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NEWSLETTER
ACCESS TO ENERGY is a multidisciplinary corporate service shelter integrated by
committed professionals that collaborate contributing knowledge and experience to
provide comprehensive tailored solutions which facilitate the opening and operations
of our clients in Mexico.
The firm provides all kinds of essential services for every stage of a company’s life
cycle: feasibility analysis, soft landing opening, operation, logistics, and attached
services required for a successful corporate strategy.
Number 22
EDITION AND PRODUCTION: ACCESS TO ENERGY CONTACT: [email protected]
www.accesstoenergy.mx Page 2 to 17
News from international Energy sector.
Newsletter June 2017.
WEEKLY ROUND UP MAY 29 – JUNE 4, 2017: CFE LOOKS
FOR HELP, AND THE TRUMP FACTOR ON RENEWABLES.
(Renewable Energy Mexico) 2
COMMENTARY: A NEW ERA OF SHARED CLEAN-ENERGY
LEADERSHIP BEGINS IN CHINA. (International Energy
Agency) 3
ABU DHABI PORT EASES RESTRICTIONS ON OIL TANKERS
GOING TO AND FROM QATAR. (Reuters) 4
INTEREST IN MEXICO’S OFFSHORE BLOCKS IS SURGING.
(Oil Price) 5
TERMINATION OF THE PEMEX FRANCHISE CONTRACT OF
SEVEN SERVICE STATIONS IN PUEBLA. (Pemex) 6
A LOOK AT OIL THEFT AROUND THE WORLD. (Business
Insider UK) 7
PREPARING THE POWER SECTOR FOR THE LOW CARBON
TRANSITION. (International Energy Agency) 9
'SPECTACULAR' DROP IN RENEWABLE ENERGY COSTS
LEADS TO RECORD GLOBAL BOOST. (The Guardian UK)10
NEW OIL AND GAS VENTURE FILES FOR IPO IN MEXICO.
(Financial Times) 11
WORLD RENEWABLE ENERGY PRODUCTION INCREASES
BY RECORD LEVELS IN 2016 – ENOUGH TO POWER HALF
OF WESTERN EUROPE. (Independent) 11
A PERIOD OF ADJUSTMENT. (The Oil &Gas Year) 12
OIL, GAS EXECS SAY E&P ACTIVITY STILL HOLDING
STRONG IN GOM. (Rigzone) 15
SUBSEA SYSTEMS INSTITUTE LAUNCHES DIGITAL
UPSTREAM PROJECT. (Your Oil and Gas News) 16
(
WEEKLY ROUND UP MAY 29 – JUNE 4, 2017:
CFE LOOKS FOR HELP, AND THE TRUMP
FACTOR ON RENEWABLES.
During the Forum held on May 30, “La UNAM y los desafíos
de la nación”, this year dedicated to sustainable energy
systems, experts in energy gathered. They stated that,
although there is no one renewable energy source able to
replace oil yet, Mexico’s transition toward these kind of
technologies is going the right way. They also pointed to
the lack of national talent, from technicians to researchers,
and the importance of education institutions to help
change this.
To boost the infrastructure and energy sector Mexico
Infrastructure Partners emitted, on May 31, its second CKD
with a total value of MX$5.57 billion, and it is expected to
have a ROI of 12-13 percent.
On May 31, CFE released the tariffs valid for June, which
included a reduction of 0.3 percent compared to May’s
tariffs for the High Consumption domestic clients (DAC
tariff) and no increase whatsoever for Low Consumption
clients. The same reduction was applied for commercial
clients. Finally, the industrial sector will see an increase in its
tariffs of 0.5-1.1 percent.
Seeking to solve part of its financial problems, on June 1
CFE announced its intentions to emit a total of MX$8 billion
in bonds to the Mexican Stock Market (BMV).
Eosol will invest MX$400 million in the construction of its new
solar park in Durango, which will have a generation
capacity of 225MWs. The construction is expected to
generate 500 jobs for the construction phase.
www.renewableenergy.com.
www.accesstoenergy.mx Page 3 to 17
COMMENTARY: A NEW ERA OF SHARED CLEAN-ENERGY LEADERSHIP
BEGINS IN CHINA.
There is a new reality in clean energy. The world’s major emerging
economies – including China, India, and several others – are moving to the
center stage of the clean energy transition. By betting heavily on energy
efficiency, on wind, solar and other renewables, as well as other less
carbon-intensive technologies, these countries are increasingly leading
the way.
This is the significance of the top-level meeting of energy ministers from the world’s biggest economies in Beijing
next month. The fact that representatives from fossil-fuel producers like Mexico and Saudi Arabia will join
renewable-energy pioneers like Denmark and Germany for a top-level meeting in China is not a coincidence.
We are witnessing a global consensus that the key to the energy transition will reside with decisions made in
emerging economies.
There are many reasons to stand for clean energy today. These can range from reducing greenhouse gas
emissions but also battling the scourge of air pollution, improving energy security by reducing the dependency
of fossil fuels, diversifying supply, creating high-tech jobs or fostering innovation. As such, approaches to clean
energy will vary from country to country.
According to the International Energy Agency, all of the projected growth in energy demand in the next 25
years will take place in emerging and developing countries. This means that implementing the right kind of
policies and technologies will be critical to ensure stable supplies as well as meeting desirable environmental
outcomes.
The good news is that this is happening. India was the first country to set comprehensive quality and
performance standards for light emitting diodes (LEDs), and it expects to save as much as 277 terawatt-hours
of electricity between 2015 and 2030, avoiding 254 million metric tons of CO2 emissions or the equivalent of 90
coal-fired power plants.
