Mexico Energy News
Issue 6, July-September 2018
Table of Contents
I. Editor’s Note
II. Articles
III. Sparks
I. Editor’s Note
As the two articles below indicate, President Elect Andrés Manuel López Obrador (AMLO) has sketched out his energy plans. They include increasing oil production, revamping Pemex’s existing refineries, and building a new refinery in Tabasco.
AMLO’s energy plans have met with widespread skepticism. For example, energy analyst David Shields, commenting on AMLO’s planned refinery in Tabasco, questioned the ability of the incoming administration to complete it in three years. He noted, “A project of such magnitude would take two years just to plan, prepare the site, select the technology, receive bids for construction, and obtain the necessary social and environmental permissions.” He estimated that another five or six years would be required until the project can be completed. Shields also questioned the size of the project, inquiring, “Why such a large mega-refinery when there are serious doubts as to its profitability, costs, location, logistics, and crude supply?” (
Reforma,
Aug. 21, p. 5
negocios
).
Throughout López Obrador’s campaign, including during the three presidential debates, climate change and renewable energy simply went unmentioned. AMLO’s heavy commitment to oil development, a multi-billion-dollar rail line across the Yucatán Peninsula, and various new social programs leave little room for government development of renewables. Given the absence of discourse on renewable energy, it is difficult to know what plans, if indeed any exist, AMLO has made for renewable energy.
As the Peña Nieto administration winds down, losses at the “productive state enterprises,” as Pemex and the Federal Electrical Commission are known, are soaring. This is not surprising, since typically during the last year of a presidential term, known as an “Año de Hidalgo,” significant amounts of public assets make their way into private hands.
Finally, as is indicated below, a PowerPoint “Energy in Mexico” is now available.
Mexico Energy News’ editor Philip L. Russell has prepared a PowerPoint presentation, “Energy in Mexico,” which covers hydrocarbons, renewables, electricity, clean-energy goals, the energy reform, and President-Elect Andrés Manuel López Obrador. Russell has accepted multiple speaking invitations from three Ivy League schools and Stanford, and he has been certified as an expert witness in federal court. He has written seven books on Latin America, most recently
The Essential History of Mexico
(Routledge). In addition, his writings on Mexico have appeared in publications ranging from Mexico City’s La Jornadato The New York Times. Last, but not least, he recently received the Virginia Murray Brewer Award as the Sierra Club’s outstanding outings leader for the state of Texas. To schedule a presentation by Russell of “Energy in Mexico,” contact him at russell@mexicoenergynews.com.
II. Articles
Oil: One Ploy after Another?
by David Shields
Andrés Manuel López Obrador (AMLO) has reproached President Enrique Peña’s administration (2012-2018) for failing to meet its oil-production goals and for leaving him with production below the 2012 level. The energy reform, he says, was a “despicable swindle (
vil engaño
)”. AMLO promises to slow and reverse the decline in oil production. However, he has set goals which are even more ambitions than Peña Nieto’s in terms of volume and percentage increase. Can he do it? Or is his promise simply hot air?
The president-elect says that oil production will increase from 1.8 million barrels a day (mbd) to 2.6 mbd, that is, a 44 percent increase. Mexico only increased production by that amount once, during the López Portillo (1976-1982) administration. That was when the Cantarell field, the second-largest oil field in the world, was discovered and developed. Now, that field is almost exhausted.
With the exception of the Ku-Maloob-Zaap field, Mexico no longer has any giant and supergiant fields at peak production. Extraction at Ku-Maloob-Zaap, which produces extra-heavy crude,will soon begin its decline. Nor have there been discoveries to replace existing fields. Proved oil reserves now total 6.5 billion barrels—sufficient for roughly six years of production. This leads to the question of how AMLO will accomplish a major increase in production. What oil fields does he have that Peña Nieto did not have?
AMLO wants Pemex service companies to drill wells on land and off-shore in the southeast. However, in this century, Pemex has already ordered the drilling of thousands of wells that are barely profitable due to their low production. Today, the average cost of drilling for and producing a barrel of crude in Mexico is far greater than it was a decade ago. It won’t benefit Pemex to drill wells that cost 42 million pesos each if most of them only produce a little oil. Instead, it will undermine Pemex finances.
