Is Mexico’s Oil Boom Under Threat?

28 Feb 2017   Mexico

In 2013, Mexican President Enrique Pena Nieto launched the Reforma Energética (RE) to reverse the nation’s decline in oil production and encourage green energy initiatives by ending the monopoly of Petróleos Mexicanos (PEMEX) in the nation’s fossil fuel sector and opening up opportunities for foreign direct investment. Now, four years after the reforms began, a new presidential hopeful is threatening to derail the liberalization and review any contracts that have been signed since the entire process began. Lopez Obrador, who currently polls in first place to be elected for Mexico’s top public office in 2018, has argued that the current government’s position of inviting foreign funds to its nation is unconstitutional. Recognizing that the reforms have created economic opportunities for thousands of Mexican students and professionals, the candidate has toned down his rhetoric, suggesting a referendum before any decisions regarding the future of the RE are made. Reuters reports […]

Mexico’s Pemex sharply reduces losses as oil prices rise

28 Feb 2017   Mexico

Mexican state-owned oil company Pemex on Monday reported a much smaller fourth-quarter loss, due in large part to higher crude prices. The loss narrowed to $1.58 billion (32.6 billion pesos) from $9.8 billion a year earlier. “Pemex’s finances are today stable with positive trends; however, we believe there is certainly room for improvement,” Chief Financial Officer Juan Pablo Newman said on a conference call with analysts. Revenue at the company officially known as Petroleos Mexicanos rose more than 20 percent to $15.67 billion, according to a filing to the Mexican stock exchange. The price of Mexico’s crude oil export mix jumped by 22 percent during the quarter to average nearly $41 per barrel. Still, Pemex has not posted a quarterly profit since 2012. Long used as a cash cow for […]

Mexico turns to the Jurassic era for shale oil

21 Feb 2017   Mexico, Shale Oil

Mexico’s plans to develop its shale oil resources have finally taken a step forward following years of largely fruitless efforts by the state owned company Pemex. Canada’s Renaissance Oil and Russia’s Lukoil are joining forces to develop the Amatitlan block of the Chicontepec region. They aren’t interested in the shallower tight oil, but in the stack’s deeper Pimienta shale formation, which is what they consider Mexico’s Eagle Ford. Renaissance and Lukoil agreed to a $60 million accelerated development plan for the Amatitlan block for 2017, which will include workovers of existing wells, and the drilling of new wells. The Pimienta formation, located in the Upper Jurassic layer of the Chicontepec, is an important play for the future production of Mexico, as output has been trending lower. Renaissance estimates original oil in place in the Amatitlan block at 4.2 billion barrels of oil equivalent, and estimated the Pimienta section at […]

Mexico says gasoline costs to fall slightly, prices set daily next week

18 Feb 2017   Mexico

A man points a nozzle at the camera at a Pemex petrol station in Mexico City, Mexico February 3, 2017. Mexico’s Finance Ministry said on Friday that national gasoline prices would fall 2 Mexican cents per liter on Saturday, but prices would be set daily beginning next week as the country moves toward a free market in gasoline. The ministry said in a statement that maximum prices would be published daily, with Saturday’s price holding until the next update on Tuesday. Prices will be set going forward on the web page of the Energy Regulator Commision ( Mexico raised gasoline prices at the start of the year, and the 14 percent hike in regular gas prices sparked protests and looting around the country. The hike helped drive the annual inflation rate in January to its highest level in more than four years. The government is expected to adjust the […]

Mexico City, Parched and Sinking, Faces a Water Crisis

17 Feb 2017   Climate, Mexico

On bad days, you can smell the stench from a mile away, drifting over a nowhere sprawl of highways and office parks. When the Grand Canal was completed, at the end of the 1800s, it was Mexico City’s Brooklyn Bridge, a major feat of engineering and a symbol of civic pride: 29 miles long, with the ability to move tens of thousands of gallons of wastewater per second. It promised to solve the flooding and sewage problems that had plagued the city for centuries. Only it didn’t, pretty much from the start. The canal was based on gravity. And Mexico City, a mile and a half above sea level, was sinking, collapsing in on itself. It still is, faster and faster, and the canal is just one victim of what has become a vicious cycle. Always short of water, Mexico City keeps drilling deeper for more, […]

Mexico’s Pemex Sets Euro Corporate Debt Record with $4.49 Billion Issue

15 Feb 2017   Mexico

Mexico’s national oil company Petróleos Mexicanos issued €4.25 billion ($4.49 billion) in bonds Tuesday, the largest euro-denominated emerging market corporate bond deal on record. Emerging market investments have recovered from an initial slump after President Donald Trump’s November election victory. Mexican assets in particular sold off after Mr. Trump’s win, with the peso falling by as much as 16% against the dollar in the months…

