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LAS POLÍTICAS DE PETRÓLEO Y GAS EN MÉXICO
ANÁLISIS DE LOS MARCOS INDUSTRIALES, INSTITUCIONALES Y JURÍDICOS
Baker & Associates, Energy Consultants 1770 St. James Place, Suite 406 Houston, Texas 77056 USA
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Reporte No. 10013
© 2006 Baker & Associates, Energy Consultants. Derechos Reservados ALCANCES Y OBJETIVOS
ste informe es un resumen de resultados obtenidos de una revisión independiente de los temas relacionados a la industria, comercio y políticas públicas que afectan al Esector del petróleo y gas en México. Nos enfocamos en tres temas: las operaciones/ fi nanzas de PEMEX, las instituciones del sector y su reglamentación, y el aspecto jurídico.
La revisión de los datos y temas fue enriquecida gracias a los comentarios expresados en conferencias académicas y de la industria realizadas en el año 2005, incluyendo aquellas patrocinadas por PEMEX/Colegio de Ingenieros Petroleros de México (CIPM), Veracruz, Feb. 20-23; la Comisión Reguladora de Energía (CRE), Veracruz, Oct. 16-18; Asociación Nacional de la Industria Química (ANIQ), Ciudad de México, Oct. 20-21; Platts, Houston, Oct. 27-28; Cámara Británica de Comercio, Ciudad de México, Nov. 22; y El Colegio de México/ Asociación Mexicana de Economía Energética (AMEE), Ciudad de México, Nov. 28-29.
Todos los panelistas en sus exposiciones presentadas en distintos foros públicos, tanto en el país, como en el exterior, coinciden en que en el México de hoy se requiere de un diagnóstico consensuado respecto al marco que se debe plantear y el rumbo que se debe seguir.
Nuestro propósito es el de aportar argumentos fundamentados que posibiliten encontrar un rumbo acorde con el entorno mexicano, que permita a su vez rectifi car las defi ciencias observadas. Por este motivo es que al fi nal de nuestra exposición nos surge la interrogante ¿Por dónde empezar?
El sector petrolero mexicano, que incluye petróleo crudo, gas natural y petroquímica, no es una isla comercial ni su política se encuentra aislada de América del Norte y de la región del Caribe; y desde esta óptica, en los últimos años se han realizado reuniones de especialistas de los gobiernos de los países de la región, con la fi nalidad de explorar cuestiones y solu- ciones de interés común. Este tópico, entre otros, como las posibles aportaciones de las energías renovables y la conservación al suministro nacional, por ejemplo, son interesantes y merecen atención pero no son examinados en este documento.
En este reporte el enfoque se orienta, más bien, hacia la maquinaria industrial, institucional y política que opera dentro de las fronteras de México. Nos interesa la problemática del suministro de petróleo crudo y gas natural, pero desde un punto de vista integral.
Tal y como lo observó un panelista, en un comentario incisivo, lo que se necesita es una revisión del portafolio completo de las opciones energéticas disponibles en México.
Nuestro objetivo es que los argumentos y conclusiones expuestos en este informe enriquezcan el diálogo sobre las políticas energéticas mexicanas, e impulsen los cambios necesarios para garantizar un suministro oportuno y competitivo de aceite crudo, gas natural, productos refi nados y petroquímicos en las décadas venideras.
George Baker Director de Investigación Energia.com, una fi lial de Baker & Associates, Energy Consultants
Houston 16 de marzo de 2006
LAS POLÍTICAS DE PETRÓLEO Y GAS EN MÉXICO 1 Análisis de los marcos industriales, institucionales y juridicos ANÁLISIS DE LOS MARCOS INDUSTRIALES, INSTITUCIONALES Y JURÍDICOS
bservamos que la organización actual y el curso de la industria del petróleo y gas en México son insustentables. Como resultado, la perspectiva del país en términos Ode seguridad energética y crecimiento económico está en riesgo. A fin de minimizar este riesgo y fortalecer el sector, se requiere realizar cambios de fondo en los próximos años. De ser bien instrumentados, estos cambios podrían transformar al sector en un pilar del desarrollo sustentable del país.
Los desafíos y oportunidades para dicho sector en México, dentro de las áreas operativas, financieras, institucionales/regulatorias, y jurídicas, son muchos y estan relacionados entre sí. De tal forma que, para poder lograr un resultado satisfactorio, se requiere atender todas estas áreas.
1. OPERACIONES/FINANZAS DE PEMEX
Los esfuerzos en exploración realizados por Petróleos Mexicanos (PEMEX) en los últimos 25 años han proporcionado resultados poco satisfactorios. El reemplazo de la producción con nuevos descubrimientos ha sido menor al 15% de las reservas probadas en 2004, cifra por debajo del promedio global de la industria, lo que ha empujado las reservas a niveles críticos. Cantarell, del cual depende más de la mitad de la producción de PEMEX, comenzará a experimentar una declinación natural significativa en los próximos años.
Se estima que los yacimientos en aguas profundas del Golfo de México tienen el potencial para cubrir esta brecha a largo plazo; sin embargo, pretender explotar este potencial sin los conocimientos, experiencias y capacidades técnicas que puede aportar la industria petrolera internacional resultaría en una acción onerosa, larga y altamente riesgosa en las vertientes financiera y ambiental. Cabe señalar que se trata más de aportaciones metodológicas que tecnológicas.
La capacidad de refinación en México no ha crecido en sintonía con la economía y la población. Las operaciones de refinación per cápita son, en el presente, 15% menores que la cifra lograda en 1993. Las refinerías son incapaces de abastecer los productos refinados que requiere el mercado nacional, en términos de volumen o calidad, razón por la cual existe una significativa y cada vez mayor importación de éstos; se con- sidera que con una reestructuración de la industria, lo que hoy son importaciones podrían ser en el futuro productos elaborados en México, con un impacto positivo en la economía nacional y regional.
La producción nacional de gas natural tampoco satisface la demanda, y ante los resultados pocos alentadores de exploración la factibilidad de incrementar la producción a 8,700 millones de pies cúbicos por día en el año 2010 es altamente cuestionable.
El gobierno mexicano ha impulsado dos políticas para compensar la falta de nuevos descu- brimientos de gas: la primera es la importación de gas licuado por medio de buque tanque y la segunda es incrementar la importación de gas seco por ducto desde los Estados Unidos.
LAS POLÍTICAS DE PETRÓLEO Y GAS EN MÉXICO 2 Análisis de los marcos industriales, institucionales y juridicos En ambos casos, el gas es comercializado a precios internacionales, que son calculados por medio del mecanismo del “costo de oportunidad”. Se piensa que se debe ser muy cuidadoso en lo que se refiere a la política de fijación de precios, de tal forma que un nuevo mecanismo para proteger a los consumidores contra la volatilidad de precios de EUA no se convierta en un desincentivo para modernizarse e invertir en la producción nacional de gas, la cual impulsaría la participación de las empresas mexicanas y fomentaría el empleo.
En el área de la petroquímica, a pesar de contar con una abundante materia prima, un mer- cado en crecimiento, y el interés de los inversionistas mexicanos e internacionales, ha sido imposible negociar los acuerdos de inversión (pública y/o privada) que se requieren para modernizar y ampliar la capacidad existente.
Finalmente, en términos de finanzas, PEMEX es la compañía petrolera más endeudada en el mundo. Esta deuda, aunada a los pasivos laborales y a otras responsabilidades, asciende a un monto total que se acerca a los 100 mil millones de dólares. La administración del Presi- dente Vicente Fox ha impulsado medidas que buscan capital de inversión de compañías privadas, mexicanas e internacionales, pero estas medidas, por diferentes razones, no han sido recibidas favorablemente en algunos sectores. Se percibe que el futuro crecimiento de PEMEX no puede seguir siendo financiado a través de un mayor endeudamiento.
2. INSTITUCIONES/REGLAMENTACIÓN
El tema del gobierno corporativo de PEMEX conlleva muchos puntos y cuestionamientos relacionados entre sí. Para que los ejecutivos de PEMEX puedan ser vistos como líderes empresariales con una gran responsabilidad de rendir cuentas ante los accionistas (confor- mados por la sociedad mexicana), se piensa que la figura jurídica de PEMEX debería cambiar de un organismo gubernamental a la de una sociedad mercantil.
Además, el cargo de Director General de PEMEX deberá de ser fortalecido con atribu- ciones ejecutivas efectivas. Actualmente—y a pesar de lo expuesto en el Artículo 59 de la Ley Federal de las Entidades Paraestatales (LFEP) en el que se establecen las facultades y obligaciones de los directores generales–el alcance del cargo en el caso de PEMEX tiene una flexibilidad limitada, y cuenta con pocas herramientas con las cuales puede implemen- tar los planes que sean desarrollados. Colateralmente, debido a que los funcionarios de se- gundo nivel en PEMEX suelen ser nombrados por razones políticas, existen ambigüedades potenciales en términos de la rendición de cuentas.
En la actualidad, el órgano de gobierno de PEMEX como empresa es el Consejo de Administración. El consejo está compuesto por once miembros, seis de diferentes secretarías gubernamentales y cinco del sindicato petrolero. En general, los miembros carecen de conocimientos sobre la industria petrolera internacional. Consideramos que este con- sejo es inefectivo como organismo de supervisión pública y como guía en asuntos relevantes de administración, tales como estrategia comercial, finanzas y reclu- tamiento ejecutivo. Se estima que sería conveniente reestructurar el consejo para que contara tanto con funcionarios públicos de carrera como con empresarios con trayectoria en la administración de empresas en los mercados nacionales e internacionales. Además sería relevante que todos los miembros del consejo tuvieran conocimientos acerca de la indus- tria petrolera internacional.
Al mismo tiempo, sería útil contar con comités de auditoría con la autoridad suficiente para solicitar información sobre las opciones disponibles para PEMEX en sus diferentes áreas de
LAS POLÍTICAS DE PETRÓLEO Y GAS EN MÉXICO 3 Análisis de los marcos industriales, institucionales y juridicos operación (en la Fracción X del Artículo 58 de la LFEP el concepto de “comité de apoyo” ya existe).
Por otra parte, la Comisión Reguladora de Energía sólo cuenta con autoridad sobre unos cuantos eslabones de la cadena de valor de la industria petrolera. Además, existen serias dudas sobre el futuro de esta institución que ha existido durante diez años; desde el año 2000, el presupuesto y las asignaciones de personal a la CRE se han ido reduciendo progresi- vamente. ¿Es esta institución un verdadero regulador o únicamente un emisor de permisos para compañías, públicas y privadas, que cuida que se entregue la documentación requerida para cumplir con las leyes y normas federales e internacionales? Es un paso positivo que la CRE se encuentre promoviendo un cambio para que sus finanzas se vean reforzadas por medio del pago de cuotas por parte de los permisionarios.
Se observa que son múltiples instancias gubernamentales las que tienen un impacto signifi- cativo en el sector petrolero. Debido a su facultad para aprobar o rechazar el financiamiento de proyectos propuestos por PEMEX, la Secretaría de Hacienda y Crédito Público (SHCP) determina muchos aspectos de las políticas energéticas. Haciendo uso de su facultad para administrar los precios de los productos energéticos, la Secretaría de Economía también tiene un impacto en las políticas energéticas. Estas consideraciones convergen en un comentario expresado en público por un ex-ejecutivo de PEMEX en una conferencia sobre energía realizada en el Colegio de México: “El tema del gobierno corporativo de PEMEX es menos importante que el de la gobernabilidad del sector energético en su totalidad”.
El desempeño y las funciones de la Secretaría de Energía (SENER) se han venido cuestio- nando casi desde el origen de la dependencia en los ochentas. Un cuestionamiento, por ejemplo, concierne a dos de las funciones que potencialmente crean conflictos de interés irreconciliables. Por una parte, el Secretario de Energía es el presidente de los consejos de administración de las compañías nacionales energéticas (PEMEX y las dos compañías de electricidad, CFE y LFC). Como tal, el secretario es responsable por la salud empresarial de dichas organizaciones. Por otra parte, éste también es responsable de fomentar un am- biente de negocios que atraiga capital en términos competitivos con la mejor tecnología disponible para obtener el máximo beneficio de los recursos petroleros de México.
Esta tensión, más la incidencia en el sector petrolero de otras dependencias gubernamen- tales, no sólo debilita la eficiencia y el prestigio de la SENER sino que también afecta la credibilidad de su titular como interlocutor del Estado dentro y fuera del pais en temas relacionados con la política energética de la administración en turno.
Cabe señalar que en el escenario internacional en países con vastos recursos petroleros y de gas, existen entes reguladores que todavía no existen en México. Un ejemplo sería una instancia con facultades autónomas de gestión que sea responsable de la vigilancia por parte del Estado sobre la explotación petrolera.
Hoy en día, PEMEX en su función central de exploración y producción es auto- regulada sin una supervisión pública efectiva. La SENER ha estudiado y documentado la necesidad de contar con una instancia reguladora independiente con competencia sobre la explotación petrolera, pero aún no se han realizado las acciones correspondientes, ya sea mediante la asignación de nuevas facultades a la CRE o por medio de la creación de una nueva agencia reguladora.
De tal manera, se llega a la conclusión de que México necesita a la brevedad de una regulación efectiva en todas las áreas ligadas a la cadena de valor de la industria petrolera.
LAS POLÍTICAS DE PETRÓLEO Y GAS EN MÉXICO 4 Análisis de los marcos industriales, institucionales y juridicos 3. JURÍDICO
Observamos que los conceptos de la proveeduría gubernamental, como los plasmados en la Ley de Obra Pública y Servicios Relacionados con la Misma (LOPSRM), son eficientes para satisfacer las necesidades cotidianas del sector público, pero también observamos que estos conceptos no alcanzan a satisfacer todas las necesidades de PEMEX en lo referente a la adquisición de tecnología, bienes y servicios.
Un problema en particular es que las leyes son sordas en cuestiones relacionadas con la eficiencia de ejecución; un ejemplo es la dificultad de cambiar el curso de las actividades licitadas y contratadas una vez que la obra ha iniciado. En la industria petro- lera, un proyecto siempre tiene cierto grado de incertidumbre. Conforme se ejecuta un proyecto, se adquieren nuevos datos y mayor conocimiento que con frecuencia dictan cambios en las actividades remanentes con el fin de evitar resultados sub-óptimos, o para aprovechar oportunidades y crear un resultado significativamente mejor. En cualquier caso, se debe contar con la experiencia suficiente para saber cuándo cambiar el curso de las actividades, y además los contratos deberían ser lo suficientemente flexibles para permitir que dichos cambios se hagan de forma efectiva y transparente. Actualmente no son así.
La Ley Reglamentaria del Artículo 27 Constitucional en la Rama del Petróleo, que fue publicada el 29 de noviembre de 1958, en su artículo sexto prohíbe, en su aplicación, la operación comercial de compañías petroleras internacionales en México. Si esta política llegara a cambiar, la ley también debería cambiar para eliminar ambigüedades costosas tanto para PEMEX como para las compañías.
A nivel estructural, los conceptos del status quo están entretejidos en los Artículos 25, 27, 28 y 73 de la Constitución. Estos artículos se encuentran al parecer profundamente conca- tenados por lo que cambiar cualquiera de éstos aparentemente requiere cambiarlos a todos. “No se puede convertir la figura jurídica de Petróleos Mexicanos, un organismo del gobierno federal, a la de una corporación comercial de la noche a la mañana”, observa el Lic. Raúl Nocedal, un experto jurídico quien ha desempeñado cargos relevantes tanto en la Secre- taría de Energía como en la CRE, y quien añade, “se necesita de un marco jurídico completo”.
¿POR DÓNDE EMPEZAR?
al como se ha visto, al tocar prácticamente cualquier tópico del sector petrolero se topa uno de inmediato con múltiples temas y cuestionamientos. La industria Tpetrolera es altamente compleja, y al observarla desde diferentes perspectivas se hace cada vez más complicada: los recursos remanentes son más difíciles de detectar, y una vez que se descubren, son más difíciles y costosos de producir (como en aguas profundas); el sistema global de refi nación enfrenta el desafío de convertir crudos cada vez más pesados en productos de mejor calidad. Al mismo tiempo, el ambiente comercial también suele sufrir cambios imprevistos. La industria petrolera está en constante aprendizaje y cambio para responder a estas demandas. Lo que es de primera clase el día de hoy, mañana será la segunda opción.
De esta manera, se percibe la conveniencia de contar con una visión de fondo de los retos que enfrenta la industria petrolera mexicana; para ello—y paradójicamente—es también ne- cesario contar con un conocimiento de las instituciones reguladoras, las prácticas operativas
LAS POLÍTICAS DE PETRÓLEO Y GAS EN MÉXICO 5 Análisis de los marcos industriales, institucionales y juridicos y los avances tecnológicos de la industria petrolera internacional. No es posible, insistimos, profundizar en la problemática de PEMEX sin tener esta visión internacional.
Por consiguiente, mediante la profundización dinámica de las dos realidades, la mexicana y la internacional, se puede encontrar un enfoque particular, mismo que corresponderá a los valores y a las instituciones del entorno mexicano. En este enfoque encontramos a un PEMEX robusto, ágil y con una fuerza laboral que está al tanto de los avances en las prácticas internacionales.
En nuestra visión a largo plazo, PEMEX es una compañía de exploración y producción que opera–junto con su competencia y socios–no sólo en México, sino en otras cuencas y mer- cados. En la actualidad, PEMEX se encuentra muy lejos de esta visión: Es la única com- pañía petrolera nacional que no cuenta con la fl exibilidad para hacer crecer sus capacidades tecnológicas, habilidades comerciales y oportunidades de inversión mediante alianzas u otras fi guras comerciales. Una mayor fl exibilidad en este sentido traería como consecuencia una transferencia continua de tecnología de punta: las reser- vas de petróleo y gas en México aumentarían, la producción se incrementaría, y se podría extraer el mayor valor de cada barril. Las nuevas aportaciones tecnológicas, administrativas y de capital incidirían sobre la seguridad energética y el desarrollo económico nacional.
CONCLUSIONES
os tiempos han cambiado. El status quo institucional, legal y político que funcionó tan bien en el pasado no protegerá en el futuro los intereses de México en términos Lde seguridad nacional y energética. Se requiere de una ponderación de las opciones políticas disponibles para el Estado mexicano ante la realidad de hoy en la que, como hemos visto, se nota la declinación de campos, el deterioro en el balance comercial del sector energético y el gran reto del desarrollo de los yacimientos en aguas profundas que aún están por descubrirse. En este proceso de ponderación inevitablemente surgirán las negociaciones y la necesidad de llegar a compromisos, mismos que requieren de un debate objetivo entre organismos independientes para encontrar una solución económica y políticamente viable.
El camino a seguir es aquél que evite dos formas equivocadas de enfrentarse a la realidad petrolera: la primera, sobredimensionar—como se hizo en México a principios de los ochentas—los benefi cios de la explotación petrolera; la segunda, subestimar los benefi cios que pudieran ser obtenidos mediante un replanteamiento integral del marco petrolero mexicano.
Es ahí, en un espacio estratégico que se encuentra situado entre ambos extremos, en donde los actores involucrados en el sector energía en México deberán concentrar todos sus esfuerzos y capacidades para que, con el apoyo de la sociedad, se logre ubicar con la mayor certeza el punto de partida y el rumbo que se debe tomar.
LAS POLÍTICAS DE PETRÓLEO Y GAS EN MÉXICO 6 Análisis de los marcos industriales, institucionales y juridicos PORTALES DE REFERENCIA EN INTERNET
Internacionales
BP Statistical Review of World Energy 2005 http://www.bp.com/genericsection.do?categoryId=92&contentId=7005893
U.S. Department of Energy http://www.eia.doe.gov
North American Energy Working Group http://www.pi.energy.gov/naewg.html
Nacional Energy Board (Canadá) http://www.neb.gc.ca
Secretariado del TLCAN http://www.nafta-sec-alena.org
Seguridad y Prosperidad de América del Norte http://www.spp.gov
American Petroleum Institute http://api-ec.api.org/newsplashpage/index.cfm
Norwegian Petroleum Directorate http://www.npd.no/English/Frontpage.htm
Railroad Commission of Texas http://www.rrc.state.tx.us
[email protected] México
Secretaría de Energía http://www.energia.gob.mx
Petróleos Mexicanos E&P (PEP) http://www.pep.pemex.com
Instituto Mexicano del Petróleo (IMP) http://www.imp.mx
Procuraduría Federal del Consumidor (PROFECO) http://www.profeco.gob.mx
Comisión Reguladora de Energía (CRE) http://www.cre.gob.mx
Comisión de Energía del Senado http://www.senado.gob.mx/comisiones/directorio/energia/body/doc_concurrente.htm
Comisión de Energía de la Cámara de Diputados http://www.diputados.gob.mx/comisiones/energia
Asociación Mexicana de Economía Energética (AMEE) http://www.amee.com.mx
Asociación Mexicana de Energía y Desarrollo Sustentable (AMEDES) http://www.amedes.org.mx
Asociación Mexicana de Gas Natural (AMGN) http://www.amgn.org.mx
LAS POLÍTICAS DE PETRÓLEO Y GAS EN MÉXICO 7 Análisis de los marcos industriales, institucionales y juridicos 19 de enero de 2006 Un reporte de análisis empresarial y de políticas públicas
REPLANTEAMIENTO DE LA POLÍTICA PETROLERA EN MÉXICO: TEMAS INDUSTRIALES, INSTITUCIONALES Y DE POLITICAS PUBLICAS
Baker & Associates, Energy Consultants 5177 Richmond Ave. Ste 525 Houston, Texas 77056
A management and policy report January 19, 2006
RETHINKING OIL POLICY IN MEXICO: INDUSTRY, INSTITUTIONAL AND POLICY ISSUES Content Indice
SUMMARY PAGE RESUMEN PÁGINA Principal findings i Conclusiones principales i Purpose of report 1 Propósito del reporte 1 Scope of report 1 Alcances del reporte 1 Introduction: Evolution of global oil industry 2 Introducción: Evolución de la industria petrolera mundial 2
UNSUSTAINABLE FUTURE 3 UN FUTURO NO SUSTENIBLE 3 1. Pemex’s operations 3 1. Las operaciones de PEMEX 3 Exploration and production 3 Exploración y producción 3 Refining 3 Refinación 3 Natural gas 3 Gas natural 4 Petrochemicals 4 Petroquímica 4 2. Finances 5 2. Finanzas 5 3. Institutions 5 3. Instituciones 5 Office of Energy Minister 5 Secretaría de Energia 5 Office of Director General of Pemex 5 Director General de Pemex 6 Pemex, S.A 6 Pemex S.A. 7 CRE 7 CRE 7 Upstream regulator 8 Upstream regulator 8 4. Legal and regulatory frameworks 8 4. Los marcos legales y regulatorios 9 Pricing issues 8 La administración de precios 9 Government Procurement Law 9 La ley de obras públicas 9
WHERE TO BEGIN? 10 ¿POR DONDE EMPEZAMOS? 10 Decisions pending 10 Las decisiones a tomar 10
APPENDICES 12 APPENDICES 12 Internet resources and documentation 12 Fuentes documentales en el Internet 12 Acknowledgments 13 Agradecimientos 13
ENERGIA.COM 14 ENERGIA.COM 14
Quick Links web http://www.energia.com e-mail [email protected]
rethinking oil policy in mexico::ii Replanteamiento de la política petrolera en México Principal Findings Conclusiones principales
Major changes are needed to avoid further deterioration in Mexico’s energy bal- La política energética de México requiere de cambios para fortalecer el sec- ance, an outcome, were it to occur, would put the country’s energy security and tor petrolero y sus instituciones, con la finalidad de incrementar la producción, economic growth at risk. actualizar la infraestructura y las prácticas operativas y evitar más deterioro en la balanza comercial. 1. Pemex’s four operating units have performed below expectations for a quarter- century: 1. Durante los últimos 25 años, las unidades de negocio de Petróleos Mexicanos • Pemex Exploration & Production (PEP) is the largest offshore producer world- (PEMEX) han operado muy por debajo de las expectativas en muchos renglones: wide, but does not replace its production with proved reserves. • PEMEX Exploración y Producción es el productor costa afuera más grande del • Pemex Refining has not expanded capacity to keep pace with population mundo, pero no alcanza a reponer su producción con nuevas reserves probadas. growth, and petroleum imports are now a quarter of supply. • PEMEX Refinación no ha ampliado su capacidad al ritmo del crecimiento de la • Pemex Gas has blocked the opening of the gas market and its control of the población, y requiere importar una cuarta parte del abastecimiento de market today is greater than in 1995. productos. • Pemex Petrochemicals has been losing capacity and competitiveness, and • PEMEX Gas ha bloqueado la apertura del mercado del gas; su posición en el cannot close deals with investors. mercado tiene hoy más peso que en 1995. • PEMEX Petroquímica ha estado perdiendo capacidad productiva y 2. The finances of Pemex are not those of a real oil company. competitividad y no ha podido concretar alianzas con inversionistas.
3. Institutions and laws are inadequate for a market-oriented, competitive and 2. Las finanzas de PEMEX no son las de una empresa petrolera a nivel mundial. Su transparent administration of the oil sector. nivel de deuda total es alrededor de $100 mil millones de dólares. • The offices of Energy Minister and Pemex Director General are weak. • The CRE is weak, and there is no upstream1 regulator. 3. Las instituciones y las leyes del sector energético en México son inadecua- das para un mercado competitivo y una administración transparente del sector 4. The private sector supports Pemex because it petrolero. can negotiate prices with the government. • Las facultades tanto del Secretario de Energía como las del Director General de PEMEX son débiles. 5. Assessment of the debate • La Comisión Reguladora de Energía (CRE) es débil y no existe un regulador • A review of real options for the energy sector is missing. para el “upstream”.1 • Today’s debate is a repetition of known positions, without a spirit of inquiry and compromise. 4. La Iniciativa Privada apoya a PEMEX con la certeza de poder negociar con el gobierno precios preferenciales.
5. Conclusiones acerca del debate • Las opciones reales para el sector energético no se ventilan adecuadamente. • Se repiten las posiciones conocidas, con poco espíritu de investigación y
1El término”upstream” también se utiliza en español. Se refiere a las diversas actividades relacionadas 1The term upstream refers to the diverse activities associated with the exploration and production of petroleum. con la exploración y producción de hidrocarburos.
rethinking oil policy in mexico::i Replanteamiento de la política petrolera en México Purpose Porósito del Reporte
The purpose of this report is to document, in one place, the principal arguments El propósito del reporte es documentar, en un sólo lugar, los principales argumen- bearing on the future of the Mexican oil industry seen as an area of commerce and tos relacionados con el futuro de la industria petrolera mexicana desde el punto investment. de visto comercial y de inversión. Nuestra intención es que los argumentos aquí planteados contribuyan al diálogo, Our intention is that the findings and arguments in this report will contribute to en México y en el extranjero, acerca del futuro de la política energética mexicana. the dialogue, in Mexico and abroad, about the future of Mexican energy policy. Consideramos que se necesitan cambios para revitalizar las instituciones, de tal We find that changes are needed to reenergize institutions so that they may wisely manera que estas puedan administrar sabiamente tanto los recursos naturales manage natural resources and markets. In this way, they will guarantee a timely como los mercados de forma que puedan garantizar un suministro oportuno and competitive supply of crude oil, natural gas, and petroleum products for the y competitivo de petróleo crudo, gas natural y sus productos derivados para las decades ahead. décadas venideras. La revisión de datos y temas fue enriquecida también por los comentarios expre- We also wish to acknowledge and respond to several comments expressed at re- sados en varias conferencias industriales y académicas recientes, entre las cuales cent industry and academic conferences, among these were programs sponsored hubo programas auspiciados por PEMEX (Veracruz, 20 a 23 de febrero de 2005), by PEMEX (Veracruz, Feb. 20-23, 2005), the CRE (Veracruz, Oct. 16-18, 2005), ANIQ la CRE (Veracruz, 16 al 18 octubre de 2005), ANIQ (Ciudad de México, 20 y 21 de oc- (Mexico City, Oct. 20-21, 2005), Platts (Houston, Oct. 27-28, 2005), British Chamber tubre de 2005), Platts (Houston, 27 y 28 de octubre de 2005), Cámara Británica de of Commerce (Mexico City, Nov. 22, 2005) and El Colegio de México/AMEE (Mexico Comercio (Ciudad de México, 22 de noviembre de 2005) y El Colegio de México/ City, Nov. 28-29, 2005). AMEE (Ciudad de México, 28 y 29 de noviembre de 2005).
rethinking oil policy in mexico::1 Replanteamiento de la política petrolera en México Scope of Report Alcances del Reporte
his report is a summary of findings of a more extensive review of industry, ste informe constituye una síntesis de una detallada revisión sobre los commercial and policy issues affecting the Mexican oil sector. Petróleos aspectos comerciales y estratégicos que afectan la industria petrolera TMexicanos (Pemex) is, in addition to all its other attributes, a paradox: On Emexicana. PEMEX hoy en día vive una interesante paradoja: por un lado, es the one hand, it is the largest offshore oil producer in the world; on the other, it op- la empresa con la más alta producción crudo en el mar a nivel mundial; pero por erates in just one country without strong prospects for an international presence. otro, es una empresa que exclusivamente opera en México sin fuertes perspec- tivas de incursionar internacionalmente The focus of this report is on the industrial, institutional and policy machinery that operates within Mexico’s borders. We examine four topics: Pemex operations, El enfoque de este reporte es en la industria, instituciones y maquinaria política Finances, Institutions and Legal and regulatory frameworks. At the end, we ask, que funciona dentro de las fronteras de México. En el reporte se tocan cuatro Where to begin? puntos: Operaciones de PEMEX, asuntos financieros, institucionales y los marcos legales y regulatorios. Y al concluir, nos preguntamos: ¿Por dónde empezamos? Our concerns are about policy choices, organizational issues and risk; the report’s findings are expressed largely in qualitative terms. In other reports we carry out Nos interesan las alternativas políticas, asuntos organizacionales y riesgo; las con- quantitative analysis of capacity, markets and trends. clusiones del reporte están expresadas principalmente en términos cualitativos. En otros reportes, llevamos a cabo análisis cuantitativos de capacidad, mercados y This report does not examine a number of collateral subjects which, although tendencias. important, cannot be considered here. Among these are the following: • Energy policies having to do with conservation or the different forms of Ciertos temas colaterales al sector, aunque importantes, no son examinados en renewable energy. este reporte. Entre éstos se pueden mencionar los siguientes: • Energy initiatives concerning Central America • Las políticas de conservación de energía y las modalidades de energía • Trilateral discussions held since 2002 about energy policy and regulation renovable. between Mexico, the U.S. and Canada • Las iniciativas en materia de energía en Centroamérica. • Pemex’s labor union. • Las conversaciones trilaterales sostenidas desde 2002 entre México, Estados • Pemex as a political or nationalistic symbol. Unidos de América (EUA) y Canadá sobre energía y su regulación. • El sindicato de PEMEX. • PEMEX como un símbolo político o nacionalista.
rethinking oil policy in mexico::2 Replanteamiento de la política petrolera en México Introduction: Evolution of the global oil industry Introducción: La evolución de la industria petrolera mundial n the oil industry of the 21st century there are capital, technological and managerial requirements that did not exist in 1973, the year of the first n la industria petrolera del siglo 21 existen requerimientos de capital, IOPEC oil embargo and the first year of new oil production from the giant tecnología y capacidad operativa que no existían en 1973, año en que se Reforma fields in the states of Tabasco and Chiapas. In 1973, large-scale oil and Esuscitó el primer embargo petrolero por parte de la OPEP y primer año gas production from the North Sea, Alaska, the U.S. Gulf of Mexico and Mexi- de producción de los campos gigantes petroleros de Reforma en los estados co’s Campeche Sound were still dreams of geologists and engineers. de Tabasco y Chiapas. En 1973, la producción a gran escala de petróleo y gas del Mar del Norte, Alaska, el Golfo de México de los EUA y de la Sonda de During this period, the oil industry has changed its character as well: the major Campeche era todavía un sueño de geólogos e ingenieros. oil companies no longer own steel. It is the oilfield service companies that own the tools, equipment, rigs and, in some areas, advanced technology. Their Durante este periodo, la industria petrolera también ha cambiado su carácter: tasks are defined by the oil companies who assume responsibility for risks in las principales compañías petroleras ya no son propietarias del acero. Las the expectation of market-based rewards. Service companies manage hard- compañías de servicios de los campos petroleros son las propietarias de la ware and technology; oil companies manage frontier projects and reservoirs. herramienta, el equipo, las plataformas y, en algunas áreas, de tecnología avan- zada. Sus tareas están definidas por las compañías petroleras que asumen la Most of the world’s oil is under the administration of national oil companies, responsabilidad de los riesgos bajo la expectativa de recompensas basadas en and that upwards of 60% of world oil production comes from some 250 giant el mercado. Las compañías de servicios administran el equipo y la tecnología and super-giant fields. There is only one super-giant field in Mexico: mientras que las compañías petroleras cuidan el desarrollo de los yacimientos Cantarell. All of these fields are already in decline, or will be, in decline in y administran los proyectos de frontera. the coming decade. It’s worth noting that a generation has passed in Mexico without the discovery of a giant or super-giant field. La mayor parte del petróleo mundial se encuentra bajo la administración de compañías petroleras nacionales, y más del 60% de la producción mundial de petróleo viene de cerca de 250 campos gigantes y súper-gigantes. En México, sólo existe un campo súper-gigante: Cantarell. Se espera que este empiece a declinar en los próximos años. Cabe señalar que ha pasado una generación en México sin descubrir algún campo gigante o súper-gigante.
rethinking oil policy in mexico::3 Replanteamiento de la política petrolera en México Unsustainable Future Un Futuro Insostenible
n this section of the report we discuss Pemex’s operations, institutional and n este apartado se comenta lo referente a las operaciones de PEMEX, las insti- Ipolicy and legal matters. Etuciones del sector y los marcos legales y políticas. We find that the present organization and policy orientation of the oil industry Hemos observado que la organización actual y la orientación política de la industria in Mexico are unsustainable in industrial, financial, institutional and regulatory del petróleo en México son insostenibles en los rubros industrial, financiero, institu- terms. Major changes are needed in the next few years to avoid further deterio- cional y regulatorio. Se requieren cambios a corto plazo para evitar el deterioro del ration in Mexico’s energy balance, an outcome that will put the country’s energy balance de energía, cuyo resultado pondría en riesgo la seguridad energética y el security and economic growth at risk. crecimiento económico.
1. PEMEX’S OPERATIONS 1. LAS OPERACIONES DE PEMEX a. Exploration efforts over the past 25 years have yielded unsatisfactory a. Los esfuerzos de exploración de los últimos 25 años han producido resulta- results. Replacement of production with new discoveries of proved reserves dos poco satisfactorios. El reemplazo de la producción con nuevos descubrimien- (the so-called 1P) has been extremely low (under 15% in 2004), and the reserves tos de reservas probadas (las llamadas 1P) ha sido demasiado bajo (por debajo del base has now reached a critical position. 15% en 2004), y la base de reservas ha alcanzado una posición crítica.
An article by David Shields published in the Mexico City newspaper Reforma on En un artículo publicado en el periódico Reforma el día 6 de diciembre de 2005, Dec. 6, 2005, gives a dark picture of the production outlook for the super-giant el analista David Shields pinta un cuadro oscuro del panorama de producción del field Cantarell, a field that, for a generation, has been the foundation of Mexican campo súper-gigante de Cantarell- un campo que durante una generación ha sido oil exports and one of the pillars of public finances. 2 el cimiento de las exportaciones petroleras de México y constituye uno de los pilares de las finanzas públicas. Meanwhile, the present strategy of PEMEX pursuing new reserves in deepwater by itself will, if continued, lead to an expensive and risky course of trial and error. Por otro lado, si PEMEX por sí sola continúa con su estrategia de buscar nuevas In addition, there could be great environmental consequences. reservas en aguas profundas podría ser una solución lenta y costosa con grandes consecuencias ambientales.2 b. PEMEX’s refineries in Mexico have not kept up with population growth. Re- finery volumes per capita are today 15% less than they were in 1993. The predict- b. Las refinerías de PEMEX en México no han mantenido el paso del crecimiento able result is that PEMEX is unable to supply the domestic market in the needed poblacional. El volumen de crudo procesado per cápita en las refinerías es ahora volumes and the quality of petroleum products. 15% menos que en 1993. El resultado predecible es que PEMEX es incapaz de surtir el mercado doméstico con los volúmenes y calidad requeridos de los productos There is a large and growing import bill for products that could be produced petrolíferos. in Mexico if the industry were restructured. Meanwhile, the Consumer Protec- tion Agency (Profeco) reports that as many as 70% of PEMEX-franchised ser- Hay un gran y creciente déficit de las importaciones de productos que podrían vice stations have defective flow meters, the use of which results in consumer elaborarse en México si se reestructurara la industria. Mientras tanto, la Procuraduría fraud and an annual tax evasion estimated at US$6.7 billion. Similar patterns Federal de Protección al Consumidor (Profeco) reporta que hasta el 70% de las gaso-
2 Additional discussion of these topics is in George Baker, “Mexico’s presidential elections trigger oil policy 2 Se encuentra un análisis adicional a estos tópicos en George Baker: “Las elecciones presidenciales de México debate,” Oil & Gas Journal (Tulsa), Nov. 14, 2005, pp. 20-23. disparan el debate sobre la política petrolera,” Oil & Gas Journal (Tulsa), 14 de noviembre de 2005, pp. 20-23.
rethinking oil policy in mexico::4 Replanteamiento de la política petrolera en México exist in LPG distribution. lineras franquiciadas por PEMEX tienen medidores defectuosos, cuyo uso resulta en un fraude a los consumidores estimado en 18 mil millones de pesos y una evasión c. Natural gas. PEMEX is unable to supply demand from domestic produc- fiscal correspondiente. Existen patrones similares en la distribución del gas LP. tion, and its promise to increase gas production to 10 Bcfd at some point in the pesos (US$6.7 billones). Existen patrones similares en la distribución del gas LP. future is regarded as unrealistic by most observers. The Government has chosen a policy of encouraging LNG supplies and increasing imports of piped US gas in c. Gas natural. PEMEX es incapaz de surtir la demanda con la producción nacional order to compensate for PEMEX’s lack of new discoveries. y su promesa de aumentar la producción a 10 mil millones de pies cúbicos por día en algún punto del futuro es visto como poco probable por muchos. El gobierno LNG and imported piped gas will both be expensive, and neither will escogió la política de motivar el suministro de gas natural licuado (GNL) y las impor- protect the Mexican economy from the volatility and high levels of U.S. taciones crecientes de gas entubado de los EUA para compensar por la carencia de prices. nuevos descubrimientos.
Confusing signals were sent by PEMEX GAS in 2001 when, at first, it showed Tanto el GNL como el gas entubado importado serán caros y ninguno de ellos great enthusiasm to receive expressions of interest from prospective LNG protegerá a la economía mexicana de la volatilidad y los altos niveles de los operators for a site in Altamira; then, in mid-year, Pemex Gas mysteriously was precios en EUA. no longer interested (two years would pass before the Federal Power Utility (CFE) would issue a public tender for LNG-supplied gas for Altamira. Something PEMEX GAS mandó señales cruzadas en 2001 cuando, en el mes de enero mostró similar happened two years later in mid-2004 when PEMEX GAS had almost gran entusiasmo tras recibir expresiones de interés de operadores prospectivos de finished negotiations for a new pipeline in the U.S. to meet the growing gas GNL para ubicarse en Altamira, Tamps.; luego, a mediados de ese mismo año, cesó demand in Chihuahua, when, again, it passed the responsibility for negotiating su interés (pasarían dos años antes de que la Comisión Federal de Electricidad [CFE] a gas supply contract to CFE—despite its lack of experience. convocara a una licitación pública para el suministro de GNL en Altamira). Algo similar ocurrió dos años después, en 2004, cuando PEMEX GAS estaba por finiquitar Now, as CFE considers a new LNG terminal in Manzanillo, PEMEX GAS wants to la negociación de un nuevo gasoducto para suministrar gas de los EUA, atendiendo make sure the gas contracts are better than the ones that CFE negotiated alone. a la creciente demanda en Chihuahua, Chih., cuando una vez más, pasó a la CFE la If the Manzanillo project materializes, there will be two state-owned companies responsabilidad de la negociación de un contrato de suministro de gas, a pesar de su engaged in the marketing of natural gas. falta de experiencia. Ahora, cuando la CFE está considerando una nueva terminal de GNL en Manzanillo, Col., PEMEX Gas quiere asegurarse de que los contratos de gas From all this, the question arises: Who is in charge of natural gas supply policy in sean mejores que los que CFE negoció por sí sola. Mexico? A raíz de todo esto surge la pregunta: ¿Quién está a cargo de la política de suministro de gas natural en México? d. Petrochemicals. Despite ample feedstock, a growing market and the inter- est of Mexican and international investors, for diverse reasons since 1995 it has proven impossible to fund either public or private investment to modern- d. Petroquímicos. A pesar de la existencia de suficiente materia prima, un mercado ize and expand existing capacity. creciente y del interés de inversionistas mexicanos e internacionales, desde 1995 y por diversos motivos se ha sido imposible fondear la inversión pública o privada para According to the Mexican Chemical Association (ANIQ), in 2004 Mexico’s modernizar y expandir la capacidad existente. chemical trade deficit reached US$6.7 billion--and the deficit is expected to grow. De acuerdo con la Asociación Nacional de la Industria Química (ANIQ), en 2004 el déficit de productos químicos de México llegó a los $6.7 mil millones de dólares y se espera que éste déficit se incremente.
rethinking oil policy in mexico::5 Replanteamiento de la política petrolera en México Then there is the saga of Project Fénix, a proposed million-ton ethylene plant Otro ejemplo es la saga del Proyecto Fénix, una planta propuesta con capacidad that was ballyhooed by the Fox administration from 2002 until the embarrassing de un millón de toneladas, que fue anunciada con bombo y platillo por la admin- collapse of negotiations with prospective investors in mid-2005. istración de Vicente Fox desde el año de 2002, y que fue pospuesta a mediados del 2005, después del penoso colapso de las negociaciones con los inversionistas. The government could never decide on the ideal location of the new complex, and El gobierno nunca pudo decidir la ubicación ideal para el nuevo complejo, y fue pre- the public relations offices of the governors of the states of Veracruz and Tamauli- sionado por las oficinas de relaciones públicas de los gobernadores de los estados pas fought media wars for three years over which location was best for Mexico. de Veracruz y Tamaulipas, quienes entablaron guerras mediáticas durante tres años, Investors wanted a break with U.S. benchmarks for the pricing of feedstock and con la finalidad de influir en la decisión de cuál sería la ubicación que más le conven- other government-supplied inputs—but the reply was the always same, “We can’t dría a México. do that. If we gave you a discount on international prices, everyone would want a discount.” Los inversionistas quisieron pasar por encima de las evaluaciones comparativas de los EUA para establecer el precio de la materia prima y otros insumos suministrados por el gobierno, pero la respuesta fue siempre la misma: “No podemos hacer eso. Si te damos un descuento sobre los precios internacionales, todos querrán descuentos.”
2. Finances 2. Finanzas
PEMEX is the most heavily indebted oil company worldwide. It is no secret PEMEX es la empresa petrolera más endeudada del mundo. No es un secreto that PEMEX survives on borrowed money, some of which is formal debt but most que PEMEX sobrevive de dinero prestado, algo del cual es deuda formal pero la of which is disguised debt in a form of contractor financing known as PIDIREGAS. mayoría es deuda disfrazada bajo la forma de financiamiento a contratistas conocida These two categories of debt, plus pension obligations and other liabilities, add up como PIDIREGAS. La suma de estas dos categorías de deuda, aunado a las de las to a figure that approaches US$100 billion. obligaciones por pensiones y otros riesgos, asciende a un número cercano a los $100 mil millones de dólares. The Fox administration has proposed measures to seek investment capital from pri- vate companies, Mexican and international, but has met with scant public support La administración de Vicente Fox ha propuesto medidas para buscar capital de inver- and limited commercial success. sión de empresas privadas mexicanas e internacionales, pero ha recibido poco apoyo por parte de la sociedad civil y cuenta con pocas perspectivas de éxito comercial. None of the many proposals for the fiscal reform of PEMEX call into question its ambivalent attitude about reform: Pemex wants to be treated and taxed like an Observamos que ninguno de las múltiples propuestas para la reforma fiscal de oil company while retaining its ambiguous status as an arm of the federal govern- PEMEX cuestiona la postura ambivalente de ésta: Quiere ser tratada y gravada como ment. una compañía petrolera pero a la vez quiere conservar sus status ambiguo de un órgano del gobierno federal.
3. Institutions 3. Instituciones
The Energy Ministry (SENER) Secretaría de Energía (SENER) The true role of the Energy Ministry in the oil sector has been questioned from El verdadero papel de la Secretaría de Energía en el sector petrolero se ha venido diverse perspectives. The presence of other ministries, most notably Finance cuestionando desde varias perspectivas. La presencia de otras secretarías, en (SHCP), often eclipses the influence of the Energy Ministry. By its ability to approve particular la de Hacienda (SHCP), eclipsa con frecuencia la influencia de la Secre-
rethinking oil policy in mexico::6 Replanteamiento de la política petrolera en México and disapprove financing for projects proposed by Pemex, the Finance Ministry taría de Energía. Dada su facultad para aprobar y desaprobar financiamiento para sets energy policy. By his ability to allocate spending priorities inside the company, proyectos propuestos por PEMEX, la Secretaría de Hacienda establece una política the Corporate Director of Finance makes energy policy. By its ability to administer energética. Mediante su facultad para administrar los precios de los productos prices of energy products, the Economy Minister also sets energy policy. petrolíferos, el Secretario de Economía también establece una política energética. Por medio de su facultad para ajustar los tiempos de la asignación de recursos a These considerations converge in a disturbing comment voiced from the audi- los proyectos de inversión de las subsidiarias, el Director Corporativo de Finanzas ence by a former Pemex executive at a recent energy conference: “The subject of también establece una política energética. Estas consideraciones convergen en un the corporate governance of Pemex is less important than the governance of the comentario preocupante, expresado por un ex–ejecutivo de PEMEX en un con- energy sector as a whole.” greso de energía reciente: “El tema del gobierno corporativo de PEMEX es menos A case in point is the guerrilla warfare taking place in Guadalajara, Monterrey and importante que el gobierno del sector energético en su conjunto.” other cities between LPG and natural gas distributors: no regulator or policy-mak- ing authority exists to negotiate an end the conflict. Another case is the disorderly Un caso que ilustra lo anterior es la guerra sucia entre los distribuidores de gas lubricants market where the principal actors have years of civil complaints, court LP y de gas natural en Guadalajara, Monterrey y otras ciudades: no existe ninguna orders and lawsuits without the expectation of an equitable resolution. entidad reguladora o instancia gubernamental que sea responsable por la elabo- ración de políticas para resolver los conflictos. Otro caso es la ingobernabilidad The Energy Ministry serves as a publishing house of ten-year forecasts on selected en el mercado de lubricantes; los principales actores tienen años en denuncias, areas of the energy sector: electricity, LPG, refined products and natural gas. Tell- amparos y juicios sin una expectativa de una resolución equitativa. ingly, there are no forecasts for the crucial areas of oil and gas production and the petrochemical sector. The ministry also publishes an annual energy balance. None El Secretario de Energía: ¿Cabeza del sector? of its publications are widely consulted, however, given that the premise for the En la actualidad, el Secretario de Energía posee dos funciones que crean conflictos forecasts is a policy status quo. (A forecast would attract many readers would be irreconciliables de interés. Por un lado, es presidente del consejo directivo de las one that estimated the effect of a change in policy.) compañías estatales de energía (PEMEX y las dos de servicios eléctricos, CFE y LFC). Como tal, el Secretario tiene la responsabilidad del saneamiento de estas orga- Office of Energy Minister: Head of the energy sector? nizaciones. Al mismo tiempo, también es responsable de promover un ambiente Today, the energy minister has two roles that create irreconcilable conflicts of de negocios que atraiga capital bajo términos competitivos y con la mejor tec- interest. On the one hand, he is the chairman of the board of directors of the state nología disponible para obtener el máximo beneficio económico de la dotación de energy companies (Pemex and the two power utilities, CFE and LFC). As such, hidrocarburos de México. Ya que ambos son objetivos clave para el país, inevi- the Minister has responsibility for the health of those organizations. At the same tablemente surgirán interferencias que requerirán compromisos y la necesidad time, the Minister is responsible for promoting a business environment that at- de soluciones negociadas, y es difícil percibir cómo podría el mismo funcionario tracts capital on competitive terms and the best available technology to produce cubrir ambas funciones imparcialmente. maximum economic benefit from Mexico’s hydrocarbon endowment. While both are key objectives for the country, trade-offs and the need for compromise will La SENER también funciona como una casa editorial: publica pronósticos a diez inevitably arise, and it is difficult to see how one official could fulfill both functions años para ciertas áreas del sector energía: electricidad, gas LP, productos refina- impartially. dos y gas natural. Dice mucho el que no haya pronósticos para la producción de petróleo crudo y gas natural ni para el sector petroquímico. La SENER también publica un balance nacional de energía; sin embargo, sus publicaciones son poco consultadas, dado que la premisa de los reportes es un status quo en las políticas públicas. (Un reporte que atraería a un mayor número de lectores sería un análisis del efecto del cambio en las políticas.)
rethinking oil policy in mexico::7 Replanteamiento de la política petrolera en México Office of Director General of PEMEX Director General de PEMEX The office of the director general of a large state-owned oil company is where two En el puesto de director general de una empresa petrolera nacional se presenta independent realities converge: the one is the art and science of managing a large con frecuencia la convergencia de dos realidades independientes: la primera, la organization—regardless of its specific charter. The other reality is the local frame- universal, consiste en el arte y la ciencia de dirigir una organización grande—no work in which the oil industry operates. importa su ramo. La segunda es el entorno local en el que tiene que operar esa empresa. In its universal dimension, it is the responsibility of the CEO to project himself and his vision in such a way that reconciles the distinct agendas, not only of the operat- En la dimensión universal, su responsabilidad es proyectarse en una forma que ing subsidiaries, contractors and labor organizations, but also those of regulators logre una reconciliación y una convergencia de agendas distintas, no sólo las de las and other government authorities. The goal is always the same: add value to its subsidiarias, los contratistas y sindicatos, sino también las de las instancias regula- products and services. doras y gubernamentales. El propósito siempre es el mismo: dar valor agregado a los productos y servicios. In its local dimension, the CEO has to attend to the idiosyncrasies of the country in oil-related matters. The goal is always the same: supply the local market through En la dimensión local, su responsabilidad es la de atender a las idiosincrasias del national production and imports while protecting citizens, the environment and país en materia petrolera. El propósito siempre es el mismo: abastecer el mercado the reputation of the company. nacional con productos elaborados en casa o importados, proteger a la sociedad, al medio ambiente y a la imagen de su empresa. The formal attributes of the PEMEX director general are mainly defined in terms of staff roles as a communicator and fiduciary agent not as a business leader with bottom-line Los atributos del Director General de PEMEX están definidos principalmente en responsibility. His job description includes the requirement to draw up plans, but his términos de sus funciones administrativas como comunicador y agente fiduciario, freedom to plan is sharply restricted and he has few tools with which to implement no como líder empresarial con responsabilidad de maximizar las utilidades de the plans that he does manage to draw up (This was the experience of PEMEX officials la empresa. La descripción del puesto de Director General de PEMEX incluye el who, since 1995, have been planning to divest Pemex’s petrochemical assets requerimiento de elaborar planes, pero su libertad para planificar está fuertemente restringida y dispone de pocas herramientas para implementar los planes que As a public official, the Director General has no effective authority over the actions logre confeccionar (Esto fue la experiencia de los ejecutivos de PEMEX que, desde of senior executives in the Corporation and operating units. Two results flow from 1995, intentaron privatizar los activos de PEMEX Petroquímico). this situation: The director general is seen as responsible for the setbacks that hap- pen in the operating units or in international markets. Some of us recall a dramatic Como funcionario público, el Director General tiene poca autoridad efectiva sobre instance of this type that took place in mid-1981 and which resulted in the removal los subalternos inmediatos que sean designados por el Presidente de la República. from office of the Pemex director general.3 De esta situación surgen dos resultados: A pesar de la falta de autoridad es prob- able que sea el Director General quien resulte visto como responsable por los The second result is that the presidential appointee who is director general of contratiempos que suelen suceder en las subsidiarias o en los mercados interna- one of the operating units feels little or no obligation to respond to the Director cionales.3 Algunos recordamos un caso notorio en este sentido que sucedió en el General’s instructions or strategic guidance. A Corporate Director is seen more as año 1981.4 an adversary than as an ally with resources and advice, and in consequence the valuable experience of these executives is lost.4 3 Accidentes graves en algunas áreas de las subsidiarias no han resultado en la destitución o renuncia del 3 Major accidents in some of the areas of the operating units do not lead to the removal or resignation of Director General de PEMEX; ejemplos son los de 1984 (San Juanico), 1992 (Guadalajara), 1996 (Cd. Pemex) the Pemex Director General, as in those in 1984 (San Juanico), 1992 (Guadalajara), 1996 (Cd. Pemex) and y 2004-5 (Nanchital). 2004-5 (Nanchital). 4 Un caso de este tipo tuvo lugar a mediados del año 1981 que tuvo como consecuencia la destitución del 4 One case of this type occurred in mid-1981 that led to the removal of the Pemex Director General. Director General de PEMEX.
rethinking oil policy in mexico::8 Replanteamiento de la política petrolera en México El segundo, es que el ejecutivo designado presidencialmente, que funge como di- The Director General lead discussions to a consensus on strategic options lines of rector general de una subsidiaria, siente poca o ninguna obligación de responder action, and he should expect compliance from his executives at the corporate and a las instrucciones o lineamientos estratégicos del Director General. Un Director operating levels. In PEMEX, however, it seems that everything works against his Corporativo es visto más como mal necesario que como un colega con recursos performing the role of chief executive officer of a major oil company. y consejos, lo que puede traer consigo el desperdicio de la valiosa experiencia de estos ejecutivos.5 These and other considerations lead us to conclude that the Office of the Direc- tor General of Pemex is the weakest link in the management and public El Director General debería guiar las discusiones sobre las opciones estratégicas y oversight of the Mexican oil sector. las líneas de acción, y debe de poder contar con el cumplimiento de sus ejecuti- vos tanto en la Corporación como en las subsidiarias. En PEMEX, parece que todo funciona en contra de su desempeño como presidente de una empresa petrolera grande.
PEMEX, S.A. De esta manera, llegamos a la conclusión de que el puesto de Director Gen- Other PEMEX corporate issues include the need for tax relief and a new model of eral de Pemex es el eslabón más débil de la gestión y vigilancia pública del corporate governance. The new model would free Pemex from the constraints of sector petrolero mexicano. the Public Works Law and allow it to operate with its own budget that is separate from that of the federal budget at large. PEMEX, S.A. Otros temas corporativos relacionados con Petróleos Mexicanos incluyen el alig- For PEMEX executives to be both credible business leaders and accountable to eramiento de los impuestos y un nuevo modelo de gestión corporativa. El nuevo shareholders who form Mexican society, the legal status of PEMEX needs to be modelo liberaría de las restricciones de la Ley de Adquisiciones y Obras Públicas y changed from that of a government agency to that of a mercantile society: Servicios Relacionados con las Mismas y le permitiría operar con un presupuesto Pemex, S.A., and the office of the Director General needs to refurnished into that propio que esté separado del presupuesto federal. of a real CEO following international practice. Para que los ejecutivos de PEMEX sean líderes de negocios creíbles y se les acredite In any scenario, and as the CRE has insisted, a change is needed to separate Pemex ante los accionistas quienes, en su conjunto, constituyen la sociedad mexicana, el Gas Marketing from Pemex Gas Pipelines, as their fusion spawns cross-subsidies status legal de PEMEX requiere cambiarse, de una entidad gubernamental and non-transparency. a una sociedad mercantil: PEMEX, S.A. y el puesto del Director General necesita ser reconfigurado de acuerdo a prácticas internacionales. In the same vein, PEMEX’s board is composed of eleven members, six from gov- ernment ministries (without global oil industry knowledge) and five from the Oil Bajo cualquier escenario, y como ha insistido la CRE, se necesita de una reestruc- Union (similarly lacking expertise). This body is ineffective as an agency of public turación interna de PEMEX GAS para separar a la “Comercializadora PEMEX GAS” oversight and as a source of guidance on matters of strategy, finance and executive de “PEMEX GASODUCTOS”, ya que la fusión de estas actividades se presta a los recruitment. The board needs to be restructured to include auditing committees subsidios cruzados y a la falta de transparencia. with authority to demand information and documents bearing on the options available to PEMEX in its various areas of operation.6 En el mismo sentido, el consejo de PEMEX está conformado por once miembros, seis de los cuales son de secretarías gubernamentales (sin un conocimiento global 5 It is telling that the entire office of the Corporate Director of Strategic Planning [DCPE] was eliminated in de la industria petrolera) y cinco del sindicato petrolero (igualmente carentes de mid-2004 as unnecessary overhead. 5 Eso nos está diciendo el hecho de que la Subdirección Corporativa de Planeación Estratégica [DCPE] fue 6 The board is routinely provided just one proposed choice or solution to consider. eliminado a mediados de 2004 como un costo indirecto innecesario.
rethinking oil policy in mexico::9 Replanteamiento de la política petrolera en México Energy Regulatory Commission (CRE) experiencia internacional). Este grupo es ineficaz como una entidad de supervisión Established as a regulatory agency in 1995 the CRE has authority only over just a pública y como guía en asuntos estratégicos, financieros y de reclutamiento ejecu- tiny slice of the petroleum value-chain (the administration of natural gas franchis- tivo. El consejo deberá reestructurarse para incluir comités de auditoria con auto- es, LNG permits and private power projects). ridad para exigir información y análisis que documenten las opciones disponibles para PEMEX en sus diferentes áreas de operación.6 There are serious questions about the future of this ten-year-old institution and its mandate. Is it an active economic agent or just an issuer of permits to companies, Comisión Reguladora de Energía (CRE) public and private, who do the required paperwork to show compliance with fed- Establecida como órgano regulador en el año de 1995, la CRE sólo tiene autoridad eral and international norms and standards? Since 2000, the budget and staffing sobre una pequeña rebanada de esta cadena de valor (la administración de las allocations of the CRE have been progressively reduced, while its responsibilities franquicias de distribución de gas natural y el otorgamiento de permisos en mate- have been increased to include matters extraneous to its central mission as an ria de gas natural). economic regulator (safety audits, for example). Existen serios cuestionamientos acerca del futuro de esta institución de 10 años Upstream regulator de antigüedad y de su mandato. ¿Es un agente económico activo o solamente Beyond the CRE, the regulatory bodies and functions, that are commonly found una emisora de permisos para compañías públicas y privadas, que completa todo in countries with large endowments of oil and gas, do not exist in Mexico. As one el papeleo requerido para que la documentación cumpla con las normas y es- result, Pemex in its central role of exploration and production is self-regulated, with tándares federales e internacionales? Desde el año 2000, el presupuesto y asigna- no effective public oversight. The need for a regulatory institution has been stud- ciones de personal a la CRE han ido disminuyendo progresivamente, mientras que ied and documented in the Energy Ministry, but no action has yet been taken to las obligaciones han aumentado al incluir asuntos ajenos a su misión central como create one by adding new functions and authority to the CRE or by forming other regulador económico (auditorias de seguridad, por ejemplo). regulatory agencies.7 Más allá de la CRE, las entidades y funciones reguladoras que se encuentran These and other considerations lead us to conclude that Mexico needs comúnmente en países con grandes dotaciones de petróleo y gas, no existen en regulation over all links in the energy value-chain. México. Como resultado, PEMEX en su papel central de exploración y producción, es autorregulado sin alguna supervisión pública efectiva. La necesidad de una institución reguladora se ha estudiado y documentado en la Secretaría de Energía, pero todavía no se ha tomado acción alguna para crearla por medio de la adición de nuevas funciones y autoridad de la CRE o a través de la creación de otras de- pendencias reguladoras.7
México necesita urgentemente una regulación para todos los eslabones de la cadena de valor energética.
6 Al Consejo se le proporciona rutinariamente una solución propuesta para su consideración. 7 The Office of Exploration and Exploitation of Hydrocarbons (DGEEH), a department of the Energy 7 Puede ser que un día la Dirección General de Exploración y Explotación de Hidrocarburos (DGEEH) de Ministry, might one day become the regulator of resource-related policy and programs; but currently it has la SENER se transforme en un ente regulador, pero actualmente no cuenta con la autoridad, personal o neither the mandate, staff, or budget to do so. presupuesto para tal efecto.
rethinking oil policy in mexico::10 Replanteamiento de la política petrolera en México
PUBLIC POLICY PERSPECTIVE No. 10018
Public Policy Perspectives are issued periodically, in English or in Spanish, as a public service with the aim of inviting fresh discussion of matters of law, policy, regulation and corporate governance. This document was prepared to help fill the vacuum in Mexico of public discussion in relation to the sanctions recently applied to two prominent Pemex executives and five members of their respective teams.
Three hypotheses are offered for discussion: <1> In the case of the sanctions in PMI, the SFP auditors acted without a thorough grounding in oil market norms and practices. <2> The export sale of coker naphtha was at its true market price; and there was no “discount,” as alleged by SFP auditors. <3> The Public Servant Accountability Act of 2002 needs revision to provide additional protection to traders in any agency of the federal government. The topic of the sanctions given to personnel in Pemex E&P will be reported separately.
GLOBAL OIL INDUSTRY PUZZLED BY PEMEX EXEC SANCTIONS Auditors lacked knowledge of commodity market trades George Baker
n October 11, 2011, it became public knowledge that federal auditors had found fault with the performance of duty of the two Pemex executives who are the best known in the international O oil industry: Rocío Cárdenas and Sergio Guaso. The first served as the CEO of PMI Comercio Internacional (PMI), Pemex’s international arm; the second as the leader of the department in Pemex’s upstream business unit that was responsible for designing public tenders that would put in practice the procurement philosophy of the Energy Reform of 2008. This turn of events was met with incredulity by industry and academic observers, customers and contractors. In conversation, industry and academic observers in Mexico and Houston express their concern that such measures will only hurt Pemex and the government, in addition to damaging the careers and professional networks of two outstanding executives. The present analysis, based on discussions with sources familiar with some of the details and background issues, focuses on the logic and institutional costs associated the sanctions applied to the executive sanctions in PMI.
Contents Discussion ...... 2 Table 1 Press titles in English translation ...... 8 Exhibit A Press release of SFP ...... 9 MEI report titles in 2011 ...... 10
MEXICO ENERGY INTELLIGENCE® (MEI) is a commercial and policy advisory service offered by BAKER & ASSOCIATES, ENERGY CONSULTANTS, a management consultancy based in Houston. MEI reports facilitate two‐way communi‐ cation between Mexican public and private institutions and the global environment. Our reports examine policy, institutional and cultural issues as they affect the operating environment, energy regulation, and government and private investment in Mexico’s energy sector. Reports are distributed principally on a subscription basis. [email protected] P.O. Box 271506 ~ Houston, TX 77277‐1506 (713) 255‐0000 GLOBAL OIL INDUSTRY PUZZLED BY PEMEX EXEC SANCTIONS
GLOBAL OIL INDUSTRY PUZZLED BY PEMEX EXEC SANCTIONS1
Auditors lacked knowledge of commodity market trades
George Baker
n October 11, 2011, it became public knowledge that federal auditors had found fault with the performance of duty of the two Pemex executives who are the best known in the international oil industry: Rocío Cárdenas and Sergio Guaso. The first served as the oCEO of PMI Comercio Internacional (PMI), Pemex’s international arm; the second as the leader of the department in Pemex’s upstream business unit that was responsible for designing public tenders that would put in practice the procurement philosophy of the Energy Reform of 2008. This turn of events was met with incredulity by industry and academic observers, customers and contractors. In conversation, industry and academic observers in Mexico and Houston express their concern that such measures will only hurt Pemex and the government, in addition to damaging the careers and professional networks of two outstanding executives.
In none of these cases has there been an allegation of illegalities; but Mexico would not be Mexico if the media did not seize upon ambiguities in the language of the government’s press briefing (where the word “orchestrated” was used once) in order to construct a narrative about a vast web of PMI corruption. Aside from a paid ad placed in REFORMA on October 18th by friends of Rocío Cárdenas, the Mexican media has not yet asked if the auditors reached the wrong conclusions. The aim here is to provide an alternative view, and to offer suggestions as to how to improve the law and the market knowledge of auditors. The issues in dispute are of such a different character that they deserve separate treatment, and the present discussion will focus on matters concerning the PMI executives. What observers found incredulous was not only that the allegations of administrative impropriety imputed to the PMI executives were of dubious merit, but also the severity of the sanctions meted out to four Pemex careerists who were internationally recognized for their competence and professionalism. It’s easier to understand concerns about the magnitude of the sanctions than to explain the technical issues of the allegations: Not only was the employment of the four PMI executives terminated, but each was barred from returning to public service in the federal government for
1 This document is a condensation of sections of MEXICO ENERGY INTELLIGENCE® Market Note 106 “Making Sense of the PMI Sanctions,” issued October 24, 2011.
October 25, 2011 MEXICO ENERGY INTELLIGENCE®
Page 2 of 13 GLOBAL OIL INDUSTRY PUZZLED BY PEMEX EXEC SANCTIONS
ten years. On top of these sanctions, which were severe enough in themselves, there were huge fines: US$21 million in the case of Rocío Cárdenas. We may turn now to the technical issues, which have to do with refinery operations, the commodity market for petroleum products and the nature of the trading profession. The federal auditors determined that in 2008‐09, when Ms. Cárdenas was in charge of the Refined Products Department, she and her subordinates authorized the sale of “coker gasoline” to two international trading companies at below‐market prices. The sale price was said to be $1.75 million dollars below cost and at a discount of $24.3 million dollars below the value that the product should have fetched if its price, adjusted for differences in quality, had been indexed to reformulated gasoline that is sold in Mexico City. By Article 15 of the Public Servant Responsibility Act of 2002 auditors are entitled to impose fines up to three times the amount of either the benefit received or the damages that were caused. There are several angles from which the findings of the Ministry of Government Accountability (SFP) may be seen in a different light: In carrying out an inspection of the transactions of a commodity trading company—be the product corn oil, olive oil or gasoline—auditors must be careful to make a sharp distinction between managerial discretion and behavior that may be characterized as illegal, grossly negligent or incompetent. Some observers believe that the auditors failed to make this distinction. The government’s characterization of the product itself was incorrect: the product that was sold was coker The SFP findings may be challenged naphtha, a highly toxic intermediate product that may on multiple counts. not be compared for pricing purposes to finished gasoline; and for this reason the government’s calculation of economic damage may be questioned. There is a thin market for the residual liquid waste of a refinery coker. To turn this twice‐ processed material into an intermediate product that can be sold to a refinery as feedstock requires additional treatment such as caustic washing, which itself creates environmental liabilities. (The BBC reported on the environmental risks and legal liabilities associated with a previous sale of this product, citing an incident from 2006 with the Dutch trading company Trafigura.) The sale by PMI of these cargos was motivated by the accumulation of this coker residual that threatened to exceed the storage capacity of Pemex’s northern Cadereyta refinery. The choices for Pemex Refining were to a) add more storage capacity, b) cut back refinery runs so as to slow down the rate of the production of coker naphtha or c) export the product at whatever price it could obtain.
October 25, 2011 MEXICO ENERGY INTELLIGENCE®
Page 3 of 13 GLOBAL OIL INDUSTRY PUZZLED BY PEMEX EXEC SANCTIONS
For Pemex Refining, building more storage containers would only postpone the eventual day of reckoning. To cut back on refinery runs would have a huge opportunity cost, as it would mean that the output of the entire slate of refined products would be reduced, creating a gap in programmed domestic supply that would have to be covered by imports. On this point, one of the allegations of the government may be true: the PMI managers did not carry out an explicit cost‐benefit study where the opportunity cost of cutting back refinery runs was compared to the cost of exporting the product at or below cost (Exhibit A). But in the world of trading there may not have been time for such a study. In buying or selling, traders have to make quick mental calculations that include multiple variables: quality, demand, supply, storage and price. Timing is also important: A trade made Friday afternoon obeys calculations different from those made Monday morning. An oil company‐‐or any company that trades in commodities‐‐‐must respect the decisions of its traders. A corporate or government auditor who is displeased by trading losses must ask himself, if, at the end of the month or reporting period, the trader, on balance, made money. In some trades there will always be losses. If the auditor is still dissatisfied with the performance of a trader or commercial manager, his options are to admonish, retrain or reassign. Other than for illegal behavior or gross negligence, termination is not an option. Termination would send a demoralizing message, the effect of which would be to bias future trading decisions that would bring about greater economic losses. Seen in this light, the sanctions against the PMI executives are likely not to be sustained in court. In this case, by Article 22 of the cited law, the salaries Termination is not an option. and benefits of the affected persons will have to be restored. Lamentably, the appeal process is known to take years—well beyond the tenure of the appointees of the current administration—and involve significant legal costs. Such mistakes of factual interpretation by government officials are inevitable when they try to impose rules in place of market principles. Thirty years ago, June of 1981, Pemex, correctly sensing the weakening of the oil market, offered a $4 discount on its crudes; but government officials rescinded this discount. By mid‐July Pemex had lost half of its 1.5 million b/d export market and, with it, billions of badly needed dollars. Mexico’s “Lost Decade” of the 1980s began with that Mexico’s “Lost Decade” of the mistake. 1980s began with rescinding a The Oil Boom of 1979‐81 brought with it egregious acts of discount on crude oil. corruption, and it was for that reason that the original Public Servant Accountability Act of 1982 was passed within the first month of the installation of a new government.
October 25, 2011 MEXICO ENERGY INTELLIGENCE®
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Twenty years later, a new version of the law was enacted that made public servants liable, not only for acts of corruption but for economic losses to the State caused by their actions or acts of omission. Ideally, this law could be used as a powerful tool to curb pervasive product theft from Pemex, or to Public servants in the federal limit multi‐million dollar transfers to the Oil Union. government are personally liable for Where this law in its present form is not useful is as a actions that cause economic losses to tool for auditors to second‐guess Pemex managers who the State. are trying to do their jobs and carry out their broad responsibilities. Stepping back, it would seem that the intent behind having Pemex’s international trading function carried out by private law such as P.M.I. Trading, Ltd., was precisely to protect the traders from situations such as the one under discussion. As seen, this corporate structure does not offer PMI all the protections that were anticipated. The first conclusion to which these considerations point is that there is more work ahead for Congress: In the Public Servant Responsibility Act there should be a carve‐out for commodity traders in any federal service that would protect them from such sanctions for commercial transactions where illegal behavior is not alleged. The second conclusion is that auditors should be educated in market principles and transactions, possibly by means of internships with PMI in the trading department. What is not in question is the PMI concept, which dates from the late 1980s and developed under the leadership of Pedro Haas; and which recognizes that Pemex as a state‐owned company requires an agile international group in order for it to capture value by playing by market rules. But the careers of the Pemex professionals who have Revisions to law and policy are been sanctioned are in doubt. Should the executives needed. prevail against the sanctions it may be hoped that Mexican auditors, policymakers and lawmakers will take notice. XX
George Baker is the publisher of MEXICO ENERGY INTELLIGENCE®, a subscription‐based business and policy advisory service based in Houston.
Write to: [email protected]
October 25, 2011 MEXICO ENERGY INTELLIGENCE®
Page 5 of 13
COMUNICADO DE PRENSA No. 98/2011
11 de octubre de 2011
CASTIGA SFP A CUATRO DIRECTIVOS DE PMI: PROVOCAN DAÑO POR 1.75 MILLONES DE DÓLARES A PEMEX AL VENDER GASOLINA BARATA
La Secretaría de la Función Pública (SFP) destituyó e inhabilitó a la directora general de PMI Comercio Internacional S. A. de C. V. (PMI), por un periodo de diez años para trabajar en el gobierno federal, y le impuso una multa por 238 millones, 942 mil pesos. Cabe aclarar que estas sanciones a la directora general de PMI corresponden a hechos en los que está implicada en el periodo en que ocupaba el cargo de Directora Comercial de Refinados en la misma entidad. Además, la SFP sancionó a otros tres directivos: 1) Al Gerente Comercial de Gasolinas y Componentes de PMI con destitución, inhabilitación por diez años para trabajar en el gobierno federal y multa por 12 millones, 35 mil pesos. 2) Al encargado de despacho de la Dirección Comercial de Refinados de PMI con destitución, inhabilitación por diez años para trabajar en el gobierno federal y multa por 85 millones, 65 mil pesos. 3) Al Subdirector Comercial de Gasolinas y Componentes de PMI con destitución, inhabilitación por diez años para trabajar en el gobierno federal y multa por 170 millones, 683 mil pesos. En una investigación a la Subdirección de Gasolinas y Componentes de PMI, la SFP detectó que los directivos hoy sancionados autorizaron un descuento, excesivo e injustificado, en la venta de gasolina cóquer, a favor de las dos empresas de compra‐venta de hidrocarburos más grandes del mundo. Esta conducta generó un daño estimado en 1.75 millones de dólares, calculado a partir de la diferencia entre los ingresos por la venta, y los costos del combustible y de la venta. Además, si PMI hubiera vendido la gasolina cóquer a precio de mercado habría percibido 24.3 millones de dólares, por lo que el perjuicio es equivalente a esta cantidad. La investigación de SFP no encontró evidencia de que el descuento que otorgaron los directivos sancionados se sustente en la diferencia de calidad entre la gasolina cóquer y la gasolina RBOB (gasolina reformulada, similar a la que se distribuye en el Valle de México), como debería haber ocurrido. Los directivos de PMI que están implicados en este caso tampoco justificaron dicho descuento a partir de un análisis de costo‐beneficio. Para efectos de la investigación, el precio de mercado de la gasolina The PMI managers did not justify the cóquer se determinó a partir del precio de la gasolina discount on the basis of a cost- RBOB, menos un descuento que refleja la diferencia benefit analysis. de calidades entre ambos combustibles. La revisión por parte de la SFP descubrió que la entonces Directora Comercial de Refinados omitió informar con detalle el estado de pérdidas y ganancias reales y los resultados de las operaciones comerciales al Comité Interno de PMI. La investigación de SFP detectó otras irregularidades en las operaciones de compra‐venta de gasolina cóquer: la falta de oferta del producto a diferentes clientes, así como la ausencia de estrategias y de actividades adecuadas de comercialización. Este comunicado se fundamenta en lo estipulado por el artículo 49, fracción VI del Reglamento Interior de la SFP. CORREO ELECTRONICO: [email protected]
Page 1 of 2 October 11, 2011 Page 6 of 13 Found items in search: 16 Mexico Energy Intelligence ® www.energia.com Printed in this report: 16
Table 1 High-Profile Audit of PMI Trades
Free translation of Spanish headlines Keyword: 105.1
Records found as of 10/31/2011 Title Source File
October
Oct 26, 2011
<1> Accountability Minister Defends Sanctions Against PMI Executives Reforma 17870
Oct 24, 2011
<2> Sanctions Against PMI Ignored Storage Bottleneck, Says Academic Specialist Reforma 17871
Oct 20, 2011
<3> CAPITANES: “Coker Gasoline” as Waste Product of Refining Reforma 17858
Oct 19, 2011
<4> Energy Minister Questions Need for PMI Affiliates Reforma 17857
Oct 16, 2011
<5> Fraud in the Pemex Sale of Gasoline Revista Contralínea 17850
<6> Auditors Investigate PMI Director’s Role in Questioned Study Revista Contralínea 17851
Oct 14, 2011
<7> Pemex Executives Sanctioned for Irregularities in Contracts La Jornada 17840
<8> Trafigura's Pemex Cadereyta refinery coker gasoline waste story breaks Petroleum World 17843
Oct 12, 2011
<9> Column: J. Jesús Rangel M. ~ Uncertain Future for New Incentive Contracts for Milenio 17866 Pemex <10> Pemex Busts a Corruption Ring Reforma 17859
<11> Official Defrauds Pemex But Escapes Jail Time Tabasco Hoy 17839
Oct 11, 2011
<12> Sanctions Against Female Executive in Pemex Reforma 17855
<13> Pemex Executive Embezzles from Pemex but No Jail Time Reforma 17856
<14> Government Accountability Office (SFP) Sanciones Executives of Pemex’s Secretaría de la Función 17835 Trading Arm Pública
February
Feb 08, 2011
<15> Government Accountability Office Sanctions 14 Employees of Pemex Refining Secretaría de la Función 17836 Pública <16> Government Accountability Office (SFP) Sanctions 2 Executive of PMI Secretaría de la Función 17837 Pública Page 7 of 13
MEI Press database Related to MEI Report 100106 Mon, Oct 31, 2011 ( 7:24 AM )
PUBLIC POLICY PERSPECTIVE No. 10019
Public Policy Perspectives are issued periodically, in English or in Spanish, as a public service with
the aim of inviting fresh discussion of matters of law, policy, regulation and corporate governance. This document was prepared to help fill the vacuum in Mexico of public discussion in relation to the sanctions recently applied to two high‐profile Pemex executives and five members of their respective teams.
Two conclusions are offered for discussion: <1> There will be a substantial opportunity cost associated with the dismantling of the New Ventures Office of Pemex E&P, as the key members have developed a unique expertise and an extensive professional network outside of Mexico that will take years to replace. <2> PMI’s export sale of the low‐quality coker naphtha, an intermediate product, was done to avoid the high opportunity cost of cutting back refinery runs in order to slow down its accumulation at the Cadereyta refinery: it would have meant that the lost production would have to have been replaced by imports of gasoline and other refined products.
QUIS CUSTODIET IPSOS CUSTODES? George Baker
n la coyuntura de hoy, la pregunta del poeta romano Juvenal puede expresarse así: ¿Quién vigila a los auditores? Las sanciones administrativas en Pemex incitan a cuestionamientos más allá de E lo evidente. Las sanciones en contra de la Directora General de PMI Comercio Internacional y el Subdirector de nuevos negocios de Pemex Exploración y Producción, así como cinco integrantes de sus respectivos equipos tienen todo a su favor menos oportunidad y comprensión de la industria petrolera nacional e internacional.
Se trata de los efectos colaterales negativos innecesarios a sus respectivas instituciones tanto en el exterior como en el interior del país. En Estados Unidos, los ejecutivos de Pemex con más renombre son justamente Rocío Cárdenas y Sergio Guaso, conocidos por sus habilidades profesionales ‐‐amén de su verticalidad.
¿Conviene a Pemex, el gobierno de Calderón y por ende el país poner en duda estas calidades en las mentes de los socios comerciales en el extranjero? Claro que no.
En Estados Unidos, somos mexicanizados políticamente en materia del sobre‐entendimiento. Sobre‐ entendemos que las sanciones en contra de la abogada Aurora Pierdant y la joven econometrista Guadalupe Campuzano ineluctablemente van a poner en duda no sólo la actuación de ellas en 2007 con relación a contratos sobre ductos sino también a su actuación en 2010‐11 con relación a los contratos incentivados de exploración y producción.
Al sobre‐entender el asunto en esta manera, se pone en entredicho la viabilidad jurídica y comercial de la segunda ronda de licitaciones que está (o estaba) a punto de arrancarse en noviembre.
October 25, 2011 MEXICO ENERGY INTELLIGENCE® Page 1 of 3 QUIS CUSTODIET IPSOS CUSTODES?
Es más. Al destituir a Aurora y Guadalupe se está dañando a Pemex E&P como institución con relación a su capacidad de articular en el extranjero los programas de contratación. Los temas jurídicos y económicos son tan sutiles y complicados que ni un abogado o economista en 1,000 podría explicarlos, en inglés, ante un auditorio de 300 representantes de la industria petrolera en el extranjero.