Mexico certainly has great, untapped oil potential. But to take advantage of it, Pemex will have to make a radical shift, investing an order of magnitude more than the 75 billion pesos that AMLO plans. Such spending, which is beyond the company’s ability to finance, would require a different fiscal structure.
The best options are fracking and deep-water development. However, AMLO has banned the former and prevented Pemex from the later since it would not benefit the oil-service providers in southeastern Mexico. Both options formed part of Peña Nieto’s energy reform, whose virtue is relying on private investment rather than Pemex resources. However, the results will only be seen in the medium and long term. It will not be available in three or four years to supply the new refinery.
In the near future, there will be no more giant fields. Current proved reserves are already under development. They are no new finds to compensate for the decline of mature fields. Pemex lacks funds for massive exploration. With which fields does AMLO plan to increase production? With how much money, how many wells, and how soon? If AMLO and his team cannot answer these questions with a robust, well defined plan, his promises can’t be fulfilled. The Peña Nieto administration promised to increase production, but greatly underestimated the difficulty and time required to do so. Today, AMLO is being equally imprudent. It is likely that Mexico’s production will continue to fall before it stabilizes and begins to increase. It will not increase by political will alone.
There are those who applaud López Obrador and offer to drill wells and build his refinery. However, there are many technical experts—Pemex employees and its retirees—who can affirm that fields in southeastern Mexico, on land and off-shore, are insufficient to reverse the decline in production. AMLO needs to listen to these opinions and not just to those of his team or to those who cheer and flatter him in order to favor their own interests.
The question remains: Will there be enough crude of sufficient quality to supply the new refinery? Everything indicates that there will not be.
This article was originally published in Spanish in the September 18 issue of
Reforma
.
Energy Crossroads
by Verónica Baz
From the invention of fire and the domestication of animals, up through nuclear energy and fracking, energy sources have underlain economic development. This was apparent with the Phoenician naval fleet, the English industrial revolution, and in the United States, which has recently doubled its oil production.
Maintaining a nation’s diverse energy resources at competitive prices is a permanent, ever-changing challenge. As Alfred Crosby noted in his book
Children of theSun
, today humans use 20 times as much energy as in 1850 and five times more than we used in 1950.
Mexico’s failure to have an energy plan that meets its needs for growth could present serious problems. It would not be the first time that a nation stagnates or even backslides due to its not having an adequate energy plan. It’s time to consider how the López Obrador administration will address Mexico’s energy needs. There are already worrying signs. Energy is too important to be constrained by false dilemmas and old slogans.
As of now, it appears that the new administration’s goal is to supply fuel, build refineries, and eliminate the petroleum trade deficit. There also appears to be a preference for projects that are carried out by Pemex and the Federal Electricity Commission (CFE). No one appears concerned that the president-elect is making promises that he cannot or should not fulfill.
Unlike the situation faced by previous administrations when oil production and the price of crude were higher, today Mexico does not have time for debates between liberals and nationalists. Nor does it have time to seek energy independence at the expense of growth. Nor should it cling to ideas which made good campaign slogans, but which are actually unworkable. Mexico needs the incoming administration to shift from campaign slogans to an objective understanding and a strategy that transcends political divisions.
The incoming administration faces enormous problems. It also must deal with an inevitable decline in oil income. It must consider the natural-gas supply—key to the generation of electricity and the petrochemical industry. This won’t happen as long as Pemex continues without addressing its production decline and if sufficient gas pipelines aren’t built to import gas from the United States. Both solutions are unpopular among certain sectors of society.
One of the ways Mexico could increase production would be by fracking. However, we still haven’t, as a nation, had a discussion about its costs and benefits. Rather, discourse concerning fracking has served to present ideological positions rather than to evaluate its possibilities.
Likewise, the incoming administration will have to decide if it will confront theft of fuel or if it will continue tolerating it. Confronting it will require holding actors, such as the oil-workers union, responsible. The union has first-hand information. It will be necessary to determine just who is benefiting from the network of actors who engage in fuel theft.
