September 6, 2021 edition—AMLO’s constitutional reform; refineries’ production; and upstream’s future.
Last Week in a Minute or Less
Electric Power & Renewables. AMLO said the power sector constitutional reform will be presented in September; and Baja California’s solar project created some friction.
Natural Gas Mid-Downstream & LNG. Mexican liquefaction projects can meet some needs; and Yucatán needs more natural gas.
Liquid Fuels Mid-Downstream. Pemex’s Cadereyta refinery lost power; investing in refineries did not boost production; and Deer Park lost US$360m this year.
Oil & Gas Upstream. Despite legal changes, Mexico’s upstream remains attractive; and Ku-Maloob-Zaap is up and running again.
Government & NGO. Mexico’s GDP grew 1.5% in the second quarter; and remittances hit a new record in July.
Déjà vu all over again. Last week’s readers were particularly interested in Saavi Energy’s purchase (El Economista – Spanish); natural gas storage needs (El Economista – Spanish); and AMLO’s natural gas plans (Reforma- Spanish).
Geopolitics & Trade
Canada and Mexico will discuss USMCA content rules with the US. Canada and Mexico will seek consultation with the US over the interpretation of content rules for automobiles set out in the USMCA (Reuters – English) (El Financiero – Spanish). Canada’s participation will avoid a direct confrontation between Mexico and the Biden administration.
Mexico’s exports grew 15.2% in July. The value of Mexican exports in July reached US$40bn, a 15.2% increase (El Financiero – Spanish). In June, the value of exports increased 29.12% and in May, 125.21%.
Mexico aims to recover US air safety rating in 2022. The Mexican Foreign Minister said Mexico could recover its Category 1 air safety rating with the US Federal Aviation Administration in the first half of 2022 (Reuters – English). In May, the FAA downgraded the country to a Category 2 rating, the lowest level.
Mexico’s GDP grew 1.5% in the second quarter. Mexico’s economy grew 1.5% in the second quarter, compared to the previous one (El Financiero – Spanish). Compared to the second quarter 2020, the GDP increased 19.5%.
ECLAC trusts Mexico’s economic recovery… The Economic Commission for Latin America and the Caribbean (ECLAC) forecasts 6.2% growth for Mexico’s economy, and is among the Latin American nations with the best recovery in 2021 (Forbes – Spanish).
…and so does Banxico. Mexico’s central bank increased its GDP growth forecast to 6.2% from 6%, considering the vaccination program and the second quarter growth (Forbes – Spanish).
Remittances hit a new record in July. Mexico’s remittances reached US$4.5bn in July, a new historic record thanks to the US economic recovery (Forbes – Spanish). The amount is a 28.6% increase compared with July 2020.
Legal & Regulatory
Despite legal changes, Mexico’s upstream remains attractive. Sergio Pimentel, Agon consultant and a former official at the National Hydrocarbon Commission (CNH), explained how Mexico’s regulations can still be used to bring investment into the country’s 25 billion barrels of oil equivalent in deepwater reserves (Platts – English).
The CRE okayed Gas Bienestar’s business. The Energy Regulatory Commission approved two permits to distribute LP gas to the Gas Bienestar company in Tepeji del Río Ocampo and Tula de Allende (El Economista – Spanish). The company started a testing phase in Iztapalapa with a 9% cut in prices (El Financiero – Spanish).
The CRE created an LP gas distributor list. The Energy Regulatory Commission (CRE) will require all LP gas distributors with permits to provide the names, addresses, telephones, mail, personal ID codes, driver’s licenses, plates, and vehicle types to be registered in a list in 20 days (El Economista – Spanish).
AMLO said the power sector constitutional reform will be presented in September. President López Obrador said that the constitutional reform to restore dominance of the state-owned company CFE in the power generation sector will be presented to congress in September (Platts – English) (Forbes – Spanish).
