The Weekly Brief: Mexico


September 17, 2018 edition—Cenace’s power capacity; first private oil pipeline; and Canada’s NAFTA negotiations.




Last Week in a Minute or Less


Renewables & Electricity. The Cenace will add 12,429MW of power capacity to the system; and the CRE plans tariffs for CFE’s competitors.


Natural Gas & Liquid Fuels. BP and IEnova will store fuels together; the CRE okayed the first private oil pipeline; and Bechtel and ICA look into the new refinery.


Oil & Gas Upstream. AMLO should take care of five big oil projects; and AMLO wants to produce 2.6 million barrels per day by 2025.


Money & Power. Mexico wants to end the steel dispute; Freeland and Lighthizer met in Washington to discuss NAFTA; and AMLO will pursue the Mayan train.


Déjà vu all over again. Last week’s readers were particularly interested in Pemex and CFE’s budget (El Economista – Spanish); the new refinery’s construction (El Financiero – Spanish); and the delay in the fourth power auction (El Financiero – Spanish).



NAFTA Negotiation


Freeland and Lighthizer met in Washington to discuss NAFTA. The Canadian Foreign Minister Chrystia Freeland met with US Trade Representative Robert Lighthizer to discuss the NAFTA renegotiation (Reuters – English) (El Economista – Spanish) (El Financiero – Spanish). President Trump said that US trade negotiators are “dealing in good faith” with Canada (Washington Examiner – English).


Democrats may block a NAFTA without Canada. Key Democrats warned that a Democratic US House majority in November will reject a Trump administration redesign of the North American trade deal that excludes Canada (Bloomberg – English). Lawmakers said they will watch over any agreement reached by the Trump administration.


Trump threatened Canada with autos. President Trump threatened Canada with a 20% tariff on cars that would be the “ruination” of the Canadian economy (Bloomberg – English). He made the comments as talks to revise NAFTA continue.


Mexico wants to end the steel dispute. The Mexican Economy Minister Ildefonso Guajardo said Mexico plans to end a tariff dispute over steel and aluminum with the United States (Reuters – English) before the signing of the new trade agreement.



The Road to Reform


AMLO wants more oil by 2025. President-elect López Obrador plans to increase oil production by 44%, reaching 2.6 million barrels per day by the end of the presidential term (Platts – English) (El Economista – Spanish). The National Hydrocarbons Commission (CNH) expects that level of production by 2024 (El Financiero – Spanish).


Bechtel and ICA look into the new refinery. The US company Bechtel and ICA met with the new administration to discuss the proposed new refinery in Dos Bocas, Tabasco (El Financiero – Spanish). Energy advisors estimate the 70 hectares in the Dos Bocas Port are not enough to construct a refinery with a capacity of 100,000 barrels per day (Reforma – Spanish).


The CRE plans tariffs for CFE’s competitors. Before the end of 2018, the Energy Regulatory Commission (CRE) will publish the operational tariffs necessary for the three companies that will start competing with CFE for clients (Reforma – Spanish).


The CRE okayed the first private oil pipeline. The Energy Regulatory Commission awarded the first permit to transport fuel through a pipeline connecting Tuxpan, Veracruz and Tula, Hidalgo (El Economista – Spanish).


The CRE ruled on fuel prices visibility. The Energy Regulatory Commission published the rules to provide maximum visibility of fuel prices in gas station storage tanks (DOF – Spanish). The goal is to provide the customer with visible and accurate information on fuel prices.


Experts worried over Pemex’s natural gas contract release program. Gas market observers are concerned with the lack of liquidity and supply guarantees and how it could complicate the final phase of Pemex’s natural gas contract release program, designed to allow the entry of new gas marketers (Platts – English).



Political Economy


Inflation went through the roof in August. Due to a rise in gasoline and gas prices, Mexican inflation was higher than expected in August, reaching 4.9%, compared to 4.81% in July, and above the 4.83% analysts had forecasted (Reuters – English).


AMLO will pursue the Mayan train. President-elect López Obrador met governors in the Southeast states of Mexico to discuss the Mayan Train project (Excelsior – Spanish). The goal is to start construction by December 1st and to be certain the project will be completed on time (SDP Noticias – Spanish).


