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Feike de Jong is a journalist based in Mexico City, México. He has written in international media such as the Atlantic CityLab, The Guardian and Fortune International, as well as having been an investigative reporter for Mexican business magazine Expansion. He won the Walter Reuter Prize in 2010 for an article on the impact of climate change in Mexico. He has blogged on urbanism for Forbes Mexico and was given a grant by the Mexican Secretariat of Culture to write an e-book/app on the edge of the greater Mexico City Area in 2015. This app is finished and will apear in the ITunes Store in March 2017. He has worked as a freelance researcher and editor for clients such as PwC Mexico, UC Davis and corporate accountability NGO Poder. He has also organized musical festival and events in Mexico City, as well as tours to the periphery of the megalopolis in collaboration with Mexico City's Rufino Tamayo Museum.
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US$1bn Mexico combined cycle plant to go to popular consultation
Mexico's President Andrés Manuel López Obrador announced that the future of a 22bn peso (US$1.15bn), 647MW combined cycle plant in Morelos will be decided by popular consultation on February 23 and 24. The plant, owned by state utility CFE, has been inoperative due to protests over an aqueduct needed for steam generation. Affected municipalities will receive the lowest electricity rates as compensation and an incentive to vote in favor.
Pemex aid package seen as too little, too late
Mexican business associations and analysts are underwhelmed by the government's fiscal aid package for Pemex, despite a 25% increase in the company's exploration and production investment budget. Critics, including business chambers, banks, and ratings agencies, argue that the aid is insufficient to address Pemex's challenges, such as declining production and significant debt. José Manuel López of CONACO suggests that more investment and private involvement are needed. Ratings agency Fitch and research firm Capital Economics also express doubts about the effectiveness of the aid package.
Mexico's CFE to offer special power rates to water utilities
Mexico is addressing the impact of the 2018 electricity rates policy, which led to higher prices, by proposing special power rates for water utilities. A meeting between CFE head Manuel Bartlett and the senate's energy and waterworks committees resulted in a request to the energy regulator CRE to reactivate these rates. The 2018 policy, criticized for causing unexpected rate hikes, has led to CFE cutting off electricity to several municipal water utilities due to unpaid bills.
Mexican president meets O&G operators
Mexican President Andrés Manuel López Obrador met with Amexhi, the country's key oil and gas operators' association, to encourage increased private sector production. The meeting included discussions on the ratification of a minimum production goal of 280,000 barrels per day by 2024. Alberto de la Fuente, CEO of Shell México and head of Amexhi, stated that the private sector would intensify investment efforts, particularly in executing contracts from licensing rounds, which will remain suspended as per the president's statement.
Mexico's natural gas controller launches annual consultation
Mexico's natural gas controller Cenagas has initiated its annual public consultation process, which will continue until April 12, with results expected on May 6. This process aims to gather opinions from potential natural gas users through seven public consultations in collaboration with the energy ministry (Sener), local governments, and national and state business chambers. The outcomes will inform the national development plan for energy and the 2019-2024 infrastructure development plan.
AMLO opens door for Pemex IPO
President Andrés Manuel López Obrador (AMLO) does not rule out a Pemex IPO on the Mexican stock exchange but notes that Pemex may not need additional financing due to its adequate budget. Morgan Stanley has recommended Pemex bonds to clients, anticipating further government assistance. Finance minister Carlos Urzúa mentioned an additional aid package is being prepared. Former CNH head Juan Carlos Zepeda previously suggested that Pemex would need significant annual investment for exploration, production, and debt service to meet future targets.
Mexico adds 1.1GW of solar in eight months
Mexico added 1,089MW of solar power generation capacity between June last year and February this year, reaching a total of 3,305MW. The largest plants are Enel's 363MW Villanueva Solar in Coahuila and Acciona/Tuto Energy's 317MW Puerto Libertad in Sonora. Major upcoming projects include Enel's 500MW Magdalena solar park in Tlaxcala and 400MW Parque Solar Palma Loca in Zacatecas. Sener projects an additional 3,518MW of solar capacity by mid-2020 from long-term energy auctions.
TV Azteca concession guarantee to Banco Azteca not linked to non-payment of bondholders – CEO
TV Azteca's broadcast concessions, valued at MXN 9.4bn, were used as a guarantee for a loan from Banco Azteca in 2020. CEO Rafael Rodriguez clarified that this guarantee was not linked to the postponement of payments to bondholders announced in February 2021. The concessions were part of a restructuring plan and financial discipline efforts initiated in 2018. The delay in registering these concessions as guarantees was attributed to the COVID-19 pandemic. The concessions do not include physical infrastructure and are not considered a recoverable asset by bondholders. If TV Azteca defaults, Banco Azteca could sell the concessions, though it would be complicated.
AMLO appoints energy watchdog commissioners
President Andrés Manuel López Obrador appointed four commissioners to Mexico's energy regulator CRE after his nominations failed to gain senate approval. The appointees are Luis Linares Zapata, Norma Leticia Campos, José Alberto Celestino, and Guadalupe Escalante. The appointments were made under a legal provision allowing the president to act if the senate fails to approve nominations twice.