It’s one thing for opponents of the government to say “no gasolinazo.”* It’s quite another thing for an administration that’s responsible for maintaining sound public finances. We hope that the incoming administration is able to learn from the past, consider what has been achieved, and be aware of the shortcomings of the energy reform. It must take advantage of Mexico’s human capital (independent of party affiliation ) and govern with humility. That is the only way for Mexico to move forward.
* The “gasolinazo” was a sharp increase in the price the government charged for gasoline in 2017. (See Issue 1.)
Originally published in Spanish in the September 21, 2018, edition of
Reforma.
III. Sparks
During 2017, 21.1% of energy consumed in Mexico came from “clean” sources. Of this, 15.7% came from renewables and 5.4% came from other clean sources, a government category which includes nuclear. The remaining 78.9% came from fossil fuels.
pv-magazine-mexico.com
,
Sept. 1, 2018.
Mexican CO
2
production declined to 473.4 million tonnes in 2017, 2.9% below the figure for 2016
(p. 49)
. This was due to Mexico’s primary energy consumption declining by 2.6% in 2017
(p.8)
. Reduced primary energy consumption led to a 3.4% decline in oil consumption
(p. 15)
and a 4.4% decline in natural-gas consumption.
BP 2018: 29.
LP gas is the principal fuel source for 75.7% of Mexican homes. Firewood supplies energy to 14.3%, while 8% use natural gas.
Reforma
, Sept. 14, 2018, p. 1
negocios.
Each year some 250,000 additional vehicles are added to the 5.5 million vehicles which circulate in Mexico City.
Excélsior
, Oct. 1, 2018.
Oil
Mexico’s proved oil reserves totaled 7.2 billion barrels at the end of 2017. These reserves, 0.4% of the world total, will last 8.9 years at the current rate of production.
BP 2018: 12.
Eni México has awarded
Mitsui Ocean Development & Engineering Company
(MODEC) a letter of intent for supply, charter, and operation of an FPSO (floating production, storage and offloading) capable of processing up to 90,000 bd of crude. It will operate six miles off-shore from the Gulf Coast.
offshore
.
com
, Sept. 12, 2018.
Gas
Mexico’s proved natural gas reserves totaled 6.9 trillion cubic feet at the end of 2017—enough for 4.8 years at the current rate of production.
BP 2018: 26.
In 2017, Mexican natural-gas production totaled 1.437 trillion cubic feet, 6.5% below 2016.
BP 2018: 28.
U.S. natural-gas exports to Mexico averaged 4.2 bcfd during 2017. This figure increased to 4.4 bcfd during the first five months of 2018. In July, for the first time, such exports exceeded 5 bcfd.
El Economista
, Aug. 22, 2018.
In 2005, natural gas generated 34% of Mexico’s electricity. Now, it accounts for 55% of generation.
El Economista
, Aug. 22, 2018.
During the first half of 2018, Pemex produced an average of 4.823 bcfd of natural gas, 9% below the corresponding period of 2017.
Reforma
, Aug 15, 2018, p. 2
negocios
.
In 2017, the United States exported 1.486 trillion cubic feet of natural gas to Mexico by pipeline and 134 billion cubic feet as LNG. Mexico was the best U.S. LNG customer. Mexican LNG imports totaled 233 billion cubic feet.
BP 2018:34.
During the first eight months of 2018, Mexican LNG imports averaged 0.73 bcfd—14% above the corresponding figure for 2017. During July, LNG imports averaged 1 bcfd. Total natural-gas consumption in July averaged 8.7 bcfd, 4% above the corresponding figure for 2017. Imported LNG costs $11 per million btu. In contrast, gas imported by pipeline costs $4.10 per million btu. In the future, pipelines now under construction should prevent much of the necessity to import LNG.
Reforma
, Sept. 19, 2018.
During the current presidential administration (2012-2018), 17 new gas pipelines have been built, adding 4,639 kilometers of pipeline—an increase of 41%.
Reforma
, Sept. 24, 2018, p. 7
negocios
.
