November 7, 2013
The Financial Times, 11/06/2013
The fate of proposals to reform the Mexican oil and gas industry, now being considered by the country’s lawmakers, matters well beyond Mexico itself. The outcome could reshape the energy sector in a number of important countries.
For Mexicans, the nationalisation of oil and gas resources in 1938 was a mark of independence and freedom from manipulation by oil companies. The event marked the start of a resistance movement that challenged the existing rules of the game — first in Iran, then across the group of countries that became Opec, the oil producers’ cartel. The action helped define the resource nationalism of much of Latin America. Pemex, the company that took over the expropriated assets of the international companies, was a model for the national oil groups created around the world.
October 16, 2013
BBC News, 10/16/2013
At least four people have been killed and three injured in a gas explosion in the central Mexican state of Puebla, officials say. It is not yet clear what caused the blast at the natural gas storage plant at the Chachapa industrial park.
The explosion set off a fire which engulfed much of the area. The main highway linking Mexico City and Veracruz was closed for more than four hours as firefighters brought the blaze under control.
September 30, 2013
The Wall Street Journal, 9/27/2013
U.S. energy companies are turning to Mexico as they struggle to find uses for the glut of natural gas that has depressed domestic prices for the fuel.
Pipelines are carrying twice as much natural gas to Mexico as they did in 2010, according to federal data, helping to push U.S. gas exports to the highest level since the Energy Information Administration began tracking them in 1973.
The U.S. still imports more gas than it exports, and its shipments to Mexico account for a little less than 3% of U.S. production. But rising exports to Mexico are bringing the U.S. closer to becoming a net exporter of natural gas, and could provide a meaningful boost to domestic gas prices, some analysts say.
September 19, 2013
The Miami Herald, 9/18/2013
Prices for natural gas over the border in Texas are at historic lows, so what happened earlier this month at the Gulf of Mexico port of Altamira, Mexico, might seem to defy market logic.Huge tankers arrived from distant Yemen and Nigeria to offload liquefied natural gas at a price four times the market rate for natural gas in the United States.
At Mexico’s two other liquefied natural gas terminals, on the Pacific coast, the same phenomenon occurs, with expensive liquefied gas arriving from Peru, Indonesia and even Africa. It’s a sign of Mexico’s enormous energy crisis, even as oil remains the mainstay of the country’s economy. Mexico has huge natural-gas reserves, yet those reserves are largely untapped, and the nation is a net importer of the fuel.Abundant supplies of natural gas at low prices lie just across the border, but U.S.-Mexico pipelines are already handling all they can.
July 3, 2013
The shale gas boom has done a lot to boost the US economy. It’s such a big deal you can see it from space. All that new natural gas has lowered energy costs, which has led analysts to wonder if it could help make America’s energy-heavy manufacturing businesses more competitive with countries that have low labor costs but over-burdened energy infrastructure. But there’s a lot standing in the way of that vision, including the potential for gas exports to affect the value of the dollar, and the observation that maybe energy costs aren’t such a big deal.
But where the US is faltering, Mexico is taking advantage of all that cheap natural gas to boost factories; last year, pipelines brought more natural gas across the border than ever before. Mexico is already successfully competing with places like China on labor prices, but its energy costs are lower, too. Combine that with its proximity to the United States and deep integration into the American supply chain, and you’ve got a recipe for export-oriented success. Pemex, the country’s state-owned oil company, is spending $3.3 billion to build a new, 750-mile pipeline from Los Ramones, Mexico, near the country’s industrial heartland, to Agua Dulce, near Texas’ shale oil fields.
July 2, 2013
Financial Times, 7/1/2013
The US shale gas boom is shaping up to be an important competitive advantage for manufacturers – in Mexico. US natural gas exports to Mexico hit a record last year, helping hold down the country’s energy costs as its industry grew rapidly. Planned new pipelines that will enable further rapid growth in imports from the US will strengthen and lock in that advantage, and help to give Mexico a competitive edge over other emerging economies for as long as North American shale production remains strong.