¿Dónde va Pemex E&P a reclutar un abogado y un econometrista para sustituirlas? Es dudable que los auditores hayan pensado en los costos colaterales de las sanciones.
Los daños causados por las sanciones en contra de Rocío y su equipo son de orden distinto. Se trata del respaldo institucional que va a dar Pemex y, atrás de Pemex, el gobierno, al gerente responsable por la toma de decisiones comerciales.
Según el difunto Jorge Díaz Serrano—y yo me asumo a su lectura—el país pagó por más de 20 años en costos económicos por no haberle respaldado en la decisión tomada oportunamente por él en junio de 1981 de bajar en $4 dólares la cotización de los crudos mexicanos.
Ahora, la Secretaría de la Función Pública está sancionando funcionarios de PMI por haber vendido los residuales del proceso de refinación a un precio excesivamente abajo del precio justo de mercado según la estimación de los auditores. ¿Qué tal si en el momento de la venta era urgente deshacerse de estos volúmenes por la falta de almacenamiento? ¿Qué tal si en este momento había sólo un comprador de estos residuos que son de la más baja calidad debido a su alto contenido de azufre?
Cobra relevancia señalar que estos residuos son tan tóxicos que uno de sus compradores (Trafigura) tuvo que pagar compensaciones superiores a los 100 millones de dólares y enfrentó juicios internacionales relacionados con el manejo de dichos residuos comprados a PMI? (Ver el reporte de BBC.)
Al sugerir que los precios de las compra‐ventas beneficiaron a empresas internacionales –y considerando la magnitud de las sanciones‐‐, el Secretario de la Función Pública da a entender que hubo corrupción por parte de la red que Rocío “orquestó”, mismo que los medios, tomaron como pauta para sus encabezados. Sin embargo, no hay indicio alguno de que los funcionarios se hayan visto beneficiados de estas operaciones; sino que la ley en la materia permite a los auditores sancionar por múltiplos del daño o perjuicio a la empresa, independientemente de la causa o motivación de dicho daño o perjuicio, lo cual hace sancionable cualquier error gerencial.
En las apreciaciones de los auditores operaron dos falacias: uno, que hubo daño a la empresa: El deshacerse de un producto intermediario tóxico para que se estaba agotando capacidad de almacenamiento logró un beneficio; dos, no hubo descuento, siendo que no se trataba de precios pre‐ establecidos ni cotizaciones generales. El producto fue vendido a su precio de mercado en aquellos momentos.
No es difícil ver cómo esta práctica de auditoría contribuye a la parálisis, no al fortalecimiento, de PEMEX, castigando a los pocos funcionarios que trabajan para crear soluciones a los problemas de la empresa.
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QUIS CUSTODIET IPSOS CUSTODES?
Al parecer, los auditores no entienden que en transacciones comerciales a veces uno pierde algo para conservar algo. En 1981 la clase política criticó severamente a Jorge Díaz Serrano, el entonces Director General de Petróleos Mexicanos, por el haber “perdido” los $4/barril, no importa que, al revocar su descuento, Pemex perdió la mitad de sus clientes y el país dejó de percibir miles de millones de dólares en ventas de petróleo crudo.
¿Y qué tal de la lección de estas sanciones para los futuros traders de PMI? No hacer nada que no fuera contemplado y escrito en una fórmula de precios justos, cuesta lo que cueste en oportunidad comercial.
Así que, regresando a la pregunta original: ¿Quién vigila—o, si quieres, educa—a los auditores? Hay más en juego sobre—y abajo—de la mesa que el cuestionamiento de funcionarios sobre su desempeño en 2007 y 2008. En las alturas de 2011, por el bien del país más vale prevenir que lamentar (leer: imponer sanciones).
XX
George Baker is the publisher of MEXICO ENERGY INTELLIGENCE®, a subscription‐based business and policy advisory service based in Houston.
Write to: [email protected]
October 25, 2011 MEXICO ENERGY INTELLIGENCE® Page 3 of 3
PUBLIC POLICY PERSPECTIVE No. 10021
ublic Policy Perspectives are issued periodically, in English or in Spanish, as a public service with the Paim of inviting fresh discussion of matters of law, policy, regulation and corporate governance. This document was prepared to help fill the vacuum in public discussion of the issues facing Pemex and the National Hydrocarbons Commission (CNH) in relation to full‐cycle EP contracts.
What should the Hydrocarbons Commission Tell the Next Government?
Repeal the Hydrocarbons Commission Act of 2008; negotiate and promulgate a new law
IN AN ARTICLE IN THE NEW YORK TIMES on April 23, 2012, Carlos Morales, director of Pemex’s upstream unit, was quoted as criticizing the CNH for trying to “coach the coach.” Pemex has gone to the length of expressing its dissatisfaction by filing an administrative complaint in federal court. In the Mexican Energy Ministry to which, by law, the Commission is an advisory body, there are rumors of friction, both with the minister as well as with the under‐secretary of hydrocarbons. As the Commission was established to regulate only the state oil company, it was itself without a legal mandate in relation to Pemex contractors. In 2011, prospective bidders for three blocks in the Southern Region were told that they were subject to the “indirect regulation” of the Commission, as they would have to follow the regulations that it had issued in relation to Pemex. Such admonitions were met with skepticism, however, as the very concept of indirect regulation seemed to lack a legal foundation. This PUBLIC POLICY PERSPECTIVE identifies shortcomings in the laws and legal dispositions that have an impact on the CNH, taking note of one area in which the CNH has not yet been involved: the criteria for the awarding of a full‐cycle contract for to an oilfield operator. The discussion critiques the present “lowest‐price” criterion, and proposes an alternative approach.
Contents INTRODUCTION 2 WHAT’S WRONG WITH THE CURRENT LAWS THAT AFFECT THE CNH? ...... 2 WHAT IS TO BE REGULATED? ...... 3 LANGUAGE OF THE NEW LAW ...... 5 Appointments and Reappointments ...... 5 PEMEX’S AWARD CRITERIA FOR FULL‐CYCLE CONTRACTS ...... 5 What’s wrong with the current tie‐breaking methodology? ...... 5 What’s wrong with the lowest, nominal price methodology? ...... 6 Another Option: Award to the lowest, risked‐price bid ...... 6 CONCLUSIONS ...... 7 End‐Notes
MEXICO ENERGY INTELLIGENCE® (MEI) is a commercial and policy advisory service offered by BAKER & ASSOCIATES, ENERGY CONSULTANTS, a management consultancy based in Houston. MEI reports facilitate two‐way communi‐ cation between Mexican public and private institutions and the global environment. Our reports examine policy, institutional and cultural issues as they affect the operating environment, energy regulation, and government and private investment in Mexico’s energy sector. Reports are distributed principally on a subscription basis. [email protected] P.O. Box 271506 ~ Houston, TX 77277‐1506 (713) 255‐0000 CNH 2.0
CNH 2.0 Repeal the Hydrocarbons Commission Act of 2008; negotiate and promulgate a new law
INTRODUCTION ROUND THE WORLD, governments struggle with the problem of how to develop the country’s national resources at the least expense to the taxpayer and with the greatest number of benefits, both direct and indirect, from the exploration and exploitation of those resources. It is A an awkward fact for the rest of the world that the U.S. and Canadian systems of mineral rights have brought the highest level of private investment in the global oil and gas industry. In the U.S., mineral rights may be held not only by the federal government, but by state, county and city governments, as well as by corporations and individuals. It has been repeatedly observed in the United States that the so‐called Shale Gas Revolution would not have taken place—certainly not at the pace that that has been seen—if all mineral rights, including petroleum, had been owned by the federal government.i This crazy‐quilt of mineral rights has brought with it an analogously confusing universe of regulators at each level. Further, at the state level, regulations differ. What is true of the electrical code for drilling rigs in Texas is not true of Alaska, where codes have higher requirements. It is a truism to say that public institutions come to have the acceptance and support of society because of a perceived need. In commerce, a product or service gains market acceptance for the same reason. Apple’s late Steve Jobs famously said that, in designing the iPad, market research was unnecessary; as he himself had determined that the need for such a product existed. In Mexico, the administration led by Felipe Calderón decided that a new public institution was needed as a technical counterweight to Pemex; but the market reception that the National Hydrocarbons Commission (CNH) has received is nothing like that of the iPad. The institution was created as part of the Energy Reform of 2008, but it has not yet received unwavering support in its natural, institutional ecosystem. In this discussion we shall argue that the legislation that defines and limits the CNH is inadequate; and that the path of amendments to reorient the CNH Act is not a viable choice.
WHAT’S WRONG WITH THE CURRENT LAWS THAT AFFECT THE CNH? Mexico has a political culture that is distrustful of political upstarts who might, on impulse, change the traditional oil narrative and its legal foundation. For this reason, there are multiple padlocks on all the doors of the energy sector. Some observers have lamented that “Nothing can be changed in Mexico’s energy sector unless everything is changed.”
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CNH 2.0
Legal fiction about Pemex as the sole oil and gas producer in Mexico Mexico’s Petroleum Law, which provides the implementing legislation of relevant paragraphs of Constitutional Article 27, needs to be amended in such a way that the State recognizes that oil and gas fields may be operated by third parties under contract with Pemex (or as the Nation disposes), with the Since 2003, Pemex has not been the explicit requirement that third parties are subject to the only oil and gas operator in Mexico. regulatory competence of the CNH. At present, these third‐party operators (Petrobras, Repsol, Petrofac, Diavaz and SINOPEC, among others) are treated as non‐existent under the Petroleum Law. The operators fall under the wide umbrella of a generic Pemex contractor, even though the language of Article 6 is specifically directed to them as oil and gas producers. The situation is a variation of what Mexicans call “double language”: the operator‐cum‐contractor is needed in order to “make Pemex more efficient” but he is neither subject to CNH regulatory oversight nor is he paid by globally competitive standards of compensation.ii For policy traditionalists, the easy rationalization of the fiction that there is only one operator in Mexico is that Pemex still has the sole commercial rights to its production as well as the production of others. This claim is only partially true, as the contractor‐operator also has a claim on the revenue from the incremental production in his block.iii The fact that there is just one commercial agent of production does not, therefore, disguise the fact that there are multiple operators.
Lack of Focus The purpose of the Commission has to be understood as the public oversight of the national petroleum patrimony in relation to global best practices. The terms “internacional” and “global,” however, are nowhere to be found in the text of the law. Instead, the Commission (in Article 3 of the law) is admonished to “strictly” follow the policies that are incorporated in the National Energy Strategy. The key word here is not “strictly” but “national.” The law asks the Commission to focus inwardly, on the idiosyncrasies of Mexican, sui generis policies, and in this way does a disservice to the Nation, as it asks the commission to ignore worldwide experience in matters of regulation.
WHAT IS TO BE REGULATED? The law (in the same Article 3) requires of the Commission that it should endeavor to assure that Pemex carries out its exploration and production projects with attention to four topics: Mature and abandoned fields, assuring that they are developed profitably Reserve replacement as a guarantee of natural energy security, paying attention to the “available technology” and “economic viability”
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CNH 2.0
Utilization of the most appropriate technology Protection of the environment and the sustainability of natural resources.iv Four matters are fundamentally wrong in Article 3: 1. These laudable goals are matters of policy, not ones of regulation. The Commission’s regulatory mandate should focus on the means, or process, by which these goals are implemented. If the means involves the use of third‐parties, then the Commission should be directly involved in the manner by which the contractor‐operator is selected and the development plans that he intends to implement. In Indonesia, PB Migas, the upstream regulator, also takes charge, through public tenders, of the drilling rigs that a block operator may use.
2. It was well‐known at the time of drafting the CNH law that Pemex was planning to out‐ source the redevelopment of mature and abandoned fields by means of a full‐cycle contract.v The law, however, is silent on the matter of the authority of the CNH to regulate with (or even interact with) the eventual winners of the blocks that would be the objects of public tenders. This absence has caused headaches for the Commission: in order to claim its authority over a “farmee,” the CNH has had to resort to the legally dubious notion of “indirect regulation,” a concept which Pemex has not even bothered to recognize. 3. All oil companies have a risk tolerance. Some exploration plays have more risk than others. It would be a clear case of exceeding a regulator’s authority for the CNH to try to get involved in discussions with Pemex about risk parameters. A case in point here is the CNH’s position expressed in Mexico and abroad that it is “too risky” for Pemex to drill wildcat wells in the deepwater Not available to Pemex are the IOC’s Perdido area. There may be good reasons why Pemex datasets, in‐house software and should not, at present, drill in Perdido, and some of global experience of its people. these reasons may fall under the competence of the CNH; but risk assessment cannot be one of them.vi 4. When the law says “most appropriate technology” it assumes that technology is an off‐the‐shelf product that is available on the open market. This perspective is one that the oilfield service companies have insisted on, but one that traditional oil companies have rejected. The “appropriate technology” that is in use in BP, ConocoPhillips and the other major IOCs has a great deal of proprietary components, including datasets, in‐house software and quality‐assurance protocols. The drill rigs and crews are rented, but the skills behind the selection of a drill site and the drilling target are not available to Pemex. As one IOC country manager in Mexico put it, wryly, “If Pemex wanted to rent our technology, it would have to rent our people, research facilities, databases and worldwide experience.”
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CNH 2.0
Hence, the “available technology” requirement only assures the public and the government that the technology that is actually available to Pemex is used; it ignores the technological skills that that may be found outside the “National Energy Strategy” and Pemex’s narrow technological window.
LANGUAGE OF THE NEW LAW We do not propose language for the new law, but seek to identify some of the issues that must be addressed by the LXII Legislature and the new government. Funding of the Commission The scope of authority of the Commission should be formally extended to all full‐cycle operators (Pemex and others). The Ley de Derechos (Government Revenue Act) may be modified to provide for a small, regulatory fee may be applied to each barrel of production of the contract‐operators (as well as to the production of Pemex itself), thereby creating a built‐in, operating budget for the Commission. Peace in Deepwaters The Commission has rightly and admirably voiced the policy goal of having a common set of offshore safety regulations for the entire Gulf of Mexico, including Cuba. The public record suggests that the Commission was involved only marginally, if at all, in the negotiations concerning the transboundary hydrocarbon treaty with the United States. The Commission should be named as a party to the future negotiations with all four of Mexico’s neighbors. Its role in the administration of the agreement has yet to be decided.
Appointments and Reappointments The criteria for appointment as commissioner need to be rethought. The five commissioners of the CNH are to be appointed by the Federal Executive. Article 5 of the CNH Act specifies that the president of the commission should have the academic title of engineer or its “equivalent in some discipline related to the petroleum industry.” Beyond the requirement of an appropriate academic degree, a commissioner must have experience of more than ten years in the petroleum industry. The language here is excessively vague: What did this person accomplish during these ten years? What size of a budget did he or she handle? For the performance of duty of how many people was the candidate responsible? Has this person shown an aptitude for looking at an issue from the perspective of the Public Interest or only as a technical problem to be solved? For reappointment, a commissioner should be able to document a record of leadership in the development of upstream regulation in the light of global regulatory practices. PEMEX’S AWARD CRITERIA FOR FULL‐CYCLE CONTRACTS In the bid submission and awards function held by Pemex on August 18, 2011, there were multiple anomalies that, properly, could have come under the cognizance of a regulator—but were not.
What’s wrong with the current tie‐breaking methodology? Two or more bids would be judged to be a technical tie if their bids were 10% or less apart. As expected by industry observers, new‐to‐market Petrofac would aggressively seek a contractual beachhead in
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Mexico and, hopefully, overcome the counter‐pressure expected from Schlumberger, the Pemex contractor that, for decades, had held the informal title of Primus Inter Pares, or First Among Equals.vii With a floor bid price of US$5.00/BOE, it was easy to anticipate that the two bids would be between $5.00 and $5.10 (as, indeed, they were). The tie‐breaking mechanism would be awarded to the company that offered the highest increase in its investment commitment to the basic work program that Pemex had established (US$58 million). The minimum acceptable offer was 20%. Schlumberger’s bid of 60% was outmatched by that of Petrofac at 100.5%. There are several criticisms to make of this tie‐breaking procedure, but the most serious is that it violates the principle of the efficient use of capital. “You would have to gold‐plate every valve and pipeline in the block to actually spend that much money in two years,” one retired Pemex engineer observed in informal conversation a few weeks after the award. A second consideration is that the increase in the work program will be geared to increasing production; hence, 75% of the money that the contractor pays as the tie‐breaker investment‐commitment will eventually be returned to him through the cost‐recovery mechanism. A third criticism is that this mechanism is wholly ad‐hoc, and fails to correspond to any of the precepts of procurement as embodied in Constitutional Article 134.
What’s wrong with the lowest, nominal price methodology? The least‐price rule (and associated mentality) has its ancestry in the Public Works Law (LOPSRM), where it is explicitly stated that the government must choose the lowest price among bids of qualified bidders. A main goal of the Energy Reform of 2008 was to carve out a separate contractual area for Pemex: by new procurement rules to be devised by the corporate board of directors, Pemex would be able to by‐pass the Public Works Law in its entirety for those core activities of its business units. In early 2010, the Special Procurement Guidelines (DAC) were published that gave Pemex the legal basis for devising its new, full‐cycle contracts.viii With the publication of the Pemex Administration Act of 2008 and the DAC, there is no legal requirement for Pemex E&P to The immediate award of a contract insist on the lowest‐price bid. In Article 19 (c) of the DAC, after the opening of bids has no which gives the conceptual time‐line of events in a public foundation in the DAC. tender, there is no requirement that the presentation and opening of the bids be followed immediately by the award of the contract. On the contrary, subparagraph (v) provides for time for Pemex to ask for clarifications of the proposal, including providing the opportunity for bidders to correct any omissions in their documentation.
Another Option: Award to the lowest, risked‐price bid As CNH Commissioner Javier Estrada has observed, there is a worldwide debate about which is the most efficient procurement model. “Some economists have argued, for example, that the second‐lowest bid should be accepted.” He cautions that no model should be regarded as definitive and permanent. We shall consider, as an alternative to the raw, lowest‐price method, a variation, which awards a contact to the bidder with the lowest, risked price.
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CNH 2.0
In a given procurement exercise, one IOC assigns a multi‐disciplinary team to examine the technical bid and qualifications of a bidder (a process that may take weeks or months, depending on the size and nature of the work to be performed). Several key qualifications are graded on a score from 0.5 to 5, where 1.0 is the industry standard and 5 indicates either a poor record (as with safety) or scant experience (as with a company entering a new market). A score of 0.75 would be in relation to a particular qualification for which the bidder was substantially above industry expectations. These scores are averaged to give one number, which is then multiplied by the bid price. The bidder with the lowest adjusted price wins the contract. If it is taken as a given that the fundamental aim of the CNH is to serve the Public Interest in relation to the country’s hydrocarbon patrimony, then it follows that the criteria by which a bidder for a full‐cycle contract is selected fall within its competence.
CONCLUSIONS
1) The defects of the present Hydrocarbon Act of 2008 cannot be repaired by amendment. 2) A new law should be written that draws a clear line between state regulation and legitimate corporate policy. The new law should focus on establishing the limits of the authority of the Commission. The law should omit explicit reference to Petróleos Mexicanos, as a regulator with a Experience as a regulator is more mandate to regulate just one company quickly ends important than experience in oil. in overlapping authority. 3) The CNH should be established as a true regulator, in the fashion of the Central Bank, and in this way provide healthy distance from the Hydrocarbons Deputy Minister and the Minister. 4) The CNH should receive adequate funding on a timely basis. The CNH law insinuates that there will be inspections; but there is no budget for such activities, and the CNH hardly has the expertise to inspect the maintenance records, for example, of a blow‐out preventer. At present, the CNH only inspects data (although there have been field trips, such as to Chicontepec).
5) The qualifications for the appointment of commissioners need to be reconsidered. The present requirements are too loose. The candidate needs to have experience in regulation as the first requirement, in whatever industrial or commercial activity that may be. In the same vein, the qualifications for the reappointment of a commissioner should be revisited, keeping in mind the perennial desire of Pemex and the Energy Ministry to infiltrate its ranks so as to make its rulings more amenable with their respective wishes. 6) In the new law, the CNH should be formally designated as the Executive Agency that will be established by the terms of the 2012 Transboundary Hydrocarbon Treaty with the United States. 7) The tie‐breaking rule established by Pemex in 2011 should be prohibited, as should any rule that assigns a public tender for a full‐cycle contract to the bid with the lowest, un‐risked‐price. For this, the DAC will also need to be amended in order to make these requirements clear.
.
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END‐NOTES
i At OTC 2012, Pemex’s Sergio Guaso said that public tenders for shale gas in Mexico are scheduled for mid‐2013. ii The constitutionality of this article is ripe for questioning by the Supreme Court: Constitutional Article 134 says, in essence, that the State must carry out its procurement according to principles the provide the best value “for the providing of services whatever their nature,” taking into account “price, quality, financing, timeliness and other relevant considerations.” The argument could be made that the restrictions of Article 6 of the Petroleum Law have no constitutional basis; further, that they violate the precepts of Constitutional Article 134. iii We have argued in a separate report (Market Note 111), that the success of this farm‐out program a la mexicana will never be known by the public, given that Pemex, as a matter of corporate ideology, will refuse to publish the incremental production figures of the contractor, by block. Statistically, all production is that of Pemex, regardless of which operating company produces it. iv The federal government has cabinet ministries dedicated to environmental protection and water resources. What additional public oversight is expected from the CNH? v We have argued that these contracts should be understood as farm‐outs; but, as Pemex’s director general put it, the term “farm‐out” would carry a politically awkward connotation in Mexico and therefore cannot be used in official presentations. vi There are good reasons why someone should drill in Perdido: A cross‐border, commercial discovery would set in motion the framework agreement between the U.S. and Mexico that was approved by the Mexican Senate on April 12, 2012. vii During the Fox Administration (2000‐06) it was said of Schlumberger that it made “more money in the Northern Region of Pemex than in the Southern Cone of Latin America.” viii Pemex adopted the terms “full‐cycle” (as well as “EP”) at my suggestion.—ed.
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MEXICO ENERGY INTELLIGENCE®
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100128 • May 10, 12 What Should the Hydrocarbons Commission Tell the Next 011 Government? The new government that takes office on Dec. 1, 2012, should be told that the Hydrocarbons Commission Act of 2008 has too many imperfections to be improved by amendment, and needs to be repealed. The government and the Congress should devise a CNH 2.0 that will clearly define the limits of its mandate. In the new law, the CNH should be involved in the development of a methodology to award full-cycle contracts on the basis of the lowest risk-based price.
100126 • Apr 22, 12 ENERGY SECURITY INDICES: Adjusting Supply Numbers for 07 Freedom and Diversity This report draws on the presentation and Q&A in Houston on April 19, 2012, of Karen Harbert, president of the Institute for 21st Century Energy, an organization affiliated with the U.S. Chamber of Commerce. The Institute has developed an index of U.S. energy security based on a model that incorporates 37 metrics that cover the spectrum of traditional and untraditional energy sources. This report offers a critique of the model by reference to variables that were excluded and other observations.
100121 • Mar 19, 12 US-Mexico Transboundary Hydrocarbon Agreement: A New Face 09 for Pemex’s Incentive Contract? Until 2012, neither Mexico or the U.S. had signed a cross-border agreement related to petroleum. Lease auctions of blocks continuous with Mexico on the U.S. side received no bids. The agreement provides a scaffolding of public oversight for the unitization of cross-border fields and for the eventual formation of a joint operating agreement between "licensees" on both sides. At this stage, the agreement is limited to sharing information, not risk. This Market Note asks about the boilerplate language, political timing and subtext of this agreement, noting its accomplishments and shortcomings.
100118 • Feb 27, 12 Mar 29, 12 What the CRE Should Tell the Next Government? 012 This report, the first of a series concerning the information that should be provided to the government that will be installed on December 1, 2012, concerns the institutional and policy challenges that confront the Energy Reggulatory Commission (CRE) in fulfulling its mandate to regulate the electric and gas sectors on behalf of both public and private investors and consumers. These “challenges” are expressed in this report as a series of problems, each with suggestions about possible solutions.
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100114 • Jan 19, 12 Gunfight at Perdido 02 This report provides a glimpse of the distance between Pemex and the CNH regarding the appropriateness of wildcat drilling in the Perdido Area. At a seminar at the Baker Institute at Rice University on January 18, 2012, Pemex Director General Juan José Suárez Coppel spoke matter-of-factly of the plans of Pemex to drill several, ultra-deepwater wells in Perdido. Across town, on the same day, CNH President Juan Carlos Zepeda argued, with passion, that it was premature for Pemex to risk drilling deepwater wells.
100111 • Feb 02, 12 Pemex's Farm-Out Program: How to Evaluate Its Efficiency? 319 This report proposes that the term "farm-out" best captures the sense of Mexican energy policy since 1992 in power, gas and the upstream. The report examines alternative approaches to evaluating the success of the decade-old farm-out program in Pemex E&P, a program that, to date, has yet to be evaluated by Pemex's board or auditors from the government (SFP) or Congress (ASF). The report provides several optics by which the success of the program may be evaluated.
100099 • Sep 06, 11 Sep 18, 11 Pemex Protocols for Bidding and Awarding Incentive Contracts 112 This report identifies the concerns expressed by bidders and observers of the first round of incentive contracts and restates them as suggestions for improvement for the next round. The concerns deal with the bidding criteria, the selection of qualified bidders, the use of maximum and minimum bids, tie-breaking rules, Pemex equity participation, and the protocol for making the awards.
100077 • Jan 30, 11 The National Hydrocarbon Commission in 2015: A Scenario 28 Analysis Mexico's National Hydrocarbons Commission (CNH) was established by law as part of the Energy Reform package of 2008. Its function was defined as an adjunct, advisory body attached to the Energy Ministry. This report inquires, via scenario analysis, into the future of this agency. Will it become a true regulator, and, in this capacity, administer any public tenders involving access to petroleum deposits? Will it be come marginalized from policy decision-making? Or, will the status quo of 2011 continue in 2015?
100074 • Jan 14, 11 Deepwater Safety for Pemex: Guidelines of the Hydrocarbon 25 Commission On Jan. 11, 2011, Mexico’s National Hydrocarbons Commission (CNH) published its Resolution No. 12.001/10, which covers the safety precautions, standards and training that Pemex should develop for its deepwater operations. The guidelines reflect a close study of the situation at the BP Macondo well in relation to the blowout in 2010. This report comments on the strengths and weaknesses of these guidelines.
MEI New Rpt/ 900 (713) 255-0000 [email protected] May 12, 2012
PUBLIC POLICY PERSPECTIVE No. 10022
UBLIC POLICY PERSPECTIVES are issued periodically, in English or in Spanish, as a public service with the aim of inviting fresh discussion of matters of politics, law, policy, regulation and P corporate governance. This document was prepared to provide background on Mexican presidential elections, and to consider the possibility that the PRI candidate might lose.
MEXICAN SPRING Notes on Mexican Presidential Cycles
THIS POLICY PERSPECTIVE ABSTRACTS FROM OUR MARKET NOTE 132.
HE U.S. PRESS has awarded the presidential election to the PRI’s telegenic candidate, Enrique Peña Nieto, citing poll results. An unexpected anti-PRI student movement, however, T has undermined the impression of inevitability of a return of the PRI to power after twelve years in the opposition. The real dynamics of the Mexican presidential election of 2012 are found online, in the social media. In response to the abuses of the election of 2006, Mexican authorities ruled that negative advertisements were forbidden. Anyone interested in the present electoral cycle that has seen, on YouTube, any of the many search results for “Hitler and Pena Nieto” will realize how this rule has been circumvented online, with a mixture of venom and humor. Even the promotional clips may be presented as negative, as in the one with the title (in Spanish) of “Why el Peje [López Obrador] Should Not Win in 2012.” The present report takes the position that the presidential race of 2012 is between the PRI and PRD, and its purpose is to prepare the reader for either outcome. Table 1 shows what each candidate has to overcome in the five states that together account for 40% of the national vote.
CONTENTS INTRODUCTION ...... 2 Mexico’s Electoral System, 1929‐1994...... 2 The Shocks to the PRI System ...... 4 BACKGROUND ...... 5 Scripted, Flawed and Dirty Elections ...... 5 The Scripted Election of 2006 ...... 5 DISCUSSION ...... 6 The National Electoral Fiesta of 2012 ...... 6 The Social Media and the Election ...... 7 The 3rd Debate #Yo Soy 132 of June 19 ...... 7 The crucial importance of just five states ...... 8 OBSERVATIONS ...... 9 CONCLUSIONS ...... 10
MEXICO ENERGY INTELLIGENCE® (MEI) is a commercial and policy advisory service offered by BAKER & ASSOCIATES, ENERGY CONSULTANTS, a management consultancy based in Houston. MEI reports facilitate two‐way communi‐ cation between Mexican public and private institutions and the global environment. Our reports examine policy, institutional and cultural issues as they affect the operating environment, energy regulation, and government and private investment in Mexico’s energy sector. Reports are distributed principally on a subscription basis. [email protected] P.O. Box 271506 ~ Houston, TX 77277‐1506 (713) 255‐0000 MEXICAN SPRING
Public Policy Perspective No. 10022
Notes on Mexican Presidential Cycles
INTRODUCTION THIS POLICY PERSPECTIVE EXAMINES POSSIBILITY OF A PRI LOSS in the presidential elections of 2012. For professionals in business and government who have come to Mexico (or who have come to age in Mexico) during the past twelve years of the two center-right PAN presidencies, the angry noises from students about the terrible consequences of a PRI return to the presidency are likely to seem over-blown, exaggerated. How could the return of the center- left party that had ruled Mexico for seven decades be that bad?
Mexico’s Electoral System, 1929‐1994 From 1929-2000, Mexico operated as a one-party democracy, “the perfect dictatorship,” as Mario Vargas Llosa, the Peruvian novelist, described it in 1990. As evidence, it would have been necessary to point to the single fact that newsprint was a state monopoly. A great percentage of Mexico’s gross domestic product was from the contribution, if not of state monopolies (like Pemex and CFE), then from private oligopolies and duopolies. In the media, it was enough to see an ad from a government company to know that the editorial content had been “bought” by the system. This system—Mexicans themselves called it “the system”—was one of political patronage, government contracts and crony capitalism, wrapped up neatly in the pretty pronouncements of the 1917 Constitution that affirmed in Article 123 and other articles that a Mexican citizen had the right to employment, education, housing and health care, in addition to other rights like the ability to form trade unions. The fact that the country’s skewed income distribution left half the population in poverty would—as a matter of ritual--be taken as a “challenge” for each cycle of presidential candidates. In the PRI system, everyone in the middle class and above was dependent, directly or indirectly, on a government contract (or contact), or so it seemed.1 A second fact, were one necessary, was that until 1989, all state governors were from the government party.2 When criticism arose about the undemocratic character of having a single party win the presidency without interruption (in the manner of Cuba, North Korea and the Soviet Union), Mexican apologists would point to the unofficial, political pendulum in Mexico by which one six-year presidency that leaned to the right would be followed by another that leaned to the left; hence, there was an off-the-record democratic process within the PRI itself.
1 Those that presumed otherwise were either bought off (and incorporated into the system) or subject to government sanctions or complicity, as was widely suspected in the failed kidnapping and murder on September 17, 1973, of Eugenio Garza Sada, a Monterrey industrial tycoon. 2 This outcome derived largely from the fact that the state governs were appointed by the same party and its president. During the presidency of Carlos Salinas (1988-94), some half-dozen governors were switched out on presidential orders.
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Public Policy Perspective No. 10022 The genius of the Mexican political system arose from the ability of the political class to build social pyramids. During the iconic years of the PRI era, the mass of Mexican voters were organized into trade unions, each of which, in turn, belonged to a union of unions, and all of these merged into a confederation of such unions, at the head of which-- for roughly a half- century—was one man: Fidel Velázquez.3 The key feature of this system was that that these pyramids controlled the votes, funded the PRI Mexico’s genius lies in building campaigns, and bused workers to cheer the PRI pyramids, social and otherwise. candidates when they came to town.4 The line between labor union leader and legislator has always been an object of negotiation, thanks to Mexico’s unique system of set-aside seats in the Congress known by the word plurinominal (which, in free translation, might be rendered as “short list”).5 Today, two politically important social-electoral pyramids in Mexico are the state-employee union of teachers and that of oil workers. The teachers’ union has formed its own political party; To focus only on the outcome of the and the back-room negotiations by its leader, Elba elections is to take a narrow, Anglo Esther Gordillo, was essential to the PAN’s tainted perspective: it is the whole process to victory in 2006.6 watch, not just the names of winners and losers on Election Day. With three exceptions (those of 1988, 1994 and 2000), the presidential elections that took place during the period between 1970 and 2000 obeyed the system’s rules. All policy and ideological debate would take place before the unveiling of the PRI presidential candidate; afterwards, there would be solid support by all factions. The political system in Mexico invested enormous sums in making the campaign a political fiesta and the PRI candidate the civic redeemer who would fill potholes, bellies and bank accounts. The election itself was intended to be almost an after-thought, a validation of what
3 Take the oil workers, for example. Prior to 1935, each refinery and company had its own union, but in that year they consolidated into the Syndicate of the Petroleum Workers of the Republic of Mexico. The STPRM, in turn, was a member of the Confederation of Mexican Workers (or CTM) headed by the immortal Fidel Velázquez, who would famously say, “Death has passed me by.” 4 The matter of busing would come up in the elections of 2012 in the days following the confrontation of the PRI candidate at the Jesuit-run Ibero-American University on May 11th. His media handlers would insinuate that the demonstrators were not students, but agents who had been bused in. In a subsequent video on YouTube, 131 students gave their names and student ID numbers to document their claim that the protest against Peña Nieto was a genuine student movement. 5 The idea, roughly speaking, is that a quarter of the seats in the Congress will be awarded, proportionately, to persons on a list submitted by each of the parties. In this way, the Oil Union has seats in Congress, as does the Teachers’ Union and other pyramidal constituencies. As there is no immediate reelection, these non-elected legislators—the head of the Oil Union, for example-- switch back and forth between the Senate and the Chamber of Deputies. 6 One reward was to have Gordillo’s son-in-law appointed as a deputy secretary of education.
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Public Policy Perspective No. 10022 everyone knew was going to happen in the first place: namely, that the PRI candidate would again prevail over other, lesser candidates with dubious characters and claims. The Shocks to the PRI System In the second half of its seventy-year run in power, the PRI System suffered three shocks: 1968, 1985 and 1994. The event of 1968 was the student protest movement that shook the industrial world from Paris to Tokyo, including the U.S. and Mexico. If there was a common theme, it would have been an objection to the authoritarian complacency, feigned democracy and consumerism of the older generations and their institutions. The government of Gustavo Díaz Ordaz (1964-70) had appointed Carlos A. Madrazo, a Tabasco politician (and former state governor) in his late 40s, as the president of the PRI, hoping that he would keep the younger generation in line. Madrazo interpreted his appointment as a mandate for change, and replaced many functionaries of the Old Guard. In the process, Madrazo made enemies, and his tenure was brief. He was forced to resign in 1965. Madrazo began to court students in private universities, the Iberoamerican University, among others, as if in preparation for an independent candidacy for the presidency in 1970. He also approached industrial conglomerates. He and his wife died in June 1969 in the crash of a commercial flight to Monterrey, on what was presumably a fund-raising trip. When the student movement broke out in 1968—timed to gain maximum, global media leverage from the Olympic Games that were about to begin in Mexico City--the government sought to repress it with soldiers, police and thugs. October 2 in Mexico is remembered as the most violent moment of that repression, with army units firing on students in a park named the Plaza de las Tres “Mr. President, our Culturas, at the housing complex of Tlatelolco.7 candidate Colosio has been The shock of 1985 was caused by a major earthquake and its assassinated in Tijuana!” aftermath. The crack in the PRI’s monopoly of presidential power Rubbing his eyes, the could be seen. There were hundreds of government buildings that president asked, “What time collapsed (from shoddy workmanship and bribed inspectors, it was is it?” The perplexed aide said), an unknown number died (in the thousands or tens of replied, “Sir? It is 6:30 p.m.” thousands), and it was the people—not the government—that spontaneously led the rescue and relief efforts. “Is it that late?” the president dryly replied. The shock of 1994 was the implosion of the PRI system: its own presidential candidate was assassinated. Illustrative of the dark suspicions at the time was the tale that on the afternoon of
7 The events at Tlatlolco have been portrayed in novels, movies and memoirs. The book by Elena Poniatowska was based on interviews with persons who lived through those events. The book has become a classic of Mexican literature.
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Public Policy Perspective No. 10022 assassination a staff assistant came into the president’s office, agitated, finding the president taking a nap. BACKGROUND It seems as if each long-time observer of, or participant in, Mexican politics develops his or her own private history of Mexico, a unique reading of what happened, why and to whom. In Market Note 132 we reach back in memory to elections as far back as 1970. In the present POLICY PERSPECTIVE, we move the clock forward to 2000, the year when the PAN replaced the PRI. Scripted, Flawed and Dirty Elections In our Market Note 132 (no political significance intended), we classified Mexican elections since 1970 as scripted, flawed or dirty. The elections of 1970, 1976, 1982, and 2006 were scripted, that is, their outcomes were known in advance from the beginning. As political analyst Samuel Schmidt observes, for the outcome of the election of 2012 to be scripted—that is, with a victory by Peña Nieto—the margin of victory cannot be so large as to generate shouts of “fraud,” but nor can it be so small (as it was in 2006) to have the same effect. The elections of 1988 and 1994 were flawed—something horribly failed--, while the elections of 2000 was dirty: The serious supporters of Vicente Fox belonged to a Political Action Committee (PAC) known as the “Friends of Fox,” and included, by association, a number of international companies and foreign governments. Fox was the candidate of the PAC, and only by convenience of the PAN.8 In the end, it was a one-man, one-vote election, with sitting President Ernesto Zedillo casting the deciding ballot. The Scripted Election of 2006 President Fox wanted the PAN to nominate Santiago Creel as its presidential candidate; but backroom party politics and political pay-offs favored Felipe Calderón. During the extended campaign, which began at the end of the year prior to the elections, PAN’s principal competitor, Andrés Manuel López Obrador, was demonized in the media as a Mexican Hugo Chávez. Even U.S. academia got behind the smear campaign against López Obrador. George Grayson, a distinguished political scientist with a half-dozen books on Mexico, ridiculed the candidate in a commissioned treatise in English. On the other side of the street, the Fox administration monopolized the airwaves in TV and radio spots that itemized the accomplishments of the federal government during its incumbency. In the end, the PAN candidate was said to have won with a margin of less than 1% of the
8 In 1988, as a federal deputy in the Lower House of Congress, Fox voted to uphold the controversial election of the PRI’s candidate Carlos Salinas. In 2012, Fox has urged support of the PRI’s candidate should he win the election (by a credible margin).
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Public Policy Perspective No. 10022 popular votes.9 Inferential evidence of the dirtiness of the 2006 election may be seen in the series of prohibitions in the election of 2012, starting with the bizarre blacking out during the official election period of government websites that describe the accomplishments and program of the current administration. A second inference of the dirty character of the 2006 election may be seen in the prohibition of attack ads by candidates in the 2012 election.10 DISCUSSION The National Electoral Fiesta of 2012 Observers who recall, from memory, the days when the PRI candidate was the undisputed, civic champion of reform and progress, will tell you that the casting and media attention given to the PRI candidate of 2012 reminds them of times past. It could even remind them of the candidacy in 1982 of Pepe López Portillo who—running unopposed--travelled the country like a madman, promising everything to everyone. From the start, Enrique Peña Nieto was greeted with flowers by the media and the pollsters, principally, Mitofsky (“Myth-ski,” say skeptics). The international media took the clue, and promoted Peña Nieto by reference to his polling numbers. The first presidential debate was held on Sunday, May 6 (and may be seen on YouTube), and some commentators said that Peña Nieto was “the winner.” Events were working out well for the PRI candidate, who was consistently shown to be ahead in the polls. Voters, commentators said, were tired of the PAN and dissatisfied with its anti-narco policies. Voters feared the PRD’s candidate, who caused such an uproar and disruption to normal life in Mexico City when he refused to accept defeat in 2006. The PRI’s candidate, in contrast, offered a new face of a reformed PRI which was now kinder and gentler (to borrow a phrase from American politics). Peña Nieto’s candidacy seemed a shoe-in until his address to the students at the Ibero-American
9 In this election the PRI candidate was the son of PRI reformist Carlos A. Madrazo (mentioned above). 10 The English expression, “To lock the barn only after the horse has escaped,” applies to these campaign prohibitions.
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Public Policy Perspective No. 10022 University on May 11. The visit was marred by protests by students about his actions as governor and about his qualifications to be president. He was chased off campus by protesters (the scene may be viewed on YouTube). In the days following, his supporters explained that the protesters really had not been students, but were paid agents who had been bused in to heckle him. The Social Media and the Election The claim that the protest against the visit and candidacy of Peña Nieto was not carried out by students hit a nerve with the Ibero students themselves; and some of the students who protested the appearance of Peña Nieto on campus uploaded on YouTube a film strip in which 131 of them gave their names and student ID numbers. The Movement “I am 132” is an allusion to the uncounted number of supporters of the movement beyond the original 131. The movement gained public attention by marches in the street and by attack ads online. The attack ads sought to discredit Peña Nieto’s Old Guard political and financial supporters (a context in which former president Carlos Salinas would often be mentioned). The PRI’s mindset is visually compared to that of Hitler in a series of film clips in which the Führer appears to be furious (to judge from the subtitles in Spanish) about one thing or another having to do with Peña Nieto’s campaign. The most savage of the clips in this series is the one that concerns the ill-starred visit to the Ibero. The subtitles have Hitler demanding that the media and pollsters be bought off, and that the visit to the university be declared a success (See insert above). Mexicans being Mexicans (with their unparalleled genius for political irony), it was not long before there were parodies of attack ads in which supporters of a candidate represented themselves as detractors. One of these concerns the 20 reasons why López Obrador should not be elected president (See insert, left). The PRI was not the only object of online fury: so also were the “opportunistic parties” who, by the electoral rules in place since 2000, permit political entrepreneurs to declare themselves a “political party,” and in this way receive, among other benefits, public funding and immunity against prosecution. In one of the debates, Josefina repeatedly asserted that a vote Gabriel Quadri would be a vote “for a single family,” referring to head of the teachers’ union.
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Public Policy Perspective No. 10022 One online campaigned urged citizens to vote for any of the three main parties, “but not a single vote for the parasitical pseudo-parties” (See insert). The 3rd Debate #Yo Soy 132 of June 19 In some way not yet documented in the public record, a previously unscheduled, unofficial debate was organized and held from 8-10 p.m. on June 19. It was broadcast on two university radio stations (UNAM and UAM) and on the Internet—but on neither of the television giants, TV Azteca or Televisa. The moderator was a university student, and a series of questions were posed to individual candidates by students (See: www.antiepn.com.mx/tercer-debate-en-vivo/). The four candidates were invited, but the PRI candidate declined, alleging (it was said) that it would be a “trap.” Reminiscent of what had happened six years before, when the PRD candidate refused to attend the first debate, an empty chair was placed to visually mark the absence of Peña Nieto (See insert). The second segment of the debate was about monopolies in Mexico. Having noted the lack of competition in cement, food, media, banking and telecommunications, the candidates discussed monopolies in energy. Gabriel was lucid about the need for competition in oil and power, and insisted on a constitutional change to Articles 27 and 28. “Mexico spends more on subsidies on fossil fuels than on education,” he said. Andrés Manuel, in contrast, said that talk of “opening” was a euphemism for “privatization.” He favors no change in constitutional mandate. Josefina criticized the PRD candidate for wanting to “lower prices by decree.” She also criticized the abuses of the leadership of the Oil Union.
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Public Policy Perspective No. 10022 The crucial importance of just five states If, as the PAN’s candidate maintains, that the presidential race is among three finalists (and not just two, as the PRI and PRD candidates supose), then in a system of direct elections, one candidate needs a plurality, something over a third of the votes. In Mexico, 40% of eligible voters are concentrated in just five states: Mexico, DF, Veracruz and Nuevo León. To win a plurality will require, of each candidate, that he or she maintain traditional voter allegiances in some states while breaking the grip of other parties in others. It is not necessary that any candidate win a plurality in all five states, but it is essential that they do well (Table 1).
OBSERVATIONS THE TERM “DEBATE” IN MEXICO means “timed, serial monologues,” so it seems from viewing the presidential debates. As Gabriel Quadri observed in his concluding remarks, the third debate had “more content and better interaction among the candidates.” About energy, he said that there was agreement about the need for renewable energies and reducing subsidies on fossil fuels. Only Quadri asked for a change to Constitutional Articles 27 and 28 to permit competition in oil and power. It is easy to see that Quadri’s party could play the role of spoiler for any of the parties, in the way that Ralph Nader did in the U.S. election of 2000, by pulling votes away from a candidate. To judge from the cinematographic creativity of the anti-PRI films on YouTube, most of the student protesters were pursuing a career in social communications. There are many coded messages in the selection of the López Obrador dream cabinet: The appointment of Rogelio Ramírez de la O, whose graduate studies were in England, would represent the first time in a generation in which this position has not been filled by an Ivy School graduate. The appointment of former UNAM rector Ramón de la Fuente as education minister would be a direct challenge to Elba Esther Gordillo and the teachers’ union. When asked on June 17 about who would win, a Mexican waiter at Pico’s Restaurant in Bellaire, Texas, responded thus: “Andrés Manuel will win, as in 2006; but, as then, the system will keep him from assuming the office as president.”
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Public Policy Perspective No. 10022 When asked on June 17 about who would win, a Mexican waiter at Pico’s Restaurant in Bellaire, Texas, responded thus: “Andrés Manuel will win, as in 2006; but, as then, the system will keep him from assuming the office as president.” Another Mexican voter in Houston remarked on June 27 that her parents in Reynosa will vote for the PRI. “They are going to vote for the flag,” she said, alluding to the fact that the red, white and green colors of the PRI logo are also those of the Mexican national flag. Latin American columnist Mary O’Grady observes that the Mexican election is as much about who comes in second and third (and in which order) as it does about who comes in first.11 Looking ahead, for the eventual winner, to govern it is important to also win the governorships and strong positions in the senate and congress.12
CONCLUSIONS
AMONG THE CANDIDAES, GABRIEL QUADRI is the strongest advocate of competition in all sectors of the economy, including oil and electric power. He was the only one to mention the Hydrocarbons Commission (CNH), insisting that it—not Pemex—should be in charge of the nation’s oil patrimony. If Peña Nieto does not win the presidency, it will be the social media that is to blame (or receive the credit, depending on one’s perspective). It will mean that the PRI’s long, dark tale of democratic simulation continues to hurt its chances to reclaim the presidency. In a poll taken after the final, and unofficial, debate, only 13% of university students were not aware of #Yo Soy 132; but of older voters above the age fifty, 41% had not heard of the movement. Historically, it has been in the rural populations where the PRI has had its greatest strength. It will also be the nostalgic population that will vote for the Flag. By these indications, and barring low voter turn-out from these PRI strongholds, the institutional math favors the PRI. Said differently, the “Mexican Spring” may only bloom in urban areas.
.
11 Wall Street Journal, May 25, 2012. “Will the PRI Retake Mexico?” 12 The candidates for the state governorships are reviewed in an online article by George Grayson that is published in the edition of Mexidata.info of June 25, 2012.
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MEI Market Note No. 132 Houston, June 17; Rev. June 20, 2012
MEXICAN SPRING Can the top‐placed candidate lose the presidential election?
THE U.S. PRESS HAS GIVEN THE PRESIDENTIAL ELECTION TO THE PRI CANDIDATE, Enrique Peña Nieto, citing poll results. An unexpected anti‐PRI student movement, however, has undermined T the impression of inevitability of a return of the PRI to power after twelve years in the opposition. The real dynamics of the Mexican presidential election of 2012 are found online, in the social media. In response to the abuses of the election of 2006, Mexican authorities ruled that negative advertisements were forbidden. Anyone interested in the present electoral cycle that has seen, on YouTube, any of the many search results for “Hitler and Pena Nieto” will realize how this rule has been circumvented online, with a mixture of venom and humor. Even the promotional clips may be presented as negative, as in the one with the title (in Spanish) of “Why el Peje [López Obrador] Should Not Win in 2012.” The present report takes the position that the presidential race of 2012 is between the PRI and PRD, and its purpose is to prepare the reader for either outcome. Contents
SUMMARY ...... 2 INTRODUCTION ...... 3 BACKGROUND ...... 3 Mexico’s Electoral System, 1929‐1994 ...... 3 The Shocks to the PRI System ...... 5 Mexico’s Scripted, Flawed and Dirty Elections ...... 6 THE SCRIPTED ELECTION OF 1970 ...... 6 THE SCRIPTED ELECTION OF 1976 ...... 6 THE SCRIPTED ELECTION OF 1982 ...... 6 THE FLAWED ELECTION OF 1988 ...... 6 THE DIRTY ELECTION OF 1994 ...... 7 THE DIRTY ELECTION OF 2000 ...... 7 THE SCRIPTED ELECTION OF 2006 ...... 7 DISCUSSION ...... 8 The National Electoral Fiesta of 2012 ...... 8 The Social Media and the Election ...... 9 The 2nd Debate of June 10 of the Presidential Candidates ...... 10 JOSEFINA VÁZQUEZ ...... 10 ANDRÉS MANUEL LÓPEZ OBRADOR ...... 10 GABRIEL QUADRI ...... 11 ENRIQUE PEÑA NIETO ...... 12 The 3rd Debate #Yo Soy 132 of June 19 ...... 12 OBSERVATIONS ...... 13 CONCLUSIONS ...... 13 Titles of related MEI reports ...... 14
______MEXICO ENERGY INTELLIGENCE® (MEI) is a commercial and policy advisory service offered by BAKER & ASSOCIATES, ENERGY CONSULTANTS, a management consultancy based in Houston. MEI reports facilitate two‐way communication between Mexican public and private institutions and the global environment. Our reports examine policy, institutional and cultural issues as they affect the operating environment, energy regulation, and government and private investment in Mexico’s energy sector. Reports are distributed principally on a subscription basis. +1 (713) 255‐0000 MEXICO ENERGY INTELLIGENCE® Page 1 of 14
PUBLIC POLICY PERSPECTIVE No. 10024 Houston, September 4, 2012
UBLIC POLICY PERSPECTIVES are issued periodically, in English or in Spanish, as a public service with the aim of inviting fresh discussion of matters of politics, law, policy, regulation and Pcorporate governance.
THE MEXICAN CONTROVERSY ABOUT PMI The after-shocks of the sanctions against PMI executives in 2011
ince 1989, PMI Comercio Internacional, S.A. de C.V., has served Pemex as its trading arm. The PMI Group of Companies has also served the Finance Ministry as a vehicle by which to leverage S Mexican present and future oil exports. Oil export receivables are used as the basis for the issuance of bonds, and foreign tax liabilities are minimized. To accomplish these goals, a legal structure has been established that required the creation of corporate identities in countries and, in the U.S., states (such as Delaware) that offer tax advantages (Table 1). From the perspective of any large corporation, PMI’s legal structure looks normal. Consider Apple, Inc., which could be characterized as a Chinese company with only its corporate, research and marketing operations domiciled in the U.S. The public knows nothing of the hundreds of legal entities that exist worldwide that were created to serve its manufacturing and marketing goals. Pemex provides the minimum of public information in its annual filing of Form 20-F to the U.S. Securities Exchange Commission; but in Mexico the PMI website has not been updated since 2008, creating, for critics who are naturally suspicious of all things “Pemex,” a large target for accusations of corruption. More than one voice has called for the disappearance of PMI entirely. The present POLICY PERSPECTIVE provides an overview of both sides of the argument; and asks if Article 51 of the Pemex Act of 2008 allows some PMI functions to be performed by Pemex directly.
CONTENTS WHY PMI BENEFITS MEXICO ...... 2 Original Logic of the PMI Group of Companies ...... 2 AVOID WRITS OF GARNISHMENT ...... 2 FINANCIAL LEVERAGE ...... 3 FLEXIBILITY IN RELATION TO THE PUBLIC PROCUREMENT RULES ...... 4 Subsequent Development of the PMI Group of Companies ...... 4 WHERE CRITICS FIND FAULT IN PMI ...... 5 Complex Organization ...... 5 Lack of Transparency ...... 6 Lack of Subordination to the Pemex Corporate Board ...... 6 Non-Accountability of Funds ...... 7 Leadership ...... 7 Upside and Downside Potential ...... 8 SHOULD SOME PMI OPERATIONS BE BROUGHT BACK INTO PEMEX? ...... 8 OBSERVATIONS ...... 9 CONCLUSIONS ...... 9 Table 1. Companies that form the PMI Group ...... 11
MEXICO ENERGY INTELLIGENCE® (MEI) is a commercial and policy advisory service offered by BAKER & ASSOCIATES, ENERGY CONSULTANTS, a management consultancy based in Houston. MEI reports facilitate two‐way communi‐ cation between Mexican public and private institutions and the global environment. Our reports examine policy, institutional and cultural issues as they affect the operating environment, energy regulation, and government and private investment in Mexico’s energy sector. Reports are distributed principally on a subscription basis. [email protected] P.O. Box 271506 ~ Houston, TX 77277‐1506 (713) 255‐0000 THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
HIS POLICY PERSPECTIVE EXAMINES the controversy about the PMI Group of Companies. The first section deals with the origin of PMI and the legal, commercial and T financial logic that lay behind its formation and evolution, which took place over about a decade, starting in the late 1980s. The second section deals with some of the criticism that PMI has received from within Mexico. A third section asks if it makes sense to make use of the flexibility in matters of procurement that are available to Pemex on account of the 2008 Energy Reform in relation to the functions that are performed by offshore companies that are members on the PMI Group of Companies. Does it make sense, in other words, to bring home some or all of the functions that Pemex had delegated to PMI? .
WHY PMI BENEFITS MEXICO The PMI structure of offshore companies is not a Mexican invention; it is a Mexican iteration of a legal and financing strategy used worldwide by large corporation. The PMI model was forced upon Pemex and the Mexican government by the inefficiencies and embarrassments of crude oil marketing in the late ‘70’s and early ‘80s. The back-office story of the selling of the PMI in Pemex and the Energy Ministry has not been told. The reconstruction that follows in this section charts a logical progression, no a chronological one. Original Logic of the PMI Group of Companies We do not rank or weigh the reasons and reasoning for the creation of the PMI Group of Companies. Below are some of the reasons (and not meant to be complete):
AVOID WRITS OF GARNISHMENT For many decades before Pemex had a Procurement Office on the west side of Houston, located in the 1980s on Gessner Blvd. On one occasion in the early 1990s, President Carlos Salinas’s airplane landed at the Houston International Airport, and was astonished to learn that as a result of a writ of garnishment in a civil complaint by Arriba Limited any asset belonging to the Government of Mexico found in the United States would be confiscated pending the liquidation of the claims of Arriba against Pemex (and, by extension, the Mexican Government). As one result of that incident, since the mid-1990s there is no entry in the Houston telephone directory for “Pemex” or for “Petróleos Mexicanos.” There is no target, in other words, for any
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024 future writ of garnishment. Pemex’s procurement office is still in Houston, but with a different name: Integrated Trade Systems (ITS), with its legal domicile in the Cayman Islands. Another asset that could be the target of a writ of garnishment was the account receivables (or IOUs) from Pemex’s crude oil sales. Consider this transaction: Pemex sells a cargo of crude oil to a U.S.-based refinery, and sends an invoice for payment. If, as a legal instrument, the obligation-to-pay is under the jurisdiction of U.S. courts, then a plaintiff could ask that those obligations be garnished pending settlement of his complaint. As Pemex cash-flow from oil exports is vital to the functioning of the federal government (and not only for Pemex), it was a matter of national economic security to devise a legal structure by which those obligations-to-pay were out of reach of U.S. (or European) courts. Thanks to the “PMI Solution” (as it might be called), Pemex’s international transactions are legally protected against third-party claims.
FINANCIAL LEVERAGE In the Oil Boom of 1977-81--and when José (Pepe) Carral was the country manager for Bank of America—mega-syndications were made to Pemex on the strength of its increasing oil reserves, which, under the late Jorge Díaz Serrano, rose to 72 billion barrels.1 When the oil market turned south in mid-1981, the shock was felt throughout the economy, provoking a series of devaluations of the Mexican currency. One of the goals of the many internationally educated economists in the presidential administrations of Miguel de la Madrid, Carlos Salinas and Ernesto Zedillo was to insulate the Mexican peso from abrupt changes in the oil market. One method, taken in 1991 in the course of negotiations with the U.S. government for a Free Trade Agreement (FTA), was to change the national accounts in Mexico in a way that would represent the flow of imports and exports in the border maquiladora (or in-bond) industry as true imports and exports, not, as before, as “border transactions.” The effect was to dramatically reduce the share of oil exports as a share of total Mexican exports: where, before, oil exports were 60% and higher, afterwards, they were 20% and lower. A second method of protecting the Mexican peso involved PMI. Instead of issuing debt instruments against the implied collateral of “Mexican reserves,” PMI could narrow the concept to bonds against receivables from Pemex export receivables. Market uncertainty about Mexico could be expressed as higher interest rates on PMI bonds, not by an attack on the value of the Mexican currency.
1 At the time, the convention of classifying reserves as Proved, Probable and Possible (3P) was not in use in Pemex; this change would come in the late 1990s (to the great consternation of analysts).
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
Having PMI issue bonds also gave protection to lenders against the possibility of confiscatory taxes by the Mexican government on Pemex revenue. By having the money offshore in pre-tax accounts, lenders could be reasonably assured that they would be paid.2 Pemex also made use of the so-called PIDIREGAS financing mechanism, which allowed Pemex to borrow off-balance-sheet money from international lenders for a specific revenue-generating project. At any industry conference related to Mexico, a representative present from the U.S. Export-Import Bank proudly will unfailing remind the delegates that “Pemex is our number-one customer.”3
FLEXIBILITY IN RELATION TO THE PUBLIC PROCUREMENT RULES Another consideration that required a marketing structure outside of Pemex (conceived of, legally, as an agency of the state) was the limitation imposed on government agencies in relation to the purchase of goods and services. Pemex, like all government agencies, was required to purchase gasoline, chemicals and other products by use of a public tender (a practice still used in Venezuela, Ecuador and some other countries). Advocates of a market approach4 argued that a trading arm should be established that was outside the limitations and restrictions of the LAASSP (the acronym of the government procurement law). The central argument was that in the global oil market opportunities to buy and sell cargos would appear unexpectedly—and briefly—and in order to optimize both sales and purchases it would be necessary to have the authority to act immediately on the opportunity. The awkward (and ultimately unsatisfactory) solution to achieving this flexibility was to assign several hundred Pemex employees to be virtual employees of PMI’s offshore companies. In their capacity as employees of these offshore companies they would not be held accountable to the rules of the LAASSP (they would, however, be accountable to the Public Servant Accountability Law, which could impose sanctions, civil and criminal, for negligence). Subsequent Development of the PMI Group of Companies As Mexican domestic demand for refined petroleum products grew, and exceeded national refining capacity, Pemex began to look for processing agreements with refineries outside Mexico. The opportunity in 1991 to own a 50% share in an outdated refinery owned by Shell Oil Company was seen by Pedro Haas, PMI’s first chief executive, as an excellent opportunity to expand Pemex’s international assets by leveraging on the credit rating of Shell and its ownership of the refinery.
2 Lenders would not have accepted the terms offered by Pemex E&P in 2011-12 in full-cycle E&P contracts: Contractors are to be paid from the “available cash” after deductions for taxes and royalties. 3 Industry executives do not believe that the EXIM Bank is doing them or Pemex any favors by substituting U.S.- tax-payer money in place of private capital for the development of Mexico’s oilfields. 4 Led by Adrían Lajous, Pedro Haas and Pedro Aspe, among others (we are surmising).
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
The joint venture was able to leverage a mere US$500 million in cash ($250 million by each side) into sufficient financing to overhaul the refinery. The key element was that Pemex would guarantee to (a) supply the venture with a certain volume of crude oil and (b) buy a certain volume of refined products by a given pricing mechanism. The banks were satisfied that the deal would pay the rent—that is, principal and interest. Again, for the Mexican side, there were the twin issues of minimizing U.S. taxes on its share of the profits from the joint venture, and protecting its asset (50% ownership) from any capricious writ of garnishment. Here again, the savoir faire of PMI and international lawyers comes to the rescue, although with the necessity of creating additional legal entities.5
WHERE CRITICS FIND FAULT IN PMI The discussion in this section provides an overview of the concerns that have been voiced by diverse persons and organizations, public and private, about the organization and operations of PMI. The concerns listed here are not meant to be comprehensive. Complex Organization
5 A discussion of each of the new entities and its functions is outside the scope of this report, and it is doubtful that sufficient documentation exists in the public domain for such an assessment.
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
Given the diversity of legal, tax and commercial objectives, PMI has every reason to have a complex organization (Exhibit A and Table 1).
Lack of Transparency PMI publishes virtually nothing about its structure, operations and governance. As companies that are not government agencies (in the sense that Pemex, CNH and CRE are such agencies), it could be argued that PMI has no legal obligation to provide any information beyond that of its own choosing (which is precious little). While this argument is probably legally correct, some would say it is politically stupid: in Mexico, PMI is the topic only in the harmful criticism of its employees, mission and, as a general concept, its social license. Lack of Subordination to the Pemex Corporate Board The existence and membership of a board of directors of PMI Comercio Internacional are not topics about which information is provided in the public domain. This information gap came to
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
light when, in September of 2011, the US$1.5 billion purchase of shares of Repsol-YPF became public. The director general of Pemex, Juan José Suárez Coppel, was identified as the president of the PMI board and the person responsible for the controversial investment decision. The Pemex corporate board of directors, meanwhile, had not been previously consulted in that decision, for which reason an opinion by the Investment Committee of the board had not been obtained. Some observers have expressed concern that Pemex and government officials have lost sight of the original governance model by which the PMI companies serve Pemex, and are subordinate to decisions by Pemex; the offshore companies should not serve their own interests, financial or otherwise. Non‐Accountability of Funds Career critics of Pemex in Mexico have always pointed to their inability to explain the flow of funds in the PMI Group of Companies as prima facie evidence that there must be misconduct and the illegal channeling of public funds into private hands. PMI is thought to be one of the secret mechanisms by which Mexico’s Political Class funds its share of the national wealth. Political realists observe that the Government wants to know about such misconduct only selectively; no one in government, for example, was particularly interested in knowing about the goings-on of the “hijos de Martha” who were the stepsons of President Vicente Fox (2000-06). So the fact that flow of funds cannot be explained from information in the public domain is not evidence that any illegal action has taken place; but it is evidence of the carelessness of officials in Pemex and the government in not taking a proactive stance in educating the public about the money trail in the PMI Group of Companies. Leadership The accusations of misconduct in 2010 and 2011 against PMI employees, including the chief executive officer of PMI Comercio Internacional, gave critics new energy to characterize the entire PMI structure as a rogue operation that benefitted private interests of the parties directly involved as well as of those of others. For example, the fact that 0.03% of the shares of PMI Comercio Internacional should belong to the Energy Ministry (SENER) has been seen that profits flowed from Pemex into a black box of unaccountability in the Ministry. Some observers have wondered about the wisdom of having a parallel organization of auditors that is embedded in PMI Comercio Internacional. The existence of these auditors dilutes the responsibility of managerial supervision; and managers themselves find themselves with someone looking over their shoulders on a daily—not quarterly—basis.
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
Upside and Downside Potential As with public service in general (anywhere) it is conceptually and administratively difficult to find a way to provide bonuses for superior performance. Pemex indeed has a complex bonus system, but it is not one that satisfies the traders; nor does it give them incentives. “If I make Pemex US$25 million, I don’t feel adequately compensated by a bonus of US$500,” a trader might say to himself. “On the contrary,” the trader might add, “if I lose $1 million in a trade, I could be sanctioned and have my career in public service ruined by the uninformed zeal of an auditor, someone who, himself, is looking to get promoted by virtue of the number of officials whom he has sanctioned.”.
SHOULD SOME PMI OPERATIONS BE BROUGHT BACK INTO PEMEX? Article 51 of the Pemex Administration Act of 2008 (Pemex Law) provides that, for core activities, Pemex is free to draw up those procurement rules that best conform to the nature of the global oil industry. In January, 2010, Pemex issued its Special Procurement Rules (the so-called DAC), but they were focused almost exclusively on issues related to the contracting of full-cycle services for exploration and production. The DAC did not address the procurement rules of the trading department. It would take a careful review by international law experts to evaluate the potential benefits and costs of bringing functions currently performed by the PMI Group of Companies back into Pemex.6
6 Perhaps the new Center for U.S. and Mexican Law of the University of Houston could be involved in such an assessment.
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
OBSERVATIONS It is not self-evident that any direct benefits would be obtained from internalizing PMI functions; but a review would be necessary to assess any changes to PMI’s current arrangements. The policy of not instructing Mexican journalists and the general public is evidence of deaf ears in SENER, PMI, Pemex Corporate and the Investor Relations Department. As discussed in our Market Note 140, the PMI structure requires yet another off-shore company to make the trick of protecting the receivables from oil exports from writs of garnishment in the U.S. That company is Pemex Finance, Ltd. (See insert). It is not clear why this company is not part of the PMI Group; and, oddly, PMI documents make no reference to it. One wonders about the lack of published papers by Mexican lawyers in the private sector who have previous experience in Pemex’s legal department. The logic and history of the PMI experiment calls for someone with a direct knowledge of the back-office history as well as with the legal issues that the PMI companies were established to resolve.
CONCLUSIONS Critics of the PMI System, as it might be called, have thus far failed to make the case that Pemex or the National Interest has been harmed by the complex system of offshore companies. On the contrary, after that one incident in the Houston airport, no presidential aircraft, nor any other asset belonging to Pemex or the Mexican government, has been subject to a writ of garnishment. Further, and of greater importance, the PMI System seems to have been one of the factors that decoupled changes in the oil market from the Mexican national currency.7 The conclusion by one labor organi- zation that “PMI should not exist” (See insert8) is not supported by our
7 There are other explanatory factors, such as the amassing of larger dollar cash reserves by the Central Bank. 8 Elektron (Boletin del Frente de Trabajadores de la Energia de México), Vol. XII (55), February 25, 2012. “El grupo privado PMI de Pemex.”
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024 review of the data and economic issues that underlie the legal structure of PMI. Where there is vast room for improvement is in the area of public relations: Here, SENER, Pemex, PMI and the PMI Investor Relations Department have failed to offered an easy-to- understand case that the PMI System serves the public interest. This failure need not be permanent. But time is running out. The sanctions against the PMI traders in 2008-11, coupled with the embarrassment over a purchase of Repsol shares that had not been approved by Pemex’s corporate board, has lowered the morale of the remaining professionals as well as the public image of PMI. The next administration could come—quite erroneously—to the conclusion that the PMI System had been one big mistake; and take steps that, unintentionally, would harm Pemex’s ability to operate efficiently in the global oil and products markets.
.
September 4, 2012 BAKER & ASSOCIATES, ENERGY CONSULTANTS Page 10 of 11
Table 1
PMI Group of Companies
Legal structure conceptually similar to other large companies
September 2, 2012
Legal Residence Employees Pemex Shares Notes (%)
MARKETING COMPANIES
1 PMI Comercio Mexico, DF 330 98.33 Began operations on March 24, Internacional, S.A. de 1989, as the successor of the C.V. Coordinación Ejecutiva de Comercio Exterior, which had served as Pemex product marketing department.
2 PMI Petroquimica, S.A. Mexico, DF 0 50.00 Established in 2000. Shares are de C.V. 50/50 with PMI Comercio Internacional
3 PMI Trading, Ltd. Dublin, Ireland 0 48.50 Established in May, 1991. One of two companies in PMI group in which Pemex has a direct. shareholder interest.
PORTFOLIO MANAGEMENT
4 Deer Park Refining Ltd., Delaware Shell employees 0 Established in 1993. 50/50 equity Partnership only. with Shell Oil Company.
5 PMI Holdings, B.V. Amsterdam 0 100.00 Formed in March, 1988.
6 PMI Holdings Petróleos Spain 0 100.00 Originally established in July 1988 España, S.L. and domiciled in Curacao, Dutch Antilles. On Dec. 30, 2005, the company changed its name and legal domicile.
SERVICE COMPANIES
7 Pemex Internacional Madrid 4 0 Shares are held by PMI Holdings España, S.A. Petróleos España, S.L. (100%)
8 Pemex Services Europe, London, UK 0 0 Established in 1988. Shares are Ltd. held by PMI Holdings Petróleos España, S.L. (100%)
9 PMI Holdings North Delaware, US 12 0 Established in 1992. Shares are America, Inc. held 100% by PMI Norteamérica, S.A. de C.V. (NASA)
Baker & Associates, Energy Consultants Report Generator™ File No. 782 www.energia.com Table 1 PMI Group of Companies: Legal structure conceptually similar to other large companies p. 2
Legal Residence Employees Pemex Shares Notes (%) 10 PMI Marine, Ltd. Dublin, Ireland 0 100.00 Formed in December 1993. Owned by Pemex Exploración & Producción, but considered as part of the PMI Group of Companies.
11 PMI Services, B.V. Holland 0 0 Established in 1988. Shares are held by PMI Holdings Petróleos España, S.L. (100%)
12 PMI Services North Houston 0 0 Established in 1992. Shares are America, Inc. held by PMI Holdings Petroleos España, S.L. (100%)
Baker & Associates, Energy Consultants Report Generator™ File No. 782 www.energia.com MEXICO ENERGY INTELLIGENCE® Other products
Reports related to MEI 10024
Table/ MEI # Published Updated Topic Pages graph ††
100140 • Aug 28, 12 What should PMI Tell the Next Government? 211 Established in the 1990s, the PMI Group of Companies serves Pemex as its trading department as well as the holding company for international assets such Pemex's 50% stake in the Deer Park refinery. The trading department was known for its highly motivated and qualified professionals. Personnel issues in 2010 and 2011, however, have shaken morale and cut into profits. This report lists measures for consideration that are aimed at restoring the productivity of the trading unit and to prevent the recurrence of the abuses of the personnel system such as those that occurred in 2010-11.
100130 • Jun 07, 12 THE AMBASSADOR AND THE PETROLEUM CLUB (Part II) 212 Ambassador Arturo Sarukhán was the keynote speaker at the innaugural luncheon of the Center for U.S. and Mexican Law and Policy, a new program of the Law Center of the University of Houston. This report is based on notes taken during his remarks on the current drivers of U.S.-Mexico diplomatic relations. The report includes a second section on topics that the speaker chose not to address.
100106 • Oct 24, 11 Nov 8, 11 Making Sense of PMI Exec Sanctions 28 This report examines the puzzling turn of events by which the two most well known Pemex executives, Rocío Cárdenas and Sergio Guaso, were relieved of their duties on the same day, along with members of their teams. The focus of the report is on the findings of government auditors who found fault in the pricing of coker naphtha in a series of export sales. The report concludes that the auditors acted without a grounding in the dynamics of commodity markets, and that revisions to the law are needed to protect traders.
100065 • Oct 28, 10 Integrated Trade Systems 43 Up to the early 1990s, Pemex had a Purchasing Office in Houston, the location of which, in the 1980s, was on South Gessner Avenue, and, as I recall, there was warehouse space for deliveries. A prospective supplier could easily find "Pemex" or "Petróleos Mexicanos" in the telephone directory or by calling the information operator.
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+1 (713) 255-0000 [email protected] Sep 4, 2012
PUBLIC POLICY PERSPECTIVE No. 10023 Houston, July 23, 2012
UBLIC POLICY PERSPECTIVES are issued periodically, in English or in Spanish, as a public service with the aim of inviting fresh discussion of matters of politics, law, policy, regulation and Pcorporate governance. This document was prepared to provide background on the murky role in Mexican national and local elections of LPG interests.
LPG INTERESTS AND THE ELECTIONS
Notes on Mexican Presidential Cycles
HE LPG LOBBY has long been seen as one of the major sources of campaign financing for all major political parties. Because the LPG business model is based on cash T transactions, in recent years suspicions of money‐laundering have been voiced, but not yet documented in the courts or in press reports. The blood relationship, close or distant, between the contested winner of the 2012 presidential election and the Nieto family‐based LPG conglomerate based in Querétaro has not been established in the public record. What is known is that Atlacomulco, the birth place of the PRI candidate, is associated with the political dynasty of the late Carlos Hank González, who in decades of public service, made his fortune with Pemex by means of trucking contracts for the delivery of petroleum products, principally gasoline and LPG. The present document reissues our earlier report of 2005 (No. 694), which examined the shadowy market structure of LPG distribution in Mexico. That report argues that the full‐cycle economics of natural gas are much more competitive than those of LPG; but concludes that the LPG enclave will not soon be challenged by elected public officials whose campaigns were financed with funds from LPG lobbyists and affiliated laundromats.
MEXICO ENERGY INTELLIGENCE® (MEI) is a commercial and policy advisory service offered by BAKER & ASSOCIATES, ENERGY CONSULTANTS, a management consultancy based in Houston. MEI reports facilitate two‐way communi‐ cation between Mexican public and private institutions and the global environment. Our reports examine policy, institutional and cultural issues as they affect the operating environment, energy regulation, and government and private investment in Mexico’s energy sector. Reports are distributed principally on a subscription basis. [email protected] P.O. Box 271506 ~ Houston, TX 77277‐1506 (713) 255‐0000 PUBLIC POLICY PERSPECTIVE 10023
APPENDICES...... 21
Document A. Introduction to family-held LPG business practices ...... 22 Table 1. LPG market statistics (bilingual)...... 23 Table 2. Controversial LPG business practices (press titles) ...... 24 Table 3. LPG and natural gas safety concerns (press titles) ...... 26 Table 4. Gas LDC concerns (press titles)...... 28 Table 5 LPG federal standards (list) ...... 29 Table 6 LPG websites ...... 30 Table 7 Costos y riesgos del servicio de gas natural...... 31 Table 8 Costos y riesgos del servicio de gas LP ...... 34 Fig. 1 Residential natural gas service: diagram of cost elements...... 37 Fig. 2 Componentes del costo del servicio doméstico de gas natural ...... 38 Fig. 3 Residential LPG service: diagram of cost elements...... 39 Fig. 4 Componentes del costo del servicio doméstico de gas LP...... 40 Related reports ...... 41 Product notes and disclaimer...... 42
[email protected] Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 2 Jun 23, 2005
This report inquires into the total cost of service of LPG and natural gas for residential and commercial customers in Mexico, t aking into account cost s and risks for the customers and communities beyond those of the regulated prices for each product. Example: consumer fraud in LPG cylinder service has been estimated at US$500 million annually. This report identifies components of costs and risk for both LPG and natural gas service. Translated titles from the Mexican press provide a glimp se into developments in the Fox administration.
INTRODUCTION
Any comparative discussion of the business models and operations of LPG distributors and local natural gas companies (gas LDCs) in Mexico must begin with an examination of the LPG business in most of Mexico as if it existed without competition from natural gas. In 2002 LPG distributors handled upwards of 27 million metric tons annually , equivalent to about 330,000 b/d of product. In 2005 industry estimates put the LPG market value at US$7.1 billion (Table 1).
But the LPG market in some of it s dimensions is tightly controlled by the government: foreign investment is not allowed; imports and wholesale transactions are managed by Pemex; and ret ail prices and sales commissions--af ter a brief, but unsuccessful, experiment with liberalization--are administered by public officials.
LPG trade associations
Little systematic knowledge exist s in the public domain, but in a country that prides itself on umbrella organizations it is an arresting fact that there are two trade associations of LPG distributors: one is the "National" (Asocigas), composed of the major companies, the other is the "Mexican" (Asocimex), composed of smaller and medium-sized companies. The leader of the first is Francisco Aparicio Varela, and the second Enrique Arizmendi.
Both organizations have elegant websites (Asocimex has harp music on its homepage) and each is said to have a history that goes back fif ty years. Neither site provides a list of its members, but the "National" does give the names of it s board of directors as of May 2004.
Estimates by Asocigas put the top 10 LPG conglomerates as controlling 75% of the national market.
MEI (713) 627-9390 © 20052001 Baker & Associates, Energy Consultants. All rights reserved. www.energia.com Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 3 Jun 23, 2005
A review of the Mexican press since 2001 hint s at points of difference: The "Mexican" complains that in some market s in the country the "National" is trying to drive it s members out of business by unfair competition. There are also points of similarity: both organizations want the government to decontrol the pricing of LPG , especially, they say, if the government is serious about it s plans to replace all 24 million port able cylinders in the country by the end of 2005.
Natural gas trade association
As late as 1991 in Mexico a dat abase search of the term "gas" in all of federal jurisprudence, as published in the Federal Registry (DOF), the few result s pertained only to LPG. There were no regulations whatsoever relating to natural gas, even though natural gas distribution systems existed in Mexico, all of which, but a few , were run by the State, either by Pemex or CFE. Two examples of natural gas distribution systems of those years were Diganamex and Diganaqro, corresponding to the est ablished market pockets in Mexico City (the famed Tlaltelolco housing complex was one) and Querétaro. Pemex really controlled the business, but it s day-to-day operations were, in practice, in private hands. Jorge Rebolledo, Sr., was the director general of both of these natural gas distribution comp anies (LDCs). His son, Jorge Rebolledo, Jr ., is president of the Mexican Natural Gas Association (AMGN), an organization founded in the mid-1990s that has it s offices in the corporate headquarters of Grupo Diavaz on Ave. Revolución in Mexico City.
In 1996 the government began a vigorous effort, led by Héctor Olea, then president of the CRE, to attract private investors to government auctions of natural gas distribution franchises. In the next five years some 15 franchises were awarded: the leading international companies were Sempra, Rep sol, GDF, Tractebel, representing American, Spanish, French and Belgian interest s. (Another American company, Kinder-Morgan, would come to have a small gas LDC in Hermosillo.)
But things did not go as well as expected from the perspective of the gas LDCs: where the federal government supported investment by international comp anies in local infrastructure, local city government s often opposed it. (The PRD-controlled Mexico City government has been critical of the operations of natural gas distributors in the city, and especially so of Gas Natural México.)
Neither the government nor the companies apparently expected the fierce competition from the LPG distributors.
A sharp, private exchange of views took place in the energy ministry in mid-July 2004, with representatives of the natural gas, LPG and electric industries; but the point s of discussion made public were limited government pricing policies, whereas the point s
MEI (713) 627-9390 © 20052001 Baker & Associates, Energy Consultants. All rights reserved. www.energia.com Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 4 Jun 23, 2005 of disagreement extend far beyond pricing issues.
Cultural and political importance of LPG market in Mexico
In the United States, the word "gas" in ordinary conversation is universally understood to refer to gasoline. In Mexico, in contrast, the term "gas" almost universally refers LPG, where it is the fuel of choice in nine out of ten homes (estimated at 89.5 million in 2004).
Where, in the United States, LPG usage is mainly associated with rural areas that do not have access to natural gas service. In Mexico, in contrast, out side of a few urban pockets where there fewer than two dozen natural gas franchises operate, LPG operators control the market. The AMGN in 2004 estimated that there were 1.6 million natural gas residential customers.
In the early 1990s Jorge Rebolledo, Sr ., observed wryly that few of his natural gas customers realized that they were receiving natural gas service. "They think we have a huge LPG storage t ank somewhere--underground, I suppose," he would say with a twinkle in his eye.
Where, since 1995, the limited opening of the natural gas market- -in storage, transportation, distribution and trade --has been the object of federal energy policy; in relation to LPG, the market is closed except to Mexicans. A few voices in Mexico from time to time speak out in favor of market liberalization, but without ef fect.