Sales of Pemex hydrogen plants under corruption microscope
Mexican President Andrés Manuel López Obrador announced the release of files on a new Pemex corruption investigation, focusing on the sale of three hydrogen plants to private companies without tenders. The deals, involving Cryoinfra, Air Products and Chemicals, and Linde Gas North America, have raised concerns due to their direct assignment and high monthly payments from Pemex. The business model is reminiscent of the controversial Etileno XXI deal with Braskem Idesa, a subsidiary of the scandal-tainted Odebrecht. Pemex is reportedly resorting to costly imported ethane to fulfill its obligations under the Etileno XXI contract.
Work set to start on Mexico's first wave project in H1
Construction on Mexico's first wave power project, the 4.8MW Manzanillo project by Eco Wave Power, is set to begin in May or June after delays in 2018. The project is closing financing with a Swedish bank and has all required permits except for a zoning change. Investor uncertainty during the 2018 electoral year was a principal cause for the delay, but current investor sentiment is favorable. The project has an option agreement to sell electricity to the University of Colima and is in talks with Manzanillo port and municipality for additional off-take agreements.
Mexico regulator approves new permitting times
Mexico's upstream regulator CNH has approved changes to the approval times for various plans, programs, and modifications submitted to the commission. The approval time for plans has been reduced from 120 business days to 85 days, while the time to permit modification of plans has been cut to 35 business days. Approval times for programs and pilot plans have been shortened from three months to 40 business days, and modification of evaluation programs has been reduced to 35 business days. Yearly work and budget programs will now be approved within 20 business days, with modifications approved within 15 business days instead of three months.
TV Azteca concession guarantee to Banco Azteca not linked to non-payment of bondholders – CEO
TV Azteca's broadcast concessions, valued at MXN 9.4bn, were used as a guarantee for a loan from Banco Azteca in 2020, unrelated to the postponement of payments to bondholders in 2021, according to CEO Rafael Rodriguez. The concessions were part of a restructuring plan and financial discipline efforts. The delay in registering these concessions was due to the COVID-19 pandemic. The concessions do not include physical infrastructure and are not considered recoverable assets by bondholders. If TV Azteca defaults, Banco Azteca could sell the concessions, though it would be complicated.
Unifin bondholders projected to recover 0-7% according to company proposal
Unsecured holders of international notes from Mexican non-bank financial institution Unifin are projected to recover between 0-7% according to a company proposal. Bondholders expressed dissatisfaction with the proposal, preferring liquidation over the current offer. Concerns were raised about the quality of Unifin's loan portfolio, with 75% of loans having major risk exposure. Bondholders have 15 working days to decide on the plan, with the ad hoc group holding sufficient debt to influence the decision.
Unifin bondholders projected to recover 0-7% according to company proposal
Unsecured holders of international notes from Mexican non-bank financial institution Unifin are projected to recover between 0-7% according to a company proposal. Bondholders expressed dissatisfaction with the proposal during a call, preferring liquidation over the current offer. Concerns were raised about the quality of Unifin's loan portfolio, with 75% of loans having major risk exposure. Bondholders have 15 working days to decide on the plan, with the ad hoc group holding sufficient debt to influence the decision.
Mexico revises fuel VAT discount
Mexico's government, under President Andrés Manuel López Obrador, has maintained the gasoline VAT at full value but continues to apply a discount to effectively lower fuel prices. The finance ministry revised the tax discount formula to ensure benefits reach end customers, as previous discounts were increasing service stations' profit margins. The new formula calculates tax discounts based on wholesale prices. The ministry reported record income from the fuels VAT in January, marking a significant increase.
Mexico's new long-term energy plan submitted for review
Mexico's national energy control center (Cenace) submitted a proposal for the Prodesen long-term energy plan to the energy ministry (Sener) on February 28. The plan, which aims to define the development program for the Mexican grid, will undergo a review process by Sener's electricity unit, potentially taking several months depending on political approval. At the Mexico Energy Roundtable, Akihito Escobar from Cenace highlighted the challenge of reconfiguring the electricity transmission grid to accommodate the new government's focus on hydroelectric power.
Total Play fiber assets offer path through challenging debt landscape
Total Play is exploring options to manage its challenging debt situation, including leveraging its unencumbered fiber optic assets and cutting capital expenditures. The company has significant debt, with plans to address upcoming bond maturities without seeking a haircut or in-court reorganization. Analysts suggest that reducing capex could provide the necessary financial flexibility. Total Play's fiber assets are highly valued, and the company has a strong business model with high client retention. However, past financial issues with its owner, Grupo Salinas, raise concerns about future debt management.
Sun sets on Mexico’s paradise beaches as climate crisis hits home
In Quintana Roo, Mexico, climate change is causing sea levels to rise and beaches to erode, threatening the tourism industry. José Escalante is selling his beachfront hotels due to these environmental challenges, including unmanageable seaweed and security concerns. Scientists predict significant beach loss by 2050, and hurricanes are intensifying, further damaging the coastline. Despite these issues, the region is experiencing rapid development, which exacerbates the problem. Some measures, like coral reef insurance, are being taken, but the long-term sustainability of the tourism industry is in question.