Another upshot is that by committing to these new clean technologies, countries like China are helping drive
down costs for the benefit of the world. China is now the undisputable global leader of renewable energy
expansion worldwide, and the IEA forecasts that by 2021, more than one-third of global cumulative solar PV
and onshore wind capacity will be located in China.
Recently announced renewable projects have broken new records, with power purchase agreements for
several onshore wind and large solar PV farms now below USD 50/MWh. In Mexico, the average price of the
long-term auctions in October 2016 was 33.5 USD/MWh, a level that is extremely competitive, even if wind and
solar power are not always generating. Similar figures can be found in several Latin American countries, Middle-
East and African countries.
CLEAN ENERGY MINISTERIAL.
As clean energy is increasingly driven by the emerging economies, global political leadership in advancing
clean energy will be increasingly shared. This is precisely the function of the Clean Energy Ministerial (CEM),
which was created in 2010, and whose goal is to form a partnership that brings together major industrialized
and emerging economies to focus on clean energy technologies and policies, reduce environmental impacts,
and ensure reliable and affordable supplies.
Our timing is critical. Action by the 25 CEM members, representing 90% of global energy investment and 75% of
global emissions, is crucial for making the world less carbon-intensive than today.
In Beijing, our focus will be to provide a collaborative environment to tackle these challenges in areas ranging
from transportation, buildings to the power sector. Our governments will seek to increase electric mobility, with
a target to reach 30% of the new vehicle fleet by 2030. The recent announcements of the Indian government
www.accesstoenergy.mx Page 4 to 17
will go a long way towards this end. Another challenge for CEM governments will be to increase EV charging
providers by a factor of ten in the next five years. Other priority areas include improving efficiency in buildings,
which account for nearly a third of all energy consumption and 20% of greenhouse gas emissions. It remains a
critical sector and must be addressed at all levels, between governments, industry, regional and city leaders.
In the power sector, the CEM is seeking to move away from the coal-or-renewables paradigm. Coal was the
fuel of the last 100 years, and renewables will likely be the dominant fuel of the next century for many countries.
At the same time, we must recognize that so-called dispatchable power plants – including thermal generation
– are key for many countries to ensure energy security during the transition to a cleaner energy system. And so,
the Beijing meeting will launch new work to address this challenge.
To succeed, this energy transition will require the full backing of industry. This is why the CEM includes top-level
executives from companies involved in all aspects of the energy field who offer a unique on-the-ground
perspective and ultimately determine where investments end up going. They are often the first to recognize
what drives clean energy uptake.
This is a unique time for the CEM, which is entering a new phase of cooperation and growth in our short history.
The world of energy is changing. Facts on the ground unequivocally point to the key role of emerging
economies in clean energy. Come next week’s meeting in Beijing, held from 6-8 June, we are likely to see this
reflected in the leadership of the CEM.
https://www.iea.org/newsroom/news/2017/june/commentary-a-new-era-of-shared-clean-energy-leadership-begins-in-
china--.html
ABU DHABI PORT EASES RESTRICTIONS ON OIL TANKERS GOING TO
AND FROM QATAR.
Abu Dhabi port authorities have eased restrictions on oil tankers going to
and from Qatar, according to industry sources and shipping circulars seen
by Reuters on Wednesday.
Abu Dhabi Petroleum Ports Authority issued a new circular on Wednesday
removing previous restrictions on non-Qatar owned, flagged or operated
vessels sailing to and from Qatar.
This effectively allows direct trade between the two ports and co-loading of crude cargoes, a Singapore-
based shipbroker said.
A Middle East-based industry source said there had been no official notification on halting the co-loading of
crude cargoes.
The ban on vessels carrying the Qatari flag and vessels owned or operated by Qatar is still in place, according
to the circular.
But given there are few Qatari-flagged or owned vessels, this is unlikely to have as big an impact on the
market as the previous circular, the shipbroker added.
Reuters reported on Wednesday two very large crude carriers (VLCCs), which can each carry up to 2 million
barrels of oil, loaded Abu Dhabi grades on Wednesday, despite having taken Qatari crude in an earlier leg of
the voyage.
www.accesstoenergy.mx Page 5 to 17
On Monday, Saudi Arabia's Ports Authority told shipping agents not to accept vessels flying the Qatari flag or
ships owned by Qatari companies or individuals, it said on its Twitter account, adding that Qatari goods would
be barred from unloading in Saudi ports.
On Wednesday, Saudi's Ras Tanura oil port issued a notice stressing the restrictions issued earlier by the Saudi
Ports Authority, according to a copy seen by Reuters.
Another industry source said the notice indicated co-loading of crude cargoes at Saudi ports would be
allowed.
On Monday, Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed ties including all air, land and
sea transport links with Qatar, accusing it of supporting terrorism. Doha denies the accusation.
http://www.reuters.com/article/us-gulf-qatar-oil-idUSKBN18Y1DY
INTEREST IN MEXICO’S OFFSHORE BLOCKS IS SURGING.
The Comisión Nacional de Hidrocarburos (CNH), which will conduct the
lease sale, has listed a total of 25 groups that have successfully pre-
qualified for the Round 2.1 sale. As might be expected, supermajors are
prominent among the companies involved. Chevron (ticker: CVX),
ConocoPhillips (ticker: COP) and Shell (ticker: RDS.A) have each pre-
qualified. Other major international companies include Eni (ticker: E),
Repsol (ticker: REP) and Total (ticker: TOT).
Several NOC’s have also applied, including CNOOC, Pemex, Lukoil, Petronas, Colombia’s Ecopetrol and India’s
ONGC. International E&P’s that have signed on include Noble (ticker: NOG), Premier (ticker: PMO) and Ophir
(ticker: OPHR). Five consortiums have also applied, accounting for a total of 11 companies. A total of 15 offshore
lease blocks will be offered in this sale. According to CNH, these 15 blocks contain a combined 1.6 BBOE of
recoverable resources. Block 11, in the southern section offshore from Tabasco, has the largest prospective
resource of any block with a P50 of 300 MMBOE.
