Mexico’s Pemex to add 30,000 bpd capacity to top refinery

Reuters, 5/22/2013

State oil monopoly Pemex will boost capacity at its biggest refinery, Salinas Cruz, by 9 percent in a $4 billion expansion, its head of refining said, part of Mexico’s aim to wean itself off supplies of refined production from the United States. The Mexican government will seek a major overhaul of the domestic industry later this year, and Pemex is under pressure to boost output and efficiency in the country’s lumbering energy sector.

Miguel Tame, Director General of Pemex’s PEMX.UL refining arm, told the Reuters Latin American Investment Summit that the company was about to begin the overhaul at Salinas Cruz, which would increase production by 30,000 barrels per day (bpd) when completed in 3-4 years. “That is where I have space, where I have storage tanks and pipelines to bring as much crude as possible,” Tame said in an interview. “I can still boost daily processing at Salinas Cruz by 30,000 barrels if I undertake the reconfiguration.”

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Mexico Aims to Triple Natural Gas Imports from U.S.

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.

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Mexico debates opening its doors for shale development

FuelFix, 5/15/2013

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.”

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Mexico: Uphill battle joined in effort to restructure oil industry

Financial Times, 5/15/2013

When Mexico in the 1950s reinforced laws making it illegal for Pemex to enter into joint ventures with third parties, it closed Mexican oil to private capital, foreign or national. Experts say the apparent determination of Mr Peña Nieto and his centrist Institutional Revolutionary party to open up the country’s oil industry could prompt tens of billions of dollars of investment a year. Developing the potentially huge reserves of shale gas could also lower energy costs, cementing Mexico’s new-found competitiveness as a manufacturing centre for the Americas.

Yet at least two big obstacles to their development remain. The first is Pemex itself. Created in 1938 in the aftermath of the 1910 revolution, the once-shining symbol of Mexico’s 20th-century confidence is a shadow of what it was. It is better known today for its inefficiency, corruption and huge losses. Only its exploration and production arm, one of its four subsidiaries, regularly turns a profit – about 95.5bn pesos ($7.9bn) last year, according to preliminary results. Its other three subsidiaries produced a combined net loss of 111.6bn pesos (roughly the same as the annual state budget of Bolivia). All this was against Pemex’s reported sales last year of about 1.6tn pesos.

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Mexico sues BP over Gulf disaster as oil giant faces 2,200 new lawsuits in less than two months

The Telegraph, 4/30/13

The explosion on the Deepwater Horizon rig on April 20, 2010, killed 11 men and unleashed the worst offshore oil spill in US history. In first-quarter results on Tuesday, BP said that since March 6 it had been named as a defendant “in more than 2,200 additional civil lawsuits brought by individuals, corporations and government entities” and warned that “further actions are likely to be brought”.

It said the plaintiffs in these cases included “a foreign government”, understood to be Mexico, which had threatened to sue BP soon after the 2010 accident. BP said it believed the onslaught of new lawsuits had been submitted ahead of the third anniversary of the disaster, after which the company could have tried to use a statute of limitations to dismiss their claims.

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Can reform save Mexico’s oil industry?

Smart Planet, 3/27/2013

Mexico owns a gold mine of oil, much of it just out of its reach. The country’s national oil monopoly, Petroleos Mexicanos, lacks the technology and expertise to drill the deep waters of the Gulf of Mexico, where its latest oil finds lie. Historically, its hands have been tied: A prohibition on foreign partnerships and inadequate reinvestment in the business have prevented the company known best as Pemex from venturing beyond its shallow fields into the deep.

But the energy reform currently under debate could change that, opening Mexico’s oil sector to foreign investment –- if the new government can amass the legislative support it needs and surmount substantial public opposition.

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New Leader Taps Mexican Discontent to Press Agenda of Change

The New York Times, 3/26/2013

Few topics get Mexicans more worked up than their country’s cellphone service, especially that provided by the dominant carrier, Telcel. “Their rates are really high, and then there’s no signal sometimes,” said Armando Gómez Fuentes, 42. “The signal goes away really quickly. It’s a mess.” But there he stood recently at a Telcel store, waiting to buy a new phone, resigned to the dominance of the carrier, which controls 70 percent of the Mexican market, and doubtful that the country’s smaller rivals could do any better.

It is that well of popular frustration — over poor cellphone service, limited programming on television, flagging schools — that President Enrique Peña Nieto has tapped in a series of attention-getting moves that he promises will “transform Mexico” and accelerate growth in an economy that has expanded too slowly to lift the country out of the developing world.

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Spain’s Gas Natural to build its first LatAm wind farm in Mexico

Global Post, 3/24/2013

For the latest Mexico Institute publications on energy and natural resources, click here.

Spanish energy giant Gas Natural Fenosa has started construction of a wind farm in the southern Mexican state of Oaxaca, the company’s first facility of this type in Latin America, executives told Efe. The wind farm, which will have 234 MW of installed generating capacity, is expected to be finished in 2014.

The facility will be the third-largest of the wind farms being constructed across the region. Gas Natural Fenosa’s wind farm will likely cost about $300 million euros (some $389 million), industry sources told Efe. The Barcelona-based energy giant currently has about 2,580 MW of generating capacity in Latin America.

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Mexico’s leftist opposition rallies against energy reforms

Reuters, 3/17/2013

Waving party flags and shouting their support, tens of thousands of leftist party members rallied on Sunday against government plans to overhaul Mexico’s energy sector, a preview of the tough road ahead for President Enrique Pena Nieto’s reform push. Organized by the leftist Party of the Democratic Revolution, or PRD, the rally took place on the eve of the 75th anniversary of the nationalization of the country’s oil industry, the historical pivot that gave birth to state oil monopoly Pemex.

Speakers denounced any move to privatize the government-run oil giant, even though Pena Nieto and other members of his centrist Institutional Revolutionary Party, or PRI, have consistently denied any plans to sell or privatize Pemex. “We are being loyal to this historical legacy that has given our oil riches to the nation and we are going to defend it with everything we’ve got,” said Jesus Zambrano, the PRD’s national president, to rousing applause.

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Weekly News Summary: March 8th

The Mexico Institute’s “Weekly News Summary,” released every Friday afternoon summarizes the week’s most prominent Mexico headlines published in the English-language press, as well as the most engaging opinion pieces by Mexican columnists.

What the English-language press had to say…

At its national assembly last Saturday, PRI members voted to end the party’s opposition to constitutional changes that would allow increased private participation in the oil sector, and reversed their previous position on the application of value added tax (IVA) to food and medicine. Leaders of the three main political parties continued to work on a “game-changing” telecommunications reform that is expected to shake up a highly monopolized sector of the Mexican economy. The Miami Herald’s Andres Oppenheimer addressed the recent optimism surrounding the Mexican economy, pointing out that many Mexicans remain skeptical. TIME’s Tim Padgett echoed the sentiment, drawing a parallel between current headlines labeling Mexico “the New China” or “the Aztec Tiger” and similar hype preceding Mexico’s 1994 peso crisis.

Following the excitement of last week’s arrest of Elba Esther Gordillo, journalists began focusing more closely on Peña Nieto’s education reform and the much-needed changes to the country’s lagging public education system. Carlos Slim topped the Forbes billionaire rankings for a fourth consecutive year, while drug kingpin Joaquin “El Chapo” Guzman was left out. The Christian Science Monitor reported Slim’s large share over the telecommunications sector has kept broadband connection costs high, and internet connectivity rates low, compared to the rest of Latin America. Also this week, Mexico’s Supreme Court ruled two common anti-gay words constitute hate speech and are not protected under freedom of expression.