Trump’s Mexican Standoff May Send U.S. Gas to $2 If Exports End

1 Feb 2017   Mexico

Natural gas prices in the U.S. may tumble about 40 percent if President Donald Trump’s diplomatic showdown with Mexico becomes an all-out trade war. Prices could slide to $2 per million British thermal units or lower if U.S. gas exports to Mexico by pipeline are halted, according to Tudor Pickering Holt & Co. and Again Capital LLC. While analysts with those companies don’t anticipate a complete cutoff, they’re watching closely for signs of any disruption to the shipments, which accounted for as much as 5 percent of U.S. production of the fuel last year. Trump’s push to impose a 20 percent tax on imports from Mexico to pay for a border wall is threatening to reverse a shift toward stronger alliances between the U.S. and its southern neighbor. The nations’ economies have become increasingly intertwined as […]

Mexico’s Growth Slows as Oil Output Drop Outweighs Services

1 Feb 2017   Mexico

Mexico’s growth slowed in the fourth quarter, dragged down by falling oil production, even before the full impact of President Donald Trump’s potential to hurt the economy was fully felt. Gross domestic product rose 0.6 percent from the previous three months, according to preliminary figures released by the national statistics institute Tuesday, matching the median forecast of 16 economists surveyed by Bloomberg. That’s a slowdown from the third quarter, when the economy grew at the fastest pace in three years. From the previous year, GDP expanded 2.2 percent, also matching analyst projections. The outlook for 2017 worsened significantly with Donald Trump’s election in November. Economists have cut growth expectations as his promise to end or overhaul the North American Free Trade Agreement and make Mexico pay for a border wall upset decades of stronger cooperation between the nations, damped investment projections and sent the peso to a record low. […]

Pemex Refinery Output Hits Lowest Since 1990

1 Feb 2017   Mexico

Petroleos Mexicanos ’s refinery output in 2016 fell to the lowest level in 26 years as government budget cuts forced the Mexican state oil company to delay maintenance. Only three of seven major planned maintenance projects were carried out in 2016, while Pemex’s six refineries registered as many as 88 unplanned unit stoppages during the year, according to company documents Bloomberg obtained through a records request. Crude processing fell 12 percent in 2016 compared to a year ago to 933,062 barrels a day, the lowest yearly volume since 1990, when Mexico’s energy information agency, an arm of the Energy Ministry, started publishing the data. “The key issue is that Pemex needs resources in order to boost output; without that it is very difficult to expect a more positive outcome,” Ixchel Castro, senior analyst for Latin American oils and refining markets at Wood Mackenzie, said Monday by phone from Mexico […]

Trump’s Border Tax Could Further Reduce Mexico Oil’s U.S. Ties

31 Jan 2017   Mexico

U.S. President Donald Trump’s proposed tariff on Mexican goods has the country’s oil industry considering just how much it needs the American market. A 20 percent border tax to build a wall between Mexico and the U.S. means Canadian oil-sands competitors will enjoy a leg up and U.S. motorists will suffer higher prices at the pump due to the tariff on Mexican oil. Pemex , Mexico’s principal producer, isn’t waiting for Trump’s plan to come to reality. The state-owned company has already been reducing its reliance on the U.S. In the first 11 months of 2016, Mexico exported 48 percent of its crude to the U.S., down from 69 percent in 2014, according to Mexico’s Energy Information Agency data. Asian buyers took 26 percent while Europe accounted for 23 percent. “Mexico has a strong relationship with clients in Asia and Europe,” said Ixchel Castro, a senior analyst for Latin […]

U.S. Gas May Be One Trade That Survives Trump’s Mexico Clash

28 Jan 2017   Mexico

U.S. Stands to Suffer in Border War With Mexico It could take more than a political standoff between President Donald Trump and Mexico to keep U.S. shale gas from flowing south. While Mexico works to reverse declining oil and gas production, the nation’s burning record amounts of natural gas pulled from tight-rock formations north of the border. Pipeline deliveries of the fuel from the U.S. have more than doubled in the past two years, and Mexico’s now tied with Chile as the biggest buyer of tanker shipments of U.S. liquefied natural gas leaving Louisiana’s coast. The gas exports stand in sharp contrast to the showdown threatening one of the world’s biggest bilateral trading relationships. Mexico’s President Enrique Pena Nieto canceled a meeting with Trump Thursday after the U.S. leader blasted him on Twitter for refusing to pay for a wall along […]

Mexico’s Pemex imports first diesel cargo via train from U.S.

18 Jan 2017   Mexico

Mexico’s state oil company Pemex began receiving imported fuel by train at a new privately run terminal for the first time in January as companies expand storage and transportation operations under the country’s energy opening, a senior executive said in an interview. The cargo of just under 60,000 barrels arrived from Port Arthur, Texas, on Jan. 7 at the new private San Jose Iturbide storage terminal in central Guanajuato state via train, marking another first for the company which normally uses pipelines and seaports for fuel imports. Isaac Volin, head of Pemex’s trading arm PMI Comercial Internacional, said the initial cargo was used to test the new process, but he expects similar diesel cargos to supply the terminal via rail about every eight days. “It’s […]

Despite Plunging Peso, Wildcatters Try Making Money on Oil in Mexico

16 Jan 2017   Mexico

Wildcatters are crossing the border into Mexico to pour money into the country’s recently deregulated energy sector, betting that the plunging peso and other economic stress won’t disrupt their business. Mexico’s privatization of its deep-water reserves and onshore fields, which began 18 months ago, represents a new opportunity for energy explorers and investors that have been competing against each other in U.S. and Canadian oil…