Interest in Mexican offshore properties is increasing as the overall oil industry recovers. Mexico’s recent
deepwater offshore lease sale was highly successful, with eight out of ten blocks sold.
FIRST PRIVATE OFFSHORE OIL WELL IN 80 YEARS RECENTLY BEGAN DRILLING.
A major milestone was achieved in May, as a JV between Premier Oil, Talos Energy and Sierra Oil & Gas began
drilling the Zama-1 offshore well. This is the first time in nearly 80 years that a private company has drilled an
offshore oil well in Mexico. Each of these companies has pre-qualified for the most recent lease sale.
Privately-held Talos Energy is the operator of the well, with a 35 percent stake. Premier owns 25 percent, while
Sierra holds the remaining 40 percent. According to Premier, the Zama-1 well has a P90-P10 gross unrisked
resource range of 100-500 MMBOE.
Premier expects Zama-1 will take about 90 days to drill, and will have a total cost to the company of $16 million.
Tudor Pickering & Holt, however, predict that this resurgence will not have an effect for some time. While the
firm does expect shallow water production to be the next material near-term contributor to Mexican
www.accesstoenergy.mx Page 6 to 17
production, it will not have a significant effect for several years. TPH predicts Mexican production will decline
by about 5 percent per year through the end of this decade.
http://oilprice.com/Energy/Crude-Oil/Interest-In-Mexicos-Offshore-Blocks-Is-Surging.html
TERMINATION OF THE PEMEX FRANCHISE CONTRACT OF SEVEN SERVICE STATIONS IN PUEBLA.
Following through with the inter-institutional cooperation strategy to fight fuel theft, Petróleos Mexicanos
executed the termination of the Pemex Franchise contracts of seven service stations located in the
municipalities of Palmar de Bravo (2), Cuyoaco (2), Tecamachalco, Huixcolotla and Quecholac in the state of
Puebla, which allegedly perpetrated irregular fuel sales and showed fiscal inconsistencies. This measure is the
result of the inter-institutional operation that was performed on April 18, during which, aside from suspending
the fuel supply, tax audits were begun and bank accounts were blocked.
Pemex, the Ministry of Finance and Public Credit, through the Tax Management System (SAT as per its acronym
in the Spanish language) and the Financial Intelligence Unit, participated in the operation, as well as the Office
of the Attorney General of the Republic. The Ministry of National Defense and the National Security Commission
through the Federal Police, in addition to the State Police, provided support and human rights protection at all
times, to ensure the safety of the personnel involved.
This inter-institutional cooperation has the purpose to create an environment of certainty for the end users, as
well as to fight the illegal fuel market, tax evasion, money laundering and trade fraud. The Government of the
Republic will continue working to fight the illegal trade of petroliferous products, which strongly affects the
community and national finances. Petróleos Mexicanos reiterates its committment to continue fighting this
crime and take it to the furthest extent possible.
To fight these crimes, we request the support of the public through anonymous reports to the following numbers
and e-mails:
Litros de a litro (Full liters). PROFECO
55 68 87 22, Mexico City and Metropolitan area.
01 800 468 87 22, long distance free of charge from the rest of the country.
Illegal tapping. Pemex
01 800 228 96 60
Criminal actions. Federal Police
088
01 800 440 36 90
http://www.pemex.com/en/press_room/press_releases/Paginas/2017-049-national.aspx
www.accesstoenergy.mx Page 7 to 17
A LOOK AT OIL THEFT AROUND THE WORLD.
Thousands of miles of oil pipelines connect the world’s oil producing hubs
to their key customers’ refineries and electrical grids. By replacing trucks,
the advent of the pipeline has dramatically reduced the carbon emissions
associated with transporting fuel from point A to point B, but their
unattended nature makes them an attractive target for thieves who could
refine and sell the products for rock-bottom prices on the black market or
other illicit venues.
Oil theft has become incrementally more sophisticated over the past few
decades as transnational gangs and separatist organizations steal fuel to fund their operations. Deepening
geopolitical rivalries amongst states that share pipeline routes also encourage state-backed embezzlement of
energy resources. These are their stories:
NIGERIA.
Nigeria notoriously suffers from oil theft perpetrated by pirates in the Gulf of Guinea, separatist groups in the
Niger Delta, and private citizens looking to make a quick buck. In 2016, Michele Sison, the U.S. deputy
ambassador for the United Nations at the time, said Africa’s largest producer lost $1.5 billion in revenues every
month due to the extensiveness of the oil laundering game across the nation.
MOROCCO.
The border between regional rivals Morocco and Algeria was closed for security reasons in 1994 following an
attack on the Atlas Asni Hotel in Marrakesh. Still, thousands of barrels make it across the border on donkeys,
according to a report by The Guardian in 2013. That summer, Algerian authorities became resolved to end
petrol trafficking on the desert border, resorting to the execution of the animals from a distance. In two
instances, donkeys had even been blown up.
Morocco imports the vast majority of its fuel needs, since it has virtually no fuel reserves of its own. The cheap
illegal fuel from its neighbor saves Rabat hundreds of thousands of dollars in import costs, so law enforcement
turns a blind eye to the smuggling, which occurs far from official checkpoints.
THAILAND.
The differential between oil and gas prices in Malaysia and Thailand spurs the unauthorized transfer of the
former’s fuel via land and sea routes through the Gulf of Thailand. Even after Malay authorities lowered gasoline
subsidies, prices remained lower than those in its northern neighbor.
