The Weekly Brief: Mexico


October 29, 2018 edition—Power Global’s sun; Talos and Hokchi’s exchange; and steel tariffs discussed.




Last Week in a Minute or Less


Renewables & Electricity. Power Global Corporation took over Coahuila’s sun.


Natural Gas & Liquid Fuels. Marathon will use IEnova’s fuel storage terminal; Kansas City Southern increased cross-border fuel shipments by 164%; and AMLO plans to stop gasoline imports in three years.


Oil & Gas Upstream. Talos and Hokchi will exchange interest in two blocks; Oro Negro will not return its oil platforms; and the Energy Ministry still considers 536 areas for future biddings.


Money & Power. Mexico and Canada worked to eliminate steel tariffs; AMLO’s team is considering ending the special tax on fuels; and HR Ratings trusts Pemex.


Déjà vu all over again. Last week’s readers were particularly interested in GIS Power’s power plant (El Financiero – Spanish); the power sector’s uncertainty (El Financiero – Spanish); and CFE’s savings with natural gas (Excelsior – Spanish).



NAFTA Negotiation


Trump threatens to close the border. President Trump is considering mobilizing the US military to close the border to stop the caravan of migrants from Central America (Reuters – English). Mexico’s Foreign Minister Luis Videgaray said the country will face the challenge of the migrant caravan (Reuters – English).


What are the new auto rules in the USMCA? The USMCA defined the new conditions for the auto industry in the region. The regional content will have to be 66% when the agreement is signed (El Economista – Spanish), increasing to 69% in January of the following year, and then to 72% and 75% in subsequent years.


Mexico and Canada worked to eliminate steel tariffs. The future Mexican chancellor, Marcelo Ebrard, and the Canadian minister, Chrystia Freeland, discussed how to eliminate steel tariffs in the context of the agreement signing (El Financiero – Spanish) by December (Reuters – English). Justin Trudeau received a Mexican delegation of the next ministers named by President-elect López Obrador (El Economista – Spanish).


The Comce recommended to diversify Mexico’s markets. The Mexican Board of Foreign Trade (Comce) said that besides the USMCA, Mexico must consider the diversification of markets and take advantage of other transnational treaties to promote economic growth (El Economista – Spanish).



The Road to Reform


AMLO’s team is considering ending the special tax on fuels. The next Energy Secretary said her team is considering eliminating the special tax on gasolines (IEPS) and how to recover that contribution in the 2019 budget, amounting to MXN250bn (Spanish). The goal is to maintain the budget to finance social and infrastructure projects.


The Energy Ministry still considers 536 areas for future biddings. The five-year plan of the Energy Ministry was updated in September and still includes 536 areas with oil potential in 262,000 square kilometers in Mexico (El Economista – Spanish). AMLO’s economic advisor confirmed farmouts will continue and Rounds 3.2 and 3.3 have not been cancelled.


The ethanol specifications were set and published. The Energy Ministry published the characteristics and quality specifications for bio-ethanol, bio-diesel, and bio jet fuel (DOF – Spanish). The publication includes the measuring and sampling specifications for the biofuels’ quality.


The autonomy of the CNH and the CRE is discussed. The ruling party Morena proposed a law to centralize the Energy Regulatory Commission (CRE) and the National Hydrocarbons Commission (CNH) in the Energy Ministry (El Financiero – Spanish) (El Economista – Spanish). The Amexhi (El Economista – Spanish), the Coparmex (El Financiero – Spanish), the CNH (El Financiero – Spanish), and Moody’s (El Financiero – Spanish) are concerned about the proposal.


The Comener launched a program for new energy sector technologies. The Mexican Board of Energy, the University of Texas, and the Fruition Technology Lab launched a call to promote research and new technology development for the hydrocarbons sector (El Financiero – Spanish).



Political Economy


The Odebrecht soap opera continues. Odebrecht offered Mexico’s government US$18m and information on briberies in exchange for accessing public contracts again (Reuters – English) (El Economista – Spanish). Pemex presented a lawsuit against Odebrecht, claiming the payment of at least MXN121.7m plus interest since 2014 (Expansión – Spanish).


The 2019 budget was decided and defined. The next administration plans to obtain MXN474bn extra by improving tax collection and reducing public sector running costs (El Economista – Spanish). The construction of the new refinery will receive MXN50bn (El Economista – Spanish).