The general sensation is that the LPG market in Mexico, it s structure, principal actors and real economics, are topics that are not on the t able for inquiry by journalist s or industry analysts. (Document A provides a sep arate introduction to this little- understood subject.)
Purpose and expectations of this study
The general question that we are trying to frame in this report is this: Which costs more for residential and commercial service, LPG or natural gas? (In this report we are not examining the economics or politics of these two product s in the transport ation or industrial sectors, nor are we examining progress in special topics like price controls, subsidies, policy liberalization or cylinder replacement.)
In exploring the question we shall want to consider the fully burdened cost of each product, not only to the consumer but also to the neighborhood, municip ality and federal government.
MEI (713) 627-9390 © 20052001 Baker & Associates, Energy Consultants. All rights reserved. www.energia.com Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 5 Jun 23, 2005
Our expectation (or research hypothesis) is that LPG service cost s consumers, neighborhoods and municip alities more than natural gas service; but that, in the present configuration of public policy , the political controversies surrounding natural gas pricing and service end up costing the country more than would have been the case with LPG.
In other words, we expect that, if indirect costs and risks are taken into account, several unexpected outcomes will emerge:
•LPG service will be more expensive than natural gas service, both for the consumer , the neighborhood and the municipality.
•The structure and dynamics of the LPG market in Mexico obey archaic models of crony capitalism and the informal market and are inconsistent with the modern, formal market of natural gas distribution that the federal government has--with only limited dedication and success--promoted since 1995.
•The perseverance of these archaic business models in federal policy put s at risk present and future investments in natural gas distribution by international comp anies.
BACKGROUND
Market, pricing and regulatory controversies
LPG
LPG distributors in 2001 saw the government t ake control of retail prices; their efforts to date to have the prices liberalized have come to naught. Distributors say that without higher commissions they will be unable to replace the 24 million port able cylinders currently in use throughout the country.
Early in the Fox administration there was an attempt to t ax LPG for vehicle use, to make it roughly equivalent to gasoline; LPG distributors complained loudly about this idea. Gasoline distributors, understandably, make the opposite argument, saying that LPG is being given a subsidy.
LPG distributors have also had to face complaint s from federal authorities about allegations of consumer fraud, safety and environment al issues (T ables 2 and 3 provide glimpses into the coverage of these topics in the Mexican press: Spanish titles are translated into English; the original titles are available on request.)
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When in the spring of 2005 the uproar took place in Monterrey and other cities about the high price of natural gas, LPG distributors and even lawmakers tried various means to convince the public to return to LPG service.
Natural gas
The fundamental problem that natural gas distributors have had to face is the lack of coordination between federal and municip al authorities in relation to natural gas franchises and permits. It is the federal government that provides the franchise, but all of the dirty work (literally) of digging trenches, tearing up sidewalks and laying pipe requires permits of local authorities.
In some cases, prompted by LPG distributors (or so gas LDCs suspect), local authorities have been quick--too quick--to apply sanctions against the gas LDCs for real and imagined violations of safety codes and commercial practices.
The circus of popular protest s that took place in Monterrey in the spring of 2005 that resulted in higher consumer prices was an opportunity for everyone af fected by the price increases to convert a regulatory issue into a populist cause.
Table 4 gives only a hint of the frustration that gas LDCs have experienced by what they regard as unfair competition by LPG distributors and the indif ference of federal authorities.
Regulation
Any commercial activity in Mexico will be regulated by a dozen or more federal agencies, especially so in the case of a ubiquitous product like LPG . There are, for example, laws and regulations concerning the manufacturing and testing of LPG containers (Table 5 lists federal standards relating to LPG.) We mention only a few of the regulators and agencies responsible for policy and public oversight.
Energy Ministry (SENER)
There is a General Office of LPG Affairs in the Energy Ministry. One of the topics taken up by this of fice during the Fox administration is a program to replace used (and possibly) leaking LPG cylinders throughout the country . There is an Inter-ministerial Committee on LPG on which there are represent atives of the energy , economy and finance ministries, also representatives from the Office of the President, that monitors pricing policies.
On March 13, 2001 (four months after the Fox term began) the government put in place price controls for LPG. A program was created in that year to replace all of the 23.5
MEI (713) 627-9390 © 20052001 Baker & Associates, Energy Consultants. All rights reserved. www.energia.com Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 7 Jun 23, 2005 million portable LPG cylinders (20 and 40 kg.) in Mexico by Dec. 2005.
CRE
The primary responsibility of the Energy Regulatory Commission is the regulation of natural gas prices and the administration of tenders for new distribution franchises. The Commission has also been tasked for developing a methodology for LPG pricing.
Profeco
The Consumer Protection Agency has taken a proactive role in investigating incidents of consumer fraud in LPG distribution. Its website also posts a discussion of differences of LPG and natural gas, including a table related to health and safety (Table 2 gives the safety comparisons.)
CFC
The Federal Competition Commission reportedly has opened a half-dozen investigations about alleged market abuses in LPG market s. The website post s a number of routine documents having to do with mergers of LPG comp anies.
Trade Organizations
As mentioned, there are two main trade organizations for LPG distributors, the "National" association (ASOCIAGAS) and the "Mexican" association (ASOCIMEX). The history of these two organizations is not public information, nor are the bases for the choice of membership in the one or the other . ASOCIGAS, better financed, is a member of the World LP Gas Association (WORLDLPGAS.COM). In addition, there is an association of truckers (CANCAR). (Table 6 lists websites relating to LPG in Mexico.)
In addition there is an association of manufacturers of LPG cylinders (Asociación Mexicana de Fabricantes de Recipientes de Gas). Reportedly (but without a website) there is a regional association of LPG distributors (Cámara Regional de Gas LP), to which Miguel Zaragoza and six other companies belong.
Market size and segments
TOTAL SALES IN LPG
Mexico in 2003 was ranked highest in LPG consumption per capita, with 83 kilograms. In 1995 the residential sector represented 78% of the tot al LPG market, but, in 2003, this sector had shrunk to 64%. Vehicle use in the first year was only 2% but by 2003 it had grown to 13%. LPG sales are concentrated in the central st ates, where, in 2003, nearly 40% of the national demand was found; the growth rate here has been observed
MEI (713) 627-9390 © 20052001 Baker & Associates, Energy Consultants. All rights reserved. www.energia.com Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 8 Jun 23, 2005 at 3.6%, while, in the northeast, where there is a strong natural gas culture, the demand for LPG has grown at 1.8%, about half.
Every day there are some 800,000 deliveries of LPG port able cylinders and resupply to 200,000 stationary tanks. The industry has a vehicle fleet of nearly 30,000 ret ail (local) and long-haul trucks.
Private LPG companies operate 1,200 storage facilities. The industry generates some 60,000 direct jobs (Table 1 provides industry statistics.)
RESIDENTIAL AND COMMERCIAL SECTOR
Some 80% of Mexican homes and businesses rely on LPG service for heating. Statistics on the distribution of regional market s are provided in the 10-year forecast published by the Energy Ministry.
TRANSPORTATION USE
In 2001 there were some 700,000 LPG vehicles, with 1,800 service st ations. In the Mexico City some 37,000 service vehicles use LPG in a market area where there are 11 service stations in the S tate of Mexico and 4 in the Federal District. In July 2001 there were 40 members of ASOCIMEX who were ready to invest a tot al of US$120 million adding new distribution centers in the DF.
There is also an association of truckers and haulers (www .cancanar.com).
Stakeholders
The stakeholders in the Mexican LPG market are Pemex Refining, Pemex Gas, a half- dozen distribution conglomerates located princip ally in western, northern and north- western states, plus several hundred small distribution comp anies in the central, eastern and southern states. In addition, there are transportation companies that serve as contractors to Pemex who deliver product from refineries to distribution terminals around the country. Pemex's PMI is the only importer of LPG.
Foreign investment in LPG is tightly restricted and policy liberalization is opposed by Mexican distributors.
REPORT DISCUSSION
In mid-2003 a technical advisor to the two major LPG distributors told the newsp aper Reforma that consumers should consider the full range of cost s and risks associated
MEI (713) 627-9390 © 20052001 Baker & Associates, Energy Consultants. All rights reserved. www.energia.com Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 9 Jun 23, 2005 with natural gas before deciding to switch from LPG (July 2, 2003). Antonio Rodríguez Gaytán explained that in the case of natural gas the customer p aid an additional 0.92 pesos/M3 as a distribution cost and 55 pesos for the service. "In contrast, for more than 60 years, since the beginnings of the LPG distribution business, there is no additional cost in the sale of our product," he was quoted as having said.
The expert noted that Mexico has st andards for LPG that are sometimes more strict than those found in other countries.
To drive home the point he cited the situation of a hypothetical family of four in Mexico City whose home has a stove and a water heater: the family will require two refills of 30 kilograms of LPG every two months at a cost of 381 pesos. "The same family using natural gas would require 136 M3 bimonthly--plus a charge for distribution, plus a charge for the service, plus the VAT (value-added tax)--which would result in a cost of 491 pesos, that is, 28.8% higher than the family would p ay for LPG."
Bravo! While the logic and the numbers might be questioned, the analytical direction is correct, and, for the purposes of comp aring the cost of LPG and natural gas, the article subtitle provides an import ant piece of information which is not provided by Pemex: the heat content of LPG: 19,026 calories. The unit of weight or volume, however, is not specified in the article, nor is it an equivalence provided by any conversion factor provided by Pemex or the Energy Ministry. There is no way to verify the comparison without, also, a value for the heat content of natural gas per cubic meter.
The Ministry in its 10-year forecast for the LPG market provides a table of volumetric equivalences, with a footnote that the average density of LPG in Mexico is 0.54 kg/liter . In the Ministry's annual energy balance, the heat content of LPG (gas licuado) is given as 3,812 MJ/bbl for 2003, a value that convert s to 44.401 MJ/kg and 10,605.075 kcal/kg. (In prior years, Pemex analysts have questioned the accuracy of the Ministry's estimate of the average heat content, without, however , providing one of their own.)
The analysis that we wish to pursue concerns not just pricing issues, however , but broader concepts of cost and risk that lie beyond government pricing formulas. W e illustrate the idea by reference to the economics of automobile ownership.
Concept of total cost of ownership
In the showrooms of agencies where luxury cars are sold a commonly heard concept is "total cost of ownership." The idea is that it p ays to look not only at the purchase price of the car but to also look, comp aratively, at the sum of estimated cost s and estimated residual values in comparing vehicles for purchase.
During the ownership period the cost s of maintenance, license, insurance and body
MEI (713) 627-9390 © 20052001 Baker & Associates, Energy Consultants. All rights reserved. www.energia.com Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 10 Jun 23, 2005 work will be higher for, say, a Mercedes SUV than for a model made by Chevrolet. At the end of the ownership period, however, it would be expected that the residual value of the Mercedes would be higher than that of the Chevrolet. Example: If the first cost $60,000 but retained 75% of its value after 5 years, the ownership cost would be the same as for a $30,000 vehicle that ret ained 50% of its value.
While the cost of maintenance, insurance and the rest would be higher for the Mercedes, these costs would be counterbalanced by the value given to what dealers call "exclusivity" and what p assengers would regard as added safety and highway comfort.
It is this line of reasoning that in this report we wish to apply to residential and commercial fuel options in Mexico. The idea is to examine analogous concepts to see if there is any basis for concluding that there is a greater cost of service associated with LPG or with natural gas.
A second goal is to identify those cost s and risks borne by three other actors beyond the consumer, namely, the neighborhood, municipality and Mexican economy.
The point, then, is that measured by the pocketbook expense of the customer , it may (or may not) be true that natural gas costs 28% more than LPG; but the costs and risks do not stop with the amount of the outlays in cash. It may be true that although in terms of cash outlays natural gas is 28% more expensive than LPG , it may also be true that when all cost and risk component s of the two services are comp ared, natural gas is 50% cheaper than LPG.
Natural gas service, like the Mercedes, may be cheaper in the long run and big picture.
Costs and risks of natural gas service
This discussion is presented in compressed from in Fig. 1 in English and inTable 7 and Fig. 2 in Spanish.
Apparent costs
The consumer p ays for the cost of the methane molecule, which is valued by a methodology that makes use of reference prices in relevant markets, taken to mean the U.S. Gulf Coast (and typically Houston). There have been proposals to use a basket of natural gas prices that are enjoyed by Mexico's competitors, with the idea that such a change would lower gas prices significantly . Energy Ministry Fernando Elizondo warned in the spring of 2005 that changes in price methodology should not be expected in any time soon.
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Additional costs and risks
ASSUMED BY THE CUSTOMER
•The consumer has to assume the cost of converting household appliances like water heaters and stoves (and, in a few areas, air conditioners) from LPG to natural gas. In addition, he has to assume the cost, measured in temporary inconvenience of having his house or apartment refitted to natural gas service. There is also a risk of explosion were leaked gas to accumulate in closed sp aces.
•The neighborhood also assumes the cost s and temporary inconvenience associated with the tearing up of streets and sidewalks to install natural gas pipelines.
ASSUMED BY THE NATURAL GAS DISTRIBUTOR
Normal Costs
•Around-the-clock service to respond to reports of leaks, line ruptures, etc.
•Pipeline ruptures caused inadvertently by public works or private construction activities
Atypical costs seen in Mexico
•Hostility of city officials, local lawmakers and the press
•Excessive delays in granting permits and in making inspections
•Harassment of company employees by paid agitators
•Damage to corporate image caused by negative publicity
ASSUMED BY THE MUNICIPALITY
Normal costs and risks
•In being the host to a natural gas franchise, the municipal government bears the direct costs of administering construction permits, carrying our inspections and, occasionally, hearing complaints from residents.
•There is also a risk of pipeline leaks and ruptures, some of which are caused inadvertently when operators of unrelated public works project s damage an underground pipeline. (Risks of ruptures from earthquakes are now low .)
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•Municipalities in which there are large LPG t ank farms there is the risk of a major accident, such as the explosion on Nov . 19, 1984, in a suburb of Mexico City where, as a result, there were 500 fatalities.
Atypical costs seen in Mexican cities
•There are cost s arising from the fear and confusion in neighborhoods where the installation of natural gas service is being disputed by existing LPG distributors.
•There are costs arising from the delayed or canceled expansion of natural gas service in neighborhoods where resistance--and sometimes outright opposition-- to natural gas service in the community and local government has been worked up by LPG promoters.
•Costs generated by the effort to (false) alarms of gas leaks, when, in reality , only the gas odorizing agent (mercaptan) had been maliciously spilled into local sewers.
•Costs also arise from the absence in Mexico of a single governmental authority that is responsible for LPG and natural gas rules and pricing. Hence, disputes about franchises and rights are not easily resolved.
•Costs spring out of social agitation, when, as in the case of the mobilized natural gas customers in Monterrey in May 2005, there were marches and protest s of all kinds, which required the reassignment of police officers and other public officials.
ASSUMED BY THE MEXICAN GOVERNMENT AND ECONOMY
There are several cost categories: first, the foregone benefit s of natural gas service in communities (and entire cities) where international investors have decided that the risk/reward ratio was unfavorable to them. A related category is the discouragement of natural gas LDCs, who see in the Mexican government of ficials either an inability or unwillingness to take measures to discourage unfair practices by LPG distributors and, simultaneously, to uphold the rights of franchise-holders in their distribution areas.
There is also the risk of a spill-over perception that the government cannot be trusted to provide fair investment opportunities in any area of the energy sector . The distrust of public policy in relation to investment s in natural gas service in government- auctioned natural gas distribution franchises parallels the distrust of government policy in relation to Pemex's Multiple Service Contract s (2002-05), where, also, there were public tenders that received no bidders. In relation to the MSCs, Pemex gave assurances that the contract s were legal, but in one case, Rep sol, a federal court agreed in 2004 to review the legality of the basic contract; so far , only a few isolated voices have called for a review of the franchises of gas LDCs.
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Costs and risks of LPG service
This discussion is presented in compressed form in Fig. 3 in English and in Table 5 and Fig. 4 in Spanish.
Apparent costs
The official price of LPG service p aid by the customer includes at least five element s: the molecule, processing, transport ation, storage and distribution, only the first and fourth have a transp arent cost mechanism. The molecule price is determined by a methodology that links it to the Mount Belvieu market, while the distributor is given a straight sales commission (currently 5%).
The cost of processing LPG in Pemex's gas plant s is not public, nor is the bidding process, identities or prices paid to jobbers or haulers who deliver product from the gas plants to distribution points. The cost of storage of LPG Pemex's distribution point s is also not public information.
Additional costs and risks
The tabulation of costs and risks is more complex for LPG than for natural gas.
ASSUMED BY THE CUSTOMER
COSTS
•The LPG residential or commercial customer pays in cash for the replacement cylinder or the filling of his st ationary tanks (he also p ays for the t anks and their inst allation), plus tips to the delivery men.
•The customer p ays in the value of the inconvenience of having to arrange for someone to be on his premises to receive the delivery of LPG . (Most single people in Mexico live in ap artments, as the building assumes responsibility for the delivery of LPG.)
ASSUMED RISKS
•The customer assumes the risks of defective cylinders, which may result in leaks and environmental contamination.
•He assumes the risk of consumer fraud in the form of under-weight cylinders.
•He assumes the risk of the interruption of his service for not having p aid attention to
MEI (713) 627-9390 © 20052001 Baker & Associates, Energy Consultants. All rights reserved. www.energia.com Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 14 Jun 30, 2005 the volume of remaining gas in the cylinders or t anks.
One restaurant in Mexico City p aid dearly for this oversight: On June 27, 2004, the rest aurant, Las Fuentes, which had been struggling to attract customers for months, was filled with customers who had arrived early for the protest march that would begin at 10 a.m. at the Angel Monument. The customers wanted hot coffee and breakfast, but, only at this moment, did the manager discover that the restaurant's LPG tanks were empty. Emergency service was called, but it did not arrive before dozens of unhappy customers had lef t the rest aurant, which, the following year , closed it s doors, af ter thirty years of operation. Had it had uninterrupted service that day, a new customer based might have been created.
•Risk of explosions in cases of leaks in sp aces without adequate ventilation.
•The security of the property is compromised by the entry of strangers on the premises.
ASSUMED BY THE MUNICIPALITY
Normal Costs
•As normal costs and risks, the neighborhood and municip ality assume the cost s of noise pollution and environmental contamination from two sources: cylinder leaks and vehicle emissions from delivery trucks.
•There is extra road use and traffic congestion associated with LPG cylinder deliveries in trucks.
•In allowing natural gas franchise operators to begin marketing and infrastructure operations within city limits, some city government have assumed the cost s and risks associated with the inevitable competition by LPG distributors.
Atypical costs seen in Mexico
•Local officials receive intense lobbying from LPG agent s, and are pressured to obstruct the operations of the natural gas LDCs, by delaying city permits, for example.
•In late June 2005 flyers were distributed in Guadalajara neighborhoods wrongly asserting that PROFECO had declared that it was not obligatory to accept natural gas service.
ASSUMED BY THE MEXICAN GOVERNMENT AND ECONOMY
NORMAL RISKS
•Explosions in centers of LPG storage (as in "San Juanico" in 1984 in Mexico City). In some cities, such as Reynosa, the government is trying to remove Pemex's LPG storage facilities to locations outside of city limits.
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•Environmental contamination from the leaks of LPG cylinders. (A study a few years ago attributed a significant share of air pollution in Mexico City to this cause.)
•Risk of highway accidents involving LPG haulers.
ATYPICAL RISKS OBSERVED IN MEXICO
•Resistance to a change in public policy that creates legal and commercial sp ace for natural gas LDCs.
•Mistrust of local and state authorities of the correctness of public policy in the areas of energy and private investment. (The social protest marches in Monterrey in May of 2005 had distinctly anti-Spanish--and, by extension, anti-foreign messages.)
Questions and policy choices ahead
This report has mainly considered questions without answers: How much, for example, in $/BTU equivalent, did it cost Monterrey in May to have police monitor the thousands of marchers in the streets who were protesting the high cost of natural gas service?
In this section we shall consider briefly several policy opportunities that could address some of these questions.
Publishing the $/BTU cost-conversion factors
It is unexpected that in the Energy Ministry's ten-year forecast of LPG supply and demand, there is not a heat-content conversion factor . A simple conversion engine could be posted on the SENER website. It is equally unexpected that in the Ministry's annual national energy balance the only mention in any government document of the heat content of LPG is in the unit of MJ/barrel, when commerce is conducted in BTUs, not megajoules, and when Mexican residential customers are familiar only with calories (or Kcal) as measures of heat.
Restructuring Pemex Gas
One of the policy questions asked throughout the Zedillo and Fox administrations has been this: How to lower the out-of-pocket expense of delivered natural gas for residential, commercial and industrial customers? Approaches to answering this question have varied wildly and there is no sp ace in this report to consider more than one.
During 1996-97, when the CFE's gas utility in Monterrey was put up for privatization, the industrial lobby there successfully convinced the government to instruct the CRE
MEI (713) 627-9390 © 20052001 Baker & Associates, Energy Consultants. All rights reserved. www.energia.com Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 16 Jun 23, 2005 to exclude their account s from the gas load to be privatized. The choice was not between natural gas and LPG, but between having, as a service provider, either Pemex Gas or the future winner of the CFE auction for the Monterrey gas distribution franchise. It was clear then, as it is now , that a gas LDC without large-volume customers has to charge more for it s service than would otherwise be the case. Part of the responsibility for the high prices of Monterrey residential customers, therefore, lies in the decision taken by the big companies not to participate in the cost-of-service structure of the private LDC gas franchise.
One measure, long discussed in private, but not yet voiced as a policy option by public authorities, would be to restructure Pemex Gas in such as way as to eliminate it s role as a gas marketer entirely . In that way , all natural gas customers in a gas franchise area--including those in the so-called "self-supply" associations--would be required to buy their gas either from the local distributor or contract for their own gas from foreign suppliers. No customer or self-supply association would be allowed to buy gas from Pemex directly.
Evaluate the real economics of LPG service
Critics would say that the LPG distribution value chain, as an activity that is regulated and protected by the government, is a model of non-transp arency. An analysis of the opportunity costs associated with this value chain is long overdue. What benefit s do customers, neighborhoods and the national economy forego to have 80% of homes supplied with LPG service? The political and policy protection of fered by the government to the current market giants--the Zaragoza's and their friends--must come at a price, a quid pro quo: ¿A cambio de qué? Whatever the coin of payment may be, Mexico is foregoing the investment s in storage, transport ation and distribution that international companies like Penn Octane are ready to make. LPG service by defective portable cylinders has had a cost in air quality deterioration; hopefully , the cylinder- replacement program will significantly improve, if not eliminate, this source of air pollution.
Redefine federal-state-municipal authority
During the Middle Ages in the Iberian Peninsula, the ayunt amientos, or city councils, had a measure of independence in relation to the Crown. In matters of LNG and natural gas permits, the Fox administration has learned that this tradition lives on. The CRE, representing federal authority, issued Marathon Oil a permit for an LNG terminal in Baja California, but in 2004 the st ate government expropriated the land considered as the best site for the terminal, thereby spiking the project.
In Jalisco and the Federal District, among other areas, municipal authorities have gone
MEI (713) 627-9390 © 20052001 Baker & Associates, Energy Consultants. All rights reserved. www.energia.com Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 17 Jun 30, 2005 out of their way to block gas LDCs from carrying out their exp ansion plans to which they legally committed themselves in their original offer to the CRE. While jurisdictional gaps and conflicts between federal and local authorities are by no means unique to Mexico (there is one going on, for example, between the S tate of California and the U.S. Federal Energy Regulatory Commission over a proposed LNG site in Long Beach), the current culture of defiance in st ate and municipal capitals in relation to federal energy policy and it s regulatory institutions bodes well neither for the federal government nor for private investors, Mexican or otherwise.
OBSERVATIONS
During all of the Fox administration there have been no successful tenders of natural gas distribution franchises. Why? As troublesome, some natural gas franchises have all but given up in their attempt to penetrate the LPG market zones in their franchise areas. Why?
Independently of the participation of natural gas LDCs in the residential and commercial fuels market, it would seem that the present organization and policy framework of the LPG business in Mexico is costing the country money measured as a) the foregone investment s that international comp anies would make in LPG infrastructure, b) the cost of the continuation of abusive, oligopolistic practices that questionably serve the development of modern, competitive markets, and c) the effect that the negative public image of the integrity of the industry has on investor and consumer confidence in the economy and public policies.
The federal government is vulnerable to pressure from the LPG lobby, but the reasons for its power are unclear . The families who control the LPG business in Mexico are from the North (princip ally Chihuahua and Nuevo León), and the Fox team is st affed with northerners for whom the policy and market st atus quo needs few adjustments.
No one wants to talk much about the dysfunctionalities in public policy relating to LPG as an object of energy policy . The Federal Competition Commission (CFC) opened investigations into oligopolistic practices of some LPG distributors, but the problems and issues go far beyond those of market presence and control. Public authorities have given attention to LPG cylinders as a risk to public safety and air quality .
Mexico's Consumer Protection Agency (PROFECO) has publicized cases of the systematic under-filling of LPG cylinders. The agency would like to do more, but has limited budgets and staff. PROFECO executives were not amused by the distribution of flyers in Guadalajara with bogus information and warnings to LPG customers that they "should not be deceived" by natural gas distributors. “Consumers need to be protected also from intentionally misleading information about their right s as consumers,” a senior official told MEI. Mexico Energy Intelligence ® Analyst Report 05 - 694 p. 18 Jun 30, 2005
CONCLUSIONS
A one-on-one comparison of the ret ail price of LPG and natural gas scaled to heat content ($/BTU) fails to capture the true economics of the service provided. In comparing costs and risks assumed both by the user, the neighborhood and the municipality, the analysis suggests (but does not establish) that natural gas service costs much less than does LPG service.
The LPG market operates as a pre-NAFTA island of privilege for established conglomerates without much public oversight. The topic has not been the object of any investigative journalism or academic study of which we are aware.
When the energy ministry says that for the next ten years it will reserve LPG storage, transportation and distribution to "Mexicans," the ministry doesn't mean that the industry will be open to just any Mexican business entrepreneur who want s to get to the business. What the ministry really means is that the existing oligopolistic structures will continue to receive political protection from the government in its policy framework in relation to LPG.
If successful, the new programs proposed by the Fox administration regarding training, safety and infrastructure will help modernize the LPG business in Mexico.
The analysis further suggests that under the current regulatory and policy framework, the combination of (1) the harassment of natural gas distribution companies by municipal authorities (abetted by LPG interests) coupled with (2) the native-son favoritism shown by the federal government toward LPG distributors has compromised the initial international perception that natural gas LDCs represented a sound business opportunity. "We did not come to Mexico just to wait," complained the director of one international company with gas LDCs in Mexico. It's a complaint worth heeding
GB
MEI (713) 255-0000 wh_y www.energia.com Document A
Public information on the LPG business in Mexico
Regular, if scattered, information about the LPG business in Mexico comes princip ally from four sources: the Office of LPG Affairs in the Energy Ministry (SENER), the Mexican associations of LPG distributors and truckers, the press--and the "street," meaning pop- ular and business folklore and impressions. Information on LPG business practices is occasionally made available also by the Federal Competition Commission (CFC) and the Consumer Protection Agency (PROFECO).
Information seldom comes from competitors to LPG distributors, namely, the old and new natural gas distribution franchises. Nor does it come from international comp anies who are ready and willing to invest in LPG infrastructure and commerce if given the chance by a liberalization of law and policy (Penn Octane Corporation is, perhaps, the best-posi- tioned example of a company in this group: see www.pennoctane.com.)
The word on the street is that the LPG business is, first of all, a family business controlled by the fabled Five Families. All of the estimated 400 LPG distribution companies are pri- vately held, so there is no financial information available to the public.
One study by Ariel Yépez, a Pemex analyst, in 2004 found that in14 of 30 local market s in Mexico were was little competition, and that there were monopoly conditions in the states of Colima and Quintana Roo. The study concluded that almost 70% of LPG sales in Mexico are carried out by only 12 conglomerates, but that four of these alone account for 40% of national sales. Inthe states of Baja California, Baja California Sur, Campeche, Nayarit, Oaxaca, Sinaloa, Tabasco, Yucatán, Durango and Jalisco the largest distributor of LPG had over 50% of the market (Reforma, June 28, 2004).
Conglomerates typically establish separate companies for each market area. The pat- tern is seen in the information on the CFC website regarding the merger of Grupo Fuentes with 9 other companies. The data show that Fuentes was buying these compa- nies to expand its activities into new markets of Coahuila, Guanajuato and Jalisco. The merger was approved on April 11, 2002 by the CFC (Exhibit A). . Exhibit A
Extract from a CFC protocol approving the merger of Grupo Fuentes and Gas But ano del Bajío, S.A. de CV (File CNT-233-2001) 1. The Parties
Grupo Fuentes. Made up of several comp anies, among them Servi-Gas del Norte, SA; Gas Supremo Juárez, SA; Distribuidora Fuva del Parral, SA de CV; Gas Comercial de Chihuahua, SA; Gas Comercial de Cuauhtémoc, SA and Gas Comercial Delicias, SA. Grupo Fuentes provides the distribution service for liquefied petroleum gas (LP gas) in the geographical areas of Northern Chihuahua and Southern Chihuahua.
Gas Butano del Bajío; Gas de Romit a; Gas de Lagos; Surtigas; Gas Real; Gas Doméstico; Gas y Combustibles; Guanagas and Gas de Ojuelos. These companies provide LP gas distribution service in the geographical areas of Coahuila and Guanajuato-Querétaro-Lagos de Moreno, Jalisco. (Note that the com- mon owner of the companies being sold is not mentioned in the protocol.)
These families use proxies, or name-lenders, to give the public appearance of inde- pendent businesses. Guadalajara, Cd. Juárez and Tijuana are centers of LPG market power concentration. In the Valley of Mexico and in the Gulf and southern st ates there is less concentration of ownership and a modicum of market competition. In recent years the Federal Competition Commission (CFC) has brought five actions against LPG dis- tributors for monopolistic practices, but no definitive judgment has been issued.
One of the complaints that has reached the press is that the big conglomerates are forc- ing small LPG distributors out of business, in p art by offering discounts on the of ficial price.
The largest of the Five Families is the Zaragoza family , whose roots are mainly in the North. It turns out that there are two branches of the Zaragoza family in the LPG busi- ness. The two Zaragoza companies are Zeta, led by Tomás Zaragoza, and Tomza, head- ed by Jesús Zaragoza. The companies controlled by Tomás Zaragoza, with dominant presence in Guadalajara, Tijuana and Cancún, among other cities, has been estimated at 13% of the national market.
To show it s unwillingness to permit Tractebel to est ablish its natural gas franchise in Guadalajara, the LPG distributor Thermogas (led by Jesús Zaragoza) sought to invali- date the CRE permit on the grounds, it claimed, that the CRE president at the time, Héctor Olea, had acted improperly by joining Tractebel after his term expired at CRE.
The other major groups are these:
Soni, led by Santiago Oñate, who, only in the Central Mexico market, is the owner of many companies including Invalle, Gas de Cuernavaca, Gas Noel and Sonigas. His conglomerate is estimated to control 25% of the most important market in Mexico, where residential market demand in 2003 rose to 929,000 tons. (Other major competitiors in the central market are Tomás Zaragoza, whose 8 comp anies have 10% market share, and Gas Uribe with 7.3%.)
Gas Uribe, led by Oscar Uribe
Fuentes, led by Eduardo Fuentes (operates mainly in Chihuahua, where, in Cd. Juárez, the company has franchises in both LPG and natural gas).
Another "street fact" about the LPG business is that it s owners are politically connected at the highest levels of government in Mexico; hence, laws and regulations are tilted to favor their continued market power . An example of this power is the long-held policy against foreign investment in distribution, storage and transport ation. (Trade is legally open, but PMI, Pemex’s trading company, is the sole importer.)
A third fact of the domain of popular culture is that the LPG distributors will stop at very little to preserve their turf against intruders, be they other LPG distributors or aspiring natural gas local distribution comp anies (LDCs). Each guards it s territory against out- siders with the zeal of fabled mafia gangsters (a comparison sometimes heard in off-the- record conversations). Shooting the tires of the LPG delivery trucks of competitors is one way that has been used to convey a message of territorial infringement. An "outsider" newly arrived in the past decade is the natural gas distribution franchisee, who, with his federal permits, is eager to penetrate the LPG market in his franchise area.
In the early years, especially in Mexico City and Guadalajara, it was common for LPG distributors to take measures to intimidate not only the pipeline crews of the natural gas companies but also city authorities responsible for permit s and inspections. Natural gas LDCs complained of unreasonable delays in the granting of permit s and of fines and inspections the main purpose of which seemed to be harassment with the intent of dis- couraging the LDC operator from seeking to expand his pipeline network into that neigh- borhood of his franchise territory.
Neighborhoods where natural gas has been inst alled or about to be inst alled occasion- ally have been terrorized by mysterious appearances of the odorizer (mercapt an) that normally put in gas as a safety measure in local sewers. Resident s are alarmed by the possibility of a gas leak and explosion. (A rare press report of such an incident was reported in La Jornada on April 14, 2005.)
There were a few cases where "intimidate" would have been too mild a term to describe the actions of vandalism and harrassment applied internecene conflict s between LPG distributors and against the natural gas distributors. Rev. 23 June 2005 Table 1
El mercado de gas LP en cifras LPG market statistics, 2004
Concepto Todo México Area metropolitana**
Empresasª 450 45 Companies Plantas de almacenamiento Storage facilities 925 60 Estaciones de Carburación* LPG service stations 2,951 500 Vehículos que usan Gas LP LPG vehicles 700,000 250,000 Cilindros en circulación LPG cylinders in use 23,500,000 8,500,000 Tanques estacionarios LPG stationary containers 2,000,000 700,000 Camiones de reparto portátil Trucks for delivery of portable cylinders 18,000 7,500 Camiones de reparto estacionarios Trucks for delivery of stationary containers 6,000 2,100 Tractocamiones con semi-remolque Semi-trailers 2,800 Servicios diarios Daily deliveries 1,000,000 350,000 Reparto diario cilindros portátiles Delivery of portable cylinders 800,000 280,000 Reparto diario a tanques estacionarios Delivery to stantionary containers 200,000 70,000 Cobertura de la población Coverage of the residencial market 80% Hogares con servicio Residents with LPG service 20 millones 7 millones Empleos directos Direct employment 60,000 21.000 Empleos Indirectos Indirect employment 180,000 63,000 Crecimiento de la demanda Annual demand growth (%) 3.1% anual Producción Pemex output (b/d) 247,000 barriles diarios Importación Pemex imports (b/d) 85,000 barriles diarios 332,000 barriles diarios lo Ventas internas Domestic (inland) sales que equivale a 27,400 toneladas Valor del mercado Market size (USD) 7,100 millones de dólares ª Includes all related services and manufacturers. Conexos incluye empresas de acero, transportistas, cilindreros, etc.. * Includes LPG service stations. Incluyen Estaciones comerciales y de auto abasto. ** Metropolitan Mexico City. El Área Metropolitana incluye el D.F y 22 municipios del Estado de México
Data/fuente: Asocigas (2005) Translations: MEI
Found items in search: 24 Mexico Energy Intelligence ® www.energia.com Printed in this report: 24
Table 2 Controversial business practices of LPG operators
Spanish titles translated Keyword: 694.1
Records found as of 6/22/2005 Title Source File
May
May 06, 2005
<1> Customers defrauded of US$500 million annually in LPG deliveries Reforma 10687
<2> Consumer fraud in LPG distribution: Profeco El Financiero 10708
April
Apr 14, 2005
<3> Strong odor of natural gas caused by spill of mercaptan La Jornada 10141
<4> LPG distributors offer incentives to switch from natural gas El Norte 10163
October
Oct 12, 2004
<5> Black market in LPG cylinders El Universal 7701
September
Sep 02, 2004
<6> CFC drops monopoly abuse investigations in LPG case El Universal 7084
June
Jun 28, 2004
<7> War breaks out among LPG companies over distribution routes El Universal 6117
April
Apr 14, 2004
<8> Authorities fearch for clandestine LPG distributors El Economista 5302
February
Feb 27, 2004
<9> PRD authorities in Mexico City to verify legality of LPG distributors El Economista 4799
Feb 24, 2004
<10> Actions in Mexico City to be taken against 2 illegal distributors of LPG El Economista 4757
Feb 19, 2004
<11> Fear of monopolization of LPG industry El Financiero 4713
MEI Press database Related to MEI Report 694 Wed, Jun 22, 2005 ( 5:00 PM ) 2 Mexico Energy Intelligence ® Table 2 www.energia.com Controversial business practices of LPG operators
Records found as of 6/22/2005
Title Source File
Feb 18, 2004
<12> Mexico City authorities look to solve illegal LPG distribution Reforma 4685
Feb 17, 2004
<13> LPG distributors with illegal operations are identified Reforma 4681
December
Dec 22, 2003
<14> “Magical” replacement of LPG cylinders El Financiero 4182
Dec 19, 2003
<15> Monopolies block foreign capital in LPG El Financiero 4057
<16> LPG monopolies close door to private investors El Financiero 4178
Dec 10, 2003
<17> LPG distributors launch campaign against natural gas in Mexico City El Heraldo de México 3869
July
Jul 02, 2003
<18> LPG spokesman defends value against natural gas Reforma 2176
January
Jan 13, 2003
<19> Consumer protection agency sanctions LPG Reforma 497
December
Dec 01, 2002
<20> Controversy over LPG resurfaces Reforma 333
November
Nov 27, 2002
<21> Tax on LPG would fuel black market Milenio 316
Nov 25, 2002
<22> Tax on LPG for vehicle use would costs jobs and promote black market Reforma 292
October
Oct 04, 2002
<23> A new complaint against Tractebel Milenio 116
September
MEI Press database Related to MEI Report 694 Wed, Jun 22, 2005 ( 5:00 PM ) Found items in search: 15 Mexico Energy Intelligence ® www.energia.com Printed in this report: 15
Table 3 Safety and environmental issues related to LPG & natural gas
Spanish titles translated Keyword: 694.4
Records found as of 6/22/2005 Title Source File
June
Jun 09, 2005
<1> Energy Ministry to impose new safety rules on LPG distributors La Jornada 10736
May
May 18, 2005
<2> Gardiners accidentally cause gas pipeline rupture La Crónica.com 10855
May 17, 2005
<3> Low risk from gas leak in El Rosario: Gas Natural México El Universal 10854
January
Jan 26, 2005
<4> LPG distributors reach 60% level in switching out old cylinders Esmas.com 10771
February
Feb 19, 2004
<5> 4 injured in LPG and natural gas leaks in Mexico City La Jornada 4714
<6> LPG tank explodes; 4 injured El Universal 4715
Feb 18, 2004
<7> New safety rules for natural gas and LPG Milenio 4690
<8> LPG and NG markets to improve safety: Energy Ministry El Financiero 4693
Feb 03, 2004
<9> 12,000 business use LPG without safety certifications El Heraldo de México 4566
January
Jan 09, 2004
<10> Consumer agency guidelines regarding risk of gas explosion El Universal 4246
December
Dec 15, 2003
<11> Distributors to invest US$650 million in new LPG cylinders Reforma 3927
November
MEI Press database Related to MEI Report 694 Wed, Jun 22, 2005 ( 5:10 PM ) 2 Mexico Energy Intelligence ® Table 3 www.energia.com Safety and environmental issues related to LPG & natural gas
Records found as of 6/22/2005
Title Source File
Nov 19, 2003
<12> Public risks in LPG use, say authorities Reforma 3525
Nov 07, 2003
<13> Limited public resources for LPG oversight: Energy Ministry La Crónica de Hoy 3311
September
Sep 24, 2003
<14> 40% of the LPG cylinders are replaced El Heraldo de México 2696
June
Jun 07, 2002
<15> Substitution of 7,000 LPG cylinders in Oaxaca Boletínes de Prensa 10770 -SENER
MEI Press database Related to MEI Report 694 Wed, Jun 22, 2005 ( 5:10 PM ) Found items in search: 11 Mexico Energy Intelligence ® www.energia.com Printed in this report: 11
Table 4 Complaints, mostly in 2004, of gas LDCs
Spanish titles translated Keyword: 694.1
Records found as of 6/22/2005 Title Source File
September
Sep 13, 2004
<1> Tractebel discouraged by permit requirements in Guadalajara Milenio 7269
August
Aug 23, 2004
<2> Mexican families prefer LPG to natural gas Reforma 6913
July
Jul 19, 2004
<3> Tractebel complains of unfair practices by LPG distributors El Financiero 6395
Jul 14, 2004
<4> Natural gas LDCs demand equal treatment vis-à-vis LPG Reforma 6329
<5> NG distributors ask for fair treatment El Universal 6335
<6> Mexico is not the paradise that we thought: GDF Milenio 6340
<7> Gas LDCs want subsidy to equalize LPG prices La Crónica de Hoy 6342
June
Jun 28, 2004
<8> Pemex acknowledges LPG monopolies Reforma 6090
December
Dec 19, 2003
<9> Marcapasos (column): Current situation of Gas Natural Mexico Reforma 4047
November
Nov 24, 2003
<10> Gaz de France does not meet coverage commitments, complains of unfair El Financiero 3565 competition March
Mar 18, 2003
<11> Tractebel prepares its defense Reforma 4865
MEI Press database Related to MEI Report 694.2 Wed, Jun 22, 2005 ( 5:05 PM ) Table 5 Federal standards applicable to LPG service in Mexico
Mexican Federal Description and comments DOF publication Standard (NOM) date (dd-mm-yyyy)
NOM-001-SEDG- Plantas de almacenamiento para Gas L.P. Diseño y 12-IX-1997 1996 construcción. NOM-002-SEDG- Bodegas de distribución de Gas L.P. en recipientes 29-06-1999 1999 portátiles. Diseño, construcción y operación.
(Esta norma cancela y sustituye la NOM-056-SCFI-1994, publicada en el D. O. F. del 8 de diciembre de 1994). NOM-003-SEDG- Estaciones de gas L.P. para carburación. Diseño y 28-04-2005 2004 construcción. NOM-004-SEDG- Instalaciones de aprovechamiento de Gas L.P. Diseño 09-07-1999 2004 y construcción. NOM-005-SEDG- Equipo de aprovechamiento de Gas L.P. en vehículos 09-07-1999 1999 automotores y motores estacionarios de combustión interna. Instalaciones y mantenimiento.
(Esta norma Cancela y sustituye a la NOM-034-SCFI-1994) NOM-010-SEDG- Valoración de las condiciones de seguridad de los vehículos 25-10-2000 2000 que transportan, suministran y distribuyen Gas L.P. y medidas mínimas de seguridad que se deben observar (Se publicó . durante su operación nuevamente esta norma el 1 de (Esta es la norma definitiva de la Norma de Emergencia NOM-EM- febrero de 2001). 010-SEDG-1999, publicada en el D. O. F. del 23 de agosto de 1999 y cuya prorroga de vigencia por seis meses se publicó el 24 de abril de 2000). NOM-011-SEDG- Recipientes portátiles para contener Gas L.P. no expuestos a 29-03-2000 1999 calentamiento por medios artificiales. Fabricación.
(Esta norma Sustituye la NOM-EM-011-SEDG-1999 NOM-012/1-SEDG- Recipientes a presión para contener Gas L. P., tipo no 20-02-2004 2003 portátil. Requisitos generales para el diseño y fabricación. (Esta norma cancela a la NOM-021/1-SCFI-1993, publicada el 14 de octubre de 1993) NOM-011/1-SEDG- Condiciones de seguridad de los recipientes portátiles para 30-03-2000 1999 contener Gas L.P. en uso.
NOM-012/1-SEDG- Recipientes a presión para contener Gas L. P., tipo no 20-02-2004 2003 portátil. Requisitos generales para el diseño y fabricación. (Esta norma cancela a la NOM-021/1-SCFI-1993, publicada el 14 de octubre de 1993) NOM-012/2-SEDG- Recipientes a presión para contener Gas L. P., tipo no 23-02-2004 2003 portátil, destinados a ser colocados a la intemperie en plantas de almacenamiento, estaciones de Gas L. P. para carburación e instalaciones de aprovechamiento. Fabricación (Esta norma cancela a la NOM-021/2-SCFI-1993, del 14 octubre de 1993)
NOM-012/3- Recipientes a presión para contener Gas L. P., tipo no 23-02-2004 SEDG-2003 portátil, destinados a ser colocados a la intemperie en estaciones de Gas L. P. para carburación e instalaciones de aprovechamiento. Fabricación
(Esta norma cancela a la NOM-021/3-SCFI-1993, publicada el 14 de octubre de 1993 y su modificación publicada el 13 de marzo de 2000)
MEI 694 Rev. 18 June 2005 Table 5 Federal standards applicable to LPG service in Mexico
NOM-012/4- Recipientes a presión para contener Gas L. P., tipo no 25-02-2004 SEDG-2003 portátil, para uso como depósito de combustible en motores de combustión interna. Fabricación
(Esta norma cancela a la NOM-021/4-SCFI-1993, publicada el 19 de octubre de 1993) NOM-012/5- Recipientes a presión para contener Gas L. P., tipo no 02-03-2004 SEDG-2003 portátil, destinados a vehículos para el transporte de Gas L. P. Fabricación.
(Esta norma cancela a la NOM-021/5-SCFI-1993, publicada el 2 de marzo de 2004) NOM-013-SEDG- Evaluación de espesores mediante medición ultrasónica 26-04-2002 2002 usando el mé todo de p ulso-eco, para l a verificación de recipientes tipo no portátil para contener Gas L.P., en uso. (Norma definitiva de la NOM-EM-012/2-SEDG-2002).
NOM-016-SEDG- Válvula utilizada en recipientes portátiles para contener gas 19-04-2004 2003 licuado de petróleo.- Especificaciones y métodos de prueba NOM-018/2- Recipientes portátiles para contener Gas L.P., válvulas. 20-10-1993 SCFI-1993 NOM-018/3- Distribución y consumo de Gas L.P..- Recipientes portátiles y 14-10-1993 SCFI-1993 sus accesorios parte 3, Cobre y sus aleaciones-conexión integral (cola de cochino) para uso en Gas L.P.
NOM-018/4- Distribución y consumo de Gas L.P.- recipientes portátiles y 14-10-1993 SCFI-1993 sus accesorios parte 4.-reguladores de baja presión para gases NOM-019-SEDG- Aparatos domésticos para cocinar alimentos que utilizan gas 30-05-2002 2002 L.P. o gas natural-Especificaciones y métodos de prueba.
(Esta norma entrará en vigor a los 60 días naturales siguientes después de su publicación y a al entrada en vigor de ésta norma se cancela la NOM-023-SCFI-1993) NOM-020-SEDG- Calentadores para agua que utilizan como combustible gas 22-12-2003 2003 L.P. o natural, de uso doméstico y comercial. Requisitos de seguridad, métodos de prueba y marcado
(Esta norma canela la NOM-027-SCFI-1993, publicada el 15 de octubre de 1993 y la NOM-022-SCFI-1993, publicada el 14 de octubre de 1993, así como su modificación publicada el 18 de junio de 2001) NOM-025-SCFI- Estaciones de Gas L.P. con almacenamiento fijo.- Diseño y 15-10-1993 1993 construcción. (Esta norma cancela la NOM-X-66-1992). NOM-027-SEDG- Controles primarios y controles programadores de seguridad 16-07-1997 1996 contra falla de flama par a quemadores de gas nat ural, Gas L.P., diesel o combustóleo con detecc ión de flam a por medios electrónicos. (fotoceldas, fototubos o por detecc ión de la ionización de la flama).
Data: http://www.energia.gob.mx/wb2/Sener/Sene_1245_normas_de_gas_ lp
Rev. 18 June 2005 Mexico Energy Intelligence ® www.energia.com
Table 6
Selected websites on LPG in Mexico
MEI 694
REGULATION & POLICY
1 Comisión Energía de Energía (CRE) The CRE's main role is in the http://www.cre.gob.mx administration of the tenders and franchises of natural gas distributors.
2 COMISIÓN FEDERAL DE The CFE has opened http://www.cfc.gob.mx COMPETENCIA (CFC) investigation on alleged oligopolistic practices of LPG distributors in selected markets, e.g., Cancún. Website is bilingual, English and Spanish.
3 Procuraduría Federal del Consumidor Features a document that http://www.profeco.gob.mx (PROFECO) compares risks of natural gas and LPG. Has taken lead in Fox term against consumer fraud in the filling of LPG cylinders.
4 Secretaría de Energía (SENER) The Ministry has responsibility for http://www.energia.gob.mx policy oversight of LPG, and annually publishes a 10-year forecast of LPG supply and demand.
TRADE
5 Asociación Mexicana de distribuidores There are some 130 members of http://www.asocimex.com.mx de Gas Licuado y Empresas Conexas, this trade organization, made up A.C. of small and medium-sized independent distributors.
6 Asociación Nacional de Distribuidores de There are some 120 members. http://www.asocigas.com Gas LP The major distributors are in this association include Soni, Miguel Zaragoza, Nieto, Tomás Zaragoza, Vizcaino, Bello, Uribe, Regio Gas and Metropolitano.
7 Cámara Nacional del Autotransporte de One membership group in this http://www.canacar.com.mx Carga trade organization is made up of LPG jobbers who deliver product to Pemex distribution centers.
MEI websites database Related to MEI Report 669 Thu, Jun 23, 2005 Table 7
Costos y riesgos del servicio de gas natural
Hacia una contabilización de costos
Wed, Jun 8, 2005 Revised 6/30/2005
INTRODUCCION
Esta tabla contiene conceptos de costo y riesgo que se puede relacionar con el servicio de gas natural. No se proporcionan cifras ni estimaciones de los valores que pudiera obtenerse en cada caso.
1) COSTO DE LA MOLÉCULA
El costo de la molécula de gas natural entregado a los ductos de distribución refleja un complicado conjunto de elementos:
Si la molécula es de importación por ductos de EEUU, refleja la metodología de precios de los mercados relevantes de referencia (hoy, de Houston, conocido como netback) establecida en la ley vigente cuyos conceptos son administrados por la CRE.
Si la molécula es de producción nacional, y si se trata de gas asociado, hay costos de extracción, separación y transporte y que corresponden a Pemex E&P y Pemex Gas; se comercializa como si fuera gas de importación, así, acatando el concepto de costo de oportunidad.
2) COSTO DE TRANSPORTE
Pemex Gas ductos realiza negociones con la CRE para establecer costos de transporte que deben de estar incluidos en el precio combinado que pagará o el distribuidor o el usuario final.
3) COSTO DE DISTRIBUCIÓN
Las tarifas de distribución para los primeros cinco años se las autoriza la CRE en base a las ofertas originales de los licitantes al adjudicar una franquicia. Después, las tarifas deben de ser ajustadas para reflejar costos históricos de distribución.
4) COSTOS Y RIESGOS ASUMIDOS POR EL USUARIO Costos en efectivo Las facturas enviadas por correo o electrónicamente mensual o bimensualmente.
Costo por la instalación y la conversión de los aparatos domésticos.
Costos indirectos Inconveniencia temporal al instalar los ductos tanto en las calles como en la casa.
Baker & Associates, Energy Consultants Report Generator™ File No. 737 Thu, Jun 30, 2005 4:42 PM Table 7 Costos y riesgos del servicio de gas natural 2
Riesgos a) Interrupción del servicio ocasionada por un siniestro o temblor.
b) Intoxicación ocasionada por la falta de mantenimiento y/o fugas en espacios sin ventilación.
c) El no poder contar con un poder calorífico uniforme puede ocasionar una mala combustión.
5) COSTOS Y RIESGOS ASUMIDOS POR LA DISTRIBUIDORA
2Riesgos normales a) fugas y rupturas de los tubos como efectos de accidentes o siniestros
b) costo del servicio contínuo al cliente y la municipalidad las 24 horas
3Riesgos atípicos que se han visto en México a) obstaculización hacia la instalación de las tuberías
b) hostigamiento de los empleados
c) problems causados por agitadores profesionales contra el gas natural
d) actitudes negativas de las autoridades municipales, surgidas de intereses creados
6) COSTOS Y RIESGOS ASUMIDOS POR EL MUNICIPIO
1Costos a) Inconveniencia temporal al instalar los ductos en las calles.
b) Valor del tiempo de la administración de los trámites y permisos
c) Valor del tiempo de la administración de las inspecciones de las obras
2Riesgos normales a) explosiones ocasionada por fugas
b) temor y confusión en la población ocasionado por rupturas de ductos como resultado no intencional de actividades de obras públicas
3Riesgos atípicos que se han visto en México a) Miedo y confusión en la colonia provocado por las pugnas mediatizadas entre el franquicitario de gas natural y los proveedores de gas LP.
b) Rezagos en la inversión en la ampliación de la red de gas natural debido a las mismas pugnas, malinformación y obstaculización en la tramitación de los permisos.
c) Confusión por la falta de una sóla instancia de administración pública responsable por la administración de precios y normas de gas LP y de gas natural.
d) Agitación social promovidos por intereses encontrados contra el sistema de administración de precios de gas natural para usuarios comerciales como contra el servicio de gas natural en el hogar.
e) Costos directos e colaterales al responder a alarmas (falsas) de una fuga de gas cuando, en realidad, fue mercaptano tirado, con malicia, en el drenaje municipal.
Baker & Associates, Energy Consultants Report Generator™ File No. 737 Thu, Jun 30, 2005 4:42 PM Table 7 Costos y riesgos del servicio de gas natural 3
7) COSTOS Y RIESGOS ASUMIDOS POR LA FEDERACION Y LA ECONOMÍA Desaliento de los inversionistas a) Licitaciones desiertas para franquicias de gas natural, tales como en Veracruz y Tijuana.
b) Falta de inversión por particulares en infraestructura no sólo de distribución sino de trasporte y almacenamiento.
c) Percepción en el exterior de que el mercado de gas mexicano obedece a prácticas oligopólicos y desleales por parte de los distribuidores de gas LP.
d) En un mercado suspuestamente abierto, Pemex Gas sigue ejerciendo un monopolio de facto en transporte y comercialización de gas a los grandes usuarios.
e) Al mantener cerrado el mercado de gas LP a la inversión extranjera se pierden las aportaciones potenticales de capital, tecnología y administración de las empresas internacionales.
f) Riesgo de la pérdida de imágen por la publicidad negativa.
Desconfianza en la administración pública a) Desconfianza generada en la opinión pública al satanizar el carácter y el desempeño de la CRE en relación a las tarifas para la distribución de gas natural.
b) Sensación de inestabilidad regulatoria en las materias de gas natural y de gas LP
Baker & Associates, Energy Consultants Report Generator™ File No. 737 Thu, Jun 30, 2005 4:42 PM Table 8
Costos y riesgos del servicio de gas LP
Hacia una contabilización de costos
Wed, Jun 8, 2005 Revised 6/30/2005
INTRODUCCION
Esta table contiene conceptos de costo y riesgo que se puede relacionar con el servicio de gas LP. No tiene cifras ni estimaciones de los valores que pudiera obtenerse en cada caso.
1) COSTO DE LA MOLECULA
El costo de la molécula de gas LP entregado a los terminales de distribución de Pemex refleja un complicado conjunto de elementos:
a) Si la molécula es de importación o en forma de gas LP o en forma de gas propano, hay los costos de la venta del producto
b) más el trasporte a México, sea por ducto, pipa o barco.
2) COSTO DEL TRANSPORTE & ALMACENAMIENTO
a) Refleja también el costo de transporte adentro de México por los distintos medios
b) El costo de la administración de los contratos de transporte.
c) El costo de la operación del centro de almacenamiento.
3) COSTO DE LA DISTRIBUCION
a) Hay un precio final al usuario (pesos/kilograma) que incluye del márgen autorizado al distibuidor (5%).
b) Es precio administrado por instancias federales. En un tiempo el precio de gas LP era parte de la Canasta Básica. Se entiende que la Secretaría de Economía fija los precios y que el precio al hogar es “subsidiado” aunque no es información pública la metodología aplicable.
4) COSTOS Y RIESGOS ASUMIDOS POR EL USUARIO Costos en efectivo a) Pago por la entrega o del cilindro o de servicio a un tanque estacionario
b) Propinas a las personas que entregan los cylindros o que proporcionan el servicio.
Costos indirectos El valor del tiempo de la personal que recibe el gas, más el costo en tiempo en pedir el servicio y asegurar que una persona con el dinero esté en casa a la hora indicada.
Baker & Associates, Energy Consultants Report Generator™ File No. 738 Thu, Jun 30, 2005 5:21 PM Table 8 Costos y riesgos del servicio de gas LP 2
Riesgos e) explosividad en el caso de fugas en espacios sin ventilación.
f) seguridad de la propiedad afectada por la entrada de personas desconocidas.
g) riesgo de explosión tanto de los tanques estacionarios como de los cilindros por no reemplazarlos a tiempo.
h) riesgo de ahogamiento en caso de una fuga.
Se asume el usuario una serie de riesgos, entre ellos los siguientes:
a) El no poder contar con un poder calorífico uniforme puede ocasionar una mala combustión.
b) cilindros defectuosos que pueden causar fugas
c) sub-abastecimiento de los cilindros pre-llenados
d) Interrrupción de servicio por no atender al volúmen de gas disponible en el cilindro o tanque
5) COSTOS Y RIESGOS ASUMIDOS POR EL MUNICIPIO Costos a) costos administrativos indirectos
b) Contaminación del ruido
c) Deterioro de las calles por el peso de las pipas.
d) Congestionamiento del tráfico por la circulación de las pipas
e) Contaminación ambiental por lo mismo
Riesgos atípicos que se han visto en México Miedo y confusión provocado por las campañas medáticas entre los distribuidores de gas LP y gas natural
Riesgos normales a) Costo del servicio médico ocasionado por el mal majejo de los cilendros
b) Peligro de accidentes automovilísticos ocasionados por la circulación de los pipas
6) COSTOS Y RIESGOS ASUMIDOS POR LA FEDERACION aRiesgos normales a) Explosiones en los centros de distribución (como en el DF en el accidente “San Juanico” en 1984)
b) Percances en la carretera con los auto-tanques de trasporte contratados por Pemex.
c) Percepción de tolerancia oficial tanto de prácticas desleales como delictivas (el sub-llenar cilindros, por ejemplo).
Baker & Associates, Energy Consultants Report Generator™ File No. 738 Thu, Jun 30, 2005 5:21 PM Table 8 Costos y riesgos del servicio de gas LP 3
bRiesgos atípicas que se han visto en México a) Resistencia al cambio por falta de información acerca de gas natural difundida por el gobierno federal.
b) Desconfianza por parte de las autoridades municipales y estatales de la gestión pública en los rubros de energía e inversión extranjera.
c) Al no contar con una instancia reguladora única que es responsable por las actividades y normas de los distribuidores de gas LP y gas natural, se aumenta la probabilidad de una desarticulación en la gestión pública.
d) Como efecto de las movilizaciones sociales en contra de las tarifas y prácticas de las distribuidores de gas natural que son subsidiarias de empresas extranjeras, se promueve una cultura antagónica a la inversión extranjera; y como consecuencia se desincentiva la inversión extranjera en las zonas geográficas.
e) La exclusión a la inversión extranjera de las actividades de trasporte, almacenamiento y distribución da
lugar a la sensación de que en México la gestión pública es controlada por el lobby gas LP.
7) COSTOS Y RIESGOS ASUMIDOS POR PEMEX
a) El tener que abastecer a los hogares con el gas LP es no aprovechar usos alternativos como insumo para la industria química.
Baker & Associates, Energy Consultants Report Generator™ File No. 738 Thu, Jun 30, 2005 5:21 PM Fig. 1 Residential natural gas service Toward a full-cost accounting
Social costs E) The neighborhood and municipality assume a series of E costs and risks, among them 1) Inconvenience during the installation of lines 2) Inconvenience during times of maintenance or repairs Costs and risks assumed 3) Risks of pipeline ruptures and explosions by the consumer D) The customer assumes additional costs and risks Additional costs 1) interruption of service on account of an accident or earthquake 2) health risk from exposure to fumes D 3) risk of explosion in cases of pipeline ruptures or leaks
C) The consumer pays in kind from the inconvenience during C the installation of pipelines as well as in the value of his time in settling occasional disputes over billing
Regulated prices
B B) Distribution cost (regulated by the CRE) A A) Molecule cost (regulated by the CRE)
©2005 Baker & Associates, Energy Consultants. All rights reserved Rev. June 30, 2005 Fig. 2 El servicio de gas natural doméstico Hacia una contabilización de los costos y riesgos
Costos sociales E) Se asume una serie de costs y riesgos, entre ellos E 1) Inconveniencia temporal durante la fase de instalación de los ductos 2) Inconveniencia relacionada con la reparación y mantenimiento de ductos 3) Riesgo de rupturas y/o explosiones Costos y riesgos asumidos por el consumidor D) Se asume una serie de riesgos, entre ellos los siguientes: Costos adicionales 1) interrupción del servicio ocasionada por un siniestro o temblor 2) intoxicación ocasionada por la falta de mantenimiento y/o fugas D 3) exlosividad en casos de rupturas de ductos
C) Pagos en espécie relacionados con el tener que arreglar C irregularidades ocasionales en la facturación y la inconveniencia temporal durante la instalación de los ductos
Precio regulado
B B) El costo del servicio (regulado por la CRE) A A) El costo de la molécula
©2005 Baker & Associates, Energy Consultants. Derechos reservados Fig. 3 Residential LPG service Toward a full-cost accounting
Social costs E) The neighborhood and municipality pay collateral costs of E truck-delivered LPG service 1) noise pollution 2) environmental pollution 3) associated medical costs from added pollution Costs and risks assumed 4) road wear by the consumer
Additional costs D) The consumer assumes a series of risks, among them 1) under-filling of cylinders D 2) property security compromised by the entry of strangers onto the premises 3) interruption of service for failure to monitor available volume in cylinder
C C) Payments in cash (tips) and in kind for the value of the time associated with the receiving and cash payment of the service. Regulated price
B B) Distribution cost included in regulated price A A) Molecule cost
©2005 Baker & Associates, Energy Consultants. Rev. 6-VIII-06 Fig. 4 El servicio de gas LP doméstico Hacia una contabilización de los costos y riesgos
Costos sociales E) Se paga la colonia y el municipio los costos colaterales E con el servicio de gas LP por pipas, entre ellos 1) contaminación del ruido 2) contaminación ambiental, 3) costos colaterales médicos realacionados con la contaminación. Costos y riesgos asumidos 4) deteriorio de las calles por el peso y uso de las pipas por el consimidor D) Se asume una serie de riesgos, entre ellos los siguientes: Costos adicionales 1) subabastecimiento de los cilindros pre-llenados 2) seguridad de la propiedad afectada por la entrada de personas D desconocidas 3) interrupción del servicio al no dar monitoreo al nivel del combustible disponible en el cilindro C C) Pagos en efectivo (las propinas) y en espécie por el consumidor por el valor del tiempo relacionado on el recibo y pago por el servicio Precio regulado B) El costo del servicio (incluido en el precio B regulado) A A) El costo de la molécula
©2005 Baker & Associates, Energy Consultants. Derechos reservados. Rev 6-VIII-06 Mexico Energy Intelligence®
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651 • Sep 30, 03 Gas distribution in Mexico: LPG vs. natural gas 312 This report examines the ongoing struggle by natural gas distribution companies (LDCs) to extend their pipeline system within their franchise areas. LDCs face anonymous and neighborhood opposition believed to be organized by LPG distributors. In relation to public policy, the report notes the lack of public education at the local level related to matters of energy policy, such as the advantages of natural gas compared to LPG.
649 • Aug 08, 03 Fox’s off-grid energy policy 011 This report examines the ad hoc negotiations and initiatives that have passed for energy policies in the first half of the Fox administration. In chronological order, since December 2000, topics include natural gas pricing, electric reform, Multiple Service Contract, lubricants market liberalization, LNG regulations, petrochemical investments (Project Fénix)—and again, in August 2003, natural gas pricing.
595 • Jun 17, 02 Jun 24, 02 The politics and socioeconomics of LPG markets in Mexico 16 For most Mexican households, which operate without consumer credit for the purchase of goods and services, fuel used for heating and cooking is liquid petroleum gas (LPG). This product is sold on a cash-and-carry basis by street vendors who travel through neighborhoods shouting “gas!” The Government’s idea, which was launched formally in 1995, is to switch large parts of the residential market to natural gas. How realistic is this objective?
592 • Jun 15, 02 Government’s outlook for LPG market in Mexico, 2001-2010 104 At the end of 2001 Mexican authorities published its second LPG statistical overview. This report, which draws from our longer LPG market study, reviews market performance during 1993-2000 and provides highlights of the forecast for the period 2001-2010. The view that LPG demand will be flat is questioned.
393 • Jan 28, 00 LPG panic buying in Mexico 1112 Reviews the facts that led to LPG shortages in Mexico in the last weeks of 1999 and Pemex reaction to the crisis.
MEI (713) 627-9390 www.energia.com Page 1 Jun 22, 2005
PUBLIC POLICY PERSPECTIVE No. 10024 Houston, September 4, 2012
UBLIC POLICY PERSPECTIVES are issued periodically, in English or in Spanish, as a public service with the aim of inviting fresh discussion of matters of politics, law, policy, regulation and Pcorporate governance.
THE MEXICAN CONTROVERSY ABOUT PMI The after-shocks of the sanctions against PMI executives in 2011
ince 1989, PMI Comercio Internacional, S.A. de C.V., has served Pemex as its trading arm. The PMI Group of Companies has also served the Finance Ministry as a vehicle by which to leverage S Mexican present and future oil exports. Oil export receivables are used as the basis for the issuance of bonds, and foreign tax liabilities are minimized. To accomplish these goals, a legal structure has been established that required the creation of corporate identities in countries and, in the U.S., states (such as Delaware) that offer tax advantages (Table 1). From the perspective of any large corporation, PMI’s legal structure looks normal. Consider Apple, Inc., which could be characterized as a Chinese company with only its corporate, research and marketing operations domiciled in the U.S. The public knows nothing of the hundreds of legal entities that exist worldwide that were created to serve its manufacturing and marketing goals. Pemex provides the minimum of public information in its annual filing of Form 20-F to the U.S. Securities Exchange Commission; but in Mexico the PMI website has not been updated since 2008, creating, for critics who are naturally suspicious of all things “Pemex,” a large target for accusations of corruption. More than one voice has called for the disappearance of PMI entirely. The present POLICY PERSPECTIVE provides an overview of both sides of the argument; and asks if Article 51 of the Pemex Act of 2008 allows some PMI functions to be performed by Pemex directly.
CONTENTS WHY PMI BENEFITS MEXICO ...... 2 Original Logic of the PMI Group of Companies ...... 2 AVOID WRITS OF GARNISHMENT ...... 2 FINANCIAL LEVERAGE ...... 3 FLEXIBILITY IN RELATION TO THE PUBLIC PROCUREMENT RULES ...... 4 Subsequent Development of the PMI Group of Companies ...... 4 WHERE CRITICS FIND FAULT IN PMI ...... 5 Complex Organization ...... 5 Lack of Transparency ...... 6 Lack of Subordination to the Pemex Corporate Board ...... 6 Non-Accountability of Funds ...... 7 Leadership ...... 7 Upside and Downside Potential ...... 8 SHOULD SOME PMI OPERATIONS BE BROUGHT BACK INTO PEMEX? ...... 8 OBSERVATIONS ...... 9 CONCLUSIONS ...... 9 Table 1. Companies that form the PMI Group ...... 11
MEXICO ENERGY INTELLIGENCE® (MEI) is a commercial and policy advisory service offered by BAKER & ASSOCIATES, ENERGY CONSULTANTS, a management consultancy based in Houston. MEI reports facilitate two‐way communi‐ cation between Mexican public and private institutions and the global environment. Our reports examine policy, institutional and cultural issues as they affect the operating environment, energy regulation, and government and private investment in Mexico’s energy sector. Reports are distributed principally on a subscription basis. [email protected] P.O. Box 271506 ~ Houston, TX 77277‐1506 (713) 255‐0000 THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
HIS POLICY PERSPECTIVE EXAMINES the controversy about the PMI Group of Companies. The first section deals with the origin of PMI and the legal, commercial and T financial logic that lay behind its formation and evolution, which took place over about a decade, starting in the late 1980s. The second section deals with some of the criticism that PMI has received from within Mexico. A third section asks if it makes sense to make use of the flexibility in matters of procurement that are available to Pemex on account of the 2008 Energy Reform in relation to the functions that are performed by offshore companies that are members on the PMI Group of Companies. Does it make sense, in other words, to bring home some or all of the functions that Pemex had delegated to PMI? .
WHY PMI BENEFITS MEXICO The PMI structure of offshore companies is not a Mexican invention; it is a Mexican iteration of a legal and financing strategy used worldwide by large corporation. The PMI model was forced upon Pemex and the Mexican government by the inefficiencies and embarrassments of crude oil marketing in the late ‘70’s and early ‘80s. The back-office story of the selling of the PMI in Pemex and the Energy Ministry has not been told. The reconstruction that follows in this section charts a logical progression, no a chronological one. Original Logic of the PMI Group of Companies We do not rank or weigh the reasons and reasoning for the creation of the PMI Group of Companies. Below are some of the reasons (and not meant to be complete):
AVOID WRITS OF GARNISHMENT For many decades before Pemex had a Procurement Office on the west side of Houston, located in the 1980s on Gessner Blvd. On one occasion in the early 1990s, President Carlos Salinas’s airplane landed at the Houston International Airport, and was astonished to learn that as a result of a writ of garnishment in a civil complaint by Arriba Limited any asset belonging to the Government of Mexico found in the United States would be confiscated pending the liquidation of the claims of Arriba against Pemex (and, by extension, the Mexican Government). As one result of that incident, since the mid-1990s there is no entry in the Houston telephone directory for “Pemex” or for “Petróleos Mexicanos.” There is no target, in other words, for any
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024 future writ of garnishment. Pemex’s procurement office is still in Houston, but with a different name: Integrated Trade Systems (ITS), with its legal domicile in the Cayman Islands. Another asset that could be the target of a writ of garnishment was the account receivables (or IOUs) from Pemex’s crude oil sales. Consider this transaction: Pemex sells a cargo of crude oil to a U.S.-based refinery, and sends an invoice for payment. If, as a legal instrument, the obligation-to-pay is under the jurisdiction of U.S. courts, then a plaintiff could ask that those obligations be garnished pending settlement of his complaint. As Pemex cash-flow from oil exports is vital to the functioning of the federal government (and not only for Pemex), it was a matter of national economic security to devise a legal structure by which those obligations-to-pay were out of reach of U.S. (or European) courts. Thanks to the “PMI Solution” (as it might be called), Pemex’s international transactions are legally protected against third-party claims.
FINANCIAL LEVERAGE In the Oil Boom of 1977-81--and when José (Pepe) Carral was the country manager for Bank of America—mega-syndications were made to Pemex on the strength of its increasing oil reserves, which, under the late Jorge Díaz Serrano, rose to 72 billion barrels.1 When the oil market turned south in mid-1981, the shock was felt throughout the economy, provoking a series of devaluations of the Mexican currency. One of the goals of the many internationally educated economists in the presidential administrations of Miguel de la Madrid, Carlos Salinas and Ernesto Zedillo was to insulate the Mexican peso from abrupt changes in the oil market. One method, taken in 1991 in the course of negotiations with the U.S. government for a Free Trade Agreement (FTA), was to change the national accounts in Mexico in a way that would represent the flow of imports and exports in the border maquiladora (or in-bond) industry as true imports and exports, not, as before, as “border transactions.” The effect was to dramatically reduce the share of oil exports as a share of total Mexican exports: where, before, oil exports were 60% and higher, afterwards, they were 20% and lower. A second method of protecting the Mexican peso involved PMI. Instead of issuing debt instruments against the implied collateral of “Mexican reserves,” PMI could narrow the concept to bonds against receivables from Pemex export receivables. Market uncertainty about Mexico could be expressed as higher interest rates on PMI bonds, not by an attack on the value of the Mexican currency.
1 At the time, the convention of classifying reserves as Proved, Probable and Possible (3P) was not in use in Pemex; this change would come in the late 1990s (to the great consternation of analysts).
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
Having PMI issue bonds also gave protection to lenders against the possibility of confiscatory taxes by the Mexican government on Pemex revenue. By having the money offshore in pre-tax accounts, lenders could be reasonably assured that they would be paid.2 Pemex also made use of the so-called PIDIREGAS financing mechanism, which allowed Pemex to borrow off-balance-sheet money from international lenders for a specific revenue-generating project. At any industry conference related to Mexico, a representative present from the U.S. Export-Import Bank proudly will unfailing remind the delegates that “Pemex is our number-one customer.”3
FLEXIBILITY IN RELATION TO THE PUBLIC PROCUREMENT RULES Another consideration that required a marketing structure outside of Pemex (conceived of, legally, as an agency of the state) was the limitation imposed on government agencies in relation to the purchase of goods and services. Pemex, like all government agencies, was required to purchase gasoline, chemicals and other products by use of a public tender (a practice still used in Venezuela, Ecuador and some other countries). Advocates of a market approach4 argued that a trading arm should be established that was outside the limitations and restrictions of the LAASSP (the acronym of the government procurement law). The central argument was that in the global oil market opportunities to buy and sell cargos would appear unexpectedly—and briefly—and in order to optimize both sales and purchases it would be necessary to have the authority to act immediately on the opportunity. The awkward (and ultimately unsatisfactory) solution to achieving this flexibility was to assign several hundred Pemex employees to be virtual employees of PMI’s offshore companies. In their capacity as employees of these offshore companies they would not be held accountable to the rules of the LAASSP (they would, however, be accountable to the Public Servant Accountability Law, which could impose sanctions, civil and criminal, for negligence). Subsequent Development of the PMI Group of Companies As Mexican domestic demand for refined petroleum products grew, and exceeded national refining capacity, Pemex began to look for processing agreements with refineries outside Mexico. The opportunity in 1991 to own a 50% share in an outdated refinery owned by Shell Oil Company was seen by Pedro Haas, PMI’s first chief executive, as an excellent opportunity to expand Pemex’s international assets by leveraging on the credit rating of Shell and its ownership of the refinery.
2 Lenders would not have accepted the terms offered by Pemex E&P in 2011-12 in full-cycle E&P contracts: Contractors are to be paid from the “available cash” after deductions for taxes and royalties. 3 Industry executives do not believe that the EXIM Bank is doing them or Pemex any favors by substituting U.S.- tax-payer money in place of private capital for the development of Mexico’s oilfields. 4 Led by Adrían Lajous, Pedro Haas and Pedro Aspe, among others (we are surmising).
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
The joint venture was able to leverage a mere US$500 million in cash ($250 million by each side) into sufficient financing to overhaul the refinery. The key element was that Pemex would guarantee to (a) supply the venture with a certain volume of crude oil and (b) buy a certain volume of refined products by a given pricing mechanism. The banks were satisfied that the deal would pay the rent—that is, principal and interest. Again, for the Mexican side, there were the twin issues of minimizing U.S. taxes on its share of the profits from the joint venture, and protecting its asset (50% ownership) from any capricious writ of garnishment. Here again, the savoir faire of PMI and international lawyers comes to the rescue, although with the necessity of creating additional legal entities.5
WHERE CRITICS FIND FAULT IN PMI The discussion in this section provides an overview of the concerns that have been voiced by diverse persons and organizations, public and private, about the organization and operations of PMI. The concerns listed here are not meant to be comprehensive. Complex Organization
5 A discussion of each of the new entities and its functions is outside the scope of this report, and it is doubtful that sufficient documentation exists in the public domain for such an assessment.
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
Given the diversity of legal, tax and commercial objectives, PMI has every reason to have a complex organization (Exhibit A and Table 1).
Lack of Transparency PMI publishes virtually nothing about its structure, operations and governance. As companies that are not government agencies (in the sense that Pemex, CNH and CRE are such agencies), it could be argued that PMI has no legal obligation to provide any information beyond that of its own choosing (which is precious little). While this argument is probably legally correct, some would say it is politically stupid: in Mexico, PMI is the topic only in the harmful criticism of its employees, mission and, as a general concept, its social license. Lack of Subordination to the Pemex Corporate Board The existence and membership of a board of directors of PMI Comercio Internacional are not topics about which information is provided in the public domain. This information gap came to
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
light when, in September of 2011, the US$1.5 billion purchase of shares of Repsol-YPF became public. The director general of Pemex, Juan José Suárez Coppel, was identified as the president of the PMI board and the person responsible for the controversial investment decision. The Pemex corporate board of directors, meanwhile, had not been previously consulted in that decision, for which reason an opinion by the Investment Committee of the board had not been obtained. Some observers have expressed concern that Pemex and government officials have lost sight of the original governance model by which the PMI companies serve Pemex, and are subordinate to decisions by Pemex; the offshore companies should not serve their own interests, financial or otherwise. Non‐Accountability of Funds Career critics of Pemex in Mexico have always pointed to their inability to explain the flow of funds in the PMI Group of Companies as prima facie evidence that there must be misconduct and the illegal channeling of public funds into private hands. PMI is thought to be one of the secret mechanisms by which Mexico’s Political Class funds its share of the national wealth. Political realists observe that the Government wants to know about such misconduct only selectively; no one in government, for example, was particularly interested in knowing about the goings-on of the “hijos de Martha” who were the stepsons of President Vicente Fox (2000-06). So the fact that flow of funds cannot be explained from information in the public domain is not evidence that any illegal action has taken place; but it is evidence of the carelessness of officials in Pemex and the government in not taking a proactive stance in educating the public about the money trail in the PMI Group of Companies. Leadership The accusations of misconduct in 2010 and 2011 against PMI employees, including the chief executive officer of PMI Comercio Internacional, gave critics new energy to characterize the entire PMI structure as a rogue operation that benefitted private interests of the parties directly involved as well as of those of others. For example, the fact that 0.03% of the shares of PMI Comercio Internacional should belong to the Energy Ministry (SENER) has been seen that profits flowed from Pemex into a black box of unaccountability in the Ministry. Some observers have wondered about the wisdom of having a parallel organization of auditors that is embedded in PMI Comercio Internacional. The existence of these auditors dilutes the responsibility of managerial supervision; and managers themselves find themselves with someone looking over their shoulders on a daily—not quarterly—basis.
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
Upside and Downside Potential As with public service in general (anywhere) it is conceptually and administratively difficult to find a way to provide bonuses for superior performance. Pemex indeed has a complex bonus system, but it is not one that satisfies the traders; nor does it give them incentives. “If I make Pemex US$25 million, I don’t feel adequately compensated by a bonus of US$500,” a trader might say to himself. “On the contrary,” the trader might add, “if I lose $1 million in a trade, I could be sanctioned and have my career in public service ruined by the uninformed zeal of an auditor, someone who, himself, is looking to get promoted by virtue of the number of officials whom he has sanctioned.”.
SHOULD SOME PMI OPERATIONS BE BROUGHT BACK INTO PEMEX? Article 51 of the Pemex Administration Act of 2008 (Pemex Law) provides that, for core activities, Pemex is free to draw up those procurement rules that best conform to the nature of the global oil industry. In January, 2010, Pemex issued its Special Procurement Rules (the so-called DAC), but they were focused almost exclusively on issues related to the contracting of full-cycle services for exploration and production. The DAC did not address the procurement rules of the trading department. It would take a careful review by international law experts to evaluate the potential benefits and costs of bringing functions currently performed by the PMI Group of Companies back into Pemex.6
6 Perhaps the new Center for U.S. and Mexican Law of the University of Houston could be involved in such an assessment.
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024
OBSERVATIONS It is not self-evident that any direct benefits would be obtained from internalizing PMI functions; but a review would be necessary to assess any changes to PMI’s current arrangements. The policy of not instructing Mexican journalists and the general public is evidence of deaf ears in SENER, PMI, Pemex Corporate and the Investor Relations Department. As discussed in our Market Note 140, the PMI structure requires yet another off-shore company to make the trick of protecting the receivables from oil exports from writs of garnishment in the U.S. That company is Pemex Finance, Ltd. (See insert). It is not clear why this company is not part of the PMI Group; and, oddly, PMI documents make no reference to it. One wonders about the lack of published papers by Mexican lawyers in the private sector who have previous experience in Pemex’s legal department. The logic and history of the PMI experiment calls for someone with a direct knowledge of the back-office history as well as with the legal issues that the PMI companies were established to resolve.