Pemex Is So Cash-Starved It’s Selling a Little League Baseball Field

14 Jan 2017   Mexico

Pemex has put a kids’ recreation park up for sale as it combs through its assets searching for property it can exchange for needed cash. Mexico’s state-run oil company, which has reported 16 consecutive losses and is nearly $100 billion in debt, is auctioning off a little league baseball field and a sports complex used by employees in the eastern state of Veracruz, according to a report by El Universal reviewing the company’s annual property sales plans. A Pemex press official confirmed the story is accurate. Mired in the company’s worst financial crisis in its history, Chief Executive Officer Jose Antonio Gonzalez Anaya has reiterated on several occasions that the company intends to sell its non-strategic assets to generate capital. In an effort to reduce its operating losses and find partners to improve efficiency in a number of areas, Pemex is said to have hired UBS Group AG to […]

Mexico president tries again to calm anger over gas hike

13 Jan 2017   Mexico

Mexico’s president tried again on Thursday to calm anger over the big jump in gasoline prices this month amid a historically weak currency and continued threats by Donald Trump to steer manufacturers back to the United States. In his latest speech, the deeply unpopular President Enrique Pena Nieto outlined measures that he said would help families mitigate the impact of the price hike. Yet steps like notifying more than 3 million Mexicans older than 65 that they have money in government retirement accounts seemed unlikely to dissipate the outrage that led to widespread looting in parts of the country and marches calling for his resignation. Earlier this week, Pena Nieto promised to police price increases for staple goods and invest in modernizing public transportation. But it was difficult to see how any of that could make up for the overnight 20 percent […]

Oil, Trump, leave Mexico in dire economic straits

12 Jan 2017   Mexico

Mexico, the second largest economy in Latin America, is facing economic headwinds because of lower oil prices and U.S. trade policy, a study finds. The New Year brought new challenges to Mexican President Enrique Peña Nieto as U.S. President-elect Donald Trump bore down in a series of pre-inauguration critiques targeting the nation’s staple automotive manufacturing sector. The Mexican peso has declined more than 10 percent since Trump’s surprise election victory in November and foreign investors are wary of taking action given the president-elect’s threats on higher tariffs and stiffer taxes for cars made for the U.S. market. Elsewhere, the Mexican president has faced domestic unrest after retail fuel prices skyrocketed following a deregulation effort that rang in 2017. An […]

600 Hundred Arrested And 1 Dead As Mexican Gas Price Protests Intensify

6 Jan 2017   Mexico

Some 600 people have been arrested, one policeman killed and around 300 stores looted as protests intensify in Mexico following the weekend decision to hike fuel prices by 20 percent, the Associated Press reports . Citing Mexican business chambers, the news agency said that supplies of basic goods and fuel are under threat as protesters blockade highways, ports and terminals and the situation intensifies to chaos on the streets and looting. As one of the more difficult to implement parts of the government’s sweeping energy reforms, deregulation required a 20 percent increase in fuel prices that has enraged the population. On New Year’s Day, when the policy took effect, the cost of a gallon of standard-grade unleaded fuel was US$2.95, up 14 percent from the price of US$2.60 on 31 December. The price of premium fuel rose by up to 20 percent, according to the LA Times. This situation […]

Mexican Drug Cartels Threaten To Blow Up Gas Stations Over Massive Price Hike

3 Jan 2017   Mexico

While Mexico has reasons to be concerned about the upcoming presidential inauguration of Donald Trump, who has vowed to make life, and especially trade relations, for Mexicans far more “complicated” under his administration, the population of Mexico has far more pressing problems. The finance ministry’s recent announcement that it would raise the price of gasoline by as much as 20.1 percent to 88 cents per liter while hiking diesel prices by 16.5 percent to 83 cents, went into effect on January 1, welcoming in the new year with a surge in the price of one of Mexico’s most important staples – leading to widespread anger, protests and in some cases violence. As Telesur reports , the people of Mexico “are entering the New Year in a state of rage and anxiety” with protests planned for Sunday to strongly denounce the government’s huge hike in gasoline prices. The sharp rise […]

Weaknesses in Mexico’s oil sector are creating ‘chaos’ during the holiday season

2 Jan 2017   Mexico

The holiday season has been a little less merry for car owners in Mexico as gasoline shortages in many parts of the country have forced grumbling customers to contend with hours-long lines. In hard-hit parts like Leon, in Guanajuato state, filling up your tank often means driving around from one station to the next just to find one that has fuel. “It’s chaos,” said Guadalupe Lopez, a customer service worker in Leon who visited eight stations on a recent day before she finally found a pump that wasn’t dry. “One worker told me they had gone a day and a half without supply.” Rumors are swirling of gas station owners purportedly hoarding fuel ahead of a price deregulation that takes effect Sunday , and will let them […]

