’s expect natural gas prices in North America to remain above between US$2 and US$3 dollars per million BTU (El Financiero – Spanish). The price range could increase due to increased production costs or inflation.


Pemex exported less crude and earned more. Crude exports between January and August reached 1.030 million daily barrels on average, a 9.3% fall compared to the same period in the previous year (Forbes – Spanish). However, Pemex’s profits for the exports grew.



Strategy & Operations


Iberdrola trusts renewables to reduce social inequality. The social inequality in the power sector and the cost of the service will go down with increasing renewable energy use (El Financiero – Spanish). Renewables and batteries could be a solution for areas with poor accessibility.


Mexico is not as attractive for renewables. Mexico dropped to number 33 of 40 countries in the Renewable Energy Country Attractiveness Index this year (El Financiero – Spanish). In the previous administration, Mexico reached seventh place worldwide. The reason is the country’s legal and regulatory environment.


Braskem Idesa and Pemex agreed on ethane supply. Braskem Idesa and Pemex agreed that the state-owned company would reduce its ethane supply by half to 30,000 barrels per day (Platts – English). The initial 2010 contract included 66,000 barrels per day of ethane supply over 20 years.


EDF is not worried about a Mexican court ruling. EDF Renewables denied that a court ruling banning wind farm construction on indigenous communities’ lands will affect the development of its 252MW Gunaa Sicarú project (Wind Power Monthly – English). The project is planned on private lands.



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!)




The Future of Energy Virtual Conference will be held October 12-14.


Mexico Infrastructure & Sustainability Summit is scheduled for October 27-28.


Mexico Assembly will be held in May 2022 in Mexico City.



Lateral Thinking


Green hydrogen can transform 150 plants. Hannover Fairs México and the Mexican Hydrogen Association signed an agreement to boost the green hydrogen industry. The association estimates that almost 150 solar and wind plants can produce green hydrogen to generate power or add to pipelines (PV Magazine – Spanish).



Quote of the Week


“I have devoted to architecture as a sublime act of poetic imagination. In me it is rewarded to anyone who seeks poetry and beauty.”


– Luis Barragán (1902-1988), Mexican architect and engineer.




We hope you have a productive week. Please send any news, comments, or green hydrogen projects to


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