Rolling Stone says Pemex is helping to sneak stolen fuel into the US. The article claims that fuel stolen in Mexico, approximately 23,500 barrels per day, reaches the US with insider help (El Economista – Spanish). LP gas distribution companies have doubled their losses due to fuel robbery and have closed 17 delivery routes (Milenio – Spanish).


AMLO and Putin may meet in December. The Russian president and President-elect López Obrador could meet December 1 at AMLO’s inauguration (El Economista – Spanish). The next Foreign Relations Minister said invitations to foreign leaders were sent out last week.


AMLO and border governors met to help marginalized cities. President-elect López Obrador and six governors of the Northern border states met to discuss a new program to develop measures to improve family conditions in 15 highly marginalized cities (El Financiero – Spanish).



Market Trends


Mexico’s GDP is expected to grow 2.2%. The Institute of Industrial Development and Economic Growth (Idic) forecasted the GDP to reach between 1.5% and 2.2% (El Economista – Spanish). Focuseconomics also expects Mexico’s GDP to grow 2.2% (El Economista – Spanish).


Inflation moves faster than interest rates and salaries. The increase in prices affects the performance of interest rates (El Financiero – Spanish). Contractual salaries increased 5.5% in August, increasing the possibility of an increase in rates (El Financiero – Spanish).


Brent crude oil broke the US$80 ceiling. Crude prices in London increased after US crude reserves fell and Iran sanctions increased the fear that demand may outpace production (El Financiero – Spanish). Crude reserves fell by 5.3 million barrels against analysts’ forecasts of an 805,000 barrel drop.


The OECD finds Mexico’s economic cycle “not too dynamic.” In July, OECD found three consecutive months of slowly growing main economic indicators (MEI) in Mexico (El Economista – Spanish). The MEI registered a reading of 99.4 points.



Strategy & Operations


The Cenace will add 12,429MW of power capacity to the system. Thanks to 84 new power generation plants, 12,429MW of power capacity will be added to the national system in the first six months of 2019 (El Financiero – Spanish), according to the National Center of Energy Control (Cenace).


AMLO should take care of five big oil projects. To encourage production, President-elect López Obrador should follow up on five top projects: Amoca-Miztón-Teocalli, Hokchi, Zama, Ichalkil-Pokoch, and Ixachi (Pulso Energético – Spanish). Together they amount to 1.237 billion barrels of crude oil equivalent in reserves and 400,000 barrels of oil per day in added production.


BP and IEnova will store fuels together in Ensenada. The British company BP and IEnova signed a long-term contract to use 50% of the initial capacity of the marine terminal for fuel storage and delivery in the Power Center La Jovita. BP would be able to store 500,000 barrels in the terminal (Expansión – Spanish).


The Salina Cruz and Madero refineries are still in trouble. Salina Cruz is operating at 40% of its capacity after different incidents caused halts in the past year (Forbes – Spanish). Gasoline production at the Francisco I. Madero refinery fell 94% in July compared to the same month in 2017 (Mural – Spanish).


A leak in Puebla’s pipeline is under control. A gas leak in Pemex’s pipeline in Puebla caused by an illegal tap forced the inhabitants of nine colonies to evacuate the area (El Financiero – Spanish). Pemex suspended operations on the gas pipeline located north of the state’s capital.



Old School Social


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


The Energy Storage International is scheduled for September 24-27 at the Anaheim Convention Center in California.


The S&P Global Platts 22nd Annual Mexican Energy Conference will be held 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



Lateral Thinking


Lazy monarchs pick up deadly parasites. Each year Monarch butterflies drop out of their seasonal migration to start colonies in the southern United States where gardeners have planted native milkweed (Science Mag – English). Monarchs that stopped were 13 times more likely to be infected.



Quote of the Week


“El amor a la patria comprende todos los amores humanos, ese amor se siente primero y se explica luego.”


“Love of country entails all the human loves, that love is felt first and explained later.”


– Justo Sierra Méndez (1848-1912), Mexican writer, historian, journalist, and politician.



We hope you have a productive week. Please send any news, comments, or butterfly cures to


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]