CONCLUSIONS Critics of the PMI System, as it might be called, have thus far failed to make the case that Pemex or the National Interest has been harmed by the complex system of offshore companies. On the contrary, after that one incident in the Houston airport, no presidential aircraft, nor any other asset belonging to Pemex or the Mexican government, has been subject to a writ of garnishment. Further, and of greater importance, the PMI System seems to have been one of the factors that decoupled changes in the oil market from the Mexican national currency.7 The conclusion by one labor organi- zation that “PMI should not exist” (See insert8) is not supported by our
7 There are other explanatory factors, such as the amassing of larger dollar cash reserves by the Central Bank. 8 Elektron (Boletin del Frente de Trabajadores de la Energia de México), Vol. XII (55), February 25, 2012. “El grupo privado PMI de Pemex.”
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THE MEXICAN CONTROVERSY ABOUT PMI Public Policy Perspective No. 10024 review of the data and economic issues that underlie the legal structure of PMI. Where there is vast room for improvement is in the area of public relations: Here, SENER, Pemex, PMI and the PMI Investor Relations Department have failed to offered an easy-to- understand case that the PMI System serves the public interest. This failure need not be permanent. But time is running out. The sanctions against the PMI traders in 2008-11, coupled with the embarrassment over a purchase of Repsol shares that had not been approved by Pemex’s corporate board, has lowered the morale of the remaining professionals as well as the public image of PMI. The next administration could come—quite erroneously—to the conclusion that the PMI System had been one big mistake; and take steps that, unintentionally, would harm Pemex’s ability to operate efficiently in the global oil and products markets.
.
September 4, 2012 BAKER & ASSOCIATES, ENERGY CONSULTANTS Page 10 of 11
Table 1
PMI Group of Companies
Legal structure conceptually similar to other large companies
September 2, 2012
Legal Residence Employees Pemex Shares Notes (%)
MARKETING COMPANIES
1 PMI Comercio Mexico, DF 330 98.33 Began operations on March 24, Internacional, S.A. de 1989, as the successor of the C.V. Coordinación Ejecutiva de Comercio Exterior, which had served as Pemex product marketing department.
2 PMI Petroquimica, S.A. Mexico, DF 0 50.00 Established in 2000. Shares are de C.V. 50/50 with PMI Comercio Internacional
3 PMI Trading, Ltd. Dublin, Ireland 0 48.50 Established in May, 1991. One of two companies in PMI group in which Pemex has a direct. shareholder interest.
PORTFOLIO MANAGEMENT
4 Deer Park Refining Ltd., Delaware Shell employees 0 Established in 1993. 50/50 equity Partnership only. with Shell Oil Company.
5 PMI Holdings, B.V. Amsterdam 0 100.00 Formed in March, 1988.
6 PMI Holdings Petróleos Spain 0 100.00 Originally established in July 1988 España, S.L. and domiciled in Curacao, Dutch Antilles. On Dec. 30, 2005, the company changed its name and legal domicile.
SERVICE COMPANIES
7 Pemex Internacional Madrid 4 0 Shares are held by PMI Holdings España, S.A. Petróleos España, S.L. (100%)
8 Pemex Services Europe, London, UK 0 0 Established in 1988. Shares are Ltd. held by PMI Holdings Petróleos España, S.L. (100%)
9 PMI Holdings North Delaware, US 12 0 Established in 1992. Shares are America, Inc. held 100% by PMI Norteamérica, S.A. de C.V. (NASA)
Baker & Associates, Energy Consultants Report Generator™ File No. 782 www.energia.com Table 1 PMI Group of Companies: Legal structure conceptually similar to other large companies p. 2
Legal Residence Employees Pemex Shares Notes (%) 10 PMI Marine, Ltd. Dublin, Ireland 0 100.00 Formed in December 1993. Owned by Pemex Exploración & Producción, but considered as part of the PMI Group of Companies.
11 PMI Services, B.V. Holland 0 0 Established in 1988. Shares are held by PMI Holdings Petróleos España, S.L. (100%)
12 PMI Services North Houston 0 0 Established in 1992. Shares are America, Inc. held by PMI Holdings Petroleos España, S.L. (100%)
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Reports related to MEI 10024
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100140 • Aug 28, 12 What should PMI Tell the Next Government? 211 Established in the 1990s, the PMI Group of Companies serves Pemex as its trading department as well as the holding company for international assets such Pemex's 50% stake in the Deer Park refinery. The trading department was known for its highly motivated and qualified professionals. Personnel issues in 2010 and 2011, however, have shaken morale and cut into profits. This report lists measures for consideration that are aimed at restoring the productivity of the trading unit and to prevent the recurrence of the abuses of the personnel system such as those that occurred in 2010-11.
100130 • Jun 07, 12 THE AMBASSADOR AND THE PETROLEUM CLUB (Part II) 212 Ambassador Arturo Sarukhán was the keynote speaker at the innaugural luncheon of the Center for U.S. and Mexican Law and Policy, a new program of the Law Center of the University of Houston. This report is based on notes taken during his remarks on the current drivers of U.S.-Mexico diplomatic relations. The report includes a second section on topics that the speaker chose not to address.
100106 • Oct 24, 11 Nov 8, 11 Making Sense of PMI Exec Sanctions 28 This report examines the puzzling turn of events by which the two most well known Pemex executives, Rocío Cárdenas and Sergio Guaso, were relieved of their duties on the same day, along with members of their teams. The focus of the report is on the findings of government auditors who found fault in the pricing of coker naphtha in a series of export sales. The report concludes that the auditors acted without a grounding in the dynamics of commodity markets, and that revisions to the law are needed to protect traders.
100065 • Oct 28, 10 Integrated Trade Systems 43 Up to the early 1990s, Pemex had a Purchasing Office in Houston, the location of which, in the 1980s, was on South Gessner Avenue, and, as I recall, there was warehouse space for deliveries. A prospective supplier could easily find "Pemex" or "Petróleos Mexicanos" in the telephone directory or by calling the information operator.
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Home MEXICO ENERGY INTELLIGENCE® CATALOG OF REPORTS, ARTICLES AND BRIEFING TITLES (1995‐2012)
YEAR MARKETS POLICY PEMEX SPECIAL BRIEFINGS
2012 CRUDE OIL ENERGY SECTOR GOVERNANCE RESOURCE BASE UPSTREAM OUTLOOK
2011 NATURAL GAS PRESIDENCY CORPORATE PERSPECTIVES NATURAL GAS OUTLOOK
2010 LPG SENER PMI EAGLE FORD DOWNSTREAM OUTLOOK
2009 LNG CRE PEP CROSS‐BORDER FCPA RISK
2008 REFINED PRODUCTS CNH PREF DEEPWATER ADVANCED SPANISH
2007 RENEWABLES CFC PGPB MACONDO TRANS‐BOUNDARY AGREEMENT
2006 BAJA CALIFORNIA CFE PPQ INCENTIVE CONTRACTS EAGLE FORD IN MEXICO
2005 JALISCO ASF ITS ENERGY REFORM
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Abbreviations and terminology To access a report
Updated: 2/XI/2012 Previous MEXICO ENERGY INTELLIGENCE® Home CATALOG OF REPORTS, ARTICLES AND BRIEFING TITLES (1995‐2012)
YEAR MARKETS POLICY PEMEX SPECIAL BRIEFINGS
2004 NUEVO LEON SCJN IMP ELECTRIC SECTOR ADVANCED ENGLISH
2003 OTHER REGIONAL SFP STPRM SECURITY AND RISK
2002 OILFIELD SERVICES NEXT GOV’T LEADERS LEGAL
2001 POLITICS
2000 CULTURE & HISTORY
1999 INTERNATIONAL
1998 FINANCE & ACCOUNTING
1997 CONFERENCES
1995 TRANSLATIONS
Abbreviations and terminology MEDIA & ACADEMIA To access a report Updated: 1/XI/2012
PEMEX
PEAKING INFORMALLY, Pemex may compared to the story of the Three Blind Men and the Elephant in the Indian fairy tale: The first man, feeling its legs, reports that an elephant is S like a tree; the second, feeling its side, says it is like a house; the third, grasping its trunk, declares that it is like a snake.
Such would be the diversity of views that a visitor from Mars would encounter in relation to Pemex: one person would declare that Pemex is the emblem of Mexico’s economic and political independence; another would complain that it is an inefficient bureaucracy that is controlled by the Oil Union; a third would say that it is an oil company that is undercapitalized and that it suffers from a lack of market‐driven competition.
Other surfaces of this elephant include the following (among many others): Pemex is the largest customer of Schlumberger, the French oilfield service giant. Pemex also contributes about a third of the federal budget. For decades, starting in the late 1970s, Pemex was the oil company with the largest volume of offshore oil production. Pemex’s super‐giant Cantarell field produced at one time over 2 million barrels of oil daily. Pemex has a union and non‐union labor force said to be two—if not three—times the level that would be needed by a competitor.
There are vast depositories of official (government) information about Pemex, first of all on its own website, then on that of the Energy Ministry (SENER), Energy Regulatory Commission (CRE), Hydrocarbon Commission (CNH) and the US Securities Exchange Commission (SEC).
As for the Mexican press, the coverage of Pemex by REFORMA, EL ECONOMISTA, MILENIO and EXCELSIOR ranges from the benign to the agnostic; in contrast, the coverage of Pemex by LA JORNADA, PROCESO and CONTRALINEA ranges from neutral to toxic.
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The reporting of MEXICO ENERGY INTELLIGENCE® takes the view that Pemex, as an oil company, should be examined exclusively in the light of global standards and best practices. We are interested in understanding institutional issues like corporate governance, culture and public oversight.
Our reporting has been concerned in recent years less about “the numbers,” which are easily available and are reported by Pemex and the national media, than about institutional issues, including governance, leadership, culture, and procurement philosophy and protocols. We are interested less in what the Energy Minister said, than in what he or she didn’t say.
We leave it to others to measure Pemex’s performance by reference to Mexico’s National Narrative.
Mexico Energy Intelligence® Updated 02/XI/12 Page 1 of 1
Selected topics, Pemex eLibrary Extract of Document Titles (2010‐12), Law eLibrary Mexico Energy Intelligence ® Table 1
Karen Miyasaki - Found Guilty by Press Spanish titles freely translated
Keyword for search: 100139 Title Source MEI Keywords File No. 2010
MAY May 23, 2010 Sunday
<1> Fraud of US$13 million in Pemex: Trader Involved [Published 11:35 a.m.] El Universal Karen Miyasaki 17958
<2> Pemex Detects Trading Fraud for US$13 Million [Published: 12:08 p.m.] El Norte Karen Miyasaki 17969
<3> PMI Official Denies Trading Fraud [Published: 7:12 pm] Reforma Karen Miyasaki 17970
<4> Mexico oil exec investigated in $13 million fraud [Published 4:44 pm EDT] Reuters Karen Miyasaki 18011
May 24, 2010 Monday
<5> Fraud in PMI of US$13 Million, Declares Controller Salvador Vega Milenio Karen Miyasaki 17959
<6> Trading Fraud Detected in Trading Arm of Pemex El Porvenir Karen Miyasaki 17960
<7> Former PMI Manager Accused of Fraud Declares Innocence El Economista Karen Miyasaki 17961
<8> Pemex to Carry Out Parallel Investigation into Alleged Trading Fraud Milenio Karen Miyasaki 17965
<9> Authorities to Investigate Pemex Trader CNNEXPANSION Karen Miyasaki 17972
<10> PMI Trader to Defend Herself Against Charges CNNEXPANSION Karen Miyasaki 17973
<11> Two Charges of Fraud in PMI CNNEXPANSION Karen Miyasaki 17974
<12> Fraud Detected in Pemex PMI Solo Opiniones Karen Miyasaki 18001
<13> Miyasaki Denounces Accusation as an Abuse of Authority Reforma Karen Miyasaki 18003
<14> Fraud Dected in PMI Trading Operations Reforma Karen Miyasaki 18004
<15> Fraud Detected in Pemex of US$13 Million El Universal Karen Miyasaki 18012
May 25, 2010 Tuesday
<16> BLUE OIL Asks Pemex to Inform It of Alleged Fraud CNN Karen Miyasaki 17957
<17> Pemex Launches Investigation; Miyasaki Prepares Defense Milenio Karen Miyasaki 18002
<18> Pemex Corporate Board Not Advised of Charges Against PMI Manager Reforma Karen Miyasaki 18005
<19> PRI Congressman Demands Punishment for Acts of Corruption in Pemex Reforma Karen Miyasaki 18006
JUNE Jun 02, 2010 Wednesday
<20> Congressmen Urge Pemex to Explain Mega-Fraud La Jornada Karen Miyasaki 17963
(713) 255-0000 Press articles related to MEI 100139 Thu, Aug 23, 2012 2:31 PM Mexico Energy Intelligence ® Table 1
Karen Miyasaki - Found Guilty by Press
Title Source MEI Keywords File No.
Jun 15, 2010 Tuesday
<21> PIRA Consultancy Affirms Commercial Legitimacy of PMI Transactions Reforma Karen Miyasaki 17967
<22> Pemex Board Caught By Surprise Regarding Alleged Trading Fraud Reforma Karen Miyasaki 17968
Jun 16, 2010 Wednesday
<23> PIRA Report Validates Trades of PMI’s Mayasaki Reforma Karen Miyasaki 18007
2011
JANUARY Jan 20, 2011 Thursday
<24> Government Auditor Imposed 20-Year Bar on Public Service and Fine of Reforma Karen Miyasaki 18008 US$13 million
APRIL Apr 03, 2011 Sunday
<25> Federal Auditor Investigates PMI Executive for Alleged Misuse of Funds Revista Contralínea Rocío Cárdenas 17964
<26> Authorities Dismantle Group Around Chief of Pemex Trading Group Revista Contralínea Karen Miyasaki 17971
DECEMBER Dec 19, 2011 Monday
<27> Judge Asks for the Detention of Former PMI Manager Reforma Karen Miyasaki 17966
Dec 20, 2011 Tuesday
<28> Authorities Order the Capture of ex-PMI Trader for Fraud Terra Karen Miyasaki 18000
Dec 21, 2011 Wednesday
<29> Lawyer for Miyasaki Accuses the Goverment Acted in Bad Faith Reforma Karen Miyasaki 18009
<30> Federal Judge Orders Arrest of Miyasaki Reforma Karen Miyasaki 18010
2012
JANUARY Jan 09, 2012 Monday
<31> Attorney General Orders Arrest of ex-PMI Trader La Jornada Karen Miyasaki 17962
(713) 255-0000 Press articles related to MEI 100139 Thu, Aug 23, 2012 2:31 PM Table 1
Abbreviations and Terminology
Energia.com
Thu, Nov 1, 2012
Revised 11/4/2012
ABBREVIATIONS ABREVIATURAS Y SIGLAS A15-page list of acronyms and abbreviations for Mexican and US Government terms was included in President Calderon’s Address to the Congress on Sept. 1, 2006.
http://pnd.calderon.presidencia.gob.mx/pdf/PrimerInformeEjecucion/siglasyabreviaturas.pdf ASF AUDITORIA SUPERIOR DE LA FEDERACION. This agency reports to the Mexican Congress, and, for this reason, may be regarded as the counterpart to the US General Accountability Office. http://www..asf.gob.mx ATG ACTIVO TERCIARIO DEL GOLFO is Pemex’s new name for the paleocanal known as Chicontepec (a rural village). In October, 2012, Pemex announced a 3rd round of public tenders for the production of oil and gas from Chicontepec. The CNH’s view of the outlook for Chicontepec development may be seen in the document linked below. http://cnh.gob.mx/_docs/ATG/ATG_primera_revision_8abril.pdf CFE COMISION FEDERAL DE ELECTRICIDAD. Mexico’s national power utility, which, in 2009, incorporated the operations of LUZ Y FUERZA DEL CENTRO, a second utility that had served Metropolitan Mexico City. http://www..cfe.gob.mx
CIEP CONTRATO INTEGRAL DE EXPLORACIÓN Y PRODUCCIÓN. See “Incentive EP Contract.” http://contratos.pemex.com
CNH COMISION NACIONAL DE HIDROCARBUROS. Mexico’s agency for public oversight of Pemex’s upstream operations. http://www..cnh.gob.mx
COMPRANET COMPRANET is the Mexican government’s procurement website. Documentation on present and past public tenders under both the Public Works Law (LOPSRM) and the Federal Produrement Act (LAASSP).
http://www.compranet.gob.mx http://www.pemex.com/index.cfm?action=content§ionID=5&catID=34 CRE COMISION REGULATORA DE ENERGIA. Mexico’s regulator for natural gas transmission, distribution and storage. It is the permitting agency for pipelines, storage and distribution infrastructure. The CRE also sets natural gas prices, based on a netback methodology based on US benchmarks. http://www.cre.gob.mx
Mexico Energy Intelligenc® Report Generator™ File No. 789 Sun, Nov 4, 2012 12:54 AM Table 1 Abbreviations and Terminology 2
DAC DISPOSICIONES ADMINISTRATIVAS DE CONTRATACIÓN are the special procurement rules that are required by Article 51 of the Pemex Law of 2008. These rules were conceived as applicable principally to upstream projects. They were approved by the Pemex Corporate Board of Directors in December 2009 and published on January 6, 2010 (and later modified on March 10, 2010).
http://www.ptq.pemex.com/RM/Documents/Disposiciones%20Administrativas%20de%20Contratacion.pdf
FCPA FOREIGN CORRUPT PRACTICES ACT is legislation enacted in 1998 that is meant to complement parallel legislation in other countries. The law establishes that it is a criminal offense to bribe, or attempt to bribe, a public official. http://www.fcpa.us/ IFAI INSTITUTO FEDERAL DE ACCESO A LA INFORMACION Y PROTECCION DE DATOS is the government agency that performs functions analogous to those mandated by the Freedom of Information Act in the United State. Journalists routinely ask IFAI for data and documentation regarding the operations and investments of Pemex and CFE. http://www.ifai.gob.mx/ IMP INSTITUTO MEXICANO DEL PETROLEO, established in 1965, is often described as the “research arm” of Pemex; but this is true only in a very restricted sense. One of its roles is to field-test new products and technologies that are offered to Pemex. It is also offers technical training courses to Pemex staff.
The IMP has a campus in a northern neighbood of Mexico City. The current director is Dr. Vinicio Suro, formerly VP of the Southern Region. http://www.imp.mx/ INEGI INSTITUTO NACIONAL DE ESTADISTICA Y GEOGRAFIA is the federal government’s mapping and statistical center. Information provided by INEGI issues publications that provide demographic and economic data for states and municipaliti and municipalities. http://www.inegi.org.mx IPP INDEPENDENT POWER PRODUCER is a legal scheme used in Mexico by which a privately constructed and operated power plant is not considered in the public service provided that all of its generated power is sold to CFE.
http://www.powermag.com/business/Power-in-Mexico-Mexicos-Generation-Mix_2656_p2.html ITS INTEGRATED TRADE SYSTEMS, INC., is Pemex’s Strategic Procurement Office, based in Houston. Through this offshore company, Pemex is able to acquire unique technologies and services without the requirement of a public tender in Mexico. http://www.itsinc.com LNG Liquified Natural Gas. This is an industrial activity that enables the transportation, by a special vessel, of liquified “stranded gas” (from deposits that may be 1,000’s of miles away), to be “regassified” at a local market where the gas can be consumed.
Mexico Energy Intelligenc® Report Generator™ File No. 789 Sun, Nov 4, 2012 12:54 AM Table 1 Abbreviations and Terminology 3
LPG Liquid Petroleum Gas. Delivered to users typically by truck or rail. In Mexico, it is consumed principally by residential and commercial customers for heating and cooking.
LPG is also an alternative motor fuel. http://www.fueleconomy.gov/feg/lpg.shtml MGI MGI SUPPLY,, LTD, is the trading and logististics arm of Pemex Gas. Little documentation is in the public record about its mandate, officers and investments. MGI itself has an offshore subsidiary called TAG, based in the Cayman Islands.
http://www.gas.pemex.com/PGPB/Productos+y+servicios/Gas+natural/Comercio+exterior/MGI+Supply/ PEP PEMEX EXPLORACION Y PRODUCCION was created with the restructuring ot Pemex in July 1992. http://www.pep.pemex.com. PGPB PEMEX GAS Y PETROQUIMICA BASICA is responsible, by law, only for the processing for natural gas, as the other functions of gas transmission, storage and distribution are open to private sector investments.
Pemex Gas has at least two offshore subsidiaries: MGI Supply, Ltd., reportedly domiciled in the United States, and TAG, domiciled in the Cayman Islands. These entities are involved in offering hedging services for Pemex’s industrial customers; additonally, they are involved as investors in pipeline projects.
http://www.gas.pemex.com. PIDIREGAS PROYECTOS DE INFRAESTRUCTURA DIFERIDOS EN EL REGISTRO DEL GASTO [PUBLICO] is a mechanism for off-balance-sheet financing that is used in the electric sector (with IPPs) and in Pemex up November of 2008.
http://www.cfe.gob.mx/ConoceCFE/1_AcercadeCFE/Finanzas/Paginas/Pidiregas.aspx PMI PMI is a stand-alone name, not the abbreviation of other words. The PMI Group of Companies is mainly composed of offshore companies owned by Pemex and other agencies of the federal government. http://www.pmi.com.mx PPQ PEMEX PETROQUIMICA is the business unit responsible for operating those chemical plants which, according to law, exclusively produce a list of intermediate products, principally ethylene. http://www.ptq.pemex.com PREF PEMEX REFINACION (also abbreviaed as PR) was created with the restructuring ot Pemex in July 1992. This busines unit operates refineries, terminals, pipelines and vessels. http://www.ref.pemex.com.
SCJN SUPREMA CORTE DE JUSTICIA DE LA NACION. Mexico’s Supreme Court. http://www.scjn.gob.mx
Mexico Energy Intelligenc® Report Generator™ File No. 789 Sun, Nov 4, 2012 12:54 AM Table 1 Abbreviations and Terminology 4
SENER SECRETARIA DE ENERGIA. Mexico’s Energy Ministry, an agency that annual publishes a 10-year forecasts of demand for power, LPG, natural gas and refined products. The ministry also publishes a natural energy balance. The ministry has been involved, with Pemex and the Foreign Ministry, in negotiations pertaining to cross-border oilfields, the policy cognizance of which was given to SENER in the Energy Reform of 2008. http://www.sener.gob.mx SFP SECRETARIA DE LA FUNCION PUBLICA.. The compliance agency of the executive branch. http://funcionpublica.gob.mx/
SHCP SECRETARIA DE HACIENDA Y CREDITO PUBLICO is Mexico’s Finance Ministry. This agency controls Pemex’s budget according to its criteria, which are likely not to match the best practices of international oil companies. http://shcp.gob.mx SICORI SISTEMA CORPORATIVA DE INFORMACION GEOGRAFICA DE PETROLEOS MEXICANOS is a high-tech department that maintains a database on Pemex’s infrastructure, as well as access roads and the names (and even home telephone numbers) of local officials who may need to be reached in case of an emergency).
There is a useful monthy bulletin published by SICORI, but it is not posted on the Internet. http://www.forotallerpetrolero.pemex.com/sicori.html SIDOE SUBDIRECCIÓN DE INGENIERÍA Y DESARROLLO DE OBRAS ESTRATÉGICAS is a special department of PEP that is responsible for the design and procurement of key infrastructure, such as drilling rigs, terminals and accomodation vessels (floteles). SIDOE’s offices are in Villahermosa.
http://www.pemex.com/index.cfm?action=news§ionID=118&catID=11381&contentID=16438 SRE SECRETARIA DE RELACIONES EXTERIORES, Mexico’s foreign ministry. http://www.sre.gob.mx/ STPRM SINDICATO DE TRABAJADORES PETROLEROS DE LA REPUBICA MEXICANA is the consolidated organization, founded in 1935, of the several company unions that existed before the expropiation of 1938. The current labor contract is posted on the internet.
The senior officer of the union is Carlos Romero Deschamps, who has been secretary general since 1994. There is no website for the union headquarters; but Chapter 40 has posted its own web address.
http://www.stprmsec40.org/ http://www.pemex.com/files/content/cct_2011-2013.pdf
Mexico Energy Intelligenc® Report Generator™ File No. 789 Sun, Nov 4, 2012 12:54 AM Table 1 Abbreviations and Terminology 5
VPM VENTAS DE PRIMERA MANO is Mexico’s way of keeping the State at the cash register for every retail sale.Except for natural gas in CRE-permitted franches, no energy product produced by a state company is offered wholesale, for subsequent retail sale by private parties.
Where, outside of Mexico, a refiner might sell his product to a service stattion retailer, allowing the latter to set his own prices; in Mexico the State maintains control of the final price, thus eliminating any middle men. http://www.amegas.net/definicion.pdf
TERMINOLOGY ENERGY REFORM REFORMA ENERGETICA is a term that is used in Mexico to refer to those legal, institutonal and policy measures that would lead to improved performance, efficiencty and public oversight of Mexico’s state-owned energy companies.
“Energy Reform” therefore does not refer to discussions about the desirability of changing from a command model to a market model for oil and power. The term refers to methods to make the currentt, non-market system better.
In the spring and summer of 2008 there were ten weeks of debate in the Mexican senate about the shape and direction of energy reform. The so-called Energy Reform legislation created or affected ten pieces of legislation, each of which may be down-loaded from Pemex’s website.
http://www.pemex.com/index.cfm?action=content§ionid=137 INCENTIVE EP CONTRACT INCENTIVE EP CONTRACT is one of the informal names in circulation to refer to the to PEP’s farm-out contacts of 2011-12. The formal name is Contrato Integral de Exploración y Producción (CIEP).
A farm-out contract is one in which the owner of mineral rights sub-leases those rights to a third party under terms that 1) require the investor (farmee) at his expense develops his portion of the acreage; 2) reimburse the investor for his expenses out of future production; and 3) provide a profit incentive from the revenue from production.
“Every farm-out agreement is different,” observes Ron Smith, who was the international business development consultant with Challenge Minerals, Inc., a Transocean subsidiary that specialized in farm-in transactions.
The Mexican EP contract has the essential features of a farm-out agreement, only with constraints such as requiring that expense reimbursement come from after-tax revenue from contractor production. http://contratos.pemex.com/portal/ OVER THE FENCE “Over the fence” refers to a mode of contracting for services of standard utilities, such as hydrogen and desulferization (for a refinery), electric power and water treatment, among others.
Pemex’s plans for refinery upgrades (and a new refinery at Tula) are good candidates for over-the-fence service: A technology company agrees to build and operate its own plant and provide the product or services to Pemex on a take-or-pay basis.
This mode of contracting is supported by SENER, as it achieves global technologies and operational efficiences; but it is opposed by the Oil Union, as it would cut into union-controlled jobs.
Mexico Energy Intelligenc® Report Generator™ File No. 789 Sun, Nov 4, 2012 12:54 AM Table 1 Abbreviations and Terminology 6
UNIT OPERATOR The Transboundary Hydrocarbon Agreement, signed on February 20, 2012, between the U.S. and Mexico calls for any cross-border oilfield to be “unitized,” meaning that it is to be treated as a single commercial unit with a single “operator” who is responsible for making decisions regarding operations and investments.
As Pemex has not yet qualified to be a licensed operator in the U.S. Gulf of Mexico, it would be unable to serve as the unit operator for any future cross-border field that might be discovered. This situation means that, at present, the operator on the Mexican side would have to be the counter-party on the U.S. side; but this situation is not contemplated by current Mexican legislation.
For this reason, in the long list of definitions in the introduction to the treaty, there was no entry for “unit operator.” http://www.state.gov/r/pa/prs/ps/2012/02/184235.htm
Mexico Energy Intelligenc® Report Generator™ File No. 789 Sun, Nov 4, 2012 12:54 AM Web categories for Energia.com 2
100’S - MARKETS
100 CRUDE OIL Mexico’s sovereign credit rating is sensitive to the outlook for crude oil exports, Mexico’s principal source of foreign exchange, after remittances, maquiladora wages and tourism. There have been two corrections since the Oil Boom of the late 1970s (1979-81): 1982-87, when the Mexican basket fell from $34/bbl to less than $10; and again in the late 1990s when a cargo of Mexican crude was sold to a refinery in Spain for less than $5/bbl. Managers and executives of PMI, Pemex’s trading house, were successful in closing the spread between Mexico’s light-grade Isthmus and its heavy-grade Maya by promoting upgrades in US Gulf Coast refineries that would include cokers to handle the Maya crude export.
101 NATURAL GAS Prior to 1995, the availability of natural gas in Mexico was limited mainly to the northern border states, principally Nuevo León. Pricing of natural gas was a function of the need to move high sulfur fuel oil (HSFO) from Pemex refineries that lacked cokers and that, collectively, produced upwards of 400,000 b/d. New environmental regulations in 1999 required that HSFO be excluded from major metropolitan areas. The Natural Gas Act of 1995 and the CRE Establishment Act of 1995 contemplated a future in which there would be competitvie gas markets with a price hub inside Mexico. For that, a pipeline was needed to compete with one of Pemex; but, to date, amost all new gas transporation pipelines have been built under contract with Pemex or CFE, and there is no expectation that an independent line will be built in the forseeable future.
The Energy Ministry annually publishes online a 10-year outlook of domestic demand for natural gas (sener.gob.mx). 102 LPG Liquid Petroleum Gas (LPG) , or “propane” in the United States, is the fuel that is used in 80% of Mexican households for heating and cooking. Mexican has a high per capita consumption of LPG, owing to the limited availability of natural gas. Since 1995, there have been some 20 new natural gas franchises that are operated by the private sectors; but expansion of the distribution network for natural gas is routinely opposed by LPG distributors, who rightly sense serious competition.
The Energy Ministry annually publishes online a 10-year outlook of domestic demand for LPG (sener.gob.mx). 103 LNG Liquified Natural Gas (LNG) was not even considered in the mid-1990s when the Natural Gas Act of 1995 was enacted. The option of creating a source of natural gas supply that was independent of the U.S. market; the interest in LNG arose from the so-called “ENRON gas crisis,” which pushed prices up three and four times the historic level of $2.50/mmcf. Since 2003, there have been three LNG receiving facilities build in Mexico: Altamira, Ensenada and Manzanillo.
104 REFINED PRODUCTS Except for commerce in motor oil and grease, all petroleum products are supplied by Pemex on an exclusive basis. Pemex imports about 50% of its supply of unleaded gasoline, a situation arose from the lack of construction of refinery capacity over 30 years, combined with low refinery capacity utilization.
The Energy Ministry annually publishes online a 10-year outlook of domestic demand for petroleum products (sener.gob.mx).
Mexico Energy Intelligenc® Report Generator™ File No. 788 Thu, Nov 1, 2012 7:58 AM Web categories for Energia.com 3
105 PETROCHEMICALS In 1995 Pemex was hoping to privatize its its petrochemical plants, and each of the major facilities was established as a separate company for this purpose. When the oil union effectively blocked the privatization policy, Jesús Reyes Heroles, the energy minister, was dismissed (and exiled to Washington as Mexico’s ambassador).The ten chemical companies were eventually reabsorbed into Pemex Petroquímica. During the Fox administration, there was a three-year effort to launch “Project Fénix,” a major ethylene plant. The project attract a prospective consortium of a Mexican and Canadian; but the deal never closed, as the State would not allow discounts on the principal inputs needed for the plant to be profitable (natural gas, electricity, water).
106 ELECTRIC POWER Electric power in Mexico is generally considered a “public service” that is exclusively provided by federal power utilities, of which there were two until 2010 when President Felipe Calderón ordered the closing of Luz y Fuerza del Centro, a 100-year-old company that had served Metropolitan Mexico City.
As with most things in relation to state exclusivity, there are exceptions that permit private investment. IPPs (Independent Power Producers), which first appeared in the mid 1990s, are under contract with CFE; the supply some 40% of the national power output. There are also power cooperatives, which operate under a permit of “self-supply.”
The Energy Ministry annually publishes online a 10-year outlook of domestic electric demand (sener.gob.mx).
107 RENEWABLES & THE ENVIRONMENT The subject of renewable sources of energy became a matter of policy attention only recently. In Oaxaca there are wind farms, in Sonora there are solar farms, and in Mexicali there are “smart houses” with solar panels that sell excess power back to CFE.
108 BAJA CALIFORNIA Baja California is the only state on the northern border that runs its power grid on the same frequency as its US neighbor. This condition has attracted private developers to build power plants in Baja under contract with CFE but with additional capacity intended for export.
For many years, a geothermal plant near Mexicali known as Cerro Prieto (Black Hill) exported electricity to San Diego Gas & Electric. Mexicali, which had one of the few LPG distribution pipeline grids in residential areas, in 1996 became the first area where a CRE-permitted franchise was awared.
109 JALISCO Guadalajara is the western hub of energy demand in Mexico. Pemex supplies natural gas via a trunkline that originates in its gas processing plant at Cactus, on the coastal plain hundreds of miles to the East. The industrial sabotage of this line in 2007 promoted the government to seek alternative sources of supply. Eventually, CFE decided on an LNG plant at Manzanillo.
There is also a natural gas local distribution company (LDC); but, despite its CRE permit, has had limited success in competing with LPG distributors in what they regard as their core business areas.
110 NUEVO LEON Nuevo León is the industrial hub of Mexico, and here the great Mexican steel, glass, cement and chemical companies are located. The metropolitan area of Monterrey has a natural gas culture that goes back to the 1930s, when an American company laid the initial gas distribution grid.
For decades the natural gas grid in Monterrey was operated by CFE; but in the mid-1990s it was privatized in a public tender operated by the CRE. Currently, the grid is operated by Gas Natural Fenosa, the Spanish gas and power company.
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111 OTHER REGIONAL In relation to energy infrastructure, there are “Two Mexico’s”: the Rich and the Poor. The latter are on the Pacific Coast and in the “Deep South” (Morelia, Guerrero, Oaxaca, Chiapas and Quintana Roo) and the Pacific Coast (Sonora, Sinaloa and Baja California Sur).
In 2012, CFE issued public tenders for a series of natural gas pipelines along the Pacfic coast, which brings to life a vision that Pemex expressed in a pipeline map published in 1979.
In the mid-1980s the Mexican Petroleum Institute (IMP) published a three-volume study of regional energy demand in Mexico; but today there are no government data published on energy demand by state or region.
Mexico Energy Intelligenc® Report Generator™ File No. 788 Thu, Nov 1, 2012 7:58 AM Mexico Energy Intelligence®
PERSPECTIVES ON THE MEXICAN CRUDE OIL VALUE CHAIN
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305 • Dec 19, 98 Falling oil prices and mexican economy 1 Decrease in oil prices, energy policy and the importance of the informal sector in the mexican economy.
293 • Oct 21, 98 Characteristics of Mexican crude oils 1 Description of the characteristics of Mexican crude oils.
260• Apr 17, 98 Crude oil statistics, 1993-98 Crude oil production statistics for 1993-1998.
254• Mar 23, 98 Crude oil production curtailments Agreement between Mexico, Saudi Arabia and Venezuela to cut crude oil production and exports.
252• Mar 19, 98 Crude oil markets Comments on current conditions in crude oil markets.
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PERSPECTIVES ON THE MEXICAN NATURAL GAS VALUE CHAIN
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100143 • Oct 02, 12 Tesis 193/2011 ~ Jurisprudence by Contradiction 39 For more than a decade, in Guadalajara and in other cities where the CRE has issued permits for natural gas distribution, LPG interests have successfully blocked the local distribution company (LDC) from installing the pipeline infrastructure. Techniques have changed: in the late 1990s there were physical intimidation and misinformation campaigns, then a series of civil suits. At last, the Supreme Court (SCJN) stepped in, overturning a local court’s ruling that Jalisco Civil Code could justify blocking LDC construction.
100118 • Feb 27, 12 Mar 29, 12 What the CRE Should Tell the Next Government? 012 This report, the first of a series concerning the information that should be provided to the government that will be installed on December 1, 2012, concerns the institutional and policy challenges that confront the Energy Reggulatory Commission (CRE) in fulfulling its mandate to regulate the electric and gas sectors on behalf of both public and private investors and consumers. These “challenges” are expressed in this report as a series of problems, each with suggestions about possible solutions.
100097 • Aug 25, 11 Sep 10, 11 Shale Gas in Mexico: Ready, Aim-Estimate 36 This report reviews the seminar on shale gas in Mexico that was held in Houston on Aug. 23, 2011, at which Dr. Luis Ramos gave the first public presentation by Pemex on this topic. Pemex estimates that in the aggregate there are over 600 Tcf of recoverable natural gas in shale formations. The report also takes note of the study by the Baker Institute at Rice University which provides cost estimates for several shale formations.
100085 • Apr 28, 11 May 12, 11 Outlook for Natural Gas Pipeline Capacity: Who regulates the Pemex-CFE 05 Mexican power and gas customers are becoming increasingly vulnerable to brown-outs and supply shortages that are both attributable to the lack of available capacity in Mexico's two natural gas pipeline systems: those of Pemex and CFE. Immediate public policy action is needed to integrate the two existing systems and to incentivize the construction of new pipeline capacity.
100054 • Aug 25, 10 Outlook for Natural Gas Storage in Mexico 32 This market note briefly surveys the unmet expectations related to natural gas storage that have been experienced by policymakers and prospective investors in the fifteen years since this industrial activity was opened to private investment as part of the natural gas legislation of the mid-1990s. The project launched in 2005 between CYDSA and SalTec International is given attention.
100029 • Mar 04, 10 Energy and Drugs 11 This report inquires into the relationship between illegal drugs and the energy market in Mexico. It is observed that in order to launder money efficiently, drug cartels need cash-based businesses to give the appearance of a legitimate business reason for depositing, daily, large amounts of cash. For this reason, cash-based business such as LPG distribution, gasoline franchises, hotels and massage parlours are ideal businesses for drug cartels. The strong LPG opposition to the expansion of NG should be seen in this light.
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688 • Nov 21, 06 Calderon’s first energy crisis: Natural gas pricing 112 This report predicts that there will be a crisis in public policy over natural gas pricing in the first 100 days of the Calderón administration. The report examines the often-voiced complaints of Mexican residential and industrial consumers that natural gas prices in Mexico are too high. The analysis supports this conclusion, but for reasons not commonly heard in Mexico. The report offers an analysis of the steps needed to lower prices in the short- and medium-terms. It also identifies ideas that are not deemed workable in Mexico.
08242006 • Aug 24, 06 Natural Gas as a Factor of Regional Development 016 A PowerPoint presentation given by George Baker as a guest lecturer at the business school of the University of Guadalajara on Aug. 24, 2006.The paper argued that the Houston price of natural gas included a “social wrapping” that was not included in the CRE calculation of the Mexican price. The paper also argued the the fully burdend cost of LPG service is much higher than the fully burdened cost of natural gas. The audience was upwards of 50 people, including LPG representatives (in the front row).
120105 • Dec 01, 05 El monopolio y el precio del gas 02 This report examines alternative views about the pricing of natural gas in Mexico, including one by the Natural Gas Association (AMGN) that urges a cost-based, pricing system.
The report was published in Spanish in ENERGIA A DEBATE (December 2005). http://www.energiaadebate.com/Articulos/dic_2005/george_baker.htm
694 • Jun 23, 05 Aug 6, 06 Indirect and social costs of LPG and natural gas service 1216 This report inquires into the total cost of service of LPG and natural gas for residential and commercial customers in Mexico, taking into account costs and risks for the customers and communities beyond those of the regulated prices for each product. Example: consumer fraud in LPG cylinder service has been estimated at US$500 million annually. This report identifies components of costs and risk for both LPG and natural gas service. Translated titles from the Mexican press provide a glimpse into developments in the Fox administration.
678 • Oct 22, 04 Natural gas pricing and procurement controversies in Mexico, 1993-2004 28 This report surveys the landscape of proposals and practices for natural gas pricing, storage and transportation since NAFTA came into effect Jan. 1, 1994. The successes and shortcomings of public and private tenders and direct negotiations are examined in relation to projects in gas, power and refinery upgrades. The report retraces some of the early history of the 1990s as background for developments during the Fox administration.
667 • Mar 31, 04 Mexican energy in 2003. Year of natural gas 313 This report highlights major developments in Mexico's energy sector in 2003, making special note of advances and setbacks in natural gas, power and energy policy. The report takes note of personnel changes during the year, and contains tables that document the Metrogas pipeline safety controversy in Mexico City and the CRE's five-year review of natural gas distribution permits.
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651 • Sep 30, 03 Sep 21, 09 Gas distribution in Mexico: LPG vs. natural gas 312 This report examines the ongoing struggle by natural gas distribution companies (LDCs) to extend their pipeline system within their franchise areas. LDCs face anonymous and neighborhood opposition believed to be organized by LPG distributors. In relation to public policy, the report notes the lack of public education at the local level related to matters of energy policy, such as the advantages of natural gas compared to LPG.
649 • Aug 08, 03 Fox’s off-grid energy policy 011 This report examines the ad hoc negotiations and initiatives that have passed for energy policies in the first half of the Fox administration. In chronological order, since December 2000, topics include natural gas pricing, electric reform, Multiple Service Contract, lubricants market liberalization, LNG regulations, petrochemical investments (Project Fénix)—and again, in August 2003, natural gas pricing.
647 • Jul 25, 03 Natural gas pricing crisis in Mexico 112 This report discusses the widening gulf between Pemex and Mexican industry in relation to gas pricing philosophy. The 36-month period of a special "Mexico price" for industrial consumers ends in December 2003. Pemex proposes a return to U.S.-indexed pricing while industry wants a formula price based on a basket of gas prices that includes those paid by Mexico's trading partners outside of the U.S. and Canada, especially China.
619 • Dec 29, 02 Dec 30, 02 Natural gas price fixing in Mexico 19 In the context of a larger discussion of gas pricing, this report describes the CRE’s repairs to the formula governing natural gas prices in Mexico. The need arose when in November 2002 the U.S. price index for gas that had been used to benchmark Mexican prices was not published, owing to suspicions that U.S. price data had been fraudulently manipulated by traders.
586 • Jun 26, 02 Upstream gas conference: Concepts and body language 05 This report provides an overview of the Mexican gas conference held in Mexico City June 20-21, 2002. Emphasis is given to the basic concepts presented by Pemex and to the coded messages contained in a number of the presentations.
580 • Apr 12, 02 Drivers of natural gas demand in Mexico, 2001-2010 96 This report analyzes three drivers of natural gas demand in Mexico: global economy, the internal market and a mix of both effects. This report presents scenarios of natural gas demand, by economic driver, for the period 2001-2010.
568 • Feb 28, 02 Sturm und Drang in Mexico’s natural gas markets 26 This report questions the need for new natural gas supplies in Mexico as the U.S. and Mexican economies continue to show signs of weakness. The report follows up on earlier analysis (MEI 529) that predicted lower gas demand in Mexico.
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561 • Dec 31, 01 UNAM Seminar on Natural Gas 13 On Dec. 3, 2001 the Energy Studies Program of the National University in Mexico City (UNAM) organized a 3/4 day conference on upstream, midstream and downstream issues on natural gas. This report provide highlights of the presentations.
529 • Aug 31, 01 Modeling natural gas demand in an economic slow-down 54 This report examines the combined effect of U.S. and Mexican economic slow-down on Mexican natural gas demand for the period 2001-2009. This conclusions of the report differ from the Government’s official forecast for this period.
530 • Aug 08, 01 Opportunity costs of a closed natural gas market 04 Comments on the economic and political costs to Mexico of having a closed natural gas transportation market in Northern Mexico.
516 • Jun 28, 01 “Green Economist” Overture: gas market forecasting in Mexico 02 Comments on potential effect of slow-down in U.S. economy on rate of growth of Mexican natural gas demand.
497 • Apr 20, 01 Rumor of revocation of Pemex $4 gas contracts in Sonora 02 Reports on rumors of a possible revocation of Pemex’s $4 gas supply contracts in Sonora.
496 • Apr 18, 01 Outlook for natural gas markets in Mexico 03 Review of Pemex statistics and Government forecasts relating to natural gas supply and demand. Examines Pemex’s dominant role in the natural gas market in 1999-2000.
492 • Apr 16, 01 Natural gas market outlook, 2000-2009 58 Survey of Pemex ‘s statistics for natural gas production and sales. Asks about the likelihood that Pemex will meet supply targets of Energy Ministry for 2009.
472 • Jan 12, 01 Dec 30, 02 Natural gas pricing crisis in Mexico 06 An appraisal of short- and long-range options to move Mexico’s natural gas sector from a command economy to a market-based economy. The cover letter to Energy Minister Ernesto Martens is dated January 11, 2001, at the peak of the controversy in Mexico regarding natural gas pricing, which became the first policy crisis of the new Fox administration.
471 • Jan 05, 01 Energy policy dilemma: How to price natural gas in Mexico? 012 In December, 2004, a major controversy erupted between the Government and Monterrey industry over natural gas prices. This report reviews the reactions to Pemex’s proposal to finance gas purchases over $4/MMBTU.
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473 • Jan 02, 01 NG pricing disputes 03 Discussion of recent demands by Mexican industry over the natural gas pricing policies (Houston netback pricing).
467 • Dec 27, 00 Crisis in natural gas pricing in Mexico 03 A review of the history and current developments related to the pricing of natural gas in Mexico. The history of the effort to link natural gas prices in Mexico to those of a benchmark in theUnited States is only partially known. One version is that the idea began with American companies,who,during the negotiations in 1991-92 that eventually led to NAFTA, argued that they wanted protection against an uncertain gas pricing policy of Pemex. In 1995, the CRE, headed by Héctor Olea, approached former mentors at Rice and asked for an economicanalysis of natural gas pricing in Mexico.
447 • Sep 30, 00 Pemex Strategic Gas Program (Pt. 3). Interview Dr. Pedro Silva 1 Cites interview published in Pemex bulletin Sicori (Sept. 2000) with director of Pemex Strategic Gas Program (PEG), Dr. Pedro Silva.
445 • Sep 12, 00 Pemex’s Strategic Gas Program (Pt. 2) Overview 68 Reviews basic production and import- substitution goals of 8-year program.
438 • Aug 07, 00 Calculating Pemex’s natural gas transportation & service charges 89 Analysis of structure of Pemex’s gas distribution and transportation prices.
429 • Jun 29, 00 Natural gas distribution franchises, 1996-2000 15 Discussion of the history of the CRE’s awards of gas distribution franchises and database output on the awards. The CRE’s award of the Guadalajara natural gas franchise on June 21 to Tractebel was the last of the of the
Zedillo Administration. Tractebel’s price cap offer (Po) of US$0.25/Gcal narrowly beat that of Gaz de France’s of $0.28/Gcal.
426 • Jun 13, 00 Northern Baja Gas Pipeline Consortium 01 Discussion of announcement by Sempra Energy to build a natural gas pipeline across northern Baja California, thereby carrying out a physical bypass of its own pipelines system in Southern California.
418 • May 18, 00 Mar 24, 06 Pemex natural gas pricing, by marketing region 315 This report examines the logic of traditional bundled prices, using original Pemex data of June 1998 for illustration. There are some two dozen pricing regions or sectors, a few of which, like Monterrey, have subsectors (Monterrey and Monclova, in this instance). The report includes database output of bundled prices of natural gas in Pemex’s principal markets, noting differences for each class of service (e.g., firm annual, firm monthly, interruptible).
395 • Feb 02, 00 Coalbed Methane gas (CBM)
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378 • Nov 14, 99 Outlook for natural gas storage 01 Natural gas storage was opened to private investors in the presidential decree of November 5, 1995; but, to date, it has been an investment opportunity without investors. On July 26, 1996, an explosion at Pemex’s major gas processing facility at Cactus took some 1.0 Bcfd of burner tip gas out of the market for more than a week (MEI 96-127). The offshore, associated gas was flared. Pemex on that day certainly wished that it had invested in gas and LPG storage or had encouraged others to do so.
379 • Nov 13, 99 Gas "self-supply" associations as LDC competitors 01 Analysis of the regulatory concept of self-supply organizations in natural gas and their impact on competition. The Mexican concept of “auto-abastecimiento” (self-supply) is a peculiar feature of Mexican energy regulations, one probably created at the instance of industrialists from Monterrey, where the largest self-supply associations in gas and power are found. The feature permits companies to band together to either petition Pemex, in the case of gas, for service, where, otherwise, any one company’s load might be too small to be seen in Pemex’s searchlight.
352 • Jul 02, 99 Natural gas import duty -- Reverse engines 01 Report on the mexican government decision to postpone the lifting of the natural gas import duty in reaction to the anti-dumping suit against Mexico.
342 • May 26, 99 Mexican Government to lift gas import duty July 1 01 Analysis of the effects of the agreement reached to eliminate the import duty on natural gas by July 1, 1999.
330 • Apr 02, 99 Natural gas price behavior 2 Discussion of the behavior of natural gas prices in Mexico and analysis of key drivers.
323 • Feb 28, 99 AMGN presentation Natural Gas Market Hou 1/25 0 Report on the presentation by the president of the Mexican Natural Gas Association (AMGN) on January 25, 1999 in Hosuton.
311 • Jan 12, 99 Outlook for Open Access in natural gas markets 01 Some thoughts about the present and future of Open Access in Mexico.
266 • Apr 28, 98 Effects of NG pricing mechanism 02 Discussion of some issues in the natural gas pricing mechanism.
265 • Apr 27, 98 Analysis of NG pricing formula 01 Analysis of mechanism for natural gas pricing in Mexico.
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257 • Apr 08, 98 Negotiations to Eliminated Mexico’s Natural Gas Duty 02 Negotiations to eliminate the duty on natural gas imports into Mexico. The Mexican Commerce Department (SECOFI) has made an offer to trade its natural gas import duty on natural gas in exchange for an elimination of the U.S. duty on PTA (purified terephthalic acid), an input into the production of polyester and PET, used for making plastic bottles.
253 • Mar 20, 98 Natural gas outlook 1997-2006 31 Analysis of Energy Ministry’s forecast for natural gas consumption for the 1997-2006 period. According to the SE, domestic consumption of NG is expected to grow by some 160%, from 2.6 Bcfd in 1997 to 6.7 Bcfd in 2006. More than half of that increase is explained by NG consumption in the electric power sector (Fig. 1). In turn, these expectations are supported by the programmed conversion of several CFE plants to NG and new public and private (IPP) capacity powered by gas in order to meet new air quality regulations.
250 • Mar 02, 98 Standard conditions of measure:US v MX 3 Some issues on the measurement of energy and standard conditions of energy products in the US and Mexico.
120897 • Dec 08, 97 Mixed Messages in Mexican Gas Markets 01 This article,published in Oil & Gas Journal, discusses the contradictions in Mexico’s natural gas policies: On the one hand, the government in its Natural Gas Act of 1995 and the CRE Establishment Act of 1995 signaled its intent to foster market conditions in which there would be natural gas transportation lines that competed with those of Pemex; on the other hand, it signed into NAFTA a 10% tariff on natural gas imports, the effect of which is to make any new pipeline to Mexico non-competitive.
12081997 • Dec 08, 97 Mixed Messages in Mexican Gas Markets 11 An article by George Baker and published in Oil & Gas Journal (Dec. 8, 1997). NAFTA was supposed to open Mexican natural gas markets to pipeline developers and marketers; but the government, under pressure from Pemex, included a 10% duty on natural gas imports (to decline 1% annually). Then, in the summer of 1997, when Pemex was supposed to divest itself of its industrial accounts in the Monterrey gas franchise zone, it changed its mind (and the CRE, which is supposed to care about markets) went along.
237 • Dec 03, 97 CRE bid evaluation process of Cost Proposals; Mty bid 02 Analysis of CRE’s bid evaluation process.
236 • Dec 02, 97 Gas sales contracts: lessons from the early 80’s 0 Discussion of the law and diplomacy of the gas purchase contracts between a U.S. buyer consortium and Pemex in the early 1980s.
232 • Nov 12, 97 Mexico’s natural gas import duty 0 Status of the negotiations to reduce and eliminate the import duty on natural gas.
231 • Nov 11, 97 Competition between fuel oil and natural gas 02 Analysis of the competition between fuel oil and natural gas.
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228 • Oct 30, 97 SE report on investment opportunities in nat gas 0 Energy Ministry report on investment opportunities in the natural gas sector.
206 • Jul 25, 97 Controversial decisions (e.g., Mty pipelines) 02 Review of recent controversial decisions of the CRE regarding natural gas markets.
204 • Jul 24, 97 Material balance vs. pricing 2 Outlook for heavy fuel oil production and displacement by natural gas in Northeastern Mexico.
202 • Jul 23, 97 Price perceptions affecting natural gas infrastructure 2 Price perceptions and import duty affecting the development of competition in natural gas markets in Northeastern Mexico.
203 • Jul 23, 97 Natural gas import duty - recent developments 01 Status of the natural gas import duty reduction and elimination negotiations.
187 • May 14, 97 Natural gas import duty - recent developments 0 Status of the negotiations to eliminate the natural gas import duty.
185 • May 01, 97 Futurology of NE Mexico 1 Analysis of the probable growth of the natural gas market and availability for Northeastern Mexico.
05011997 • May 01, 97 Mexico's Gas Import Tariff: Roadblock to Investments and Recovery 23 This article by George Baker sharply criticizes the Mexican government's 6% import duty on natural gas for its effect of doubling the gas transporation cost from Houston to the border. As events would come to show, the import duty efficiently discouraged Monterrey industry from supporting MidCon's proposal for an independent gas pipeline to Monterrey. This article appeared the May, 1997, issue of NATURAL GAS (pp. 16-18), a monthly publication of John Wiley & Sons.
184 • Apr 22, 97 Petrochemical privatization; import duty on natural gas 0 A critique of the approach used to privatize Pemex Petrochemical assets and of the existing import duty on natural gas.
182 • Apr 15, 97 6% duty on natural gas imports 01 Schedule for the reduction and elimination of the duty on natural gas imports.
179 • Apr 07, 97 Northern gas strategy--at what cost to Pemex? 1 E&P program for the Burgos basin and drilling and infrastructure contracts.
170 • Feb 25, 97 CRE role in markets for gas 0 Natural gas markets in Mexico and the role of the CRE in introducing competition.
149• Oct 15, 96 Outlook on Mexican natural gas import tariff *Maria
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98• Mar 01, 96 Areas for investment in gas transmission and distribution *Maria
66• Nov 02, 95 Formal ceremony presenting new natural gas regulations *Maria
67• Nov 02, 95 Natural gas prices in Mexico Provides conversion factor for Pemex’s gas prices quoted in pesos/M3.
68• Nov 02, 95 Outlook for gas LDCs in Mexico Reviews factors affecting the emergence of gas local distribution companies (LDCs) in Mexico.
55 • Sep 26, 95 Natural gas production forecast through 12/95 21 Pemex forecast of natural gas production in short term.
51 • Sep 09, 95 LPG v. natural gas culture in Mexico City 01 Report of conversations with Jorge Rebollledo [senior], president of DIGANAMEX, the natural gas distributorship in Mexico City, about the absence of a natural gas culture in Mexico. The social cost of LPG and the current market leaders in the residential sector are also considered.
50• Sep 08, 95 New Canadian study on Natural gas supply and demand in Mexico Comments on CERI study of natural gas markets in Mexico.
38• Jul 09, 95 Policy issues in natural gas sector
40• Jul 09, 95 Natural gas supply shortfalls, by region MEI estimates of shortfall of natural gas, by city.
33• Jun 04, 95 Outlook for Mexico’s Natural Gas Balance, 1992-2010 Chevron paper on natural gas forecast.
30• Jun 01, 95 $5 billion for gas-related investments in Mexico? Staff publication. Where?
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PERSPECTIVES ON THE MEXICAN LPG VALUE CHAIN
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100029 • Mar 04, 10 Energy and Drugs 11 This report inquires into the relationship between illegal drugs and the energy market in Mexico. It is observed that in order to launder money efficiently, drug cartels need cash-based businesses to give the appearance of a legitimate business reason for depositing, daily, large amounts of cash. For this reason, cash-based business such as LPG distribution, gasoline franchises, hotels and massage parlours are ideal businesses for drug cartels. The strong LPG opposition to the expansion of NG should be seen in this light.
08242006 • Aug 24, 06 Natural Gas as a Factor of Regional Development 016 A PowerPoint presentation given by George Baker as a guest lecturer at the business school of the University of Guadalajara on Aug. 24, 2006.The paper argued that the Houston price of natural gas included a “social wrapping” that was not included in the CRE calculation of the Mexican price. The paper also argued the the fully burdend cost of LPG service is much higher than the fully burdened cost of natural gas. The audience was upwards of 50 people, including LPG representatives (in the front row).
694 • Jun 23, 05 Aug 6, 06 Indirect and social costs of LPG and natural gas service 1216 This report inquires into the total cost of service of LPG and natural gas for residential and commercial customers in Mexico, taking into account costs and risks for the customers and communities beyond those of the regulated prices for each product. Example: consumer fraud in LPG cylinder service has been estimated at US$500 million annually. This report identifies components of costs and risk for both LPG and natural gas service. Translated titles from the Mexican press provide a glimpse into developments in the Fox administration.
651 • Sep 30, 03 Sep 21, 09 Gas distribution in Mexico: LPG vs. natural gas 312 This report examines the ongoing struggle by natural gas distribution companies (LDCs) to extend their pipeline system within their franchise areas. LDCs face anonymous and neighborhood opposition believed to be organized by LPG distributors. In relation to public policy, the report notes the lack of public education at the local level related to matters of energy policy, such as the advantages of natural gas compared to LPG.
595 • Jun 17, 02 Jun 24, 02 The politics and socioeconomics of LPG markets in Mexico 16 For most Mexican households, which operate without consumer credit for the purchase of goods and services, fuel used for heating and cooking is liquid petroleum gas (LPG). This product is sold on a cash-and-carry basis by street vendors who travel through neighborhoods shouting “gas!” The Government’s idea, which was launched formally in 1995, is to switch large parts of the residential market to natural gas. How realistic is this objective?
592 • Jun 15, 02 Government’s outlook for LPG market in Mexico, 2001-2010 104 At the end of 2001 Mexican authorities published its second LPG statistical overview. This report, which draws from our longer LPG market study, reviews market performance during 1993-2000 and provides highlights of the forecast for the period 2001-2010. The view that LPG demand will be flat is questioned.
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415 • Apr 15, 00 LPG market and infrastructure (1999 data) 36 Analysis of LPG production, market data and infrastructure.
393 • Jan 28, 00 LPG panic buying in Mexico 1112 Reviews the facts that led to LPG shortages in Mexico in the last weeks of 1999 and Pemex reaction to the crisis.
355 • Jul 24, 99 New LPG regulations 03 On June 28, 1999 the Mexican government published in the Diario Oficial the long awaited revisions to regulations governing the trade, transportation, storage and distribution of LPG. The new regulations replace those of 1993.
333 • Apr 10, 99 LPG markets in Mexico 4 Outlook for deregulation in Mexico’s LPG markets.
317 • Feb 06, 99 LPG production and market outlook 5 In its slide presentation on January 15, 1999 in Villahermosa (MEI 99-316), Pemex Gas (PGPB) provided a forecast of LPG balance for the period 1998-2001. This report provides the highlights of the presentation.
286 • Aug 17, 98 LPG markets 11 A discussion of the outlook for for LPG market deregulation in Mexico.
284 • Aug 07, 98 Apr 24, 03 Regional LPG Markets 32 This report reviews historical data of regional LPG market demand and prices from 1991-97.
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PERSPECTIVES ON THE MEXICAN LNG VALUE CHAIN
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669 • Sep 21, 04 Oct 6, 06 Market and political dynamics of West Coast LNG 18 This report surveys the commercial and political environment in which proposed LNG projects will operate in market areas here labeled NW Periphery, Greater Southern California and SW Periphery, and which extend from British Colombia to Michoacán. The report concludes that LNG projects are vulnerable, if not from commercial and regulatory issues, then from political ones.
670 • Mar 10, 04 LNG politics and permits after expropriation in Baja 210 This report examines the logic of due diligence in Mexico's energy sector in the light of the unexpected interruption of negotiations between the State of Baja California and Marathon Oil Company. Marathon's proposed project was the most far-reaching regional development project proposed for the state in a generation. What lessons are to be drawn for regulators and the remaining and future LNG developers in relation to projects in Mexico?
655 • Sep 23, 03 Oct 3, 03 Altamira LNG: Has the other shoe dropped? 211 This report reviews the unusual history of LNG promotion in Altamira, Tamaulipas, and asks if the award on Sept. 11, 2003 of an international tender to the sole bidder, Gas del Litoral, ends--or fuels--controversy about public policy in relation to gas supply and pricing in Mexico.
627 • Feb 17, 03 Integration of LNG and IPP projects in Mexico 312 This report provides an overview of the history of the idea of an LNG regasification terminal in Mexico. The concepts and impact of the CFE's tender issued on December 24, 2002, are discussed, particularly in relation to the rescheduling of IPP projects in the Altamira region. Risks faced by policy and economic actors are identified.
611 • Nov 07, 02 LNG in Mexico: two steps forward, one step back 07 This report comments on advances in LNG policy in Mexico, and questions the wisdom of a CFE tender for LNG in Altamira. The viability of an LNG project in Baja California would also be strengthened by the passage of the Fox power reform initiative.
594 • Jul 21, 02 Jul 22, 02 LNG in Mexico: New actors, new drama 06 This report is an update on LNG developments that have been made public. Pemex Gas has withdrawn from the list of prospective anchor customers for an LNG terminal in Altamira, and has been replaced by CFE. This change introduces a new dynamic into Mexican gas and power markets. The market logic and drama varies from one prospective LNG site to another. An LNG terminal in Baja California will be affected by California environmental standards.
582 • May 14, 02 May 16, 02 Outlook for LNG and MSC: Aftermath of Supreme Court Ruling 07 This report reviews the principal arguments of the Mexican Supreme Court related to its ruling of April 25, 2002 in relation to electric power. Two questions are asked about the future: How do these arguments affect other energy policy innovations, such as LNG and Multiple Service Contracts? What is needed for a sustainable division of powers to exist in Mexico?
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571 • Mar 27, 02 LNG wars in Baja California 15 This report reviews what is, as of late March 2002, the most contested business opportunity in Mexico’s energy sector: building an LNG terminal in Baja California to supply the California market with power and gas.
544 • Dec 29, 01 Jun 6, 02 LNG progress and challenges 17 This report reviews developments in the regulatory development cycle of the last five months of 2001 (and first five months of 2002) that affect LNG operations in Mexico. The report also examines issues that surpass the regulatory authority of the CRE and that could negatively affect the success of an LNG project.
551 • Nov 09, 01 NIMBY a la mexicana 27 This report notes that local politics in Mexico can stop major projects, such as a golf course in Tepoztlán, for example. Local politics can also affect energy projects, as LNG terminal developers in Baja California have discovered. Several examples of popular opposition to commercial projects are cited.
535 • Aug 28, 01 Logic supporting LNG terminal in Altamira 04 This report identifies economic and policy factors that support the concept of an LNG terminal in Altamira.
534 • Aug 25, 01 Wellhead-to-lightbulb integration? Advances in LNG and beyond 3 This report comments on the regulatory advances and pending issues in several areas of Mexico’s energy sector: LNG, IPPs, midstream, upstream.
531 • Aug 13, 01 LNG terminal in Altamira: Optical illusion? 07 This report questions the logic of building an LNG terminal on the Mexican Gulf Coast. U.S. LNG terminal capacity would seem adequate to supply incremental demands, and LNG marketers will prefer U.S. prices and markets to those in Mexico.
527 • Jul 29, 01 LNG press bulletin 02 Reflections on the Energy Ministry press bulletin of June 28 about an LNG terminal in Altamira in which Energy Minister Ernesto Martens seemed to contradict Pemex Gas in relation to the procurement process.
521 • Jul 12, 01 LNG tender for Altamira 02 Review of history of Pemex Gas’ interest in promoting an LNG terminal in Altamira.
519 • Jul 06, 01 Jul 17, 02 Energy Ministry promotion of LNG in Altamira 02 Comments on press announcements related to LNG projects: 1) May 23, 2001, that an agreement had been reach between El Paso Energy and Pemex Gas to build an LNG terminal in Altamira, 2) June 28, 2001 announcing an agreement between El Paso and Shell for the same. A year later, in May 2002, the players had changed.
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PERSPECTIVES ON THE MEXICAN REFINED PRODUCTS VALUE CHAIN
Table/ File # Published Updated Topic Pages graph
608 • Nov 05, 02 Fuel oil markets in Mexico 117 This report reviews the market, statistics and government outlook for fuel oil in Mexico. The view that CFE and most of industries (that use fuel oil) will switch to natural gas from fuel oil in the period 2002-2010 is questioned.
587 • Jun 27, 02 Base Oil Black Market in Mexico 44 A look at the lucrative black market for base oils in Mexico and the measures taken by the government to control it.
558 • Dec 24, 01 Feb 7, 02 Competition in Mexico’s motor oil market? 28 Analysis of the legal and economic arguments of Mexlub in relation to the Federal Competition Commission resolution against Pemex’s refinery unit for monopolistic practices in the motor oil and lubricants market. Update of the legal and financial status of Mexlub.
481 • Mar 09, 01 LNG outlook for Mexico 03 Comments on recent interest in LNG infrastructure in Mexico in the light of high natural gas prices in Mexico and the gas and power crisis in California.
457 • Dec 21, 00 Competition in Mexican lubricants market 06 Recent developments in the lubricants market in Mexico include a commercial and legal controversy surrounding Mexlub, the holding company of the wholesale Pemex franchise. Bardhal and other reformulators want to see their brands sold in Pemex gasoline stations.
424 • Jun 08, 00 Mexican gasoline price trends and issues, 1997-99. Analysis of rack-to-pump 6 Analysis of recent trends in gasoline prices in Mexico, noting movements relative to producer price index.
334 • Apr 14, 99 Gasoline “markets” in Mexico 4 Review of recent disputes and controversies over gasoline pricing in Mexico.
321 • Feb 15, 99 PEMEX Refining investments program 1999-2001 0 Review of the presentation by Pemex Refining (PR) to the Construction Industry on January 16, 1999.
303 • Nov 25, 98 PEMEX gasoline price increases 02 Gasoline price increases and energy products pricing and taxation policy in Mexico.
231 • Nov 11, 97 Competition between fuel oil and natural gas 02 Analysis of the competition between fuel oil and natural gas.
201 • Jul 03, 97 Fuel oil prices 1 Analysis of pricing mechanisms for Pemex heavy fuel oil.
91• Feb 20, 96 Analysis of fuel sources and sales expressed in MMcfd (Data Missing) *Maria
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PERSPECTIVES ON THE MEXICAN REFINED PRODUCTS VALUE CHAIN Table/ File # Published Updated Topic Pages graph
86• Feb 13, 96 Mexico’s gamble in its downstream strategy *Maria
110695 • Nov 06, 95 Mexico’s Energy Policies Stand at Crossroads 13 This article describes pending issues and decisions that would affect investor interest in the to-be-privatized Pemex’s chemical plants as well as in new opportunities in natural gas transportation and distribution. The outlook for natural gas service to Baja California is examined.
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Titles of MEI reports related to energy markets and politics in Guadalajara, Jalisco
Table/ File # Published Updated Topic Pages graph
100143 • Oct 02, 12 Tesis 193/2011 ~ Jurisprudence by Contradiction 39 For more than a decade, in Guadalajara and in other cities where the CRE has issued permits for natural gas distribution, LPG interests have successfully blocked the local distribution company (LDC) from installing the pipeline infrastructure. Techniques have changed: in the late 1990s there were physical intimidation and misinformation campaigns, then a series of civil suits. At last, the Supreme Court (SCJN) stepped in, overturning a local court’s ruling that Jalisco Civil Code could justify blocking LDC construction.
100055 • Sep 05, 10 Sep 27, 10 Guadalajara: Graveyard of Modern Energy Policy 13 This report describes several of the exchanges that took place in Guadalajara during and after a seminar that took place on August 26, 2010, on the subject of energy efficiency. Participating were panelists from CRE and Pemex (Fluvio Ruiz) as well as others from the private sector (including George Baker). The limits to a free discussion were sharply felt by the panelists and audience.
100029 • Mar 04, 10 Energy and Drugs 11 This report inquires into the relationship between illegal drugs and the energy market in Mexico. It is observed that in order to launder money efficiently, drug cartels need cash-based businesses to give the appearance of a legitimate business reason for depositing, daily, large amounts of cash. For this reason, cash-based business such as LPG distribution, gasoline franchises, hotels and massage parlours are ideal businesses for drug cartels. The strong LPG opposition to the expansion of NG should be seen in this light.
08242006 • Aug 24, 06 Natural Gas as a Factor of Regional Development 016 A PowerPoint presentation given by George Baker as a guest lecturer at the business school of the University of Guadalajara on Aug. 24, 2006.The paper argued that the Houston price of natural gas included a “social wrapping” that was not included in the CRE calculation of the Mexican price. The paper also argued the the fully burdend cost of LPG service is much higher than the fully burdened cost of natural gas. The audience was upwards of 50 people, including LPG representatives (in the front row).
595 • Jun 17, 02 Jun 24, 02 The politics and socioeconomics of LPG markets in Mexico 16 For most Mexican households, which operate without consumer credit for the purchase of goods and services, fuel used for heating and cooking is liquid petroleum gas (LPG). This product is sold on a cash-and-carry basis by street vendors who travel through neighborhoods shouting “gas!” The Government’s idea, which was launched formally in 1995, is to switch large parts of the residential market to natural gas. How realistic is this objective?
MEI (713) 255-0000 www.energia.com Page 1 Oct 23, 2012 Mexico Energy Intelligence®
PERSPECTIVES ON THE MEXICAN LNG VALUE CHAIN
Table/ File # Published Updated Topic Pages graph
669 • Sep 21, 04 Oct 6, 06 Market and political dynamics of West Coast LNG 18 This report surveys the commercial and political environment in which proposed LNG projects will operate in market areas here labeled NW Periphery, Greater Southern California and SW Periphery, and which extend from British Colombia to Michoacán. The report concludes that LNG projects are vulnerable, if not from commercial and regulatory issues, then from political ones.
670 • Mar 10, 04 LNG politics and permits after expropriation in Baja 210 This report examines the logic of due diligence in Mexico's energy sector in the light of the unexpected interruption of negotiations between the State of Baja California and Marathon Oil Company. Marathon's proposed project was the most far-reaching regional development project proposed for the state in a generation. What lessons are to be drawn for regulators and the remaining and future LNG developers in relation to projects in Mexico?
655 • Sep 23, 03 Oct 3, 03 Altamira LNG: Has the other shoe dropped? 211 This report reviews the unusual history of LNG promotion in Altamira, Tamaulipas, and asks if the award on Sept. 11, 2003 of an international tender to the sole bidder, Gas del Litoral, ends--or fuels--controversy about public policy in relation to gas supply and pricing in Mexico.
627 • Feb 17, 03 Integration of LNG and IPP projects in Mexico 312 This report provides an overview of the history of the idea of an LNG regasification terminal in Mexico. The concepts and impact of the CFE's tender issued on December 24, 2002, are discussed, particularly in relation to the rescheduling of IPP projects in the Altamira region. Risks faced by policy and economic actors are identified.
611 • Nov 07, 02 LNG in Mexico: two steps forward, one step back 07 This report comments on advances in LNG policy in Mexico, and questions the wisdom of a CFE tender for LNG in Altamira. The viability of an LNG project in Baja California would also be strengthened by the passage of the Fox power reform initiative.
594 • Jul 21, 02 Jul 22, 02 LNG in Mexico: New actors, new drama 06 This report is an update on LNG developments that have been made public. Pemex Gas has withdrawn from the list of prospective anchor customers for an LNG terminal in Altamira, and has been replaced by CFE. This change introduces a new dynamic into Mexican gas and power markets. The market logic and drama varies from one prospective LNG site to another. An LNG terminal in Baja California will be affected by California environmental standards.
582 • May 14, 02 May 16, 02 Outlook for LNG and MSC: Aftermath of Supreme Court Ruling 07 This report reviews the principal arguments of the Mexican Supreme Court related to its ruling of April 25, 2002 in relation to electric power. Two questions are asked about the future: How do these arguments affect other energy policy innovations, such as LNG and Multiple Service Contracts? What is needed for a sustainable division of powers to exist in Mexico?
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PERSPECTIVES ON THE MEXICAN LNG VALUE CHAIN Table/ File # Published Updated Topic Pages graph
571 • Mar 27, 02 LNG wars in Baja California 15 This report reviews what is, as of late March 2002, the most contested business opportunity in Mexico’s energy sector: building an LNG terminal in Baja California to supply the California market with power and gas.
544 • Dec 29, 01 Jun 6, 02 LNG progress and challenges 17 This report reviews developments in the regulatory development cycle of the last five months of 2001 (and first five months of 2002) that affect LNG operations in Mexico. The report also examines issues that surpass the regulatory authority of the CRE and that could negatively affect the success of an LNG project.
551 • Nov 09, 01 NIMBY a la mexicana 27 This report notes that local politics in Mexico can stop major projects, such as a golf course in Tepoztlán, for example. Local politics can also affect energy projects, as LNG terminal developers in Baja California have discovered. Several examples of popular opposition to commercial projects are cited.
535 • Aug 28, 01 Logic supporting LNG terminal in Altamira 04 This report identifies economic and policy factors that support the concept of an LNG terminal in Altamira.
534 • Aug 25, 01 Wellhead-to-lightbulb integration? Advances in LNG and beyond 3 This report comments on the regulatory advances and pending issues in several areas of Mexico’s energy sector: LNG, IPPs, midstream, upstream.
531 • Aug 13, 01 LNG terminal in Altamira: Optical illusion? 07 This report questions the logic of building an LNG terminal on the Mexican Gulf Coast. U.S. LNG terminal capacity would seem adequate to supply incremental demands, and LNG marketers will prefer U.S. prices and markets to those in Mexico.
527 • Jul 29, 01 LNG press bulletin 02 Reflections on the Energy Ministry press bulletin of June 28 about an LNG terminal in Altamira in which Energy Minister Ernesto Martens seemed to contradict Pemex Gas in relation to the procurement process.
521 • Jul 12, 01 LNG tender for Altamira 02 Review of history of Pemex Gas’ interest in promoting an LNG terminal in Altamira.
519 • Jul 06, 01 Jul 17, 02 Energy Ministry promotion of LNG in Altamira 02 Comments on press announcements related to LNG projects: 1) May 23, 2001, that an agreement had been reach between El Paso Energy and Pemex Gas to build an LNG terminal in Altamira, 2) June 28, 2001 announcing an agreement between El Paso and Shell for the same. A year later, in May 2002, the players had changed.
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Titles of MEI reports related to energy markets and politics in Baja California
Table/ File # Published Updated Topic Pages graph
100127 • May 26, 12 May 29, 12 FCPA Risk in Mexico (Part II): Wal-Mart vs. Sempra 630 This report is a follow-up of an earlier report on FCPA risks in Mexico, published July 23, 2011. In that repor report we examined diverse risks as seen in the stories of Metalclad, Marathon Oil and Sempra Energy in Mexico. In this report, we examine, comparatively, the allegations of illicit payments in Mexico made by Wal-Mart and Sempra. At the same time, we reexamine the discussion among economists about the efficiency of corruption as a mechanism that promotes economic development.
100094 • Jul 21, 11 The FPCA Risk in Mexico 313 This report seeks to identify features of the Mexican operating environment that tend to put individuals and corporations at risk for non-compliance of the Foreign Corrupt Practices Act of 1977. The report identifies eight (8) situations in Mexico where a company subject to FCPA rules may either be a victim of corruption or find himself in circumstances that could compromise his FCPA compliance standards and protocols. The history of Metalclad, Marathon Oil and Sempra Energy illustrate these situations.
669 • Sep 21, 04 Oct 6, 06 Market and political dynamics of West Coast LNG 18 This report surveys the commercial and political environment in which proposed LNG projects will operate in market areas here labeled NW Periphery, Greater Southern California and SW Periphery, and which extend from British Colombia to Michoacán. The report concludes that LNG projects are vulnerable, if not from commercial and regulatory issues, then from political ones.
670 • Mar 10, 04 LNG politics and permits after expropriation in Baja 210 This report examines the logic of due diligence in Mexico's energy sector in the light of the unexpected interruption of negotiations between the State of Baja California and Marathon Oil Company. Marathon's proposed project was the most far-reaching regional development project proposed for the state in a generation. What lessons are to be drawn for regulators and the remaining and future LNG developers in relation to projects in Mexico?
660 • Jan 27, 04 Jan 11, 05 New actors in LNG politics in Baja California 19 This report reviews the increasingly unpredictable contest in Baja California that is unfolding on two levels: the first between the three commercial competitors and the second between the federal government and local authorities. The shift occurred in Dec. 2003 when Shell joined Sempra, and ChevronTexaco secured federal support for an offshore siting that bypasses local jurisdictions.
641 • Jun 23, 03 Risk exposure in the permitting process in Mexico 212 The problematic character of permits is one that confronts all business activities in Mexico, from office space to industrial facilities. In a number of instances, permits have ignited controversy instead of resolving issues. Contractors with federal permits occasionally find themselves facing municipal and state opposition in addition to opposition from landowners, citizen groups and NGOs.
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Titles of MEI reports related to energy markets and politics in Baja California Table/ File # Published Updated Topic Pages graph
594 • Jul 21, 02 Jul 22, 02 LNG in Mexico: New actors, new drama 06 This report is an update on LNG developments that have been made public. Pemex Gas has withdrawn from the list of prospective anchor customers for an LNG terminal in Altamira, and has been replaced by CFE. This change introduces a new dynamic into Mexican gas and power markets. The market logic and drama varies from one prospective LNG site to another. An LNG terminal in Baja California will be affected by California environmental standards.
571 • Mar 27, 02 LNG wars in Baja California 15 This report reviews what is, as of late March 2002, the most contested business opportunity in Mexico’s energy sector: building an LNG terminal in Baja California to supply the California market with power and gas.
551 • Nov 09, 01 NIMBY a la mexicana 27 This report notes that local politics in Mexico can stop major projects, such as a golf course in Tepoztlán, for example. Local politics can also affect energy projects, as LNG terminal developers in Baja California have discovered. Several examples of popular opposition to commercial projects are cited.
481 • Mar 09, 01 LNG outlook for Mexico 03 Comments on recent interest in LNG infrastructure in Mexico in the light of high natural gas prices in Mexico and the gas and power crisis in California.
426 • Jun 13, 00 Northern Baja Gas Pipeline Consortium 01 Discussion of announcement by Sempra Energy to build a natural gas pipeline across northern Baja California, thereby carrying out a physical bypass of its own pipelines system in Southern California.
110695 • Nov 06, 95 Mexico’s Energy Policies Stand at Crossroads 13 This article describes pending issues and decisions that would affect investor interest in the to-be-privatized Pemex’s chemical plants as well as in new opportunities in natural gas transportation and distribution. The outlook for natural gas service to Baja California is examined.
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PERSPECTIVES ON THE MEXICAN REFINED PRODUCTS VALUE CHAIN
Table/ File # Published Updated Topic Pages graph
608 • Nov 05, 02 Fuel oil markets in Mexico 117 This report reviews the market, statistics and government outlook for fuel oil in Mexico. The view that CFE and most of industries (that use fuel oil) will switch to natural gas from fuel oil in the period 2002-2010 is questioned.