The El Encino-Topolobampo gas pipeline has been completed at a cost of $1.2 billion. The 30-inch pipeline carries 0.67 bcfd of natural gas 560 kilometers from El Encino, Chihuahua, over the Sierra Madre to Topolobampo, Sinaloa.
Petróleo y Energía
, July-Aug. 2018, p. 28.
After completion of the El Encino-Topolobampo gas pipeline, various communities along the pipeline route staged a protest in the Chihuahua state capital. Residents alleged that TransCanada, the builder of the pipeline, is paying “unjustly” low compensation to affected communities, was responsible for acts of repression against communities along the pipeline route, and took as much as 60 meters of right-of-way when the contract only called for 10 to 15 meters, and that local authorities were bribed to accept unfair contracts.
Reforma
, Sept. 19, 2018.
The National Hydrocarbon Commission (CNH) estimated that this year natural-gas production will average 3.735 bcfd.
Reforma,
Sept. 21, 2018, p. 3
negocios
.
In 2008, to supply natural gas to the U.S. market, Sempra Energy opened the Costa Azul LNG import terminal north of Ensenada, Baja California. By the time it was completed, fracked gas was supplying the U.S. market, so little use was made of the terminal. Now, Sempra has announced that it hopes to reconfigure Costa Azul into an export terminal to export U.S. LNG to Asia.
Desmog Blog
,
Aug. 7, 2018.
Farther down the peninsula, New Fortress Energy announced that it would build and operate an LNG import terminal at Pichilingue, Baja California Sur, just north of La Paz. The 3.5 billion-peso project will import gas to be used for electrical generation.
Reforma,
Aug. 17, 2018, p. 6
negocios.
Coal
Mexico’s coal production totaled 5.5 million tonnes of oil equivalent—0.1% of world production. Thanks to imports, it consumed 13.1 million tonnes of oil equivalent, 0.4% of the world total.
BP 2018: 38-39.
Jet Fuel
At the beginning of the current presidential term (2012-2018), Mexico only imported 5.5% of the jet fuel it consumed. Currently, imports supply 62.5% of consumption. Between 2013 and 2018, consumption rose from 62,200 barrels a day (bd) to 86,800 bd.
El Economista
,
Aug. 29, 2018.
Renewables
The Energy Department (SENER) reported that its three clean-energy auctions resulted in $8.6 billion of projects that are expected to add 6,988 megawatts (MW) of capacity by 2020.
SENER 2018: 6.
Of the 329,162 gigawatt-hours (GWh) of electricity generated in 2017, 69,396 GWh came from clean energy—an increase of 6.98%
(ibid., p. 5)
. Energy Secretary Pedro Joaquín Coldwell commented, “The 65 green projects produce energy at competitive prices, without the need of subsidies.”
forbes.com.mx, Aug. 22, 2018.
Mexican renewable-energy consumption increased at an annual rate of 9.1% between 2006 and 2016. In 2017, it increased by another 9.0%.
BP 2018: 44.
Mexico’s goals are to produce 37.5% of electricity from clean-energy sources by 2020 and half by 2050.
Reforma
, Sept. 24, 2018, p. 10
negocios
.
Solar:
PV came into its own in 2017 with the generation of 1,149.6 GWh, a 435% increase over 2016. Distributed generation systems were the most important factor in this increase.
SENER 2018: 14
.
The first solar farm in Mexico began operation in 2013. Now, 30 solar farms operate with a capacity of 1,500 megawatts. Eighty-thousand residences, retail outlets, and industries supply an additional 500 megawatts of distributed PV capacity.
Reforma
, Sept. 24, 2018, p. 10
negocios
.
Average insolation in the state of Sonora is 6.2 KWhr/
m2
/day. For Mexico as a whole, it is 5.5 KWhr/
m2
/day.
PV Magazine-Mexico
, July 26, 2018.By comparison, world PV leader China only averages 4.5 KWhr/
m
2
/day.
Milenio
, Aug. 30, 2018.
Wind:
In 2017, wind generation only increased by 157.09 GWh—1.5% above 2016. This small increase was the result of the September 2017 earthquake, which damaged generation facilities and transmission infrastructure.
