September 20, 2021 edition—Querétaro’s energy; CFE’s pipelines; and oil contracts.
Last Week in a Minute or Less
Electric Power & Renewables. Querétaro will have a new energy agency; and Nuevo León shines bright.
Natural Gas Mid-Downstream & LNG. CFE will untangle the pipelines conflict.
Liquid Fuels Mid-Downstream. Gas Bienestar workers launched a protest; AMLO said that CRE’s workers do not ask for bribes; and illegal taps hit Pemex hard.
Oil & Gas Upstream. AMLO is not happy with the oil contracts; private oil companies invested US$18bn in six years; and Hokchi gives oil investment a US$1bn push.
Government & NGO. Mexico’s government trusts the GDP; the US and Mexico reached an action plan; and AMLO will give Pemex’s DUC a break.
Déjà vu all over again. Last week’s readers were particularly interested in natural gas imports (Milenio – Spanish); GE’s forecast for Mexico’s renewables (El Economista – Spanish); and Mexico’s hydrogen future (El Economista – Spanish).
Geopolitics & Trade
The US and Mexico reached an action plan. The High-Level Economic Dialogue resulted in decisions on four main pillars for the economic relation: rebuild together; promote economic, social, and sustainable development in the south of Mexico and Central America; secure tools for future prosperity; and invest in our people (Forbes – Spanish).
Ken Salazar became Mexico’s new US ambassador. The new US ambassador said Mexico and the US should change their way of thinking to generate new opportunities (Forbes – Spanish). Salazar was particularly concerned with migratory issues.
The US private sector accused AMLO of ignoring the USMCA. In a letter to Vice President Kamala Harris, 19 industrial, trade, and research associations accused the López Obrador administration of “ignoring many of the commitments” made by Mexico in the USMCA (El Economista – Spanish).
Inflation remains out of hand. Inflation reached 5.59% in August, its lowest level in five months but still way above Banxico’s goal of 3%, +/- a percentage point (El Financiero – Spanish).
Mexico’s government trusts the GDP. According to the 2022 budget, President López Obrador’s government improved the GDP growth forecast to 4.1% from 3.6% (El Financiero – Spanish). The goal of the 2022 budget is to contribute to inclusive economic and social development and to attack the inequalities emphasized by the COVID-19 crisis.
AMLO will give Pemex’s DUC a break… For 2022, the Finance Ministry plans to cut Pemex’s right of shared utility (DUC) by 14%, lightening the state-owned company’s tax burden (El Economista – Spanish). The DUC has been reduced from 65% at the start of the current administration to 54% now.
…but still has a long way to pay its debts. The state-owned company still must pay US$29.8bn in debt through March 2023 (El Economista – Spanish). President López Obrador said that Pemex’s debt is the debt of the Mexican government.
Legal & Regulatory
AMLO cut the CNH and CRE’s budget. The 2022 budget will assign fewer resources to the National Hydrocarbons Commission (CNH) and the Energy Regulatory Commission (CRE). The CNH will have a MXN222.8m budget and a 2.2% cut, and the CRE will receive MXN256.5m, a 2.4% cut compared to 2021 (El Financiero – Spanish).
AMLO is not happy with private oil contracts. According to President López Obrador, among the 110 contracts, most are not activated and received no investment, and could be canceled, but there would be a fuss (El Financiero – Spanish). AMLO said the oil contracts were a ruse.
AMLO said that CRE’s workers do not ask for bribes. President López Obrador denied accusations that members of the Energy Regulatory Commission request bribes in exchange for speeding up gas station permits (El Economista – Spanish). The accusations named Guadalupe Escalante Benítez, appointed by AMLO, and the head of the hydrocarbons unit, among others.
SAT asked LP gas retailers for more changes. The Tax Revenue Service asked LP gas companies to change their equipment for volumetric controls in six months (Forbes – Spanish). The goal is to reduce the market for illegal hydrocarbons and oil.