587 • Jun 27, 02 Base Oil Black Market in Mexico 44 A look at the lucrative black market for base oils in Mexico and the measures taken by the government to control it.
558 • Dec 24, 01 Feb 7, 02 Competition in Mexico’s motor oil market? 28 Analysis of the legal and economic arguments of Mexlub in relation to the Federal Competition Commission resolution against Pemex’s refinery unit for monopolistic practices in the motor oil and lubricants market. Update of the legal and financial status of Mexlub.
481 • Mar 09, 01 LNG outlook for Mexico 03 Comments on recent interest in LNG infrastructure in Mexico in the light of high natural gas prices in Mexico and the gas and power crisis in California.
457 • Dec 21, 00 Competition in Mexican lubricants market 06 Recent developments in the lubricants market in Mexico include a commercial and legal controversy surrounding Mexlub, the holding company of the wholesale Pemex franchise. Bardhal and other reformulators want to see their brands sold in Pemex gasoline stations.
424 • Jun 08, 00 Mexican gasoline price trends and issues, 1997-99. Analysis of rack-to-pump 6 Analysis of recent trends in gasoline prices in Mexico, noting movements relative to producer price index.
334 • Apr 14, 99 Gasoline “markets” in Mexico 4 Review of recent disputes and controversies over gasoline pricing in Mexico.
321 • Feb 15, 99 PEMEX Refining investments program 1999-2001 0 Review of the presentation by Pemex Refining (PR) to the Construction Industry on January 16, 1999.
303 • Nov 25, 98 PEMEX gasoline price increases 02 Gasoline price increases and energy products pricing and taxation policy in Mexico.
231 • Nov 11, 97 Competition between fuel oil and natural gas 02 Analysis of the competition between fuel oil and natural gas.
201 • Jul 03, 97 Fuel oil prices 1 Analysis of pricing mechanisms for Pemex heavy fuel oil.
91• Feb 20, 96 Analysis of fuel sources and sales expressed in MMcfd (Data Missing) *Maria
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PERSPECTIVES ON THE MEXICAN REFINED PRODUCTS VALUE CHAIN Table/ File # Published Updated Topic Pages graph
86• Feb 13, 96 Mexico’s gamble in its downstream strategy *Maria
110695 • Nov 06, 95 Mexico’s Energy Policies Stand at Crossroads 13 This article describes pending issues and decisions that would affect investor interest in the to-be-privatized Pemex’s chemical plants as well as in new opportunities in natural gas transportation and distribution. The outlook for natural gas service to Baja California is examined.
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PERSPECTIVES ON THE MEXICAN PETROCHEMICAL VALUE CHAIN
Table/ File # Published Updated Topic Pages graph
693 • May 21, 05 May 31, 05 Outlook for new petrochemical capacity in Mexico 1517 This report examines the outlook for new petrochemical capacity in Mexico, with special reference to Pemex's proposed Project Fénix, a million-ton ethylene complex based on liquids feedstock. The report places Mexico's situation in the light of regional and global market trends, as discussed in the 29 April 2005 Gulf Coast petrochemical conference sponsored by the Global Energy Management Institute of the University of Houston. Table 11 provides a glimpse into the state and national politics of Project Fénix in Mexico with a chronology of titles translated into English.
633 • Mar 26, 03 Greenfield petrochemical projects in Mexico: Case studies 615 This report provides an overview of two attempts during 1998-2001 by the Mexican developer Serbo Corp. Corp. to implement its vision of a new urban complex consisting of an industrial park for investors in petrochemical plants, commercial facilities and surrounding residential housing and services. The billion-dollar project, had it succeeded, would have resulted in Ciudad Altamira. Serbo’s vision is scheduled to be reborn in 2003 as Project Phoenix, with the difference that the developer and anchor customer will be Pemex’s chemical unit.
612 • Dec 03, 02 Dec 19, 02 Petrochemical sector: evolution and developments 1110 This report reviews the history of Mexican legislation and policy in the chemical sector. An analysis of leading statistical indicators for the period 1990-2001 indicates trends in capacity, production, sales and trade. Comments on Pemex’s efforts to improve efficiency and attract private investment in new capacity.
491 • Apr 17, 01 Pemex’s chemical business: recent performance 1 Recent performance analysis of Pemex’s chemical unit.
488 • Mar 30, 01 Profile of Pemex petrochemical output, sales and trade, 1995-2000 14 A survey of aggregate statistics and selected individual products for Pemex’s petrochemical operations, 1995-2000.
450 • Oct 18, 00 Petrochemical industry forum in Mexico City, October 16 02 This report provides highlights of the industry forum held in Mexico City on Oct 16, 2000 sponsored by Pemex and the PUE (www.unam.mx/pue). Speakers voiced their opposition to natural gas pricing based on the HSC.
358 • Aug 04, 99 Petrochemical privatization outlook 02 Review of attempts to upgrade and privatize Pemex Petrochemicals (PPQ) assets.
322 • Feb 16, 99 PEMEX Petrochemical investments program 1999-2001 0 Report on the presentation by Pemex Petrochemical to the Construction Industry on January 15, 1999.
294 • Oct 18, 98 PEMEX’s chemical trade balance 1993-1998 6 Statistics on petrochemical trade balance and outlook.
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PERSPECTIVES ON THE MEXICAN PETROCHEMICAL VALUE CHAIN Table/ File # Published Updated Topic Pages graph
283 • Jul 23, 98 Mar 14, 03 The greenfield option for chemical investors 02 In the early 1990s, with NAFTA appearing on the policy horizon, Pemex undertook a review of its petrochemical assets and businesses. Consulting firms such as ADL, SRI and ChemSystems were contracted to assess Pemex’s infrastructure, technology and market outlook under more competitive conditions.
262 • Apr 25, 98 New Government Initiative in chemicals 01 New proposal for privatization of Pemex chemical units.
184 • Apr 22, 97 Petrochemical privatization; import duty on natural gas 0 A critique of the approach used to privatize Pemex Petrochemical assets and of the existing import duty on natural gas.
150• Oct 16, 96 Mexican Government’s new petrochemical strategy *Maria
115• May 24, 96 Petrochemical privatization policy--revised paper Rev 7.3 *Maria
100• Mar 07, 96 Yellow journalism about petrochemical privatization *Maria
59• Oct 23, 95 Energy and petrochemical policies in Mexico: A review *Maria
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PERSPECTIVES ON THE ENERGY MARKETS AND POLITICS IN BAJA CALIFORNIA
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669 • Sep 21, 04 Oct 6, 06 Market and political dynamics of West Coast LNG 18 This report surveys the commercial and political environment in which proposed LNG projects will operate in market areas here labeled NW Periphery, Greater Southern California and SW Periphery, and which extend from British Colombia to Michoacán. The report concludes that LNG projects are vulnerable, if not from commercial and regulatory issues, then from political ones.
670 • Mar 10, 04 LNG politics and permits after expropriation in Baja 210 This report examines the logic of due diligence in Mexico's energy sector in the light of the unexpected interruption of negotiations between the State of Baja California and Marathon Oil Company. Marathon's proposed project was the most far-reaching regional development project proposed for the state in a generation. What lessons are to be drawn for regulators and the remaining and future LNG developers in relation to projects in Mexico?
660 • Jan 27, 04 Jan 11, 05 New actors in LNG politics in Baja California 19 This report reviews the increasingly unpredictable contest in Baja California that is unfolding on two levels: the first between the three commercial competitors and the second between the federal government and local authorities. The shift occurred in Dec. 2003 when Shell joined Sempra, and ChevronTexaco secured federal support for an offshore siting that bypasses local jurisdictions.
641 • Jun 23, 03 Risk exposure in the permitting process in Mexico 212 The problematic character of permits is one that confronts all business activities in Mexico, from office space to industrial facilities. In a number of instances, permits have ignited controversy instead of resolving issues. Contractors with federal permits occasionally find themselves facing municipal and state opposition in addition to opposition from landowners, citizen groups and NGOs.
617 • Dec 17, 02 Cross-border gas pipelines: regulators, markets and policies 07 This report builds on discussions with the Railroad Commission of Texas of topics such as its collaboration with Mexico's CRE. The Commission anticipates expanded cross-border gas trade and infrastructure and foresees Mexico as a future exporter of gas.
594 • Jul 21, 02 Jul 22, 02 LNG in Mexico: New actors, new drama 06 This report is an update on LNG developments that have been made public. Pemex Gas has withdrawn from the list of prospective anchor customers for an LNG terminal in Altamira, and has been replaced by CFE. This change introduces a new dynamic into Mexican gas and power markets. The market logic and drama varies from one prospective LNG site to another. An LNG terminal in Baja California will be affected by California environmental standards.
571 • Mar 27, 02 LNG wars in Baja California 15 This report reviews what is, as of late March 2002, the most contested business opportunity in Mexico’s energy sector: building an LNG terminal in Baja California to supply the California market with power and gas.
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PERSPECTIVES ON THE ENERGY MARKETS AND POLITICS IN BAJA CALIFORNIA Table/ File # Published Updated Topic Pages graph
551 • Nov 09, 01 NIMBY a la mexicana 27 This report notes that local politics in Mexico can stop major projects, such as a golf course in Tepoztlán, for example. Local politics can also affect energy projects, as LNG terminal developers in Baja California have discovered. Several examples of popular opposition to commercial projects are cited.
458 • Dec 28, 00 Electric power market and CFE infrastructure in Baja California 810 A review of CFE generation infrastructure and trends in Baja California power market.
426 • Jun 13, 00 Northern Baja Gas Pipeline Consortium 01 Discussion of announcement by Sempra Energy to build a natural gas pipeline across northern Baja California, thereby carrying out a physical bypass of its own pipelines system in Southern California.
272 • Jun 01, 98 Competitive bidding for the Rosarito IPP? 02 Tenders for a power plant and natural gas pipeline in Rosarito.
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PERSPECTIVES ON THE ENERGY MARKETS AND POLITICS IN JALISCO AND GUADALAJARA
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100143 • Oct 02, 12 Tesis 193/2011 ~ Jurisprudence by Contradiction 39 For more than a decade, in Guadalajara and in other cities where the CRE has issued permits for natural gas distribution, LPG interests have successfully blocked the local distribution company (LDC) from installing the pipeline infrastructure. Techniques have changed: in the late 1990s there were physical intimidation and misinformation campaigns, then a series of civil suits. At last, the Supreme Court (SCJN) stepped in, overturning a local court’s ruling that Jalisco Civil Code could justify blocking LDC construction.
100055 • Sep 05, 10 Sep 27, 10 Guadalajara: Graveyard of Modern Energy Policy 13 This report describes several of the exchanges that took place in Guadalajara during and after a seminar that took place on August 26, 2010, on the subject of energy efficiency. Participating were panelists from CRE and Pemex (Fluvio Ruiz) as well as others from the private sector (including George Baker). The limits to a free discussion were sharply felt by the panelists and audience.
100029 • Mar 04, 10 Energy and Drugs 11 This report inquires into the relationship between illegal drugs and the energy market in Mexico. It is observed that in order to launder money efficiently, drug cartels need cash-based businesses to give the appearance of a legitimate business reason for depositing, daily, large amounts of cash. For this reason, cash-based business such as LPG distribution, gasoline franchises, hotels and massage parlours are ideal businesses for drug cartels. The strong LPG opposition to the expansion of NG should be seen in this light.
08242006 • Aug 24, 06 Natural Gas as a Factor of Regional Development 016 A PowerPoint presentation given by George Baker as a guest lecturer at the business school of the University of Guadalajara on Aug. 24, 2006.The paper argued that the Houston price of natural gas included a “social wrapping” that was not included in the CRE calculation of the Mexican price. The paper also argued the the fully burdend cost of LPG service is much higher than the fully burdened cost of natural gas. The audience was upwards of 50 people, including LPG representatives (in the front row).
595 • Jun 17, 02 Jun 24, 02 The politics and socioeconomics of LPG markets in Mexico 16 For most Mexican households, which operate without consumer credit for the purchase of goods and services, fuel used for heating and cooking is liquid petroleum gas (LPG). This product is sold on a cash-and-carry basis by street vendors who travel through neighborhoods shouting “gas!” The Government’s idea, which was launched formally in 1995, is to switch large parts of the residential market to natural gas. How realistic is this objective?
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PERSPECTIVES ON THE ENERGY MARKETS AND POLITICS IN NUEVO LEON
Table/ File # Published Updated Topic Pages graph
256 • Apr 03, 98 Power outage in Monterey, 3/19/98 01 Power outage in Monterrey and the prospects for cogeneration and IPP projects.
237 • Dec 03, 97 CRE bid evaluation process of Cost Proposals; Monterrey bid 02 Analysis of CRE’s bid evaluation process.
219 • Sep 13, 97 CRE ruling in Monterrey re: Pemex Gas pipelines 01 A critique of the policy decision of the CRE announced on August 25 to permit direct-connects by Monterrey industrial companies to Pemex Gas pipelines.
211 • Aug 06, 97 Monterrey air quality in 1999 1 Discussion of the Cadereyta project, its impact on air quality in Northeastern Mexico and compliance with NOM-085.
206 • Jul 25, 97 Controversial decisions (e.g., Mty pipelines) 02 Review of recent controversial decisions of the CRE regarding natural gas markets.
190 • May 20, 97 Monterrey Center for Environmental Quality Research 0 Monterrey Tech Center for Environmental Quality Research study of the impact of natural gas imports on air quality in Mexico.
185 • May 01, 97 Futurology of NE Mexico 1 Analysis of the probable growth of the natural gas market and availability for Northeastern Mexico.
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PERSPECTIVES ON THE OILFIELD SERVICE MARKET IN MEXICO
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100100 • Oct 31, 11 The Oilfield Service Market After Santuario 36 This report argues that the structure of the oilfield services market was significantly altered as a result of the outcome of the bidding for the Santuario Block in Pemex's first round of public tenders. The 9 bids submitted on August 18, 2011, fell into three distinct groups, of which the most competitive was the subset that offered bids that were a technical tie. The report concludes that the bidding protocols and awards protocols were inefficient, with the exception of making the identity of the losers transparent.
100093 • Jul 01, 11 Jul 2, 11 BP's Lessons from BP-Macondo 04 On June 30, 2011, at a workshop sponsored by the OCS Advisory Board BP's exploration manager for the Gulf of Mexico set forth the principal lessons from the accident at the Macondo well on April 20, 2010. The lessons were grouped in five categories: 1) Prevention, Drilling and Equipment Monitoring 2) Containment, 3) Relief Wells, 4) Spill Response and 5) Crisis Management. The report notes such such future-oriented goals do not address changes ahead in the contractual relationships between contractors and the oil company and among oil companies themselves.
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MEI REPORTS ON THE ENERGY SECTOR
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1042511 • Apr 25, 11 Outlook for Mexican Oil and Gas: Policy, Commerce and Corporate 118 This paper was prepared for presentation at the New York Energy Forum on April 25, 2011. The paper provides an overview of the evolution of oil policy in Mexico, and concludes with comments on the present policy to engage operating companies under fee-per-barrel contracts with Pemex.
100007 • Jan 25, 11 Mexico's National Energy Council: Citizen Input vs. Policy Leadership 26 This report expands the scope of an earlier report published in May 2009, which focused on the qualifications of members of the National Energy Council. The revised report raises questions about the need for, and nature of, the advice that could be given to the Energy Ministry from this and another advisory body, the Consultative Forum, that were created by the Energy Reform of 2008. The Forum seeks “citizen input.” Can such advice, if given, substitute for policy leadership?
100034• Mar 24, 10 Aug 12, 10 Glitches in the Mexican Oil Sector: An Introduction In this report, glitches of three kinds are identified: gaps, ambiguities and inconsistencies. They are found at all levels of government and all levels of law: constitution, law, regulations, statutes and administrative dispositions. Such glitches negatively impact the efficient operation of the petroleum value chain, from exploration to regulation.
100033 • Mar 21, 10 Legal Structure of the Mexican Energy Sector: Demystified 22 This report provides a simplified (and demystified) description of public administration in the energy sector. The goal is quickly arrive at vantage point from which the legal and institutional landscape in which the upcoming public tenders for Pemex's performance contracts may be seen.
100005 • May 21, 09 The Perfect Monopoly in Energy 11 Fig. 1 of this report plots 14 oil producing countries along two axes: 1) commercial control of energy production (X axis: STATE vs. PRIVATE) and 2) Popular opposition to the State’s ole in the energy sector (Y axis: HIGH vs. LOW). Mexico is plotted in the quadrant of HIGH STATE, LOW OPPOSITION, and, as such, may be the only perfect monopoly in energy. The report asks about the opportunity cost to Mexico of the government’s considerable investment in maintaining a broad consensus on the state’s role in energy.
685 • Apr 23, 05 May 17, 05 Mexican energy in 2004 and its impact for 2005-06 1117 The year began with optimism both for developers and public officials in government and in the state-owned energy companies. In LNG, for example, Chevron, Marathon and Tractebel were poised to see their projects move forward, but, at year end, only Chevron’s survived. In the heated political climate, Energy Minister Felipe Calderón lost his job, as did four senior executives in Pemex, including CEO Raúl Muñoz. This report reviews events and trends of 2004 with special reference to the energy sector.
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677 • Aug 29, 04 Aug 31, 04 Mexico’s energy sector: Summer 2004 713 This report reviews developments in the institutions in Mexico that are involved in Mexico’s energy sector: Pemex, CFE, CRE, SENER, ASF, Supreme Court and Congress. The summer is memorable for the high prices caused by supply uncertainties in Iraq and Venezuela. In Mexico the second round of Multiple Service Contracts was launched amidst growing controversy. Other controversies in the summer were LNG terminals and consumer fraud allegations at Pemex-branded gasoline stations.
100399 • Oct 03, 99 Zedillo Score Card in Energy 12 This a summary of a keynote address at the British American Chamber of Commerce in Mexico City on Energy Day, Oct. 5, 1999. The address analyzed indicators of a transition in the energy sector from a command economy to a market economy. A table lists segments of the energy value chain and asks if a market proposal had been submitted and, if so, implemented. Published in the newsletter of the Chamber, pp. 16-17.
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How the President of Mexico shapes the energy sector
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100144 • Oct 09, 12 Mexican Presidents and Oil: Patterns of Politically Unhealthy Behavior 09 This report offers a critique of the pattern of Mexican presidents in inserting themselves into the Pemex news cycle. The occasion for the report is the rambling, sentimental press conference given by President Felipe Calderón on October 5, 2012, in relation to the discovery by Pemex of an oilfield at Supremus-1 in the Perdido area near the U.S.-Mexico maritime border. In the background section to the report the “victim” psychology in Mexico is explored. As for the cross-border oil agreement, Articles 4 and 6 of the Petroleum Law and incompatible with its implementation.
100130 • Jun 07, 12 The Ambassador and the Petroleum Club (Part II) 212 Ambassador Arturo Sarukhán was the keynote speaker at the innaugural luncheon of the Center for U.S. and Mexican Law and Policy, a new program of the Law Center of the University of Houston. This report is based on notes taken during his remarks on the current drivers of U.S.-Mexico diplomatic relations. The report includes a second section on topics that the speaker chose not to address.
100012 • Aug 31, 09 Calderón Presidency at the Half-Way Point 01 This report, published the day prior to the annual State of the Union Address, briefly notes the accomplishments and shortcomings of the Calderón administration in each of the years 2007, 2008 and 2009.
735 • Apr 30, 08 Benefit analysis of Calderón’s legislative proposals for oil sector 36 This report examines the benefits and shortcomings of the Mexican government's proposals for new legislation in the oil sector that were made public April 8, 2008. As to benefits, we find only two in the category of High Value, but many in the category of Directionally Correct. We find just one proposal in the category of Direcctionally Incorrect, namely, the one-company model for deepwater development in the Mexican Gulf of Mexico.
734 • Apr 12, 08 MEI Journal: Pemex Diagnostic vs. Calderón Proposals 54 By design, an MEI report deals with only one topic. An upstream subscriber asked for reports that cover multiple topics. The MEI Journal comments on DIAGNOSTIC report of Pemex, also of the Usumacinta accident, also of the interview with Juan Carlos Collado re the CRE.
733 • Mar 18, 08 MEI Journal: The Energy Counter-Reform Begins 04 A MEI Journal Report comments on multiple topics, including the counter-movement against Calderón’s energy reform proposals; the 70th Oil Expropriation Celebrartion; and Pemex’s deepwater media campaign.
721 • Oct 31, 06 Calderón's transition team vs. oil policy 1012 This report seeks to reconstruct the upstream briefings given to the Calderón transition team by Pemex executives and Energy Ministry officials. The report also takes note of advice by experts and political groups opposed to private investment in the oil sector. The situation facing the new administration is examined in the context of trends affecting the oil industry worldwide. The report reviews parameters of selected oilfields as they might be understood by economists and MBAs in the transition team. Update 1 discusses what energy officials did not tell the team.
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10014 • Jan 19, 06 Public Policy Perspective No. 10014: Rethinking Oil Policy in Mexico 013 This bilingual report offers a perspective on industrial, institutional and policy issues related to Mexico’s oil and gas industry. The report concludes that the four operating divisions of Pemex have performed below expectations for a quarter-century; and that institutions and laws are inadequate for a market-oriented, competitive and transparent administration of the oil sector.
671 • Apr 29, 04 Petroleum Day 2004: Open Season on Oil Policy and Pemex 315 This report examines the politics of Petroleum Day in Mexico, with reference to the celebrations of 2003 and 2004. Under President Fox the event is undergoing political engineering and its future importance in Mexican politics is in doubt. The report reviews the addresses and arguments of Cuauhtémoc Cárdenas on March 17 and those of Raúl Muñoz Leos and Felipe Calderón on March 18.
650 • Dec 02, 03 Dec 8, 03 Fox administration at midterm: Performance and criticism 214 This report assesses the situation of the Fox administration at the midpoint of its term, taking into account the unexpected challenges associated with the global recession and the difficult relationship with the United States. Special attention is given to the events of the third anniversary of his presidency, including the megamarcha of Nov. 27, 2003.
605 • Oct 28, 02 Fox’s energy statistics package for the Congress: Review and critique 1110 A review of the trends indicated in the statistics on the oil and power sectors provided by President Fox in his September 1, 2002 address to the Mexican Congress. It includes a review of historical and macroeconomic issues affecting the energy sector. The data from selected tables are referenced, and major trends are shown in graphs.
593 • Jul 19, 02 From lightbulb to wellhead: Upstream philosophy under Fox 17 Since early 2001 Pemex has been working on a new development strategy for gas-prone basins. To call this strategy “new” is only partly true, as the Mexican government, since 1992, has sought to create activity niches for private capital. This report examines the background and criticism of philosophy of the Multiple Service Contracts.
523 • Jul 13, 01 Presidential decree in the Electricity Sector Laws 02 Reactions to Presidential decree issued by President Fox and Ministry of Energy Ernesto Martens regarding the purchase of surplus capacity and energy by the CFE.
514 • Jun 25, 01 Raúl Muñoz’s vision of Pemex, Rice University, June 22, 2001 04 PEMEX CEO speaks at the Baker Institute at Rice University, outlining his idea that the traditional concept of service contract should be “stretched” to motivate private investors.
444 • Sep 08, 00 Fausto Alzati heads Fox Transition Team for energy 01 Biographical sketch -- Head of Fox Transition team for energy.
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371 • Sep 22, 99 Information policy as a constraint on investment in the energy sector 35 This report draws on an internal database that reports Pemex’s published data on reserves for selected fields for the Northern Region by geological basin and sub-basin.
367 • Sep 02, 99 Presidential, business and project cycles 02 Analysis of Mexican presidential cycles and the derived business cycle.
352 • Jul 02, 99 Natural gas import duty -- Reverse engines 01 Report on the mexican government decision to postpone the lifting of the natural gas import duty in reaction to the anti-dumping suit against Mexico.
54• Sep 26, 95 Zedillo’s first Sate of the Union address (September 1, 1995) Translation of first State of Union Address of President Ernesto Zedillo.
121994 • Dec 19, 94 Por qué Carlos Salinas no debe dirigir la OMC 02 REFORMA. Carlos Salinas no es un candidato viable para dirigir la nueva Organización Mundial de Comercio. Sus éxitos como Presidente al abatir la tasa de inflación y negociar un acuerdo de comercio e inversión entre México, EU y Canadá son eclipsados por fracasos de mayor magnitud en política económica. This article, published the day before the first devaluation of the peso in the post-Salinas period, was seen in the Finance Ministry as “adding firewood to the bonfire,” as a former official recalls.
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Mexico’s Energy Ministry
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100007.1 • May 29, 09 Jan 25, 11 The National Energy Council: Membership Profiles 21 This report briefly examines the membership profile the National Energy Council, a 16-member advisory body within the Energy Ministry that was created by the 2008 Energy Reform. Table 1 lists the original members; Table 2 sorts the members by the years of exprience in the energy sector. Of the 16 members, only 3 had professional experience of 25 years or more, while 6 had a background of three years or fewer.
554 • Nov 20, 01 Mexican Government Energy Program, 2001-06 14 The report reviews the contents of the 150-page document issued in October by the Energy Ministry. The report gives an annotated table of contents and an assessment of its contribution to the debate over energy policy in Mexico.
519 • Jul 06, 01 Jul 17, 02 Energy Ministry promotion of LNG in Altamira 02 Comments on press announcements related to LNG projects: 1) May 23, 2001, that an agreement had been reach between El Paso Energy and Pemex Gas to build an LNG terminal in Altamira, 2) June 28, 2001 announcing an agreement between El Paso and Shell for the same. A year later, in May 2002, the players had changed.
434 • Jul 14, 00 Energy Ministry briefing for Fox Transition Team? 02 Questions ability of Energy Ministry to give adequate explanation of real issues facing new government.
181 • Apr 14, 97 Energy Ministry market forecast for 1996-2005 01 Analysis of Energy Ministry’s 10-year forecast of the natural gas market (Prospectiva del Mercado de Gas Natural 1996-2005).
171 • Feb 14, 97 IAEE Address of Energy minister in Houston 2/12 0 Summary of an address given by Energy Secretary Jesús Reyes Heroles in Houston on February 12.
116• Nov 24, 96 Jul 17, 02 Foreseeing upstream policy in Mexico, 1996-2002 Long arrow of energy policy points upstream. Commentary on MEI graph of “From lightbulb to reservoir in Mexico”.
137 • Aug 14, 96 Ideas for Mexico’s Energy Ministry 01 In general, there is no responsible public discussion or debate about energy policyissues in Mexico. Most parties of the discussion use public forums to pressurePemex, the CFE and the Government, often by recourse to sensationalism and yellow journalism.
128• Jul 30, 96 Trip report of meeting in Energy Ministry, July 23 In a meeting with a top level official in the Energy Ministry on July 23, several topics were discussed, including the present situation in the petrochemical privatization and the outlook for upstream policy in the Zedillo administration. Also discussed was the status of the controversial 7% duty on natural gas imports from the United States (See attached report and enclosures). [Publisher’s note of 10/31/12: MEI reports were sent by regular mail during this period. We shall look for the paper files and scan them.]
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118• Jun 03, 96 London address of Jorge Eduardo Navarette *Maria
99• Mar 02, 96 Energy plan 1996-2000--summary in English *Maria
92• Feb 22, 96 SE energy balance *Maria
95• Feb 22, 96 Proposed changes in oil policy *Maria
83• Feb 13, 96 Policy role of Energy Minister in Mexico *Maria
84• Feb 13, 96 Mexico City press report on speech of Energy Minister *Maria
85• Feb 13, 96 Text of speech of Energy Minister *Maria
36• Jun 22, 95 New internal regulations of the Energy Ministry
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Mexico’s Energy Regulatory Commission (CRE)
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100118 • Feb 27, 12 Mar 29, 12 What the CRE Should Tell the Next Government? 012 This report, the first of a series concerning the information that should be provided to the government that will be installed on December 1, 2012, concerns the institutional and policy challenges that confront the Energy Reggulatory Commission (CRE) in fulfulling its mandate to regulate the electric and gas sectors on behalf of both public and private investors and consumers. These “challenges” are expressed in this report as a series of problems, each with suggestions about possible solutions.
100085 • Apr 28, 11 May 12, 11 Outlook for Natural Gas Pipeline Capacity: Who regulates the Pemex-CFE 05 Mexican power and gas customers are becoming increasingly vulnerable to brown-outs and supply shortages that are both attributable to the lack of available capacity in Mexico's two natural gas pipeline systems: those of Pemex and CFE. Immediate public policy action is needed to integrate the two existing systems and to incentivize the construction of new pipeline capacity.
734 • Apr 12, 08 MEI Journal: Pemex Diagnostic vs. Calderón Proposals 54 By design, an MEI report deals with only one topic. An upstream subscriber asked for reports that cover multiple topics. The MEI Journal comments on DIAGNOSTIC report of Pemex, also of the Usumacinta accident, also of the interview with Juan Carlos Collado re the CRE.
678 • Oct 22, 04 Natural gas pricing and procurement controversies in Mexico, 1993-2004 28 This report surveys the landscape of proposals and practices for natural gas pricing, storage and transportation since NAFTA came into effect Jan. 1, 1994. The successes and shortcomings of public and private tenders and direct negotiations are examined in relation to projects in gas, power and refinery upgrades. The report retraces some of the early history of the 1990s as background for developments during the Fox administration.
660 • Jan 27, 04 Jan 11, 05 New actors in LNG politics in Baja California 19 This report reviews the increasingly unpredictable contest in Baja California that is unfolding on two levels: the first between the three commercial competitors and the second between the federal government and local authorities. The shift occurred in Dec. 2003 when Shell joined Sempra, and ChevronTexaco secured federal support for an offshore siting that bypasses local jurisdictions.
641 • Jun 23, 03 Risk exposure in the permitting process in Mexico 212 The problematic character of permits is one that confronts all business activities in Mexico, from office space to industrial facilities. In a number of instances, permits have ignited controversy instead of resolving issues. Contractors with federal permits occasionally find themselves facing municipal and state opposition in addition to opposition from landowners, citizen groups and NGOs.
525 • Jul 21, 01 Jul 21, 02 CRE decree on LNG: Progress to July 2001 03 A report on the progress of CRE in regulating LNG activities in Mexico, including comments on a meeting held at the CRE on July 27, 2001 with some 50 prospective developers.
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513 • Jun 24, 01 CRE rethinks LNG 02 In May 2000 the CRE’s position was that LNG was an unregulated activity, open without CRE involvement. A year later, the CRE is rethinking its role, and is in the process of developing regulatory and permitting guidelines.
476 • Feb 01, 01 Questioning the “Mexico Price” for natural gas 02 On January 13th, Government and Industry settled on a $4 price for natural gas for 3 years, in effect dumping the CRE’s pricing formula.
458 • Dec 28, 00 Electric power market and CFE infrastructure in Baja California 810 A review of CFE generation infrastructure and trends in Baja California power market.
463 • Dec 14, 00 CRE call for public comments on gas industry - scope and politics 02 Report of discussions in CRE regarding scope of call for public comments on natural gas industry. Discussions held with CRE commissioners during the period December 7-14 have highlighted the possibilities as well as the limits of the Commission’s call for public comments on the natural gas industry in Mexico. The call for public comments initially was scheduled to expire December 1, but the deadline was extended to January 31 at the request of trade associations and other parties. (About a dozen comments were submitted by the initial deadline, including one by MEI.)
462 • Dec 12, 00 Midstream proposal to CRE to improve efficiency of natural gas industry 09 Document submitted to the CRE on November 30, 2000 in response to a call for public comments on the natural gas industry. Topics concern midstream gas issues of policy and pricing.
443 • Sep 04, 00 Pemex General Terms and Conditions (Pt. 1): VPM rules 01 Initial critique of the long-awaited GT&C for natural gas transportation.
436 • Aug 01, 00 Natural gas pricing crisis (du jour) and future policy options 01 Monterrey industry protests to Government about high natural gas prices. CRE grants a 25% discount on benchmark for customers with hedging contracts.
398 • Feb 16, 00 Río Bravo III project (CRE Memorandum) 01 Discussion of the IPP tender for Rio Bravo III project and the consequences of the project being built in the US side.
379 • Nov 13, 99 Gas "self-supply" associations as LDC competitors 01 Analysis of the regulatory concept of self-supply organizations in natural gas and their impact on competition. The Mexican concept of “auto-abastecimiento” (self-supply) is a peculiar feature of Mexican energy regulations, one probably created at the instance of industrialists from Monterrey, where the largest self-supply associations in gas and power are found. The feature permits companies to band together to either petition Pemex, in the case of gas, for service, where, otherwise, any one company’s load might be too small to be seen in Pemex’s searchlight.
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377 • Nov 12, 99 CRE vs. Pemex in future gas sales 01 Report on the CRE search for regulatory models of natural gas markets to have open access on PGPB pipeline system. CRE commissioners are pondering a regulatory and legal dilemma: They have been warned by outside academic consultants that unless Open Access takes place on Pemex’s pipeline system the entire market reform in both natural gas and electricity is in jeopardy. They are asking themselves the question, Should we be following the Argentine or the American model of gas deregulation?
365 • Aug 21, 99 Outlook for regulated tariffs 1 Forecast of CFE regulated tariffs until 2009 using MEI software tool, KWMex.
346 • Jun 10, 99 FERC Order 636 in Mexico? 01 Report on the CRE’s terms and conditions of the use of PGPB’s national pipeline system.
312 • Jan 30, 99 Has the CRE admitted defeat in natural gas marketing? 01 Discussion of the CRE’s view of regulatory policy in natural gas markets in Mexico, as presented at the Economist Energy Summit in Houston.
289 • Sep 19, 98 MEI meeting with Energy Commission 02 MEI staff meeting with Energy Commission officer during his visit to Houston.
222 • Sep 22, 97 CRE gas franchise award in Río Pánuco 0 Two companies challenge the CRE decision of awarding the Rio Panuco LDC to NorAm-led consortium.
220 • Sep 15, 97 CRE award in Tampico/Madero/Altamira 02 The CRE awards the Tampico-Madero-Altamira franchis zone for natural gas LDC to a consortium led by NorAm.
219 • Sep 13, 97 CRE ruling in Monterrey re: Pemex Gas pipelines 01 A critique of the policy decision of the CRE announced on August 25 to permit direct-connects by Monterrey industrial companies to Pemex Gas pipelines.
188 • May 15, 97 Hermosillo LDC award 0 CRE awards the LDC franchise in Hermosillo and surrounding areas to KN Energy.
170 • Feb 25, 97 CRE role in markets for gas 0 Natural gas markets in Mexico and the role of the CRE in introducing competition.
147• Oct 11, 96 CRE self-supply pipeline permit in Queretaro *maria
139• Aug 26, 96 Mexicali natural gas franchise *Maria
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136• Aug 14, 96 Press reports: Pemex and CRE to sell natural gas distributors *Maria
134• Aug 09, 96 CRE authorization of third party pipeline access program *maria
69• Nov 17, 95 Pemex response to unveiling of natural gas regulations *Maria
66• Nov 02, 95 Formal ceremony presenting new natural gas regulations *Maria
67• Nov 02, 95 Natural gas prices in Mexico Provides conversion factor for Pemex’s gas prices quoted in pesos/M3.
61• Oct 23, 95 The CRE’s philosophy of natural gas regulation *Maria
62• Oct 23, 95 Critique of the CRE’s review of its hearings CRE review of hearings on natural gas regulations
56• Sep 27, 95 Draft of natural gas regulations, 6/22/95 Comments on draft regulations for natural gas.
46• Aug 01, 95 White paper in English by the CRE on Mexico’s natural gas outlook *MARIA
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Mexico’s Hydrocarbon Commission (CNH)
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100128 • May 10, 12 May 12, 12 What Should the Hydrocarbons Commission Tell the Next Government? 011 The new government that takes office on Dec. 1, 2012, should be told that the Hydrocarbons Commission Act of 2008 has too many imperfections to be improved by amendment, and needs to be repealed. The government and the Congress should devise a CNH 2.0 that will clearly define the limits of its mandate. In the new law, the CNH should be involved in the development of a methodology to award full-cycle contracts on the basis of the lowest risk-based price.
100114 • Jan 19, 12 Gunfight at Perdido 02 This report provides a glimpse of the distance between Pemex and the CNH regarding the appropriateness of wildcat drilling in the Perdido Area. At a seminar at the Baker Institute at Rice University on January 18, 2012, Pemex Director General Juan José Suárez Coppel spoke matter-of-factly of the plans of Pemex to drill several, ultra-deepwater wells in Perdido. Across town, on the same day, CNH President Juan Carlos Zepeda argued, with passion, that it was premature for Pemex to risk drilling deepwater wells.
100077 • Jan 30, 11 The National Hydrocarbon Commission in 2015: A Scenario Analysis 28 Mexico's National Hydrocarbons Commission (CNH) was established by law as part of the Energy Reform package of 2008. Its function was defined as an adjunct, advisory body attached to the Energy Ministry. This report inquires, via scenario analysis, into the future of this agency. Will it become a true regulator, and, in this capacity, administer any public tenders involving access to petroleum deposits? Will it be come marginalized from policy decision-making? Or, will the status quo of 2011 continue in 2015?
100074 • Jan 14, 11 Deepwater Safety for Pemex: Guidelines of the Hydrocarbon Commission 25 On Jan. 11, 2011, Mexico’s National Hydrocarbons Commission (CNH) published its Resolution No. 12.001/10, which covers the safety precautions, standards and training that Pemex should develop for its deepwater operations. The guidelines reflect a close study of the situation at the BP Macondo well in relation to the blowout in 2010. This report comments on the strengths and weaknesses of these guidelines.
100006 • May 26, 09 Press Interview with George Baker Regarding the National Hydrocarbons 02 This report provides a summary of a telephone interview with a Mexico City-based journalist, consisting ofquestions and responses by George Baker regarding the new appointees to the National Hydrocarbon Commission (CNH) and the mandate of the commission itself. The conversation revolves around the question of Mexico eventually having a true upstream regulator.
600 • Aug 26, 02 Fox’s electric power reform: Fuss vs. philosophy 17 The reaction in Mexico City to President Vicente Fox’s August 16th proposed reform for the power sector caused an electric storm of controversy. This report sorts out philosophical, policy and polemical issues, and assesses the politics of congressional action.
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Titles of MEI reports related to Mexico’s Federal Competitiveness Commission (CFC)
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558 • Dec 24, 01 Feb 7, 02 Competition in Mexico’s motor oil market? 28 Analysis of the legal and economic arguments of Mexlub in relation to the Federal Competition Commission resolution against Pemex’s refinery unit for monopolistic practices in the motor oil and lubricants market. Update of the legal and financial status of Mexlub.
442 • Aug 29, 00 Monterrey gas markets: Consolidation vs. Competition 03 This report considers the request by Gas Natural México (GNM) to the Federal Competition Commission (CFC) to expand its market presence in Monterrey by acquiring full control of one of its local competitors, Compañía Mexicana de Gas (CMG). GNM recently acquired its seventh natural gas distribution company and is now looking to buy its eighth. Therefore, the decision by the CFC to approve or deny the merger will sharply affect the outlook for competitive markets and infrastructure investments in natural gas markets.
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Mexico’s Federal Power Utility (CFE)
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600 • Aug 26, 02 Fox’s electric power reform: Fuss vs. philosophy 17 The reaction in Mexico City to President Vicente Fox’s August 16th proposed reform for the power sector caused an electric storm of controversy. This report sorts out philosophical, policy and polemical issues, and assesses the politics of congressional action.
510 • Jun 15, 01 CFE Schedule of Project Tenders for 2001 12 Summary of the projects to be awarded through public tender by the CFE in 2001.
509 • Jun 07, 01 Thermal efficiency of CFE’s fossil fuel plants 312 CFE statistics on fuel consumption, generation and thermal efficiency for 1998.
458 • Dec 28, 00 Electric power market and CFE infrastructure in Baja California 810 A review of CFE generation infrastructure and trends in Baja California power market.
430 • Jun 27, 00 CFE fossil-fuel regional capacity (database output) 527 Database output of CFE fossil fuel power generation capacity, by region, facility and unit.
397 • Feb 04, 00 Río Bravo III project (U.S. side plant option) 01 This report discusses the Mexican Government’s proposal in February 2000 to promote cross-border power infrastructure.
396 • Feb 03, 00 CFE power tenders for 2000. 47 Details of CFE tenders for 2000 including generation and transmission projects.
350 • Jun 22, 99 Change in CFE rules for IPPs to allow private power marketing 01 Analysis of the CFE ruling that, for the first time, permits bidders in an IPP tender to build additional capacity for direct power sales to parties other than the CFE.
331 • Apr 03, 99 Pemex and CFE investment programs 01 Conference proceedings of the 5th annual symposium on energy and construction. A new publication includes the text as well as the view graphs and the clarity of the photocopy is better than the earlier texts. The presentations given in Villahermosa January 15-16 cover the investment programs of the government energy agencies for the next three years.
314 • Feb 02, 99 Alfredo Elias Ayub - new head of CFE 02 The sudden replacement of the CFE’s head, Dr. Rogelio Gasca Neri, by Lic. Alfredo Elías allows for two broad interpretations (or “lecturas” as political tea-leaf reading is called in Mexico). Policy conflict. The easiest interpretation is that there was a policy conflict between Gasca Neri and the Energy Ministry led by Luis Téllez over the management of the electric power sector. What is still surprising is that, at least outwardly, the historically weak ministry should have prevailed over the CFE in a matter of policy.
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Mexico’s Federal Power Utility (CFE) Table/ File # Published Updated Topic Pages graph
313 • Feb 01, 99 CFE investment program 1999-2007 01 Highlights of the CFE’s investment program presented at the annual congress organized by the Mexican Construction Industry Chamber of Commerce.
276 • Jun 19, 98 Thermal efficiency of CFE plants 21 MEI’s computation of thermal efficiencies for CFE’s plants. MEI is currently developing a CFE Power Plant Database. It includes basic information about each plant, such as location, year put into service, type of technology and capacity. Annual operational data are provided for generation, fuel consumption and thermal efficiency. The database will provide reports on topics such as regional patterns of generation, fuel consumption and thermal efficiency.
272 • Jun 01, 98 Competitive bidding for the Rosarito IPP? 02 Tenders for a power plant and natural gas pipeline in Rosarito.
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The Accountability Office of the Mexican Congress (ASF)
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100105 • Oct 30, 11 Making Sense of the Sanctions in Pemex E&P 79 This report examines the sanctions imposed on Sergio Guaso and two members of the team that composed the Office of New Ventures in Pemex E&P. In the three weeks following the matter becoming public (on October 11) neither Pemex nor the Government has published any official statement regarding the matter. The report examines the O&M contract issued in 2007 to Houston-based EMS Lld., which is rumored focus of the audtor’s investigation. Tables 1 and 2 are relevant press titles in English translation.
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Titles MEI reports related to energy issues related to the Mexican Supreme Court (SCJN)
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100143 • Oct 02, 12 Tesis 193/2011 ~ Jurisprudence by Contradiction 39 For more than a decade, in Guadalajara and in other cities where the CRE has issued permits for natural gas distribution, LPG interests have successfully blocked the local distribution company (LDC) from installing the pipeline infrastructure. Techniques have changed: in the late 1990s there were physical intimidation and misinformation campaigns, then a series of civil suits. At last, the Supreme Court (SCJN) stepped in, overturning a local court’s ruling that Jalisco Civil Code could justify blocking LDC construction.
582 • May 14, 02 May 16, 02 Outlook for LNG and MSC: Aftermath of Supreme Court Ruling 07 This report reviews the principal arguments of the Mexican Supreme Court related to its ruling of April 25, 2002 in relation to electric power. Two questions are asked about the future: How do these arguments affect other energy policy innovations, such as LNG and Multiple Service Contracts? What is needed for a sustainable division of powers to exist in Mexico?
581 • May 08, 02 Judges Reject Fox Energy Reform 04 According to critics, President Fox sought private investment in the electric sector by means of changing the law through modifications to regulations. On April 25, 2002, the Supreme Court invalidated Fox’s decree of May 22, 2001. This report analyzes the logic, reactions and implications of the Court’s ruling.
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The Mexican Ministry of Government Accountability (SFP)
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100147 • Oct 21, 12 Oct 22, 12 PMI TRADING HOUSE 215 PMI is one of Pemex’s competitive advantages in the global products market, and for two decades since its founding in the late 1980s has provided Pemex with profits and market efficiencies. In the final two years of the Calderón administration, there was a sequence of mishaps and missteps that damaged PMI’s reputation, morale and ability to operate a trading house. This report identifies the functions of the trading house and recommends a restructuring of PMI, preserving the PMI trading units, and renaming the remainder.
100141 • Sep 15, 12 What Should Pemex's Trading House Tell the Next Government? 411 Since 2010, morale and profits at Pemex's trading house have been falling, and experienced traders are leaving. Recent events have shown that the legal structure will not bear close scrutiny. Traders are technically employees of PMI Comercio Internacional, S.A. de C.V., a Mexican company; but they carry out their trades as agents of an offshore company with no employees. If there’s an issue with auditors, the trader has no protection. Laws and procurment rules need updating to legalize trading within Pemex.
10018 • Oct 25, 11 Global Oil Industry Puzzled by Pemex Exec Sanctions 45 MEI Public Policy Perspective No. 10018 provides a discussion for the benefit of the general reader about the personnel and institutional issues associated with sanctions of executives and managers at Pemex E&P and PMI. Policy Perspective reports are available at no cost from the website of Mexico Energy Intelligence® (www.energia.com).
10019 • Oct 25, 11 Public Policy Perspective No. 10019 - Qui Custodiet Ipsos Custodes? 03 Se trata de los efectos colaterales negativos innecesarios a sus respectivas instituciones tanto en el exterior como en el interior del pais. En Estados Unidos, los ejecutivos de Pemex con mas renombre son justamente Rocio Cardenas y Sergio Guaso, conocidos por sus habilidades profesionales--amen de su verticalidad.¿Conviene a Pemex, el gobierno de Calderón y por ende el país poner en duda estas calidades en las mentes de los socios comerciales en el extranjero? Claro que no.
100106 • Oct 24, 11 Jun 19, 12 Making Sense of PMI Exec Sanctions 28 This report examines the puzzling turn of events by which the two most well known Pemex executives, Rocío Cárdenas and Sergio Guaso, were relieved of their duties on the same day, along with members of their teams. The focus of the report is on the findings of government auditors who found fault in the pricing of coker naphtha in a series of export sales. The report concludes that the auditors acted without a grounding in the dynamics of commodity markets, and that revisions to the law are needed to protect traders.
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What to tell the next government about energy?
Table/ File # Published Updated Topic Pages graph
100142 • Sep 21, 12 Sep 24, 12 What the PRI Must Learn About Energy 48 The basic framework of a closed, Soviet-era economy did not changed under PAN rule; but there have been innovations: LNG, a cross-border hydrocarbon agreement, deepwater exploration, MSC, renewable energy technologies and one new regulatory institution, the National Hydrocarbons Commission. Table 1 provides a rough guide to the topics and issues in the energy sector that the new office-holders and presidential appointees in Pemex and CFE will have to manage.
100140 • Aug 28, 12 Aug 30, 12 What should PMI Tell the Next Government? 211 Established in the 1990s, the PMI Group of Companies serves Pemex as its trading department as well as the holding company for international assets such Pemex's 50% stake in the Deer Park refinery. The trading department was known for its highly motivated and qualified professionals. Personnel issues in 2010 and 2011, however, have shaken morale and cut into profits. This report lists measures for consideration that are aimed at restoring the productivity of the trading unit and to prevent the recurrence of the abuses of the personnel system such as those that occurred in 2010-11.
10021 • May 11, 12 What should the Hydrocarbons Commission Tell the Next Government? 08 This report argues that legal mandate of the National Hydrocarbons Commission, which was created by the Energy Reform of 2008, is inadequate to cope with the challeges of regulating Pemex’s deepwater operations; and that new legislation is needed.
100128 • May 10, 12 May 12, 12 What Should the Hydrocarbons Commission Tell the Next Government? 011 The new government that takes office on Dec. 1, 2012, should be told that the Hydrocarbons Commission Act of 2008 has too many imperfections to be improved by amendment, and needs to be repealed. The government and the Congress should devise a CNH 2.0 that will clearly define the limits of its mandate. In the new law, the CNH should be involved in the development of a methodology to award full-cycle contracts on the basis of the lowest risk-based price.
100118 • Feb 27, 12 Mar 29, 12 What the CRE Should Tell the Next Government? 012 This report, the first of a series concerning the information that should be provided to the government that will be installed on December 1, 2012, concerns the institutional and policy challenges that confront the Energy Reggulatory Commission (CRE) in fulfulling its mandate to regulate the electric and gas sectors on behalf of both public and private investors and consumers. These “challenges” are expressed in this report as a series of problems, each with suggestions about possible solutions.
437 • Aug 03, 00 Challenges in energy policy for the incoming Fox Government 01 Discussion of energy policy bottlenecks unresolved by Zedillo Administration. Proposed 4 steps for the Fox administration: 1) To create real competition in natural gas transportation and marketing; 2) To get real information about Mexico's petroleum resource base; 3) To implement the Zedillo electric power restructuring initiative; 4) To sell off Pemex's petrochemical units.
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What to tell the next government about energy? Table/ File # Published Updated Topic Pages graph
360 • Aug 06, 99 “Mexico’s Energy Sector: Challenges for 21st Century’” 0 Analysis of a paper presented by Energy Undersecretary Jorge Chavez at the luncheon program sponsored by the Interamerican Chamber of Commerce, held in Houston on August 6, 1999.
011794 • Jan 17, 94 Challenges in Petroleum Policy for the Next President of Mexico 43 An extensive review of the situation of the oil and gas industry in the early 1990s. The call for a regulatory framework for natural gas anticipated the Natural Gas Act of 1994 and the restructuring of the Energy Regulatory Commission. Published in Oil & Gas Journal (Jan. 17, 1994, pp. 33-39)
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Governance in Pemex and the Oil Sector
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100092 • Jun 27, 11 Public Oversight of Oilfield Services, Pipeline and EPC Procurement 012 This report examines the ways in which companies and governments seek to procure goods, services and investments--and the ways in which things can go wrong. Drawing on examples as diverse as the BP-Macondo accident and Pemex refinery upgrades, the report seeks to discover lessons and caveats that apply to public and private procurement in Mexico and elsewhere. The report comments on the procurement programs of Pemex E&P, and asks if the rules are suitable to upgrades to refineries.
764 • Dec 01, 10 Pemex’s EP Contract Model: Board Objections and Concerns 29 This report examines the arguments and concerns of two outside board members, Rogelio Gasca and Fluvio Ruiz, in relation to the voting on November 24, 2010, on the EP Contract Model. Dr. Gasca was alone in voting against approval of the contact model; while Dr. Ruiz voiced concerns about how the model should be implemented. Table 1 compares the concepts of the EP Contract to those of the Multiple Service Contract (MSC).
100068 • Nov 27, 10 Pemex’s EP Contract: The Voting by the Corporate Board 15 This report draws principally on the documentation related to the voting at the session of November 24, 2010, of the Pemex Board of Directors. At this session the Pemex EP Contract Model received unanimous support save for the one dissenting vote of Rogelio Gasca Neri. This report reviews his legal and economic arguments against approval of the contract model.
100057 • Sep 15, 10 Value-creation as a goal shared by Pemex and IOC/NOCs 01 This report notes that an oil company that is the operator of a field normally receives economic value from a major commercial discovery, such as new lines of credit and greater investor interest. In Mexico, in contrast, there is not yet a way to allow an operator in an upstream service company to receive such benefits from a commercial discovery.
100056 • Sep 08, 10 Sep 16, 10 Double Discourse in Pemex Governance 311 This portfolio report contains an 11-page assessment of the primary, secondary and "transcendental" issues facing Pemex governance asof September 1, 2010. The primary issue concerns ultimate accountability for Pemex decisions and the role--if at all--that the Pemex corporate board will have in such decisions. The report examines the controversy surrounding the restructuring of Pemex, and identifies issues that could be taken into account such as the reestablishment of a VP for Exploration in Pemex E&P.
762 • Aug 13, 10 Outlook for Corporate Governance in Pemex 109 This report assesses the outlook for corporate governance in Pemex in the light of the controversial appointments in July 2010 to the boards of directors of the Pemex operating units. The report is also informed by the findings of the OECD report on Pemex corporate governance which were contained in a report released in late June 2010.
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Governance in Pemex and the Oil Sector Table/ File # Published Updated Topic Pages graph
100051 • Jul 22, 10 Staffing the Boards of Directors of Pemex's Operating Units 16 This market note reviews the committee assignments of the three new outside board members of Pemex subsidiaries that were appointed July 1, 2010. The report gives special attention to the appointment of Jaime Zabludovsky to the Procurement Commitee of Pemex E&P; it is this committee that will have to first approve the new upstream contract model. (Includes 5 tables.)
100003 • Mar 12, 09 Softball in the Mexican Senate: Confirmation Hearings of Pemex Outside 02 This report comments on the Senate confirmation hearings of the four nominees that had been proposed by President Felipe Calderón on February 20, 2009. The report notes that the questions asked by senators were soft ones, and that a nominee’s views on hard questions were avoided (we list five hypothetical quesitons that could have been asked, such as a candidate’s views on joint development of cross-border oilfields and his views on the role, if any, of IOCs in developing deepwater resources in Mexico.
725 • Feb 13, 07 Mar 10, 08 Damage control of reports of Cantarell field decline 212 Since early 2004, the most sensitive topic in the energy sector has been the decline of Cantarell, Mexico's largest oilfield. Pemex's position is that the rate of decline has been foreseen and is being managed. Reports to the contrary are met with a sharp rebuttal. This report examines the events set in motion by the Wall Street Journal story run on Jan. 27, 2007 that Cantarell's decline was more serious than had been reported. The report analyzes the information and messages of the press briefing held on Feb. 7 of Pemex’s new Director General, Jesús Reyes Heroles.
706 • Feb 20, 06 Aug 2, 07 The search for solutions in Cantarell: 2006 and beyond 112 This report offers two interpretations, technical and political, of the internal Pemex study that was leaked to the Mexican press in November 2005 and which described the possibility that a decline in the output of the Akal field of the Cantarell Complex could occur sooner and more rapidly than had previously been believed. While the study's review of geophysical data has the look and feel of scientific rigor, its presentation will not influence policymakers and timing of the leak suggests a political agenda.
703 • Nov 27, 05 Mexico's undiscovered petroleum resources: the science and the politics 28 This report provides new information and commentary on Pemex's 2005 estimate for undiscovered petroleum resources. The estimate is also to be understood in the light of political and cultural traditions relating to the use of quantified data in Mexico. The Pemex estimate is contrasted with research findings reported by the Rand Corporation in 1980.
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Pemex Corporate
Table/ File # Published Updated Topic Pages graph
100116 • Jan 29, 12 Pemex's Outsourcing Philosophy 26 This report examines the logic of Pemex's outsourcing philosophy in which three innovative contract models are employed: Field Labs, Performance (or Incentive) Contracts and Transactional Service Contracts. Pemex aspires to employ these contracts in order to pass through a transitional phase on its path toward the goal of being an internationally competitive oil company. The report unpacks Pemex’s outsourcing matrix, and offers a critique of its underlying philosophy.
100047 • Jun 03, 10 Pemex's 5-year business plan, 2010-2014: What are the Drivers? 01 This report asks about Pemex’s use of the term “business plan.” The reference is to a 500-page, confidential plan for the period 2010-14. The public summary and press release, instead of listing decisions that had been made, listed 23 “challenges” in relation to which future decisions would be made. Pemex says nothing about the lines of business that it wishes to enter or leave, the assets which it hopes to acquire or divest, or the commercial relationships that it aspires to change or create, at home or abroad.
100016 • Oct 15, 09 Suárez Coppel Testifies to Congress 01 This report offers a critique of the testimony given by Juan José Suárez Coppel on Oct. 14, 2009, in his first appearance as director general of Pemex. The report notes that in contrast to his initial comments of Sept. 7, 2009, when he had no positive remarks to make about his predecessor; on Oct. 14 he testified to the Congress that everything in Pemex was in order. There is a link to 50 pages of transcript on the web portal of the Lower House: http://cronica.diputados.gob.mx.
757 • Sep 26, 09 Juan José Suárez Coppel in Pemex: Change Agent? 412 This report examines background and policy agenda behind the unexpected appointment of Juan José Suárez Coppel on Sept. 7, 2009, as director general of Pemex. This report examines the cases against Reyes Heroles and the concerns in circulation about the ability of Suárez Coppel to make a meaningful difference in implementing the reform legislation and in pushing the energy policy agenda of President Calderón.
615 • Dec 03, 02 Dec 13, 02 Raúl Muñoz Leos in the University of Texas at Austin 06 A review of the issues addressed in the lecture given by Pemex CEO Raúl Muñoz Leos at the University of Texas in Austin on November 21, 2002. The topics of the presentation included upstream, refining, petrochemicals and multiple service contracts.
565 • Jan 25, 02 Enron and Pemex: similarities and differences 07 This report discusses points of comparison and difference between Enron and Pemex in matters of environmental liability, financial reporting and political connections.
553 • Nov 16, 01 Pemex corporate strategy as seen in the public record 06 This report consolidates information made public by Pemex about its strategic directions and programs. The logic of the “multiple service contract” is described, and the political obstacles to success are identified.
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Pemex Corporate Table/ File # Published Updated Topic Pages graph
511 • Jun 26, 01 Dec 16, 03 Baker Institute and Mexico 03 Review of the politics of a program held at Rice University on June 22, 2001, attended by Raúl Muñoz Leos, CEO of Pemex, José Antonio Ceballos, SVP Operations, Thomas F. McLarty, Amy Jaffed and others. It was on this occasion that the Pemex CEO said “Pemex has to learn to be more ambitious.”
501 • Jun 04, 01 Newest Pemex Board of Directors 12 Report on new Pemex Board of Directors after May 7, 2001.
490 • Apr 15, 01 Overview of Pemex programs 08 Survey of Pemex operations in the upstream and midstream from the perspective of business development. Reviews the EXITEP Pemex industry exposition. Includes Pemex PowerPoint slides.
484 • Mar 13, 01 PEMEX as “best oil company in the world” 02 Critique of President Fox’s statement that he wants to make Pemex “the best oil company in the world.” Deconstruction of myths of Pemex’s importance in the Mexican economy.
480 • Mar 07, 01 Fox names outside members to corporate Board of Directors of Pemex 06 On February 13, 2001, President Fox named four prominent Mexican Business leaders to Pemex's Board of Directors––thereby igniting a firestorm ofcontroversy about the wisdom, legality and even constitutionality of the nominations.Two of the four business leaders named were brought to fame during the controversial Salinas Administration (1988-94): Carlos Slim of Telmex and Alfonso Romo of GrupoPulsar. In addition, Lorenzo Zambrano of Cemex and Rogelio Rebolledo of Frito-Lay Latin America.
478 • Feb 12, 01 Recentralization of Pemex governance 02 A report of Pemex plans for reorganization, with emphasis on Raúl Muñoz’s proposal for a centralized model of governance.
469 • Jan 28, 01 Past, prospective and future Pemex CEOs 04 A review of the process by which the new head of Pemex was selected and by which others were passed over.
422 • May 30, 00 Notes for Pemex’s 10 year plan, 2001-2010 021 A Pemex-centric view of markets and Mexican governmental and regulatory agencies.
410 • Apr 05, 00 Two Pemex CEO resignations: Díaz Serrano & Lajous 02 A comparison of the management performance of 2 Pemex CEOs, Jorge Díaz Serrano and Adrián Lajous
406 • Mar 27, 00 Pemex administration under new CEO Rogelio Montemayor 01 Discusses the possible upcoming changes of key personnel in Pemex under the tenure of Rogelio Montemayor. Also reviews the role of the Oil Union in the forthcoming presidential elections.
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Pemex Corporate Table/ File # Published Updated Topic Pages graph
403 • Mar 22, 00 Resignation of Adrián Lajous from Pemex (Part 4) 12 Discusses the different views in Mexican energy circles, including Pemex, about the resignation of Adrian Lajous as head of Pemex.
392 • Jan 19, 00 Criticism of management performance of Adrían Lajous at Pemex. 01 Discussion of Lajous resignation and management of Pemex and its main projects. The resignation of Adrián Lajous as CEO of Pemex on December 14, 1999 deserves analysis, not only in terms of its origins, political messages and implications for the July 6, 2000 presidential elections [MEI 00-391], but also in relation to (a) the management of Pemex and (b) Government strategy vis-à-vis OPEC.
391 • Jan 18, 00 Political messages in the removal of Lajous from Pemex? 010 Discussion of the political messages behind the resignation of Adrian Lajous from Pemex. The attached report attempts to apply a general rule of Mexican politics that changes in key personnel contain political messages to the topic of the resignation of Adrián Lajous from Pemex on December 14, 1999.
386 • Dec 15, 99 Resignation of Adrían Lajous as CEO of PEMEX 01 Discussion of the possible motives of the resignation of Adrian Lajous as CEO of Pemex. Three scenarios are analyzed.
368 • Sep 03, 99 Pemex Board of Directors 02 Analysis of the organization of Pemex’s Board of Directors and its limited role in energy policy design.
349 • Jun 22, 99 Pemex CEO talk to AAPG on Mexican oil reserves 0 Analysis of a document presented by Adrian Lajous before a joint meeting in Mexico of the AAPG and AIPM (Asociación de Ingenieros Petroleros de México) in mid-April.
324 • Mar 01, 99 Lajous comments on private investment outlook 01 Analysis of Lajous views about private investment in the upstream.
247 • Jan 30, 98 Pemex Capital Budget Briefing, Puebla, Jan. 16-17, 1998 02 A review of Pemex E&P investment program and projects. Of the total Pemex investment budget, some 70% will be dedicated to E&P projects (an increase over the typical 60%). The investment budget of Pemex exceeds the ability of the Mexican construction, equipment and service companies to meet the requirements of a $7-8 billion dollar investment budget. This concern was not echoed in our conversations with the CFE in January, but the sheer size of the Pemex budget is likely to result in a shortage of Mexican suppliers and contractors for the CFE
180 • Apr 06, 97 Annual operations report for 1996 0 Description of Pemex’s annual operations report and statistical appendix for 1996 (Memoria de Labores 1997).
143• Sep 09, 96 Pemex 1995 annual report *Maria
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Pemex Corporate Table/ File # Published Updated Topic Pages graph
94• Feb 22, 96 Lajous’s speech on Feb. 9, 1996, at unveiling of energy plan Comments on address by Pemex CEO Adrián Lajous on occasion of announcement of energy plan for Mexico.
80• Jan 19, 96 Lajous’s address to a meeting of the Interstate Nat. Gas Ass. of Amer. *Maria
69• Nov 17, 95 Pemex response to unveiling of natural gas regulations *Maria
65• Nov 02, 95 Pemex 1994 annual report *Maria
47• Aug 16, 95 Pemex 1994 statistical yearbook Comments on Pemex’s Memoria de Labores for 1994.
100183 • Oct 01, 83 Mexico's Petroleum Sector: Performance and Prospect 290 30+ This book by George Baker provides an overview of Pemex's performance during the Oil Boom of 1976-81, employing statistics that at the time were not widely available. Attitudes toward Mexico by the Reagan administration are reported. Based on interviews in Japan, the author examines the nascent Japanese-Mexican oil trade. (Tulsa, Pennwell, 1984). Bibliographical note and Index.
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Pemex Corporate
Table/ File # Published Updated Topic Pages graph
100116 • Jan 29, 12 Pemex's Outsourcing Philosophy 26 This report examines the logic of Pemex's outsourcing philosophy in which three innovative contract models are employed: Field Labs, Performance (or Incentive) Contracts and Transactional Service Contracts. Pemex aspires to employ these contracts in order to pass through a transitional phase on its path toward the goal of being an internationally competitive oil company. The report unpacks Pemex’s outsourcing matrix, and offers a critique of its underlying philosophy.
100047 • Jun 03, 10 Pemex's 5-year business plan, 2010-2014: What are the Drivers? 01 This report asks about Pemex’s use of the term “business plan.” The reference is to a 500-page, confidential plan for the period 2010-14. The public summary and press release, instead of listing decisions that had been made, listed 23 “challenges” in relation to which future decisions would be made. Pemex says nothing about the lines of business that it wishes to enter or leave, the assets which it hopes to acquire or divest, or the commercial relationships that it aspires to change or create, at home or abroad.
100016 • Oct 15, 09 Suárez Coppel Testifies to Congress 01 This report offers a critique of the testimony given by Juan José Suárez Coppel on Oct. 14, 2009, in his first appearance as director general of Pemex. The report notes that in contrast to his initial comments of Sept. 7, 2009, when he had no positive remarks to make about his predecessor; on Oct. 14 he testified to the Congress that everything in Pemex was in order. There is a link to 50 pages of transcript on the web portal of the Lower House: http://cronica.diputados.gob.mx.
757 • Sep 26, 09 Juan José Suárez Coppel in Pemex: Change Agent? 412 This report examines background and policy agenda behind the unexpected appointment of Juan José Suárez Coppel on Sept. 7, 2009, as director general of Pemex. This report examines the cases against Reyes Heroles and the concerns in circulation about the ability of Suárez Coppel to make a meaningful difference in implementing the reform legislation and in pushing the energy policy agenda of President Calderón.
615 • Dec 03, 02 Dec 13, 02 Raúl Muñoz Leos in the University of Texas at Austin 06 A review of the issues addressed in the lecture given by Pemex CEO Raúl Muñoz Leos at the University of Texas in Austin on November 21, 2002. The topics of the presentation included upstream, refining, petrochemicals and multiple service contracts.
565 • Jan 25, 02 Enron and Pemex: similarities and differences 07 This report discusses points of comparison and difference between Enron and Pemex in matters of environmental liability, financial reporting and political connections.
553 • Nov 16, 01 Pemex corporate strategy as seen in the public record 06 This report consolidates information made public by Pemex about its strategic directions and programs. The logic of the “multiple service contract” is described, and the political obstacles to success are identified.
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Pemex Corporate Table/ File # Published Updated Topic Pages graph
511 • Jun 26, 01 Dec 16, 03 Baker Institute and Mexico 03 Review of the politics of a program held at Rice University on June 22, 2001, attended by Raúl Muñoz Leos, CEO of Pemex, José Antonio Ceballos, SVP Operations, Thomas F. McLarty, Amy Jaffed and others. It was on this occasion that the Pemex CEO said “Pemex has to learn to be more ambitious.”
501 • Jun 04, 01 Newest Pemex Board of Directors 12 Report on new Pemex Board of Directors after May 7, 2001.
490 • Apr 15, 01 Overview of Pemex programs 08 Survey of Pemex operations in the upstream and midstream from the perspective of business development. Reviews the EXITEP Pemex industry exposition. Includes Pemex PowerPoint slides.
484 • Mar 13, 01 PEMEX as “best oil company in the world” 02 Critique of President Fox’s statement that he wants to make Pemex “the best oil company in the world.” Deconstruction of myths of Pemex’s importance in the Mexican economy.
480 • Mar 07, 01 Fox names outside members to corporate Board of Directors of Pemex 06 On February 13, 2001, President Fox named four prominent Mexican Business leaders to Pemex's Board of Directors––thereby igniting a firestorm ofcontroversy about the wisdom, legality and even constitutionality of the nominations.Two of the four business leaders named were brought to fame during the controversial Salinas Administration (1988-94): Carlos Slim of Telmex and Alfonso Romo of GrupoPulsar. In addition, Lorenzo Zambrano of Cemex and Rogelio Rebolledo of Frito-Lay Latin America.
478 • Feb 12, 01 Recentralization of Pemex governance 02 A report of Pemex plans for reorganization, with emphasis on Raúl Muñoz’s proposal for a centralized model of governance.
469 • Jan 28, 01 Past, prospective and future Pemex CEOs 04 A review of the process by which the new head of Pemex was selected and by which others were passed over.
422 • May 30, 00 Notes for Pemex’s 10 year plan, 2001-2010 021 A Pemex-centric view of markets and Mexican governmental and regulatory agencies.
410 • Apr 05, 00 Two Pemex CEO resignations: Díaz Serrano & Lajous 02 A comparison of the management performance of 2 Pemex CEOs, Jorge Díaz Serrano and Adrián Lajous
406 • Mar 27, 00 Pemex administration under new CEO Rogelio Montemayor 01 Discusses the possible upcoming changes of key personnel in Pemex under the tenure of Rogelio Montemayor. Also reviews the role of the Oil Union in the forthcoming presidential elections.
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Pemex Corporate Table/ File # Published Updated Topic Pages graph
403 • Mar 22, 00 Resignation of Adrián Lajous from Pemex (Part 4) 12 Discusses the different views in Mexican energy circles, including Pemex, about the resignation of Adrian Lajous as head of Pemex.
392 • Jan 19, 00 Criticism of management performance of Adrían Lajous at Pemex. 01 Discussion of Lajous resignation and management of Pemex and its main projects. The resignation of Adrián Lajous as CEO of Pemex on December 14, 1999 deserves analysis, not only in terms of its origins, political messages and implications for the July 6, 2000 presidential elections [MEI 00-391], but also in relation to (a) the management of Pemex and (b) Government strategy vis-à-vis OPEC.
391 • Jan 18, 00 Political messages in the removal of Lajous from Pemex? 010 Discussion of the political messages behind the resignation of Adrian Lajous from Pemex. The attached report attempts to apply a general rule of Mexican politics that changes in key personnel contain political messages to the topic of the resignation of Adrián Lajous from Pemex on December 14, 1999.
386 • Dec 15, 99 Resignation of Adrían Lajous as CEO of PEMEX 01 Discussion of the possible motives of the resignation of Adrian Lajous as CEO of Pemex. Three scenarios are analyzed.
368 • Sep 03, 99 Pemex Board of Directors 02 Analysis of the organization of Pemex’s Board of Directors and its limited role in energy policy design.
349 • Jun 22, 99 Pemex CEO talk to AAPG on Mexican oil reserves 0 Analysis of a document presented by Adrian Lajous before a joint meeting in Mexico of the AAPG and AIPM (Asociación de Ingenieros Petroleros de México) in mid-April.
324 • Mar 01, 99 Lajous comments on private investment outlook 01 Analysis of Lajous views about private investment in the upstream.
247 • Jan 30, 98 Pemex Capital Budget Briefing, Puebla, Jan. 16-17, 1998 02 A review of Pemex E&P investment program and projects. Of the total Pemex investment budget, some 70% will be dedicated to E&P projects (an increase over the typical 60%). The investment budget of Pemex exceeds the ability of the Mexican construction, equipment and service companies to meet the requirements of a $7-8 billion dollar investment budget. This concern was not echoed in our conversations with the CFE in January, but the sheer size of the Pemex budget is likely to result in a shortage of Mexican suppliers and contractors for the CFE
180 • Apr 06, 97 Annual operations report for 1996 0 Description of Pemex’s annual operations report and statistical appendix for 1996 (Memoria de Labores 1997).
143• Sep 09, 96 Pemex 1995 annual report *Maria
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Pemex Corporate Table/ File # Published Updated Topic Pages graph
94• Feb 22, 96 Lajous’s speech on Feb. 9, 1996, at unveiling of energy plan Comments on address by Pemex CEO Adrián Lajous on occasion of announcement of energy plan for Mexico.
80• Jan 19, 96 Lajous’s address to a meeting of the Interstate Nat. Gas Ass. of Amer. *Maria
69• Nov 17, 95 Pemex response to unveiling of natural gas regulations *Maria
65• Nov 02, 95 Pemex 1994 annual report *Maria
47• Aug 16, 95 Pemex 1994 statistical yearbook Comments on Pemex’s Memoria de Labores for 1994.
100183 • Oct 01, 83 Mexico's Petroleum Sector: Performance and Prospect 290 30+ This book by George Baker provides an overview of Pemex's performance during the Oil Boom of 1976-81, employing statistics that at the time were not widely available. Attitudes toward Mexico by the Reagan administration are reported. Based on interviews in Japan, the author examines the nascent Japanese-Mexican oil trade. (Tulsa, Pennwell, 1984). Bibliographical note and Index.
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The PMI Group of Companies
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100147 • Oct 21, 12 Oct 22, 12 PMI TRADING HOUSE 215 PMI is one of Pemex’s competitive advantages in the global products market, and for two decades since its founding in the late 1980s has provided Pemex with profits and market efficiencies. In the final two years of the Calderón administration, there was a sequence of mishaps and missteps that damaged PMI’s reputation, morale and ability to operate a trading house. This report identifies the functions of the trading house and recommends a restructuring of PMI, preserving the PMI trading units, and renaming the remainder.
100141 • Sep 15, 12 What Should Pemex's Trading House Tell the Next Government? 411 Since 2010, morale and profits at Pemex's trading house have been falling, and experienced traders are leaving. Recent events have shown that the legal structure will not bear close scrutiny. Traders are technically employees of PMI Comercio Internacional, S.A. de C.V., a Mexican company; but they carry out their trades as agents of an offshore company with no employees. If there’s an issue with auditors, the trader has no protection. Laws and procurment rules need updating to legalize trading within Pemex.
10024 • Sep 04, 12 The Mexican Controversy About PMI 210 This Public Policy Perspective is meant to defend the PMI concept against critics who equate the complexity of the legal structure of its offshore affiliates with corruption and mismanagement. The logic of the PMI initiative in the late 1980s is explained; and the evolution and current structure of the PMI Group of Companies is shown. The report reviews the principal criticisms against the PMI organization, but adds one more: PMI has done a terrible job of public relations. PMI’s bad press in Mexico is its own fault.
100106 • Oct 24, 11 Jun 19, 12 Making Sense of PMI Exec Sanctions 28 This report examines the puzzling turn of events by which the two most well known Pemex executives, Rocío Cárdenas and Sergio Guaso, were relieved of their duties on the same day, along with members of their teams. The focus of the report is on the findings of government auditors who found fault in the pricing of coker naphtha in a series of export sales. The report concludes that the auditors acted without a grounding in the dynamics of commodity markets, and that revisions to the law are needed to protect traders.
524 • Jul 27, 01 Pemex product imports in 2000 35 Review of Pemex gasoline and diesel imports, by region and customs district, in the year 2000.
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Pemex Exploration & Production (PEP)
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102208 • Oct 22, 08 Mexico's agenda for Exploration and Reserve Growth, 2008-2020 19 This report, originally designated MEI Discussion Paper 08-001, evaluates the energy reform legislation of 2008 from the perspective of oil exploration. The question is raised about the extent to which Mexican authorities have learned the lessons of the oil-market collapse of 1985-87. It is noted that in these years, when IOCs cut staff--by as much as a million workers industry-wide--Pemex’s staffing level grew.
708 • Mar 31, 06 Pemex's regional reserve replacement record 136 This report, based on public data, examines the performance at the regional level of Pemex's exploration and field development programs. Calculations for crude oil and natural gas provide values for the "integral" reserve-replacement ratios. Some of the results are higher, others lower, than the ratios reported by Pemex for the national average. 13 tables.
659 • Dec 30, 03 Pemex’s offshore platform program, 2003-07 66 This report provides an overview of Pemex’s ambitious offshore platform program for the second half of the Fox administration. Table 1 provides a breakdown of planned investments in platforms and pipelines, by Pemex region. Tables 2-4 give a 10-year outlook for Ku-Maloob-Zaap. Table 5 provides a preliminary list of proposed platforms in all regions.
575 • Sep 06, 02 Project management capacity in Pemex: From Cantarell to MSC 19 The report asks about the history and future of the outsourcing of project supervision in Pemex, taking Cantarell development projects and the proposed MSC program as examples. The report concludes that to the extent such outsourcing is needed at all, then it applies to oil projects more than to gas basins.
559 • Dec 29, 01 Basic Transfer Pricing for Energy Companies in Mexico 113 An introduction to the theory and practice of transfer pricing, with an emphasis on energy firms. This 12-page report provides an overview of the regulatory framework governing transfer pricing rules in Mexico and an appendix that describes the associated paperwork and reporting requirements of Mexican tax authorities.
537 • Aug 27, 01 Field trip to Pemex infrastructure 07 This report reviews highlights of visits to Pemex facilities, including a trip to the Cantarell Project infrastructure on August 17, 2001. The trip included a visit to Akal-C, the FSO ship Ta’kunah and the onshore nitrogen plant.
485 • Mar 16, 01 Pemex E&P Investment Program for 2001 24 Analysis of Pemex E&P investment program presented at the Annual meeting of the energy and industrial sector of the Mexican Chamber of the Construction Industry, held in the city of Monterrey on February 17, 2001.
466 • Dec 20, 00 Estimation of Pemex hydrocarbon production, by basin 24 A summary report of Pemex oil and gas production by basin.
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449 • Oct 05, 00 Estimating unit costs in Pemex’s Strategic Gas Program (PEG) 2 Analysis of cost and cash-flow projections of Pemex Exploration & Production for its Strategic Gas program, 2000-2014.
445 • Sep 12, 00 Pemex’s Strategic Gas Program (Pt. 2) Overview 68 Reviews basic production and import- substitution goals of 8-year program.
428 • Jun 15, 00 Upstream outlook, 2000-2002 01 Reviews the upstream policy agenda for the next government. With the change of government scheduled for Dec. 1, 2000, the eternal questions reappear: (1) Will there be a spontaneous change of heart about upstream policy?, (2) Is there anything to be done in the next 12 months to facilitate the implementation of any actual change of heart regarding the upstream, midstream or downstream? While the answer to the first question is a qualified “no,” the answer to the second is a qualified “yes.”
423 • Jun 14, 00 Pemex’s Strategic Gas Program (PEG). Attached article re Macuspana 69 Article by Fabio Barbosa on Pemex’s strategic gas program, translated by James L. Wilson.
417 • May 01, 00 Oil and gas output in 1999, by basin and selected fields 01 Database output of Pemex’s data for some 30 fields for oil and gas production in 1999.
400 • Feb 29, 00 Pemex operational statistics, Dececember 1998-1999 14 Reports monthly statistics of Pemex production, sales and trade for 1999.
399 • Feb 24, 00 Inventory of sedimentary formations by hydrocarbon basin 95 This report provides a tabulation of Mexico’s petroleum producing formations, by basin. This report provides tables on Mexico’s petroleum-producing formations. A geological formation is a stretch of rock long enough to be mapped with properties that are associated with a common depositional history and environment. A knowledge of Mexico’s real oil and gas potential therefore will not be provided by Pemex or the Government, as such an estimate would require factoring in the production efficiencies of private sector producers, an intellectual exercise that today is off-limits.
385 • Dec 20, 99 Pemex natural gas production, by basin and reported field, 1989-98 29 This report provides an analysis of Pemex natural gas production, by basin and reported field, 1989-98. As Pemex does not provide production information by basin, this report is based on our internal matching of fields and basins.
375 • Oct 26, 99 Oil production, by basin, 1989-98 35 Report on oil production statistics by geological basin for the period 1989-1998. The tables were presented at the 1999 Energy Day sponsored by the British Chamber of Commerce of Mexico.
361 • Aug 07, 99 Pioneers in Mexican geophysics after 1938 02 Profile of Santos Figueroa, a prominent figure of Pemex’s initial exploration efforts.
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Pemex Exploration & Production (PEP) Table/ File # Published Updated Topic Pages graph
357 • Jul 29, 99 MEI inventory of Pemex oil and gas fields: Northern fields 114 This report is a preliminary output from an MEI database of Pemex oil and gas fields. The 164 fields are those of the Burgos Basin and Sabinas Basin, which, in the database, are grouped together under the heading of Northern Border E&P Region. The goal of this database is to capture data on the basic geology, location, type, discovery year and cumulative production of each field..
354 • Jul 23, 99 Media crisis over Cantarell Project 01 Report about the rumors and allegations of poor management and corruption in the development of the Cantarell project.