Coronacrisis offers mariachi opportunities: perform via webcam
The COVID-19 crisis has heavily impacted Mexico, leading to a decline in live mariachi performances. Fernando Gendrop, who has a history of hiring mariachis, has turned to ordering performances via videoconference for personal celebrations. Mariachi groups, like Mariachi Cuajimalpa, have adapted by performing digitally, allowing them to reach international audiences. Despite the challenges, musicians like Paxpi Montesinos remain optimistic about the future of mariachi music and its ability to adapt to new formats.
Poor and Rich Mexico View Death – and the Virus – Very Differently
The article explores the contrasting attitudes towards death and the COVID-19 pandemic between Mexico's wealthy elite and its poorer population. While the elite, influenced by modernity and access to information, exhibit a heightened fear of the virus, the poorer communities, who celebrate the Day of the Dead and rely on local sources for news, show less fear and more concern for economic survival. The piece highlights the cultural and socioeconomic disparities in how different segments of Mexican society are coping with the pandemic, with the elite taking more stringent precautions and the poor focusing on immediate economic challenges.
Reclaimed lakes and giant airports: how Mexico City might have looked
Mexico City's history and potential future have been shaped by its relationship with water, from the construction of dykes to prevent flooding to the draining of lakes that has led to the depletion of aquifers. Various unbuilt projects over the years have sought to address the city's urban challenges, such as the double ring road proposal in 1967, the Aztlan 2000 social housing complex, and the Ciudad Futura development that would have recreated a lake environment. The most recent failed project was a new airport designed by Fernando Romero and Norman Foster, which was cancelled after a public referendum. Current mayor Claudia Sheinbaum has plans to recover some of the city's waterways, continuing the long history of urban development initiatives.
Mexico approves E&P plans
Mexico's hydrocarbons commission CNH approved exploration plans for Tecpetrol's Misión area and the development plan for Pemex's offshore Cheek field, along with offshore well drilling by Hokchi Energy and PC Carigali. The Cheek field, with significant reserves, is part of Pemex's strategy to boost short-term production. Tecpetrol's plan involves drilling in the Burgos basin with substantial investment and reserve estimates.
Operators want to be exposed to market risk
Mexican NOC Pemex is shifting towards integral service contracts for hydrocarbon extraction and production, moving away from production sharing and licensing agreements. These incentivized contracts pay companies based on the amount of barrels extracted, with higher rates for higher risks. The current administration under President Andrés Manuel López Obrador may reconsider production sharing and licensing agreements after evaluating the results of existing contracts. The government is also migrating contracts for Pemex farm-outs, with auctions planned for October.
Pemex fleet renovation advances
Mexican NOC Pemex received the first of three multi-purpose offshore support vessels from the shipyards of the naval affairs ministry. The vessels are part of a package of 22 ordered to renovate its fleet of smaller support ships, with the first vessel to be based in Rosarito on the Pacific coast in Baja California state.
Pemex E&P tenders focusing on Bloques Sur
Fourteen of Pemex's last 20 tenders have focused on onshore areas in the Bloques Sur region, covering Veracruz, Chiapas, and Tabasco. These tenders, announced between February 21 and April 1, include services like gas injection, well stimulation, and equipment repairs. The region is significant for its seven blocks scheduled for farming out in Mexico's upcoming licensing round and contains key fields like Magallanes and Ogarrio. Production costs in the region were slightly above Pemex's average at the end of 2017.
Dos Bocas refinery proposals to be submitted by mid-April
Mexican President Andrés Manuel López Obrador announced that four companies, including Technip, KBR, Bechtel-Techint, and WorleyParsons-Jacobs, have agreed to submit proposals for the Dos Bocas refinery tender by April 18. The project is valued between 150bn and 160bn pesos. The government also plans to spend 25bn pesos on refurbishing Mexico's six existing refineries, which are operating at 30% capacity, to achieve self-sufficiency in gasoline and reduce consumer prices. In 2018, Mexico's gasoline and diesel demands were heavily reliant on imports, primarily from the US.
Oceanteam Mexico JV dissolved
Norwegian offshore services company Oceanteam terminated a joint venture with Mexican services company Diavaz. The JV, in which Oceanteam held a 40% share, was created in 2014 to service the Mexican offshore market. The share will be taken up by Diavaz, aligning with Oceanteam's revised strategy to divest non-controlled business and position itself as an offshore services investment platform.
Senate requests report on Dos Bocas refinery permitting
The Mexican Senate's energy committee has requested a report from energy safety regulator ASEA on zoning changes and environmental impact studies for the US$8bn Dos Bocas refinery in Tabasco. Opposition senators are concerned about the clearing of 300ha of forest and mangrove swamp, for which the contractor was fined and required to reforest. Construction is expected to begin mid-year.
Mexico's CFE seeking 5.2Mt of coal
Mexico's state-run electricity utility CFE is seeking to acquire 5.2Mt of coal through tenders. The first tender for 330,000t from the Sabinas area in Coahuila was launched on March 22, with offers accepted until April 2 and the contract to be awarded on April 4. The second tender for 4.9Mt to supply the Petacalco plant in Guerrero was launched on March 25, with offers accepted until April 5 and the contract to be awarded on April 8. Mexico's coal-fired plants, which include Río Escondido, Carbon II, and Petacalco, represent 9% of the country's total capacity. Coal use is expected to remain stable until 2023, with an increase anticipated due to new capacity.
