October 16, 2017 edition— IEnova acquired 50% of Los Ramones II; Ayin-Batsil will be relaunched; and NAFTA’s fourth round of renegotiation is on tap.
Last Week in a Minute or Less
Renewables & Electricity. The CFE will help reconnect Puerto Rico; solar energy could be expensive in the coming auctions; and Enel sold down its wind farms.
Natural Gas & Liquid Fuels. Cenagas considers a natural gas hub; IEnova acquired 50% of Los Ramones II Norte pipeline; and the CNH needs a good hydrocarbon salesman.
Oil & Gas Upstream. Ayin-Batsil will be relaunched in 2018.
Money & Power. The fourth round of NAFTA renegotiations started with tensions over Trump’s threats; Mexico will receive catastrophe funds; and the IMF raised Mexico’s growth forecast.
Déjà vu all over again. Last week’s readers were particularly interested in NAFTA talks running into 2018 (English); Wall Street’s views on NAFTA (English); and Iberdrola’s projects for the third auction (Spanish).
The NAFTA negotiations
The opening bell rang for the fourth round. NAFTA negotiators gathered in Washington to start the fourth round of talks. Energy is on the agenda and rules of origin will be discussed (Spanish) (English). Health, textile, services, environment, financial, and anticorruption issues will be discussed before the round closes on October 17.
Trudeau met Trump and tensions over NAFTA rose… President Donald Trump and Canadian Prime Minister Justin Trudeau met at the White House and reiterated their commitment to upgrade NAFTA (English). President Trump would consider a bilateral agreement with Canada if the NAFTA renegotiations fail (English) (Spanish).
…and Mexico will only remain if it is convenient. Foreign Relations Minister, Luis Videgaray Caso, affirmed that Mexico will only remain in NAFTA if the terms are beneficial for the nation (English) (Spanish). Videgaray declared that Mexico should be ready to say no or even leave the treaty.
North American businessmen united to defend NAFTA. US and Mexican business leaders met in Mexico City to discuss ways to defend NAFTA (Spanish). The US Chamber of Commerce accused the Trump administration of making “poison pill proposals” to sabotage the NAFTA renegotiations (English).
The Road to Reform
The next gasoline tenders could go local. Fuel market analysts believe the forthcoming fuel open seasons could be organized by dividing infrastructure into sub-regions in the zones where Pemex will begin to lease transport and storage capacity to private companies (Spanish). For areas liberalized since June 15, the Energy Regulatory Commission plans to divide the different open seasons.
Solar energy could be pricier in the next auction. After years of falling solar PV costs, experts and managers expect a rise in prices (Spanish). The resolution of the third electricity auction of renewable energy will be announced November 22.
Cenagas plans a natural gas hub for Monterrey. The National Center of Natural Gas Control (Cenagas) is considering installing a hub in Monterrey to redistribute natural gas to new routes (Spanish). The project will depend on the capacity required which will determine the hub’s size and cost.
Hydrocarbons seller wanted. The National Hydrocarbons Commission (CNH) called for private services to sell the crude oil and gas obtained from shared production contracts in the international market (Spanish). The contracts will last three years and the company will sell hydrocarbons as they are delivered by the extracting company.
Ayin-Batsil will be relaunched in 2018. The Energy Ministry (Sener) expects the Ayin-Batsil shallow-water block to be open for bids by the first quarter of 2018 (English) (Spanish). Sener announced that in the first quarter 64 areas will be auctioned along with two Pemex farmouts.
Caintra and the CFE became best friends. The Chamber of Industry of Nuevo León (Caintra) signed a cooperation agreement with CFE Distribución Golfo Norte. The state-owned company will provide preferential service for Caintra members affected by a blackout (Spanish).
Mexico and Sweden also got closer. Mexico’s Foreign Relations Minister and Sweden’s European Union and Commerce Affairs Minister signed an agreement to strengthen the development of their bilateral relationship (Spanish). The agreement will promote trade, investments, scientific cooperation, and mining development (English).
