Oil’s latest casualty: Mexico

8/20/15 CNBC World Economy

energy - oil barrels“Another disappointing year” looms for Mexico, with growth hit by the rout in the oil price and falling crude production, amid concerns as to the impact of the upcoming U.S. Federal Reserve interest rate hike.

The country will post its second quarter gross domestic product (GDP) figure later on Thursday and will be closely watched especially after the Mexican central bank lowered its growth forecast for 2015 for a fourth time last week, to between 1.7 percent and 2.5 percent.

The oil rout has hurt Mexico, whose top export is crude petroleum. Light crude hit a six-and-a-half-year-low on Thursday of $40.21 and a dip below $40 seems possible for the first time since 2009.

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Mexican energy reform brings big opportunities to Houston’s midstream companies

8/20/15 Houston Business Journal

8000285504_fe021fbed2_zTo bring home the disparity between the amount of oil and gas midstream infrastructure that exists in Mexico versus the United States, Beatriz Maney, managing director at Houston-based OFSCap LLC, told a room full of industry insiders a startling figure.

Mexico has 5,500 miles of oil and gas pipeline built in the country, while Texas alone has 55,000 miles of pipeline.

The message from the panelist at the Mexico Energy and Business Forum at the Four Seasons Hotel in downtown Houston was clear: The potential for new midstream infrastructure in Mexico presents a booming opportunity for midstream companies, and not only for the large ones.

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U.S. Allows Limited Oil Exports to Mexico

8/14/15 The New York Times

energy - oil pumpsThe Obama administration on Friday gave oil companies temporary permission to export a limited amount of oil to Mexico at a time when a glut is cutting into domestic petroleum profits and employment.

The decision by the Commerce Department fell short of removing a ban on crude exports that goes back to the 1970s, when international oil boycotts produced long lines at gasoline stations and threatened the American economy. It also does not make a broad national security exception for Mexico, which has long existed for Canada, to release larger-scale exports.

But support for an end to the ban is growing in Congress among Republicans and Democrats from oil states like Texas. The administration has been reluctant to remove the ban, although it has already given permission over the last two years to American producers to sell some extra-light forms of crude, called condensates, on a limited basis.

The oil industry lent cautious applause to the administration’s move, but repeated its calls for a complete end to the export ban.

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Falling energy prices in Mexico could be bad for Ontario

8/13/2015 CBC News

energy - gas pumpOngoing efforts to drive down the costs of energy in Mexico may hurt the competitiveness of the industrial sector in southwestern Ontario, warns an energy policy expert.

Over the past two years, Mexico has brought forward legislative changes to allow greater private and foreign investment in its oil, gas and electricity sectors, said Duncan Wood, the director of the Mexico Institute in Washington, D.C.

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Mexico industrial output up in June on factory, oil rebound

8/12/15 Economic Times

energy - oil_rigMexican industrial output rose in June, bouncing back from a steep drop in the previous month as manufacturing, construction and oil production picked up, official data showed on Tuesday. Industrial output rose 0.2 percent in June from May, the national statistics agency said. That was just below expectations for a 0.3 percent expansion in a Reuters poll. Factory output edged up 0.1 percent from May. Mexico sends nearly 80 percent of its exports, mostly factory goods, to the United States.  The construction sector, which also is a component of industrial production, rose 0.4 percent month-on-month. Mexico’s economy grew at its slowest pace in more than a year in the first quarter, undermined by flagging oil production and weak US demand for exports.

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Mexico’s falling electricity rates draw manufacturers

08/11/15 CNBC

light bulbIt just got a lot cheaper to turn the lights on in Mexico.

A number of factors influenced the country’s slow but steady rise as a manufacturing hub for multinational corporations, including its membership in NAFTA, other trade agreements, cheap labor costs and its proximity to the United States.

But observers point to another recent development that they see accelerating investment in Mexico and boosting economic productivity: Electricity is getting cheaper.

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U.S. Natural Gas Exports to Mexico Taking Off

08/03/15 Forbes

Export Or Import DirectionsJust as Space X rockets may be taking off from the beaches at Boca Chica near Brownsville, natural gas exports to Mexico look to also sky rocket in the coming years. Due to changes in Mexican law in 2013 opening the electricity market to private investment, billions of dollars in contracts have been let to build power plants, electrical distribution facilities and natural gas pipelines. In turn U.S. pipeline companies and gas producers have moved to capture the lion’s share of that market. Given the fact that Texas and Gulf Coast producers have been rapidly losing their old Northeast and Midwest markets to Marcellus producers this has proven to be a timely and vital new market. The Energy Information Agency (EIA) estimates that natural gas exports to Mexico were 3% of production in April 2015 and are expected to grow to 5% by 2030.

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