Mexican NCRE projects lagging clean certificate requirements
Non-conventional renewable energy projects in Mexico are not progressing quickly enough to meet the clean energy certificate (CEL) requirements set by the energy ministry (Sener). The projected renewable power generation of 16,483GWh this year is unlikely to meet demand. As of mid-March, only eight of the 18 projects from the 2015 auction are operational, and 10 of the 56 plants from clean energy auctions were operational as of February. Sener confirmed the CEL requirements for 2020-2022, maintaining the obligations despite potential shortfalls. Mexico's clean energy production goal for 2022 is 31.7%, equivalent to 110,822GWh, against an expected demand of 340,627GWh.
Chevron to fork out US$400mn for Mexico fuel storage capacity
Chevron plans to invest US$400 million over 15 years to acquire fuel storage capacity in Ensenada and Topolobampo, Mexico. The company, through its Chevron fuels division in Mexico led by José Parra, aims to move 35,000 barrels per day of diesel and gasoline from IEnova-built terminals by early 2021. Additional capacity acquisitions are considered in Sonora, Baja California, and the Bajío region. Kansas City Southern México anticipates a 15% increase in gasoline transport due to demand from newly opened service stations post-liberalization in 2016. Mexico has 70 fuel storage projects in progress, requiring US$4.48 billion in investment, with significant capacity additions in Veracruz, Mexico, and Tamaulipas. As of December, Mexico's gasoline demand was 788,000 barrels per day, with 78% met by imports.
AMLO: Dos Bocas refinery construction to start in 3 months
Mexican President Andrés Manuel López Obrador announced that the Dos Bocas refinery project management contract will be resolved within a month, with construction starting in two to three months. Four groups, including Bechtel-Techint and WorleyParsons-Jacobs, have been invited to the tender. Techint's strong local manufacturing presence may aid in achieving the 50% local content goal. Mexico's refinery capacity utilization was at 30% in December, according to the Energy Ministry. The refinery is a flagship project expected to be completed in three years. Pemex reported increased gasoline and diesel production in February compared to January.
Telford vessels hired for Pemex work
Mexican services company Protexa has contracted three multi-purpose DP3 support vessels from Telford Offshore for shallow water engineering, procurement, construction, and installation in the Gulf of Mexico for NOC Pemex. The vessels will be contracted for a combined period of 400 days. Pemex will be developing 16 new fields in the offshore Tabasco and Campeche regions in the coming year to bring new production online.
Mexico issues guidelines for emergency protocols
Mexico's hydrocarbons safety regulator ASEA has issued guidelines for the creation of emergency protocols in the oil and gas sector. These guidelines outline technical measures that regulated companies should incorporate, including lists of hazardous materials, potential preventive measures, and the availability of local emergency response services.
Energy officials differ on Mexico prices
Mexico's grid administrator Cenace anticipates 2019 energy prices to remain stable or decrease compared to 2018, despite challenges such as a prolonged drought and the integration of distributed solar systems. Martin Vivar, director of Cenace's wholesale electric market administration, assured sufficient reserve capacity. However, industry experts at the Mexico WindPower conference expressed doubts about the government's reliance on hydroelectric generation for renewable energy growth, questioning the adequacy of water in dams.
Pemex's US$840mn Pol field plan gets regulatory approval
Upstream regulator CNH approved the modification of Pemex's development plan for the shallow water Pol field, preparing it for abandonment. The plan includes continuing production until 2021 to recover 2.6 million barrels of crude and 3.6 billion cubic feet of natural gas, with the field producing 1,574 barrels per day as of January. The US$837 million plan will culminate in the dismantling of production platforms by 2040, with short-term actions including repairs to two wells and the capping of 26 wells between 2020 and 2024.
CRE publishes load center interconnection guide
Energy regulator CRE has published a guide detailing the technical requirements for connecting load centers to the Mexican network. The guide includes suggestions for the development and presentation of work plans to meet these requirements.
Dos Bocas tender terms to be published soon
The terms for the tender of Mexico's Dos Bocas refinery will be announced on March 18, as stated by President Andrés Manuel López Obrador. The refinery is projected to cost between US$6bn and US$8bn and will take three years to build. This announcement follows a contradiction between deputy finance minister Arturo Herrera, who suggested a delay to allocate resources to boost Pemex's production, and energy minister Rocío Nahle, who affirmed the refinery would proceed. The president's latest statement appears to resolve this contradiction.
CNH approves ENI, Lukoil swap
Mexico's upstream regulator CNH approved a swap between Italian major ENI and Russian Lukoil, involving a trade of participation in areas 10 and 12 in Cuencas del Sureste. Area 10 has 512Mboe of P10 light crude reserves, while area 12 has 958Mboe of P10 heavy crude reserves. Additionally, CNH approved four extra wells for Pemex's Valeriana onshore field evaluation plan, six production tests, and an update of the characterization model. The regulator also approved Pantera's exploration plan for area 8 in the Burgos basin.
