Oil Deal of the Year: Mexico Set for $6 Billion Windfall

11/22/2015 Bloomberg

energy- oil pumps 2Mexico is set to get a record payout of at least $6 billion from its oil hedges this year, according to data compiled by Bloomberg.

The Latin American country locks in oil sales as a shield against price declines through a series of financial deals with banks including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. For 2015, Mexico guaranteed sales at almost $30 a barrel higher than average prices over the past year.

The 2015 payment, due next month, is set to surpass the record from 2009, when the Mexican government said it received $5.1 billion after prices plunged with the global financial crisis. The country’s crude has fallen by almost half over the hedging period so far this year. Crude sales historically cover about a third of the government budget.

 “The windfall is huge,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd., a London-based consulting company. “This gives Mexico breathing space.”

The hedge, which runs from Dec. 1 to Nov. 30, covered 228 million barrels at $76.40 each for the Mexican oil basket, according to government documents and statements. With less than two weeks to the end of the program, the basket has averaged $46.61 a barrel over the period.

Read more…

ICA Fluor Awarded Miguel Hidalgo Refinery Upgrade Contract in Mexico

11/18/2015 Nasdaq

ICA FLUOR MEXICO CITY, Nov. 18, 2015 (GLOBE NEWSWIRE) — ICA Fluor, the industrial construction joint venture of Empresas ICA, S.A.B. de C.V. (BMV:ICA) (NYSE:ICA) and Fluor Corporation(NYSE:FLR), announced today that signed a contract with Pemex Transformacion Industrial to supply detail engineering, procurement and construction (EPC) services for the utilities and offsites that are part of the Tula Refinery upgrade at Hidalgo, Mexico. The total contract value is $1.1 billion.

This contract results from the joint efforts of Pemex Transformacion Industrial (formerly Pemex Refinacion) and ICA Fluor to continue with the modernization process of the Tula Refinery.

Read more…

Mexico’s Pemex seeking partners for refinery upgrades

Reuters  11/17/2015

532687354_fdef042d72_zMexico’s state-owned oil company Pemex is seeking private partners for three major refinery upgrades that will allow it to convert more heavy crude into higher-value fuels like gasoline, a company executive said on Tuesday.

Pemex estimates required investment for the construction and installation of coking units at its Salina Cruz, Tula and Salamanca refineries at $12.3 billion.

“We think these projects can be completed by means of partnerships with third parties,” said Juan Marcelo Parizot, Pemex’s head of marketing for its newly-created Industrial Transformation division.

“The goal is to assimilate the best operational and management practices,” he said, adding that partnerships would share risks and rewards as well as lower the amount of capital that Pemex would have to invest upfront.

Read more…

IMF cuts Mexico economic outlook as oil output falls

202857618_223d565208_zReuters 11/17/2015

Nov 17 The International Monetary Fund on Tuesday trimmed its economic growth forecasts for Mexico citing a decline in oil production, which funds nearly a third of the country’s budget.

The IMF lowered estimates for Mexico’s economic expansion to 2.5 percent for next year from 2.8 percent predicted in October, citing expected cuts in production at state-owned oil giant Pemex. It also lowered this year’s forecast to 2.25 percent, from 2.3 percent previously.

Read more…

No Keystone, No Problem: TransCanada Turns to Mexico Expansion

oil pipeline150Bloomberg Business 11/17/2015

Days after the U.S. spurned TransCanada Corp.’s proposal to expand its Keystone pipeline network across North America, Mexico opened its arms.

TransCanada won the rights last week for its sixth pipeline in Mexico, one of the company’s key targets for growth. The Nov. 10 decision came four days after the U.S. denied TransCanada’s bid to build its Keystone XL oil sands project across the border into Nebraska where it would connect to existing pipes leading to Gulf Coast refineries.

Mexico’s need for foreign investment to help the nation improve its infrastructure is a welcome opportunity for TransCanada after losing its seven-year battle to complete Keystone XL. The Canadian company, which owns both pipelines and power plants, plans to invest more than $3 billion in the country by 2017, said Robert Jones, President of Mexico operations.

Read more…

Mexico asks to join IEA

Oil barrelsUnited Press International 11/17/2015

PARIS, Nov. 17 (UPI) — Mexico’s secretary of energy said from Paris his country submitted a formal request to join the Western-backed International Energy Agency.

Fatih Birol, executive director of the IEA, said reforms were putting the Mexican energy sector on a level playing field with member states.

“Mexico has made remarkable progress in transforming its energy sector into a market-oriented one that is based on the principles reflected in the IEA shared goals,” he said in a statement. “There is every reason to expect that this successful process will continue and be reinforced and accelerated by closer ties with the IEA.”

Read more…

Mennonite Farmers Prepare to Leave Mexico, and Competition for Water

corn farmNew York Times 11/16/2015

Neat fields of onion, soybean and yellow corn stretch behind his concrete and adobe house. In the farmyard, a few dozen cows stand in a corral, ready for milking, and a canary-colored reaper awaits repair. But beneath this valley of orderly farms in the center of Chihuahua State, the picture is less than serene, officials and farmers say.

Underground reservoirs have been drained by thirsty crops, like corn, that are the mainstay of the Mennonites’ success, they say. Competition for groundwater — which officials have warned could run out in 20 years — has strained relations between the pacifist, Low German-speaking Mennonites and other farmers and, on occasion, incited violence.

Read more…