GDF Suez inks MOU in Mexican energy sector

April 14, 2014

construction cranesUnited Press International, 4/11/14

French energy company GDF Suez said Friday it signed a memorandum of understanding to develop natural gas prospects in Mexico. Gerard Mestrallat, chairman of GDF Suez, signed the measure Friday with Emilio Lozoya, his counterpart at state-owned Petroleos Mexicanos, known also as PEMEX.

“For GDF Suez, the signing of this memorandum illustrates the participation of our group in developing energy infrastructure in Mexico,” Mestrallat said in a statement. “A central part of our strategy is to accelerate our presence in fast growing markets, and Mexico is clearly a very attractive one.”

PEMEX said in a separate statement the deal with the French energy company lays the foundation for the development of technology that would help curb climate change through energy efficiency efforts and the overall reduction of greenhouse gases.

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Mexico lawmakers see delay in energy reform fine print

April 2, 2014

Mexico BricksReuters, 4/1/14

Top Mexican congressional officials said on Tuesday that the approval of the eagerly-awaited fine print of a landmark energy overhaul will likely be delayed until at least May, meaning Congress would have to call a special session to debate it.

Passed late last year, the constitutional overhaul ended state-owned oil company Pemex’s 75-year monopoly and paves the way for billions of dollars worth of new investments in the country’s lumbering energy sector.

The reform stipulated that lawmakers have until April 20 to approve so-called secondary legislation that fleshes out key commercial and regulatory details of the reform, but Congress appears poised to bust the deadline.

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Pemex Says Request to Retain Prospective Resources Leaves Room for Others

March 26, 2014

energy - oil barrelsThe Wall Street Journal, 3/26/14

The chief executive of Mexico’s state-owned energy monopoly said Tuesday that his company’s request to retain exclusive rights to prospective oil resources still leaves huge swaths of the Gulf of Mexico’s deep waters available to private players.

Emilio Lozoya, head of Petróleos Mexicanos, also said in an interview that the request leaves open to private-sector investment a majority of the industry’s potential in shale-rock formations. Mr. Lozoya said the company’s formal petition to the Energy Ministry seeks to find a balance between keeping resources to meet Pemex’s needs and encouraging the entrance of new players.

Pemex’s request in the so-called Round Zero was designed “to allow Petróleos Mexicanos to have enough reserves that give it sustainability in the medium- and long-term, while giving the market sufficient resources to develop through the private sector,” he said. Even in areas where Pemex is given exclusive rights, it is free to pursue joint ventures, the chief executive said.

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Pemex wish list signals start of Mexican energy reform

March 24, 2014

pemex2The Financial Times, 3/20/14

Mexico will take the first concrete step towards breaking up its 76-year-old energy monopoly on Friday when Pemex, the national oil company, sends regulators a wish list of fields it wants to keep. Pemex has said the six-month process – dubbed “Round Zero” in anticipation of the formal licensing rounds to follow – will not be public.

However, the National Hydrocarbons Commission (CNH), the newly beefed-up regulator that will advise the energy ministry on selection of Round Zero prospects and will conduct bidding rounds, expects to publish Pemex’s list, which is certain to be scrutinised by global oil groups.

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Mexico’s Pemex mulls crude imports, more exports to India, Japan

March 18, 2014

energy - oil barrelsReuters, 3/17/14

Mexico’s Pemex PEMX.UL is considering crude imports to boost local refinery output, but at the same time, it expects to sell more oil to India and Japan to diversify its exportmarkets. The state-owned company could begin imports of light and intermediate crudes as early as this year to improve production of higher-value refined products like gasoline, Jose Manuel Carrera, chief executive officer of its P.M.I. Comercio Internacional oil trading arm, said in an interview.

Mexico, the world’s 10th-largest crude oil producer, has very rarely imported the commodity, instead preferring a decades-long self-sufficiency. Still, it must import about half of its gasoline due to flagging refinery output at home.

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Pemex CEO Invites World to Tap Mexico’s Energy Shale Reserves

March 4, 2014

energy - oil barrelsBloomberg, 3/4/14

The chief executive officer of Mexico’s state-run oil company Petroleos Mexicanos invited the world to explore for shale deposits in its recently opened energy sector. “Mexico holds about the sixth largest shale gas reserves in the world,” Emilio Lozoya said in a speech yesterday at the CERA energy conference in Houston. “You’re more than welcome to come and join the exploration opportunity,” he told a crowd of representatives from the world’s largest energy companies, such as Chevron Corp. and Exxon Mobil Corp.