Illegal refineries near the Niger Delta allow stolen oil to be processed and used in the local economy, but a new
initiative by Lagos would allow the facilities to become legal and secure oil from the government at a
negotiated price. Nigeria’s oil minister Emmanuel Ibe Kachikwu advanced the plans last month in order to
dissuade locals from attacking oil infrastructure.
A portion of the stolen crude leaves Nigerian borders for processing elsewhere. Evidence from 2014 suggests
Nigerian crude had been smuggled into Ghana, mixed with Ghanaian crude before refining and export to
Morocco and other European markets for sale on legal markets.
MEXICO.
Cartels active in the northern half of this Latin American country are ready to be free from their drug addiction.
With a modest upfront capital investment of $5,000 - $8,000, cartels have realized they can tap directly into
state-owned gas pipelines and withdraw seemingly unlimited supplies of gasoline, which they then sell along
the highway at a discount to official government prices. It's a win-win situation whereby the drug cartels make
100 percent profit margins and citizens get "cheap" fuel.
www.accesstoenergy.mx Page 8 to 17
Last year’s numbers from state-run PEMEX said the nation’s pipeline had been tapped almost 7,000 times in
order to supply these illegal markets, which grow in size every year due to heavy participation from ordinary
citizens as demand catalysts. The more prolific the fuel thieves become, the more expensive gasoline becomes
for legal customers, which only encourages them to become the cartels’ newest buyers. It’s a vicious cycle.
The thefts amount to about $1 billion in losses annually, says Luis Miguel Labardini, an energy consultant at
Marcos y Asociados and senior adviser to Pemex’s chief financial officer in the 1990s. “If Pemex were a public
company, they would be in financial trouble just because of the theft of fuel,” he said to Zero Hedge. “It’s that
bad.”
AZERBAIJAN.
Like Nigeria, groups aiming to steal fuel from this country target crude resources. The criminal organizations that
specialize in the practice fill up trucks of the illegally obtained raw goods and transport them to neighboring
countries in trucks and trains—which do not have to be searched by customs officers due to the terms of trade
agreements with neighboring countries, according to a report by Forbes.
Global Risk Insights notes that almost 60 percent of the Azeri economy operates underground, with untaxed
and unregulated oil activities representing a large chunk of the dark underbelly of the national GDP.
MOROCCO.
The border between regional rivals Morocco and Algeria was closed for security reasons in 1994 following an
attack on the Atlas Asni Hotel in Marrakesh. Still, thousands of barrels make it across the border on donkeys,
according to a report by The Guardian in 2013. That summer, Algerian authorities became resolved to end
petrol trafficking on the desert border, resorting to the execution of the animals from a distance. In two
instances, donkeys had even been blown up.
Morocco imports the vast majority of its fuel needs, since it has virtually no fuel reserves of its own. The cheap
illegal fuel from its neighbor saves Rabat hundreds of thousands of dollars in import costs, so law enforcement
turns a blind eye to the smuggling, which occurs far from official checkpoints.
THAILAND.
The differential between oil and gas prices in Malaysia and Thailand spurs the unauthorized transfer of the
former’s fuel via land and sea routes through the Gulf of Thailand. Even after Malay authorities lowered gasoline
subsidies, prices remained lower than those in its northern neighbor. Most of the fuel movement occurs on a
small scale in this region. For example, in February, law enforcement near the Thai-Malay border caught three
cars with modifications to hold 500 liters of fuel in the vehicle’s bodies.
“Their modus operandi was to fill up petrol at stations near the Bukit Bunga bridge, Tanah Merah, using local
vehicles before smuggling them into Thailand,” said the local chief of police. “We believe their activities had
been going on for some time. Stern action will be taken against petrol stations found to be in cahoots with
smugglers.”
Ships carrying refined oil and gas cargo have the options of selling their goods to other ships at sea. The carriers,
most often disguised as fake fishing vessels, bring the remaining fuel to Thai shores, where the traffickers will find
dozens of new costumers.
“Their modus operandi was to fill up petrol at stations near the Bukit Bunga bridge, Tanah Merah, using local
vehicles before smuggling them into Thailand,” said the local chief of police. “We believe their activities had
been going on for some time. Stern action will be taken against petrol stations found to be in cahoots with
smugglers.”
www.accesstoenergy.mx Page 9 to 17
Ships carrying refined oil and gas cargo have the options of selling their goods to other ships at sea. The carriers,
most often disguised as fake fishing vessels, bring the remaining fuel to Thai shores, where the traffickers will find
dozens of new costumers.
http://uk.businessinsider.com/oil-theft-by-transnational-gangs-and-separatist-organizations-2017-6
PREPARING THE POWER SECTOR FOR THE LOW CARBON TRANSITION.
While electricity demand growth is slowing in many countries around the
world, the deployment of renewable power generation continues to grow
dramatically. In fact, over the next five years, renewables are expected to
remain the fastest-growing source of electricity generation worldwide. This
undeniable success of renewable energy – and particularly the success of
solar PV and wind – has started to change the face of the power sector.
Yet the success of renewables, driven in part by continuing and dramatic decline in the price of wind and solar
PV technologies, is precipitating a need for power system transformation in many jurisdictions. This is because
the integration of high shares of variable renewable energy (VRE) such as solar PV and wind is not a simple task.
This is due to the unique technical and economic attributes of VRE as well as the complex nature of the power
system itself. The large-scale uptake of VRE also challenges traditional policy, market and regulatory frameworks
regardless of market structure, whether they lean towards competitive markets or towards more vertically
integrated utility models.
Without taking appropriate action, this complexity can act as a brake as countries seek to add ever larger
shares of VRE to their power systems. If a power system is operated on the last century’s technologies and
market frameworks, investors may hesitate to add more variable renewables. Undertaking this difficult power
system transformation means better understanding what steps need to be taken.