Mexicans are outraged over a big hike in gas prices on Jan. 1

2 Jan 2017   Mexico

Mexican motorists awoke to a shock as gasoline prices at the pump shot up by more than 20 percent in some corners of the country on the first day of the year, sparking panic buying, street protests and even a call by one prominent lawmaker for a “peaceful revolution.” “If the price of gasoline goes up, we’re going to pay more [for] everything else,” said Iván Rosales, an employee at a trucking company who protested the price hike Sunday at the iconic Ángel de la Independencia monument in Mexico City. “I don’t mind paying [gasoline] taxes, but where are the services?” Rosales said, pointing to potholes on the street. “[Politicians] always prefer pocketing the money instead of spending it as they should.” The hike, the result […]

US gasoline exports to Mexico hit record high on refinery issues, strong demand

31 Dec 2016   exports, Mexico, USA

Mexico’s record-low refinery production and growing consumer demand helped push US gasoline exports there to a new high in October, a trend that has boosted prices in both countries. Gasoline exports to Mexico climbed 1.86 million barrels to 12.08 million barrels in October, according to US Energy Information Administration data released Friday, the highest total since that data started being tracked in 1993. The previous peak was 11.42 million barrels in December 2010. Mexico is by far the largest importer of US gasoline, taking in 45.8% of the 177.4 million barrels of finished gasoline the US exported through October of this year. That export demand has pushed prices to unseasonably strong levels in the US Gulf Coast, which typically sees demand weaken during the fall and winter months. The outright price for Gulf Coast pipeline-delivered conventional gasoline was assessed at $1.7098/gal Thursday, its highest price since August 18, 2015. […]

Mexico: Gasoline Prices Expected To Rise By As Much As 20 Percent In January

28 Dec 2016   Mexico

Gasoline prices in Mexico will rise by as much as 20 percent at the start of January, the country’s Finance Ministry said Dec. 27, Reuters reported. The price increase was expected and comes as part of a liberalization program for Mexico’s fuel sector. The price of Magna gasoline will jump by around 14 percent to an average price of 15.99 pesos per liter, while the price of Premium gasoline will increase by about 20 percent to an average of 17.79 pesos per liter. The cost of diesel is set to rise by 16.5 percent, to an average price of 17.05 pesos per liter. While energy reform is likely to remain the law of the land in Mexico no matter who wins the country’s 2018 presidential elections , it could face setbacks if leftist candidate Andres Manuel Lopez Obrador wins the vote.

U.S. refiners cash in on Mexico’s record fuel imports

28 Dec 2016   Mexico

U.S. Gulf Coast refiners are cashing in on rising fuel demand from Mexico, shipping record volumes to a southern neighbor that has failed to expand its refining network to supply a fast-growing economy. The fuel trade could top a million barrels per day (bpd) at times in 2017 as Mexico becomes increasingly dependent on the United States for strategic energy supplies and providing business worth more than $15 billion a year to refiners such as Valero ( VLO.N ), Marathon Petroleum ( MPC.N ) and Citgo Petroleum. The rise in Mexico’s fuel imports reflects an economy that, after expanding for 27 quarters in a row even amid a public austerity plan, has been unable to increase its refining output to satisfy the consistent growth of its energy demand. It has led […]

Mexico Gasoline Prices to Surge by the Most in Two Decades

28 Dec 2016   Mexico

Mexico will raise gasoline prices by as much as 20 percent in January, stoking inflation that’s already running at the fastest pace in almost two years. A month after the increase is implemented, prices will start to adjust on a daily basis as the government loosens its control of the gasoline market, the Finance Ministry said in an e-mailed statement Tuesday. January’s increase in unleaded gas will be the biggest since November 1998. The jump in prices risks pushing up inflation at a time when a slump in the peso has already fueled concern about rising consumer prices and led the central bank to raise interest rates five times this year. It is a risk Mexico is willing to take as the government gradually lifts controls over gasoline prices to open the fuel market to private development, a move made possible by a landmark energy overhaul in 2013. “This […]

U.S. Natural Gas Needs Mexico

23 Dec 2016   Mexico, USA

The United States became a net exporter of natural gas in November 2016, a development driven by falling imports (due to high domestic natural gas production) and rapidly increasing natural gas exports. The two main drivers of U.S. natural gas exports are the Mexican natural gas pipeline and the LNG export terminal at Sabine Pass, operated by Cheniere Energy through Cheniere Energy Partners. If conditions remain the same, and foreign demand for natural gas continues to increase, the U.S. has the potential to become a major energy exporter. That is, of course, if politics doesn’t get in the way. As of September 2016, total U.S. natural gas pipeline exports reached 185 billion cubic feet (BCF), an increase of 33 percent from last year. Exports to Mexico were way, way up this year, exceeding 123 BCF and rising 79 percent from last year. Canada, the other major market for U.S. […]

U.S. refiners cash in on Mexico’s record fuel imports

22 Dec 2016   Mexico, USA

U.S. Gulf Coast refiners are cashing in on rising fuel demand from Mexico, shipping record volumes to a southern neighbor that has failed to expand its refining network to supply a fast-growing economy. The fuel trade could top a million barrels per day (bpd) at times in 2017 as Mexico becomes increasingly dependent on the United States for strategic energy supplies and providing business worth more than $15 billion a year to refiners such as Valero, Marathon Petroleum and Citgo Petroleum. The rise in Mexico’s fuel imports reflects an economy that, after expanding for 27 quarters in a row even amid a public austerity plan, has been unable to increase its refining output to satisfy the consistent growth of its energy demand. It has led to rapid reversal in energy trade […]

