May 23, 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.”
May 22, 2013
Mexico President Enrique Pena Nieto’s reform agenda that includes legislation to end the monopoly of state-owned Petroleos Mexicanos faces delays due to a shake-up in the former ruling party’s leadership.
Former President Felipe Calderon’s National Action Party, or PAN, yesterday ousted former Finance Minister Ernesto Cordero from the Senate party leadership. The decision erodes the political consensus parties have built in congress, complicating the economic reform agenda, according to IdeaGlobal and Javier Oliva, a political scientist at Mexico’s National Autonomous University.
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 15, 2013
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.
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.
May 7, 2013
The Washington Post, 5/7/2013
It has been 75 years since President Lázaro Cárdenas seized the country’s foreign-dominated petroleum industry and placed every drop of oil under the everlasting domain of the Mexican people. But while it once was a source of national pride, the state-run monopoly he created — known as Pemex — has become a dinosaur, sapped by debt, sagging output and dated technology. The Mexican government siphons off the company’s revenue to cover about one-third of the federal budget, leaving insufficient funds for what has become a critical task: finding more oil.
Mexico remains the third-largest source of foreign oil for the United States after Canada and Saudi Arabia. But the country’s easy-pump crude is quickly running dry, and the company lacks the technology and know-how to drill for the vast stores of tougher-to-reach deposits that are thought to exist beneath Mexico’s deserts and seas. Fixing the company, Petroleos de Mexico, has become a top priority for Mexico’s new president, Enrique Peña Nieto. With an overhaul plan expected by late summer, U.S. and other global energy companies are waiting to see whether Mexico will once more give outsiders a crack at the country’s hydrocarbon treasures, including the massive, virtually untapped beds of shale gas south of the Texas border.
April 5, 2013
To learn more about Mexico’s structural reform agenda and new security strategy, don’t miss next week’s event at the Mexico Institute.
The Economist, 4/4/13
Until recently a good place to catch forty winks amid the din of Mexico City was in one of the country’s somnolent legislative palaces. Cameras have often caught congressmen snoozing on the job, between games of Angry Birds on their taxpayer-funded iPads. But the past few months have seen Mexico’s legislators jolted awake. Enrique Peña Nieto, who became president on December 1st, has set a furious pace, pushing through reforms designed to correct some of his country’s long-standing structural weaknesses.
Out of government, Mr Peña’s Institutional Revolutionary Party (PRI), which ran Mexico for seven uninterrupted decades until 2000, had acted as an obstacle to reform rather than an instigator. Before last July’s presidential election the party did its best to block the proposals of Felipe Calderón (who in any case proved to be inept at constructing consensus). After Mr Peña’s victory this changed, with the passage of a labour reform that the PRI had previously blocked. An education law in February claws back control of teachers’ hiring and firing, previously the preserve of the teachers’ union. The new president sent a powerful signal to dissenters when the union’s leader, Elba Esther Gordillo, once a leader of the PRI, was arrested on charges of embezzling more than $150m of union funds (an allegation she denies).
April 4, 2013
Pemex Exploración y Producción (PEP) suscribió un convenio de colaboración por cinco años con la firma Exxon Mobil con el fin de impulsar el desarrollo científico, tecnológico y de recursos humanos en la exploración, perforación, producción, transporte y almacenamiento de hidrocarburos.
A través de este acuerdo de carácter no comercial, ambas compañías podrán promover la colaboración en áreas de interés mutuo, sin que suponga prestación de servicio por una parte o la otra, además de que no implica contraprestación alguna, destaca.