The World Bank will transfer US$140m to Mexico after the earthquakes… The Finance Ministry confirmed the payout from the catastrophe bond for US$150m, after the 8.2 earthquake that hit Oaxaca and Chiapas (Spanish). The Bank confirmed the earthquake met the magnitude, location, and depth parameters to be eligible for the payout (English).
… and rebuilding schools will cost MXN20bn. President Enrique Peña Nieto announced that replacing education infrastructure damaged by the earthquakes will cost approximately MXN20bn (Spanish). In Chiapas and Oaxaca, 10,000 bank cards were handed out to help rebuild damaged homes.
The Platts 21st Annual Mexican Energy Conference provides an in-depth understanding of the opening up of new energy markets. Hear from the key companies working in the areas of electric power, natural gas, refined products, and much more. For more information, including a full agenda, visit: www.platts.com/mexicanenergy or www.platts.com/energiamexicana
The IMF has confidence in Mexico’s expansion. The International Monetary Fund (IMF) increased Mexico’s growth forecast to 2.1% from 1.9% by the end of 2017 (Spanish). The IMF hopes the NAFTA negotiations go smoothly and Mexico continues to overcome its structural problems, including low productivity and labor market duality (English).
Free services lowered inflation to 6.35%. After fourteen months of steady increases, inflation started to fall due to the temporary suspension of fees for public transportation, tolls, and mobile services after the earthquake on September 19 (Spanish). Inflation declined to 6.35%, down from 6.66% registered in August (English).
Afores bet on renewables. Mexico’s pension funds, including XXI Banorte, Afore Sura, Banamex, and Pensionissste, invested in wind and solar energy (Spanish). The Afores have invested MXN107.5bn, or 10.23% of the total funds they have available for financing the energy sector.
Mexico’s international reserves keep dropping. International reserves have suffered four consecutive weeks of losses. From the previous week, in the week from October 2 to 6, the amount was reduced by MXN159m, reaching a balance of US$172.8bn (Spanish). This is the lowest balance since December 11, 2015.
Strategy & Operations
IEnova acquired 50% of Los Ramones II Norte pipeline. The Sempra Energy subsidiary announced the acquisition of a 50% stake in the Los Ramones II Norte pipeline bought from Pemex Transformación Industrial’s share (English) (Spanish). The 452-km pipeline started operations in February 2016, transporting natural gas from Nuevo León to San Luis Potosí.
Enel offered stakes in its wind energy plants. The Italian company sold 80% ownership of eight special purpose vehicles to Caisse de depot et placement du Québec and Mexico’s pension fund CKD (English). The total value of the agreement is US$1.35bn and Enel will continue operating the plants (Spanish).
Oxxo Gas and the CRE made peace. The Energy Regulatory Commission (CRE) and Oxxo Gas settled their battle over the process for changing the title holder of the gas stations (Spanish). It took the CRE one year to make the change and 66 gas stations were affected by the delay.
The CFE will help reconnect Puerto Rico. Twelve specialists from the state-owned company traveled to Cuba and Puerto Rico to help reconnect power services following damage caused by Hurricanes Irma and María (Spanish). The CFE workers will diagnose infrastructure, analyze equipment availability, and help install reconnections.
Old School Social
Events in the world beyond your screen – go see and be seen!
The 2o FIEM is November 15-16 at Querétaro Centro de Congresos. The event has achieved ample recognition in the energy sector and has become the opportunity to take advantage of and promote clean energies in the region.
Mexico City’s taxis get a technological makeover. Taxi services suffered when mobile-based ride services entered the market. L1BRE offered to equip the city’s 138,000 taxis with two tablets, one for the driver and one for the passengers, to be used as a meter and for identifying the fastest route to the destination (English).
Quote of the Week
“La libertad de prensa, lo mismo que todas las libertades, tendrá sus inconvenientes, tendrá sus peligros; pero con todos ellos es preferible a la tranquila placidez del despotismo, como decía Tácito.”
“Freedom of the press, as all liberties, has its inconveniences and its dangers; but those are preferable to the peaceful tranquility of despotism, as Tacito said.”
-José María Vigil (1829-1909), Mexican writer.
We hope you have a productive week. Please send any news, comments, or new ways to make Mexican taxis efficient to MexicoWeekly@energynarrative.com.
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