The experience gained in many countries over the past decades have brought to light numerous measures to
effectively design and operate power systems that can integrate increasing amounts of VRE while ensuring the
cost effectiveness and reliability of the power system. These measures range from advanced technological
solutions and improved planning practices to policy and market mechanisms.
To be sure, not all measures will work for all countries. There are significant differences across power systems in
terms of the structure of electricity markets, physical infrastructure, and regulatory mechanisms, among other
aspects.
Despite this diversity, a number of principles are emerging that encompass measures to enable successful
integration of renewables, including improved power system operation and planning, and updated policy,
regulatory and market frameworks. Using these principles as a basis, a new edition of the Status of Power System
Transformation Report, produced by the IEA in collaboration with the 21st Century Power Partnership and the
National Renewable Energy Laboratory (NREL), provides a series of concrete examples and best practices that
have already been implemented throughout the world.
The report also presents an assessment framework to measure power system transformation across a wide
variety of jurisdictions. The framework examines four aspects relevant to power system transformation: markets
and operations; planning and infrastructure; uptake of innovative technology; and efficiency and sector
coupling.
www.accesstoenergy.mx Page 10 to 17
Four case studies – Indonesia, South Africa, Mexico and Australia – capture the diversity of contexts and drivers
for power system transformation. Indonesia, for example, represents a rapidly growing power system where
affordability and energy access are primary drivers. Australia, on the other hand, has seen stagnating electricity
demand and volatile wholesale electricity prices.
The report provides policymakers an understanding of what changes are taking place today in countries
around the world, and presents a valuable framework in determining the next steps in their own planning and
investments, as they take the necessary steps towards building out a 21st century power system.
https://www.iea.org/newsroom/news/2017/june/preparing-the-power-sector-for-the-low-carbon-transition.html
'SPECTACULAR' DROP IN RENEWABLE ENERGY COSTS LEADS TO
RECORD GLOBAL BOOST.
Renewable energy capacity around the world was boosted by a record
amount in 2016 and delivered at a markedly lower cost, according to new
global data – although the total financial investment in renewables
actually fell.
The greater “bang-for-buck” resulted from plummeting prices for solar and
wind power and led to new power deals in countries including Denmark, Egypt, India, Mexico and the United
Arab Emirates all being priced well below fossil fuel or nuclear options.
Analysts warned that the US’s withdrawal from the Paris climate change agreement, announced last week by
Donald Trump, risked the US being left behind in the fast-moving transition to a low-carbon economy. But they
also warned that the green transition was still not happening fast enough to avoid the worst impacts of global
warming, especially in the transport and heating sectors.
The new renewable energy capacity installed worldwide in 2016 was 161GW, a 10% rise on 2015 and a new
record, according to REN21, a network of public and private sector groups covering 155 nations and 96% of
the world’s population.
The new record capacity cost $242bn, a 23% reduction in investment compared to 2015, and renewables
investment remained larger than for all fossil fuels. Subsidies for green energy, however, are still much lower than
those for coal, oil and gas.
New solar power provided the biggest boost – half of all new capacity – followed by wind power at a third and
hydropower at 15%. It is the first year that the new solar capacity added has been greater than any other
electricity-producing technology.
“A global energy transition [is] well under way, with record new additions of installed renewable energy
capacity, rapidly falling costs and the decoupling of economic growth and energy-related carbon dioxide
emissions for the third year running,” said Arthouros Zervos, chair of REN21.
“Trump’s withdrawal of the US from the Paris agreement is unfortunate,” said Christine Lins, executive secretary
of REN21. “But the renewables train has already left the station and those who ignore renewables’ central role
in climate mitigation risk being left behind.”
Vivien Foster, global lead for energy economics at the World Bank, said: “Over 2016 there has been a dramatic
and sustained improvement in the competitiveness of renewable power generation technologies. The most
spectacular renewable energy prices were revealed through auctions that are gaining in popularity in many
countries.”
https://www.theguardian.com/environment/2017/jun/06/spectacular-drop-in-renewable-energy-costs-leads-to-record-
global-boost
www.accesstoenergy.mx Page 11 to 17
NEW OIL AND GAS VENTURE FILES FOR IPO IN MEXICO.
Vista Oil & Gas, a special purpose acquisition vehicle (SPAC) backed by Riverstone Capital and Miguel
Galuccio, the former boss of Argentine state oil company YPF, has filed a prospectus for an initial public offering
in Mexico.
“We consider that there is an opportunity to acquire material assets in a region with abundant resources that
has historically been characterised by insufficient investment in the exploration and production sector,” the
company, which is expected to launch its IPO in about a month on the Mexican Stock Market, said in the
prospectus.
Its initial focus will be on acquisition targets in Mexico, Argentina, Brazil and Colombia. It named no company it
is interested in buying at this stage and did not disclose the expected size of its IPO.
Riverstone is one of the biggest private equity backers in the energy sector. Its companies include Sierra Oil &
Gas, the first private Mexican oil company formed since the country’s landmark 2013 reform of the sector to
allow private investment. It also formed Silver Run Acquisition Corp, a similar SPAC headed by former EOG chief
Mark Papa, which went public in the first quarter of 2016 and had achieved a market capitalisation of $4.1bn
a year later.
The management team is made up of Mr Galuccio and Pablo Vera Pinto, a former finance director at YPF, as
well as Juan Garoby, who led the unconventional resources team at YPF and Alejandro Cherñacov, a former
market relations officer at YPF and former CFO at Jagercor Energy Corp.
Mexico’s stock market has only one quoted energy company and the new venture is likely to attract interest
from pension funds.
