September 27, 2021 edition—MEM’s tariffs; Pemex’s fracking; and Cancún airport’s fuel storage.
Last Week in a Minute or Less
Electric Power & Renewables. MEM’s tariffs are better than CFE’s; the Cuzcatlán mining company will power up with sun; and a judge granted a writ of amparo against a wind project.
Natural Gas Mid-Downstream & LNG. High natural gas prices are coming.
Liquid Fuels Mid-Downstream. Cancún’s International Airport will expand its fuel station; the Sener canceled Trafigura and Windstar Energy’s permits; and the CRE still has more than 1,000 gas station requests blocked.
Oil & Gas Upstream. Pemex will use fracking.
Government & NGO. AMLO proposed an agreement between the Celac, the US, and Canada; Mesef believes Mexico is still attractive to investors; and the OECD expects a lot from Mexico’s economy.
Déjà vu all over again. Last week’s readers were particularly interested in CFE’s pipeline construction (El Economista – Spanish); Querétaro’s energy agency (Energía Hoy – Spanish); and Querétaro’s plans to attract US investments (El Economista – Spanish).
Geopolitics & Trade
The UK may join the USMCA. Prime Minister Boris Johnson will consider the possibility of including the UK in the North American trade agreement (El Financiero – Spanish). President Joe Biden clarified that a bilateral agreement with the UK is not a priority.
Coahuila looks abroad for trade. The Economy Minister of Coahuila will create the Mexican Board of Foreign Trade of the Northeast, including Nuevo León, Coahuila, Chihuahua, Durango, and Tamaulipas (El Economista – Spanish). The Mexican Association of Economic Development Ministries plans to include Sinaloa and Chihuahua in the northern trade corridor.
AMLO proposed an agreement between the Celac, the US, and Canada. In front of the Celac community, President López Obrador suggested the creation of a regional economic agreement including the US and Canada (El Economista – Spanish). The goal would be to build a continental block similar to the origin of the European Union.
Mesef believes Mexico is still attractive to investors. According to the platform, Mexico is still attractive to investors, and there is interest to do business under the new status quo defined by the government (El Economista – Spanish). Mesef warned about the need to get on board the renewable energy train.
Mexico’s economy had a bad August. Mexico’s economic activity fell in August by 0.24%, with a 0.5% contraction in national industry activities (El Financiero – Spanish). The country was suffering the third wave of COVID-19 infections (El Economista – Spanish).
The OECD expects a lot from Mexico’s economy. The Organization for Economic Co-operation and Development (OECD) forecasts Mexico’s economy will grow by 3.4% in 2022 (El Economista – Spanish). The prediction is above the previous estimate of 3.2% and under the Mexican government forecast of 4.1%.
Public expense in 2022 will not call private investment. According to the Center of Economic Studies of the Private Sector (CEESP), the increase in public investment in 2022 will not attract private investment and boost economic development due to the lack of social profitability and transparency (El Financiero – Spanish).
Legal & Regulatory
The Sener canceled Trafigura and Windstar Energy’s permits. The Energy Ministry canceled the permits to import hydrocarbons for Trafigura México and Windstar Energy Resources (Energy 21 – Spanish). The Sener argued that seven of the eight permits are in the process of being repealed while one is about to expire.
The STPRM plans a strike on September 30. The Oil Workers Union of the Mexican Republic will go on strike on September 30; two months have passed since the union agreed on postponing meetings to discuss the contract revision (El Economista – Spanish).
The CRE still has more than 1,000 gas station requests blocked. Aside from the power sector, the Energy Regulatory Commission (CRE) has hit the gas station sector with paralyzing modifications on brands, rights transfers, modifications, pre-registries, etc., since the beginning of 2020 (El Financiero – Spanish).
Pemex will use fracking. Considering its hydrocarbon production goals and despite President López Obrador’s promise to avoid fracking, the state-owned company increased its request of 2022 budget resources to take advantage of that extraction technology (Reforma – Spanish).
Gasoline prices reached new heights. Due to the increase in oil prices, regular gasoline prices attained an historic increase in August, at 20.30 pesos per liter (El Economista – Spanish). Premium gasoline reached 22.29 pesos per liter and diesel 21.79 pesos per liter.
LP gas prices keep rising. According to the Energy Regulatory Commission (CRE), 32 states will see an increase in LP gas prices: a weekly increase of between 1.9% and 3% (El Financiero – Spanish). In eight weeks, gas prices increased 7.4% on average (El Economista – Spanish).
MEM’s tariffs are better than CFE’s. In Monterrey, the Wholesale Electricity Market (MEM) offers an average generation cost of 0.62 pesos per kilowatt/hour; CFE’s tariff is 1.02 pesos per kilowatt/hour (El Economista – Spanish). Industrial clients under self-supply contracts must decide if they continue with those contracts (El Financiero – Spanish).
Winter is coming…and so are high natural gas prices. Together with the European market, Mexico’s natural gas buyers are panicking over the increase in natural gas prices, expected to worsen in the coming months (Natural Gas Intel – English). Around 60% of Mexico’s power plants run on natural gas, and 70-80% of Mexico’s gas is imported from the US.
Pemex is not happy with its fuel sales. The state-owned company expects a fall in fuel sales compared to pre-pandemic levels due to a slow recovery of domestic demand and the growing competition of private companies (El Financiero – Spanish). Pemex expects a 19% drop in gasoline sales in 2021 compared to the levels before COVID-19.
Strategy & Operations
The Cuzcatlán mining company will power up with sun. The mining company started its work in renewable generation with the installation of 72 solar panels to generate 30kWh in San José del Progreso, Oaxaca (El Economista – Spanish). The system will power up the unit’s computers, lighting, and systems.
An illegal tap on a Pemex pipeline exploded. An illegal tap connected to the Tixpan-Azcapotzalco pipeline exploded in the Acolman municipality (El Financiero – Spanish). No one was injured but two trucks parked next to the illegal tap burned up.
Some of Mexico’s dams cannot hold any more water. At least 60 of the 210 big dams in Mexico are at their maximum storage capacity, meaning nearby populations are in danger due to overflowing (El Economista – Spanish). The dams are located in 16 states.
Bimbo will invest in greener power. Grupo Bimbo renewed its RCF line for US$1.7bn and will focus on sustainability, mainly in energy and water areas (El Financiero – Spanish).
A judge granted a writ of amparo against a wind project. A federal judge granted Zapotec communities at the Tehuantepec Isthmus a writ of amparo against continuing the construction of the Gunna Sicarú wind park owned by Électricité de France (Proceso – Spanish).
Cancún’s International Airport will expand its fuel station. The international airport will receive an investment of MXN156m to install new storage tanks and update its fire system to international and national security guidelines (El Economista – 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!)
The MEC 2021 Exclusive Virtual Roundtables are scheduled for September 29 – October 1.
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.
Querétaro’s data centers need reliable power supply. Querétaro is expected to attract MXN72bn in investments in data centers (El Economista – Spanish). The Energy Agency argued that this type of project requires energy capacity.
Quote of the Week
“Mira el bosque desnudo
De sus pomposas galas.”
“Look at the forest naked
From its luxurious galas.”
– José Tomás de Cuéllar (1830-1894), Mexican writer and journalist.
We hope you have a productive week. Please send any news, comments, or reliable power sources to MexicoWeekly@energynarrative.com.
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