347 • Jun 26, 99 Alphabetical listing and classification of Pemex fields 01 Presents MEI’s classification of Mexican oil and gas fields in a form useful to the explorationist.
336 • Apr 22, 99 Pemex’s new 2-volume study of Mexico’s hydrocarbon reserves 1 Report on new publication by Pemex on reserves by 3-P system.
329 • Mar 31, 99 New Pemex oil and gas reserve estimates 7 Report on the recently issued volumes on Pemex’s reserves.
327 • Mar 14, 99 Downward values for Pemex’s oil reserves 01 This report discusses the first downward revisions to Pemex’s oil and gas reserves during the time of Adrián Lajous as Director General.
325 • Mar 02, 99 Crude Oil reserve assessments 01 Comments on the philosophy and practice of resource management of hydrocarbons in Mexico.
315• Feb 01, 99 PEMEX E&P investment program
Reviews the Pemex E&P investment program presented at the annual Energy and Industry congress held January 15-16, 1999 in Villahermosa, Tabasco.
304 • Nov 29, 98 PEMEX EOR project: comparative economics 02 Economics of the EOR project for nitrogen injection in Cantarell field.
258 • Apr 08, 98 Burgos Basin geology 1 Discussion of Pemex’s reporting practices of reserves and elaboration of basin maps.
249 • Feb 27, 98 New study of hydrocarbon for Reforma region 0 Preliminary information on the new study of hydrocarbon reserves in Reforma region.
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Pemex Exploration & Production (PEP) Table/ File # Published Updated Topic Pages graph
239 • Dec 20, 97 Outlook for Upstream Business Development: 1998-2002 02 NAFTA, which was then being negotiated, was a complete failure from the perspective of U.S. and Canadian producers who hoped that there might be some negotiated mechanism that would offer them business opportunities as producers. Nevertheless, the Procurement Chapter of NAFTA established mechanisms that gave international equipment vendors and contractors a better future as suppliers to Pemex and the CFE. Producers, then as now, are left out of the picture.
215 • Aug 22, 97 Upstream production contract consultants 02 A discussion of upstream production practices and policies in Mexico.
207 • Jul 25, 97 Burgos Basin development program 02 Review of Pemex E&P program for the development of the Burgos basin.
183 • Apr 15, 97 Burgos Basin and the Rule of 9% 02 Announcement of the winner for drilling and infrastructure contract for the Burgos basin project.
175 • Mar 14, 97 Cantarell (NE offshore) oil and gas recovery factors 21 New Pemex methodology for hydrocarbon reserves in the Campeche area.
142• Sep 09, 96 Pemex awards E&P contract to Norwegian firm *Maria
119• Jun 04, 96 Logical role of private sector in hydrocarbon production *Maria
109• May 15, 96 Pemex offshore oil and gas production *Maria
107• May 02, 96 Pemex capital expenditures, E&P Offshore and E&P Products *Maria
93• Feb 22, 96 E&P program of Pemex, 1995-2000 *Maria
032493 • Mar 24, 93 Such Progress in Mexico's Oil Patch Is Welcome 01 This op-ed article by George Baker describes innovative steps by Pemex during the early 1990s, such as the award of a turnkey drilling contract to Triton Engineering in February, 1991, the purpose of which was to seek international performance standards. Other measures, such as the Shell-Pemex joint ventures, are taken as indicators of futher reforms that will take place once NAFTA is passed. Houston Chronicle, March 24, 1993 (translated in 3 pages in Pemex's Síntesis Periodistica, March 25, and sent to the author by fax).
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Pemex Refining (PREF)
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100092 • Jun 27, 11 Public Oversight of Oilfield Services, Pipeline and EPC Procurement 012 This report examines the ways in which companies and governments seek to procure goods, services and investments--and the ways in which things can go wrong. Drawing on examples as diverse as the BP-Macondo accident and Pemex refinery upgrades, the report seeks to discover lessons and caveats that apply to public and private procurement in Mexico and elsewhere. The report comments on the procurement programs of Pemex E&P, and asks if the rules are suitable to upgrades to refineries.
100009 • Jul 25, 09 Pemex Refinery Selection Process 03 This report speculates that one result of the delays, confusion and politization of the site selection for a Pemex refinery may be the replacement of the director general of Pemex, Jesós Reyes Heroles. The reports names hypothetical replacements, but in this list Juan José Suárez Coppel--who was named the new director general six weeks later was not mentioned. The report also inquires into the feasibility of building and financing a new refinery, given that the option of private investment was nixed in the reform.
590 • Aug 08, 02 Aug 16, 02 Will Pemex Refining keep up with demand? 148 This report reviews statistics and rumors relating to the performance and outlook for Pemex's refining subsidiary. A critique of the Energy Ministry's forecast for the period 2001-2010 is provided. Rumors concern the eventual role of private investment in the refining sector.
505 • May 31, 01 Shell-Pemex Maya II refinery upgrade; Cadereyta mirror image 06 Report on the refinery upgrade at the facility in Deer Park, Texas joint ventured between Shell and Pemex, with comments on the progress and problems of the “twin plant” at Pemex’s Cadereyta Refinery.
308• Dec 19, 98 ISO 9002 awarded Pemex refinery tank farms *MC
191 • May 21, 97 Delay in the award of the Cadereyta project 1 Postponement of the award of the Cadereyta project to a general contractor.
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Pemex Gas Pipelines & Marketing (PGPB)
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498 • May 04, 01 PGPB Investment Program for 2001 and Outlook 911 Required investments in PGPB for the 2001-2006 period. Production and demand forecast for the 2001-2010 period.
377 • Nov 12, 99 CRE vs. Pemex in future gas sales 01 Report on the CRE search for regulatory models of natural gas markets to have open access on PGPB pipeline system. CRE commissioners are pondering a regulatory and legal dilemma: They have been warned by outside academic consultants that unless Open Access takes place on Pemex’s pipeline system the entire market reform in both natural gas and electricity is in jeopardy. They are asking themselves the question, Should we be following the Argentine or the American model of gas deregulation?
316 • Feb 05, 99 PEMEX Gas investment program 01 Reports Pemex Gas presentation at the annual Energy and Industry congress held January 15-16, 1999 in Villahermosa, Tabasco.
269 • May 17, 98 Pemex Gas proposed General Terms & Conditions 0 Analysis of the General Terms and Conditions proposed by Pemex Gas.
255 • Mar 31, 98 PEMEX gas balance, 1995-97 4 Discussion of Pemex natural gas utilization and balance reporting practices.
219 • Sep 13, 97 CRE ruling in Monterrey re: Pemex Gas pipelines 01 A critique of the policy decision of the CRE announced on August 25 to permit direct-connects by Monterrey industrial companies to Pemex Gas pipelines.
213 • Aug 22, 97 Strategic choices ahead for Pemex Gas 1 Discussion of Pemex Gas strategies for the long run.
179 • Apr 07, 97 Northern gas strategy--at what cost to Pemex? 1 E&P program for the Burgos basin and drilling and infrastructure contracts.
131 • Aug 08, 96 Cactus explosion: background analysis 12 An interview on Aug. 3 with Hugh Harleston, Jr., a former Pemex contractor, now retired in Tijuana,led to a new perspective on the Cactus explosion of July 26: The contractor visitedthe refrigeration units at the Cactus plant in December 1994, and, at the time, wasrepresenting a systems automation company.
127 • Jul 30, 96 Explosion in Cactus gas processing plant 12 Immediate implications of major explosions in the gas processing plant at Cactus, in the SE Reforma fields. According to Adrián Lajous at Pemex, 1 Bfcd ofgas processing capacity will be taken off line for at least 18 months.
114• May 20, 96 Confirmation of new Pemex Gas Director *Maria
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Pemex Gas Pipelines & Marketing (PGPB) Table/ File # Published Updated Topic Pages graph
111• May 14, 96 Pedro Haas replacement at Pemex Gas *Maria
98• Mar 01, 96 Areas for investment in gas transmission and distribution *Maria
38• Jul 09, 95 Policy issues in natural gas sector
30• Jun 01, 95 $5 billion for gas-related investments in Mexico? Staff publication. Where?
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Pemex’s Chemical Division (PPQ)
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358 • Aug 04, 99 Petrochemical privatization outlook 02 Review of attempts to upgrade and privatize Pemex Petrochemicals (PPQ) assets.
322 • Feb 16, 99 PEMEX Petrochemical investments program 1999-2001 0 Report on the presentation by Pemex Petrochemical to the Construction Industry on January 15, 1999.
306 • Dec 19, 98 Morelos Complex bid 01 Tender for a minority 49% share in Pemex’s Morelos Petrochemical complex.
261 • Apr 16, 98 Pemex investment budget for 1998-2000 in chemicals 12 This report comments on the investment program for Pemex chemical plants and recent speculation about their privatization. In mid-April, 1998, the Mexican press reported that the Energy Ministry was developing a policy paper that advocated the elimination of the 49% ceiling on private ownership of the once-to-be-privatized chemical units. In view of the political volatility of the subject, it is understandable that no one in the Ministry wanted to take credit for the policy paper––even to the point of refusing to confirm its very existence.
44 • Aug 02, 95 Pemex Petrochemical spin-offs 41 Press briefing of Pemex CEO in relation to divestiture of Pemex petrochemical plants. Pemex is to remain a share-holder in the new privatized companies for a period of several years; also the companies will be required to continue with existing union contracts.
45 • Aug 02, 95 Pemex Petrochemical privatization 11 Oil analyst David Shields takes strong objection to the way in which the divestment process in relation to Pemex’s petrochemical plants is taking place. He argues that the policy is a matter of expediency, without any strategic plan for how the petrochemical industry is to grow in the future. he advocates postponement of the sale..
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Pemex’s Strategic Procurement Office in Houston (ITS)
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100065 • Oct 28, 10 Integrated Trade Systems 43 Up to the early 1990s, Pemex had a Purchasing Office in Houston, the location of which, in the 1980s, was on South Gessner Avenue, and, as I recall, there was warehouse space for deliveries. A prospective supplier could easily find "Pemex" or "Petróleos Mexicanos" in the telephone directory or by calling the information operator.
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Titles MEI reports related to energy issues related to the Mexican Petroleum Institute (IMP)
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541 • Oct 03, 01 IMP address: World Oil after New York: Case of Mexico 7 This report reconstructs the main points of the presentation given by George Baker to the Mexican Petroleum Institute on September 19, 2001. The Spanish PowerPoint slides are also available.
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Mexico’s Federal Power Utility (CFE)
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600 • Aug 26, 02 Fox’s electric power reform: Fuss vs. philosophy 17 The reaction in Mexico City to President Vicente Fox’s August 16th proposed reform for the power sector caused an electric storm of controversy. This report sorts out philosophical, policy and polemical issues, and assesses the politics of congressional action.
510 • Jun 15, 01 CFE Schedule of Project Tenders for 2001 12 Summary of the projects to be awarded through public tender by the CFE in 2001.
509 • Jun 07, 01 Thermal efficiency of CFE’s fossil fuel plants 312 CFE statistics on fuel consumption, generation and thermal efficiency for 1998.
458 • Dec 28, 00 Electric power market and CFE infrastructure in Baja California 810 A review of CFE generation infrastructure and trends in Baja California power market.
430 • Jun 27, 00 CFE fossil-fuel regional capacity (database output) 527 Database output of CFE fossil fuel power generation capacity, by region, facility and unit.
397 • Feb 04, 00 Río Bravo III project (U.S. side plant option) 01 This report discusses the Mexican Government’s proposal in February 2000 to promote cross-border power infrastructure.
396 • Feb 03, 00 CFE power tenders for 2000. 47 Details of CFE tenders for 2000 including generation and transmission projects.
350 • Jun 22, 99 Change in CFE rules for IPPs to allow private power marketing 01 Analysis of the CFE ruling that, for the first time, permits bidders in an IPP tender to build additional capacity for direct power sales to parties other than the CFE.
331 • Apr 03, 99 Pemex and CFE investment programs 01 Conference proceedings of the 5th annual symposium on energy and construction. A new publication includes the text as well as the view graphs and the clarity of the photocopy is better than the earlier texts. The presentations given in Villahermosa January 15-16 cover the investment programs of the government energy agencies for the next three years.
314 • Feb 02, 99 Alfredo Elias Ayub - new head of CFE 02 The sudden replacement of the CFE’s head, Dr. Rogelio Gasca Neri, by Lic. Alfredo Elías allows for two broad interpretations (or “lecturas” as political tea-leaf reading is called in Mexico). Policy conflict. The easiest interpretation is that there was a policy conflict between Gasca Neri and the Energy Ministry led by Luis Téllez over the management of the electric power sector. What is still surprising is that, at least outwardly, the historically weak ministry should have prevailed over the CFE in a matter of policy.
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Mexico’s Federal Power Utility (CFE) Table/ File # Published Updated Topic Pages graph
313 • Feb 01, 99 CFE investment program 1999-2007 01 Highlights of the CFE’s investment program presented at the annual congress organized by the Mexican Construction Industry Chamber of Commerce.
276 • Jun 19, 98 Thermal efficiency of CFE plants 21 MEI’s computation of thermal efficiencies for CFE’s plants. MEI is currently developing a CFE Power Plant Database. It includes basic information about each plant, such as location, year put into service, type of technology and capacity. Annual operational data are provided for generation, fuel consumption and thermal efficiency. The database will provide reports on topics such as regional patterns of generation, fuel consumption and thermal efficiency.
272 • Jun 01, 98 Competitive bidding for the Rosarito IPP? 02 Tenders for a power plant and natural gas pipeline in Rosarito.
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Pemex’s Oil Union (STPRM)
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576 • Sep 20, 02 Pemexgate: [PRI & Oil Union] vs. [Fox & Pemex] 07 This report analyzes the politically complex story behind "Pemexgate," the scandal associated with the alleged money-laundering of Pemex funds to support candidates of the official party (PRI) in the elections of 2000. The scandal is that such practices should have become a scandal. The good news is that by addressing the issue, Fox is advancing one of his policy goals.
335 • Apr 26, 99 Trade unionism in Mexico: Ben S. Stepansky & V. Fox 04 Report about trade unionism in Mexico: Ben S. Stepansky and V. Fox.
240 • Dec 23, 97 Release of “La Quina” and Mexican labor union politics 02 Release of “La Quina” and labor union politics in Mexico.
092893 • Sep 28, 93 Criminal Trial, Political Outcome 01 This article examines La Quina's defense following his detention in 1989 in a government coup. The article asks, at the end, Does the Western institution of "due process" exist in Mexico? If not, is there a commitment in Mexico to establish it expeditiously? Is the matter of concern to the U.S. Congress in negotiating the North Amercian Free Agreement with Mexico? The article was published in the short-lived, English language edition of El FINANCIERO INTERNATIONAL (Los Angeles).
010693 • Jan 06, 93 El papel de la ley no escrita en el sistema judicial mexicano 01 This article by George Baker (The Role of Unwritten Law in Mexico's Judicial System), was one of a series of articles that were criticial of the judicial actions by the Salinas government against the leaders of the Oil Union. The essay argues that case against the union leaders was for their having broken unwritten rules. Published in La Opinión (Los Angeles), Jan. 6, 1993.
082992 • Aug 29, 92 La Quina y el Castigo de Dios 12 This article by George Baker reviews the criminal case against Oil Union leader Joaquín Hernández Galicia (aka, La Quina), but focuses on the defense. Written during the time of NAFA negotiations, the article speculates that the Mexican judicial system itself could come to be regarded as a risk favor for investors. FACTOR FINANCIERO (a weekly paper), Aug. 29, 1992.
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Leaders and Leadership in Pemex and the Energy Sector
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100076 • Jan 20, 11 Ernesto Cordero for President? (and Energy Requiem for Georgina Kessel) 18 This report asks if the cabinet changes ordered by President Calderón on Jan. 7, 2011, portend the eventual PAN presidental candidacy of Ernesto Cordero, the finance minister. The report in greater length reports on the unexpected departure of Dr. Georgina Kessel from the Energy Ministry. The report provides an assessment of her legacy the energy sector, going back to 1994. Of the many key developments in the oil sector since 2006, what credit should Dr. Kessel receive for policy leadership?
100060 • Dec 21, 10 Juniors in Mexico’s Oil Sector: Are They Quick Learners? 27 This report examines the sociological cohort of the English-speaking graduates of public and private universities outside of Mexico (often with degrees in economics) who come to occupy mid- and senior-level positions in the public sector in Mexico. Table 1 is a list of illustrative names of persons in this cohort, sorted by the career of the parent or ancestor who branded the family name as a member of the ruling class.
100030 • Mar 05, 10 Questioned Pemex Appointments: Criticism in the Senate 01 This report comments on the practice of high-level appointments in Pemex of politicians and the politically-connected who have no prior experience in the oil industry. On. March 2, 2010, this common practice was sharply criticized by Sen. Francisco Labastida in relation to the appointment of three officials: Carlos Treviño, Jordy Herrera and Mario Avila.
757 • Sep 26, 09 Juan José Suárez Coppel in Pemex: Change Agent? 412 This report examines background and policy agenda behind the unexpected appointment of Juan José Suárez Coppel on Sept. 7, 2009, as director general of Pemex. This report examines the cases against Reyes Heroles and the concerns in circulation about the ability of Suárez Coppel to make a meaningful difference in implementing the reform legislation and in pushing the energy policy agenda of President Calderón.
689 • Jan 31, 05 Mar 2, 05 Management turnover in Mexico’s energy sector, 2002-05 310 This report examines the frequency of, and rationale for, the turnover of senior staff in Pemex and the Energy Ministry during the Fox Administration. More changes and forced retirements are expected. Table 1 is a list of key positions in Pemex with the names of incumbents in each of the years 2002-04. Table 2 is a selective list of the names of persons who either left Pemex or who were rotated in 2004-05. Table 3 lists the names of managers who--according to rumors as of late January--have an uncertain future in 2005.
682 • Nov 19, 04 Jun 6, 06 Assessment of the performance of Raúl Muñoz in Pemex 013 This report, based on a review of the Mexican press and interviews with diverse sources in Mexico City, provides a preliminary evaluation of the performance of Raúl Muñoz Leos as Director General of Pemex. Insinuations that he had overstepped legal requirements or procedural rules are untrue; but there are other arguments that, individually and taken together, could made a case for a change of command in Pemex. What is the main lesson of Muñoz's tenure in Pemex?
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Leaders and Leadership in Pemex and the Energy Sector Table/ File # Published Updated Topic Pages graph
680 • Nov 04, 04 Nov 15, 04 Luis Ramírez Corzo is Pemex CEO 615 This report examines the causes and business messages of the change in the top leadership of Pemex when, on Nov. 1, 2004, Luis Ramírez Corzo, the E&P director, was named CEO of Pemex in substitution of Raúl Muñoz Leos. The report examines factors that led to the departure of Muñoz and the challenges the new director will face. Six tables provide the titles of the Mexican press coverage of the event.
348 • Jun 21, 99 Management record of Adrián Lajous 01 Review of the acomplishments of Adrián Lajous during his career in Pemex.
341 • May 25, 99 “Lajous Doctrine” of the Mexican upstream 01 Discussion of a WSJ article about business practices in Pemex and the outlook for privatization.
324 • Mar 01, 99 Lajous comments on private investment outlook 01 Analysis of Lajous views about private investment in the upstream.
297 • Oct 26, 98 Laura Itzel Castillo (PRD), Joaquin Hernandez (PRD) 02 Discussion of why congressmen in Mexico are not engaged in proposals, analysis and evaluation of policies.
243 • Jan 08, 98 Recent changes in top gov’t personnel 02 Description of recent changes in Zedillo’s cabinet.
226 • Oct 23, 97 Luis Téllez is new Energy Minister 02 Dr. Luis Tellez Kuenzler is named Energy Minister.
223 • Sep 23, 97 Rumors of personnel change 02 Rumors of government personnel changes in energy sector related positions.
176 • Mar 27, 97 List of who’s who in the energy sector 02
Summary of the annual Petroleum Day ceremony held this year at the Cadereyta Refinery near Monterrey.
120• Jun 12, 96 Meeting with Ingenieros Pemex--Constitucion 1917 *Maria
117• Jun 11, 96 David Shields’s paper at UCLA May 28, 1996 *Maria
114• May 20, 96 Confirmation of new Pemex Gas Director *Maria
113• May 15, 96 “Radio Pasillo” Alert--New head of Pemex? *Maria
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Leaders and Leadership in Pemex and the Energy Sector Table/ File # Published Updated Topic Pages graph
111• May 14, 96 Pedro Haas replacement at Pemex Gas *Maria
103• Mar 29, 96 Pedro Haas resignation from Pemex *Maria
94• Feb 22, 96 Lajous’s speech on Feb. 9, 1996, at unveiling of energy plan Comments on address by Pemex CEO Adrián Lajous on occasion of announcement of energy plan for Mexico.
81• Jan 22, 96 Appointment of new energy minister *Maria
80• Jan 19, 96 Lajous’s address to a meeting of the Interstate Nat. Gas Ass. of Amer. *Maria
60• Oct 23, 95 Comments by former Pemex CFO on infrastructure finance Comments on a presentation by Ernesto Marcos in Houston.
39• Jul 09, 95 T/O of Pemex Gas MEI translation of Pemex Gas Table of Organization.
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Mexico’s Hydrocarbon Resource Base and Prospectivity
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100083 • Mar 30, 11 Pemex's Hydrocarbon Reserve Conference Call for 2010 21 This report comments on Pemex's 2010 reserves, and the conference call on March 30, and examines the composition of the addition to 1P reserves in 2010, and determines that only 16.7% may be attributed to independent commercial discoveries, while the remaining additions are from developments, revisions and delineations. Reference is made MEI Report No. 742, which examines the organization of exploration inside Pemex.
102208 • Oct 22, 08 Mexico's agenda for Exploration and Reserve Growth, 2008-2020 19 This report, originally designated MEI Discussion Paper 08-001, evaluates the energy reform legislation of 2008 from the perspective of oil exploration. The question is raised about the extent to which Mexican authorities have learned the lessons of the oil-market collapse of 1985-87. It is noted that in these years, when IOCs cut staff--by as much as a million workers industry-wide--Pemex’s staffing level grew.
697 • Aug 30, 05 Pemex crude oil reserve statistics, 1997-2005 810 This report asks about Pemex's ability to replace annual crude oil production with new proved reserves. The original aim of the inquiry was to document Pemex's proved reserve-replacement ratio for crude oil. During the period 1997-2005 the rules and methods for booking oil and gas reserves changed three times: What was a proved oil reserve in 1999, may not have been in 2000 or 2003. Tables show reserve levels under the three systems. In doubt is Pemex's ability to achieve its goal of 100% replacement.
01022000 • Jan 02, 00 Hacia una contabilización de los recursos petroleros mexicanos por cuenca 12 This article by George Baker was published in the journal Economía Informa, published by the Economics Department of the National University (UNAM) in the February 2000 issue (No. 284), pp. 51-53. Whereas Pemex published only sanitized data by administrative region, this article, using Pemex reserve data for Jan. 1, 1999, provides a sorting, by geological basin, of Pemex’s 1, 2 and 3P reserves, noting also comulative production, depletion from the original volume and proved reserves recovery ratio.
111896 • Nov 18, 96 Mexico's Basins Could Provide Niches for Various Sized Firms 34 This article, co-authored by George Baker and petroleum geologist James W. Wilson, examines each major Mexican petroleum basin from the angle of the size of the operating company that could optimally develop a given field. The article points out the areas where Pemex’s overhead costs and skill-sets are ill-suited as an operator; and identifies fields where, by contrast, the overhead and skill-sets of third-parties are indicated. The logic of this analysis underlies the MSC Program of 2002 and the EP Program of 2011. Oil & Gas Journal, Nov. 18, 1996
120192 • Dec 01, 92 Policy Implications of Mexico's Questioned Oil Reserves 13 This article speculates on the impact a Free Trade Agreement with the United States have on Mexican upstream oil policy. The article discusses six estimates of Mexico's proven oil reserves in 1990, including the controversial one of Francisco Iguanzo of December 1991, as published in Proceso. MEXICO POLICY NEWS (UCLA) No. 7 (Winter 1992), 3 pp.
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092691 • Sep 26, 91 Calculating Mexico's Undiscovered Reserves 82 A NAFTA-era discussion by George Baker of Mexico’s upstream outlook, with an estimate of Mexico’s undiscvered resources, using Pemex data. The CRS estimated yet-to-find oil at 69 B barrels; Baker’s estimate was 96 B barrels. In a meeting in Mexico City shortly after the article was published with Hesquith Streeter, the BP country manager, he remarked “Either you have much better data than we have, or your are just lucky.” PLATT’S OILGRAM NEWS, Sept. 26, 1991 (Vol. 69, No. 186, p. 6).
062281 • Jun 22, 81 The Eclipse of Mexican Light 73 This article by George Baker analyzes Pemex production data and exports, noting a decline in Mexico's Isthmus-grade (light) oil, relative to heavy-grade Maya crude. OIL & GAS JOURNAL, June 22, 1981 (pp. 83-85).
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Public Policy Perspectives
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10023 • Jul 23, 12 Public Policy Perspective No. 20023 - LPG Interests and the Elections 1143 The LPG lobby is a big donor to political candidate; and, for this reason, politicians and legislators stay away from laws or policies that would jeopardize the market control that LPG lobbies have in major metropolitan areas such as the DF and Guadalajara. In an analysis of the full-cycle-economics of LPG compared to natural gas, it is natural gas distribution that offers a superior value, even when the BTU price of LPG is higher.
10021 • May 11, 12 What should the Hydrocarbons Commission Tell the Next Government? 08 This report argues that legal mandate of the National Hydrocarbons Commission, which was created by the Energy Reform of 2008, is inadequate to cope with the challeges of regulating Pemex’s deepwater operations; and that new legislation is needed.
12012011• Dec 01, 11 George Baker: Pemex Needs Real Oil Competition Offers a critique of the policy reforms expressed by Enrique Peña Nieto in an exclusive interview with the Wall Street Journal (Nov. 28, 2011). Argues oil companies will not redefine “investor” to mean “Pemex contractor,” and that the true starting point for energy reform in Mexico is the overhauling of the country's national petroleum narrative. Published in the Letters to the Editor, Dec. 1, 2011.
10018 • Oct 25, 11 Global Oil Industry Puzzled by Pemex Exec Sanctions 45 MEI Public Policy Perspective No. 10018 provides a discussion for the benefit of the general reader about the personnel and institutional issues associated with sanctions of executives and managers at Pemex E&P and PMI. Policy Perspective reports are available at no cost from the website of Mexico Energy Intelligence® (www.energia.com).
10019 • Oct 25, 11 Public Policy Perspective No. 10019 - Qui Custodiet Ipsos Custodes? 03 Se trata de los efectos colaterales negativos innecesarios a sus respectivas instituciones tanto en el exterior como en el interior del pais. En Estados Unidos, los ejecutivos de Pemex con mas renombre son justamente Rocio Cardenas y Sergio Guaso, conocidos por sus habilidades profesionales--amen de su verticalidad.¿Conviene a Pemex, el gobierno de Calderón y por ende el país poner en duda estas calidades en las mentes de los socios comerciales en el extranjero? Claro que no.
012208 • Jan 28, 08 El Informe de Sancho (Critique of Mexico in WEF Comparisons) 01 This is a tongue-in-cheek, Cervantine dialog that comments about the remarks at a breakfast meeting sponsored by the British Chamber of Commerce of Mexico at which the speaker was Guillermo Ortiz, the director of Mexico's Central Bank. His presentation, which was based on the rankings of Mexico in the World Economic Forum, excluded consideration of oil in Mexican economy, Outside the Hotel Sheraton on Ave. Juárez, naked and semi-clad protesters were posted. Published in REFORMA (Jan. 28, 2008).
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717 • Oct 03, 07 Mar 12, 09 Peak Oil in Mexico: Outlook of production and exports to 2015 2011 This report examines the hypothesis that the moment of Peak oil in Mexico has already happened. The report inquires into the meaning of the great reversal in upstream outlook that took place in the Fox administration of 2000-06. In this report we focus on Cantarell and present oil production statistics and several decline projections to 2012 and 2020. We include the regression equations in the charts. We ask: Are there alternatives to a decline in oil production in Mexico? What is necessary? Or was 2004 Peak Oil?
724 • Jan 12, 07 Jan 27, 07 Freakonomics of the competitiveness of market-listed oil companies 118 This report explores the underlying economics of the operations of oil companies, private and national, whose shares are listed in stockmarkets that are open to international investors. The report argues that there are other factors that make IOCs (private and national) more competitive--by as much as $17.00/bbl (Table 1)--than an unlisted national oil company (NOC) that in the upstream operates in just one country.
720 • Oct 18, 06 Mar 19, 08 Political and institutional undercurrents in Mexico’s energy sector 212 This report evaluates concerns and speculations in the final two months of the Fox administration. The report is based on observations, conference presentations and discussions in Mexico City during the first half of October, 2006. Topics concern the future staffing of key positions in Pemex, the outlook for oil production and the postures of the political parties in the Congress. The report includes an informal survey during the week of October 9-13 of political views about the post-election situation. Tables provide titles of relevant press items during the period covered.
718 • Sep 25, 06 Apr 16, 07 New perspectives on government procurement in the energy sector 813 This report describes the background and present situation in government procurement in the energy sector, taking note of both regulated and unregulated procurement in Pemex and CFE. The report reviews the legal, policy and institutional obstacles to global integration and competitive, value-based procurement. The analysis proposes a definition for procurement in the energy sector to include all measures that add value, be they through commercial transactions, treaties or strategic alliances.
10013 • Mar 16, 06 Las Políticas de Petróleo y Gas en México: Análisis de los Marcos 16 This 7-page white paper (of which an English version was subsequently issued) was prepared as a multi-client effort to set forth ideas for oil policy reform by the new administration that would come to office as a result of the outcome of the elections to be held in July of 2006. Many of the ideas in this paper were taken up in the Energy Reform of 2008, notably the strenghtening of both the board of Pemex and the authority of the director general of Pemex and of the Energy Ministry.
10014 • Jan 19, 06 Public Policy Perspective No. 10014: Rethinking Oil Policy in Mexico 013 This bilingual report offers a perspective on industrial, institutional and policy issues related to Mexico’s oil and gas industry. The report concludes that the four operating divisions of Pemex have performed below expectations for a quarter-century; and that institutions and laws are inadequate for a market-oriented, competitive and transparent administration of the oil sector.
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700 • Dec 21, 05 Mar 28, 06 Energy regulation in North America: Toward a trilateral consensus 216 This report considers the scope and seriousness of the proposal by the Bush administration to engage the governments of Mexico and Canada in conversations about coordinated energy policies for the region. The North American Energy Working Group was established in 2002 but it seems to have been superceded by a new initiative in early 2005, the Security and Prosperity Partnership of North America. Energy proposals for Central America raise the question: How valid is a trilateral approach?
691 • Mar 18, 05 Mar 31, 05 100 years of Mexican oil: A new debate? 08 This report reviews the arguments voiced--and unvoiced--during the public presentation of a new book on the first 100 years of the Mexican oil industry. On March 15, 2005, a panel was assembled in the Club de Industriales: Enirque Krauze raised political and cultural issues, Dr. Héber Cinco cited oil statistics and Dr. Roca, Commercial Director of Schlumberger's Mexico operations, who was the general editor of the volume, told about how the book was compiled. Some wondered, Is there a new debate ahead?
686 • Feb 16, 05 Sep 11, 07 Oil and gas pipeline safety crisis in Mexico 1212 This report examines the deteriorating public confidence in pipeline safety in Mexico in the oil and gas industry. Institutional weaknesses are made visible by industrial accidents like oil spills, pipeline ruptures, well blow-outs and explosions at facilities. The oil spill in Veracruz on Dec. 22, 2004, is taken as a case in point. The report discusses safety programs in Pemex as well as on regional and national press reporting. The accident frequency points to challenges within Pemex and the federal and state governments.
658 • Feb 10, 04 The business valuation, politics and organizers of Mexico energy seminars 310 This report identifies thirty-five organizations, both commercial and nonprofit, that sponsor conferences on Mexico’s energy sector. These venues are described and scored by the highest rank of the government, Pemex or CFE official that is likely to participate as a speaker. The business and professional reasons for attending these conferences vary, and are both simple and complex. In the latter category exist policy lobbying, Pemex and CFE loyalty and competitor research.
661 • Jan 19, 04 Sep 5, 06 MSCs: Retrospect and outlook 213 This report examines the motives––for and against–participating in the first round of Pemex’s Multiple Service Contracts. Up to 1958 production sharing and equity rights to oil production were permitted in Mexico. A comparison of the Oil Law of 1958 (which governed the MSCs) with those of the prior law of 1941 suggests that major oil companies would have been more motivated to participate in the MSCs under the earlier framework. By August 2006 Pemex had developed new models of the MSCs.
650 • Dec 02, 03 Dec 8, 03 Fox administration at midterm: Performance and criticism 214 This report assesses the situation of the Fox administration at the midpoint of its term, taking into account the unexpected challenges associated with the global recession and the difficult relationship with the United States. Special attention is given to the events of the third anniversary of his presidency, including the megamarcha of Nov. 27, 2003.
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662 • Nov 26, 03 Policy dialogue with Mexican senators 312 This report describes the challenges facing any international analyst or company representative who might have the occasion to enter into a discussion of energy policy with senior Mexican political figures. One of the challenges is the proper measurement of the state of U.S.-Mexico relations; another challenge is finding a suitable topic and a style of presentation that fits within the scope of current debates over energy policy.
657 • Oct 10, 03 Pemex’s uncertain future--David Shields 16 This report reviews the book in Spanish by David Shields, Pemex, un futuro incierto (2003) and comments on the choices ahead for Pemex and Mexico in the oil sector.
624 • Jan 24, 03 A guide to data publications on Mexico’s oil and gas industry 06 This report provides a guide to statistical publications on Mexico's oil and gas sector. The information that is publicly available provides a starting point for any serious evaluation of industrial, commercial and policy issues.
621 • Dec 30, 02 Dec 31, 03 Mexican energy in 2002: A year of unfinished business 213 This report looks at the year 2002 through the lens of advances and delays in both energy policies and markets. Delays are measured in their months or years of standby status (some going back to 15 years). Topics discussed include LNG, Multiple Service Contracts, electric reform, Mexlube, LPG and petrochemicals.
577 • Jul 11, 02 Review of Pemex operating statistics, May 2002 94 This report reviews basic indicators in Mexican petroleum industry during the period May 2001 to May 2002, including data on hydrocarbon production, crude oil exports, natural gas exports and imports and domestic sales for most relevant products.
578 • Apr 06, 02 Apr 8, 02 The Dan Yergin Show 25 A major event in public television is the 3-part series, "Commanding Heights," produced by prize-winning author and oil market consultant Daniel Yergin, the first segment of which was aired on April 3, 2002. Flashbacks of major events in the twentieth century trace the rise of the globalized economy. The treatment of the Mexican debt crisis of 1995 is controversial.
563 • Jan 09, 02 Jan 2, 03 Year-end wrap-up for 2001 24 A review of the high points in energy policy and markets in 2001, including a month-by-month analysis of events. A list of MEI reports, by quarter, is provided for reference.
486 • Mar 28, 01 Overview of Pemex monthly indicators for 2000 02 A month-by-month survey of Pemex’s production, sales and trade statistics for petroleum products during year 2000.
470 • Dec 30, 00 Year-end wrap-up for 2000 010 This report notes high points in energy policy, markets and staffing in 2000, including three changes of directors general at Pemex.
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411 • May 10, 00 Jan 2, 03 Evaluation of Mexico’s energy sector and MEI reporting, 1996-1999 36 Review of principal developments in the Mexican energy sector since 1996 noting in parallel the changes that have taken place in energy sector reporting by MEI as one of the sources of data and analysis available to Mexican and international companies and government organizations.
388 • Dec 31, 99 End-of-millennium reflections on Mexican outlook 01 End-of-millennium reflections on Mexican outlook. A December 28 New York Times editorial argued that the outlook for economic growth in the next millennium is highest in countries with democratic values and a free-market economy. Individual freedom of choice is the common thread linking political and eco- nomic values. How would Mexico score on an individual freedom index? Considerations on the reasons for such a political situation are included.
390 • Dec 30, 99 MEI reporting in 1999 21 Summary of MEI activities during 1999. In 1999 MEI published 85 field and analyst reports (Table 1). Field reports draw on meetings, discussions––and rumors––, while analyst reports draw on published and internal data). These reports, which since March have been issued in both PDF and print versions, cover some 20 topics: the most frequent topics were Upstream (14), Electric power (11), Energy policy (8) and Pemex monthly statistics (7) (Table 2).
309 • Dec 22, 98 Review of MEI activities in 1998 02 Summary of MEI reporting, programs and activities during 1998.
300 • Nov 05, 98 Petroleum resouces as “tribal lands” 02 Explanations advanced by Mexican sources for the restriction on private investment in the upstream.
299 • Nov 03, 98 Energy demand/capita, 1956-1996 2 Statistics on energy consumption for Mexico and the US.
259 • Apr 09, 98 Essay on resource development models. 12 Essay by George Baker about alternative models of hydrocarbon resource development for Mexico. He argues that the future of petroleum policy in Mexico should be shaped by a careful appraisal of alternative models of resource development, namely, the current statist model, a co-development in which both the state and private capital are engaged in industrial activities, and a purely regulatory model in which the state withdraws from industrial activities altogether.
242 • Dec 31, 97 1997 wrap-up and outlook 12 1997 year-end wrap-up and outlook.
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239 • Dec 20, 97 Outlook for Upstream Business Development: 1998-2002 02 NAFTA, which was then being negotiated, was a complete failure from the perspective of U.S. and Canadian producers who hoped that there might be some negotiated mechanism that would offer them business opportunities as producers. Nevertheless, the Procurement Chapter of NAFTA established mechanisms that gave international equipment vendors and contractors a better future as suppliers to Pemex and the CFE. Producers, then as now, are left out of the picture.
238 • Dec 19, 97 Mexican nontransportation energy prices, 1990-97 2 Relative price behavior of nontransportation energy products in Mexico, 1990-1997.
234 • Dec 18, 97 DOE’s outlook for natural gas to 2015 02 US DOE’s Annual Energy Outlook and Mexican natural gas markets in the medium term.
233 • Nov 22, 97 Draft bibliography of energy sector publications 0 An introduction to the principal publications and data sources on the energy sector in Mexico.
210 • Aug 01, 97 Gov’t strategy vis-a-vis the Congress 0 Review of recent changes in energy related government positions.
167 • Feb 02, 97 Year-end wrap up for 1996 2 Wrap-up of energy sector performance for 1996, by area of industrial activity.
05231996 • May 23, 96 The "Dutch Disease" in Mexican Petrochemicals 417 This article, which was written by George Baker in collaboration with Mexico City consultant Albert Antebi, notes the political agitation related to the government's attempt to privatize Pemex's petrochemical plants in the mid-nineties. The term “Dutch Disease” is here used to refer to the collateral effects associated with bursting of an economic bubble.
104• Apr 04, 96 Analysis of government waffling *Maria
74• Dec 18, 95 Energy policy scenario analysis (White paper) *Maria
70 • Nov 19, 95 Scenario analysis of reality of new natural gas regulations 01 Asks if the new CRE regulatons should be seen under the light of 1) “You’ve Got to Start Somewhere” or 2) “It’s Not a Real Start”?
030193 • Mar 01, 93 Quantifying Pemex E&P Benefits from Foreign Strategic Associations 88 OIL & GAS JOURNAL, March 1, 1993. This 8-page article critiques and extends the arguments put forth by the Heritage Foundation on the management of Mexico’s oil sector.The analysis seeks to quantify the incremental tax revenue and ripple effects from a policy to allow oil companies a role in exploration and production. The article calls attention to the need for trust in addition to the quantification of benefits.
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• Las Politicas de Petroleo y Gas de México
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The Eagle Ford Extension into Mexico: The Slide Pack
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09152012 • Sep 15, 12 Eagle Ford Extension into Mexico: the Slide Pack >20 >200 The Eagle Ford Slide Pack and its Appendix consist of upwards of 200 slides, each with individual commentary, about the petrology, hydrology and other technical aspects of the Eagle Ford extension into Northeast Mexico. The slide pack was prepared by Guillermo Suárez, based in Mexico City. MEI is the exclusive U.S. distributor.
1000097 • Aug 26, 11 Sep 1, 11 Unconventional Gas in Mexico: Pemex's plan: Ready, Aim--Estimate 34 The program on unconventional gas resources that was held at the Petroleum Club in Houston included speakers from Mexico, including energy lawyers Rogelio López-Velarde and Nicolás Borda, Luis Ramos from Pemex E&P and Javier Estrada from the National Hydrocarbons Commission. The present report touches on the highlights of the presentations of that seminar, and asks about the shape that a development program for unconventional gas in Mexico might take.
100097 • Aug 25, 11 Sep 10, 11 Shale Gas in Mexico: Ready, Aim-Estimate 36 This report reviews the seminar on shale gas in Mexico that was held in Houston on Aug. 23, 2011, at which Dr. Luis Ramos gave the first public presentation by Pemex on this topic. Pemex estimates that in the aggregate there are over 600 Tcf of recoverable natural gas in shale formations. The report also takes note of the study by the Baker Institute at Rice University which provides cost estimates for several shale formations.
489 • Mar 22, 01 Pemex drilling philosophy for Burgos Basin 02 Comments on Pemex’s new development program for the Burgos Basin.
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Cross-Border Energy and Commerce
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100124 • Sep 23, 12 US-Mexico Transboundary Hydrocarbon Agreement (Part II) 58 At the meeting of the Mexican Senate Energy Committee on March 27, 2012, substantial objections were presented against approval of the US-Mexico transboundary hydrocarbon agreement that had been signed just the month before on February 20th in Cabo San Lucas. This report highlights some of these objections, and identifies challenges not considered in the Senate meeting.
100121 • Mar 19, 12 US-Mexico Transboundary Hydrocarbon Agreement: A New Face for 09 Until 2012, neither Mexico or the U.S. had signed a cross-border agreement related to petroleum. Lease auctions of blocks continuous with Mexico on the U.S. side received no bids. The agreement provides a scaffolding of public oversight for the unitization of cross-border fields and for the eventual formation of a joint operating agreement between "licensees" on both sides. At this stage, the agreement is limited to sharing information, not risk.
030108 • Mar 01, 08 La sociología petrolera y el reto de los yacimientos transfronterizos 13 This report addresses the need to have a regulatory environment for cross-border oilfields that promotes a dual dynamic of cooperation and competition. It was published in Spanish in ENERGIA A DEBATE (March 2008). http://www.energiaadebate.com/Articulos/marzo2008/Bakermarzo2008.htm
080107 • Aug 01, 07 Mexico Ponders Cross-Border Strategy for Deepwater GOM Fields 22 This article by George Baker concerns the institutional and regulatory limitations in Mexico and the U.S. for the development of protocols for the unitization, metering and taxation of cross-border fields. WORLD OIL (Aug. 1, 2007).
722 • Dec 05, 06 Feb 17, 07 Pemex proposes reforms for cross-border development 412 This report examines proposals by Pemex to address the challenges of joint development of oil and gas fields that straddle the U.S.-Mexico border. Pemex proposes changes in the legal environment in which it does business. The report also discusses changes that will be needed in the mandate of U.S.-side regulators for cross-border projects to go forward. We comment on the challenges that Pemex and the new government face to bring about this change in upstream policy.
063003 • Jun 30, 03 Outlook for Energy Cooporation in the U.S.-Mexican Border Region 016 This essay was based on a seminar paper for a conference on "Trade, Energy, and the Environment: Challenges and Opportunities for the Border Region, Now and in 2020," Rio Rico, Ariz. April 30-May 2, 2001. The papers were published as The U.S.-Mexican Border Environment (San Diego State University Press, 2003). For the essay by George Baker, see pp. 247-63).
617 • Dec 17, 02 Cross-border gas pipelines: regulators, markets and policies 07 This report builds on discussions with the Railroad Commission of Texas of topics such as its collaboration with Mexico's CRE. The Commission anticipates expanded cross-border gas trade and infrastructure and foresees Mexico as a future exporter of gas.
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495 • Apr 30, 01 Outlook for energy cooperation on U.S.-Mexico border 016 Seminar paper for conference on "Trade, Energy, and the Environment: Challenges and Opportunities for the Border Region, Now and in 2020,” Rio Rico, Ariz. April 30-May 2, 2001. The papers were later published as The U.S.-Mexican Border Enviornment (San Diego State University Press, 2003). The essay by George Baker (pp. 247-63) is entitled “Outlook for Energy Coorporation in the U.S.-Mexico Border Region.”
092795 • Sep 27, 95 False Expectations Regarding Border Development 1117 This seminar paper was presented in Tijuana at the Border Research Center (COLEF) at a seminar at which former President Miguel de la Madrid was also a panelist. The paper is a wide-ranging critique of the political, cultural and economic constraints on the development of the U.S.-Mexico border region; the paper examines the cultural profile of the U.S. side of the border the principal economic drivers of which are the military and aerospeace industries.
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Pemex Deepwater Developments
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100124 • Sep 23, 12 US-Mexico Transboundary Hydrocarbon Agreement (Part II) 58 At the meeting of the Mexican Senate Energy Committee on March 27, 2012, substantial objections were presented against approval of the US-Mexico transboundary hydrocarbon agreement that had been signed just the month before on February 20th in Cabo San Lucas. This report highlights some of these objections, and identifies challenges not considered in the Senate meeting.
100121 • Mar 19, 12 US-Mexico Transboundary Hydrocarbon Agreement: A New Face for 09 Until 2012, neither Mexico or the U.S. had signed a cross-border agreement related to petroleum. Lease auctions of blocks continuous with Mexico on the U.S. side received no bids. The agreement provides a scaffolding of public oversight for the unitization of cross-border fields and for the eventual formation of a joint operating agreement between "licensees" on both sides. At this stage, the agreement is limited to sharing information, not risk.
030108 • Mar 01, 08 La sociología petrolera y el reto de los yacimientos transfronterizos 13 This report addresses the need to have a regulatory environment for cross-border oilfields that promotes a dual dynamic of cooperation and competition. It was published in Spanish in ENERGIA A DEBATE (March 2008). http://www.energiaadebate.com/Articulos/marzo2008/Bakermarzo2008.htm
080107 • Aug 01, 07 Mexico Ponders Cross-Border Strategy for Deepwater GOM Fields 22 This article by George Baker concerns the institutional and regulatory limitations in Mexico and the U.S. for the development of protocols for the unitization, metering and taxation of cross-border fields. WORLD OIL (Aug. 1, 2007).
722 • Dec 05, 06 Feb 17, 07 Pemex proposes reforms for cross-border development 412 This report examines proposals by Pemex to address the challenges of joint development of oil and gas fields that straddle the U.S.-Mexico border. Pemex proposes changes in the legal environment in which it does business. The report also discusses changes that will be needed in the mandate of U.S.-side regulators for cross-border projects to go forward. We comment on the challenges that Pemex and the new government face to bring about this change in upstream policy.
063003 • Jun 30, 03 Outlook for Energy Cooporation in the U.S.-Mexican Border Region 016 This essay was based on a seminar paper for a conference on "Trade, Energy, and the Environment: Challenges and Opportunities for the Border Region, Now and in 2020," Rio Rico, Ariz. April 30-May 2, 2001. The papers were published as The U.S.-Mexican Border Environment (San Diego State University Press, 2003). For the essay by George Baker, see pp. 247-63).
617 • Dec 17, 02 Cross-border gas pipelines: regulators, markets and policies 07 This report builds on discussions with the Railroad Commission of Texas of topics such as its collaboration with Mexico's CRE. The Commission anticipates expanded cross-border gas trade and infrastructure and foresees Mexico as a future exporter of gas.
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495 • Apr 30, 01 Outlook for energy cooperation on U.S.-Mexico border 016 Seminar paper for conference on "Trade, Energy, and the Environment: Challenges and Opportunities for the Border Region, Now and in 2020,” Rio Rico, Ariz. April 30-May 2, 2001. The papers were later published as The U.S.-Mexican Border Enviornment (San Diego State University Press, 2003). The essay by George Baker (pp. 247-63) is entitled “Outlook for Energy Coorporation in the U.S.-Mexico Border Region.”
092795 • Sep 27, 95 False Expectations Regarding Border Development 1117 This seminar paper was presented in Tijuana at the Border Research Center (COLEF) at a seminar at which former President Miguel de la Madrid was also a panelist. The paper is a wide-ranging critique of the political, cultural and economic constraints on the development of the U.S.-Mexico border region; the paper examines the cultural profile of the U.S. side of the border the principal economic drivers of which are the military and aerospeace industries.
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Macondo/Deepwater Horizon Accident
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100103 • Oct 10, 11 The Political Science of Industrial Safety 36 This report seeks to abstract from the events that took place on Deepwater Horizon on April 20, 2010, in order to gain a picture of the inevitable changes ahead in law and regulation that will create a new regime in which both contractors and well owners will be jointly liability for accident prevention and accountability.
100093 • Jul 01, 11 Jul 2, 11 BP's Lessons from BP-Macondo 04 On June 30, 2011, at a workshop sponsored by the OCS Advisory Board BP's exploration manager for the Gulf of Mexico set forth the principal lessons from the accident at the Macondo well on April 20, 2010. The lessons were grouped in five categories: 1) Prevention, Drilling and Equipment Monitoring 2) Containment, 3) Relief Wells, 4) Spill Response and 5) Crisis Management. The report notes such such future-oriented goals do not address changes ahead in the contractual relationships between contractors and the oil company and among oil companies themselves.
100088 • May 30, 11 Jun 6, 11 Credit and Blame at BP-Macondo 812 This report, based on a close reading of much of the public record, complemented by industry interviews, seeks a balanced assessment of credit and blame in regard to the series of accidents at the BP-Macondo well on April 20, 2010. Blame and credit is assigned to industry and government actors for their roles before and after the blowout. The report seeks to apply lessons learned to Mexico's deepwater aspirations.
100086 • May 12, 11 May 15, 11 Risk vs. Uncertainty at BP-Macondo 04 This report recounts a conversation at OTC 2011 with a forensic engineer under contract with Anadarko about the BP-Macondo accident. The title of this report relates to an OTC panel in which a speaker the distinction between risk and uncertainty, as developed by economist Frank Knight in 1921.
010111 • Jan 01, 11 IXTOC-1 vs. Macondo 21 This article by George Baker, written in Spanish, proposes several lessons for Mexico of the BP-Macondo well blowout, noting that few, if any lessons, were learned from the Ixtoc-1 blowout of 1979-80. In both case the blow-out preventer malfunctioned, and each, at its time, was the largest offshore oil spill on record. ENERGIA A DEBATE (VII), 42: 16 (Jan.-Feb. 2011) http://energiaadebate.com/ixtoc-1-vs-macondo/
112110 • Nov 21, 10 Ixtoc-1 vs. Macondo 01 Las lecciones que aporta el caso del pozo descontrolado costa fuera de Luisiana son de igual relevancia para México que para Estados Unidos ¿Por qué? Porque los dos países—más Cuba—comparten las aguas del Golfo de México. Al parecer, el gobierno y la sociedad civil de México no lograron sacar lecciones relevantes del derrame de 1979-80 del pozo exploratorio Ixtoc-1 de Petróleos Mexicanos. Published in Energía a Debate (November 2010), and available online.
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100048 • Jun 08, 10 Jun 20, 10 The Key Lesson from BP-Macondo: Changing the Culture of Silence 12 What stands out most from the public record of the days and hours before the blow-out is the passivity of the rig crew, contractors and well owner. Everyone onboard the rig knew that there were serious problems; but no response rose above the level of griping and sarcastic barbs. The key problem, press reports suggest, is that each party took its point of view personally: there was no objective, independent assessment of the danger to which everyone was exposed. This culture of dangerous silence is what, fundamentally, needs to change. Here are two ideas for changing it.
100046 • May 28, 10 Rig Governance Model in Doubt 21 Most the controversial decisions that were taken by BP on April 18, 19 and 20-some, it is reported, with the concurrence of the MMS-were done with the knowledge--and foreboding-- of senior managers from contractors, including Transocean, the rig owner. This report notes critical moments and decisions in the final phase before the well blow-out on April 20. (The New York Times report published on Dec. 26, 2010, is instructive, to be complemented by the several other studies that have been released.)
100043 • May 19, 10 Macondo Lessons for Mexico and Cuba 02 The lessons that should be derived from the yet-uncontrolled oil spill at BP's Macondo Prospect have importance for Mexico and Cuba as much as for the United States. All three countries share the waters of the Gulf of Mexico, and all are affected by any damage to their shared marine environment. The report asks about the institutional and commercial safeguards needed to prevent the repetition of an accident of this scale.
100041 • Apr 30, 10 Oil spills in the Gulf of Mexico, 1979 vs. 2010 01 This report contrasts the public response in Mexico to the Ixtoc-I well blowout in 1979 to that of the American response to the blowout at BP’s Macondo Prospect in 2010. It is noted that the U.S. public is largely indifferent to the nationality of the oil company that operates in the Gulf of Mexico. In the U.S. media BP was “an oil firm based in London” and Transocean was a “Swiss company.” In Mexico, there is a sharp line drawn that separates Pemex from “foreign” oil and service companies.
552 • Nov 08, 01 CBI’s 5th Annual Mexican Energy 2001 05 This report reviews highlights from the industry conference on the outlook for Mexico’s energy sector that took place in Houston November 1-2, 2001.
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Pemex Upstream E&P Contracts
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100133 • Jul 04, 12 Jul 17, 12 Pemex's Mature Fields Auction (Round 2): What Went Wrong? 29 The Pemex 2nd round of bidding for the six blocks in its Northern Region was a disappointment: First, no IOC submitted a bid, which was particularly painful in relation to the Arenque Block, whose bid package Chevron had purchased. Neither of the 2 offshore blocks were awarded, on questionable grounds in each case. Mexico's bid round held on June 19th earned just $40 million; the US GOM bid round, held on June 20, earned US$2.6 billion. The report urges a legal review of aspects of Pemex’s bid protocols.
100131 • Jun 27, 12 Jul 3, 12 Chevron and the Seven Dwarfs: An Upstream Fairy Tale 013 A saying in Mexico is that “Truth is told in fiction, while fiction is told in truth.” A critique of Pemex’s second bid round, which culminated in awards on June 19, 2012, for four of the six blocks, is told in the language of a fairy tale of the Middle Ages.
100111 • Feb 02, 12 Pemex's Farm-Out Program: How to Evaluate Its Efficiency? 319 This report proposes that the term "farm-out" best captures the sense of Mexican energy policy since 1992 in power, gas and the upstream. The report examines alternative approaches to evaluating the success of the decade-old farm-out program in Pemex E&P, a program that, to date, has yet to be evaluated by Pemex's board or auditors from the government (SFP) or Congress (ASF). The report provides several optics by which the success of the program may be evaluated.
100113 • Jan 26, 12 Pemex's Hybrid Contracts: How Pemex tropicalized global contract models 318 This report examines the Pemex upstream outsourcing since 2003 for oil and gas production, starting with the Multiple Service Contract of 2003-05. The report discusses three common legal models that contributed to the Pemex hybrid: Farm-out, Production Sharing Contract (PSC) and Incremental Oil Contract. The report concludes that the farm-out model is the closest to Pemex's hybrid contract, as it confers on the contractor a legal, revenue interest in production.
100104 • Oct 11, 11 Outlook for Pemex Incentive Contracts: Press Q&A 03 This report provides a summary of the questions and answers posed by a journalist from EL NORTE in a telephone interview with George Baker on October 11, 2011, the day the sanctions concerning Pemex officials in the Office of New Ventures became public. One of the questions concerns the likelihood of delays in the initiation of the Second Round of Incentive Contracts. The reply given was that there would likely be delays owing to the additional time that Pemex would need to absorb the lessons from the first round.
100099 • Sep 06, 11 Sep 18, 11 Pemex Protocols for Bidding and Awarding Incentive Contracts 112 This report identifies the concerns expressed by bidders and observers of the first round of incentive contracts and restates them as suggestions for improvement for the next round. The concerns deal with the bidding criteria, the selection of qualified bidders, the use of maximum and minimum bids, tie-breaking rules, Pemex equity participation, and the protocol for making the awards.
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100096 • Aug 21, 11 Dec 21, 11 Pemex's Mature Fields Awards 512 The work of over a year by Pemex's Office of New Ventures produced a measure of success on August 18, 2011, when 11 companies presented bids to redevelop 3 blocks under the terms of a new, and untested, commercial model that provides payment to contractors on the basis of a fee/barrel. This report identifies the legal and institutional drivers at work behind the protocol; it also asks about the disadvantages to Pemex of a “lowest-price” approach to selecting EP contractors. Can the model be used outside of PEP?
50111 • May 01, 11 Mexico Comes Calling: A new Pemex contract model is designed to increase 13 This article is an introduction to the new Pemex contract model and the "computational gymnastics" of the compensation formulas. A quantitative example is given that shows the results of these formulas, assuming given volumes, oil price and API, sorting for the fiscal effect on marginal vs. standard oilfields. OIL & GAS INVESTOR (May 2011).
100081 • Feb 25, 11 PEMEX Contract Discretionality: An Inconvenient Translation 27 This report examines the use of conveniente and inconveniente, words that--despite the obvious English cognates--do not generally translate as "convenient" and "inconvenient." In a recent seminar, many in the audience were disoriented by the provision in the Pemex Specimen Contract of November 24, 2010, that permits Pemex to cancel a contract if a project becomes "inconvenient or unprofitable." The report provides context-sensitive translations for each occurrence of this slippery term.
100078 • Jan 31, 11 Feb 3, 11 Pemex's Integrated EP Contracts: Highlights of the AIPN Conference 25 On January 27, 2011, at a sold-out, all-day seminar held in Houston, the law, economics and regulations of Pemex's new "Integrated EP Contract" were put under a microscope by lawyers, consultants and contractors-as well as by Pemex and Mexico's National Hydrocarbons Commission. This report identifies concerns expressed during the seminar as well as in post-session discussions at two nearby bars.
100070 • Dec 09, 10 Pemex’s First Bid Round: Mature Fields 02 This report, prepared by geologist Colin Stabler, assesses the first three blocks that have been designated by Pemex for its first bid round. The report comments on the upside potential and downside risk associated with each block: Magallanes, Santuario and Carriso.
764 • Dec 01, 10 Pemex’s EP Contract Model: Board Objections and Concerns 29 This report examines the arguments and concerns of two outside board members, Rogelio Gasca and Fluvio Ruiz, in relation to the voting on November 24, 2010, on the EP Contract Model. Dr. Gasca was alone in voting against approval of the contact model; while Dr. Ruiz voiced concerns about how the model should be implemented. Table 1 compares the concepts of the EP Contract to those of the Multiple Service Contract (MSC).
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100068 • Nov 27, 10 Pemex’s EP Contract: The Voting by the Corporate Board 15 This report draws principally on the documentation related to the voting at the session of November 24, 2010, of the Pemex Board of Directors. At this session the Pemex EP Contract Model received unanimous support save for the one dissenting vote of Rogelio Gasca Neri. This report reviews his legal and economic arguments against approval of the contract model.
100040 • Apr 27, 10 Rumaila and Chicontepec: Two Versions of a TSA 23 This report examines the similarities and differences between the contract by the BP-led consortium in Iraq in the Rumaila field and the contractual model under development by Pemex for Chicontepec.
100036 • Mar 31, 10 Pemex’s Performance Contracts: What Story Can Pemex Sell? 151 This report consists of an introductory page in PowerPoint and 15 pages of a hypothetical Pemex slide presentation the purpose of which would be to “sell” the Pemex story about the upcoming performance contracts.
716 • Dec 30, 07 The upstream procurement sytstem in Mexico: organization and outlook 128 This report examines the system of upstream procurement of goods, services and technology by Pemex and offers a look into how such procurement might look under liberalized policies. One of the seemingly intractable questions in Mexico in recent years has concerned what is called "access" to deepwater technology by Pemex. The report gives special attention to the role of SIDOE as the upstream facilities department; then looks at options and organizations for a future that could involve IOCs.
676 • Aug 18, 04 Pemex’s MSC Round Two: Mexicanization 812 This report asks about the purposes, postures and features of the Second Round of Pemex's Multiple Service Contracts. Attention is given to the MSC press briefing of July 29, 2004 as well as to the arguments of critics of the Fox administration in the PRI and PRD. The report features hyperlinks to related documents and to others by opponents in the Mexican congress.
661 • Jan 19, 04 Sep 5, 06 MSCs: Retrospect and outlook 213 This report examines the motives––for and against–participating in the first round of Pemex’s Multiple Service Contracts. Up to 1958 production sharing and equity rights to oil production were permitted in Mexico. A comparison of the Oil Law of 1958 (which governed the MSCs) with those of the prior law of 1941 suggests that major oil companies would have been more motivated to participate in the MSCs under the earlier framework. By August 2006 Pemex had developed new models of the MSCs.
652 • Sep 04, 03 Crystal-balling the winners of the MSC tenders 310 This report identifies qualitative factors that could favor the outcome of the tenders for Pemex’s first round of tenders for the Burgos Multiple Service Contracts. The predictions are based on the relative interest shown by prospective bidders at site visits, taking also into account Pemex’s traditional preferences in out-sourcing services by international companies.
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645 • Aug 15, 03 Apr 21, 04 MSCs: Congress pushes back––but too late? 113 This report examines Pemex's original arguments supporting the MSCs and the criticism, doubts and concerns that have come to surround them. The MSC program is seen as a catalyst that has opened Pemex's political culture. This report was updated on April 21, 2004 after the vote in the Lower House not to proceed with a request for a constitutional review by the Supreme Court.
640 • May 02, 03 May 22, 03 Pemex MSC Technical Workshop 96 Pemex’s final orientation workshop for prospective bidders and contractors for the upcoming tenders of the Multiple Service Contracts (MSC) was held at its Data Room in Reynosa on April 28-29, 2003. This report provides an overview of topics discussed (and not discussed), tables and two approximate maps showing the political divisions in which the blocks are located. A partial list of participating companies, by category, is also included.
629 • Feb 03, 03 Sep 4, 03 Odyssey of Pemex’s Multiple Service Contracts, 1991-2003 110 This report traces the unpublished highlights of the evolution of the MSC strategy from the early 1990s through August 2003, and identifies some of the pluses and minuses of the concept from the point of view of prospective bidders for whom to bid or not to bid is the question. Update 1 (Sept. 5, 2006) examines the revised version of the concept as promoted by the Fox administration in the final months of its term.
613 • Nov 14, 02 Dec 10, 02 Advances and delays in Pemex’s Multiple Service Contracts 36 This report asks about the real reasons for the postponement on October 14, 2002, of the first international tenders of Pemex’s Multiple Service Contracts (MSC). At the CBI conference on Mexican energy held in Houston Oct. 28-29, 2002 a Pemex representative gave an estimate of the cost advantage of MSC gas over imported gas in the year 2006.
589 • Jul 24, 02 Evolution of projects in Burgos: from Pidiregas to MSC 55 This report provides a comparison between two development programs and budgets for the Burgos Basin: one of the Zedillo administration in 1996 for the period 1997-2012 and another, of the Fox administration in 2001 for the period 2002-2021. The Fox program suggests a much greater degree of difficulty and risk than had been foreseen previously.
586 • Jun 26, 02 Upstream gas conference: Concepts and body language 05 This report provides an overview of the Mexican gas conference held in Mexico City June 20-21, 2002. Emphasis is given to the basic concepts presented by Pemex and to the coded messages contained in a number of the presentations.
585 • Jun 15, 02 Draft MSC model of June 13, 2002: Finessing objections 04 On June 12, 2002, the Fox administration sent to the Congress its generic contract in draft form. The next day Pemex Exploration & Production (PEP) posted this draft on its web site. This report briefly examines the way that the draft document handles several of the items and issues of controversy.
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591 • Jun 06, 02 MSCs: new questions and concerns 06 In late May and early June 2002 new questions arose about the proposed Multiple Service Contracts for dry gas production in the Burgos Basin. Some of these concern the legality of the Multiple Service Contract (MSC) framework, others with the commercial attractiveness of that framework considered in the light of the disappointments and write-offs associated with comparable programs in Venezuela. This report itemizes concerns among prospective contractors abroad and legislators in Mexico.
574 • Mar 02, 02 The future of Multiple Service Contracts in Mexico: 3 readings 04 International observers cite multiple reasons why Pemex's proposal for a contractual framework to attract operating companies to develop natural gas basins (discussed in Oil & Gas Journal, Feb. 11, 2002) may never get off the ground. This report identifies three of these reasons.
556 • Dec 18, 01 Virtual upstream opening in Mexico 18 This report reviews points of law, politics, history and language related to the breakfast presentation on December 6th of the Multiple Service Contract (MSC) by Pemex and the Energy Ministry. What was presented in bureaucratic language as business as usual (but with a twist of lemon) is the beginning of an upstream opening in Mexico.
555 • Dec 11, 01 Pemex’s Multiple Service Contracts: Preliminary analysis of policy, legal and 17 This report reviews the highlights of the proposed Multiple Service Contracts (MSC) that are intended to bring oil and gas companies into Mexico in an operational role. The report includes a comparison of the features and context of the new dry gas initiative with those of the legal figure of the Independent Power Producer (IPP).
548 • Nov 04, 01 Benchmarking Rumors on Multiple Service Contracts 07 This report brings together a number of the press leaks and comments given in industry and academic forums in recent months in relation to the new round of "multiple service contracts” that, for the first time, are intended to attract investments by oil and gas operating companies.
543 • Oct 19, 01 Will there be a role for oil companies in Mexico, 2001-25? 018 This report is based on the oral presentation given at the Energy & Law conference co-sponsored by the ITAM and the Mexican Academy for Energy Law, which was held in Mexico City at the ITAM campus on October 11-12, 2001.
539 • Sep 11, 01 Mar 14, 03 Triangulated upstream messages: Preview of Multiple Service Contracts 05 This report comments on the presentation at the Houston Geological Society on August 28, 2001 by Alfredo Guzmán, a senior Pemex geologist, on the subject of “Exploration and Production in México: Opportunities and Challenges.” The presentation included an overview of Pemex’s proposed Multiple Service Contracts.
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281 • Jul 08, 98 Risk Contracts in Mexico? 02 This report inquires into the state of the discussion about risk contracts for resource development in Mexico. In relation to risk contracts for oil & gas development projects in Mexico, two questions are often asked by international observers: (1) Why is this policy option not seriously considered? (2) Why is it almost impossible to hold even a hypothetical conversation in Mexico about this subject with officials in the Government or in Pemex?
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Reports on Mexican energy reform proposals and measures
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100038 • Apr 08, 10 Sustainable upstream development: Missed Opportunity for Reform 12 This report examines the Oil Reform of 2008 from the perspective of sustainable upstream development. In this regard, the Reform is seen as a missed opportunity, in that it failed to empower Pemex with the legal mandate to be a minority partner in joint ventures, instead requiring Pemex to serve as a contract administrator.
120108 • Dec 01, 08 The OIl Reform in Mexico 03 This article by George Baker discusses the strong points of the 2008 Energy Reform, noting also, omissions, such as measures to involve the expertise of oil companies in deepwater E&P and making the tenure of the corporate director general of Pemex at the pleasure of the Pemex board. WORLD OIL (Dec. 1, 2008).
112808 • Nov 28, 08 Las artes marciales 01 This article offers a critique of the organizational structure of exploration in Pemex. The article suggests that a future reform would contemplate two options: one, with a VP of Exploration with line authority; two, with exploration separated from PEP and made into a separate subsidiary. REFORMA, Nov. 28, 2008.
110808 • Nov 08, 08 Los costos de oportunidad 01 An dialogue between Pedro and Pepito in which they cynically discuss the ways that some economic interests benefit by the absence of energy reform and the blocking of some of the measures that President Calderón had proposed, such as authorizing private investments in product pipelines and storage. REFORMA Nov. 8, 2008.
733 • Mar 18, 08 MEI Journal: The Energy Counter-Reform Begins 04 A MEI Journal Report comments on multiple topics, including the counter-movement against Calderón’s energy reform proposals; the 70th Oil Expropriation Celebrartion; and Pemex’s deepwater media campaign.
732 • Feb 08, 08 Mar 13, 08 Congressional energy reform in 2008? 210 This report examines the current political dynamic in Mexico in relation to the many topics for energy reform that have been proposed since 2000. Many observers believe that Calderón will push for a short menu of topics for energy reform in the spring session of Congress in 2008; others believe that the voices and forces against reform of any kind will prevail, pushing the time-table to the LXI Congress that begins Sept. 1, 2009. The report provides a list of 16 hypothetical bills that could be passed into law this term.
714 • Dec 31, 07 Feb 22, 08 Energy reform in Mexico: The Cárdenas Factor 1011 This report examines the extraordinary influence of Cuauhtémoc Cárdenas in shaping-and limiting-public discussion of energy policy in Mexico. His policy views, articulated in speeches, interviews and writings, define the politically safe space which the Calderón administration can occupy in formulating its own energy program for 2007-12. The report compares the agenda of Cárdenas with those of the National Development Plan and the Senate Energy Committee.
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Reports on Mexican energy reform proposals and measures Table/ File # Published Updated Topic Pages graph
705 • Dec 08, 05 Dec 15, 05 Proposals to restructure Pemex, 2000-05 210 This report examines the background to new proposal in the Mexican Congress to restructure Pemex in a way that eliminates the four operating units and that does away with international benchmarks for transfer prices. The highlights of the November 2005 bill in the Lower House to reorganize Pemex are discussed and possible advantages and disadvantages of the proposed reorganization are itemized.
699 • Oct 26, 05 Oct 30, 05 Setbacks in policy, regulation and industrial organization in Mexico's energy 015 This report concentrates on the setbacks in policy as well as industrial performance in the energy sector in Mexico since 1989. Discussion is in two main parts: chronological, by presidential period, and topical, by industrial activity. Topics include power, chemicals, oil and gas, regulation and legal framework. The report itemizes policy and institutional features that have not worked. The analysis offers a basis to better understand the policy positions of the parties and candidates in the 2006 elections.
698 • Oct 12, 05 Nov 16, 05 Energy debate in the 2006 elections 412 This report examines recent positions taken regarding the energy sector by principal presidential candidates. On Sept.12 President Fox offered ten proposals for the energy sector, including one constitutional reform. In the same month PRD candidate Andrés Manuel López Obrador announced his policy agenda. His ideas for the energy sector were sharply rebutted by PRI policy analyst Adrián Lajous. There are signs that energy in the election debates will become more than exercises in flag-waving.
656 • Oct 29, 03 Nov 3, 03 Reform proposals in the hydrocarbon-to-power value chain 25 This report analyzes two legislative proposals which would have the effect to strengthen Mexico’s electric power infrastructure and generation capacity. A PRI proposal submitted on Aug. 27, 2003 by Deputy Jorge Chávez Presa contemplates a constitutional change to permit private investment in nonassociated gas fields to guarantee an adequate supply for power generation. A second proposal, announced Oct. 8, 2003 by PRD Sen. Demetrio Sodi, would have Pemex Refining responsible for building 2-4 Gw of additional cogeneration capacity—enough to last to 2010?
604 • Oct 29, 02 Oct 31, 02 Proposed market design in Fox’s electric reform initiative 07 Analysis of market design in the Fox electric reform proposal. Who will be the new stakeholders in the new power market in Mexico? How will the new power market be organized and regulated?
600 • Aug 26, 02 Fox’s electric power reform: Fuss vs. philosophy 17 The reaction in Mexico City to President Vicente Fox’s August 16th proposed reform for the power sector caused an electric storm of controversy. This report sorts out philosophical, policy and polemical issues, and assesses the politics of congressional action.
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584 • Aug 01, 02 Costs of delay in electric power reform: A preliminary analysis 57 A commonplace observation regarding the delays in electric power reform in Mexico is that the economy will pay a higher price at some point in the future. This report takes an experimental approach of applying the theory of real options (taken from finance) to the analytical problem of quantifying the dollar value of delays in the CFE investment program as a result of failure to introduce structural reforms.
570 • May 22, 02 PRI’s proposal for the electric sector 12 In March 2002 the PRI submitted to the Congress its initiative of reforms for the electric sector. The proposal, which is based on seven principles, aims at reinforcing the status quo of state ownership and operation of the electric system to provide the public service of electricity. A summary and critique of the proposal principles is presented.
583 • May 22, 02 Two views on electric sector reform 12 This report provides an overview of the striking differences in perspective between traditionalists and reformers in relation to the challenges ahead in Mexico’s electric sector. Only to the extent that the reformist perspective (now in the minority) gains influence in the Mexican public and Congress will there be greater private investment in electric power generation and distribution.
518 • Jul 02, 01 Oct 21, 02 Avoiding mistakes about energy policy “openings” 03 An analogy is made about the two types of errors of statistical reasoning in relation to corporate strategy in Mexico’s energy sector. An update of MEI 00-460 of December 12, 2000.
494 • Apr 17, 01 Frustrated gas market opening under Zedillo 03 Review of the events of Nov. 5, 1995 when President Zedillo’s policy for the liberalization of the natural gas market was unveiled. Comments on Pemex’s negative reaction.
479 • Feb 14, 01 New model for Mexican energy sector? 12 This report reviews conversations held early in the Fox administration in Norway and in Mexico City between Mexican energy officials with Statoil executives and government counterparts from Norwary.
452 • Oct 20, 00 Policy trial baloons in Fox’s Transition Team for Energy 02 This report analyzes press leaks on October 13, 2000, about policy ideas being floated internally in the Fox Transition Team for Energy.
448 • Oct 04, 00 Position paper by Fausto Alzati re oil policy 07 Translation and review of position paper by Fausto Alzati.
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387 • Dec 28, 99 1999 energy policy balance: market advocates vs. central planners 01 Summary of energy policy balance during 1999: market advocates vs. central planners.The Mexican energy sector is one that is in transition from a command to a market economy. In 1999 the management of the sector was the scene of a struggle between state planners and market advocates. With few exceptions, the state planners and their political and institutional allies held their ground. One result is that the outlook for business deve- lopment favors projects in which private investors operate as contractors to the State-owned energy companies; the outlook for a role for private industry as competitors is problematic.
382 • Nov 18, 99 Legal and Institutional Issues Afecting Power Restructuring 11 Discussion of presentations on the power sector given at a panel held in New Orleans on November 5th sponsored by the Mexico Committee of the American Bar Association. The third panelist, from the private sector, focused on legal, regulatory and market obstacles standing in the way of a real market opening in the electric power sector. The paper began with a critique of the pending neoprotectionist legislation regarding Government procurement and public works.
374 • Oct 22, 99 Transition to a market economy in the energy sector: obstacles 04 British Chamber of Commce address by George Baker: “Transition to a market economy in the energy sector: obstacles”
373 • Oct 10, 99 Zedillo Energy Scorecard 12 Discussion of the progress made by the Zedillo adminitration in opening the natural gas and LPG markets.
344 • Jun 04, 99 Mexican critiques of Zedillo power restructuring initiative 01 Review of the positions and arguments against the power restructuring proposal of president Zedillo.
332 • Apr 04, 99 Delay in Congress regarding Zedillo Power Restructuring Initiative 01 Discussion of the opposition to president Zedillo’s power sector restructuring proposal. The opposition parties had agreed not to put up for a vote the Government’s proposal of February 3 to privatize the state-owned power industry.
307 • Dec 19, 98 Privatization outlook to year 2000 and beyond 0 Report on developments and trends affecting investments and operating environment in Mexico’s energy sector.
301 • Nov 13, 98 Mexican energy policy in 2008: Scenario analysis 1 Scenario analysis presentation on upstream policy at the Pemex’s upstream technology conference.
208 • Jul 31, 97 Pemex monthly stats. 06/1997 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for June1997.
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Reports on Mexico’s Electric Sector
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758 • Dec 17, 09 Structural Reform and/or Electoral Strategy: Calderón’s Risky Play against 1615 This report analyzes the foreground and background to the crisis in the labor movement that was provoked by the government’s seisure of the installations of Mexico City’s power utility and by its orders to liquidate the company and eliminate the jobs of some 44,000 employees.
100022 • Dec 08, 09 Popular Support for the SME vis-à-vis the Calderón Government 01 This report probes a century of Mexican political narrative to explain the popular support in Mexico for the terminated workers of the SME, the labor union of LFC, the government-closed power utility. The government’s justification for the "declaration of war" against the Electricians' Union is questioned in public opinion surveys
100020 • Nov 10, 09 Government Emergency Reaction to Court Ruling in SME Complaint 01 This report provides highlights of the government's position on the closure of LFC, the state-owned electric utility. An emergency press briefing was held on Sunday, November 8th, in response to a ruling by the Labor Arbitration Board (JFCA). The government depicted the demands of SME, the LFC labor union, as "a judicial adventure ride," and insisted that the collective labor agreement was defunct.
100015 • Oct 14, 09 President Calderón Liquidates Luz y Fuerza del Centro 01 This report examines the political background to the decision by President Calderón to close Luz y Fuerza del Centro (LFC), the power company with a 100-year-old, radicalized labor union. Observers speculated that the decision to close the company was, in the background, a decision to attempt to eliminate a radical, anti-government labor union that certainly would have been in the opposition in the 2012 general electons.
726 • May 13, 07 Rethinking regulation and public oversight in the electric sector 79 This report examines the drivers for change in the regulatory framework and public oversight of the electric sector in Mexico. The report reviews proposals for the electric sector in Mexico since 1999, some of which have called for constitutional changes, others for only changes in the law and regulations. The report focuses on the bill pending in the Congress that upgrades the CRE’s role in the electric sector, setting an example for expanded public oversight throughout the energy sector.
701 • Apr 26, 07 Apr 30, 07 Mexico’s energy sector: Paralysis by analysis? 29 This report examines the value of energy-sector seminars and workshops in Mexico as mechanisms that promote consensus regarding energy, industrial and investment policy and regulatory institutions. The report provides highlights from a number of conferences and workshops, from the 10-year CRE conference in the fall of 2005 to the workshop at the ITAM in 2007. The report identifies the weaknesses of such exercises, noting that panelists tend to speak in code-language that affirms the policy status quo.
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663 • Nov 21, 03 Dec 6, 03 The logic and politics of cogeneration in Mexico 213 This report reviews the history and politics of cogeneration in Mexico, focusing on the media and legislative attention given to this topic in October 2003. Table 1 of the report is a chronology of events associated with cogeneration that includes hyperlinks to the original documents. Fig. 1 is the table of contents of the hearing of the Senate Energy Commission on Oct. 7, 2003.
623 • Jan 10, 03 Statistics on Mexico's power sector 05 This report provides a short, annotated bibliography of the public and semi-public publications that provide statistics on Mexico's power sector. Such publications often hide more than reveal; but, in the land of the blind, the one-eyed statistician is king.
610 • Nov 06, 02 Electricity prices in Mexico: low, high or debatable? 58 Are Mexico's electric tariffs higher or lower than tariffs in the U.S.? In Mexico, this question alone is a political debate. In this report arguments about electricity prices in Mexico are tested using data on electricity prices for Mexico and the U.S. for the years 1994-2001.
604 • Oct 29, 02 Oct 31, 02 Proposed market design in Fox’s electric reform initiative 07 Analysis of market design in the Fox electric reform proposal. Who will be the new stakeholders in the new power market in Mexico? How will the new power market be organized and regulated?
602 • Aug 30, 02 Components of Fox reform for the electric sector 010 The Fox reform package for the electric sector submitted to Congress on August 21, 2002 includes amendments to the Constitution, existing legislation as well as the creation of new laws. The purpose of the reforms is to open the sector to private investment and create a partially deregulated power market which the Fox administration expects will be attractive for private capital.