SENER 2018: 14.
In August, Tamaulipas governor Francisco García Cabeza de Vaca and Energy Secretary Pedro Joaquín Coldwell inaugurated Reynosa I, the largest wind farm in Latin America. Zuma Energía developed the 424-megawatt project at a cost of $600 million.
El Mañana de Reynosa
, Aug. 14, 2018.
One hundred and twenty- three turbines supply energy for the 8,000-hectare project.
El Financiero,
Aug. 10, 2018.
Electricity
Mexico’s current generating capacity is 75,685 megawatts (MW).
Reforma
, Aug. 20, 2018,p. 2negocios
.
Private electricity generators, with 12,000 MW of installed capacity, account for 27.5% of the Federal Electricity Commission’s (CFE) capacity
.
Reforma
, Aug. 3, 2018, p. 1.
With 6,000 MW of generating capacity installed in Mexico, the Spanish company Iberdrola now has more capacity in Mexico than in Spain. With 17 combined-cycle and cogeneration plants, plus 325 MW of wind and 270 MW of PV under construction, the company is Mexico’s largest private power producer. Seventy-six percent of its production is sold to the Federal Electricity Commission (FCE).
elfinanciero.com.mx, July 25, 2018.
In 2017, 79% of Mexico’s electricity was generated by fossil fuels.
PV Magazine México
, Sept. 1, 2018.
In 2017, 21.08% of electricity was generated by “clean sources.” Of these, 15.66% were by renewable sources and 5.42% by other clean sources, a category which includes nuclear. Mexico’s goals are to generate 25% clean energy this year, 30% by 2021, and 35% by 2024.
SENER 2018: 4-5.
Electricity demand for air-conditioning is increasing by 7% per year.
Reforma
, Sept. 24, 2018, p. 10
negocios
.
During the past five months, the price charged to commercial and industrial electricity users increased by more than 50%. Cost increases result from increased fuel prices, interruption of natural-gas supply forcing use of more expensive fuel oil, and a decline in hydroelectric generation.
expansion.mx, Sept. 25, 2018.
At a cost of $1.7 billion, transmission lines are being built to carry 3,000 MW from the Isthmus of Tehuantepec to demand centers 600 kilometers to the north.
Reforma
, Sept. 24, 2018, p. 12
negocios
.
The good news is that, in June, sales of hybrids and electric vehicles was 101.1% above such sales for the corresponding month of 2017. Tempering such news is the realization that such sales only reached 1,591, of which only 19 were pure electrics.
Milenio
, Sept. 22, 2018.
In 2015, Mexico had 156 vehicle-recharging stations. By July of this year, they numbered 2,017. Mexico City, with 384 stations, has more than any Mexican state.
El Financiero
,
Aug. 22, 2018.
Pemex
Production
During the second quarter of 2018, Pemex produced an average of 1.855 mbd of crude, 7.3% below the corresponding quarter of 2017.
Pemex 2018:16.
During the first half of 2018, Pemex produced an average of 672,000 bd of refined products, 29% below the figure for the corresponding period of 2017.
Reforma
, July 28, 2018, p. 1.
During the second quarter of 2018, Pemex refined an average of 704,000 bd of crude, 22.2% below the corresponding quarter of 2017.
Pemex 2018: 22.
During the first seven months of 2018, Pemex produced an average of 217,100 barrels a day (bd) of gasoline, 27.8% below the corresponding figure for 2017.
El Universal
, Aug. 26, 2018.
Trade
Today we import 73% of our gasoline, 69% of our diesel, and 65% of our natural gas. Since the passage of the energy reform, our petroleum trade balance has been negative. The deficit this year will be above $20 billion.
Octavio Romero, Pemex director-general designate
Reforma
, Sept. 28, 2018.
During the first seven months of 2018, Pemex imported a record 76.1% of the gasoline it sold. This latter figure is 8.9% above the level for 2016 and 62.8% above the figure for 2000. During July, Pemex imported 79% of the 751,000 bd of gasoline it sold. Similarly, 77% of the 334,000 bd of diesel sold by Pemex in July was imported.