Citi and Credit Suisse are global coordinators for the offer.
https://www.ft.com/content/dfa4277f-6af6-3827-8716-2b71fc1537b2
WORLD RENEWABLE ENERGY PRODUCTION INCREASES BY RECORD
LEVELS IN 2016 – ENOUGH TO POWER HALF OF WESTERN EUROPE.
The world added enough renewable energy capacity to power every
house in the UK, Germany, France and Italy combined last year, according
to a new report. The record figure of 161 gigawatts cost about £187bn, but
this was a staggering 23 per cent cheaper than it would have cost in the
previous year.
And, in a further sign of the tumbling price of low-carbon electricity,
Denmark, Egypt, India, Mexico, Peru and the United Arab Emirates are all now receiving supplies at less than
five US cents (about 4p) per kilowatt-hour, “well below” fossil fuels and nuclear.
The Renewables 2017 Global Status Report, published by international renewable body Ren21, found solar
panels made up nearly half, 47 per cent, of the extra capacity added, followed by wind on 34 per cent and
hydro-electric schemes on 15.5 per cent.
In a statement, Ren21 said: “Renewables are becoming the least cost option. Recent deals in Denmark, Egypt,
India, Mexico, Peru and the United Arab Emirates saw renewable electricity being delivered at $0.05 per
kilowatt-hour or less. This is well below equivalent costs for fossil fuel and nuclear generating capacity in each
of these countries.
“Winners of two recent auctions for offshore wind in Germany have done so relying only on the wholesale price
of power without the need for government support, demonstrating that renewables can be the least cost
option.”
www.accesstoenergy.mx Page 12 to 17
Christine Lins, executive secretary of REN21, said the “world is in a race against time”. She added: “The single
most important thing we could do to reduce carbon dioxide emissions quickly and cost-effectively, is phase-
out coal and speed up investments in energy efficiency and renewables.”
“When China announced in January that it was cancelling more than 100 coal plants currently in development,
they set an example for governments everywhere: change happens quickly when governments act – by
establishing clear, long-term policy and financial signals and incentives.”
In total, more renewable capacity was added that the total extra capacity from all fossil fuels combined.
However, the transition to a zero-carbon economy is still not happening quickly enough to meet the targets set
by the Paris Agreement on climate change.
And investments in new renewable energy installations fell by 23 per cent between 2015 and 2016.
“Investment continues to be heavily focused on wind and solar PV, however all renewable energy technologies
need to be deployed in order to keep global warming well below 2C,” the Ren21 statement said.
“Transport, heating and cooling sectors continue to lag behind the power sector. The deployment of renewable
technologies in the heating and cooling sector remains a challenge in light of the unique and distributed nature
of this market.
http://www.independent.co.uk/environment/world-renewable-energy-production-record-increase-2016-green-power-
western-europe-half-ren21-a7776646.html
A PERIOD OF ADJUSTMENT.
Alfredo Alvarez, EY energy segment leader for Mexico and Central
America, talks to TOGY about the evolution of the domestic natural gas
market and power generation sectors. Established in Mexico in 1934, EY is
a global consultancy and advisory services firm catering to several
industries, such as oil and gas.
EY’s Mexico branch has 150 employees who dedicate 80% of their focus to
the energy industry. The company has doubled the size of its local practice
since the start of 2016. EY has been building a team with expertise on
Mexico’s changing regulatory and economic landscape to better help its clients operate in the local
environment. The firm has done this by emphasising the creation of multidisciplinary teams concentrating on
different sectors of the energy value chain, from upstream to downstream, and by acquiring policy knowledge
in key areas such as environmental regulation.
• On changes in the gas market: “Companies are used to simply receiving and paying for natural gas. They’ve
never made a long-term commitment to anything or understood the difference in pricing of guaranteed supply
versus a supply dependent on whether or not there is enough natural gas. You have to understand that if you
want to be sure you will have natural gas for your processes, that will be costlier than the alternative. You’ll have
to evaluate the economics of your own factory and how valuable it is for you to always be sure that you have
natural gas.”
• On the reformed power sector: “On the supply side, a lot of traders and suppliers will start fighting for the
electricity services market. Not everything is about who will provide the cheapest electricity, but also who has
the best plan for a sustainable supply of electricity with the required quality and characteristics. Now, they have
to think of risks, rewards, long- and short-term objectives and clean energy certificates. The environment is
getting more complicated and companies will have to learn.”
www.accesstoenergy.mx Page 13 to 17
Alvarez also discussed developments in the retail sector and the way Mexico’s NOC Pemex is addressing the
challenges it faces in the downstream sector. Most TOGY interviews are published exclusively on our business
intelligence platform TOGYiN, but you can find the full interview with Alfredo Alvarez below.
What were the main events in Mexico’s upstream sector over the past 12 months? The past year was a year of
definition. Upstream continued to show a positive outlook, with a fantastic result for the Trion oilfield, which is
going to be developed as a joint venture between Pemex and BHP Billiton. This was followed by a spectacular
round of bids in which 80% of the deepwater areas were awarded in December 2016 with significant
commitments to exploration.
It was also a tough year filled with discussions with authorities about the terms and conditions of how these
bidding procedures were going to take place. Still, there was major support from the industry. For Trion, both
bidders – BP and BHP – offered to absorb as carry nearly the first USD 2 billion invested in the field. After that,
each party will start [making] their additional investment, divided 60/40.
What developments are taking shape in other sectors of the oil and gas industry? The petrol and diesel market
in Mexico opened, generating a lot of discussion and questions about how to break the monopoly and start
applying equal conditions for others to compete without putting unnecessary pressure on Pemex. With the
devaluation of the US dollar and the increase in petrol and electricity prices, 2016 was tough.