Mexico to publish development plan in April
Mexico's government will publish its 2019-24 national development plan in April, with President Andrés Manuel López Obrador inviting citizens to discuss the plan on March 16 and 17. The plan will outline the government's activities in the energy sector for the coming years, although the national hydrocarbons, refining, and electricity plans have been announced but not yet made public.
Mexico energy ministry proposes electricity firm restructuring
The Mexican energy ministry (SENER) has proposed changes to the laws governing the legal separation of the state-run electricity company CFE's subsidiaries. The ministry argues that the current structure, where six subsidiaries handle generation capacity and one buys electricity from private generators, leads to inefficiencies. This is evidenced by a drop in plant availability from 86.7% in 2015 to 76.9% in 2018.
Ophir discovers oil in Mexico's Salina basin
UK-based Ophir, along with consortium partners Murphy Oil, PC Carigali, and Sierra Oil & Gas, discovered hydrocarbons in the deepwater area 5 of Mexico's Salina Basin through the Cholula-1 well. The discovery aligns with pre-drill expectations, and further drilling is needed to establish commercial viability. Ophir is in talks for a cash sale of its position in block 5. The consortium has been granted permission by CNH to leave their stakes in bond to ensure compliance with their obligations.
Finance ministry has new Pemex aid package in the works
Mexico's finance minister Carlos Urzúa announced that a new aid package for Pemex is in the works, following criticism of January's US$5.2bn package. The new package, pending approval from President López Obrador, aims to address Pemex's debt situation and production issues without affecting Mexico's underlying finances. Urzúa criticized previous governments for mismanaging Pemex and emphasized the need for substantial annual investment to turn production around.
Mexico's Dos Bocas refinery to be complete in 2022
Mexico's energy minister Rocío Nahle announced that the Dos Bocas refinery will be completed in 2022, with an estimated cost between US$6bn and US$8bn. The project faced a fine of 13.9mn pesos for environmental violations. Construction is set to begin later this year, according to Pemex.
Registration of Mexico safety protocols open until March 21
Mexico's energy safety regulator ASEA is accepting requests for the registration and authorization of the SASISOPA health, environment, and safety protocols for the distribution of natural gas, LPG, and fuel in Chihuahua, San Luis Potosí, and Yucatan until March 21. Registration and authorization for LPG and fuel dispatch in Tlaxcala will also be open until the same date.
Mexican regulator approves plans for farm
Mexico's hydrocarbons regulator CNH has approved exploration and development plans for the Cardenas-Mora and Ogarrio fields, farmed out by Pemex. The Cardenas-Mora field, jointly controlled by Petrolera Cardenas Mora and Pemex, will see an investment of US$808mn for oil and gas recovery from 2020 to 2043. The Ogarrio field, managed by DEA Erdoel and Pemex, will receive US$638mn for similar activities from 2019 to 2042. Key actions for 2019 include sidetrack openings, major repairs, and well drilling.
Mexican antitrust authority to investigate LPG market
Mexico's antitrust authority Cofece has initiated an investigation into the LPG market due to potential monopolistic practices in various stages including import, commercialization, transport, storage, and sale. LPG is a significant energy source in Mexico, accounting for 33% of residential, commercial, and public energy use as of 2016, according to data from the upstream regulator CNH.
Head of Mexico energy watchdog won't be dismissed despite probe
Guillermo García, head of Mexico's energy regulator CRE, remains in his position despite an ongoing investigation into potential conflicts of interest involving his family members working in the sector. The Mexican senate's energy committee, chaired by Armando Guadiana, confirmed he would not be dismissed. President López Obrador's administration has criticized autonomous regulators, while industry associations advocate for regulatory independence. The CRE is currently unable to function properly due to a lack of quorum after four resignations. The senate approved 11 government-proposed candidates to fill the vacancies and will decide on the appointments this month.
Zama looms large in Talos' 2019 plans
Talos Energy's 4Q18 results call emphasized progress in the Zama field, Mexico's largest discovery in two decades, with flow testing and coring operations scheduled. The company aims to finalize its investment decision by 2020 and commence production by late 2022. A pre-unitization agreement with Pemex is in place, though unitization remains uncertain. Talos also holds stakes in offshore areas 2 and 31, with exploration and delimitation wells planned for 2019 and investment decisions expected in 2020.
Construction begins on Engie's Tlaxcala wind farm
Construction began on Engie's 217MW Calpulalpan solar park in Tlaxcala state on February 28, as part of Mexico's third long-term energy auction in 2017. The US$156mn project is expected to be completed by June 30, 2020, and is one of the first of the 15 projects from that auction to commence. The auction results included 2,562MW of capacity and total investments of US$2.4bn.
Pemex production hits record low
Mexican NOC Pemex's crude production hit a record low of 1.62Mb/d in January 2019, down from 1.71Mb/d in December 2018 and 15% year-on-year. Economists warn that a 107bn-peso financial stimulus from the government could harm Mexico's federal finances long-term without sufficiently improving Pemex's situation. Moody's and CIEP highlight the negative implications for Mexico's sovereign rating and public finances. The government aims to boost production to 1.83Mb/d in 2019 through well completions, repairs, and reduced production declines.
