September 21, 2020 edition—Tamaulipas’ oil exploration; Huexca’s debate; and the “dirty” diesel deadline delayed.
Last Week in a Minute or Less
Electric Power & Renewables. The Huexca thermoelectric plant is up for debate; Siemens and Thermion partnered on a wind project; and AMLO and Iberdrola continue talking.
Natural Gas Mid-Downstream & LNG. Cenagas has good news for Yucatán.
Liquid Fuels Mid-Downstream. The IMP is evaluating Dos Bocas; Mexico plans an additional quota on gasoline; and the CRE extended Pemex’s deadline on “dirty” diesel.
Oil & Gas Upstream. Tamaulipas has hope for oil exploration; and private companies will boost oil production in 2021.
Government & NGO. The USMCA makes Mexico more attractive; inflation escaped Banxico’s goal; and Moody’s pointed to Pemex as a risk factor.
Déjà vu all over again. Last week’s readers were particularly interested in AMLO’s boost of renewables (PV Magazine – Spanish); AMLO’s interest in energy sector investment (El Financiero – Spanish); and Mexico’s possible debt of 70% of the GDP (EL Economista – Spanish).
Geopolitics & Trade
Foreign trade will be of the essence for Mexico’s future. The government said the USMCA and trade reconfiguration for global geopolitical changes would boost a speedy recovery of the country’s economy in 2021 (El Financiero – Spanish). In July, exports recovered 96.8% of the lost value since the beginning of the year.
The USMCA makes Mexico more attractive. According to the ambassador of the Concamin in France, the new NAFTA would make the country attractive for foreign companies with a long-term vision but only if certainty is provided (El Financiero – Spanish).
The US and Canada make peace with their steel. The US said that no more tariffs will be added to Canadian steel (El Economista – Spanish). The US expects steel trade to return to normal in the last four months of 2020.
Banxico said COVID-19 sets regional inflation levels. Banxico explained that the behavior of regional inflation is determined by the effect of the COVID-19 pandemic and the measures taken to avoid its spread (El Economista – Spanish). General inflation has increased due to energy prices.
Disagreement surrounds Mexico’s growth estimates. The Finance Minister defended the 2020 forecast of an 8% fall and 4.6% growth in 2021 (El Financiero – Spanish). Experts disagree and said Mexico’s economic forecast is too optimistic (El Financiero – Spanish).
Inflation escaped Banxico’s goal. Inflation reached 4.05% in August, the highest level since May 2019 (El Financiero – Spanish). Inflation is above the range set by Mexico’s central bank of 3% +/- 1 percentage point.
Mexico’s GDP decline is the third worst among the G20… According to the Organization for Economic Cooperation and Development (OECD), Mexico had a 17.1% fall in GDP during the second quarter (El Financiero – Spanish). Mexico suffered the third-worst economic contraction among the G20 countries.
…and the OECD expects a 10.2% fall in 2020. The Organization for Economic Cooperation and Development (OECD) forecasts a 10.2% contraction in 2020, up from the 7.5% estimate made in June (El Financiero – Spanish). The OECD said Mexico’s economic contraction is among the five most significant.
Legal & Regulatory
The CRE extended Pemex’s deadline on “dirty” diesel. The Energy Regulatory Commission (CRE) extended the period for the state-owned company to sell conventional diesel in areas where only ultra-low sulfur fuel can be sold to six months after the government sets the end of the COVID-19 crisis (Forbes – Spanish).
Morena presented a constitutional reform proposal killing the energy reform. The ruling party presented a constitutional reform proposal that would end the energy reform and seek to rescind all contracts awarded to date (Argus Media – English). The bill seeks to reform articles 25, 27, and 28.
Cenagas has good news for Yucatán. According to the National Center of Natural Gas Control (Cenagas), the second phase of the reconfiguration of the Cempoala compressor station in Veracruz will be complete in October (Natural Gas Intel – English). The reconfiguration would allow 350 MMcf/d-1.4 Bcf/d of natural gas to be pumped to Mexico’s south and center.
The IMP is evaluating Dos Bocas. The Mexican Institute of Oil is evaluating the progress in the construction of the Dos Bocas refinery to determine its feasibility, and the institute could adjust the production and execution times of the construction work (El Economista – Spanish).
Private companies will boost oil production in 2021. The Finance Ministry said the private sector plans to increase oil production in the next year, contributing to the production goal of 1.857 million barrels per day (El Financiero – Spanish). The Finance Ministry may consider helping Pemex’s finances again.
Moody’s pointed to Pemex as a risk factor. The international rating agency said the state-owned company’s financial crisis is the main fiscal risk that Mexico faces (El Financiero – Spanish). Government’s support for the oil company is close to 1% of GDP.
Mexico plans an additional quota on gasoline. The government of President López Obrador suggested adding a complementary quota to the special tax on gasoline if there is a fall in fuel prices (El Economista – Spanish). The goal is to protect the government’s income.
Strategy & Operations
Tamaulipas has hope for oil exploration. The National Hydrocarbons Commission (CNH) approved nine exploration plans in the Burgos Basin, reactivating the energy sector in the region (El Economista – Spanish). The exploration plans represent a base investment of US$118.2m and an incremental investment of US$554.9m.
AMLO and Iberdrola continue talking. President López Obrador met with the Spanish company representative to discuss the review of its contracts with the government (El Economista – Spanish). AMLO said he was offended when former President Felipe Calderón was named as part of Iberdrola’s board (El Financiero – Spanish).
ACE will boost the energy sector. The Association of Energy Sellers (ACE) will work to promote gas and power market efficiency, increasing industry production and national commerce (El Financiero – Spanish). The association plans to collaborate with different authorities.
The Huexca thermoelectric plant is up for debate. President López Obrador announced that work to build the Huexca thermoelectric plant will continue, and it is expected to be in operation by the end of the year (El Financiero – Spanish) (Platts – English). The communities opposing the plan have more than 15 writs of amparo against the project (El Financiero – Spanish).
Siemens and Thermion partnered on a wind project. The financing arm of Siemens and the Mexican renewable energy company will develop a 117MW wind plant in Tamaulipas (Renewables Now – English). The Delaro wind project is expected to produce enough clean power to meet the demand of 64,634 local homes.
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!)
The 2nd Edition of The Madrid Energy Virtual Conference will be held September 28-October 2.
MIREC Week has been postponed from June 2-4 to October 8-10 at Centro Citibanamex.
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.
Schneider’s plant became smart and efficient. Schneider Electric’s smart plant in Apodaca has brought savings in energy and maintenance and increased efficiency in the production process (El Financiero – Spanish). The plant has reduced its power demand by 710,898 KWh.
Quote of the Week
“Es la educación la que genera mejores condiciones de justiciar; educar evita la necesidad de castigar.”
“Education is what generates better conditions of justice; education avoids the need to punish.”
– Justo Sierra Méndez (1848-1912), Mexican writer, historian, and politician.
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