November 25, 2019 edition—Diavaz’s drilling; Kepco’s solar; and IEnova’s loan.
Last Week in a Minute or Less
Renewables & Electricity. Six renewable companies have appealed the Sener’s regulatory changes; Kepco will invest US$315m in solar; and IEnova will get a US$200m loan for four projects.
Natural Gas & Liquid Fuels. Meade is promoting a Fibra E to be offered at the Biva.
Oil & Gas Upstream. Nahle said no results, no rounds; debate surrounds Pemex’s production goal; and Diavaz will drill an onshore well that needs fracking.
Money & Power. S&P is concerned with Mexico’s low growth; Pelosi expects USMCA to be okayed by the end of the year; and analysts lowered Mexico’s growth outlook for 2020.
Déjà vu all over again. Last week’s readers were particularly interested in Mexico’s transmission needs (Platts – English); Mexico’s natural gas storage needs (Forbes – Spanish); and Mexico’s country risk level (El Economista – Spanish).
Pelosi expects USMCA to be okayed by the end of the year… Speaker Nancy Pelosi said that her goal is to have the USMCA deal approved this year (Bloomberg – English). The president of the Business Coordinator Board said the USMCA ratification will take place a few days before Thanksgiving or in the first week of December (El Financiero – Spanish).
…and AMLO is happy about it. President López Obrador welcomed US House Speaker Nancy Pelosi’s estimates that legislators are making progress in the new NAFTA ratification (Reuters – English). AMLO said he sent a letter promising to uphold a new Mexican labor law.
Labor leader said the USMCA needs more work. The head of the largest US union confederation urged Democrats to withhold support for the USMCA until the Trump administration promises more changes to the enforcement provisions (Bloomberg – English) (Reuters – English).
The Road to Reform
Bartlett went after clean energies. The head of the state-owned company said that power generation through clean sources would not work without CFE’s infrastructure and backup power due to its intermittence (Forbes – Spanish). CFE said wind power cost almost double than the electricity generated in combined cycle plants (El Financiero – Spanish).
With no power auctions, bilateral transactions are the new game. The slowing down in Mexico’s energy reform is increasing bilateral electricity transactions with less price transparency (Platts – English). Former general counsel of Mexico’s CRE said that there have been some specific policy and regulatory measures that are halting the reforms.
Nahle said no results, no rounds. Energy Minister Rocío Nahle said that if there are no tangible results, there will be no more upstream rounds (Forbes – Spanish). Nahle said they are going to support Pemex during the first three years of the government’s term.
Six renewable companies have appealed the Sener’s regulatory changes. A total of six wind companies that represent 50% of clean generation in the country presented 14 writs of amparo against the Energy Ministry’s decision to modify the rules to obtain clean energy certificates (Forbes – Spanish) (El Economista – Spanish).
How uneventful was Pemex’s cyberattack? Security and Citizen Protection Minister Alfonso Durazo said that the cyberattack is totally under control (El Financiero – Spanish) and did not cause any negative consequences (Reuters – English). The fourth day after the attack, Pemex coordinated using paper, radios, personal phones, and Excel sheets (El Financiero – Spanish).
Debate surrounds Pemex’s production goal. Energy Minister Rocío Nahle expects Pemex to fulfill the production and refining goals set for this year (El Financiero – Spanish). Others said Pemex will have to speed up its pace to add 276 wells to its operative capacity (Reforma – Spanish).
Analysts lowered Mexico’s growth outlook for 2020. According to a Citibanamex survey, analysts cut their growth outlook for 2020 from 1.2% to 1.1%, while GDP predictions for 2019 remained at 0.1% (Forbes – Spanish). Analysts expect Banxico to continue cutting the interest rate.
Direct foreign investment increased in September. Mexico received US$26bn of direct foreign investment from January to September 2019, a 7.8% increase compared to the amount reported in the same period in 2018 (El Economista – Spanish) (Reuters – English). The amount is second only to 2013 in Mexico’s history.
S&P is concerned with Mexico’s low growth. The international rating agency cited the different decisions made by the government, such as the cancellation of the new Mexico City airport and the change of energy policy (Forbes – Spanish) (El Economista – Spanish). S&P said Mexico’s economy will grow by 1.3% in 2020.
Analysts expect a fourth cut in Banxico’s interest rate. According to a Citibanamex survey, financial institutions expect a new cut in interest rates from Mexico’s central bank to 7.5% on December 19 (El Economista – Spanish). Among the 23 financial institutions that answered the survey, 22 expect a 25 base point cut.
Meade is promoting a Fibra E to be offered at the Biva. Former Finance Minister José Antonio Meade is promoting a new Fibra E at the Institutional Value Market (Biva) focused on infrastructure and energy projects (El Economista – Spanish).
Strategy & Operations
Diavaz will drill an onshore well that needs fracking. The National Hydrocarbons Commission (CNH) said that Diavaz will drill an exploratory well in an onshore field that requires fracking (Forbes – Spanish). The CNH approved the plan as a result of a migration with Pemex.
Quintana Roo created a state energy agency. The governor of Quintana Roo announced the creation of a state energy agency to regulate the use of waste to generate electricity (El Economista – Spanish). The governor announced renewable energy projects already working in the state.
A smart Schneider Electric plant won the 2019 Tecnos Award. Schneider Electric won the 2019 Tecnos Award Nuevo León 4.0 thanks to its work in innovative technological solutions development at its smart plant (El Financiero – Spanish). The plant has completely digital operations to obtain benefits in energy efficiency, automatization, and productivity.
IEnova will get a US$200m loan for four projects. The IFC and the NADB will hand a US$200m loan to IEnova to finance the installation of four solar energy plants totaling 376MW (El Economista – Spanish). The loan is part of the IFC’s efforts to work with private energy companies.
Kepco will invest US$315m in solar. The Korean company will start the construction of three solar parks in Sonora and Aguascalientes with an investment of US$315m and a combined capacity of 249MW (El Economista – Spanish). The plants are the first projects of the third long-term auction.
Old School Social
Events in the world beyond your screen—go see and be seen!
Mexico Wind Power will be held March 4-5 at Centro Citibanamex in Mexico City. Mexico WindPower is the premier wind energy event in Mexico with nine consecutive years showcasing the latest in innovations and technology for leading national and international decision-makers.
Fishing vessels are menacing the vaquita porpoise. The head of a UN treaty said the vaquita porpoise is facing imminent extinction as fishing vessels are entering its sanctuary off the coast of Mexico (Japan Times – English). There are fewer than 30 vaquita porpoises left worldwide.
Quote of the Week
“El poder es peligroso pero necesario. Su ausencia deriva en caos, su exceso en tiranía.”
“Power is dangerous but necessary. Its absence results in chaos, its excess in tyranny.”
– Jesús Silva Herzog (1892-1985), Mexican economist and historian.
We hope you have a productive week. Please send any news, comments, or fishing vessels’ controls to MexicoWeekly@energynarrative.com.
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