Fuel terminal construction ready to start in valley of Mexico
Mexican company Hydrocarbon Storage Terminal and Spain's CLH are set to begin construction on the Valle de México fuel storage terminal by March. The terminal will initially have a capacity of 600,000 barrels, with plans to expand by an additional 200,000 barrels in a second phase. The initial capacity has already been contracted for the next eight years. Mexico's current fuel storage capacity is limited to three days, a strategic weakness highlighted by recent gasoline shortages due to efforts to combat fuel theft.
Vopak to expand Mexico fuel storage capacity
Dutch firm Vopak will expand its Veracruz clean fuels terminal by 110,000 barrels, with full commissioning expected by the fourth quarter of 2020. Vopak also operates terminals in Altamira and Coatzacoalcos. Mexico's energy ministry reports 68 fuel storage projects in various stages of permitting, representing US$4.6 billion and 45 million barrels of fuel. Veracruz leads with nine projects involving 13 million barrels.
Mexico approves Pemex, private sector plans
Mexico's hydrocarbons commission CNH approved modifications to Pemex's offshore and onshore exploration plans, including additional activities and drilling of new wells. Private sector plans by Jaguar, Pantera, and GS Oil and Gas were also approved, involving drilling and investment in various basins. The approvals include significant investments and potential for increased reserves, with Pemex's offshore plan alone requiring an investment of 5.2 billion pesos.
AMLO pledges to visit communities halting pipeline work
Mexican President Andrés Manuel López Obrador plans to visit communities that are obstructing the construction of seven natural gas pipelines by IEnova, Grupo Carso, and TransCanada. He has called for the renegotiation of 'immoral' take-or-pay contracts with the state-run electricity utility CFE, but denied any intention to sue non-compliant companies, contrary to CFE director Manuel Bartlett's earlier threats. TransCanada's report indicates that three pipelines are under force majeure with fixed capacity charges, with completion dates ranging from 2018 to 2020. IEnova also declared force majeure for a pipeline affected by the Yaqui tribe since August 2017.
Iberdrola releases 2018 operational data
Spanish energy conglomerate Iberdrola released its 2018 operational data for Mexico and Brazil. In Mexico, the firm produced 10,600GWh, with 90% from combined cycle plants. Renewable production declined by 15%, while co-generation grew by 110%. Total generation capacity increased from 6,250MW in 2017 to 7,471MW in 2018. In Brazil, renewable generation rose by 58%, driven by an 87.6% increase in hydroelectric generation. Combined cycle generation declined by 57%. Total generation capacity in Brazil increased from 3,162MW in December 2017 to 3,467MW in December 2018.
Mexico added 3,000MW of capacity in 2H18
Mexico added 3,024MW of capacity to its national power grid in the second half of 2018 through 24 new generation plants, including solar, wind, combined cycle, internal combustion, and co-generation plants. Key projects include Iberdrola's 850MW Escobedo combined cycle plant, Energía Eólica del Sur's 396MW Eólica del Sur plant, Enel's 228MW Parque Solar Don José, and Acciona's 180MW El Cortijo windfarm. These projects contribute to the 12,429MW of capacity expected to come online by June 2019, ensuring a 13% operative reserve margin during peak demand, according to Cenace.
Mexico Watch: US$15bn Russian investment; fiscal incentives for renewables
Russian businessmen and local companies Petróleos Internacionales del Caribe and Dragde have agreed to invest over US$15bn in strategic energy projects in Mexico, as announced by Dragde CEO Edgar Huerta during a forum in the Mexican senate. Petróleos Internacionales del Caribe, led by CEO Michael Hood, plans to collaborate with CFE and Pemex to boost production over the next three years. Additionally, Labor party senators have proposed fiscal stimuli for renewable energy technologies in an update to the climate change law, which is set to be negotiated in the commission for environment, natural resources and climate change.
World Bank considers Mexsolar loan
The International Finance Corporation (IFC), a World Bank affiliate, is considering a loan of up to US$25 million to FV Mexsolar for a 119MW greenfield solar park in Perote, Veracruz, Mexico. Mexsolar, a consortium of Spanish companies X-Elio Energy and Cox Energy, estimates the total project cost at US$98 million, with an additional third-party loan of US$25 million anticipated. The decision will be announced on February 28.
CFE chief to present energy plan
Manuel Bartlett, CEO of Mexico's electricity utility CFE, is set to unveil a plan to stabilize the company, addressing significant financial losses attributed to corruption in fuel procurement. President López Obrador highlighted the issue, noting Bartlett's creation of an internal intelligence unit to combat the problem. The CFE's 2017 report indicated a substantial increase in fuel costs due to a natural gas shortage, impacting productivity.
Pemex fires 3 executives over alleged corruption
Mexico's Pemex has terminated three executives, Miguel Angel Lozada, Hector Salgado, and Luís Galvan, for their alleged involvement in a corruption scheme related to subcontracting to universities. Lozada was recently promoted to director of Pemex's exploration and production arm, while Salgado and Galvan held significant positions within the company.