AMLO plans to stop gasoline imports in three years. President-elect López Obrador said that Mexico will stop importing gasoline from the US with the restoration of six refineries and the construction of a new refinery in Tabasco (El Economista – Spanish).


The next administration will inherit high liability. The administration of López Obrador will have to face liabilities that represent 96.3% of the gross domestic product, MXN20.9 trillion, between financial and labor obligations of the public federal sector (Excelsior – Spanish).



Market Trends


Banxico is not optimistic. Mexico’s central bank members warned that a new increase on the interest rate is not off the table (El Financiero – Spanish). The reasons are a challenging international environment and internal risks to reach the inflation goal.


Are there gas shortages in southern Mexico? Industrial users in the region said gas shortages in southern Mexico will reach a critical point in November (Platts – English) (El Financiero – Spanish). Pemex delivered almost 100 million cubic feet per day of natural gas to its clients in the southeast (Pemex – Spanish).


HR Ratings trusts Pemex… HR Ratings maintained Pemex’s rating at HR AAA with a stable perspective (El Financiero – Spanish). Experts warned of the adverse effects of Fitch’s change on Pemex’s outlook, such as the increasing costs of financing (El Financiero – Spanish).


…and the US Treasury trusts Mexico’s credit. Mexico can negotiate a longer line of credit from the US Treasury for up to US9bn under a currency “swap line” (Reuters – English), according to the US Treasury Secretary Steven Mnuchin and Mexico’s Finance Minister José Antonio González Anaya.



Strategy & Operations


Power Global Corporation took over Coahuila’s sun. The US renewable firm will build the Laguna Solar park with an investment of US$118m and 400 new direct jobs (El Financiero – Spanish). The solar plant will be operating at the beginning of 2019 and will generate 125MW.


Talos and Hokchi will exchange interest in two blocks. Talos Energy will assign a 25% PI in Block 2 to Hokchi in exchange for a 25% PI in Block 31, immediately to the south of Block 2 (OGJ – English). Hokchi will be the operator of both blocks.


Fuel is crossing the border. Kansas City Southern increased the amount of fuel carloads by 164% (Platts – English) that moved from the US into Mexico in the third quarter of 2018. Pemex assigned four charges of 350,000 barrels each to import light Bakken crude in November (Pemex – Spanish).


Oro Negro will not hand back its oil platforms. The Oro Negro company refused to obey the order to restitute five oil platforms to the creditors group, after fraud was discovered through 15 phantom companies (Reforma – Spanish). Oro Negro presented a complaint before the Attorney General’s Office (Reforma – Spanish).


Marathon will use IEnova’s fuel storage terminal. Marathon Petroleum will store fuels in the marine storage terminal of Sempra’s subsidiary in Topolobampo, Sinaloa. Marathon signed a long-term contract for 50% of the initial capacity of a million barrels (Forbes – Spanish).



Old School Social


Events in the world beyond your screen—go see and be seen!



The Latin American LPG Seminar & Workshops will be held November 6-8 at the Hyatt Regency Mexico City.


Energy Storage North America is scheduled for November 6-8 at the Pasadena Convention Center in Pasadena, California.


The Residuos Expo will be held November 7-9 at Expo Guadalajara, in Guadalajara, Jalisco.


The S&P Global Platts 22nd Annual Mexican Energy Conference is scheduled for November 8-9 at the St. Regis Mexico City Hotel. This conference is the leading event for Mexico’s energy industries. Meet with senior officials, regulators, and entrepreneurs and learn the latest about Mexico’s energy reforms. For more information, including a full agenda and confirmed speaker line-up, visit


The XLII Semana Nacional de Energía Solar is scheduled for November 12-16 at the Palacio de Minería in Mexico City.



Lateral Thinking


Six new vaquita marinas were spotted. Marine scientists spotted six vaquitas, including a calf, in late September and early October (Rappler – English). The world’s smallest porpoise, the vaquita marina, was nearly extinct due to illegal fishing in the Gulf of California, its native habitat.



Quote of the Week


“En el gallinero de la política, la gallina más alabada no es la que pone el mejor huevo sino la que mejor sabe cacaraquearlo.”


“In the chicken coop of politics, the most praised hen is not the one that lays the best egg, but the one who knows to cluck about it the best.”


– Plutarco Elías Calles (1877-1945), Mexican general and politician.



We hope you have a productive week. Please send any news, comments, or more vaquita marinas’ sightings to


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