Reforma
,
Aug. 25, 2018, p. 10.
By value, during the first half of 2018, imports of gasoline, diesel, natural gas, and jet fuel were 36.6%, 56.2%, 47.9%, and 83.3%, respectively, above those during the first half of 2017.
El Economista
,
Aug. 13, 2018.
During the second quarter of 2018, Pemex exported an average of 1.199 mbd of crude, of which 55% went to the United States, 27% to the Far East, and 18% to Europe.
Pemex 2018: 7.
Mexico exported an average of 1.156 mbd of crude in July, 99,000 bd below the figure for July 2017. Due to higher prices, Pemex received $2.375 billion for its July crude exports, $659 million more than it had received in July 2017.
El Financiero
, Aug. 25, 2018.
Finances
Roughly 70% of Pemex’s EBITA goes for taxes.
Reforma
,July 25, 2018, p. 1
negocios
.
Pemex’s foreign-currency debt totals $104.2 billion, up 1.6% from six months ago.
Pemex 2018: 3.
Pemex now pays pensions to 105,069 retirees, while it employs 114,916 workers. Pension and benefits cost an average of 41,401 pesos per month per retiree. At the beginning of the current presidential term (2012-2018), the company had 78,827 retirees, whose pension and benefit costs averaged 32,689 pesos per month per retiree.
El Universal,
Aug. 9, 2018.
At that time, Pemex employed 150,697 workers. Pemex’s labor debt now totals $100 billion.
Reforma
,Aug. 8, 2018, p. 1.
During the first half of 2018, thieves tapped into Pemex pipelines 7,590 times to steal fuel. This figure is 49.5% above the corresponding figure for 2017.
La Jornada
,
Aug. 9, 2018.
Energy Reform
The Energy Department (SENER) reported that the winning bidders in the three clean-energy auctions so far have committed to investing $8.6 billion dollars during the next three years. Winning bidders in hydrocarbon auctions plan to spend $59 billion. In addition, $12 billion is expected in gas-pipeline construction.
Milenio
, Sept. 2, 2018.
The National Hydrocarbons Commission (CNH) announced that auction Rounds 3.2 and 3.3, originally scheduled for October, would be postponed until February 2019.
Pemex 2018: 21.
Fourteen private companies are now producing crude from wells on land. In June, their production averaged 3,753 barrels a day. In addition, these companies produced an average of 8.9 million cubic feet a day (mcfd) of associated gas and 34 mcfd of non-associated gas.
Reforma
, Aug. 16, 2018, p. 10
negocios
.
Most Pemex gas stations are franchises. During the first half of 2018, 1,209 stations changed from the Pemex franchise to other brands. This left 10,782 Pemex franchisees at mid-year. In addition, Pemex owned 46 stations.
El Universal
, Aug. 11, 2018.
In an exit poll of voters in the July 1 presidential elections, 59% of the respondents said that the energy reform had harmed them. The energy reform was even less popular than the education and telecommunications reforms. Respondents claiming harm from them were 45% and 39%, respectively.
ADN Político
, Aug. 3, 2018.
Año de Hidalgo
During the second quarter of 2018, Pemex lost $8.79 billion. The company attributed much of its losses to the depreciation of the peso.
El País
,Aug. 7, 2018.
During the first half of 2018, the Federal Electricity Commission (CFE) lost $1.5 billion—74 times its losses during the first half
of 2017.
El País
, July 27, 2018.
Increased losses in part resulted from depreciation of the peso, which made it more costly to service foreign debt and to import fuel. Also, there was an increase in the dollar price of fuel that the CFE imports. An additional factor was a rate restructuring which resulted in a decrease in the average price charged per kilowatt-hour for electricity. During the second quarter of 2018, the price averaged 1.518 pesos, 9% below the average during the second quarter of 2017.
El Universal
, July 28, 2018.
A final factor was 7.7 billion pesos of administrative costs—87% above the corresponding figure for 2017.
Reforma
, Aug. 1, 2018, p. 8.