CNH reports on 4Q18 advances, farmout round
Hydrocarbons watchdog CNH updated participants on the farmout round for seven onshore areas belonging to Mexico's state-run Pemex, scheduled for October 9. Eleven companies pre-qualified to participate, including California Resources Corporation and China Offshore Oil Corporation E&P México. CNH also reported on companies signed up for surface exploration during 4Q18 and granted new authorizations to Dowell Schlumberger and TGS. Additionally, CNH authorized the drilling of six wells in 4Q18, with a total investment of 3.7bn pesos (US$194mn).
Mexico moving less fuel by truck as thefts decline
Fuel theft in Mexico is significantly decreasing, leading to a reduction in fuel transportation by truck. Security minister Alfonso Durazo highlighted the cost differences between pipeline and truck transport and noted the government's success in preventing the theft of 2.7 million barrels of fuel in the first two months of the anti-fuel theft campaign. Pipeline theft dropped from 74,000 barrels per day in December to 8,000 barrels per day in February.
US$8bn Dos Bocas refinery tender to be invite
Mexico's energy minister Rocío Nahle announced that the tender for the US$8bn Dos Bocas refinery will be by invitation only to prevent foreign multinationals with a history of corruption from participating. Despite the allocation of 50bn pesos (US$2.6bn) in the 2019 federal budget, the timeline for the tender remains uncertain.
Mexican government's oil income dives in January
In January 2019, the Mexican government's oil income was 44.5 billion pesos, a 50% decrease from the previous year, attributed to a 7% decline in crude prices and a 10% drop in production. State-owned Pemex reported a 2.24 billion peso loss, contrary to the projected 30 billion peso surplus. The shortfall was partly mitigated by higher-than-expected funds from the oil stabilization fund FMP. The reduced oil income poses challenges for President Andrés Manuel López Obrador's administration as ratings agencies scrutinize the government's support for Pemex. The 2019 federal budget anticipates significant income from Pemex and the FMP, accounting for 19% of total projected government income. Additionally, the gasoline tax IEPS revenue increased in January 2019.
Mexico cancels US$1.2bn Yautepec
The US$1.2bn Yautepec-Ixtepec transmission line project, intended to connect Oaxaca with Mexico's central region, has been canceled. The state power company CFE cited inadequate conditions as the reason for halting further development.
Major Mexican cities still facing fuel shortages
Guadalajara and Monterrey are experiencing fuel shortages as the Mexican government intensifies efforts to combat fuel theft. In Monterrey, 25% of gas stations are affected, while Guadalajara's gasoline service stations association, Amexgas, is seeking US companies to import gasoline. Guanajuato, a central point of the crisis, reports that 50% of economic activities are impacted. General Leon Trauwitz, former pipeline security head for Pemex, is under investigation for involvement in fuel theft, with his bank accounts frozen. Pemex lost US$3bn to fuel theft in 2018.
Paraguay energy round-up
Energy demand in Paraguay has surged due to high temperatures, setting a new demand record of 3357MW on January 22. Seven 100kVA transformers in Asunción were affected by the increased demand. ANDE outlined projects under Paraguay's master plan for energy infrastructure, with the first group of projects requiring US$176mn to be tendered in February, financed by the European Investment Bank and CAF. Additional projects requiring US$300mn and US$175mn are planned for 2019. EU officials inspected a 500kV transmission line financed by the EIB in Misiones state.
Odebrecht files complaint with human rights commission
Odebrecht's lawyers have filed a complaint with Mexico's human rights commission, CNDH, accusing 12 former government officials of failing to investigate corruption charges against the company. Odebrecht argues it is being unfairly punished while government officials evade accountability. Notable officials mentioned include Alberto Elías Beltrán and Arely Gómez.
Chilean lawmakers want to end power cuts in rural water plants
Chile's lower chamber of congress has voted to request the executive branch to propose a bill mandating electricity distribution companies to provide alternative generation systems for rural water treatment plants. The resolution highlights poor service from these companies, leading to power and water supply interruptions in rural areas. Lawmakers argue that power distributors should ensure uninterrupted electricity to water plants.
Chilean lawmakers want to end power cuts in rural water plants
Chile's lower chamber of congress has voted to request the executive branch to draft a bill mandating electricity distribution companies to provide alternative generation systems for rural water treatment plants. This action is in response to poor service and frequent power cuts due to inadequate maintenance of transmission lines by these companies, which have resulted in water supply interruptions in rural areas.
Mexican regulator approves onshore exploration, development plan
Mexico's hydrocarbons regulator, CNH, has approved the exploration and evaluation plan for Area 7 in the Veracruz basin, managed by Jaguar Exploración y Producción. The plan includes acquiring geophysical data, conducting exploratory studies, and drilling an exploratory well with prospective reserves of 58Bf3 of natural gas. The exploration plan is budgeted at US$11.5 million, with US$8.6 million allocated for 2019. Additionally, the evaluation plan involves drilling four wells and conducting studies, with a total cost of US$22.2 million, of which US$21.5 million is budgeted for 2019.
Mexico looking to use tanker trucks to bring in US gasoline
Mexico is considering using tanker trucks to import gasoline from the southern US to alleviate fuel shortages in its northern states, allowing the Cadereyta refinery to focus on supplying the south. Pemex reported increased gasoline sales and significant fuel reserves, despite pipeline sabotage. The government continues its crackdown on fuel theft, blocking suspicious bank accounts. Economic concerns rise as the service sector reports significant losses due to fuel shortages. Normal service is expected to resume by the third week of January, primarily through tanker truck deliveries.