Mexico Eyes Higher Oil Output Than Venezuela, Brazil

8 Dec 2016   Mexico

Mexico plans to increase its crude oil production substantially, overtaking both Venezuela and Brazil if its plans work out. This has emerged after earlier this week, the country awarded nine major drilling contracts to international bidders for fields in the Gulf of Mexico. Venezuela currently produces around 2 million bpd , which could drop to 1.6 million bpd next year. Brazil pumped 2.6 million bpd in October. When commercial production starts at the nine new fields, Mexico’s National Hydrocarbons Commission expects the combined output from them to reach 900,000 bpd, adding to the country’s current rate of some 2 million bpd. One of the fields that will be developed in the deepwater section of the Mexican shelf, part of the Trion block, was awarded to Australia’s BHP Billiton, one of the world’s top three miners, which has been expanding its oil and gas operations recently. This, […]

Australia’s BHP Billiton Wins Bidding for Stake in Mexico’s Trion Oil Field

6 Dec 2016   Australia, Mexico

Australia’s BHP Billiton won bidding Monday to partner with Mexican state oil company Petróleos Mexicanos in the Trion deep-water oil field in the Gulf of Mexico in an auction in which 10 other deep-water blocks are also being offered. Billiton outbid BP PLC to become Pemex’s first private partner in exploration and production under Mexico’s 2013 opening of the oil industry. Bids for 10 other deep-water blocks up for auction are due to be opened later Monday. For Trion, both Billiton and BP offered additional royalties of 4%, while Billiton offered an additional cash commitment of $624 million compared with $606 million offered by BP. Billiton will have 60% of the project and Pemex 40%. The auction is the fourth under the 2013 opening of the Mexican oil industry, but the first for deep-water reserves and the first to attract the interest of major oil companies. The Trion […]

China Offshore Oil wins two Mexico Perdido blocks in deep water auction

6 Dec 2016   China, Mexico

Mexico awarded China Offshore Oil Corporation the fourth block tendered from the Gulf of Mexico’s Perdido Fold Belt off the U.S.-Mexico maritime border in a historic deep water oil and gas auction on Monday. Block 4 is a 725 square mile (1,876.7 square km) area which the energy ministry says contains some 540.5 million barrels of oil equivalent (boe) in light and extra light crude. Earlier, China Offshore Oil also won the first block auctioned in the Perdido Fold Belt. (Writing by Dave Graham)

Oil majors line up to bid for Mexican deepwater contracts

5 Dec 2016   Mexico

Some of the world’s best-known oil majors are expected to compete in a long-awaited auction for deepwater contracts in Mexico on Monday that marks a key opening of the country’s energy sector. ExxonMobil, BP, Royal Dutch Shell and Chevron and China’s Cnooc are set to be among bidders for blocks in the Gulf of Mexico that have been off-limits to private investment for nearly eight decades.  ”It is the start of the big oil game” in Mexico, said Pablo Medina, analyst at Wood Mackenzie, an energy consultancy.  The auctions will be the first big test of investment appetite in Mexico since Donald Trump romped to victory in the US election with populist pledges including renegotiating the North American Free Trade Agreement.  His Nafta pledge could, if realised, bump up exploration costs in Mexico if imports of heavy equipment needed for drilling were subjected to tariffs

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Mexican Oil Auction Offers First Major Test of Foreign Firms’ Interest

3 Dec 2016   Mexico

Mexico is preparing to auction rights to drill in the oil-rich deep waters of the Gulf of Mexico, considered the crown jewel of the country’s energy industry, which only opened to foreign investment three years ago. Monday’s auction is seen as the first major test of Mexico’s ability to work with the world’s biggest players. At a time when low oil prices are limiting production elsewhere, the deep-water blocks have caught the attention of energy giants Exxon Mobil Corp., Chevron Corp. and BP PLC, and state-owned firms Statoil ASA of Norway and Petróleo Brasileiro SA of Brazil, among others. The country’s oil regulator hopes to award up to 10 unexplored deep-water blocks and find an operating partner to take a 60% stake in the Trion oil field, located offshore just south of the […]

As Mexico Welcomes Oil Giants, Its Colossus Slowly Erodes

2 Dec 2016   Mexico

In Mexico, the era of big oil is just getting started. But for the state oil dinosaur, its best days appear to be behind it. The reign of Petroleos Mexicanos, the government-owned oil producer known as Pemex, is slowly being dismantled after a 2013 overhaul ended its monopoly and opened up the industry to foreign rivals for the first time in more than seven decades. A Dec. 5 auction in which oil majors including Exxon Mobil Corp., Chevron Corp. and BP Plc may bid on deepwater blocks marks the most significant step yet in Mexico’s effort to reclaim its spot as a global crude-producing powerhouse. Mexico needs the auction to be a hit. Out of the gate, the industry overhaul suffered a major blow when the country’s oil prices collapsed from above $100 a barrel in 2014 to as low as $19 a barrel in January. The drop stymied […]

