[vc_row][vc_column][vc_column_text]
October 19, 2020 edition—CELs rules; the petrochemical sector’s rescue; and CRE’s permits.
Last Week in a Minute or Less
Electric Power & Renewables. The CRE set the rules to hand out CELs; Impulsora and Tesla partnered up; and Baja California will have a new solar plant.
Natural Gas Mid-Downstream & LNG. The Coatzacoalcos interconnection was completed; and the IEA trusts natural gas’ comeback after COVID-19.
Liquid Fuels Mid-Downstream. Profeco closed 13 gas stations without “complete liters”; the Sener plans to rescue the petrochemical sector; and the US election will not change US investment in Mexico’s fuel.
Oil & Gas Upstream. The CRE will handle all permits.
Government & NGO. The IMF expects 3.5% growth in 2021; COVID-19 made energy investment drop 18%; and the Finance Ministry expects four more investment packages.
Déjà vu all over again. Last week’s readers were particularly interested in Mexico’s infrastructure projects (Platts – English); the US election’s effect on Mexico’s renewables (Platts – English); and Aljaval’s solar plant (Renewables Now – English).
Geopolitics & Trade
Mexico may not reach the Paris Agreement’s goals. With the cancellation of the National Fund of Climate Change, Mexico is not expected to attain the Paris Agreement’s goals (El Financiero – Spanish). For 2021, Mexico plans to invest only 1.1% of its public expense.
Canada will share its ban on single-use plastics with partners. Canada proposed a ban on single-use plastics, and the US Plastics Industry Association complained about the proposal as it would classify certain plastic items as “toxic substances” under the Canadian Environmental Protection Act (CBC – English).
The US election will not change US investment in Mexico’s fuel. Neither candidate in the US election would boost US investment in Mexico’s refined products market: President Trump does not believe in investing abroad, and Joe Biden pledged to focus on clean energy initiatives (Argus Media – English).
Political Economy
The World Bank expects Mexico’s economy to fall by 10%… The World Bank revised its previous forecast for Mexico’s economy from a contraction of 7.5% to 10% (El Financiero – Spanish). The World Bank said the Latin American and Caribbean region would be among the most affected by the COVID-19 pandemic in the world.
…and FocusEconomics forecasts a 9.9% contraction. According to FocusEconomics, the Mexican economy will fall 9.9% in 2020 and will grow by 3.7% in 2021 (El Economista – Spanish). American Chamber Mexico forecasted a 11.5% GDP fall while BNP Paribas expected an 8% contraction.
The Finance Ministry expects four more investment packages. The Investment unit of the Finance Ministry will present between three and four packages of infrastructure projects in the next six months (El Financiero – Spanish). Moody’s said the announced infrastructure plan is good for Mexico’s credit future (El Financiero – Spanish).
The IMF expects 3.5% growth in 2021. The International Monetary Fund (IMF) improved Mexico’s economic growth forecast from 3.3% to 3.5% by 2021 (El Financiero – Spanish). The IMF recommended tax stimulus in the short term to limit the effect of the COVID-19 pandemic on the economy (El Financiero – Spanish).
Legal & Regulatory
Foreign investment needs respect for rules. German and Spanish businessmen warned that future investments would drop to nothing if Mexico does not respect the ongoing renewable energy projects and signed contracts (El Economista – Spanish).
The Sener halted MXN350m in investments in Nuevo León. The Energy Ministry’s stagnation has stopped the investment of MXN350m in new gas stations in the northern state (El Financiero – Spanish). There are 35 gas stations halted in Nuevo León, while across the country some MXN3.5bn is blocked by a lack of gas station permits.
The Cofece noticed more benefits for CFE. The Federal Commission of Economic Competence (Cofece) warned that the Energy Regulatory Commission’s (CRE) proposed new regulations could benefit CFE over any other companies in the market (El Economista – Spanish). Mexico has the opportunity to receive private investment if it is valued and respected.
Profeco closed 13 gas stations without “complete liters.” The Federal Prosecutor for Consumers (Profeco) closed 13 stations over the new rule that forces gas stations to provide complete liters (El Financiero – Spanish). The Profeco checked 65 gas stations to review if they fulfill the norm.
The CRE set the rules to grant CELs. The Energy Regulatory Commission (CRE) established the criteria to hand out Clean Energy Certificates for 2018 (DOF – Spanish). The CRE published the formula and the criteria to be granted.
The CRE will handle all permits now. Energy permits will be centralized under the authority of the Energy Regulatory Commission. The goal is to control the number of permits handed out and to reduce the time to obtain permits (El Financiero – Spanish).
Market Trends
The Sener plans to rescue the petrochemical sector. Energy Minister Rocío Nahle pledged to increase natural gas supply and derivatives to the petrochemical industry sector (El Economista – Spanish). Petrochemical product demand fell 12% in 2020 due to the COVID-19 crisis.
Mexico’s gasoline demand remained steady. Despite the stagnant economy, gasoline demand in Mexico stood at 668,000 barrels per day in the week ending September 25, which is 15%, or 119,000 barrels per day, below 2019 levels (Platts – English). The level has remained unchanged since the end of June.
COVID-19 made energy investment drop 18%. Investment in the energy sector will fall 18% in 2020 due to the fall in demand caused by the COVID-19 pandemic (El Financiero – Spanish). The decreased investment may impact energy markets in the coming years.
The IEA trusts natural gas’ comeback after COVID-19. The International Energy Agency (IEA) trusts the natural gas sector will recover. Mexico imports around 70% of its natural gas from the US and has three LNG export plants planned for the Pacific Coast using US gas (Natural Gas Intel – English).
Strategy & Operations
Impulsora and Tesla partnered up. The company from Nuevo León reached an agreement with Tesla to distribute and install Tesla’s power storage batteries for the trade and industrial sector (El Financiero – Spanish). The lithium batteries are much more efficient.
The Coatzacoalcos interconnection was completed. Energy Minister Rocío Nahle assured that the 16 km pipeline that will bring natural gas to Coatzacoalcos, Veracruz, was finished (Reforma – Spanish). There are still two compression units pending in Tecolutla and Lerdo, and its bidding is pending (Liberal.com.mx – Spanish).
CFE can’t get enough of Coahuila’s coal. The state-owned company restarted the coal purchase contracts with Coahuila’s producers (El Financiero – Spanish). Only 20 of the 75 coal producers reactivated their contracts with the CFE.
Baja California will have a new solar plant. The Inter-Institutional Energy Committee decided that the LPN-CIE-001-2020 bidding to develop a solar plant that would service the state would go to Next Energy de México (PV Magazine – Spanish). The plant would have a generation capacity of 385MW and will power up the state for 30 years.
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
North American monsoons used to control wildfires. According to research from the University of Arizona, the North American monsoon dictated the length of wildfire season for centuries in the US-Mexico border region (Science Daily – English). Ending severe fires may become harder as climate change makes monsoon storms less frequent.
Quote of the Week
“Produzca lo que el país consume y consuma lo que el país produce.”
“Produce what the country consumes and consume what the country produces.”
– Manuel Ávila Camacho (1897-1955), Mexican politician and military.
We hope you have a productive week. Please send any news, comments, or monsoons’ uses to MexicoWeekly@energynarrative.com.
Tell your friends and colleagues about the Weekly Brief! They can sign up for a free one-month trial here.[/vc_column_text][/vc_column][/vc_row]