Talos upbeat on Mexico offshore
US operator Talos aims to achieve first production with cash flow by the end of 2022 from its Zama discovery. The company is currently drilling its Zama-2 appraisal well and expects to report progress on its offshore Mexico activities soon. Talos highlights offshore Mexico as one of the most attractive exploration basins globally.
Cuba Watch: Melbana and Sherritt with mixed results
Melbana Energy has entered into a deal with CubaPetroleo for the Santa Cruz field, allowing for enhanced oil recovery operations. Additionally, Melbana signed a farmout agreement with Anhui Modestinner Energy for area 9, pending regulatory approval. Sherritt, a Canadian company, anticipates drilling results from a new reservoir in area 10 by 2Q19, despite a significant drop in production in the fourth quarter of 2018.
Pemex expected to get US$1.8bn in additional government aid
Mexican NOC Pemex is set to receive US$3.6bn from the government in 2019, including a US$1.3bn capital injection, US$1.8bn to cover labor liabilities, and US$600mn in financial aid. The company aims to save US$1.6bn by combatting fuel theft. This follows a lowered credit rating by Fitch Ratings due to insufficient government support and declining production. Former upstream regulator head Juan Carlos Zepeda indicated that Pemex would need US$10bn to US$15bn annually to achieve significant production goals over the next 15 years.
Pemex pledges no more debt in 2019
Due to a US$5.2bn fiscal aid package from the Mexican government, Pemex will not take on additional debt in 2019, according to CFO Alberto Velázquez. The company, which assumed an average of 140bn pesos (US$7.2bn) in debt annually between 2013 and 2018, will also begin making early payments on existing debt.
Mexico cancels 4th energy auction
Mexico's fourth long-term electricity auction, initially scheduled for end-2018 and later suspended, was canceled by watchdog CENACE. The auction had prequalified 28 companies, including Engie, Iberdrola, Enel, and Jinko. The cancellation impacts the auction system that had previously integrated 7538MW of clean energy into the grid. The auction was part of a program by the previous government to retire 11,800MW of old thermoelectric plants, which has also been put on hold by the new administration.
BHP strikes oil in Gulf of Mexico
Australian operator BHP Billiton announced a successful oil discovery in its Trion-2DEL appraisal well in the deepwater Gulf of Mexico, marking the first deepwater well success by a foreign operator in the region. The company has initiated further appraisal of the field. The Trion area, controlled 60% by BHP Billiton and 40% by Mexican NOC Pemex, is estimated to contain 485 million barrels of oil equivalent in technically recoverable 3P reserves.
Mexico's unpaid electricity bills prompt legislative action
Mexico's federal electricity utility CFE reported losses of 14.3bn pesos in 2017 due to unpaid bills by municipalities and states. A motion presented to congress by Ana Laura Bernal aims to empower the energy regulator CRE and CFE to stipulate payment terms. The state of Chiapas and the municipality of Ixtapaluca have the highest debts. The proposed legislative change also seeks to reduce electricity rates for poorer consumers in areas with extreme temperatures. CFE had a short-term debt of 166bn pesos and posted a profit of 27.3bn pesos in 2018.
This is a link in Google Play to an app about a 51-day walk around Mexico City ubdertaken by Feike de Jong as well as different aspects of the edge of the city - contains more than 200 picture taken by the author.
Blogs on urbanism for Forbes Mexico
Limits: Explorations on the Edge of the Megalopolis of the Valley of Mexico
The article is a personal narrative by Feike de Jong, who undertook an 800km walk around the edge of Greater Mexico City to understand its vastness and complexity. He compares the city to a whale and himself to a minuscule sea creature, emphasizing the city's enormity and his own smallness. De Jong describes various experiences during his journey, including encounters with cockfighting and moments of vulnerability and reflection. He also touches on the informal urban spaces and the lives of those who inhabit the city's peripheries. The article serves as an exploration of Mexico City's urban landscape and the cultural practice of cockfighting. De Jong's ebook, 'Limits: Explorations on the Edge of the Megalopolis of the Valley of Mexico,' is mentioned to be published with a grant from Mexico’s Fondo Nacional de la Cultura y Las Artes in 2017.
Article for 2006 Mexico elections -
Article on commute from the edge of Mexico City to the city center.
An article on women leaders in Mexico City's notoriously difficult inner city - particularly involved generating contacts in Mexico City's Tepito neighborhood.
Urban vignette of Mexico City's experimental music scene done in collaboration with videoproducer Ramon Coelho.
Cambio climático: las dos caras de la moneda para los mexicanos
The article discusses the dual impact of climate change on Mexico, highlighting the country's vulnerability to global warming. It suggests that while Mexico faces significant challenges due to climate change, there are also opportunities for businesses, the government, and citizens to benefit from the situation. The article likely explores the potential for economic growth in sectors that could thrive under changing climate conditions, as well as the importance of adaptation and mitigation strategies to protect vulnerable communities and ecosystems.
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