Illegal taps hit Pemex hard. During President López Obrador’s administration, the state-owned company has lost MXN1.6bn due to illegal taps (El Economista – Spanish). The number of illegal taps made in Pemex pipelines increased between January and July 2021 compared to the same period in 2020.
Private fuel imports keep growing despite regulations. Private fuel retailers reached a new record, controlling a fourth of the fuel market (El Economista – Spanish). Between January and June, total fuel supply was 1,574,000 daily barrels, and 401,000 daily barrels were imported by private companies.
Energroup believes Mexico needs more fuel variants. The Mexican company believes there is a business opportunity in the country in the lack of availability of fuel variants, depending on the industry requirements (El Economista – Spanish). Energroup develops and sells fuels by land and sea and additives.
Mexico could lead green shipping fuel production. According to a report, Mexico could build a valuable zero carbon shipping fuels sector thanks to renewable energy potential and direct access to busy shipping routes (Hellenic Shipping News – English). The hydrogen-derived shipping fuels sector could help Mexico meet its decarbonization targets.
Strategy & Operations
CFE will untangle the pipelines conflict. The state-owned company announced new routes would be developed for the Guaymas-El Oro pipeline and the Tuxpan-Tula line (Natural Gas Intel – English). CFE will invest US$315m in the construction of the new routes (El Economista – Spanish).
Gas Bienestar workers launched a protest. Approximately 210 workers accused the newly created state company of a breach of contract (El Financiero – Spanish). Pemex denied the accusation and accused people unconnected to the company of boycotting the project (El Financiero – Spanish).
Hokchi gives oil investment a US$1bn push. Hokchi Energy cut the ribbon on its hydrocarbon processing plant with infrastructure investments above US$1bn. The new plant has a crude processing capacity of 35,000 barrels per day and 13 million cubic feet per day of gas (El Economista – Spanish).
Querétaro will have a new energy agency. The state will have a new state energy agency to develop energy policies (Energía Hoy – Spanish). Querétaro plans to attract US industry investment in the sector (El Economista – Spanish) and satisfy the industry’s energy demand (El Economista – Spanish).
Private oil companies invested US$18bn in six years. According to the Mexican Association of Hydrocarbon Companies, private oil companies have invested US$18bn from 2015 up until today and will invest US$45bn during the term of their contracts (El Economista – Spanish). Only 34 of the 111 contracts signed are in the production stage.
Pemex canceled several Vitol contracts. The state-owned company canceled three contracts with Vitol due to the most recent bribery scandal. The contracts were for butane gas, propane gas, and naphtha (Aristegui Noticias – Spanish).
Nuevo León shines bright. The state’s governor cut the ribbon on the Parque Hortícola El Berrendo solar project in Galeana. The plant will generate clean power for more than 40,000 homes and received an investment of US$39m (PV Magazine – Spanish).
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!)
EXPOGAS Virtual will be held September 20-26.
The MEC 2021 Exclusive Virtual Roundtables are scheduled for September 29 – October 1st.
The Future of Energy Virtual Conference will be held October 12-14.
Mexico Infrastructure & Sustainability Summit is scheduled for October 27-28.
Mexico Assembly will be held in May 2022 in Mexico City.
Hidalgo’s farms will be powered up by renewables. The Prosostenible program, together with the LAIF and the French Development Agency, will strengthen projects to adapt to climate change in the farming sector (El Economista – Spanish). The project includes investments in sustainable agriculture, efficient use of water, renewable energies, and energy efficiency.
Quote of the Week
“El olvido, amor mío, es palabra maldita,
que retorna a lo informe, al origen de la sombra,
disolviendo la huella de la luz traicionada.”
“To forget, my love, is a cursed word,
That returns to the shapeless, the origin of shadow,
Dissolving the footprint of betrayed light.”
– Aurora Reyes (1908-1985), Mexican writer and painter.
We hope you have a productive week. Please send any news, comments, or projects for farms to MexicoWeekly@energynarrative.com.
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