Exxon, Chevron Set to Bid in Mexico’s Deepwater Oil Auctions

29 Nov 2016   Mexico

Chevron Corp. has joined forces with Petroleos Mexicanos and Japan’s Inpex Corp. to bid next week for the right to explore for oil and natural gas, the first time the state-owned operator will partner with private companies to develop crude in the Gulf of Mexico. Seven groups and eight individual bidders have been qualified to participate in the Dec. 5 auctions that include the Trion field joint-venture with Pemex and other 10 deepwater blocks, Mexico’s National Hydrocarbons Commission announced in Mexico City on Monday. The regulator didn’t specify which bids were for the joint venture or for the other areas. Total SA has joined forces with BP Plc and Norway’s Statoil in one group, and with Exxon Mobil Corp. in another. Eni SpA and Lukoil have also joined up, and Anadarko Petroleum Corp. and Royal Dutch Shell Plc formed another group. The Mexican government made a series of adjustments […]

Can Oil Help Mexico Withstand Trump’s Attack on Trade? It’s Hard to See How

28 Nov 2016   Mexico

The town that oil built is emptying out. “For Sale” signs are plastered on concrete-block houses and sun-bleached bungalows alike. The idled oil workers who used to cluster in the main square, hoping to pick up odd jobs, have moved on. Here in Ciudad del Carmen, on the gulf coast of Mexico , even the ironclad union positions are slipping away. Some roughnecks on the offshore rigs of the national oil company, Pemex, have not worked in months, and their voices are filled with anxiety. “What do you think is going to happen?” some ask. Pemex has been limping along for years , bleeding billions of dollars annually, saddled with debt and struggling to maintain production as its giant oil fields in the Gulf of Mexico run dry. Next year, it will pump less than two million barrels a day, the lowest output since […]

Why Mexico’s Oil Reform Is A Huge Opportunity For Investors

22 Nov 2016   Mexico

When a massive country de-nationalizes its entire energy sector and opens its oil and gas doors for the first time ever to foreign companies, the opportunities are staggering. Welcome to the ‘new’ Mexico, and welcome to the early stages of an oil and gas game that will be bigger—from an investor’s perspective—than anything in history. Mexico’s move to implement historic energy reform legislation in December 2013, and follow-up legislation in 2014 that further solidified the comprehensive de-nationalization, provides an unprecedented opportunity for oil companies looking to tap into Mexico’s huge energy potential. Mexico has ended the now 75-year monopoly of state-owned Petroleos Mexicanos (Pemex), and admitted in no uncertain terms that it needs foreign partners and investors. All of this has prompted the US Energy Information Administration (EIA) to revise its 2040 forecast for Mexican oil and gas production upwards by a whopping 76 percent. All of this, says […]

Trump Trade Stance With Mexico Could Press Gas Prices

15 Nov 2016   Mexico

Donald Trump’s presidency is widely viewed as a boon for the U.S. energy industry, but some of his planned policies could pose problems for the natural-gas business. Mr. Trump has won plaudits from energy executives for saying he would peel back government regulations on oil companies, oppose global efforts to curb climate change and review a recent agreement that lifted sanctions on Iran, a major oil exporter. Yet some of his other proposals could be detrimental to natural gas. He has pledged to tear up trade pacts and wall off Mexico, which could hurt the flow of U.S. natural gas to its southern neighbor. Mexico has become an increasingly important outlet for the fuel that has helped buoy domestic prices amid a glut of shale gas, analysts say. “Mexico has been one of the […]

Wall Or No Wall: Trump Needs The Mexican Oil Industry

15 Nov 2016   Mexico

Hydrocarbon storage Two of Donald Trump’s main pledges during the presidential race were building a wall along the border with Mexico, and making the U.S. energy-independent. Now that the election is over, these issues are coming to the fore. First, the president-elect said that the wall , which he mentioned on the campaign trail and in numerous debates, is still very much on the table, though what type of “wall” that may be is an unknow. Second, he said he planned to start deporting illegal aliens—those with criminal records—which could amount to as many as three million individuals. Despite “The Wall”, the deportation of Mexican citizens, and several grandiose comments about Mexico paying for said wall—not to mention Trump’s proclamation that he would raise import tariffs up to 35 percent on some Mexican products—Mexico’s President Enrique Pena Nieto was among the first of the world leaders to congratulate Trump […]

Mexico Seeks to Export Flagship Maya Crude to U.S. West Coast

13 Oct 2016   Mexico

Cargoes would be first in eight years amid Asian competition California refineries mainly buy from Saudi Arabia, Canada Mexico is targeting U.S. West Coast refineries to boost sales of its flagship Maya crude amid a global oil glut. While Mexico has been a regular supplier of Maya oil to U.S. Gulf Coast refineries, it hasn’t shipped any to the West Coast since February 2008, according to data from the U.S. Energy Information Administration. California refineries such as Valero Energy Corp.’s Benicia, Chevron Corp.’s El Segundo and Phillips 66 used to be big buyers of the grade. Petroleos Mexicanos, the state-controlled oil producer, took the first step in making Maya exports to the West Coast a reality Tuesday by issuing an official price for November sales. Earlier in the day, Pemex said on its official Twitter account that it was planning to resume shipments to the region. “With stronger margins […]