The crude production monopoly held since 1938 by Pemex, as the state-run company is known, ended on Dec. 20. Pemex aims to attract as much as $1 trillion in energy investment during the next decade to exploit the biggest proven oil reserves in Latin America after Venezuela and Brazil, he said.

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Mexico energy reform won’t force Pemex into contracts -lawmakers

February 24, 2014

Mexican engineersReuters, 2/19/14

The keenly awaited fine print that will flesh out a landmark Mexican energy reform will not require state oil giant Pemex to take minimum stakes in contracts and will set out national sourcing requirements, leading lawmakers said on Wednesday.

Mexico’s Congress in December approved the reform that ends Pemex’s 75-year monopoly on crude production and aims to attract significant new streams of private investment into the country’s lumbering oil, gas and electricity sectors.

“Pemex will participate (in future exploration and production contracts) if it wants to participate,” said Marco Antonio Bernal, who heads the energy committee in the lower chamber of Congress and belongs to President Enrique Pena Nieto’s ruling Institutional Revolutionary Party.

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Pemex Production Chief Resigns

February 11, 2014

drawing bar chartThe Wall Street Journal, 2/7/14

The director of the exploration and production division of Mexico’s state-owned oil company Petróleos Mexicanos resigned Friday, and a deputy director was tapped to take over as the oil-and-gas monopoly gears up to face private competition for the first time in 75 years.

Carlos Morales, 59, had run the powerful production division at Pemex for a decade during a time when the company reached peak crude-oil production of about 3.4 million barrels a day in 2004. Oil output has since fallen to 2.5 million barrels a day primarily because of the steep decline of its Cantarell field.

Pemex, as the company is known, said that Chief Executive Emilio Lozoya lauded Mr. Morales for his 30 years of service. The deputy director of planning and evaluation for the production division, Gustavo Hernández García, 55, will take over Mr. Morales’s post on an interim basis, Pemex said.

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RPT-Fitch: Mexico’s energy reform positive for Pemex, challenges CFE

February 4, 2014

Energy -electricity_transmission_linesReuters, 2/4/14

Mexico’s energy reform is a long-term positive for the country and Petroleos Mexicano’s (Pemex) credit quality, while Comision Federal de Electricidad (CFE) faces margin pressures, according to a new Fitch Ratings report. ‘Fitch does not expect Pemex’s ratings to change due to the energy reform, but the company will benefit from the ability to find partners to share exploration risks and budgetary independence,’ said Lucas Aristizabal, Director.

Overall, the energy reform is a positive for Mexico’s competitiveness. Industrial and commercial electricity users with large enough loads to enter into bilateral contracts with independent power producers stand to see electricity costs decline as a result of the energy reform, assuming new generators are able to secure low cost natural gas from the United States or incremental gas production in Mexico. The rationale behind the ongoing energy reform is to attracting private investors in order to increase the country’s oil and gas production. Mexico has been severely underexplored, while production significantly decreased during the past decade, due to Pemex’s low investing ability. Mexico has estimated resources of approximately 159 billion barrels of oil equivalent (boe) with proved reserves (1P) accounting for 13.7 billion boe.

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US Energy Companies Poised to Benefit from Mexico Energy Reform

February 4, 2014

energy - oil barrelsRigzone, 1/30/14

Mexico’s energy reforms will create “abundant opportunities” for U.S. energy companies and shrink the socioeconomic disparities between Texas’ booming metro areas and its border cities, according to the latest BBVA Compass research. “The 2013 reform promises to create abundant opportunities for private companies that have the technology and expertise to revive Mexico’s hydrocarbons and electricity industries,” BBVA Compass economist Marcial Nava wrote in his report on the reforms.

Under the reform, the state would retain ownership of hydrocarbons beneath the surface and Petroleos Mexicanos (PEMEX) and Comision Federal de Electricidad (CFE) would not be privatized. However, the new legal framework would allow the ownership of hydrocarbons at the wellhead through profit-sharing, production sharing and license sharing contracts. BBVA Compass estimates that the reform could increase private direct investment inflows into Mexico by $20 billion to $30 billion per year, or 1.5 to 2.3 percent of Mexico’s gross domestic product. While secondary laws are still needed to translate the reforms into a workable framework and legal processes, U.S. oilfield services, shale gas and infrastructure companies, among others, stand to benefit from the reforms, Nava said in the Jan. 22 report.

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