600 • Aug 26, 02 Fox’s electric power reform: Fuss vs. philosophy 17 The reaction in Mexico City to President Vicente Fox’s August 16th proposed reform for the power sector caused an electric storm of controversy. This report sorts out philosophical, policy and polemical issues, and assesses the politics of congressional action.
584 • Aug 01, 02 Costs of delay in electric power reform: A preliminary analysis 57 A commonplace observation regarding the delays in electric power reform in Mexico is that the economy will pay a higher price at some point in the future. This report takes an experimental approach of applying the theory of real options (taken from finance) to the analytical problem of quantifying the dollar value of delays in the CFE investment program as a result of failure to introduce structural reforms.
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Reports on Mexico’s Electric Sector Table/ File # Published Updated Topic Pages graph
570 • May 22, 02 PRI’s proposal for the electric sector 12 In March 2002 the PRI submitted to the Congress its initiative of reforms for the electric sector. The proposal, which is based on seven principles, aims at reinforcing the status quo of state ownership and operation of the electric system to provide the public service of electricity. A summary and critique of the proposal principles is presented.
583 • May 22, 02 Two views on electric sector reform 12 This report provides an overview of the striking differences in perspective between traditionalists and reformers in relation to the challenges ahead in Mexico’s electric sector. Only to the extent that the reformist perspective (now in the minority) gains influence in the Mexican public and Congress will there be greater private investment in electric power generation and distribution.
582 • May 14, 02 May 16, 02 Outlook for LNG and MSC: Aftermath of Supreme Court Ruling 07 This report reviews the principal arguments of the Mexican Supreme Court related to its ruling of April 25, 2002 in relation to electric power. Two questions are asked about the future: How do these arguments affect other energy policy innovations, such as LNG and Multiple Service Contracts? What is needed for a sustainable division of powers to exist in Mexico?
547 • Oct 26, 01 International investors in Mexico’s gas and power markets 113 This report examines economic and market data associated with the permits granted by the Energy Regulatory Commission (CRE) in the areas of gas and power. The analysis focuses on the concentration of market power by international companies, mainly European.
523 • Jul 13, 01 Presidential decree in the Electricity Sector Laws 02 Reactions to Presidential decree issued by President Fox and Ministry of Energy Ernesto Martens regarding the purchase of surplus capacity and energy by the CFE.
397 • Feb 04, 00 Río Bravo III project (U.S. side plant option) 01 This report discusses the Mexican Government’s proposal in February 2000 to promote cross-border power infrastructure.
394 • Feb 01, 00 Mexican industry’s electric power strategy 1 Discussion of how the security of energy supplies to Mexican industry is undermined by the monopolistic positions of CFE and Pemex in power and natural gas, respectively.
382 • Nov 18, 99 Legal and Institutional Issues Afecting Power Restructuring 11 Discussion of presentations on the power sector given at a panel held in New Orleans on November 5th sponsored by the Mexico Committee of the American Bar Association. The third panelist, from the private sector, focused on legal, regulatory and market obstacles standing in the way of a real market opening in the electric power sector. The paper began with a critique of the pending neoprotectionist legislation regarding Government procurement and public works.
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Reports on Mexico’s Electric Sector Table/ File # Published Updated Topic Pages graph
351 • Jun 24, 99 Mexican “communism” in the electric sector 1 Discussion of address at , by Rosendo Flores, representative of the Mexican Electricians’ Union, speaking at the 87th meeting of the International Labor Organization, held in Geneva in June 1999. The topic of his address as the failure of neoliberal economic policies. An English translation of his remarks is provided.
328 • Mar 30, 99 Power savings outlook analysis by Rafael Friedmann 0 Document by Refael Friedman on the outlook for power savings derived from demand-side management policies.
318 • Feb 08, 99 Restructuring the electric power sector: soft issues 12 This report discusses the politics of President Zedillo’s initiative of February 1999 to restructure Mexico’s state-managed power sector.
267 • May 07, 98 Analysis of power market cooperatives 02 Analysis of the development of PEGI, a private power cooperative in Monterrey.
248 • Feb 26, 98 Pemex role in power markets 3 Review of the role of Pemex in the generation of electricity in Mexico.
229 • Oct 30, 97 SE report on investment opportunities in electric power 0 Energy Ministry report on investment opportunities in the electric power sector.
123• Jul 03, 96 Analysis of producer efficiencies *Maria
110• May 14, 96 Continuing uncertainty about Samalayuca *Maria
64• Nov 02, 95 Salamayuca IPP update Comments on delays in Samalayuca IPP project
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Titles of MEI reports related to the FCPA risk in Mexico
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100127 • May 26, 12 May 29, 12 FCPA Risk in Mexico (Part II): Wal-Mart vs. Sempra 630 This report is a follow-up of an earlier report on FCPA risks in Mexico, published July 23, 2011. In that repor report we examined diverse risks as seen in the stories of Metalclad, Marathon Oil and Sempra Energy in Mexico. In this report, we examine, comparatively, the allegations of illicit payments in Mexico made by Wal-Mart and Sempra. At the same time, we reexamine the discussion among economists about the efficiency of corruption as a mechanism that promotes economic development.
100094 • Jul 21, 11 The FPCA Risk in Mexico 313 This report seeks to identify features of the Mexican operating environment that tend to put individuals and corporations at risk for non-compliance of the Foreign Corrupt Practices Act of 1977. The report identifies eight (8) situations in Mexico where a company subject to FCPA rules may either be a victim of corruption or find himself in circumstances that could compromise his FCPA compliance standards and protocols. The history of Metalclad, Marathon Oil and Sempra Energy illustrate these situations.
100067 • Nov 07, 10 May 19, 12 The Perception of Corruption in Mexico 27 Each year, Transparency International, an NGO with a global reputation and presence, issues its report corruption in the public sector in more than 170 countries. The perception of corruption in the public sector is measured for each country on a 10-point scale, where 0 = Most Corrupt and 10 = Most Honest. Countries are also ranked, comparatively. In the 2010 report, Mexico ranked 93 in a list of 176 countries. Afganistan scored with the highest level of corruptio, while Demark was least. The present report examines different forms of corruption observed in Mexico.
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Reports on Personal and Corporate Security in Mexico
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100094 • Jul 21, 11 The FPCA Risk in Mexico 313 This report seeks to identify features of the Mexican operating environment that tend to put individuals and corporations at risk for non-compliance of the Foreign Corrupt Practices Act of 1977. The report identifies eight (8) situations in Mexico where a company subject to FCPA rules may either be a victim of corruption or find himself in circumstances that could compromise his FCPA compliance standards and protocols. The history of Metalclad, Marathon Oil and Sempra Energy illustrate these situations.
100073 • Dec 29, 10 Murder She Wrote 47 This report inquires into two of the 30,000 homicides that have taken place in Mexico during the presidency of Felipe Calderón: Marisela Escobedo, 52, a victim’s-rights advocate in Ciudad Juárez, Chihuahua; and Silverio Cavazos, 42, a former governor of the State of Colima. Such inquiries may lead to a better understanding of the nature of violent crime in Mexico and of the administration of criminal justice and of the outlook for public safety.
100067 • Nov 07, 10 May 19, 12 The Perception of Corruption in Mexico 27 Each year, Transparency International, an NGO with a global reputation and presence, issues its report corruption in the public sector in more than 170 countries. The perception of corruption in the public sector is measured for each country on a 10-point scale, where 0 = Most Corrupt and 10 = Most Honest. Countries are also ranked, comparatively. In the 2010 report, Mexico ranked 93 in a list of 176 countries. Afganistan scored with the highest level of corruptio, while Demark was least. The present report examines different forms of corruption observed in Mexico.
100052 • Jul 23, 10 Risk Factors in Pemex Debt 31 This market note identifies risk factors associated with Pemex debt that are not reported in Pemex's Form 20-F. There are three exhibits from Pemex’s filing dated June 29, 2010.
727 • Mar 13, 07 Mar 26, 07 Exploration risk, business development and energy policy in Mexico 118 This report examines cultural factors that affect discussions in the public and private sectors about energy topics in Mexico. The report considers the use of quantified data and the issues of language. In relation to styles of communication, the report notes differences between the sensibilities found in Mexico City and those found in Monterrey, the United States and Europe. In relation to quantified data, the report notes that data in the oil sector are typically not comparable with data in global databases. These features make exploration, business and policy costly and problematic.
675 • Jul 08, 04 The rising cost--and backlash--of insecurity in Mexico 114 Insecurity in the Federal District and in border cities such as Tijuana and Cd. Juárez is increasing the cost of doing business in Mexico. The same insecurity is reducing the quality of life in these cities, as average residents and business visitors are often in fear of their personal safety and that of their families. The report narrates experiences of several crime victims, describes the anti-crime protest march of June 27 in Mexico City, and draws lessons for policymakers, businesses, residents and tourists.
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Reports on Personal and Corporate Security in Mexico Table/ File # Published Updated Topic Pages graph
673 • May 25, 04 The risk of virtual expropriation: Metalclad and Marathon Oil 59 This report examines the risk to investors in infrastructure projects in Mexico from indirect or regulatory expropriation. The cases heard in the first ten years of NAFTA leave serious doubts about the remedies available under its Chapter 11. This report examines two virtual expropriations: that of Metalclad Corp. in 1997 and that of Marathon Oil in 2004. Two questions are asked: What went wrong? and What are the lessons?
639 • Apr 27, 03 Jul 18, 08 Risk exposure for contractors in the Mexican upstream 013 Contractors and subcontractors face an array of normal business risks in pursuing business opportunities in Mexico’s upstream. Risks are those contained within the terms of the contract as well as other types of risk that arise from the operating environment. This report contrasts the perceptions of risk by oil companies and oilfield service companies in relation to MSCs. It also considers risks in relationships and contracts with local companies in Mexico.
601 • Aug 27, 02 Oct 16, 03 Due diligence in Mexico’s energy sector 012 This report discusses the challenge of carrying out due diligence in Mexico’s energy sector both by public sector organizations and by private companies. Grounds for shareholder complaints about management failure to carry out due diligence are itemized, and ideas for improving management performance are offered.
598 • Aug 13, 02 Managing business intelligence services regarding Mexico 17 This report examines intellectual challenges facing the manager responsible for business development in Mexico. What is the role of business intelligence subscription services in a world in which managers complain of redundancy and information overload?
506 • May 30, 01 Country and project risk in Mexico 05 Analysis of cultural and political issues that, together, lead to country and project risk in Mexico.
326 • Mar 04, 99 PEMEX procurement pitfalls 01 Discussion of Pemex procurement practices.
279 • Jul 06, 98 Personal safety measures in Mexico City 0 Precautionary and personal safety recommendations for travelers to Mexico City. The atmosphere of Mexico City today is very much colored by a concern for personal safety. There is probably no one in the middle and upper classes who does not personally know someone who has been mugged or robbed (or worse) in the past three years.
141• Sep 03, 96 Country and security risk in Mexico *Maria
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131 • Aug 08, 96 Cactus explosion: background analysis 12 An interview on Aug. 3 with Hugh Harleston, Jr., a former Pemex contractor, now retired in Tijuana,led to a new perspective on the Cactus explosion of July 26: The contractor visitedthe refrigeration units at the Cactus plant in December 1994, and, at the time, wasrepresenting a systems automation company.
112• May 15, 96 Risk factors in financial transactions--case of Sidek *Maria
110• May 14, 96 Continuing uncertainty about Samalayuca *Maria
87 • Feb 15, 96 Jul 7, 04 Personal safety measures in Mexico 01 For the middle and upper classes of Mexico City, daily life now includes exposure to the risk of armed robbery, assault and abduction. For most persons of this sector of society (both Mexican and foreign residents), incidents of this kind have happened, if not to them personally, then to persons in their family, social or professional circles. The business traveler to Mexico also needs to be aware of this danger and to take general and special precautions.
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Reports on Diverse Legal Issues in Mexico
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100812 • Oct 08, 12 Mexico does not need Constitutional Change to Update PEMEX 01 An telephone inquiry from Notimex on October 5, 2012, in relation to the announcement by President Felipe Calderón that morning of an oil discovery at Supremus-1, near the U.S.-Mexco maritime border, resulted in an article in Milenio about the reaction of Houston-based analysts to the discovery. A Press Perspective was prepared later that day, commenting on the rumors of “constitutional changes. The article is here reprinted in Mexidata.org. (http://www.mexidata.info/id3464.html).
100127 • May 26, 12 May 29, 12 FCPA Risk in Mexico (Part II): Wal-Mart vs. Sempra 630 This report is a follow-up of an earlier report on FCPA risks in Mexico, published July 23, 2011. In that repor report we examined diverse risks as seen in the stories of Metalclad, Marathon Oil and Sempra Energy in Mexico. In this report, we examine, comparatively, the allegations of illicit payments in Mexico made by Wal-Mart and Sempra. At the same time, we reexamine the discussion among economists about the efficiency of corruption as a mechanism that promotes economic development.
110111 • Nov 01, 11 Sanciones que asombran 02 Hay auditorías que contribuyen a la parálisis, no al fortalecimiento, de Pemex. GEORGE BAKER* Quis custodiet ipsos custodes? En la coyuntura de hoy, la pregunta del poeta romano Juvenal puede expresarse así: ¿Quién vigila a los auditores? Las sanciones administrativas en contra de algunos altos funcionarios de Pemex incitan a éste y a otros cuestionamientos. [...] Published in ENERGIA A DEBATE (available online)
100106 • Oct 24, 11 Jun 19, 12 Making Sense of PMI Exec Sanctions 28 This report examines the puzzling turn of events by which the two most well known Pemex executives, Rocío Cárdenas and Sergio Guaso, were relieved of their duties on the same day, along with members of their teams. The focus of the report is on the findings of government auditors who found fault in the pricing of coker naphtha in a series of export sales. The report concludes that the auditors acted without a grounding in the dynamics of commodity markets, and that revisions to the law are needed to protect traders.
100069 • Dec 08, 10 Pemex Regulations vs. the Constitution 28 The Mexican Supreme Court ruled on December 2 and 7, 2010, that the complaints of unconstitutionality by the Chamber of Deputies in diverse matters relating to Pemex were unfounded. These court rulings seem to give Pemex the legal green light to proceed with a strategy at the heart of the Energy Reform of 2008 to attract operating companies to serve as contractors in diverse areas, including mature fields and deepwater. In this report, we explore the question, Are there still areas where Pemex's program is vulnerable to further legal challenges?
100033 • Mar 21, 10 Legal Structure of the Mexican Energy Sector: Demystified 22 This report provides a simplified (and demystified) description of public administration in the energy sector. The goal is quickly arrive at vantage point from which the legal and institutional landscape in which the upcoming public tenders for Pemex's performance contracts may be seen.
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100024 • Feb 26, 10 Extra-Judicial Fixes to Procurement Guidelines 02 This report comments on the back-room negotiations between the PT (Labor Party), PRI and PAN in relation to the Pemex procurement rules that had been issued Jannuary 6, 2010, the constitutionality of which had been questioned by the PT.
100023 • Jan 10, 10 Pemex Special Procurement Rules 12 This report gives a preliminary assessment of the new procurement rules (known as DAC, the Spanish acronym) that were issued January 6, 2010, and that permit Pemex to devise contract models outside the terms of the Public Works Law.
644 • Jun 11, 03 Legal reform as trigger event in Mexico’s energy sector? 111 This report asks if the Fox Administration is planning a reengineering of the legal foundation of the Mexican State. The report mentions two seminars held in April and May 2003, one at Harvard and the other at the Iberoamericana University. The policy issues discussed in these seminars present a preview of possible future developments in the energy sector.
546 • Oct 24, 01 Second Annual ITAM/AMDE Seminar on Energy and Law 05 This report comments on the industry and policy seminar that was held in Mexico City Oct. 11-12, 2001 and cosponsored by the ITAM and the AMDE (www.amde.com.mx).
526 • Jul 30, 01 Jan 23, 03 Energy Sector Information Act 09 This report analyzes the lack of market discipline in energy sector reporting, and proposes measures to standardize reporting, units of measure and access to people, seminar presentations and data. The idea of an Energy Sector Information Act for Mexico is explored.
372 • Oct 18, 99 Government procurement in the energy sector 01 Review of the delays in the Cadereyta refinery upgrading and government procurement in the energy sector.
326 • Mar 04, 99 PEMEX procurement pitfalls 01 Discussion of Pemex procurement practices.
010693 • Jan 06, 93 El papel de la ley no escrita en el sistema judicial mexicano 01 This article by George Baker (The Role of Unwritten Law in Mexico's Judicial System), was one of a series of articles that were criticial of the judicial actions by the Salinas government against the leaders of the Oil Union. The essay argues that case against the union leaders was for their having broken unwritten rules. Published in La Opinión (Los Angeles), Jan. 6, 1993.
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Reports on Political Issues and Presidential Cycles in Mexico
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100132 • Jun 17, 12 Jun 20, 12 Mexican Spring: The Presidential Election of 2012 012 This report asks about the possibility that the long-favored PRI candidate, Enrique Peña Nieto, may lose the July 1st election. Should he lose it, despite months of being the leading candidate, a principal cause of his defeat will have been the mobilization of public opinion against the PRI by the student movement known as "Yo Soy 132." The background section we reexamine the history of PRI rule in Mexico. We review the online, attack ads against Peña Nieto, and offer highlights of the 2nd debate.
100115 • Jan 24, 12 Oil and Mexican Elections 09 Mexico is in its fourth-generation of legal systems for oil exploration and development. From 1885-1925 the surface owner also held mineral rights. From 1925-40, there was a concession system. From 1941-58 a regimen of PSAs. Since 1958, private investment in the upstream has been only as a service contract with Pemex. Current policy, which provides for a service fee/barrel to a contractor for field operations is the most recent innovation. How will presidential candidates of 2012 see the future of upstream policy?
100008 • May 31, 09 Why Is Mexico Mexico? 01 This report succinctly asks about why Mexican economic policy requires complete control over energy prices in oil products and electricity. The answer that is suggested is that Mexico suffers from a weak tax system.
723 • Dec 22, 06 Jan 25, 07 Why López Obrador lost in 2006 012 This report examines identifies a dozen factors at play in the elections of 2006 that, together, defeated the once, sure-to-win Andrés Manuel López Obrador, the presidential candidate of the coalition led by the PRD. The working hypothesis is that the ultimate outcome of the voting on July 2 was visible by June 2. The report draws on conversations with Mexican voters, political analysts and industry observers in Mexico and the United States during the period Dec. 5-16, 2006.
692 • Nov 27, 06 How serious is the opposition to Calderón's presidency? 015 The report distinguishes between opposition to the likely policies of the new administration and opposition to the person of Felipe Calderón as President of Mexico. This report examines attitudes in Mexico toward Calderón during the weeks that culminated in the self-described inauguration on Nov. 20 of his principal opponent, Andrés Manuel López Obrador. The report is based on a series of interviews with voters and observers in Mexico City as well as on a survey of the Mexican and international press.
715 • Aug 18, 06 Sep 7, 06 Electoral outlook to January 1, 2007 514 This report examines claims of institutional bias and voting irregularities in the election of July 2, 2006. It offers an outlook for the period leading up to Dec. 1, 2006, the date set by law for the transfer of power to the new president. The report also offers an outlook for electoral and political developments in probability-weighted scenarios. Central to political forecasting is a sober pondering of the effect that the demands and strategy of civil disobedience of the PRD may have on the outcomes.
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713 • Jul 12, 06 Why the PAN lost in 2006 39 This report examines arguments and points of view voiced in Mexico City during the period July 1-3, 2006,as to why the PAN would lose the presidential elections of July 2, if not numerically, then morally by the lack of a clear mandate to govern. The arguments revolved mainly round the expected boomerang effects of actions and policies taken by the Fox administration, the PAN campaign, and the academic, media and industrial Establishment.
712 • Jun 29, 06 Jul 5, 06 Political endgame, 2006 210 This report views the elections of 2006 as a referendum on two topics: the performance of Vicente Fox as president and the readiness of Mexico to accept a government from the Left. The report draws on six months of interviews in Mexico City and elsewhere with prospective voters. The report argues that the election boils down to voting for--or against---López Obrador. A list of reasons for each choice is provided.
710 • Jun 20, 06 Why the PRD will win in 2006 39 This report examines the new political situation in Mexico that arose after the televised debate on June 6, 2006, among presidential candidates. The report concludes that the electoral dynamics of the new situation, reinforced by predictable patterns of undecided voters, point to a victory by the PRD presidential candidate on July 2.
709 • May 20, 06 Jun 28, 06 Why the PAN will win in 2006 014 This report examines the similarity between the successful electoral strategy employed by the PRI in the elections of 1988 and 1994 and the strategy employed by the PAN and PRI since 2004. The report concludes that the strategy that worked well in 1994 in Mexico and in 2004 in the United States will deliver a PAN victory in 2006.
707 • Mar 24, 06 Oct 25, 06 Anti-globalism in Mexican oil politics 137 This report examines, in detail, an example of the anti-globalist sentiment voiced in populist movements in Latin America, from Mexico to Bolivia. In the present instance, a coalition of diverse groups has issued a call for the "re-expropriation" of Mexico's oil industry from the allegedly privatizing intentions of neoliberal administrations. The authors call for the cancellation of contracts involving foreign companies, the elimination of the CRE, and other measures. The original and an English translation is appended.
704 • Dec 02, 05 Apr 27, 06 If Fox were a candidate? Voter preferences regarding the reelection of 09 This report summarizes interviews with Mexican voters in Mexico City and Houston during the period Nov. 2005-April, 2006. Voters were asked, If Vicente Fox were among the candidates for president for the period 2006-12, would you vote for him? They were also asked to rank Fox in the order in which they would vote for him were his name on the ballot. The survey gives a glimpse of how voters see Fox's administration, and may point to differences in perspectives between voters in Mexico and voters in the United States.
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695 • Aug 18, 05 Pemex performance deflated for population growth, 1993-2004 75 This report examines selected measures of Pemex performance during the period 1993-2004 and poses the question, How well has Pemex kept up with Mexican population growth and the implied demand for products and tax revenue? In some areas, crude exports, for example, Pemex is ahead of the population curve; in other areas such as petrochemicals, refining and crude production net of Cantarell, Pemex is behind. Viewing Pemex data scaled to population gives new clues about sustainability and problem areas.
696 • Jul 08, 05 Feb 6, 06 Why the PRI will win in 2006 612 This report examines arguments and data bearing on the outcome of the presidential elections of July 2, 2006. While surveys indicate that the prospective candidacy of the PRD's Andrés Manuel López Obrador is ahead of any PAN or PRI candidate, voters will likely follow traditional patterns, which, by default, give the elections to the PRI. The report draws on results of a poll of voters conducted in May 2005 by the Institute of Marketing and Opinion. The implications of a PRI victory in 2006 for energy policy are explored.
666 • Feb 23, 04 Mexican elections 2006: Andrés Manuel López Obrador 010 This report, the second in a series on the presidential elections of 2006, draws on the presentation given by political scientist George Grayson to the Houston World Affairs Council on Feb. 11, 2004. Dr. Grayson noted that the popular mayor of Mexico City would win the 2006 presidential elections in Mexico if they were held on that date. Grayson pointed to the potentially negative effects of a López Obrador presidency--negative for international investors and Mexican politicians who seek structural reforms in energy, taxes and labor.
646 • Jul 04, 03 Mexico’s midterm elections: The invisible political machinery 912 This report outlines the history and electoral machinery of elections in Mexico. An upcoming policy struggle over energy reform appears in the tea leaves of the profiles of PRI candidates for congress and governors in the midterm elections of July 6, 2003. The report explains and details the institutions of conscription and plurinominal, and provides a list of the top-listed candidates for each conscription and party.
643 • May 30, 03 Oct 27, 03 Presidential Elections, 2006 18 The midpoint in the Fox presidency is an inflection point for aspirants to his job for the period 2006-12. This report reviews the political culture of Mexico under the PRI and comments on the strengths and weakness of the three major parties as well as the persons who appear to be the leading presidential candidates: Francisco Barrio, Roberto Madrazo and Andrés Manuel López Obrador.
603 • Sep 20, 02 Regime change in Mexico: Fox’s Address to the Congress 015 In Mexico, the psychological and moral equivalent of the terrorist attacks of September 11th is the earthquake that struck the capital on September 19, 1985. This report traces its political aftershocks up to Fox’s State-of-the-Union address of September 1, 2002.
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569 • Mar 29, 02 Apr 4, 02 Chambers of industry, commerce and influence in Mexico’s business culture 27 This report profiles the principal industrial and commercial associations in Mexico (including Pemex’s oil union), and assesses their significance for the energy sector. The history, leaders and web sites of the main chambers of commerce are provided in a separate table.
572 • Mar 23, 02 May 19, 02 Carlos Salinas in Houston; seeks political rehabilitation 03 After seven years, Carlos Salinas de Gortari, returns armed with a 1,400 page memoir in English. He was in Houston on March 15, 2002 in an effort to seek political rehabilitation. He spoke at two events: a breakfast with members of the Mexican Business Council and a presentation at the Baker Institute of Rice University.
567 • Feb 27, 02 Who’s Who? in the Mexican Congress in energy policy 63 This report provides a brief discussion of the issues and agendas in energy legislation, and includes a profile of senators, federal deputies and advisors who are involved in reviewing legislative and contractual proposals for the energy sector.
566 • Feb 27, 02 Sep 10, 09 Introduction to the Mexican Congress 28 Business development managers in the power and oil and gas industries are waiting for the outcome of congressional debates on new proposals in the energy sector in Mexico. This report provides an overview of the enigmatic Mexican parliamentary system, with observations about the political and institutional dynamics affecting energy policy and proposals.
545 • Oct 22, 01 Mexican reaction to terrorist attacks of September 11, 2001 05 This report examines the impact on Mexico of the September 11, 2001, terrorist attacks on the United States. The report is based in part on the author’s having spent three of the first five weeks after the attacks in Mexico City.
528 • Jul 31, 01 Reinvention of Mexican politics 04 Provides contrasting views of performance of Fox Administration in relation to the economy and the legislative and judicial branches.
500 • May 08, 01 Gaining the competitive edge in Mexico’s energy sector 04 A review of corporate strategies over the past 20 years for gaining contracts and corporate advantage in Mexico’s energy sector. Identifies a new form of competition: the virtual tender.
482 • Mar 09, 01 Oil Union in Mexican politics 01 Comments on the back-room role of the Oil Union in Mexican politics and the possible role it may have in current energy-policy controversies such as the naming of private-sector representatives to Pemex’s Board of Directors.
465 • Dec 18, 00 Initial reactions to Fox Administration 04 A survey of views on the performance of President Fox and the outlook for his Government, as of the first 10 days in office.
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464 • Dec 15, 00 Fox Cabinet - business vs. social agenda? 14 Preliminary discussion of the Fox Cabinet.
461 • Dec 12, 00 President Fox’s inauguration 04 A review of the day’s events related to the inauguration of Vicente Fox as president of Mexico. The day began at the Basilica of Guadalupe at 7 a.m. and ended past midnight at the Castile of Chapultepec.
460 • Dec 11, 00 Outlook for change in private investment policy 02 There are positive indicators of changes toward market liberalization in both the upstream and downstream. This report analyses the two ways that business analysts may be wrong in Mexico’s energy sector.
459 • Nov 28, 00 Fox’s new energy cabinet (Part 1) 02 Initial impressions of Fox’s energy cabinet: Ernesto Martens and Raúl Muñoz Leos.
456 • Nov 17, 00 Fox Cabinet appointments 16 MEI database output of names rumored as candidates for the Fox cabinet, organized by policy area.
441 • Aug 10, 00 Energy profile of the Industrial sector, 1965-97 53 Survey of long-term industrial demand for energy, by sector.
439 • Aug 09, 00 Second Lectura: Fox was helped by PRI neoliberals 08 Thesis that PRI neoliberals intentionally blocked PRI populists and traditionalists from utilizing strong-arm tactics to guarantee a PRI victory.
440 • Aug 08, 00 Sep 29, 03 Energy demand in the residential sector, 1965-97 33 This is the first of a series of MEI reports on energy consumption by sector; other reports will deal with the industrial and transportation sectors during the period 1965-97. This report deals with the residential sector. Energy consumption by the residential sector in the period 1965-1997 has been concentrated in five products: electricity, kerosene, LPG, natural gas and wood.
435 • Aug 01, 00 Jun 11, 03 Year 2000 elections (Part 13): July 2 election observer’s report 026 This report comments on the use of election observers, the results of the elections and provides George Baker’s extensive report (with observations and analysis) as an official election observer in Tijuana on July 2, 2000.
433 • Jul 12, 00 Jun 3, 03 Year 2000 elections: Three interpretations of the Fox victory 03 Part 12 of the series on the year 2000 Mexican elections. Analyses the meaning of President Zedillo’s role on election night, and speculates how his actions worked against the PRI electoral machinery.
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432 • Jul 11, 00 Year 2000 elections (Pt. 11): Bulletproofing the July 2 elections 03 Asks if Mexican Government has bulletproofed itself against national and international reaction to a perceived electoral fraud by the PRI. The surprising turn on election night was the TV appearance of President Ernesto Zedillo around 11 p.m.: The next president of Mexico, he said, will be Vicente Fox. The announcement was stunning news for Mexicans who believed that the PRI would never peacefully give up office--even if defeated at the polls (which is the reading that most observers give to the controversial elections of July 6, 1988).
431 • Jun 26, 00 Year 2000 elections (Pt. 10). Téllez visit to Rice U., June 26, 2000 03 Report on visit to Houston of Luis Téllez to give briefing at Rice on the election procedures and safeguards.
427 • Jun 16, 00 Year 2000 elections (Part 9): Scenarios 03 3 scenarios for outcome of July 2 elections: PRI wins by a narrow margin, Fox wins by a narrow margin, PRI wins by a narrow margin that is reversed by international pressure on Zedillo government.
421 • May 29, 00 Y2K elections (Part. 8). TV debate May 26 03 Report of the second televised presidential debate in Mexico which took place following an outburst of protest by PAN candidate Vicente Fox about the scheduling of the event. Each candidate was given 3 minutes to speak to a topic, then 4 1-minute opportunities in a freestyle discussion of the topic. The topics were singularly Mexican in tone and flavor: impunity, corruption, social equality, education and the like. There were no substantive topics like energy policy, “narcodemocracia,”, the place of Mexico in the world economy or the state of U.S.-Mexico relations.
420 • May 11, 00 Y2K elections (Part. 7). Attack ads against Fox 13 Recently, there have been full-page attack ads in the Mexico City press against Fox. In the 2000 elections Cárdenas is still on the campaign trail, but the tables have turned considerably: It is as if Cárdenas is collaborating with the PRI to discredit Vicente Fox. One of the strategies (as noted in MEI 419) is to try to disassociate Fox from the mainstream of his own political party..
419 • May 09, 00 Vicente Fox & Mexican Oil: Pemex to be privatized under PAN? 04 Discussion of the controversial remarks of Fox in 1996 to the effect that under PAN there would be dramatic changes in Pemex and the oil sector.
416 • Apr 28, 00 Presidential TV debates in Mexico, April 26, 2000 01 A report and commentary on the first televised debate between the three principal candidates, Vicente Fox, Cuauhtémoc Cárdenas and Francisco Labastida.
414 • Apr 17, 00 Unpublished history of the 1938 oil expropriation in Mexico? 01 Reflections on the unpublished history of U.S. involvement in the Iranian Revolution of 1953 and speculates about a possible parallel history in the Mexican Oil Expropriation of 1938.
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404 • Mar 23, 00 Year 2000 elections (part 6). Vox populi 03 In the Mexican political context, it is more important to build scenarios of the present than it is to build ones for past or future events. Field interviews in March 2000 illustrate three distinct scenarios of the presidential election process.
370 • Sep 13, 99 Presidential electoral politics and energy policy 33 This report describes the uncertainty surrounding the selection of the PRI candidate for the presidential elections of 2000, and comments about the competition between Roberto Madrazo and Francisco Labastida. The accomplishments and shortcomings in energy policy of presidents Carlos Salinas and Ernesto Zedillo are itemized.
364 • Aug 20, 99 Year 2000 election (Part 4). Gary Hart of Mexican politics? 01 Discussion of the race to presidential candidacy by PRI pre-candidates.
345 • Jun 06, 99 Year 2000 Presidential Elections (Pt 3): Labastida is next president 01 MEI’s prediction that Francisco Labastida Ochoa will be the PRI candidate to the presidential elections.
291 • Oct 05, 98 Year 2000 Presidential Elections (part 1) 02 Prospects for energy policy liberalization for the next presidential term.
224 • Sep 23, 97 Assurances to investors in new guidelines 02 New guidelines for the privatization of Pemex Petrochemical assets.
221 • Sep 22, 97 Maquiladora industry - critique 0 Challenging of conventional wisdom about the economic benefits that Mexico receives from the operations of transnational manufacturing companies in Mexico
214 • Aug 22, 97 Exchange rate subsidy in energy policies 02 Peso overvaluation and subsidy to prices of energy products.
205 • Jul 25, 97 Democracy & energy policy 01 A discussion of mid-term elections results, democracy and energy policy in Mexico.
195 • Jun 02, 97 Mexico and the US democratic bias 02 A discussion of Mexican politics, elections, democratic process and the relation to policy and operating environment in the energy sector.
194 • May 30, 97 Chameleon theory of Mexican politics 02 Exposition of the “Chameleon” theory of Mexican politics.
178 • Apr 01, 97 PRI preliminary candidates and outlook for energy policy 0 PRI preliminary candidates and outlook for energy policy.
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177 • Mar 27, 97 Assessment of current mix of politics and economics 0 Assessment of the mix of risk and opportunity in the new policy framework for the privatization of Pemex's chemical units.
145• Oct 01, 96 PRI vote against Pemex privatization *Maria
121• Jun 20, 96 Analysis by George Grayson *Maria
022095 • Feb 20, 95 The Deconstruction of Mexican Politics 05 This essay by George Baker argues that the political terminology, institutions and processes of Mexican politics are understood only by a small fraction of the Mexican adult population for whom the articulation of public policy is as dimly viewed as it is in the United States and Canada. Unpublished. Feb. 20, 1995 (5 pages).
040794 • Apr 07, 94 Apr 15, 94 The Uncertainty Principle in Mexican Politics 212 This report was prepared as a keynote speaker address at a symposium held at Dickenson College in Carlisle, Pennsylvania. The event took place on April 7, 1994, just four months after the outbreak of the Chiapas uprising and just three weeks after the assassination of PRI presidential candidate Luis Donaldo Colosio (who, incidentally, had a graduate degree from Pennsylvania State University). These two topics are the focus of this presentation.
010192 • Jan 01, 92 A Cost-Benefit Analysis of the Oil Sector in Mexican Society 026 A chapter in a book of essays most of which were presented at a conference in 1988 at University of Texas, Austin, on the occasion of 50th anniversary of Mexico’s petroleum expropriation. The concluding essay by George Baker asked about how Mexico’s political system benefits from the status quo, and what price is paid. In Jonathan C. Brown and Alan Knight, eds. The Mexican Petroleum Industry in the Twentieth Century (Austin: University of Texas, 1992), pp. 280-306.
120190 • Dec 01, 90 Mi Comida Con Andrés: Fiscal Equity and Academic Collaboration in 341 This essay by George Baker is imitative of the then-recent American film My Dinner with Andre. The essay argues that most of the value-added from the maquiladora industry is taxed in the U.S., to the disadvantage of Mexico. SUBCONTRATACION Y EMPRESAS TRASNACIONALES: Apertura y Restruc- turación en la Maquiladora, eds. Bernardo Gonzáles-Aréchiga and José Carlos Ramírez. México: Fundación Friedrich Ebert / El Colegio de la Frontera Norte (Dec. 1990), pp. 489-530.
060185 • Jun 01, 85 The Size of the Oil Industry in Mexico's Economy 1117 JOURNAL OF ECONOMIC DEVELOPMENT (Vol. 10, No. 2). The politically correct size of the oil industry in the Mexican economy at 6% of GDP substantially understates the importance of Pemex exports, if subsidies and exchange rate factors are taken into account. During the Oil Boom of the late 1970s it was convenient for the Mexican government to down-play the importance of the oil industry in the economy (and to exaggerate Mexico's oil reserves) toward the end of enhancing Pemex's access to capital markets.
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122181 • Dec 21, 81 The Pemex Boom - Adjusted for Inflation / El Boom de Pemex Desinflado 1214 This report, issued in a bilingual format, reconstructs the income statement of Pemex for the years 1976-80 in current and constant pesos of 1980. Pemex's income statement in constant pesos shows the severe effects of inflation in Mexico brought about by the Oil Boom of 1978-81. The report was prepared by George Baker and issued as a report in ENERGY DÉTENTE (II:17), Dec. 21, 1981. Energy Detente was a publication of Lundberg Survey, Inc., the publisher of which was Dan Lundberg.
10022 • Jun 28, 12 Public Policy Perspective No. 1022 - Mexican Spring: Notes on Mexican 410 This discussion examines the dynamics of the 2012 presidential election. Legislation after the dirty campaign ads of the election of 2006 prohibited attack ads on Mexican media; in response, the political parties moved to the Internet.
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100138 • Jul 27, 12 Women in the Mexican Energy Sector: Glass Ceilings 89 This report examines the presence of professional women in the oil and power industries in Mexico. There are career paths for women in both technical and non-technical fields. Pemex has a hiring policy that is much more open to having women in supervisory positions than is CFE. Still, women face glass ceilings, that is, levels beyond which promotion may not be expected. The findings of this report have been quesitoned by some professional women in Mexico who object to the inclusion of racial profile in a discussion focused on the energy sector. Annex A lists the names and organizations of over 130 women, active and retired.
100098 • Aug 25, 11 Bicultural Glimpses: The Gentle art of cotorreo; Corporate Culture in Houston; 12 This 1 1/2-page report comments on an at-home reception for the speakers of the Unconventional Gas Seminar that was held in Houston on August 23, 2011. The report comments on the "un-Mexican" corporate culture in the oil industry in Houston, and adds an observation of former Mexican Consul-General Rodulfo Figueroa about why Hispanics are not seen on street corners in Houston asking for money.
100080 • Feb 24, 11 Power Lunches in Mexico: ¿Con Quién Comiste? 03 This report, originally published in 1998 (MEI 282) when the PRI was still in power, discusses the unwritten rules of power-positioning during business lunches in Mexico. Mexicans have techniques for finding out how close someone is to centers of power in national political life. The process is called "Social Arm- Wrestling: each contender will know who is the closest to Power. Such arm-wrestling will gain importance as the power-contenders for the 2012 presidential elections emerge.
100060 • Dec 21, 10 Juniors in Mexico’s Oil Sector: Are They Quick Learners? 27 This report examines the sociological cohort of the English-speaking graduates of public and private universities outside of Mexico (often with degrees in economics) who come to occupy mid- and senior-level positions in the public sector in Mexico. Table 1 is a list of illustrative names of persons in this cohort, sorted by the career of the parent or ancestor who branded the family name as a member of the ruling class.
100045 • May 25, 10 Trade and the Energy Sector: An Evolutionary Perspective 04 This report extends the arguments on the importance of trade in human evolution (as published in two articles in The Wall Street Journal on May 22-23, 2010). The idea is that trade is about the exchange and circulation of goods, people and trade. There can also be "retrograde" moments in evolution, moments in which trade is suspended--as in Mexico's the expropriation of the oil industry in 1938, which effectively took Mexico out of the “trade routes” of people, ideas and the community of oil companies.
100027 • Feb 27, 10 Sep 18, 10 Pemex vs. Mexican History: A Revisionist Approach to Reconciling the Oil 31 The general argument is that Mexico is trapped in its orthodox petroleum narrative. The report includes a 3-page revisionist approach to Mexican history in which the Oil Narrative emerges in a form that permits the adoption of global standards for upstream investments.
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730 • Jul 28, 07 Mar 6, 08 Mexico’s energy counterculture 108 This report examines the arguments of individuals and groups who, in diverse media, affirm that the direction of energy policy in Mexico is profoundly mistaken. We use the term “energy counterculture” to capture both the people, organizations and arguments. In its current orientation, the energy counterculture seeks to protect the state oil and power sectors from the privatizing and pro-American impulses of the Mexican government as well as from the ambitions of international companies in the energy sector.
711 • Jun 26, 06 Sep 5, 06 English, culture and leadership in Mexico’s oil sector, 2006-12 117 This report identifies, as key issues for the new government, the topics of English, culture and leadership in Mexico's petroleum industry. The report discusses little-examined features of Mexico's oil sector that have limited the ability of the state oil company to keep abreast technologically, replace reserves and operate in deepwater. The report suggests ideas for requirements to be used in executive recruitment in the oil sector.
681 • Nov 30, 04 The Mexican press: Guide for energy market and policy analysts 214 This report examines the state of Mexican print and online journalism, and the politics and economics of news reporting. An appreciation of biases and passions helps explain the news coverage of Mexico's energy sector. The media serve both as interpreters and commercial facilitators of the power struggles over institutions, policies and budgets. Comments on the political allegiances of specific publications; and examines, as a case study, the alleged electoral motivation for the change in the director general of Pemex on Nov. 1, 2004.
636 • Apr 07, 03 Apr 18, 03 Pemex, S.A. 110 This report provides an overview of a legislative proposal presented by two PRI congressmen in mid-December 2002 to reorganize Pemex into a "public interest corporation" where 10% of the stock would be open to Mexican investors and retirement fund managers. The proposal has far-reaching implications, as its goals would require new measures of transparency and accountability. The outline and text of the bill, with English headings, is appended.
635 • Mar 31, 03 Oil Expropriation Day 2003 19 This report treats the annual commemoration held on March 18th of the expropriation of the oil industry in Mexico in 1938. For the first time, the event in 2003 was held without the presence of the president of Mexico.
579 • Apr 10, 02 May 19, 02 The Mexican Women’s Initiative 26 Guadalupe Loaeza, a well known Mexican novelist whose main characters are upper-class women, spoke at the annual meeting of a nonprofit association of Hispanic women in Houston. The occasion prompted a discussion of the guarded, indirect speech characteristics of Mexican society and its relation to freedom of expression in the Mexican press.
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560 • Dec 30, 01 Social engineering of business development meetings in Mexico 23 Sales calls in Mexico’s energy sector are not only about the features and benefits of a proposed technology, project or service; they also have an intelligence-gathering function. The report provides a checklist of protocol and intelligence issues for meetings with formal presentations.
545 • Oct 22, 01 Mexican reaction to terrorist attacks of September 11, 2001 05 This report examines the impact on Mexico of the September 11, 2001, terrorist attacks on the United States. The report is based in part on the author’s having spent three of the first five weeks after the attacks in Mexico City.
540 • Sep 16, 01 Internet and other resources for energy sector data 3 This report introduces the problem of data research in Mexico’s energy sector and notes key web sites, authors and books.
538 • Sep 07, 01 Family values in Mexican business culture 03 This report provides anecdotal data about ways in which family values and relationships in Pemex and CFE can enter into and affect business activities and outcomes.
536 • Aug 27, 01 Intellectual challenges of the Mexico Business Development Manager 04 Through the literary vehicle of a partly-fictionalized dialog with a new-to-country manager, basic ideas about the nature of the information challenge in Mexico are presented. The report identifies several subtle difficulties facing business development managers in Mexico.
533 • Aug 24, 01 Dec 27, 02 Unwritten rules in the Mexican business environment 05 This report provides guidelines for professional and corporate survival in Mexico’s business environment, with special reference to unwritten rules and the language of Mexico’s oil patch.
515 • Jul 18, 01 AMEE Conference, June 13-14, 2001 03 Comments on an energy conference held in Mexico City at the CIDE June 13-14, 2001.
517 • Jun 29, 01 Corruption in Mexico––old and new faces 03 The old face of corruption is seen in allegatons in relation to Pemex’s Oil Union have circulated for decades; the new face of corruption is seen in the the names of public officials accused of being on the payroll of the drug cartels. Not only have state governors been accused of criminal complicity at the end of the Zedillo administration, the country’s anti-drug czar, Gen. Jesús Gutiérrez Rebollo, was discovered to be in the pay of the cartels. In one incident, the nortorious La Quina accused his successor in the Oil Union of misappropriating billions of pesos.
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512 • Jun 27, 01 MEI guidelines for organizing Mexico energy seminars & events 01 A set of proposed guidelines for the organization of academic and industry conferences on the Mexican energy sector.
508 • Jun 06, 01 Obituary of Santos Figueroa 01 Obituary of Santos Figueroa, one of Mexico’s early geophysicists, trained by Shell before the Expropriation in 1938.
503 • May 17, 01 Border conference on energy & environment 03 A report of a 2 1/2 day conference in Rio Rico organized by the Southwest Center for Environmental Research and Policy.
502 • May 15, 01 Participation in energy conference in Rio Rico, Arizona 9 Trip report of discussions and impressions during 2 1/2 day conference on energy and environmental policy on U.S. Mexico border.
493 • Apr 27, 01 Trip report, Pemex Commemoration Ceremonies (Cd. del Carmen, March 012 Field report of meetings with Pemex, March 17-19, 2001, in Ciudad del Carmen and Mexico City, including the Pemex Expropriation Ceremony in Cd. del Carmen with President Fox.
487 • Mar 26, 01 March 18, 2001 Commemoration of Expropriation Day in Mexico 4 Field report on President Fox’s first appearance at Oil Day in Mexico, at a ceremony held in Cd. del Carmen, Campeche on March 18, 2001.
483 • Mar 12, 01 ITESM seminar “One Day of Energy” (Monterrey, Feb. 28) 03 Comments on the industry-academic seminar held February 28, 2001 in Monterrey sponsored by the Energy Studies program of Monterrey Tech (ITESM). The keynote speaker was Ing. Ernesto Martens, the new energy minister.
477 • Feb 15, 01 Feb 6, 03 Pemex Upstream Technology Conference, 2001 16 The report describes the events and themes of Pemex’s second upstream technology conference, held in Mexico City, February 4-7, 2001. For all participants, EXITEP 2001 was a major event both for Pemex and for current and prospective suppliers (as well as critics).
474 • Jan 19, 01 Pemex press briefing Jan. 12, 2001 14 Comments on content and style of press breakfast by Pemex CEO Raúl Muñoz Leos. Includes copy of Spanish text, with English section titles.
455 • Nov 22, 00 Mexico Energy 2000 conference • Oct. 26-27, 2000 02 Highlights of the industry seminar organized by the Center for Business Intelligence that took place Oct. 26-27 in Houston.
454 • Nov 19, 00 Seminar on Mexican economy sponsored by Federal Reserve Bank 03 An overview of the 2-day conference held Nov. 2-3 in El Paso on “Political Economy and Free Markets,” sponsored by the El Paso Branch of the Federal Reserve Bank of Dallas. Comments about pitfalls in macroeconomic modeling of the Mexican economy.
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451 • Oct 25, 00 ITAM/AMDE Seminar on Energy & Law 27 An overview of the two-day program, with special attention to the sections on natural gas markets and regulation. (MEI-453 reports on the upstream panels and discussions of this program.)
453 • Oct 23, 00 Upstream discussions in ITAM/AMDE seminar on Energy & Law 04 A review of the upstream presentations and discussions of panelists and others at the Energy & Law Seminar held in Mexico City Oct. 12-13, 2000.
450 • Oct 18, 00 Petrochemical industry forum in Mexico City, October 16 02 This report provides highlights of the industry forum held in Mexico City on Oct 16, 2000 sponsored by Pemex and the PUE (www.unam.mx/pue). Speakers voiced their opposition to natural gas pricing based on the HSC.
446 • Sep 28, 00 Morelia seminar on energy policy in Mexico 02 A summary of the panel discussion in Morelia about policy options and strategy in Mexico in the hydrocarbon and power sectors.
425 • Jun 12, 00 III Congress of Mexican Assoc. of Energy Economists May 25-26 012 Review of 2-day conference at IMP headquarters on energy technology and policy. The three broad themes of the conference were energy technology, energy policy and energy markets. Speakers on policy issues consistently echoed official perspectives; little room on the program was set aside for alternative views of the proposed restructuring of electric power, for example.
413 • Apr 13, 00 Luis Téllez briefing in Houston (part 2). Political agenda 01 Review and critique of the off-the-record comments of Energy Secretary Téllez at Rice University to a largely industry audience. The report asks about the underlying agenda of the event, which took place less than three months before the July 2000 presidential elections.
412 • Apr 13, 00 Luis Téllez briefing to Houston industry April1 12 01 Initial report of a behind-doors address by Energy Secretary Luis Téllez at Rice University to an industry audience. Topics included Mexico’s negotiations with OPEC regarding oil cuts and prices.
409 • Apr 04, 00 Mexican Academy for Energy Law (meeting of Mar. 30) 01 Report of inaugural meeting of the Mexican Academy for Energy Law (AMDE). A turning point in the evolution of Mexican energy policy took place on March 30 with the initial meeting of the Mexican Academy for Energy Law. The meeting, organized by energy lawyer Nicolás Borda, took place at the elite Club de Industriales in the upscale Polanco neighborhood of Mexico City. About 150 people, mainly from industry, law and government, were in attendance. The press, however, was not invited.
384 • Dec 10, 99 Houston Access Mexico 99 conference on NAFTA 01 "Mexico Access" symposium, sponsored by the Greater Houston Partnership and the Consulate General of Mexico, among others, was held in Houston December 6-7. The theme of this year’s conference was "The Five Years of Nafta. Past and Future."
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383 • Dec 09, 99 Rice U. panel: Can the effect of competition be imported? 01 Reviews the discussions about natural gas pricing in Mexico during the electricity panel at the NAFTA conference of Dec. 6-7.
380 • Nov 17, 99 Two meanings of PRI for Mexican voters 01 An analysis of why mexican voters have not tossed out the PRI from government in 70 years.
376 • Nov 13, 99 Topic: Year 2000 Elections (Part 5): Outcome of PRI primary elections 01 Discussion of the outcome of the PRI presidential primary elections and the outlook for energy policy in the case of a PRI victory.
366 • Sep 02, 99 Mexican critique of Pemex (Ramirez de la O) 02 Press article criticizing the oil sector organization in Mexico.
363 • Aug 19, 99 Availability of upstream data 01 Discussion of Pemex policy about releasing information and data corresponding to the upstream.
302 • Nov 29, 98 Mar 6, 03 EXITEP98 Petroleum Technology Trade Show 02 Pemex’s first upstream technology and trade show (EXITEP98) featured an award ceremony for Mexico’s petroleum engineers, a series of plenary sessions and technical papers and a trade show.
296 • Oct 26, 98 Aug 15, 02 Mexican-Americans in public service 02 Mexican-Americans in US government and relations with Mexico.
295 • Oct 20, 98 Industry roundtables for energy policy discussions 02 Industry roundtables for energy policy discussions with a focus on upstream policy.
282 • Jul 22, 98 Feb 24, 11 Mexican power lunches ¿Con quién comiste? 03
This report, originally published in 1998 when the PRI was in its sixth decade of power, discusses the unwritten rules of power-positioning in the context of business lunches in Mexico. Mexicans have techniques for finding out how close someone is to centers of power in national political life. The process is called “Social Arm-Wrestling,” and the result will be that each contender will know who is the closest to Power.
200• Jun 20, 97 Energy conversion factor card Energy conversion factor card.
173 • Mar 17, 97 From where do bad business ideas about Mexico arise 0 A discussion of sources of bad ideas for energy projects in Mexico.
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03171997 • Mar 17, 97 On Colosio and Kennedy: Remembering the Assassination 01 This article is a comparative meditation of how the assassinations of Luis Donaldo Colosio and J. F. Kennedy are perceived, respectively, in Mexico and the United States. The article includes recollections of a visit to the Dallas site where Kennedy was killed. Where Colosio has a monument, Kennedy’s name does not appear on a plaque on a “site of historical interest.” EL FINANCIERO INTERNATIONAL, March 17-23, 1997 p. 5. (The international edition, published in Los Angeles, was later discontinued.)
102• Mar 21, 96 58th Anniversary of the expropriation of the oil industry *Maria
72• Dec 18, 95 Francis Fukuyama, Trust (Free Press, 1995) Book review *Maria
53• Sep 20, 95 IPP conference in La Jolla Provides information regarding upcoming conference on IPP investment in Mexico
51 • Sep 09, 95 LPG v. natural gas culture in Mexico City 01 Report of conversations with Jorge Rebollledo [senior], president of DIGANAMEX, the natural gas distributorship in Mexico City, about the absence of a natural gas culture in Mexico. The social cost of LPG and the current market leaders in the residential sector are also considered.
49• Aug 29, 95 Pemex-related conferences in Houston Calendar of upcoming conferences on Mexican energy topics.
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100026 • Feb 01, 10 Pemex vs. Global Practices 02 How to understand Pemex's position in the global oil industry? Paradoxically, little is to be learned by analyzing Pemex in Mexican terms. Most of Pemex’s limitations may be understood only by reference to global norms that are not being followed in Mexico. This report notes eleven areas where Pemex operates at a disadvantage compared to IOCs and market-driven NOCs and three areas where Pemex is changing.
120109 • Dec 01, 09 Houston: Carrefour de l'Or Noir 01 This article by George Baker appeared in a special issue a Paris-based journal SCIENCES HUMAINES. The edition featured global cities. The article described Housotn as the intersection of oil, space and medicine, the common thread of which was requirement for greater data processing. Trimestriel No. 17 (Déc. 2009-Jan.-Fév. 2010), p. 46. L’histoire de Houston est intimement liée a celle de l’industrie pétrolière. . . la ville condense tout ce que la planète peut compter de compagnies pétrolières et gazieres.
100021 • Nov 25, 09 IEA World Energy Outlook 2009 01 This report touches on the highlights of a presentation at the Baker Institute of Rice University on Nov. 24, 2009, at which Richard H. Jones, the deputy director of the IEA, presented his institution's World Energy Outlook for 2009. The outlook considered two cases: the Reference Scenario and the 450 Scenario, where the latter refers to the ppm of carbon dioxide in the atmosphere.
081009 • Aug 10, 09 Mexico, Brazil, Norway Upstream Readiness Weighed 23 This article, published in Oil & Gas Journal, presents tables and a summary discussion of the competititvess variables that bear on a country’s “upstream readiness.” Mexico is compared with Brazil and Norway, using rankings that were developed by the World Economic Forum. The artticle draws on the findings presented in MEI Report No. 756 (July 31, 2009).
684 • Dec 15, 04 Outlook for world oil and gas markets: Lessons for Mexico 09 This report draws on presentations and discussions at the conference held in Houston on Dec. 9, 2004 sponsored by the local chapter of the IAEE. The speakers and moderators were from the public and private sectors, including the University of Houston, the Oxford Institute of Energy Studies and the Reserve Bank of Dallas. Speakers concentrated on oil and gas prices and LNG markets in Europe, North America and Asia. Lessons and implications for Mexico's energy sector are noted.
668 • Jul 27, 04 Feb 23, 07 NAFTA: a mixed success at 10--abrogated at 15? 39 This report reviews the first ten years of NAFTA, and asks if the agreement in its present form will reach a 15th anniversary. As measured, regional trade expansion has been substantial, but wages are flat or declining. Some controversies, like trucking, energy and softwood lumber, defy resolution. Mexican industry is generally opposed to any further opening of the economy. Is regional convergence of the kind seen in Europe an option? If so, the premises and terms of NAFTA will need to be replaced by a broader vision.
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674 • Jun 30, 04 The “impertinence” of foreign public officials toward Mexico 19 Foreign public officials occasionally seek to instruct the Mexican public and government authorities. The topic of instruction may be anything: investor rights, water, law enforcement, drugs, oil and gas policy. Predictably, such instruction is poorly received-both by the host government and by the international business community in Mexico. Texas Gov. Rick Perry's visit to Mexico in June 2004 is a case in point.
673 • May 25, 04 The risk of virtual expropriation: Metalclad and Marathon Oil 59 This report examines the risk to investors in infrastructure projects in Mexico from indirect or regulatory expropriation. The cases heard in the first ten years of NAFTA leave serious doubts about the remedies available under its Chapter 11. This report examines two virtual expropriations: that of Metalclad Corp. in 1997 and that of Marathon Oil in 2004. Two questions are asked: What went wrong? and What are the lessons?
648 • Aug 19, 03 China as test case for basket pricing of natural gas 38 Direct foreign investment in Mexico peaked in 2001, but fell in 2002 and again in 2003. Mexican industry in a letter to President Fox dated July 1, 2003 argued that jobs and markets were being lost because Mexico’s competitors enjoyed lower input costs for power, natural gas and refined products. They proposed to internationalize Mexico’s gas prcing to include a basket of countries. This report inquires about the feasibility of this approach in the case of China.
637 • Apr 16, 03 Apr 17, 03 Aftershocks in NAFTA over Iraq 07 This report comments on an address given on April 8, 2003 by Peter Godsoe, chairman of Scotiabank, to the Canadian Chamber of Commerce of Mexico. The banker expressed concern about possible future reprisals against Canada and Mexico for their respective decisions not to support the Bush Administration’s position regarding Iraq.
634 • Mar 13, 03 Mar 14, 03 Mexico's vote on the Security Council regarding Iraq 05 This report examines the logic of Mexico's vote in the United Nations Security Council regarding the use of force in Iraq. Mexico has additional reasons to support the U.S. independently of Mexico’s views on Iraq.
618 • Dec 18, 02 Dec 19, 02 NAFTA and North America Energy: Mexico’s relative gains, 1980-2010 58 Since 1980 Mexico, Canada and the U.S. have expanded energy supplies and markets, but at different rates. This report evaluates the advances of Mexico and Canada during the historical period of 1980-2000 using the U.S. as a benchmark. A forecast for the period 2000-2010 illustrates expectations for the three countries.
609 • Dec 04, 02 Dec 5, 02 NAFTA and North America Energy 155 On Mid-2002, the North America Energy Working Group published their first study “The Energy Picture”. This report provides a description of the NAEGW group and presents the main conclusions of their energy study in the framework of NAFTA. The energy supply and demand by country for 1980, 1990, 2000 and a forecast for 2010 are presented.
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599 • Oct 31, 02 State of Texas agencies in Mexico’s energy sector 37 This report describes activities and programs of state of Texas agencies that promote business, policy and technical relationships in Mexico’s energy sector. The agencies mentioned are the General Land Office, the Railroad Commission, Bureau of Economic Geology, University of Houston, University of Texas, Austin and the Mexico City representative office of economic development.
597 • Aug 15, 02 Challenges of U.S. ambassadors to Mexico: Dwight Morrow to Tony Garza 26 On the occasion of President Bush’s nomination of Texas Railroad Commissioner Tony Garza as U.S. ambassador to Mexico, this report examines the performance of several prior U.S. ambassadors to Mexico. If confirmed, Amb. Garza will perform his duties in a culture that distrusts Americans of Mexican descent. He also will face a politically tense moment in Mexican politics, when energy policy in power, gas and refining is the object of impassioned debate.
588 • Jul 10, 02 Sep 9, 02 The Bushes, Mexico and Iraq 15 This report speculates on the implications for Mexico in regard to the Bush administration’s foreign policy toward Iraq. How will Mexico be affected by a major disruption in international oil markets brought about by a war in the Middle East?
061002 • Jun 10, 02 México: Provedor, No Socio Energético de EU 23 A rambling interview with George Baker by staff reporter Luis Carriles. The main topic discussed is the impossibility of a North American Energy Market. The changing attitudes of President Bush and Fox are also mentioned in relation to Iraq and Venezuela. The article features two memorable, staff photos, one of Baker being attended by his regular barber in Mexico City. MILENIO SEMINAL, June 10, 2002.
562 • Jan 04, 02 Mexican media events: Akemashite Omedetou Gozaimasu 04 A public relations fire broke out on January 2, 2002, the day after New Year’s Day when most senior government officials and Pemex executives had not yet returned from holiday. The “fire” concerned a story published in Tokyo that JNOC, a Japanese state-owned oil company, had received exclusive production rights in the Chicontepec Basin. Two independent readings (lecturas) emerge as to its origin and meaning.
549 • Oct 29, 01 Global business intelligence in IOCs and Pemex 06 This report reviews a presentation by an International Oil Company (IOC) to Pemex senior staff on the subject of corporate governance in the areas of global business intelligence and community, government and media relations.
507 • Jun 05, 01 Mexican outreach to Canada in the energy sector 02 Reviews recent interest by Fox Government to engage Canadian oil, gas and power companies.
468 • Dec 29, 00 U.S.-Mexico relations, 1995 and 2001 02 A review of the Clinton “Rescue Package” of 1995, making a comparison with current developments in U.S.-Mexico relations.
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401 • Mar 01, 00 Mexico’s OPEC policy; visit of Sec. Bill Richardson to Mexico 01 Reports on the controversial visit of US Energy Secretary Bill Richardson to Mexico.
362 • Aug 09, 99 Anti-dumping complaint before US ITC. Resolved. 02 Resolution on the oil anti-dumping complaint before the US ITC.
359 • Aug 05, 99 Anti-dumping complaint before US ITC. Settlement outlook 01 Discussion of a possible settlemnt in the anti-dumping complaint before the US ITC.
356 • Jul 29, 99 Anti-dumping complaint before US ITC. Likely economic consequences 01 Discussion of the possible economic consequences of the anti-dumping complaint before the US ITC.
353 • Jul 13, 99 Anti-dumping complaint before US ITC. Alarm sounded 01 Comments on the anti-dumping complaint raised before the US ITC.
339 • May 14, 99 Robert E. Rubin and Mexico 01 Discusses the role of former Secretary of the Treasury, Robert E. Rubin, in the financial rescue package for Mexico at the beginning of the Zedillo administration.
337 • May 13, 99 Neoprotectionist turn in procurement and public works regulations 09 Discussion of modifications to government procurement laws and their impact on international OEMs.
277 • Jul 02, 98 Press relations of energy companies 01 Management of press relations in Mexico for international energy companies.
271 • May 29, 98 US-Mexican relations 1 Issues in US-Mexico relations that may affect business development plans.
270 • May 18, 98 USTR to reject Mexican offer re tariff? 02 Negotiations to eliminate the duty on the imports of natural gas into Mexico. Since 1996, no one has made use of the Open Access option, for the principal reason that the existence of Mexico’s import duty on natural gas made the option of importing gas too expensive, especially in view of the pitch made by Pemex Gas Marketing (PGM) that customers do not have to pay the import duty on gas imported by Pemex.
268 • May 08, 98 Pemex Production and Trade Hightlights for March 1998 11 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for March 1998. Oil Production in March increased for the fourth consecutive month, reaching a new historic record at 3.16 MM b/d. Crude exports at 1.9 MM b/d increased by 300 K b/d from the previous month. The sharp increase in exports is explained mainly by an increase in exports to the US by 288 K b/d, from 1.35 MM b/d in February to 1.64 MM b/d in March 1998, which shows increased competition for the US market.
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257 • Apr 08, 98 Negotiations to Eliminated Mexico’s Natural Gas Duty 02 Negotiations to eliminate the duty on natural gas imports into Mexico. The Mexican Commerce Department (SECOFI) has made an offer to trade its natural gas import duty on natural gas in exchange for an elimination of the U.S. duty on PTA (purified terephthalic acid), an input into the production of polyester and PET, used for making plastic bottles.
232 • Nov 12, 97 Mexico’s natural gas import duty 0 Status of the negotiations to reduce and eliminate the import duty on natural gas.
212 • Aug 12, 97 Analogy with China and resistance to Fair Trade 0
An analogy of Mexico’s reticence to changes in energy policy with China’s resistance to fair trade.
203 • Jul 23, 97 Natural gas import duty - recent developments 01 Status of the natural gas import duty reduction and elimination negotiations.
197 • Jun 09, 97 Appointment of a new US ambassador 0 Discussion of the appointment of a new US ambassador to Mexico.
198 • Jun 09, 97 Amoco profile in Mexico 0 A description of Amoco profile in Mexico.
196 • Jun 08, 97 Appointment of a new US ambassador 0 Discussion of the appointment of a new US ambassador to Mexico.
189 • May 20, 97 Clinton’s visit of May 5-7 and the midterm elections of July 6 0 Candidates for Mexico City mayor elections and Clinton’s visit to Mexico.
187 • May 14, 97 Natural gas import duty - recent developments 0 Status of the negotiations to eliminate the natural gas import duty.
172 • Feb 26, 97 Overview and reactions to the newest framework 0 Review of the proposed new framework for the privatization of Pemex Petrochemical’s assets.
168 • Feb 10, 97 Effect of geopolitics on Mexico’s upstream policy 02 Mexico’s upstream policy in the light of the Oil Proceeds Facilities Agreement of February 1995.
01011997 • Jan 01, 97 Taking a Closer Look: Strengths and Limitations of Local Reps 02 This article, written in 1996 by George Baker in collaboration with Mexico City industry consultant Albert Antebi, offers international management cautionary tales about how to avoid the misallocation of resources (and prematurely optimistic expectations) in relation to the outlook for business development in Mexico. Published in a special edition of BU$INESS MEXICO, a monthly publication of the American Chamber of Commerce in Mexico (Vol. VI (12)/Vol. VIII (1), 1997.
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149• Oct 15, 96 Outlook on Mexican natural gas import tariff *Maria
144• Sep 24, 96 IEA study of gas regulations in Mexico *Maria
138• Aug 26, 96 Conoco proposal in the press again *Maria
124• Jul 23, 96 Crystal Ball in Mexico: Home-Office communications *maria
63• Oct 28, 95 Republican State Department transition group Announces a hearing in Congress regarding Mexico bail-out.
50• Sep 08, 95 New Canadian study on Natural gas supply and demand in Mexico Comments on CERI study of natural gas markets in Mexico.
35• Jun 16, 95 DOE Energy conference in Mexico: Schedule & briefing materials Provides the schedule of the DOE trade mission to Mexico.
050193 • May 01, 93 México: ¿Listo para el TLC? 35 An analysis by George Baker of Pemex production data from 1987-92, The agreement that would become NAFTA is seen as an important step toward the economic integration of Mexico, the U.S. and Canada. Published in PETROLEO INTERNACIONAL (No. 3), Mayo-Junio 1993, pp. 6-14.
• Aug 28, 90 Mexico's Problematic Response to the Kuwaiti Crisis 02 This article by George Baker reports on Pemex's response to the oil market crisis that was sparked by the Iraqi invasion of Kuwait. Pemex committed itself to increasing production by 100,000 b/d. The article notes that some analysts said that spare capacity was in the area of 20,000 b/d and any increase above that level could damage fields. Oil & Gas Journal, Aug. 27, 1990
030181 • Mar 01, 81 Mexico's Energy Plan Puts Exports at 1.5 MMbopd in 80s 65 The Oil Boom in Mexico from 1978-81 provoked a strong counter-reaction from political traditionalists who saw economic and national-security risks in an oil-export-led growth policy. The National Energy Plan of 1980 reflected such concerns: Oil exports were to be limited to 1.5 MM b/d and no country would be permitted to import more than 20% of its oil needs from Mexico. The article contains 1 map, 5 tables and a (youthful) photo of its author, George Baker. WORLD OIL (March 1981): pp. 109-118.
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Reports on Finance and Accounting in the Mexican Energy Sector
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100091 • Jun 13, 11 Pemex's Oil & Gas Statistics: A Critique 46 Pemex routinely publishes production and reserve statistics for the government and the general public, but these data are sterilized to remove most of their business or policy value. One issue is the legal (and statistical) fiction that Pemex is the sole operator in Mexico; hence, the gas output of operators under the MSCs is not reported to the public separately. This issue will become larger with the new Incentive Contracts. Tables in the report convert annual and monthly data to index values. Table 1 covers 2004 (Pemex's peak year) and 2010, and Table 2 covers monthly data for 2010 and 2011.
100052 • Jul 23, 10 Risk Factors in Pemex Debt 31 This market note identifies risk factors associated with Pemex debt that are not reported in Pemex's Form 20-F. There are three exhibits from Pemex’s filing dated June 29, 2010.
672 • Apr 30, 04 May 6, 04 Pemex financial reporting: For whom? 18 This report provides an introduction Pemex's financial reporting practices, noting advances and unresolved issues related to transparency. Table 1 examines and critiques the report of preliminary results as of December 31, 2003.
557 • Dec 26, 01 Mar 30, 02 Off-balance-sheet investments (PIDIREGAS) in energy sector 44 Pidiregas is an off-balance sheet financial framework developed by the Mexican government to attract private capital with minimum changes in the law and the Constitution. This report provides an overview of this program. The main body of the report is in Spanish with an introduction and summary in English.
402 • Mar 24, 00 Mar 26, 03 Problems of financial closing in energy projects in Mexico 02 This report briefly discusses problems associated with the financing of energy projects in Mexico, especially those of the CFE and IPP projects. The potential adverse effect of the April 25, 2002 ruling by the Supreme Court is noted. Conclusions itemize issues that developers must address.
274 • Jun 05, 98 Finance Minister Gurría in Houston 02 Finance Minister Gurria comments on Mexico’s energy policy during his visit to Houston.
209 • Aug 01, 97 TIPRO wish list from 1992 1 Proposal from (TIPRO) of items to be changed in Mexico’s energy sector under NAFTA.
166 • Jan 29, 97 Oil proceeds agreement 01 Lessons from the Bailout Agreement between Mexico and the US during the beginning of the Zedillo administration.
106• May 02, 96 Pemex capital expenditures by corporate group *Maria
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75• Dec 20, 95 1996 Federal budget for the energy sector *Maria
52• Sep 12, 95 Pemex June Filing with SEC *Maria
090193 • Sep 01, 93 Tax Consequences of the Unthinkable: U.S. Oil Companies as Pemex 24 This essay, written at during the time of the NAFTA negotiations, and published in a policy-oriented, academic journal, reviews the course of discussions regarding oil policy. The essay explores the tax benefits for Mexico of a change in upstream policy. 2 tables. MEXICO POLICY NEWS 9 (San Diego State University) No. 9 Fall 1993, pp. 25-29.
082790 • Aug 27, 90 Private Sector Funds Key to Mexican Role as Major U.S. Oil Supplier 43 This article is focused on the likely effect of the U.S. invasion of Kuwait on Mexico's oil industry, noting how Pemex could profit from current market conditions and outlook. The article discusses Pemex's plans to relieve back-pressure in Cantarell in order to increase production to 1.4 MM b/d by 1994. Long-term prospects, however, are seen as limited without timely investments from the private sector. Oil & Gas Journal, Aug. 27, 1990.
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Reports on Seminars, Conferences and Conference Calls
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100129 • Jun 09, 12 OTC Snapshots: From Calderón to Hart Energy 09 This report comments on Mexico's presence at the Offshore Technology Conference. The OTC is an annual event in Houston that takes place in the first week in May. In OTC 2012 Pemex had its first booth, and the head of Pemex E&P was on a panel on global trends. These are two signs that OTC and Pemex are taking each other more seriously than in the past. The report also includes reference to President Felipe Calderón’s visit to Houston April 25, and to a seminar on Latin American oil markets on May 3rd.
100130 • Jun 07, 12 The Ambassador and the Petroleum Club (Part II) 212 Ambassador Arturo Sarukhán was the keynote speaker at the innaugural luncheon of the Center for U.S. and Mexican Law and Policy, a new program of the Law Center of the University of Houston. This report is based on notes taken during his remarks on the current drivers of U.S.-Mexico diplomatic relations. The report includes a second section on topics that the speaker chose not to address.
100126 • Apr 22, 12 ENERGY SECURITY INDICES: Adjusting Supply Numbers for Freedom and 07 This report draws on the presentation and Q&A in Houston on April 19, 2012, of Karen Harbert, president of the Institute for 21st Century Energy, an organization affiliated with the U.S. Chamber of Commerce. The Institute has developed an index of U.S. energy security based on a model that incorporates 37 metrics that cover the spectrum of traditional and untraditional energy sources. This report offers a critique of the model by reference to variables that were excluded and other observations.
768 • Dec 13, 11 Mexican Oil in Houston: Seminars and Discussions 315 This report provides the highlights of several industry and policy seminars that took place in Houston in the fall of 2011, including one sponsored by the Mexican Association of Chemical Engineers (IMIQ) and another by Pemex Gas (PGPB).Topics discussed in a third event, which took place in early December, concerned principally the outlook for oil production and energy policy.
100102 • Oct 05, 11 Business Intelligence Gathering in Mexico: Looking into Hearts as Well as 27 This report was prepared to help readers calibrate expectations regarding the fall cycle of Mexico energy conferences. There is a long list of energy topics about which speakers from the public and private sectors could address in conferences (Table 1), but the political sensitivity of the topics means that few hints, if any, of a change of heart are likely to be given by government speakers who themselves may reasonably expect to be out of a job in 12-15 months, if not sooner when the next presidential administration starts the appointment process all over again. Table 2 lists attributes of seven conferences scheduled for the fall 2011.
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100101 • Sep 27, 11 Sep 30, 11 Energy Day 2011: The Redacted Public Record 313 Within the limitations imposed by the conference organizers that require the confidentiality of comments by speakers, this report provides insights into the discussions that took place during ENERGY DAY 2011, the annual conference on oil and gas policy that is sponsored by the British Chamber of Commerce of Mexico. The report enquires into the global and local trends that were in the background to each of the panels. A redacted copy of the original report is available.
765 • Mar 17, 11 Pemex's Upstream Roadshow - Houston 510 This report comments on the full-day seminar on March 8, 2011, at which speakers set forth the context and the logic of Pemex's auction of three onshore blocks in the State of Tabasco. A press breakfast was held with senior Pemex executives for reporters and editors from oil industry media, including OGJ, Oil & Gas Investor and Dow Jones. The report comments on the several presentations by Pemex executives and a SENER speaker, noting also perceptions by prospective bidders.
100082 • Mar 01, 11 Pemex 4Q 2010 Earnings Report 21 This report comments on the highlights of the Pemex 4Q 2010 Earnings Report, as delivered by webcast on March 1. The report also notes topics that were omitted from the report, such as the status of the new Tula refinery. Table 1 summarizes the principal statistical comparisons that were provided in the Pemex slides.
100075 • Jan 11, 11 Jan 16, 11 Recruitment for Top Government Jobs in Mexico: Conversations with Dr. 19 This market note summarizes conversations with Dr. Bob Brito of Rice University about the recruitment process in Mexico for top jobs in government. In Dr. Brito’s view, the Mexican system is as efficient as that of France. The “Brito Profile” for success in the public sector is a) proficiency in English and b) a graduate degree from a prestigious university abroad. The report extends this analysis to include other factors that bear on senior government appointments, and notes how the PAN have changed the weights given to these variables.
100064 • Dec 24, 10 The Ambassador and the Petroleum Club 36 On October 12, 2010, Mexico's ambassador to the United States, Arturo Sarukhan, addressed a luncheon audience of some 280 guests at downtown Petroleum Club of Houston. The ambassador spoke with confidence and wit about the positive and negative aspects of the U.S.-Mexico relationship; contrary to the expectations of the audience, however, he did not speak about oil policy or mention Pemex, except once in the Q&A.
100049 • Jun 12, 10 British Chamber Energy Day 2010: Program Ideas for the Fall Conference 12 This Market Note proposes ideas for the annual fall seminar that is sponsored by the British-Mexican Chamber of Commerce in Mexico City. As the single, memorable event of the year in the oil industry in which a British firm is involved is the accident at BP’s Macondo well in the U.S. Gulf of Mexico, the fall program should focus on safety: One panel by government regulators, a second panel by major oil companies. This recommendation was accepted, in part, by the inclusion of a panel on safety.
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100035 • Mar 26, 10 Petroleum Day 2010 01 This report comments on the protocol of addresses by officials at the March 18th Petroleum Day ceremony in Mexico, going back to 1995. The speeches of March 18, 2010, took place at the Pemex refinery in Tula, in the State of Hidalgo, where a major refinery upgrade is planned. This report also comments on the topics that were not mentioned by the speakers.
100028 • Mar 03, 10 Pemex’s 4th Quarter 2009 Conference Call 01 This report comments on the topics covered and omitted from Pemex's 4th Quarter Earnings Report in a conference call to portfolio investors. Attention is given to the so-called "Field Labs" in Chicontepec that Pemex is awarding to major service companies on a sole-source basis.
• Oct 30, 09 Pemex’s 3rd Quarter 2009 Earnings Report 01 This report provides the summary operating statistics given in Pemex's 3rd Quarter Earnings Report to lenders and bond-holders. The Pemex speakers were Carlos Morales and EstebanLevín. The report cites their comments in relation to topics such as Chicontepec and Pidiregas.
100010 • Jul 30, 09 Pemex’s 2nd Quarter Earnings Report to Lenders and Bond-holders 01 This report focuses only on the Q&A sessions, in Spanish and English, of the 2nd Quarter Earnings Call to lenders and bondholders. The report also notes the topics that were not mentioned, including the pending refinery location, Pemex's crude hedging program, or the cancelled PIDIREGAS financing program.
100004 • Mar 21, 09 PemexWeek, March 18-20, 2009 02 This report comments on two public events related to the present situation and future of Pemex. The March 18th commemoration of the oil expropriation of 1938 is the central element in Mexico’s petroleum narrative. This year, the special topic concerned the siting of a new refinery. The report notes that President Calderón said that he wanted “advice” from governors, but no mention was made of input from Pemex. The second event was Pemex’s report on the status of hydrocarbon reserves.
100002 • Mar 03, 09 Pemex 4Q 2008 Conference Call to Portfolio Investors: Critique of Q&A and 02 This market note, published on the same day as the Pemex 4th Quarter Conference call to lenders. The Pemex speakers were Esteban Levín and Vinicio Suro. The report reviews the basic operational and financial forecasts; and goes on to examine Pemex replies given to questions from financial institutions. The report notes that the meaning of “loss” in Pemex accounting is not comparable to that of other companies in Mexico.
061307 • Jun 13, 07 La OTC y el logotipo de PEMEX (Pemex’s missing presence at OTC) 01 This op-ed article laments that in OTC 2007 the only place where the logo of Pemex could be found was on the scale model of the FPSO that was being refitted for Pemex’s use. The article urges Pemex to increase its presence in OTC, sending mid-career professionals to extend their networks outside of Mexico. Published in REFORMA (June 13, 2007).
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690 • Mar 20, 05 EXITEP 2005: ¿Apertura? 112 This report reviews Pemex's upstream technology conference held in Veracruz Feb. 20-23, 2005. One highlight was an address by Pemex CEO Luis Ramírez Corzo in the presence of President Vicente Fox in which he said that Pemex needed an "apertura" (opening) to private capital. The report is a 5,300-word critique of the organization and program content of the mega-event and includes recommendations derived from off-line comments from delegates, exhibitors and presenters.
671 • Apr 29, 04 Petroleum Day 2004: Open Season on Oil Policy and Pemex 315 This report examines the politics of Petroleum Day in Mexico, with reference to the celebrations of 2003 and 2004. Under President Fox the event is undergoing political engineering and its future importance in Mexican politics is in doubt. The report reviews the addresses and arguments of Cuauhtémoc Cárdenas on March 17 and those of Raúl Muñoz Leos and Felipe Calderón on March 18.
631 • Mar 06, 03 Pemex Upstream Technology Week, 2003 67 This report provides a critical assessment of Pemex's upstream technology week, which was held in Veracruz, February 13-19, 2003 and included technical courses, trade exhibits and professional papers. The events provided a forum for distinct stakeholders in Mexico's energy sector to express their views, report scientific and technological results and, for exhibitors, sell their products and services.
614 • Nov 21, 02 6th CBI conference on Mexican energy 06 The 6th annual conference on Mexican energy policy and markets was held in Houston 28-29th, 2002. This reports offers an overview of key presentations and a critique of the underlying agenda of the event.
607 • Oct 03, 02 Energy Security Roundtable for Mexico 48 This report provides an overview of the discussions held on September 27, 2002 in Washington, DC at an invitation-only seminar attended by analysts from academia, industry and government. Not-for-attribution discussions centered on the status of structural reforms in Mexico’s oil, gas and power sectors.