China’s manufacturing labour costs overtook Mexico’s last year because of its high rates of wage inflation, and its energy costs are also significantly higher. By 2015, China’s total manufacturing costs will be about 95 per cent of US levels, with gas contributing about 4 percentage points of that, while Mexico’s will be just 89 per cent, with gas at just 1 percentage point, according to new research from the Boston Consulting Group. Mexico’s industrial output has been falling this year, but its lower costs and proximity to the US, which reduces transport costs and increases flexibility, will make it increasingly competitive as a manufacturing location, analysts say.
May 17, 2013
The Wall Street Journal, 5/16/2013
The construction of a natural gas pipeline from southern Texas to central Mexico will allow for a tripling of imports from the U.S. to meet increasing demand from industry, an official from Petroleos Mexicanos has said. Alejandro Martinez Sibaja, the director of the state-owned company’s gas division, said that Mexican industry is currently hampered by its reliance on more expensive fuels because of the lack of pipeline capacity for natural gas to come across the border.
“The lack of gas means that our industries are having to burn fuel oil,” which is currently about three times as expensive as natural gas, Mr. Martinez said in an interview on Wednesday. “A lot of investment is looking to come to Mexico, so we have to respond by providing natural gas as part of our offer to get these companies to come.” The gas supply problem is expected to be alleviated with the Los Ramones project, a pipeline that Mr. Martinez said will carry around 3 billion cubic feet of natural gas per day by 2015 from southern Texas to the central Mexican state of Guanajuato, which is a hub for the Mexican auto industry.
May 16, 2013
Energy reform is likely to be one of the most important sweeping legislative changes that an incoming Mexican government will address, experts said Wednesday at a Houston conference on energy issues. The PRI government, which led the government for most of last century and who won the 2012 election, has indicated that it may consider expanding opportunities for private and international companies to help it expand needed infrastructure to develop its natural resources, including a wealth of natural gas.
One of the key issues is whether any reforms will focus on Mexico’s state-owned energy company, PEMEX, or will make more sweeping, fundamental changes. Either way will open up additional energy supply, said Duncan Wood, the director of the Mexico Institute at the Woodrow Wilson International Center “That is a crazy situation for a country that has the fourth largest share of natural gas in the world,” Duncan said. “PEMEX can’t do it alone. It doesn’t have the know-how and technological experience to work in deeper waters and on shale.”
May 9, 2013
Despite having some of the world’s biggest shale gas reserves, Mexico imports about a third of its gas needs and, in the absence of major reform, risks further dependence on outside energy supplies, the country’s energy minister said Wednesday. “We need to enter into a new era of making the most of our non-conventional resources,” Pedro Joaquin Coldwell said at an energy conference in Mexico City. “We have prospective shale gas resources that rank us fourth globally, but we are far from taking advantage of this potential.”
Mexico has an estimated 681 trillion cubic feet of recoverable shale gas resources in deposits that may contain rich pockets of both natural gas and oil, according to the U.S. Energy Information Administration data. At the end of April, Mexico’s state oil and gas monopoly Pemex announced its first ever production of shale gas from a test well in the country’s northern Burgos basin, just across the border from Texas. The company said the Chucla 1 well produces 1.9 billion cubic feet per day of natural gas, as well as 24 barrels per day of crude oil and other condensates.
April 10, 2013
Financial Times, 4/9/13
Tuesday’s announcement that Mexico has signed an agreement with Japan’s Mitsui Corporation to construct a gas pipeline for $460m was accompanied by the idea that the deal would provide cheaper and more abundant energy for Latin America’s second-largest economy.
And so it probably will. The pipeline, which will connect Mexico to Arizona, will be able to carry about 770m cubic feet of gas every day – and cheaply – from the US to its southern neighbor. Considering that Mexico last year imported about 1.7bn cubic feet, the new infrastructure stands to add significant capacity to Mexico’s ability to import.