There are also complex processes to define how other players will be invited to utilise the transportation and
storage infrastructure that Pemex has developed over the years. It hasn’t been an easy path. The biggest
example of the difficulty regulators face is determining who will pay for the fuel that may be stolen from the
national pipeline system. The authorities haven’t decided yet.
What factors impact efficient transportation of petrol in Mexico? Geographical differences are part of the
reason behind delays in Pemex’s northwestern systems. They are close to the border and you can transport
petrol using trucks rather than pipelines.
The southern system is more complex. The use of infrastructure is linked to the opening of the market, because
nobody can sell if they cannot bring in petrol to be sold. It was after 2016 that one started to face the
complexities of the problem that aren’t so easy to solve, such as stolen product, securing rights of way, access
to water and so on.
Is the use of Pemex’s existing infrastructure by private players sustainable? It all depends on your strategy, what
you want and what you need the money for. Of course, there will be some players that will come in and build
their own infrastructure. We have examples of companies asking the CRE [Energy Regulatory Commission] for
permits for distribution using their own assets. Others will want to take a piece of a pipeline or storage facility
from Pemex or others. Important players are interested in using Pemex’s existing infrastructure. This is a new,
complex world, but I see a lot of interested players.
Will the market for natural gas vehicles expand in Mexico? You have to be careful, but it could be a good
business. Though gas is cheaper than petrol, the costs associated with converting vehicles for natural gas use
makes it so that it is only viable for frequently used vehicles, such as taxis or public city buses, which are used
daily.
Users will need to make considerable investments to install gas systems in their vehicles. Costs for vehicle
conversion vary depending on the different markets, and that’s why gas and petrol markets are different. They
have a completely different dynamic that could make your investment a good or bad one. At this moment,
the environment is set for making money in natural gas vehicles, though I don’t believe it’s a big game changer.
What is Pemex doing to ensure it is being more efficient in the downstream sector? In 2016, the CEO of Pemex
announced that the company would like to have full control of some refineries, and at the same time, allow
other companies to manage other facilities. For example, the operation of the hydrogen plant at the Tula
processing complex is being outsourced to an international company. That’s one approach – outsourcing
water, hydrogen and other ancillary services around the core business to make it more efficient.
www.accesstoenergy.mx Page 14 to 17
The other way is to invite someone to co-invest with Pemex in the core business of the refinery. Some of the
Pemex refineries need significant investments to operate, and load and digest the heavy oil that Mexico
produces. Pemex also needs to stop producing heavy fuel, which is fortunately no longer consumed by the CFE
[Federal Electricity Commission] because it is expensive and not environmentally friendly. The refineries used to
produce a lot of combustibles for the CFE, so Pemex now has a very low refinery utilisation rate.
What challenges does the natural gas market face? The real problem in the southeast of Mexico is that natural
gas is produced with more nitrogen, which Pemex has been using to increase pressure in mature fields.
However, Pemex has not invested in the infrastructure to clean the natural gas, so in the end, industrial
consumers reject the product, leading to the problem of not having enough natural gas.
When we say natural gas, we’re talking about methane, but propane, butane and ethane are also injected
together with nitrogen. There’s a scarcity of butane and other products, which is clearly a problem.
Companies are used to simply receiving and paying for natural gas. They’ve never made a long-term
commitment to anything or understood the difference in pricing of guaranteed supply versus a supply
dependent on whether or not there is enough natural gas. You have to understand that if you want to be sure
you will have natural gas for your processes, that will be costlier than the alternative. You’ll have to evaluate
the economics of your own factory and how valuable it is for you to always be sure that you have natural gas.
Industrial consumers, owners and traders will have to be willing to make an investment and take a long-term
position. It’ll take time for Pemex to reduce its influence and for these consumers to understand that they’ll have
to pay for it.
How can private companies help compensate for these chronic shortages? They can invest in new plants. They
have to reach a deal with Pemex, or eventually reach agreements with the upstream players that won in Round
1.4. The timing is important, as it’ll take a while for everyone to produce hydrocarbons. If someone is able to find
them in the southeast, they’ll have a very good business there.
How will the power generation market develop in Mexico? The CFE will have to define which areas it wants to
play and invest in. In the past, it had the mandate to do everything. Now the company will have to be selective
in where it wants to be.
On the supply side, a lot of traders and suppliers will start fighting for the electricity services market. Not
everything is about who will provide the cheapest electricity, but also who has the best plan for a sustainable
supply of electricity with the required quality and characteristics.
Now, they have to think of risks, rewards, long- and short-term objectives and clean energy certificates. The
environment is getting more complicated and companies will have to learn. It’ll be a process of several years.
Is the regulatory framework clear enough to attract foreign companies to invest in Mexico? The overall
regulatory framework is good. The problem is now we’re getting into the small details of a lot of things at the
same time. The petrol, diesel and electricity markets are not only being opened. The natural gas and LPG
markets are also being opened at the same time by the regulatory entities.
They have to go into detail about how to assign a specific part of the natural gas system, and manage what
would happen if someone wanted to bring natural gas from A to B and vice versa. It’s that level of complexity
and detail that is needed now, and that is a process that has taken other countries many years to fully organise.
How will the relationship between the USA and Mexico develop and how will that affect the energy industry? I
still believe that we will have a North American energy market, whether the countries like it or not. North America
is completely integrated, and in energy, there is interdependence.
For the US, it’s a win-win situation. If you stop selling natural gas from the US to Mexico, Mexican companies will
suffer from scarcity, but the US gas producers will go bankrupt due to the price of natural gas, which went up
as soon as the US started exporting natural gas to Mexico. There is an interdependence.
www.accesstoenergy.mx Page 15 to 17
Perhaps what will give companies pause is the Mexican presidential election in 2018. The political environment
will not affect energy itself, but it will affect the general mood related to the Mexican presidential elections,
which is causing a lot of companies to have second thoughts about entering Mexico.
