Category Archives: Energy

Winners of Mexico blocks expect to drill initial wells within a year

Mexico's three licensing rounds so far all took place in 2015.
Mexico’s three licensing rounds so far all took place in 2015.

By Starr Spencer / Platts

The winners of acreage from the first three bidding rounds in Mexico last year are moving ahead on plans to develop oil from the country’s major energy reforms, with the first wells expected as early as fourth-quarter 2016, representatives of those companies said Tuesday.

Two of the operators, Talos Energy and Roma Energy Holdings, are US headquartered. The third, Mexico’s PetroBal, was formed last year by minerals magnate Alberto Bailleres, president of conglomerate Grupo Bal which owns the world’s largest silver producer.

PetroBal will drill its first well on its block, in Mexico’s Bay of Campeche, by year’s end with US partner Fieldwood Energy, Carlos Morales Gil, previously director general of E&P for Mexican state oil company Pemex, said at the Offshore Technology Conference.

After that, “we will analyze the well results, maybe drill a few more wells in 2017, and propose a development plan,” Gil said, adding first production will likely be in 2019.

Mexico’s three licensing rounds so far — actually, these were three phases of its Round One — all took place in 2015. A fourth phase featuring 10 deepwater blocks is planned for December. In addition, Roma Energy Holdings CEO Alexandro Rovirosa told Platts on the conference sidelines that it will drill its first well early next year on a block it won in a separate Mexico bidding last December.

CEO confident in cuts at Mexico oil giant Pemex

Market Watch – José Antonio González Anaya, who is about to complete his first 100 days as Pemex CEO, has probably the toughest job in Mexico’s government: turning around an oil company that lost $30 billion last year, has seen oil output decline for 11 consecutive years, faces unfunded pension liabilities of $86 billion and is badly overstretched and overstaffed.

Mexico government to support Pemex with $4.2 billion

Last year, Pemex eliminated around 12,000 positions of retired workers, and that process, including early retirement, is expected to continue in 2016.
Last year, Pemex eliminated around 12,000 positions of retired workers, and that process, including early retirement, is expected to continue in 2016.

By Juan Montes / Wall Street Journal

Mexico’s government said Wednesday it will support troubled state-oil firm Petróleos Mexicanos, or Pemex, with $4.2 billion in fresh capital and money to make this year’s pension payments, a step some analysts saw as insufficient if oil prices remain low.

Depressed oil prices and declining oil production have led to a liquidity crunch in recent months for Pemex, Mexico’s largest company by sales and the world’s eighth-largest oil producer. The move was widely expected after the government repeatedly said it would provide financial support to Pemex, which contributes nearly 20 percent of the federal budget.

But some observers were expecting a bolder recapitalization, given that Pemex owes about $6.9 billion in overdue payments to suppliers and the firm’s total unfunded pension-liabilities amount to $86 billion.

“This is not a long-term solution, but rather a bandage to ease Pemex’s short-term cash problem,” said Antonio Juárez, an energy consultant and former Energy Ministry official. He said more support could come if oil prices don’t rebound significantly or if Pemex fails to deliver on spending cuts to which it has committed.

Mexico first power auction awards 1,750 MW to wind, solar firms

Mexico is seeking to add 20 gigawatts of clean energy in the next 15 years.
Mexico is seeking to add 20 gigawatts of clean energy in the next 15 years.

By Vanessa Dezem  and Adam Williams / Bloomberg

Renewable energy developers won contracts to produce 1,720 megawatts of power in Mexico during the country’s first-ever private auction after the government ended a decades-long state electricity monopoly in 2013.

Seven wind and solar companies including Enel Green Power, SunPower Systems Mexico and Recurrent Energy won 15-year contracts to rights to provide the state-owned Comision Federal de Electricidad with power beginning in 2018, Cesar Emiliano Hernandez, Mexico’s deputy electricity minister, said in Mexico City.

The contracts are expected to generate more than $2.1 billion in investment by 2018, he said.

“The results were better than some of the most successful auctions in the world,” Hernandez said in a press conference in Mexico City. “Many top level international companies competed and Mexico will receive a very important amount of investment.”

Mexico is restructuring its energy markets in an effort to spur billions in investment after a historic overhaul approved in 2013 to open state-run monopolies in the oil and electricity industries. The government has set a goal of getting 35 percent of its energy from clean sources by 2024, up from 25 percent now.

That didn’t work as planned: Mexico’s monopoly ends, then oil tanks

Mexico’s crude output has been slipping for 11 years.
Mexico’s crude output has been slipping for 11 years.

By Adam Williams / Bloomberg

The timing couldn’t have been worse. The end of the 76-year Petroleos Mexicanos monopoly was supposed to unleash an investment flood with companies rushing to develop massive oil reserves. It was going to be historic, and then came the rout.

“It’s tragic that Mexico waited so long to open the sector and that when an administration finally passed a meaningful energy reform, the bottom just falls out of oil prices,” said Tim Samples, a Mexican-energy analyst at the University of Georgia in Athens. “The parade did not last very long.”

Now opponents of President Enrique Pena Nieto, who was accused in some quarters of treason when he denationalized the industry in 2014, are saying they’re being proven right. Some want to bring the monopoly back.

The sweeping energy-sector overhaul was designed to attract major outside investment for the first time since Mexico booted foreign oil and gas companies in 1938. But not as many new players as expected have come in. There’s concern low oil prices might hurt the appetite for deep-water leases to be auctioned later this year.

Mexico will ask for deep-water bids in December

Fuel Fix – Mexico will issue a call for bids on 10 lucrative deepwater exploration fields in early December, President Enrique Peña Nieto said. The announcement is the firmest date yet offered as the much-anticipated auction of Mexico’s deep-water resources approaches. The Gulf of Mexico fields are among the most potentially valuable and technically challenging opportunities the country plans to offer as part of its energy privatization.

Pena Nieto axes Pemex CEO, orders cuts amid oil slump

Instructions have been ordered that all Pemex units must become more profitable.
Instructions have been ordered that all Pemex units must become more profitable.

By Gabriel Stargardter, Ana Isabel Martinez / Reuters

Mexican President Enrique Pena Nieto on Monday removed Emilio Lozoya, the head of ailing state-oil firm Pemex, replacing him with the country’s social security chief whom he tasked with cutting costs amid a global oil rout.

A close ally of Pena Nieto, Lozoya became Pemex CEO in December 2012, overseeing the company during a momentous energy reform that ended Pemex’s decades-long monopoly over the country’s oil and gas sectors.

However, his term coincided with a sharp fall in the price of oil, which, along with years of declining production, has led to record losses and drastic cost-cutting measures.

“I’ve given instructions to the new director to make the efficiency and profitability of all Pemex’s activities his top priority, with an emphasis on its international competitiveness,” Pena Nieto said at a press conference in Mexico City.

“It will be necessary to adjust the cost structure, revise the spending program and strengthen the investment processes, making use of the new joint venture and investment schemes provided by the energy reform.”

Pemex’s new boss, Jose Antonio Gonzalez, has been the director of Mexico’s Social Security Institute since 2012. Mikel Arriola, the head of health regulator Cofepris, will replace him, Pena Nieto said.

Mexican Finance Minster Luis Videgaray, who is said to have had a frosty relationship with Lozoya, said that Pemex’s board would announce fresh budget cuts in the coming days due to the slump in oil prices.