AMLO
Peña Nieto has disappeared from the political scene. AMLO is already acting as if he were president. At the end of his term, the outgoing president’s power always declines gradually. However, there’s never been a situation like this in which it appears that the transition has already occurred.
Sergio Sarmiento
Reforma
, Aug. 3, 2018, p. 10.
AMLO has already begun to scale back some of his unrealistic campaign promises. On the campaign trail, he stated that, by 2020, crude production would reach 2.5 mbd. Now his campaign staff estimates that in 2020 crude production will only total 2.01 mbd and that it will not reach 2.5 mbd until 2024.
forbes.com.mx, Sept. 28, 2018.
AMLO confirmed that he still plans to appoint Rocío Nahle as secretary of energy. Nahle, a chemical engineer by training, has worked for Pemex and currently is a member of the Chamber of Deputies. AMLO also announced the appointment of Octavio Romero, an agronomist by training, as his choice to be director general of Pemex. Finally, he announced 82-year-old Manuel Bartlett as his choice to head the Federal Electricity Commission (CFE). Bartlett, who has a doctorate in political science, has served in a wide variety of public posts including, from 1982 to 1988, as interior secretary.
El Financiero
,
July 27, 2018.
Bartlett’s nomination is one of the all-time great political rehabilitations, since he is widely regarded as having, in his position as interior secretary, orchestrated the theft of the 1988 presidential election from Cuauhtémoc Cárdenas. More recently, he has been a prominent opponent of the energy reform.
AMLO has pledged 50 billion pesos to rehabilitate Pemex’s six existing oil refineries.
El Financiero
, Sept. 30, 2018.
The incoming AMLO administration plans a $246-million project to convert 16,000 MW of oil-burning generating facilities to burn natural gas.
Reforma
, Aug. 20, 2018,p. 2negocios
.
As part of his plan for energy spending during the first three years of his administration, AMLO announced that 20 billion pesos would be invested to refurbish CFE hydroelectric plants.
Reforma
, July 28, 2018, p. 5.
AMLO announced that the Federal Electricity Commission (CFE) would cancel $2.39 billion of debt resulting from failure to pay electricity bills.
El País
,
July 31, 2018.
He later clarified that the cancellation would only apply to customers in Tabasco, his home state. In 1994, to protest election fraud when he was a gubernatorial candidate, AMLO had urged Tabasqueños not to pay their electric bills.
expansion.mx, Aug. 2, 2018.
AMLO announced that, during the first year of his administration, 75 billion pesos would be invested in petroleum exploration and drilling in an attempt to increase crude production.
expansion.mx, July 27, 2018.
There is no linear correlation between investment and production. Between 2005 and 2014, Pemex investment in exploration and production rose from $6.80 per barrel produced to $18.70. However, during this period, production declined from 3.3 mbd to 2.4 mbd.
Pulso Energético
, July 31, 2018.
Many, including Duncan Wood of the Wilson Center, expressed skepticism about this investment. Wood stated, “I think that this is an unrealistic expectation that you can dramatically increase Mexican oil production just by telling Pemex to go ahead and produce more oil.”
Energy 202,
Aug. 1, 2018.
AMLO also announced that, during the first two years of his administration, 49 billion pesos would be invested in improving the performance of Pemex’s existing refineries.
expansion.mx, July 27, 2018.
The credit rating firm Moody’s has warned that measures undertaken by the incoming López Obrador administration might damage Pemex’s credit rating. It noted that diverting funds from exploration to refinery construction could undermine profitability, as could freezing the retail price of fuel.
Reforma,July 25, 2018, p. 1
negocios
.
AMLO announced that, beginning in 2019, construction would begin on a new 400,000 barrel-a-day refinery at Dos Bocas, Paraíso, Tabasco, at a cost of more than $8.5 billion.
El País
, Aug. 7, 2018.
Bibliography:
BP 2018:
BP Statistical Review of World Energy, June 2018
.
PEMEX 2018:
Pemex presenta sus resultados al segundo trimestre de 2018,
July 27, 2018. Mexico City.
SENER 2018:
Reporte de Avances de Energías Limpias en la Matriz Energética.