Category Archives: Energy

Mexico Oil Bidders Said to Balk at Guarantees as Auction Looms

Concerns regarding financial requirements were voiced in at least seven comments on the regulator’s online forum.
Concerns regarding financial requirements were voiced in at least seven comments on the regulator’s online forum.

By Adam Williams, Andrea Navarro and Pablo Rosendo Gonzalez / Bloomberg

Some would-be bidders in Mexico’s first oil license auction are resisting guarantee requirements in an impasse that threatens to reduce competition in the country’s energy liberalization, people briefed on the matter said.

Rules require each bidding group to have one partner to act as guarantor, and for that company to maintain shareholder equity, or total assets minus liabilities, of at least $6 billion.

The stipulation of a single guarantor, rather than sharing the burden among partners, is proving prohibitive for some companies, three people said, asking not to be identified because the matter is private.

A consortium consisting of Australia-based Woodside Petroleum, Mexico’s Grupo Diavaz and Argentina’s Pluspetrol is among registered bidders reluctant to proceed, the people said. Spokesmen for all three declined to comment.

Mexico is hoping for $17 billion in private investment in the first of five oil auctions this year as it seeks to turn around a decade-long production slump at state monopoly Petroleos Mexicanos. Nineteen individual companies, including Chevron Corp. and Exxon Mobil Corp., and seven consortia qualified to bid for 14 shallow-water blocks this month.

http://www.bloomberg.com/news/articles/2015-06-26/mexico-oil-bidders-said-to-balk-at-guarantees-as-auction-looms

Iberdrola and CFE agree to develop energy projects

EFE – Spain’s Iberdrola and the Mexican Federal Electricity Commission signed an agreement to develop electricity and natural gas projects in Mexico under the energy industry overhaul. The agreement is based on “an accord signed a year ago by the two companies that called for investment of around $5 billion by Iberdrola until 2018.

http://latino.foxnews.com/latino/news/2015/06/30/spain-iberdrola-and-cfe-agree-to-develop-electric-gas-projects-in-mexico/

Mexico’s state power company plans $10 billion in projects

Mexico began a major push to expand its natural gas pipeline network after missing out on the benefits of the U.S. shale gas boom.
Mexico began a major push to expand its natural gas pipeline network after missing out on the benefits of the U.S. shale gas boom.

By Anthony Harrup / Wall Street Journal

Mexico’s state-owned electricity utility Comisión Federal de Electricidad unveiled plans Monday to tender projects for close to $10 billion, including an 800-kilometer submarine pipeline to carry natural gas from southern Texas to the Mexican Gulf Coast.

The 24 projects include five natural gas pipelines, three small pipeline branches, four power generation stations and a series of electricity transmission and distribution projects.

The projects, most of which are scheduled to start operating in 2017 and 2018, will add around 2,300 kilometers to the country’s gas pipeline network, 1,442 megawatts of electricity generating capacity, and more than 3,000 kilometers in transmission and distribution lines, CFE Chief Executive Enrique Ochoa said at an event.

http://www.wsj.com/articles/mexico-state-power-company-plans-10-billion-in-projects-1435001256

Latest discovery in Mexico could trigger a new oil boom

Oil barrels sit empty at a recycling yard.
Oil barrels sit empty at a recycling yard.

By Andy Tully / Oil Price

The Mexican state-owned oil company Petroleos Mexicanos, or Pemex, says it has discovered one of the most copious group of oil fields in the shallow waters of the Gulf of Mexico, its largest such discovery in five years.

The five fields, situated off the states of Campeche and Tabasco, have total proven, probable, and possible reserves that may be as high as 350 million barrels of crude oil equivalent and could produce as much as 200,000 barrels a day, Pemex CEO Emilio Lozoya told an energy conference in Guadalajara on Wednesday.

He called the find an “achievement … of great magnitude.”

Pemex said the recent finds were the company’s biggest since it discovered the huge Atatsil and Tsimin-Xux oil fields, which were discovered in 2008 and 2010, respectively.

On July 15, Mexico plans its first auction of leases for 14 shallow-water exploration blocks in the same area of the southern Gulf, an event that is expected to open a floodgate of private investment in the country’s energy sector.

“The certain prospect of 200,000 extra barrels of production is very good news for Pemex, for the industry and for our country,” Lozoya told the meeting in Guadalajara.

http://www.businessinsider.com/a-discovery-in-mexico-could-trigger-a-new-oil-boom-2015-6

Mexico Dodged Oil-Price Rout After Big Banks Provided Hedges

Mexico disclosed the existence of its hedges in November, as falling oil prices stoked questions among investors and analysts on how the government would handle the prospect of shrinking revenue.
Mexico disclosed the existence of its hedges in November, as falling oil prices stoked questions among investors and analysts on how the government would handle the prospect of shrinking revenue.

By Isabella Cota, Eric Martin and Carlos M Rodriguez / Bloomberg

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are among seven banks that made oil trades with Mexico that allowed the government to lock in higher prices as crude tumbled 49 percent last year.

The banks, which also include Citigroup Inc., Morgan Stanley, BNP Paribas, Barclays and HSBC Holdings, were the counterparties on oil trades the Mexican government made in 2014 to hedge prices for the coming year, the Bank of Mexico said in response to a public-information request by Bloomberg.

The government, which depends on oil for about a third of total revenue, had previously said it paid $773 million for the hedges through 43 operations in international derivatives markets.

So far, the bet is paying off: Mexico’s Maya crude-oil mix has averaged $49.42 since the end of November — well below the price of $76.40 a barrel guaranteed under the hedges. The seven banks would be on the hook to make up the price difference, according to the government.

With 228 million barrels of oil sales covered, the government’s hedges are currently worth about $6.45 billion, based on Maya prices observed since the beginning of December, and assuming that oil stays at its current level through November.

http://www.bloomberg.com/news/articles/2015-06-11/mexico-beat-oil-price-rout-as-bankers-took-other-side-of-hedge