Mexico unveils new oil finds

15 Sep 2016   Mexico

New discoveries made off the eastern coast of Mexico have the potential to produce more than 20,000 barrels of oil per day, the state energy company said. Mexican state oil company Petróleos Mexicanos said it made two oil discoveries in the deep waters of its territory of the Gulf of Mexico and four in the shallow waters, which could combine for a potential production rate of around 22,000 barrels of oil per day. All told, the discoveries contain, at the high end , an estimated 200 million barrels of oil equivalent. Mexican President Enrique Peña Nieto’s is moving to draw private investors to the state energy sector after more than 70 years of a monopoly […]

Pemex Budget Slashing to Continue as Minister Signals Austerity

9 Sep 2016   Mexico

Finance Minister sees possible cut around 100 billion pesos Pemex budget cuts continue to exacerbate oil production losses Mexico will continue to hack into the budget of its oil producer next year, a move likely to mean further financial duress and continued output declines for Petroleos Mexicanos. It’s “reasonable” that the 2017 budget reduction for Pemex, as the state-owned company is known, will be around the same amount as the 100 billion pesos ($5.4 billion) cut this year, Jose Antonio Meade, the country’s newly appointed Finance Minister, said in an interview with Radio Formula. “It is natural that the adjustment is maintained, given the fall in international oil prices,” Meade said, when asked if the government could repeat a similar reduction. “It is a reasonable deduction and in-line with what other oil companies in the world are doing given the complicated environment.” Further subtraction by the Mexican government of […]

These Oil Majors Will Bid In Mexico’s $44B Offshore Tender

20 Aug 2016   Mexico, Offshore

U.S. oil majors ExxonMobil, Chevron and Hess will bid jointly in the upcoming deepwater oil and gas tender planned by Mexico. The auction, which will take place on December 5, will involve ten deepwater blocks in the Gulf of Mexico. The tender, which is the first one focused on deepwater deposits, is expected to generate US$44 billion in proceeds. According to a source close to the three companies, they have already signed a Joint Operation Agreement for the bidding process, which means they have already selected the operators for the fields they will operate should they be awarded licenses. Mexico only allowed foreign oil companies to explore and exploit its crude reserves two years ago, forced by an 11-year decline in production. This tender now is in an area that contains what’s estimated to be 76 percent of Mexico’s prospective crude reserves. The local state-owned energy company Pemex, however, […]

Pemex Woes Snowball as Cash Crunch Deepens Production Plunge

19 Aug 2016   Mexico

Morgan Stanley sees dramatic production drop in coming years Cash flow gap forecast to reach record $22 billion this year Petroleos Mexicanos’ deteriorating finances are poised to get much worse, signaling no end in sight to years of declining oil production. The company’s output may dwindle to about 1.6 million barrels a day by 2020, less than half its 2004 peak, because it lacks the technology and funds to revamp aging fields, Morgan Stanley analysts led by Martijn Rats said in a July 24 report obtained by Bloomberg. Pemex has had cash flow shortfalls for the past three years, and this year the gap will almost double to a record $22 billion, from $13 billion in 2015, according to data and estimates compiled by Bloomberg. Once a bigger supplier to the U.S. than Saudi Arabia, Mexico’s weight has waned as the shale boom reduced American imports and the oil […]

Mexico Said to Begin Quietly Hedging 2017 Oil Price in June

13 Aug 2016   Mexico

World’s largest sovereign oil hedge started earlier than usual Mexico spends about $1 billion a year locking in prices Mexico started quietly buying contracts to lock in 2017 oil prices when futures were near their peak in June, signaling the start of what has in prior years been the world’s largest sovereign petroleum hedge, according to people familiar with the deal. The Latin American country bought put options, which give it the right to sell crude at a predetermined price, in June and July, earlier than the usual period of late August to late September, said the people, who asked not to be identified because the process is private. Brent crude, the global benchmark, peaked at nearly $53 a barrel in early June. Since then, prices have declined about $10 a barrel as the outlook for the global economy soured and OPEC countries boosted production. The people didn’t say […]

Can Mexico Reverse Its Steep Output Decline?

10 Aug 2016   Mexico

The petroleum industry in Mexico dates back over a century to 1901 where the commercial production of crude oil began. Since then, both Great-Britain and the United States played major roles in helping the country grow to being the world’s second largest producer of oil in the 1920s. The Mexican revolution caused major political unrest, and led to the nationalization of all hydrocarbon resources and the creation of the national oil company, PEMEX, in 1938. Today, approximately 50 percent of oil produced in Mexico is heavy crude, and Mexico is now the eighth largest oil producer in the world, exporting $18.8 billion worth of crude oil in 2015. PEMEX produced about 2.23 Mbbl/day in February 2016, down from its peak of 3.4 Mbbl/day in 2004, of which about 76 percent of production comes from offshore fields. The Northeast region consists of the Ku-Maloob-Zaap (KMZ) and Cantarell field, which contribute […]

