Courtesy Image from RedPolitica.mx

Courtesy Image from RedPolitica.mx

Beyond Round One’s delays, the end of 2014 evidenced rugged terrain for the Mexican oil and gas industry. Adapting to the projected standards prescribed by the unprecedented Energy Reform is still far from reaching international best practices. PEMEX is slowly fitting into taking the role as the State’s Productive Enterprise and while it has still some growing pains to go through, the overall environment relevant to hydrocarbon operations still flashes warning signals that may continue to pose challenges in Mexico’s post-Reform industry.

With roughly 3,000 illegal taps, a constant struggle to tackle fuel theft is a recurring threat that has hit the country’s refined resources for some time now. Paired to this stands another factor, the country’s fuel production has suffered a downturn given that production has declined from 2.5 million b/d in 2013 to 2.35 million b/d today, thus reducing crude inputs to cater Mexico’s refining facilities.

The extent of fuel theft in Mexico is clearly not a new situation; it is something that is known industry-wide and a fact that many key stakeholders have had to adapt to. Just this past December 29th, two León police officers (capital of the State of Guanajuato) plus two others were caught red-handed by PEMEX personnel in a nearby community; this is only one case in a million that make for fuel transportation not only a difficult task but also a very dangerous one in Mexico.

In rough estimates, about 50,000b/d of fuels are not making it to their final destination. A growing black market has developed as a result of this, where some claim that gasoline goes for almost half of its price at the pump. PEMEX is the most affected by this without a doubt, losing about MX$15 billion this year.

Courtesy Image from UnionJalisco.com.mx

Courtesy Image from UnionJalisco.com.mx

When putting these figures into perspective, it is obvious that PEMEX is really losing big time; however, significant efforts to curb these losses have not been made as of today. Military has been deployed to certain regions where fuel theft is a more common issue, but that has still not stopped illegal tappers from getting their way. Most taps are carried out in Mexico’s north, primarily in the Reynosa-Matamoros and Madero-Cadereyta pipelines, where the absence of security has already been felt by many companies which otherwise would have set-up operations in surrounding areas.

In the midst of fuel theft in the country, PEMEX is looking to change its balance between fuel imports and domestic production. Even though Mexico’s fuel imports exceed its domestic production, PEMEX is making adjustments in order to reach an unprecedented target over the next five years; to consolidate its fuel supply with roughly 25% of imports and compensate the remaining three-fourths with domestic production. In order to do this, many projects at Tula, Salina Cruz, and Salamanca are already underway to increase the SPE’s refining capacity significantly.

There are definitely pros and cons to this past year overall. While the effervescence of the Energy Reform has undoubtedly brought much attention to the country over 2014, most significantly worldwide recognition for its approval in such a short timespan, there are still many challenges; some minor but also a number of very significant ones. Essentially, guaranteeing foreign players that Mexico is a safe, transparent, and attractive country to which they can bring their operations into is still a difficult feat that must be achieved sooner than later for the Energy Reform to prove successful.

404

Looking for something?

Use the form below to search the site:


Still not finding what you're looking for? Drop a comment on a post or contact us so we can take care of it!

Visit our friends!

A few highly recommended friends...