The CRE said no to a solar plant in Hidalgo. The Energy Regulatory Commission denied the company Saturno Solar the possibility of generating electric power. The company requested the permit in 2019 (El Financiero – Spanish).
FDI dropped 23.2% between January and June. During the first six months, foreign direct investment (FDI) reached US$18.4bn, a 23.2% decrease (El Economista – Spanish). Of that, US$6.025m were new investments and the rest reinvestments and movements between companies.
LP gas prices go higher. The Energy Regulatory Commission’s (CRE) national average of maximum LP gas prices reached 23.65 pesos per kilogram on September 4, a 1.6% increase (El Economista – Spanish). The average national price for a cylinder would be 473 pesos, 18% higher than the fuel sold by the federal government in Iztapalapa.
Yucatán needs more natural gas. According to the National Chamber of Industry (Canacintra), Yucatán receives 140 million cubic feet per day of natural gas on average, covering 40% of the state’s demand (Milenio – Spanish). Canacintra celebrated the interconnection of the Mayakan pipeline.
Investing in refineries did not boost production. President López Obrador celebrated the investment of MXN33.5bn in the modernization of six refineries. Crude processing, however, remains at 706,000 barrels per day, 43% of the installed capacity (El Economista – Spanish).
Strategy & Operations
Mexican liquefaction projects can meet some needs. With the delays in US and Canadian liquefaction terminals, Mexican projects relying on cheap American feed gas with a shorter route to the East Asian market could be attractive (Platts – Spanish). Currently, there is one LNG export terminal under construction, the Energía Costa Azul facility.
Pemex’s Cadereyta refinery lost power. A power failure caused a column of smoke seen coming from the state-owned company’s refinery (El Economista – Spanish). The power failure was under control and did not affect the local population.
Hokchi Energy wants to be greener. According to Vice President Vinicio Suro, the Mexican oil company plans to be more sustainable in its operations and plans to bet on renewable energy (El Norte – Spanish).
AHMSA paid Pemex back. The head of Altos Hornos de México (AHMSA) cancelled the agreement made with Alianza Minerometalúrgica Internacional (AMI) and pledged to pay Pemex back for the Agro Nigrogenados purchase (El Economista – Spanish). AHMSA will keep an open dialogue with AMI.
Baja California’s solar project created some friction. President López Obrador answered some questions regarding the delay in granting CRE permits to private companies to develop a solar plant in Baja California (PV Magazine – Spanish). Questions were raised regarding the bidding process.
Deer Park lost US$360m this year. Due to the unexpectedly cold season in February in Texas, Deer Park was forced to close during the cold wave, losing US$360m (El Financiero – Spanish). The recently purchased refinery is fighting market volatility, caused by the pandemic and a large debt increase.
Ku-Maloob-Zaap is up and running again. Production at Pemex’s Ku-Maloob-Zaap complex was completely restored by August 30 following a fire on a platform on August 22 (Platts – English). President López Obrador said that, despite the fire, Mexico will reach its crude production goal of 1.8 million barrels per day by the end of the year.
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!)
Inter Solar will be held September 7-9, at Centro Citibanamex, in Mexico City.
Mexico Infrastructure & Sustainability Summit is scheduled for October 27-28.
Mexico Assembly will be held in May, 2022 in Mexico City.
AMIF and Jalisco will boost solar projects. The Mexican Association of Solar Industry and Jalisco’s Energy Agency signed an agreement to collaborate, promoting research, specialist participation in projects, and student participation to increase professionalization in the industry (PV-Magazine – Spanish).
Quote of the Week
“Mucho más se llena la vida de un hombre con veinte años de heroísmo como Calderón, que con sesenta de ociosidad y de miseria.”
“The life of a 20-year-old man is more full of heroism like Calderón, than the life of 60-year-old men of idleness and misery.”
– José María Velasco Ibarra (1840-1912), Mexican painter.
We hope you have a productive week. Please send any news, comments, or solar plans to MexicoWeekly@energynarrative.com.
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