Pemex Has Imported Exactly Zero Barrels of U.S. Crude Oil

9 Aug 2016   Mexico

Producer has deferred purchases of light crude from U.S. Refinery woes, smaller profit margins said to stall plans Ten months after Mexico won special dispensation to import U.S. crude oil, it has yet to take in a single barrel. Petroleos Mexicanos successfully petitioned the U.S. Commerce Department in October for permission to swap its own heavy oil for the lighter crude produced in shale formations. The effort was part of the state-owned oil company’s plan to increase fuel quality at its refineries, and came months before the government removed all prohibitions on U.S. oil exports. But the oil hasn’t come, according to the latest reports from the U.S. Census Bureau and Mexico’s Energy Ministry. Pemex says it doesn’t make economic sense to bring in U.S. crude at current prices. Even if the potential for profits improves, though, the question remains whether Mexico’s infrastructure would be able to handle the […]

Pemex loses U.S. appeal of $465 million arbitration judgment

3 Aug 2016   Mexico

A U.S. appeals court on Tuesday upheld a decision confirming a $465 million judgment won through arbitration by a unit of KBR Inc in a contract dispute with Mexico’s national oil company, Pemex [PEMX.UL]. The 2nd U.S. Circuit Court of Appeals in New York let stand a decision confirming a $300 million arbitration award for KBR’s COMMISA unit in Mexico even though a Mexican court had nullified it, and upheld a lower court ruling that added $106 million to the judgment. The judgment also includes $59 million of interest, court papers show. It is unclear whether Pemex plans to make a further appeal. The company did not immediately respond to requests for comment. KBR Chief Executive Stuart Bradie in a statement said the engineering and construction company is pleased with the […]

Pemex Losses Accumulate as Oil Production Hits Record Low

29 Jul 2016   Mexico

Mexico oil company hasn’t reported positive results since 2012 Pemex had plant explosion, received capital injection in 2Q Petroleos Mexicanos added to more than three years of losses as a cash injection from the government wasn’t enough to overcome the pinch of record-low crude output, refinery upsets and a petrochemical plant explosion. The second-quarter deficit narrowed to 83.5 billion pesos ($4.42 billion), from 84.6 billion pesos during the same period a year earlier , according to a filing sent to the Mexican Stock Exchange. The result adds on to $59 billion of losses since 2012. Crude production at Pemex, as the company is known, fell 2.2 percent from a year earlier to 2.176 million barrels a day, following a budget reduction in the first quarter that crimped the company’s exploration spending. Pemex’s refineries, which lose more than 100 billion pesos each year, continued to be hampered by outages during […]

Petróleos Mexicanos Posts $4.4 Billion Second-Quarter Loss

29 Jul 2016   Mexico

Mexican state oil company Petróleos Mexicanos on Thursday said it recorded an after-tax loss of $4.4 billion in the second quarter, as lower oil prices and output hit sales and hefty exchange losses boosted its financial costs. Sales in the quarter fell 17% from a year earlier to $13.5 billion. Pemex’s hydrocarbons production fell 3.4% in the quarter, with crude oil output down 2.2% to 2.18 million barrels a day and natural gas output off 6.4% at 5.88 billion cubic feet a day. Crude oil prices averaged $36.69 per barrel compared with $52.92 in the second quarter of 2015. Output of the company’s refineries fell 5.4%, partly because of unscheduled maintenance shutdowns. The second-quarter loss was slightly smaller in Mexican peso terms than that of a year earlier. Meanwhile, Pemex’s operating profit rose 91% to $6.6 billion, lifted by reduced cost of sales. The peso’s slide to new […]

Pemex sees oil output boost from looming joint ventures

8 Jul 2016   Mexico

Mexican state oil company Pemex expects to boost crude output over the next few years with a handful of joint ventures that will focus on onshore and offshore fields, a company official said, outlining areas it will seek to develop with outside producers. New production from the future joint ventures, or farm outs, is forecast to add about 400,000 barrels in new daily crude output and bring the company’s total to about 2.5 million barrels per day (bpd) in 2022, according to a presentation to investors published earlier this year. Pemex’s press office said this week the forecast still stands. The forecast is banking on new oil output coming from mature onshore fields Rodador, Ogarrio and Cardenas Mora; mature offshore fields Bolontiku, Sinan and Ek; heavy oil offshore fields Ayatsil, Tekel and Utsil; as well […]

Pemex oil refinery could be forced to close due to ongoing protests

18 Jun 2016   Mexico

Mexico’s national oil company Pemex said on Friday it may be forced to shut its largest refinery in the next few days if ongoing protests in the southern state of Oaxaca continue to block local roads needed to transport fuels. “If the blockades continue, it will be necessary to shut down the operations of plants at Salina Cruz in the next few days,” the company said in a statement, referring to the refinery which has daily crude processing capacity of 330,000 barrels. A dissident teachers union has escalated protests in Oaxaca state, home to the Salina Cruz refinery, including road blockades following the arrest of its leader for alleged corruption last weekend. (Reporting by David Alire Garcia; Editing by Richard Pullin)