July saw the election of Mexico’s next President, Andrés Manuel López Obrador, who is losing no time in drafting Mexico’s oil and gas future. Meanwhile, Equinor advances in its Troll development and Ecopetrol strikes oil.
Ready to fuel up? Here’s your weekly news roundup:
President Elect Andés Manuel López Obrador (AMLO) to present refinery modernization plan. The plan, involving the design of bids open to private participation to revamp Mexico’s six existing refineries and the construction of another two, is expected to be presented in August.
Moody’s highlights risks in President-Elect López Obrador’s energy policy. Chief among them, the construction of two new refineries, freezing gasoline prices and examining licensing round contracts. The initial construction budget for both refineries is set as US$6 billion but could increase 50-100 percent throughout the project’s development. Freezing gasoline prices below production costs could increase PEMEX’s debt and the examination of the contracts could compromise PEMEX’s future farmouts.
CNH welcomes AMLO’s intentions of revising all licensing round contracts. Transparency and accountability being two major drivers of the hydrocarbons regulator, CNH confirmed its desire to support the new administration in this effort, to the benefit of Mexico and in observance of the law.
PEMEX’s natural gas production on the decline. Mexico’s OC reported a production of 4.827Bcf/d in May 2018, a 9 percent decrease compared to May 2017’s 5.299Bcf/d. Reforma reported this decreased production has caused natural gas shortages in the southeastern region of the country, resulting in periodic blackouts on the Yucatan Peninsula.
Licensing rounds slowdown on the horizon. S&P Global Platts anticipates President-Elect Andrés Manuel López Obrador and his team will space out the next licensing rounds and will implement higher local content requirements.
New administration to face oil production odyssey. The year is 2003, PEMEX is at the pinnacle of its production capacity with 3.8 million b/d. In April 2018, PEMEX registered 1.86 million b/d. Manuel Rodríguez, Director General of Ainda Consultores, says the key not only lies within the continuity of the licensing rounds, but also on PEMEX’s farm-outs.
Price-controlled gasoline prepares comeback. President-Elect Andrés Manuel López Obrador and his incoming administration are preparing the return of gasoline prices cushioned from inflation with annual adjustments.
Renaissance Oil ramps up Area 15 investment to US$7.3 million. Won during Round 1.3, the Canadian oil company believes Area 15 requires additional geology and engineering works, increasing the original investment amount of US$6.76 million to US$7.3 million. CNH’s governing body approved the change made to the evaluation plan.
COPARMEX wants integral gasoline price plan. To ensure the competitiveness of Mexico’s private sector, COPARMEX requested the inclusion of variables such as input cost variations and energy efficiency mechanisms in addition to inflation-adjusted variations.
Illegal syphoning complaints increase 52 percent. 1Q18 registered 6,530 illegal syphoning complaints affecting PEMEX’s pipelines, a 52 percent growth from the 4,278 complaints in the same period during 2017.
Equinor launches phase three of the Troll field development. Norway’s Ministry of Petroleum and Energy received the further development plan from Equinor and its partners participating in the Troll license, with 2.2 billion boe up for grabs.
Morgan Stanley anticipates Brent price surge. The investment banking institution reported it is expecting Brent prices to adjust its US$77.5/b price tag estimation for 2H18 to US$85/b.
Ecopetrol strikes oil in Cundinamarca. The Colombian NOC confirmed oil findings in the Bufalo-1 well, 1,153m below ground.
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