How is EY adjusting to the transition of the domestic oil and gas industry? EY has been investing in more talent,
far beyond our typical areas of accounting, taxes and so on. We’ve been investing in new advisors for the
market. So far, we’ve incorporated several partners into our practice with a strong background in oil and gas,
power and utilities, the supply chain, petroleum and other related areas of expertise. We’re hoping to continue
that trend.
We believe this is really the beginning and companies will need a lot of advice to make their lives easier in this
new environment. We have brought in people who used to work for EY in other countries, as well as people
who are outside the EY environment. We’re open to anyone who can add value, and who knows something
about the consultancy business and how to be an advisor.
We’re building teams for different sectors. We’re building a team for power and utilities, water, upstream and
midstream.
We’re trying to take on more complex tasks that certainly require a higher level of specialisation. We now have
more than 150 professionals who spend more than 80% of their time on energy projects. The more specialised
we are, the better. We try to be one step ahead of the rest.
What are EY’s objectives for 2017? Our objective is to keep growing at a good pace. We’ve been able to
double the size of our energy practice in Mexico since the start of 2016. Now we’re taking the next step and
trying to triple that income by 2021. It’s quite ambitious, but we’re investing in talent, so that we can participate
in all these new and developing markets.
http://www.theoilandgasyear.com/articles/a-period-of-adjustment/
OIL, GAS EXECS SAY E&P ACTIVITY STILL HOLDING STRONG IN GOM.
The question posed to panelists in a session during the Louisiana Energy
Conference in New Orleans was simple: will exploration and production
activity in the Gulf of Mexico increase in a $50 oil price environment?
Though this “new normal” the oil and gas industry has adopted doesn’t
come without its challenges, responses from the panelists were overall in
the affirmative.
For starters, the Trump administration has eased up on regulations.
“What we’ve seen with the new administration is certainly more willingness to work with the industry, not just
regulate it. Still, we have a long way to go to solidify that relationship,” said Scott Heck, CEO of Energy XXI Gulf
Coast, Inc.
Loren Long, managing director - Mexico for Talos Energy LLC, a private E&P company based in Houston, noted
a difference between the United States and Mexico.
“One thing we can depend on for the U.S. is at least the regulators here have a real familiarity with the industry.
On the other hand, in Mexico, what we’ve seen is while they don’t have nearly the expertise with the technical
issues [as the U.S. regulators do], they do have enthusiasm and a willingness to truly partner with us,” said Long.
“We’ve seen that in Mexico and that’s been really refreshing. We want to see that more on this side of the
border as well.”
Heck also believes that by becoming more efficient, the industry will remain operational in the new normal.
www.accesstoenergy.mx Page 16 to 17
“Cost structure in the boat market probably can’t come down, but that’s actually an industry problem. I think
the industry can do a lot as far as sharing resources, getting boat utilization up and getting boat efficiencies up
… I think there’s a lot of opportunities for the industry to get more efficient,” he said. “But that doesn’t mean
cutting cost on an individual commodity. We may have modest increases, but not a lot. We’re going to see a
focus on the efficiency side of the business, not the cost side of the business.”
All of the panelists’ companies operate in the Gulf of Mexico, and during a time when offshore activity isn’t as
popular as the craze of onshore such as the Permian, operators are still optimistic.
“Investors chase the Permian because of the yield play. Those are getting constrained now and they’re looking
for other places they can chase where they can get high yields,” said Steve Weyel, CEO of private EnVen
Energy Corporation. “So even as out of favor as the Gulf of Mexico has been, it’s going to give them the yield
investors are looking for.”
http://www.rigzone.com/news/oil_gas/a/150406/Oil_Gas_Execs_Say_EP_Activity_Still_Holding_Strong_in_GOM
SUBSEA SYSTEMS INSTITUTE LAUNCHES DIGITAL UPSTREAM PROJECT.
Adapting new digital tools to upstream operations is a challenge for the oil and gas industry as it faces
increasing pressure to improve efficiency and safety. Industry is moving quickly to bring near real-time
intelligence and predictive analysis to the forefront, but the business and technical frameworks for this
development are poorly defined.
The Subsea Systems Institute (SSI) announces that, in partnership with Endeavor Management and World Oil, it
will sponsor an industry-based initiative focused on adapting the broad area of digitalization to the upstream
oil and gas industry.
Ultimately the project will involve direct participation by operators, service companies and engineering
contractors. The project was launched with an exploratory meeting on May 17, with 14 operators, service and
engineering companies and software providers to identify potential topics for the project, including artificial
intelligence, standard interfaces, asset security and information sharing from design through decommissioning.
A second meeting will be scheduled in the near future to determine industry commitment and support to shape
the partnership.
”This project offered by SSI provides a conduit to focus and collaborate on digitization issues that will benefit
the entire upstream industry,” said Christopher Curran, project manager for the project.
SSI was formed as a Center of Excellence under the RESTORE Act, with a focus on offshore energy development.
Led by the University of Houston, it operates in partnership with Rice University and NASA-Johnson Space Center
and focuses on bringing together industry, academia and NASA to develop the most effective and safest
technologies for operating in the Gulf of Mexico and other regions.
Key focus areas for SSI include:
• Digitalization and smarter systems leading to increased safety and efficiency, less manning and cost
• Inspection, Maintenance and Repair: performance based maintenance
• Life extension, decommissioning and plug and abandonment (P&A)
“The Subsea Systems Institute was created to improve the sustainable and safe development of offshore
energy, and working to spur wider adoption of digital methods is a part of that,” said Bill Maddock, executive
director of SSI.
http://www.youroilandgasnews.com/news_item.php?newsID=142595
www.accesstoenergy.mx Page 17 to 17
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