274 • Jun 05, 98 Finance Minister Gurría in Houston 02 Finance Minister Gurria comments on Mexico’s energy policy during his visit to Houston.
245 • Jan 31, 98 Presentation in Puebla, Jan. 16-17, 1998 0
Presentation of Pemx Refining investment program.
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Reports on Isssues of Translation in the Mexican Energy Sector
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100081 • Feb 25, 11 PEMEX Contract Discretionality: An Inconvenient Translation 27 This report examines the use of conveniente and inconveniente, words that--despite the obvious English cognates--do not generally translate as "convenient" and "inconvenient." In a recent seminar, many in the audience were disoriented by the provision in the Pemex Specimen Contract of November 24, 2010, that permits Pemex to cancel a contract if a project becomes "inconvenient or unprofitable." The report provides context-sensitive translations for each occurrence of this slippery term.
100032 • Mar 27, 10 Aug 24, 12 Petróleos Mexicanos vs. the English Language: Translating a Square Peg 07 This report examines the principal terms used in the energy sector of Mexico and provides suggestions for standard English translations of some 20 common terms used in Mexican government and energy circles. Most of these terms cannot receive a direct, literal translation. An example is órgano desconcentrado, which is here translated as “Ministerial Agency.”
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Media Coverage of Mexico’s Energy Sector
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100087 • May 18, 11 President Calderon's Bloomberg TV Interview in New York: Does Petrobras 08 In an unstructured TV interview with Bloomberg News on May 10th, President Calderon said that he would propose new legislation designed to make Pemex "more like" Statoil or Petrobras, and that there was the possibility of selling bonds to Mexicans. The history of Brazil and Petrobras reveals a very different historical and policy evolution. The report concludes that there are no lessons from Brazil or Petrobras that can realistically be applied in Mexico during the remainder of the Calderón administration.
100039.1 • Feb 13, 11 The Aristegui Affaire 12 This report is an update to an earlier report (MEI Market Note 39), on the state of investigative journalism in Mexico. The update concerns the firing of the prominent radio journalist Carmen Aristegui on Feb. 7, 2011, for an alleged breach of ethics in relation to her support of a demand by the Worker's Party (PT) that President Calderón disclose if he has an alcohol-dependency issue.
100039 • Apr 20, 10 Feb 15, 11 The State of Investigative Journalism in Mexico 16 This report examines the lack of investigative journalism in the mainstream print and electronic media in Mexico. Reporting on the energy sector is carefully circumscribed to conform to current government policy. With few exceptions, the opposition press avoids the expense and risk, legal and otherwise, of investigative journalism, instead relying on contrarian interviews. Update 1 concerns the Aristegui Affaire of February 2011, in which Mexico’s most prominent radio journalist was terminated for an alleged breach of ethics.
100031 • Mar 09, 10 Educating the press regarding Mexican oil and gas 01 This report examines the themes that circulate in stories in the Mexican and international press in March, Mexico's "Oil Month." The themes of a story published in The New York Times of March 9, 2010, is taken as an example of how the traditional oil narrative gets replayed. The press fails to report on the steps taken to close the gaps between Pemex and global practices.
389 • Dec 29, 99 Energy sector publications of interest to Mexico watchers 01 This report discusses four commercially available publications of interest to the Mexico energy community. One of these, EL FINANCIERO INTERNATIONAL, has closed. Other publications mentioned include ENERGY OUTLOOK, LA CARPETA PURPURA and PETROLEO Y ELECTRICIDAD.
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FCPA Risk in Mexico: Background Reports
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100127 • May 26, 12 May 29, 12 FCPA Risk in Mexico (Part II): Wal-Mart vs. Sempra 630 This report is a follow-up of an earlier report on FCPA risks in Mexico, published July 23, 2011. In that repor report we examined diverse risks as seen in the stories of Metalclad, Marathon Oil and Sempra Energy in Mexico. In this report, we examine, comparatively, the allegations of illicit payments in Mexico made by Wal-Mart and Sempra. At the same time, we reexamine the discussion among economists about the efficiency of corruption as a mechanism that promotes economic development.
100094 • Jul 21, 11 The FPCA Risk in Mexico 313 This report seeks to identify features of the Mexican operating environment that tend to put individuals and corporations at risk for non-compliance of the Foreign Corrupt Practices Act of 1977. The report identifies eight (8) situations in Mexico where a company subject to FCPA rules may either be a victim of corruption or find himself in circumstances that could compromise his FCPA compliance standards and protocols. The history of Metalclad, Marathon Oil and Sempra Energy illustrate these situations.
100067 • Nov 07, 10 May 19, 12 The Perception of Corruption in Mexico 27 Each year, Transparency International, an NGO with a global reputation and presence, issues its report corruption in the public sector in more than 170 countries. The perception of corruption in the public sector is measured for each country on a 10-point scale, where 0 = Most Corrupt and 10 = Most Honest. Countries are also ranked, comparatively. In the 2010 report, Mexico ranked 93 in a list of 176 countries. Afganistan scored with the highest level of corruptio, while Demark was least. The present report examines different forms of corruption observed in Mexico.
729 • Jun 25, 07 Jul 6, 07 Transparency and insider trading in Pemex 515 This report offers an overview of the decades-old practices in Mexico's energy sector that could be described as insider trading, where, by this term, we mean the use of privileged information or institutional or political power for private gain or advantage. The body of the report asks about a Mexico-City based consultancy that facilitated the leasing by Pemex of an FPSO from Bergesen Worldwide, a Chinese-owned conglomerate, as well as about means to limit insider trading.
673 • May 25, 04 The risk of virtual expropriation: Metalclad and Marathon Oil 59 This report examines the risk to investors in infrastructure projects in Mexico from indirect or regulatory expropriation. The cases heard in the first ten years of NAFTA leave serious doubts about the remedies available under its Chapter 11. This report examines two virtual expropriations: that of Metalclad Corp. in 1997 and that of Marathon Oil in 2004. Two questions are asked: What went wrong? and What are the lessons?
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Advanced English Pronunciation and Word-Choice
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100117 • Feb 16, 12 Overcoming the Mexican Accent in English (Part II) 613 This report builds on Market Note 109, which presents the basic concepts of linguistics that are needed to have a clear understanding of the challenges that face the native Spanish speaker who is already competent in English. In this report we focus on the "enemies within" that make it difficult to listen to the ways that English is actually spoken.
100109 • Nov 22, 11 Mar 29, 12 Overcoming the Mexican Accent in English (Part I) 623 This report examines, with the aid of linguistics, the differences in the phonological systems of English and Spanish. By this route the native Spanish speaker comes to see the linguistic baggage that he will automatically want to bring with him as he crosses the border into English. The report describes the most common Mexican accent in English, and offers a long-term vision for achieving English mastery. The report will also be useful for the native English speaker who wants to go beyond basic compentency in Spanish.
622 • Mar 07, 03 Mar 8, 03 Why can’t Mexico communicate in English? 16 This report offers reflections on the closing on December 31, 2002, of two Mexico City newspapers, Novedades and The News. In the case of The News, its political function was to promote Mexico’s image to English-speaking tourists and business visitors.
620 • Dec 26, 02 Dec 27, 02 Blunders, faux pas and booby traps in English-Mexican Spanish translation 16 This report notes difficulties both sides have with the problem of false cognates in translating from Mexican Spanish into English and from English into Mexican Spanish. Consider the adequacy of “subsided organism” as an English translation of organismo subsidiario. In some cases, translation errors may pass into blunders of strategy or public relations.
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Eagle Ford Shale Basin in Mexico: A Technical Slide Package
Scope and Index to Slides
Contact:
For sales inquiries in Mexico City, please call 5572 3440 or 044 55 8545 8534, or email at [email protected]
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September 19, 2012 Eagle Ford Shale Basin in Mexico: A Technical Slide Package
Scope & Purpose
he development of shale oil and gas fields in Mexico is a new activity that will be complementary to existing well‐drilling operations at the Burgos Basin. In 2011, Pemex Tdrilled the first shale rock well in Mexico (Emergente‐1) and has aggressive plans to drill new locations. Pemex does not have the technology, expertise or manpower to exploit shale resources, and somehow this will soon lead to open new areas of opportunity for private investors. Pemex recognizes the need of private companies with expertise to do massive drilling in order to pull down extraction costs. By law, in Mexico, gas, oil and liquids must be handed out to Pemex; but for the right companies there is business opportunity under the Integral E&P Contract (CIEP) program. Pemex has a program to drill 175 wells in shale formations between 2012 and 2015 to evaluate prospective reserves, and it is quite probable that they will be developed under the CIEP program. Since shale deposits co‐mingle with coal basins, there will be a need to clarify the law, which gas grants coal mining companies’ rights of use for self‐use and gathering. Eagle Ford Shale structures in Mexico are more complex, narrower and discontinuous than their counterparts in the U.S. (Texas and Louisiana). The targets in Mexico are sandstone reservoirs of Miocene and Pliocene age sourced from Jurassic (Tithonian) and Cretaceous‐age shale. Due to the amounts of risked recoverable resources, the Eagle Ford and Tithonian shale at the Burgos Basin hold the most important shale gas potential in Mexico. Since new drilling and production technologies have been developed in shale reservoirs throughout the U.S., the production of shale gas and oil is now economically feasible in the US. The amount of technically recoverable shale gas in Mexico is 700 TCF, against 862 TCF in the U.S. and 388 in Canada. The shale gas at Eagle Ford in Mexico is estimated to be 591 TCF; however, all numbers provided in this study are preliminary a pending resource evaluation. The average cost for drilling and completion per well in the Eagle Ford area is between $5 to 7 million dollars and the break‐even point for shale gas production ranges between 5.75 and 7.00 US$/MMBTU. However, the upside in the Eagle Ford basin is the availability of liquids and oil, which, in combination of at least 15% with natural gas are driving break even points down to 1.50 US$/MMBTU. In view of these opportunities and the scarcity of information about the Eagle Ford basin, GSF Consultants prepared a special study on the sources of shale rock geology and distribution throughout the northern states of Mexico. The main body of the report gives a general outlook of shale resources in Coahuila, Nuevo León and Tamaulipas. The report includes an optional annex including more technical in‐depth information as shown in the following indexes. The slide package is as comprehensive as the data permit, and provides companies with interests in U.S.‐side shale gas complementary data on the extension of Eagle Ford into Mexico. The data and slides are of immediate value to service companies and others for whom a role in Mexico is visualized.
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Eagle Ford Shale Basin in Mexico: A Technical Slide Package
Table of Contents for the Report
Slide 2 Table of contents
Slide 3 EXECUTIVE SUMMARY
Slide 6 Index.
Slide 22 INTRODUCTION & METHODOLOGY
Slide 24 PEMEX E&P & CNH STANDING ON SHALE PLAY DEVELOPMENT– Mexican Government position on shale basins
Slide 25 Potential shale resources Slide 26 Emergente‐1 the first shale gas well in Mexico Slide 27 Emergente‐1 Drilling details Slide 28 Geological analogy of the Emergente‐1 well and the Eagle Ford stratigraphy Slide 29 PEP shale gas drilling program 2012 – 2015 Slide 31 Natural gas production scenario 2012 – 2026
Slide 32 PEMEX E&P & CNH STANDING ON SHALE PLAY DEVELOPMENT– Mexican Eagle Ford Basin Development
Slide 33 Pemex started producing non‐associated natural gas at Burgos Slide 34 Burgos asset natural gas production Slide 35 Location of gas wells at the Burgos basin Slide 36 Gas wells at the Burgos basin identified through SPOT satellite images Slide 37 Optimization of artificial lifting systems in Burgos Slide 38 Optimization areas for the artificial lifting system for 750 wells in Burgos Slide 39 Landscape of the new areas of shale gas development
Slide 40 LEGAL ISSUES & BUSINESS OPPORTUNITIES: 1. U.S. – Mexico transboundary agreements on water and hydrocarbons
Slide 41 Legal frame for hydrocarbons Slide 42 NAFTA transborder area for environmental protection Slide 44 U.S. – Mexico transborder negotiations intermingle environmental, water and hydrocarbon issues Slide 46 LEGAL ISSUES & BUSINESS OPPORTUNITIES: 2. Imminent Mexican Government opening of leases for private companies Slide 47 The National Energy Strategy recognizes the need for leasing Slide 48 Legal issues and business opportunities Slide 49 Legal frame as per the National Energy Strategy 2012 – 2026 Slide 51 LEGAL ISSUES & BUSINESS OPPORTUNITIES: 3.Legal conflict between shale gas and coalbed methane (CBM) resulting from overlapping basins
Slide 52 Controversies are foreseen due to the legal frame for shale gas and CBM Slide 53 Highlights from Article 27 of the Mexican Constitution Slide 54 Shale gas and coalbed methane legislation – mining branch
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Eagle Ford Shale Basin in Mexico: A Technical Slide Package
Slide 55 Shale gas and coalbed methane legislation – petroleum branch Slide 56 CBM and shale gas extraction ownership conflicts are foreseen
Slide 57 SHALE ROCKS: 1. Availability of technically recoverable gas and/or oil from existing shale rocks
Slide 58 Definition of shale (lutite) Slide 59 Characterization of shale Slide 62 Sequence stratigraphy of the Eagle Ford (Boquillas) Formation Slide 63 Type of rock at the Boquillas Fm Slide 64 Landscape at the Boquillas Fm Slide 65 Characteristics of the Eagle Ford basin in Mexico Slide 66 Makeup of productive shale formations
Slide 67 SHALE ROCKS: Shale O&G geology and basins in Mexico extending from Eagle Ford in the U.S.
Slide 68 Eagle Ford shale play Slide 69 The Southwest Texas Heavy Oil Province is located in the Maverick basin Slide 70 Time stratigraphic chart of the Upper Cretaceous units of the maverick basin and San Marcos arch. Slide 72 The Anacacho and San Miguel formations in the Maverick basin Slide 73 Stratigraphic setting of the San Miguel formation and a series of marine – dominated shorelines and wave – dominated deltas Slide 74 The Olmos & Escondido formations in the Maverick basin Slide 75 Stratigraphic setting of the Olmos formation as a fluvial delatic system and associated shorelines Slide 76 North – south cross section through eastern maverick county Slide 77 Identified gas resources in Mexico Slide 78 O&G basins in Mexico Slide 79 Regional structures affecting the continental crust of Mexico Slide 80 Shale basins at the Gulf of Mexico Slide 81 Transborder regional paleography of the Upper Cretaceous Slide 82 Geologic structure of Burgos Slide 83 The Eagle Ford basin is transborder between Mexico and USA Slide 84 The Eagle Ford basin gets into Mexico as an extension of the Maverick basin Slide 85 Maverick basin stratigraphy Slide 86 Maverick basin stratigraphy and focus in O&G Slide 87 Northwest – southwest cross section through the Maverick basin Slide 88 Jurassic and Cretaceous stratigraphic units in southern and eastern Texas Slide 89 Definition of the Burgos Integral Asset Slide 90 Burgos basin boundaries Slide 91 Definition of the Burgos Integral Asset Slide 92 Burgos basin boundaries Slide 95 Geology of the Burgos basin within the Burgos Asset Slide 96 Geology of the Burgos basin Slide 97 Burgos basin boundaries Slide 98 Geological origin of the Eagle Ford and Burgos basins Slide 99 Cross section of the stratigraphy of the western border of the Burgos basin Slide 100 Stratigraphy of the Sabinas basin Slide 101 Geology of the Sabinas basin Slide 102 A – A transversal view of the Burgos basin geology Slide 104 The Eagle Ford basin in northeastern Mexico
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Eagle Ford Shale Basin in Mexico: A Technical Slide Package
Slide 105 The Sabinas basin in northeastern Mexico Slide 107 Landscape of Sabinas Slide 108 Geology of La Casita formation Slide 109 Geology of La Casita formation – Cross section Slide 110 Geology of La Casita formation – La Popa basin Slide 111 Sabinas basin boundaries Burgos province Slide 112 Profile of the Forastero – 1 well Slide 113 Sabinas basin boundaries – Peninsula de Tamaulipas and Isla de Coahuila Slide 116 Correlation between the Cuatro Cienegas and El Oro blocks Slide 117 Coahuila state geology Slide 118 Location of towns and mountain ranges in Coahuila Slide 119 State of Coahuila geologic profile Slide 120 Tamaulipas state geology Slide 121 Location of towns and mountain ranges in Tamaulipas Slide 122 State of Tamaulipas geologic profile Slide 123 Types of soil at the Zone II from the Burgos basin Slide 126 Nuevo Leon state Geology Slide 127 Landscape of the Aramberri area in the state of Nuevo Leon Slide 128 Location of towns and mountain ranges in Nuevo Leon Slide 129 State of Nuevo Leon geologic profile
Slide 130 SHALE ROCKS: Overlap of shale and coal basins in the Sabinas basin
Slide 131 The origin of the Maverick basin explains coal deposit structures in Coahuila Slide 132 Maverick basin geology 115 million years ago Slide 134 Location of the main coal deposits in Mexico Slide 135 The Eagle Ford basin runs towards northeastern Mexico Slide 136 Location of the main coal deposits in Mexico Slide 138 Coahuila coal deposits Slide 139 Geologic characteristics of coal deposits in Coahuila Slide 140 Coal deposits in Sabinas – Monclova
Slide 141 FRACTURING CHEMICALS & WATER MANAGEMENT: 1. What is fracturing?
Slide 143 Eagle Ford shale well boring Slide 144 Eagle Ford hydraulic fracturing Slide 145 Fracturing process in the production of shale gas Slide 146 Types of fracturing guns Slide 147 Use of fracturing guns Slide 148 CT Express Rig – Up Slide 149 Well drilling through Multiple Service Contracts at the Burgos basin Slide 150 Well drilling and natural gas processing by Pemex
Slide 151 FRACTURING CHEMICALS & WATER MANAGEMENT: 2. Fracturing chemicals for oil and gas
Slide 152 Typical Eagle Ford fracturing fluid makeup Slide 157 Fracturing chemicals cocktail composition Slide 154 Typical Eagle Ford fracturing fluid makeup Slide 158 Common Fracturing chemicals used at Eagle Ford (shale gas) Slide 159 Common Fracturing chemicals used at Eagle Ford (shale oil)
Slide 160 FRACTURING CHEMICALS & WATER MANAGEMENT: 3. Use of water in fracturing
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Eagle Ford Shale Basin in Mexico: A Technical Slide Package
Slide 161 Water use in deep shale gas exploration Slide 162 Water is needed in the production of shale gas Slide 163 Hydraulic fracturing and groundwater protection Slide 164 The use of water for shale gas is lower against other fuels
Slide 165 FRACTURING CHEMICALS & WATER MANAGEMENT: 4. Water use financials
Slide 166 Water management economics in the development and production of shale resources Slide 167 Key factors involved in water management at Eagle Ford Slide 169 Water management segments in the development and production of shale resources involved in costing
Slide 170 SUPERFICIAL AND/OR GROUNDWATER: 1. Availability of water supplies in large quantities
Slide 171 Eagle Ford field development needs are well covered by water flows at the Rio Grande Slide 175 Intermontane water basins in the Trans – Pecos region of western Texas and northern Chihuahua Slide 176 Water basins in western Texas and northern Chihuahua Slide 177 U.S. –Mexico shared transborder aquifers Slide 179 Water basins in western Texas and northern Chihuahua Slide 181 U.S. –Mexico shared transborder aquifers Slide 182 U.S. –Mexico bi‐national water bodies Slide 183 U.S. –Mexico shared transborder aquifers and legal issues Slide 185 U..S. – Mexico transboundary aquifers under international law Slide 186 Characteristics of dams on the Mexican side of the Rio Grande Slide 187 Mexican groundwater in the Eagle Ford area Slide 188 Coahuila state rivers and water bodies Slide 189 Hydrologic regions in Coahuila and Nuevo Leon Slide 190 Hydrologic regions in Tamaulipas
Slide 191 SUPERFICIAL AND/OR GROUNDWATER: 2. Availability of state‐of‐the‐art water treatment systems
Slide 192 Water treatment issues Slide 194 Schlumberger aquifer storage and recovery in fracturing operations Slide 196 Chesapeake’s Aqua Renew® program Slide 197 Intervras™ Technologies Slide 198 Ecologix integrated treatment systems for oil drilling and fracturing operations
Slide 199 EAGLE FORD DRILLING FINANCIALS: 1. Well development costs
Slide 200 Financial provisions in Mexico will use analogies with the U.S. Slide 201 Eagle Ford drilling and completion impact (2010) Slide 202 Costs for drilling at Eagle Ford
Slide 206 EAGLE FORD DRILLING FINANCIALS : 2. Production costs and break‐even point
Slide 207 Eagle Ford shale extraction of oil and gas impact (2010) Slide 208 Break‐even point for Eagle Ford shale wells Slide 209 Break‐even point considerations for Talisman Energy Eagle Ford shale wells Slide 210 The break‐even point for Talisman Energy turned out to be lower
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Eagle Ford Shale Basin in Mexico: A Technical Slide Package
Slide 211 Baker Institute break‐even point for shale gas Slide 212 Eagle Ford shale impact outlook in Texas 2020
Slide 215 EAGLE FORD DRILLING FINANCIALS: 3. Henry Hub futures prices
Slide 216 Henry hub natural gas prices are the reference in the Mexican price formula Slide 217 Henry Hub natural gas prices tend to remain low in 2012 – 2013 Slide 218 Natural gas price differentials against LPG, diesel and heavy fuel oil are the key drivers to switch fuels in Mexico
Slide 219 EAGLE FORD DRILLING FINANCIALS: 4. U.S. DOE natural gas price forecasts to 2035
Slide 220 Natural gas prices depend on availability
Slide 222 HUMAN FACTORS & REGIONAL DEVELOPMENT: benefits and hazards
Slide 223 Human factors and regional development Slide 224 The impact of Eagle Ford is reflected in the creation of jobs and increased salaries Slide 225 Permanent and temporary indirect jobs associated with drilling operations Slide 226 The payment of leases on the Mexican side can be compared to acquisition of Rights‐of‐ Way Slide 227 Managing risks of shale basin development
Slide 229 CONCLUSIONS
Slide 232 ABBREVIATIONS
Slide 234 CONVERSION FACTORS
Table of Contents for the Annex Contents
Slide 2 Foreground
Slide16 Section 1. Burgos Integral Project Development
Slide 17 Pemex Forecast 2011 – 2014 Program of studies & exploratory wells Slide 18 Development areas of the Burgos Integral Project (BIP) Slide 19 Areas included in the Integral Burgos Basin development plan Slide 20 Development plan of the BIP Slide 21 Alternatives to develop the BIP Slide 22 The Burgos Integral Project Slide 23 Expected hydrocarbons production under alternative 1
Slide 24 Section 2. Overall Eagle Ford area analysis in Mexico
Slide 25 Geologic map of the Gulf of Sabinas & the Burgos Basin Slide 26 Geologic history of Coahuila – Nuevo León and Tamaulipas Slide 27 The North American & Caribbean plates gave rise to the Sea of Tethys Slide 28 Plate distribution around the world Slide 29 Paleography of the Upper Jurassic in Northern Mexico Slide 30 Physiography in Coahuila, Nuevo León and Tamaulipas Slide 31 Geologic history of Coahuila, Nuevo León and Tamaulipas
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Eagle Ford Shale Basin in Mexico: A Technical Slide Package
Slide 32 Paleography from the Oxfordian – Upper Kimmerigdian Slide 33 Paleography from the Upper Kimmreigdian – Tithonian Slide 34 Paleography from the Berriasiano – Valanginian Slide 35 Paleography from the Upper Neocomian Slide 36 Paleography from the Albian – Cenomanian Slide 37 Paleography from the Turonian Slide 38 Paleography from the Campanian – Maastrichtian Slide 39 The Río Bravo fault, Chihuahua, Coahuila, Nuevo León & Tamaulipas Slide 40 The Río Bravo fault – map Slide 41 The Río Bravo fault – provinces Slide 42 The Río Bravo fault – depocenters Slide 43 Gravimetric map of the Río Bravo fault Slide 44 Topography of the Río Bravo fault
Slide 45 Section 3. Sabinas Basin
Slide 46 Towns in and around the Sabinas and Burgos basins Slide 47 Main towns in northern Coahuila Slide 48 Regions and hydrologic basins in northern Coahuila Slide 49 Water bodies in northern Coahuila Slide 50 Allende – Piedras Negras aquifer in Northern Coahuila Slide 51 Physiography in northern Coahuila Slide 52 Allende – Piedras Negras aquifer in Northern Coahuila – physiography & climate Slide 53 Allende – Piedras Negras aquifer in Northern Coahuila – hydrography and geomorphology Slide 54 Geology in northern Coahuila Slide 55 Sites analyzed in the state of Coahuila Slide 56 Geologic column of Muzquiz, Coahuila Slide 57 Geology of the Allende – Piedras Negras aquifer in northern Coahuila Slide 58 Geology of the Allende – Piedras Negras aquifer in northern Coahuila – Lower Cretaceous: GlenRose & Telephone Fm Slide 59 Geology of the Allende – Piedras Negras aquifer in northern Coahuila – Lower Cretaceous (El Burro Reef Complex: West Nueces Fm) Slide 60 Geology of the Allende – Piedras Negras aquifer in northern Coahuila – Lower Cretaceous (El Burro Reef Complex: McKnight & Salmon Peak Fm) Slide 61 Geology of the Allende – Piedras Negras aquifer in northern Coahuila – Lower Cretaceous: Upper Devil’s River & Del Río Fm Slide 62 Geology of the Allende – Piedras Negras aquifer in northern Coahuila – Lower Cretaceous: Buda, Eagle Ford & Austin Fm Slide 63 Geology of the Allende – Piedras Negras aquifer in northern Coahuila – Lower Cretaceous: San Miguel, Olmos, Río Escondido Fm Slide 65 The Allende – Piedras Negras aquifer: Map Slide 66 Main towns in central Coahuila Slide 67 Regions and hydrologic basins in southern Coahuila Slide 68 Water bodies in southern Coahuila Slide 69 Castaños aquifer in central Coahuila Slide 70 Physiography in southern Coahuila Slide 71 Geologic column in Monclova, Coahuila Slide 72 Stratigraphic correlations between Coahuila basins Slide 73 Physiographic provinces of Monclova Slide 74 Eagle Ford erosion in Monclova, Coahuila Slide 75 Eagle Ford topography in Monclova Coahuila Slide 76 Physiography and climate in southern Coahuila Slide 77 Hydrography and geomorphology in southern Coahuila
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Eagle Ford Shale Basin in Mexico: A Technical Slide Package
Slide 78 Castaños aquifer in southern Coahuila Slide 79 Geology in southern Coahuila Slide 80 Geology at the Castaños aquifer in southern Coahuila Slide 81 Stratigraphy at Castaños and Monclova, Coahuila: Patula & Cupido Fm Slide 82 Stratigraphy at Castaños and Monclova, Coahuila: La Peña, Aurora & Kiamichi Fm Slide 83 Stratigraphy at Castaños and Monclova, Coahuila: The Washita Group: Georgetown & Del Río Fm Slide 84 Castaños aquifer geology in southern Coahuila Slide 85 Stratigraphy at Castaños and Monclova, Coahuila: The Washita Group: Buda, Eagle Ford & Austin Fm Slide 86 Stratigraphy at Castaños and Monclova, Coahuila: The Sabinas conglomerates & quaternary alluvium Slide 87 Physiography in northern Nuevo León Slide 88 Regions and hydrologic basins in northern Nuevo León Slide 89 Water bodies in northern Nuevo León Slide 90 Geology in Nuevo León Slide 91 Geology of Coahuila & Nuevo León Slide 92 Geology of Coahuila and Nuevo León. Geologic column Valladares chart Slide 93 Geology of Coahuila & Nuevo León. La Peña & Aurora Fm shale outcrops Slide 94 Geology of Coahuila & Nuevo León. Kiamichi Fm shale outcrops Slide 95 Geology of Coahuila & Nuevo León. Stratigraphy: The Washita Group: Georgetown, Del Río & Buda Fm Slide 96 Geology of Coahuila & Nuevo León. Stratigraphy: Eagle Ford Formation Slide 97 Geology of Coahuila & Nuevo León. Stratigraphy: Austin, Upson & San Miguel Fm Slide 98 Geology of Coahuila & Nuevo León. Stratigraphy: Olmos Fm Slide 99 Slide Geology of Coahuila & Nuevo León. Stratigraphy: Physicochemical characteristics of coal at the Olmos Fm Slide 100 Geology of Coahuila, Nuevo León & Tamaulipas: Paleotectonic map of northeastern Mexico
Slide 101 Well logs at the Sabinas Basin & Coahuila
Slide102 PEP has already discovered shale gas reserves through the Emergente – 1 well Slide103 Likewise, PEP has already detected oil traces at the Montañés – 1 well Slide104 La Casita, Padilla and La Virgen plays at the Sabinas Basin Slide105 Vitrinite reflectance at Sabinas Slide106 Sabinas Basin plays Slide 107 Ethane C13 isotopes at the Sabinas Basin Slide 108 Sabinas Basin play composition Slide 109 Chemical composition of field gases at the Sabinas Basin Slide 110 Buena Suerte well log at the Sabinas Basin: Induction registry Slide 111 Buena Suerte well secondary porosity analysis Slide 112 Buena Suerte well secondary porosity analysis: M & N Values Slide 113 Buena Suerte well hydrocarbon analysis
Slide 114 Section 4. Burgos Basin
Slide 115 Main towns in northern Tamaulipas Slide 116 Regions & hydrologic basins in northern Tamaulipas Slide 117 Water bodies in northern Tamaulipas Slide 118 Water bodies in northern Tamaulipas: Hydrography Slide 119 Lower Río Bravo aquifer 2801, Tamaulipas Slide 120 Lower Río Bravo aquifer 2801, Tamaulipas: Hydrologic units
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Eagle Ford Shale Basin in Mexico: A Technical Slide Package
Slide 121 Lower Río Bravo aquifer 2801, Tamaulipas: Hydrologic units map Slide 122 Water bodies in central Tamaulipas: Hydrography & geomorphology Slide 123 Physiography in northern Tamaulipas Slide 124 Physiography & climate at the Lower Río Bravo aquifer Slide 125 Physiography & climate at the Méndez – San Fernando aquifer 2802 Slide 126 Location of the Méndez – San Fernando aquifer Slide 127 Geology in northern Tamaulipas Slide 128 Geology of the Lower Río Bravo Basin: map Slide 129 Geology of the Lower Río Bravo Basin Stratigraphy: Upper Cretaceous: Méndez Fm. Paleocene: Velasco & Midway Fm Slide 130 Geology of the Lower Río Bravo Basin Stratigraphy: Eocene: Wilcox, Carrizo, Mount Selman, Cook Mountain Fm. Slide 131 Geology of the Lower Río Bravo Basin Stratigraphy: Oligocene, Miocene, Pliocene, Pleistocene & Holocene Slide 132 Geology of the Burgos Basin: map Slide 133 Geology of the Burgos Basin. Slide 134 Geology of the Burgos Basin. Stratigraphy: Tamaulipas, San Felipe Fm Slide 135 Stratigraphic sequence from the Tertiary, Burgos Province Slide 136 Geology of the Burgos Basin. Méndez, Midway, Wilcox, Carrizo, Cook Mountain & Yegua Fm Slide 137 The Frío Marine Fm geologic structure Slide 138 Geology of the Burgos Basin: Vicksburg & Frío Fm, Conglomerate Norma, Catahoula, Oakville, Lagarto, Goliad, Beaumont and Lizzie Fm Slide 139 Geologic column of Tamaulipas Slide 140 Geology of the Burgos Basin
Slide 141 Well logs at the Burgos Basin, Tamaulipas
Slide 142 Well locations at the Burgos Basin Slide 143 Permeability analysis of the Burgos Topo – 1 well Slide 144 Porosity analysis of the Burgos Topo – 1 well Slide 145 Porosity analysis of the Burgos Topo – 1 well (log) Slide 146 Cuervito field of the Burgos Basin Slide 147 Cuervito field of the Burgos Basin: Geology Slide 148 Cuervito field of the Burgos Basin: Characteristics Slide 149 Slide Cuervito field of the Burgos Basin: Well logs Slide 150 Slide Cuervito field of the Burgos Basin: Well logs Cue – 1024 & Cue – 1031 Slide 151 Well types according to their production potential at the Cuervito field Slide 152 Well logs at the Cuervito field Slide 153 Well production curves at the Cuervito field Slide 154 Secondary recovery at Arcabuz – Culebra at the Burgos Basin Slide 155 Technical characteristics in the gas fields of the Burgos Basin Slide 156 Secondary recovery at the Burgos Basin Slide 157 Arcabuz well at the Burgos Basin Slide 158 Arcabuz well stress profile Slide 159 Arcabuz well re‐fracturing design Slide 160 Geologic – structural interpretation at the Arcabuz – Culebra area
Slide 161 Stratigraphic units and climate codes
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Eagle Ford Shale Basin in Mexico: A Technical Slide Package
Profile of GSF Consultants
GSF Consultants has over 20 years of experience in Mexico, in projects related to natural gas pipelines, petrochemicals and oilfield services. The Principal of the firm, Guillermo Suarez holds a BS in Chemical Engineering from the National University of Mexico and a Postgraduate Diploma in Food Engineering from Leeds University, England. He also holds a Certificate of Proficiency in English from Cambridge University, England. GSF Consultants is a CONACYT chartered technological firm (RCCT – 0282), engaged in energy marketing, food and petrochemicals and plant design and troubleshooting in Mexico, and Latin America. GSF Consultants also performs foreign investment feasibility studies, joint ventures, financial engineering and business plans for all type of companies interested in coming to invest in Mexico. GSF Consultants has also designed globalization strategies for companies interested in expanding their industrial efforts to Mexico, Central and South America. GSF Consultants principal clients include leading companies and institutions in the Mexican Energy Sector: Shell, BP, Pemex, Schlumberger, GDF–Suez, Koch, UNAM, Mexican Congress, Mitsui and Power Management International, among others. Between 1989 and 2009, the firm carried out studies for the U.S. Embassy in Mexico on economics, trade and energy, including sector studies on delicate issues during the negotiations of the NAFTA. GSF Consultants has a strong business relationship with Baker & Associates in Houston by providing energy market intelligence work for client projects and documentation support for MEXICO ENERGY INTELLIGENCE®. For sales of this report in the U.S., please contact George Baker, at (713) 255 0000 or (832) 434 3928, or by mail to [email protected] For sales in Mexico City, please call 5572 3440 or 044 55 8545 8534, or contact by mail at [email protected] Mailing address: Jesus Teran 37, Circuito Diplomaticos Ciudad Satelite, Naucalpan Estado de Mexico CP 53100
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MEI Market Note No. 97 August 26, 2011 Unconventional Gas in Mexico
Pemex’s plan: Ready, Aim--Estimate
NCE AGAIN, the U.S. Department of Energy has upstaged Pemex and the Mexican government regarding an assessment of Mexico’s petroleum resource base. In 1980, the Rand Corporation O released a study that gave an estimate of Mexico’s recoverable oil deposits at 10, 50 and 90% probability (http://www.rand.org/pubs/reports/R2510z2.html). Pemex never responded in kind with its own analysis in a comparable form; and, except for the estimate of undiscovered deepwater reserves which employed the 50th percentile to estimate 29.5 billion barrels of oil equivalent, has always used a point estimate without any attempt at providing a credible range of possibilities. In the present case, the Energy Information Administration (EIA), in commissioning a study of shale gas prospects outside the United States, including those in Mexico, produced a report that until the Houston seminar held on August 23, 2011, had not been answered by Pemex or the government. Speakers at the program from Mexico were energy lawyers Rogelio López‐Velarde and Nicolás Borda, Luis Ramos from Pemex E&P and Javier Estrada from the National Hydrocarbons Commission. The present report touches on the highlights of the presentations of that seminar, and asks about the shape that a development program for shale gas in Mexico might take.
Contents INTRODUCTION ...... 2 BACKGROUND ...... 2 EIA’s Assessment of 14 Shale Gas Regions Outside U.S...... 2 Pemex’s First Shale Gas Well: Emergente‐1 ...... 2
DISCUSSION ...... 2 COALBED METHANE ...... 3 PEMEX ESTIMATES ...... 3 REGULATORY ENVIRONMENT ...... 3 SHALE GAS: AN AMERICAN INNOVATION ...... 3 HOW WILL SHALE GAS BE DEVLEOPED? ...... 4
OBSERVATIONS ...... 4 CONCLUSIONS ...... 4 Appendices ...... 5 Exhibit A: Program on Unconventional Gas in Mexico ...... 6 Exhibit B EIA map of shale gas regions of Mexico...... 7 Exhibit C EIA assessment of the Burgos Basin ...... 8
MEXICO ENERGY INTELLIGENCE® (MEI) is a commercial and policy advisory service offered by BAKER & ASSOCIATES, ENERGY CONSULTANTS, a management consultancy based in Houston. MEI reports facilitate two‐way communication between Mexican public and private institutions and the global environment. Our reports examine policy, institutional and cultural issues as they affect the operating environment, energy regulation, and government and private investment in Mexico’s energy sector. Reports are distributed principally on a subscription basis.
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MEI Market Note No. 111 Houston, February 2, 2012 Pemex’s Farm‐out Program By what metrics to evaluate a decade-long hybrid?
he year 2012 is one where there is an intersection of electoral politics and petroleum law and policy. The three major political parties will each offer its own view of the past and of the T meaning of current law. Each will offer a platform that incorporates historical and ideological elements. There will predictably be voices that will express concern about the direction of oil policy and, specifically, at the contractual framework that has been used for auctions of production blocks. The new direction in oil policy arose from the Energy Reform of 2008, which authorized Pemex to devise innovative contractual formats that best fit the idiosyncrasies of the oil industry, especially in the upstream. Since that legislation, Pemex has moved forward with contracts for field laboratories in Chicontepec. Another innovation is the awarding of “Performance contracts” for the reactivation of mature fields in Tabasco. Pemex E&P is currently gearing up for a second round of public tenders in the Northern Region. Because the Performance Contract uniquely confers a revenue interest in in the incremental production from the contractor, we have relabeled it as a “farm‐out,” a term used globally but little known in Mexico. The present report asks a difficult question: How to evaluate the performance of the farm‐out program, that is, how to measure its success or failure? This is a broad question for Mexico’s presidential candidates, as well as for Pemex’s corporate and local boards. The effectiveness of this outsourcing program, compared to alternatives that may or may not be options under current law, policy and politics, should also be reviewed by the Congress, the Hydrocarbon Advisory Board (CNH) and the Energy Ministry. Contents Summary ...... 2 INTRODUCTION ...... 3 BACKGROUND ...... 4 The Challenge of Mature Fields ...... 4 The Logic of Contracts for 2012 and beyond ...... 5 DISCUSSION ...... 6 Preliminary Considerations ...... 6 Metrics with which to evaluate the Pemex Farm‐Out Program ...... 9 Oilfield infrastructure ...... 10 Production Gains ...... 11 Financial Efficiency ...... 11 Technology Transfer ...... 12 Operational Efficiency ...... 13 Deepwater Bait ...... 15 Norwegian/Brazilian Model ...... 15 Caveat: How credible the metrics? ...... 15 Wellhead Telemetry ...... 15 Authority of corporate board to obtain data ...... 16 OBSERVATIONS ...... 17 CONCLUSIONS ...... 18 Titles and scope of related MEI reports ...... 20
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100148 • Nov 03, 12 Pirates of the Caribbean: Cuban, Venezuelan, Mexican 02 This report draws on comments and presentations made at a seminar on Mexico’s economic outlook that was held in Houston on November 2, 2012, and sponsored by the Dallas Federal Reserve Bank. Professor Tim Kehoe have an expanded, economic definition of “pirate” as the person or organization that misappropriates public goods, among them rule of law, contract enforceability, and the availability of bank credit.
100147 • Oct 21, 12 Oct 22, 12 PMI Trading House 215 PMI is one of Pemex’s competitive advantages in the global products market, and for two decades since its founding in the late 1980s has provided Pemex with profits and market efficiencies. In the final two years of the Calderón administration, there was a sequence of mishaps and missteps that damaged PMI’s reputation, morale and ability to operate a trading house. This report identifies the functions of the trading house and recommends a restructuring of PMI, preserving the PMI trading units, and renaming the remainder.
100144 • Oct 09, 12 Mexican Presidents and Oil: Patterns of Politically Unhealthy Behavior 09 This report offers a critique of the pattern of Mexican presidents in inserting themselves into the Pemex news cycle. The occasion for the report is the rambling, sentimental press conference given by President Felipe Calderón on October 5, 2012, in relation to the discovery by Pemex of an oilfield at Supremus-1 in the Perdido area near the U.S.-Mexico maritime border. In the background section to the report the “victim” psychology in Mexico is explored. As for the cross-border oil agreement, Articles 4 and 6 of the Petroleum Law and incompatible with its implementation.
100812 • Oct 08, 12 Mexico does not need Constitutional Change to Update PEMEX 01 An telephone inquiry from Notimex on October 5, 2012, in relation to the announcement by President Felipe Calderón that morning of an oil discovery at Supremus-1, near the U.S.-Mexco maritime border, resulted in an article in Milenio about the reaction of Houston-based analysts to the discovery. A Press Perspective was prepared later that day, commenting on the rumors of “constitutional changes. The article is here reprinted in Mexidata.org. (http://www.mexidata.info/id3464.html).
100143 • Oct 02, 12 Tesis 193/2011 ~ Jurisprudence by Contradiction 39 For more than a decade, in Guadalajara and in other cities where the CRE has issued permits for natural gas distribution, LPG interests have successfully blocked the local distribution company (LDC) from installing the pipeline infrastructure. Techniques have changed: in the late 1990s there were physical intimidation and misinformation campaigns, then a series of civil suits. At last, the Supreme Court (SCJN) stepped in, overturning a local court’s ruling that Jalisco Civil Code could justify blocking LDC construction.
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100124 • Sep 23, 12 US-Mexico Transboundary Hydrocarbon Agreement (Part II) 58 At the meeting of the Mexican Senate Energy Committee on March 27, 2012, substantial objections were presented against approval of the US-Mexico transboundary hydrocarbon agreement that had been signed just the month before on February 20th in Cabo San Lucas. This report highlights some of these objections, and identifies challenges not considered in the Senate meeting.
100142 • Sep 21, 12 Sep 24, 12 What the PRI Must Learn About Energy 48 The basic framework of a closed, Soviet-era economy did not changed under PAN rule; but there have been innovations: LNG, a cross-border hydrocarbon agreement, deepwater exploration, MSC, renewable energy technologies and one new regulatory institution, the National Hydrocarbons Commission. Table 1 provides a rough guide to the topics and issues in the energy sector that the new office-holders and presidential appointees in Pemex and CFE will have to manage.
100141 • Sep 15, 12 What Should Pemex's Trading House Tell the Next Government? 411 Since 2010, morale and profits at Pemex's trading house have been falling, and experienced traders are leaving. Recent events have shown that the legal structure will not bear close scrutiny. Traders are technically employees of PMI Comercio Internacional, S.A. de C.V., a Mexican company; but they carry out their trades as agents of an offshore company with no employees. If there’s an issue with auditors, the trader has no protection. Laws and procurment rules need updating to legalize trading within Pemex.
09152012 • Sep 15, 12 Eagle Ford Extension into Mexico: the Slide Pack >20 >200 The Eagle Ford Slide Pack and its Appendix consist of upwards of 200 slides, each with individual commentary, about the petrology, hydrology and other technical aspects of the Eagle Ford extension into Northeast Mexico. The slide pack was prepared by Guillermo Suárez, based in Mexico City. MEI is the exclusive U.S. distributor.
10024 • Sep 04, 12 The Mexican Controversy About PMI 210 This Public Policy Perspective is meant to defend the PMI concept against critics who equate the complexity of the legal structure of its offshore affiliates with corruption and mismanagement. The logic of the PMI initiative in the late 1980s is explained; and the evolution and current structure of the PMI Group of Companies is shown. The report reviews the principal criticisms against the PMI organization, but adds one more: PMI has done a terrible job of public relations. PMI’s bad press in Mexico is its own fault.
100140 • Aug 28, 12 Aug 30, 12 What should PMI Tell the Next Government? 211 Established in the 1990s, the PMI Group of Companies serves Pemex as its trading department as well as the holding company for international assets such Pemex's 50% stake in the Deer Park refinery. The trading department was known for its highly motivated and qualified professionals. Personnel issues in 2010 and 2011, however, have shaken morale and cut into profits. This report lists measures for consideration that are aimed at restoring the productivity of the trading unit and to prevent the recurrence of the abuses of the personnel system such as those that occurred in 2010-11.
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100138 • Jul 27, 12 Women in the Mexican Energy Sector: Glass Ceilings 89 This report examines the presence of professional women in the oil and power industries in Mexico. There are career paths for women in both technical and non-technical fields. Pemex has a hiring policy that is much more open to having women in supervisory positions than is CFE. Still, women face glass ceilings, that is, levels beyond which promotion may not be expected. The findings of this report have been quesitoned by some professional women in Mexico who object to the inclusion of racial profile in a discussion focused on the energy sector. Annex A lists the names and organizations of over 130 women, active and retired.
10023 • Jul 23, 12 Public Policy Perspective No. 20023 - LPG Interests and the Elections 1143 The LPG lobby is a big donor to political candidate; and, for this reason, politicians and legislators stay away from laws or policies that would jeopardize the market control that LPG lobbies have in major metropolitan areas such as the DF and Guadalajara. In an analysis of the full-cycle-economics of LPG compared to natural gas, it is natural gas distribution that offers a superior value, even when the BTU price of LPG is higher.
100133 • Jul 04, 12 Jul 17, 12 Pemex's Mature Fields Auction (Round 2): What Went Wrong? 29 The Pemex 2nd round of bidding for the six blocks in its Northern Region was a disappointment: First, no IOC submitted a bid, which was particularly painful in relation to the Arenque Block, whose bid package Chevron had purchased. Neither of the 2 offshore blocks were awarded, on questionable grounds in each case. Mexico's bid round held on June 19th earned just $40 million; the US GOM bid round, held on June 20, earned US$2.6 billion. The report urges a legal review of aspects of Pemex’s bid protocols.
100131 • Jun 27, 12 Jul 3, 12 Chevron and the Seven Dwarfs: An Upstream Fairy Tale 013 A saying in Mexico is that “Truth is told in fiction, while fiction is told in truth.” A critique of Pemex’s second bid round, which culminated in awards on June 19, 2012, for four of the six blocks, is told in the language of a fairy tale of the Middle Ages.
100132 • Jun 17, 12 Jun 20, 12 Mexican Spring: The Presidential Election of 2012 012 This report asks about the possibility that the long-favored PRI candidate, Enrique Peña Nieto, may lose the July 1st election. Should he lose it, despite months of being the leading candidate, a principal cause of his defeat will have been the mobilization of public opinion against the PRI by the student movement known as "Yo Soy 132." The background section we reexamine the history of PRI rule in Mexico. We review the online, attack ads against Peña Nieto, and offer highlights of the 2nd debate.
100129 • Jun 09, 12 OTC Snapshots: From Calderón to Hart Energy 09 This report comments on Mexico's presence at the Offshore Technology Conference. The OTC is an annual event in Houston that takes place in the first week in May. In OTC 2012 Pemex had its first booth, and the head of Pemex E&P was on a panel on global trends. These are two signs that OTC and Pemex are taking each other more seriously than in the past. The report also includes reference to President Felipe Calderón’s visit to Houston April 25, and to a seminar on Latin American oil markets on May 3rd.
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100130 • Jun 07, 12 The Ambassador and the Petroleum Club (Part II) 212 Ambassador Arturo Sarukhán was the keynote speaker at the innaugural luncheon of the Center for U.S. and Mexican Law and Policy, a new program of the Law Center of the University of Houston. This report is based on notes taken during his remarks on the current drivers of U.S.-Mexico diplomatic relations. The report includes a second section on topics that the speaker chose not to address.
100127 • May 26, 12 May 29, 12 FCPA Risk in Mexico (Part II): Wal-Mart vs. Sempra 630 This report is a follow-up of an earlier report on FCPA risks in Mexico, published July 23, 2011. In that repor report we examined diverse risks as seen in the stories of Metalclad, Marathon Oil and Sempra Energy in Mexico. In this report, we examine, comparatively, the allegations of illicit payments in Mexico made by Wal-Mart and Sempra. At the same time, we reexamine the discussion among economists about the efficiency of corruption as a mechanism that promotes economic development.
10021 • May 11, 12 What should the Hydrocarbons Commission Tell the Next Government? 08 This report argues that legal mandate of the National Hydrocarbons Commission, which was created by the Energy Reform of 2008, is inadequate to cope with the challeges of regulating Pemex’s deepwater operations; and that new legislation is needed.
100128 • May 10, 12 May 12, 12 What Should the Hydrocarbons Commission Tell the Next Government? 011 The new government that takes office on Dec. 1, 2012, should be told that the Hydrocarbons Commission Act of 2008 has too many imperfections to be improved by amendment, and needs to be repealed. The government and the Congress should devise a CNH 2.0 that will clearly define the limits of its mandate. In the new law, the CNH should be involved in the development of a methodology to award full-cycle contracts on the basis of the lowest risk-based price.
100126 • Apr 22, 12 Energy Security Indexes: Adjusting Supply Numbers for Freedom and 07 This report draws on the presentation and Q&A in Houston on April 19, 2012, of Karen Harbert, president of the Institute for 21st Century Energy, an organization affiliated with the U.S. Chamber of Commerce. The Institute has developed an index of U.S. energy security based on a model that incorporates 37 metrics that cover the spectrum of traditional and untraditional energy sources. This report offers a critique of the model by reference to variables that were excluded and other observations.
041112 • Apr 11, 12 Why is the Mexican President in Cuba? 01 this article interprets the motive of President Calderón’s visit to Cuba with a Pemex entourage as one related to the cross-border hydrocarbon treaty with the United States that had been signed less than three weeks previously.http://www.cubastandard.com/2012/04/11/analysis-why-is-the-mex ican-president-in-cuba/
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100120 • Apr 05, 12 Center for Offshore Safety 29 This report reviews safety, organizational and policy issues related to the Center for Offshore Safety, an organization created by the API in March 2011. The report draws principally on the presentation and discussion held at the luncheon meeting of the Houston Chapter of the International Association of Energy Economics on March 7, 2012. The speaker emphasized that leading indicators of safety risk are not yet in place, and that lagging indicators tell little about the safety readiness of an organization.
100121 • Mar 19, 12 US-Mexico Transboundary Hydrocarbon Agreement: A New Face for 09 Until 2012, neither Mexico or the U.S. had signed a cross-border agreement related to petroleum. Lease auctions of blocks continuous with Mexico on the U.S. side received no bids. The agreement provides a scaffolding of public oversight for the unitization of cross-border fields and for the eventual formation of a joint operating agreement between "licensees" on both sides. At this stage, the agreement is limited to sharing information, not risk.
100118 • Feb 27, 12 Mar 29, 12 What the CRE Should Tell the Next Government? 012 This report, the first of a series concerning the information that should be provided to the government that will be installed on December 1, 2012, concerns the institutional and policy challenges that confront the Energy Reggulatory Commission (CRE) in fulfulling its mandate to regulate the electric and gas sectors on behalf of both public and private investors and consumers. These “challenges” are expressed in this report as a series of problems, each with suggestions about possible solutions.
100117 • Feb 16, 12 Overcoming the Mexican Accent in English (Part II) 613 This report builds on Market Note 109, which presents the basic concepts of linguistics that are needed to have a clear understanding of the challenges that face the native Spanish speaker who is already competent in English. In this report we focus on the "enemies within" that make it difficult to listen to the ways that English is actually spoken.
100111 • Feb 02, 12 Pemex's Farm-Out Program: How to Evaluate Its Efficiency? 319 This report proposes that the term "farm-out" best captures the sense of Mexican energy policy since 1992 in power, gas and the upstream. The report examines alternative approaches to evaluating the success of the decade-old farm-out program in Pemex E&P, a program that, to date, has yet to be evaluated by Pemex's board or auditors from the government (SFP) or Congress (ASF). The report provides several optics by which the success of the program may be evaluated.
100116 • Jan 29, 12 Pemex's Outsourcing Philosophy 26 This report examines the logic of Pemex's outsourcing philosophy in which three innovative contract models are employed: Field Labs, Performance (or Incentive) Contracts and Transactional Service Contracts. Pemex aspires to employ these contracts in order to pass through a transitional phase on its path toward the goal of being an internationally competitive oil company. The report unpacks Pemex’s outsourcing matrix, and offers a critique of its underlying philosophy.
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100113 • Jan 26, 12 Pemex's Hybrid Contracts: How Pemex tropicalized global contract models 318 This report examines the Pemex upstream outsourcing since 2003 for oil and gas production, starting with the Multiple Service Contract of 2003-05. The report discusses three common legal models that contributed to the Pemex hybrid: Farm-out, Production Sharing Contract (PSC) and Incremental Oil Contract. The report concludes that the farm-out model is the closest to Pemex's hybrid contract, as it confers on the contractor a legal, revenue interest in production.
100115 • Jan 24, 12 Oil and Mexican Elections 09 Mexico is in its fourth-generation of legal systems for oil exploration and development. From 1885-1925 the surface owner also held mineral rights. From 1925-40, there was a concession system. From 1941-58 a regimen of PSAs. Since 1958, private investment in the upstream has been only as a service contract with Pemex. Current policy, which provides for a service fee/barrel to a contractor for field operations is the most recent innovation. How will presidential candidates of 2012 see the future of upstream policy?
100114 • Jan 19, 12 Gunfight at Perdido 02 This report provides a glimpse of the distance between Pemex and the CNH regarding the appropriateness of wildcat drilling in the Perdido Area. At a seminar at the Baker Institute at Rice University on January 18, 2012, Pemex Director General Juan José Suárez Coppel spoke matter-of-factly of the plans of Pemex to drill several, ultra-deepwater wells in Perdido. Across town, on the same day, CNH President Juan Carlos Zepeda argued, with passion, that it was premature for Pemex to risk drilling deepwater wells.
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768 • Dec 13, 11 Mexican Oil in Houston: Seminars and Discussions 315 This report provides the highlights of several industry and policy seminars that took place in Houston in the fall of 2011, including one sponsored by the Mexican Association of Chemical Engineers (IMIQ) and another by Pemex Gas (PGPB).Topics discussed in a third event, which took place in early December, concerned principally the outlook for oil production and energy policy.
12012011• Dec 01, 11 George Baker: Pemex Needs Real Oil Competition Offers a critique of the policy reforms expressed by Enrique Peña Nieto in an exclusive interview with the Wall Street Journal (Nov. 28, 2011). Argues oil companies will not redefine “investor” to mean “Pemex contractor,” and that the true starting point for energy reform in Mexico is the overhauling of the country's national petroleum narrative. Published in the Letters to the Editor, Dec. 1, 2011.
100109 • Nov 22, 11 Mar 29, 12 Overcoming the Mexican Accent in English (Part I) 623 This report examines, with the aid of linguistics, the differences in the phonological systems of English and Spanish. By this route the native Spanish speaker comes to see the linguistic baggage that he will automatically want to bring with him as he crosses the border into English. The report describes the most common Mexican accent in English, and offers a long-term vision for achieving English mastery. The report will also be useful for the native English speaker who wants to go beyond basic compentency in Spanish.
110111 • Nov 01, 11 Sanciones que asombran 02 Hay auditorías que contribuyen a la parálisis, no al fortalecimiento, de Pemex. GEORGE BAKER* Quis custodiet ipsos custodes? En la coyuntura de hoy, la pregunta del poeta romano Juvenal puede expresarse así: ¿Quién vigila a los auditores? Las sanciones administrativas en contra de algunos altos funcionarios de Pemex incitan a éste y a otros cuestionamientos. [...] Published in ENERGIA A DEBATE (available online)
100100 • Oct 31, 11 The Oilfield Service Market After Santuario 36 This report argues that the structure of the oilfield services market was significantly altered as a result of the outcome of the bidding for the Santuario Block in Pemex's first round of public tenders. The 9 bids submitted on August 18, 2011, fell into three distinct groups, of which the most competitive was the subset that offered bids that were a technical tie. The report concludes that the bidding protocols and awards protocols were inefficient, with the exception of making the identity of the losers transparent.
100105 • Oct 30, 11 Making Sense of the Sanctions in Pemex E&P 79 This report examines the sanctions imposed on Sergio Guaso and two members of the team that composed the Office of New Ventures in Pemex E&P. In the three weeks following the matter becoming public (on October 11) neither Pemex nor the Government has published any official statement regarding the matter. The report examines the O&M contract issued in 2007 to Houston-based EMS Lld., which is rumored focus of the audtor’s investigation. Tables 1 and 2 are relevant press titles in English translation.
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10018 • Oct 25, 11 Global Oil Industry Puzzled by Pemex Exec Sanctions 45 MEI Public Policy Perspective No. 10018 provides a discussion for the benefit of the general reader about the personnel and institutional issues associated with sanctions of executives and managers at Pemex E&P and PMI. Policy Perspective reports are available at no cost from the website of Mexico Energy Intelligence® (www.energia.com).
10019 • Oct 25, 11 Public Policy Perspective No. 10019 - Qui Custodiet Ipsos Custodes? 03 Se trata de los efectos colaterales negativos innecesarios a sus respectivas instituciones tanto en el exterior como en el interior del pais. En Estados Unidos, los ejecutivos de Pemex con mas renombre son justamente Rocio Cardenas y Sergio Guaso, conocidos por sus habilidades profesionales--amen de su verticalidad.¿Conviene a Pemex, el gobierno de Calderón y por ende el país poner en duda estas calidades en las mentes de los socios comerciales en el extranjero? Claro que no.
100106 • Oct 24, 11 Jun 19, 12 Making Sense of PMI Exec Sanctions 28 This report examines the puzzling turn of events by which the two most well known Pemex executives, Rocío Cárdenas and Sergio Guaso, were relieved of their duties on the same day, along with members of their teams. The focus of the report is on the findings of government auditors who found fault in the pricing of coker naphtha in a series of export sales. The report concludes that the auditors acted without a grounding in the dynamics of commodity markets, and that revisions to the law are needed to protect traders.
100104 • Oct 11, 11 Outlook for Pemex Incentive Contracts: Press Q&A 03 This report provides a summary of the questions and answers posed by a journalist from EL NORTE in a telephone interview with George Baker on October 11, 2011, the day the sanctions concerning Pemex officials in the Office of New Ventures became public. One of the questions concerns the likelihood of delays in the initiation of the Second Round of Incentive Contracts. The reply given was that there would likely be delays owing to the additional time that Pemex would need to absorb the lessons from the first round.
100103 • Oct 10, 11 The Political Science of Industrial Safety 36 This report seeks to abstract from the events that took place on Deepwater Horizon on April 20, 2010, in order to gain a picture of the inevitable changes ahead in law and regulation that will create a new regime in which both contractors and well owners will be jointly liability for accident prevention and accountability.
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100102 • Oct 05, 11 Business Intelligence Gathering in Mexico: Looking into Hearts as Well as 27 This report was prepared to help readers calibrate expectations regarding the fall cycle of Mexico energy conferences. There is a long list of energy topics about which speakers from the public and private sectors could address in conferences (Table 1), but the political sensitivity of the topics means that few hints, if any, of a change of heart are likely to be given by government speakers who themselves may reasonably expect to be out of a job in 12-15 months, if not sooner when the next presidential administration starts the appointment process all over again. Table 2 lists attributes of seven conferences scheduled for the fall 2011.
100101 • Sep 27, 11 Sep 30, 11 Energy Day 2011: The Redacted Public Record 313 Within the limitations imposed by the conference organizers that require the confidentiality of comments by speakers, this report provides insights into the discussions that took place during ENERGY DAY 2011, the annual conference on oil and gas policy that is sponsored by the British Chamber of Commerce of Mexico. The report enquires into the global and local trends that were in the background to each of the panels. A redacted copy of the original report is available.
100099 • Sep 06, 11 Sep 18, 11 Pemex Protocols for Bidding and Awarding Incentive Contracts 112 This report identifies the concerns expressed by bidders and observers of the first round of incentive contracts and restates them as suggestions for improvement for the next round. The concerns deal with the bidding criteria, the selection of qualified bidders, the use of maximum and minimum bids, tie-breaking rules, Pemex equity participation, and the protocol for making the awards.
1000097 • Aug 26, 11 Sep 1, 11 Unconventional Gas in Mexico: Pemex's plan: Ready, Aim--Estimate 34 The program on unconventional gas resources that was held at the Petroleum Club in Houston included speakers from Mexico, including energy lawyers Rogelio López-Velarde and Nicolás Borda, Luis Ramos from Pemex E&P and Javier Estrada from the National Hydrocarbons Commission. The present report touches on the highlights of the presentations of that seminar, and asks about the shape that a development program for unconventional gas in Mexico might take.
100098 • Aug 25, 11 Bicultural Glimpses: The Gentle art of cotorreo; Corporate Culture in Houston; 12 This 1 1/2-page report comments on an at-home reception for the speakers of the Unconventional Gas Seminar that was held in Houston on August 23, 2011. The report comments on the "un-Mexican" corporate culture in the oil industry in Houston, and adds an observation of former Mexican Consul-General Rodulfo Figueroa about why Hispanics are not seen on street corners in Houston asking for money.
100097 • Aug 25, 11 Sep 10, 11 Shale Gas in Mexico: Ready, Aim-Estimate 36 This report reviews the seminar on shale gas in Mexico that was held in Houston on Aug. 23, 2011, at which Dr. Luis Ramos gave the first public presentation by Pemex on this topic. Pemex estimates that in the aggregate there are over 600 Tcf of recoverable natural gas in shale formations. The report also takes note of the study by the Baker Institute at Rice University which provides cost estimates for several shale formations.
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100096 • Aug 21, 11 Dec 21, 11 Pemex's Mature Fields Awards 512 The work of over a year by Pemex's Office of New Ventures produced a measure of success on August 18, 2011, when 11 companies presented bids to redevelop 3 blocks under the terms of a new, and untested, commercial model that provides payment to contractors on the basis of a fee/barrel. This report identifies the legal and institutional drivers at work behind the protocol; it also asks about the disadvantages to Pemex of a “lowest-price” approach to selecting EP contractors. Can the model be used outside of PEP?
100094 • Jul 21, 11 The FPCA Risk in Mexico 313 This report seeks to identify features of the Mexican operating environment that tend to put individuals and corporations at risk for non-compliance of the Foreign Corrupt Practices Act of 1977. The report identifies eight (8) situations in Mexico where a company subject to FCPA rules may either be a victim of corruption or find himself in circumstances that could compromise his FCPA compliance standards and protocols. The history of Metalclad, Marathon Oil and Sempra Energy illustrate these situations.
100093 • Jul 01, 11 Jul 2, 11 BP's Lessons from BP-Macondo 04 On June 30, 2011, at a workshop sponsored by the OCS Advisory Board BP's exploration manager for the Gulf of Mexico set forth the principal lessons from the accident at the Macondo well on April 20, 2010. The lessons were grouped in five categories: 1) Prevention, Drilling and Equipment Monitoring 2) Containment, 3) Relief Wells, 4) Spill Response and 5) Crisis Management. The report notes such such future-oriented goals do not address changes ahead in the contractual relationships between contractors and the oil company and among oil companies themselves.
100092 • Jun 27, 11 Public Oversight of Oilfield Services, Pipeline and EPC Procurement 012 This report examines the ways in which companies and governments seek to procure goods, services and investments--and the ways in which things can go wrong. Drawing on examples as diverse as the BP-Macondo accident and Pemex refinery upgrades, the report seeks to discover lessons and caveats that apply to public and private procurement in Mexico and elsewhere. The report comments on the procurement programs of Pemex E&P, and asks if the rules are suitable to upgrades to refineries.
100091 • Jun 13, 11 Pemex's Oil & Gas Statistics: A Critique 46 Pemex routinely publishes production and reserve statistics for the government and the general public, but these data are sterilized to remove most of their business or policy value. One issue is the legal (and statistical) fiction that Pemex is the sole operator in Mexico; hence, the gas output of operators under the MSCs is not reported to the public separately. This issue will become larger with the new Incentive Contracts. Tables in the report convert annual and monthly data to index values. Table 1 covers 2004 (Pemex's peak year) and 2010, and Table 2 covers monthly data for 2010 and 2011.
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100088 • May 30, 11 Jun 6, 11 Credit and Blame at BP-Macondo 812 This report, based on a close reading of much of the public record, complemented by industry interviews, seeks a balanced assessment of credit and blame in regard to the series of accidents at the BP-Macondo well on April 20, 2010. Blame and credit is assigned to industry and government actors for their roles before and after the blowout. The report seeks to apply lessons learned to Mexico's deepwater aspirations.
100087 • May 18, 11 President Calderon's Bloomberg TV Interview in New York: Does Petrobras 08 In an unstructured TV interview with Bloomberg News on May 10th, President Calderon said that he would propose new legislation designed to make Pemex "more like" Statoil or Petrobras, and that there was the possibility of selling bonds to Mexicans. The history of Brazil and Petrobras reveals a very different historical and policy evolution. The report concludes that there are no lessons from Brazil or Petrobras that can realistically be applied in Mexico during the remainder of the Calderón administration.
100086 • May 12, 11 May 15, 11 Risk vs. Uncertainty at BP-Macondo 04 This report recounts a conversation at OTC 2011 with a forensic engineer under contract with Anadarko about the BP-Macondo accident. The title of this report relates to an OTC panel in which a speaker the distinction between risk and uncertainty, as developed by economist Frank Knight in 1921.
50111 • May 01, 11 Mexico Comes Calling: A new Pemex contract model is designed to increase 13 This article is an introduction to the new Pemex contract model and the "computational gymnastics" of the compensation formulas. A quantitative example is given that shows the results of these formulas, assuming given volumes, oil price and API, sorting for the fiscal effect on marginal vs. standard oilfields. OIL & GAS INVESTOR (May 2011).
100085 • Apr 28, 11 May 12, 11 Outlook for Natural Gas Pipeline Capacity: Who regulates the Pemex-CFE 05 Mexican power and gas customers are becoming increasingly vulnerable to brown-outs and supply shortages that are both attributable to the lack of available capacity in Mexico's two natural gas pipeline systems: those of Pemex and CFE. Immediate public policy action is needed to integrate the two existing systems and to incentivize the construction of new pipeline capacity.
1042511 • Apr 25, 11 Outlook for Mexican Oil and Gas: Policy, Commerce and Corporate 118 This paper was prepared for presentation at the New York Energy Forum on April 25, 2011. The paper provides an overview of the evolution of oil policy in Mexico, and concludes with comments on the present policy to engage operating companies under fee-per-barrel contracts with Pemex.
100083 • Mar 30, 11 Pemex's Hydrocarbon Reserve Conference Call for 2010 21 This report comments on Pemex's 2010 reserves, and the conference call on March 30, and examines the composition of the addition to 1P reserves in 2010, and determines that only 16.7% may be attributed to independent commercial discoveries, while the remaining additions are from developments, revisions and delineations. Reference is made MEI Report No. 742, which examines the organization of exploration inside Pemex.
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765 • Mar 17, 11 Pemex's Upstream Roadshow - Houston 510 This report comments on the full-day seminar on March 8, 2011, at which speakers set forth the context and the logic of Pemex's auction of three onshore blocks in the State of Tabasco. A press breakfast was held with senior Pemex executives for reporters and editors from oil industry media, including OGJ, Oil & Gas Investor and Dow Jones. The report comments on the several presentations by Pemex executives and a SENER speaker, noting also perceptions by prospective bidders.
100082 • Mar 01, 11 Pemex 4Q 2010 Earnings Report 21 This report comments on the highlights of the Pemex 4Q 2010 Earnings Report, as delivered by webcast on March 1. The report also notes topics that were omitted from the report, such as the status of the new Tula refinery. Table 1 summarizes the principal statistical comparisons that were provided in the Pemex slides.
100081 • Feb 25, 11 PEMEX Contract Discretionality: An Inconvenient Translation 27 This report examines the use of conveniente and inconveniente, words that--despite the obvious English cognates--do not generally translate as "convenient" and "inconvenient." In a recent seminar, many in the audience were disoriented by the provision in the Pemex Specimen Contract of November 24, 2010, that permits Pemex to cancel a contract if a project becomes "inconvenient or unprofitable." The report provides context-sensitive translations for each occurrence of this slippery term.
100080 • Feb 24, 11 Power Lunches in Mexico: ¿Con Quién Comiste? 03 This report, originally published in 1998 (MEI 282) when the PRI was still in power, discusses the unwritten rules of power-positioning during business lunches in Mexico. Mexicans have techniques for finding out how close someone is to centers of power in national political life. The process is called "Social Arm- Wrestling: each contender will know who is the closest to Power. Such arm-wrestling will gain importance as the power-contenders for the 2012 presidential elections emerge.
100039.1 • Feb 13, 11 The Aristegui Affaire 12 This report is an update to an earlier report (MEI Market Note 39), on the state of investigative journalism in Mexico. The update concerns the firing of the prominent radio journalist Carmen Aristegui on Feb. 7, 2011, for an alleged breach of ethics in relation to her support of a demand by the Worker's Party (PT) that President Calderón disclose if he has an alcohol-dependency issue.
100078 • Jan 31, 11 Feb 3, 11 Pemex's Integrated EP Contracts: Highlights of the AIPN Conference 25 On January 27, 2011, at a sold-out, all-day seminar held in Houston, the law, economics and regulations of Pemex's new "Integrated EP Contract" were put under a microscope by lawyers, consultants and contractors-as well as by Pemex and Mexico's National Hydrocarbons Commission. This report identifies concerns expressed during the seminar as well as in post-session discussions at two nearby bars.
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100077 • Jan 30, 11 The National Hydrocarbon Commission in 2015: A Scenario Analysis 28 Mexico's National Hydrocarbons Commission (CNH) was established by law as part of the Energy Reform package of 2008. Its function was defined as an adjunct, advisory body attached to the Energy Ministry. This report inquires, via scenario analysis, into the future of this agency. Will it become a true regulator, and, in this capacity, administer any public tenders involving access to petroleum deposits? Will it be come marginalized from policy decision-making? Or, will the status quo of 2011 continue in 2015?
100007 • Jan 25, 11 Mexico's National Energy Council: Citizen Input vs. Policy Leadership 26 This report expands the scope of an earlier report published in May 2009, which focused on the qualifications of members of the National Energy Council. The revised report raises questions about the need for, and nature of, the advice that could be given to the Energy Ministry from this and another advisory body, the Consultative Forum, that were created by the Energy Reform of 2008. The Forum seeks “citizen input.” Can such advice, if given, substitute for policy leadership?
100076 • Jan 20, 11 Ernesto Cordero for President? (and Energy Requiem for Georgina Kessel) 18 This report asks if the cabinet changes ordered by President Calderón on Jan. 7, 2011, portend the eventual PAN presidental candidacy of Ernesto Cordero, the finance minister. The report in greater length reports on the unexpected departure of Dr. Georgina Kessel from the Energy Ministry. The report provides an assessment of her legacy the energy sector, going back to 1994. Of the many key developments in the oil sector since 2006, what credit should Dr. Kessel receive for policy leadership?
100074 • Jan 14, 11 Deepwater Safety for Pemex: Guidelines of the Hydrocarbon Commission 25 On Jan. 11, 2011, Mexico’s National Hydrocarbons Commission (CNH) published its Resolution No. 12.001/10, which covers the safety precautions, standards and training that Pemex should develop for its deepwater operations. The guidelines reflect a close study of the situation at the BP Macondo well in relation to the blowout in 2010. This report comments on the strengths and weaknesses of these guidelines.
100075 • Jan 11, 11 Jan 16, 11 Recruitment for Top Government Jobs in Mexico: Conversations with Dr. 19 This market note summarizes conversations with Dr. Bob Brito of Rice University about the recruitment process in Mexico for top jobs in government. In Dr. Brito’s view, the Mexican system is as efficient as that of France. The “Brito Profile” for success in the public sector is a) proficiency in English and b) a graduate degree from a prestigious university abroad. The report extends this analysis to include other factors that bear on senior government appointments, and notes how the PAN have changed the weights given to these variables.
100112 • Jan 05, 11 Deepwater Horizon Redux 05 This report examines new and persistent questions about the Macondo accident. One question concerns the role of the onshore control centers staffed separately by BP and Transocean.
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010111 • Jan 01, 11 IXTOC-1 vs. Macondo 21 This article by George Baker, written in Spanish, proposes several lessons for Mexico of the BP-Macondo well blowout, noting that few, if any lessons, were learned from the Ixtoc-1 blowout of 1979-80. In both case the blow-out preventer malfunctioned, and each, at its time, was the largest offshore oil spill on record. ENERGIA A DEBATE (VII), 42: 16 (Jan.-Feb. 2011) http://energiaadebate.com/ixtoc-1-vs-macondo/
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100073 • Dec 29, 10 Murder She Wrote 47 This report inquires into two of the 30,000 homicides that have taken place in Mexico during the presidency of Felipe Calderón: Marisela Escobedo, 52, a victim’s-rights advocate in Ciudad Juárez, Chihuahua; and Silverio Cavazos, 42, a former governor of the State of Colima. Such inquiries may lead to a better understanding of the nature of violent crime in Mexico and of the administration of criminal justice and of the outlook for public safety.
100064 • Dec 24, 10 The Ambassador and the Petroleum Club 36 On October 12, 2010, Mexico's ambassador to the United States, Arturo Sarukhan, addressed a luncheon audience of some 280 guests at downtown Petroleum Club of Houston. The ambassador spoke with confidence and wit about the positive and negative aspects of the U.S.-Mexico relationship; contrary to the expectations of the audience, however, he did not speak about oil policy or mention Pemex, except once in the Q&A.
100060 • Dec 21, 10 Juniors in Mexico’s Oil Sector: Are They Quick Learners? 27 This report examines the sociological cohort of the English-speaking graduates of public and private universities outside of Mexico (often with degrees in economics) who come to occupy mid- and senior-level positions in the public sector in Mexico. Table 1 is a list of illustrative names of persons in this cohort, sorted by the career of the parent or ancestor who branded the family name as a member of the ruling class.
100070 • Dec 09, 10 Pemex’s First Bid Round: Mature Fields 02 This report, prepared by geologist Colin Stabler, assesses the first three blocks that have been designated by Pemex for its first bid round. The report comments on the upside potential and downside risk associated with each block: Magallanes, Santuario and Carriso.
100069 • Dec 08, 10 Pemex Regulations vs. the Constitution 28 The Mexican Supreme Court ruled on December 2 and 7, 2010, that the complaints of unconstitutionality by the Chamber of Deputies in diverse matters relating to Pemex were unfounded. These court rulings seem to give Pemex the legal green light to proceed with a strategy at the heart of the Energy Reform of 2008 to attract operating companies to serve as contractors in diverse areas, including mature fields and deepwater. In this report, we explore the question, Are there still areas where Pemex's program is vulnerable to further legal challenges?
764 • Dec 01, 10 Pemex’s EP Contract Model: Board Objections and Concerns 29 This report examines the arguments and concerns of two outside board members, Rogelio Gasca and Fluvio Ruiz, in relation to the voting on November 24, 2010, on the EP Contract Model. Dr. Gasca was alone in voting against approval of the contact model; while Dr. Ruiz voiced concerns about how the model should be implemented. Table 1 compares the concepts of the EP Contract to those of the Multiple Service Contract (MSC).
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100068 • Nov 27, 10 Pemex’s EP Contract: The Voting by the Corporate Board 15 This report draws principally on the documentation related to the voting at the session of November 24, 2010, of the Pemex Board of Directors. At this session the Pemex EP Contract Model received unanimous support save for the one dissenting vote of Rogelio Gasca Neri. This report reviews his legal and economic arguments against approval of the contract model.
112110 • Nov 21, 10 Ixtoc-1 vs. Macondo 01 Las lecciones que aporta el caso del pozo descontrolado costa fuera de Luisiana son de igual relevancia para México que para Estados Unidos ¿Por qué? Porque los dos países—más Cuba—comparten las aguas del Golfo de México. Al parecer, el gobierno y la sociedad civil de México no lograron sacar lecciones relevantes del derrame de 1979-80 del pozo exploratorio Ixtoc-1 de Petróleos Mexicanos. Published in Energía a Debate (November 2010), and available online.
100067 • Nov 07, 10 May 19, 12 The Perception of Corruption in Mexico 27 Each year, Transparency International, an NGO with a global reputation and presence, issues its report corruption in the public sector in more than 170 countries. The perception of corruption in the public sector is measured for each country on a 10-point scale, where 0 = Most Corrupt and 10 = Most Honest. Countries are also ranked, comparatively. In the 2010 report, Mexico ranked 93 in a list of 176 countries. Afganistan scored with the highest level of corruptio, while Demark was least. The present report examines different forms of corruption observed in Mexico.
100061 • Nov 04, 10 Nov 12, 10 The Seven Losses at BP-Macondo 25 The BP Deepwater Horizon Investigation, released September 8, 2010, focused on engineering issues that concerned, principally, the loss of well control, and, secondarily, the loss of the rig itself. Only by implication was the loss of life touched on, and the loss of the oil and collateral losses that came with it were not mentioned in this report. This report identifies the other losses associated with the BP-Macondo accident, and asks, in a preliminary way, about the mechanical and human causes of each.
100066 • Oct 29, 10 Pemex’s 3Q10 Conference Call 04 This market note comments on the topics that were mentioned in Pemex’s 3rd Quarter conference calls to portfolio investors and others. Pemex reported that Cantarell production had stabilized at exactly (to 3 decimal places) the same level as the year before. The report notes that the topics that received no attention in the conference call were more important than those that were mentioned; among the former are the status of the Tula refinery, future capital needs, citizen bonds and Lakach development plans.
100065 • Oct 28, 10 Integrated Trade Systems 43 Up to the early 1990s, Pemex had a Purchasing Office in Houston, the location of which, in the 1980s, was on South Gessner Avenue, and, as I recall, there was warehouse space for deliveries. A prospective supplier could easily find "Pemex" or "Petróleos Mexicanos" in the telephone directory or by calling the information operator.
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100063 • Oct 20, 10 The Math, Science and Politics of Pemex Upstream Contracts 59 This Market Note examines the outlook for Pemex’s upstream contracts in the light of the legal terminology of upstream contracts as found in Mexico and other countries. Attention is also given to Pemex’s estimate for undiscovered resources in deepwater provinces of the Gulf of Mexico. The report concludes that Pemex and the Government must be more forthcoming about Mexico’s resource potential in order to gain support for a deepwater development program in which IOCs would participate.
100057 • Sep 15, 10 Value-creation as a goal shared by Pemex and IOC/NOCs 01 This report notes that an oil company that is the operator of a field normally receives economic value from a major commercial discovery, such as new lines of credit and greater investor interest. In Mexico, in contrast, there is not yet a way to allow an operator in an upstream service company to receive such benefits from a commercial discovery.
100056 • Sep 08, 10 Sep 16, 10 Double Discourse in Pemex Governance 311 This portfolio report contains an 11-page assessment of the primary, secondary and "transcendental" issues facing Pemex governance asof September 1, 2010. The primary issue concerns ultimate accountability for Pemex decisions and the role--if at all--that the Pemex corporate board will have in such decisions. The report examines the controversy surrounding the restructuring of Pemex, and identifies issues that could be taken into account such as the reestablishment of a VP for Exploration in Pemex E&P.
100055 • Sep 05, 10 Sep 27, 10 Guadalajara: Graveyard of Modern Energy Policy 13 This report describes several of the exchanges that took place in Guadalajara during and after a seminar that took place on August 26, 2010, on the subject of energy efficiency. Participating were panelists from CRE and Pemex (Fluvio Ruiz) as well as others from the private sector (including George Baker). The limits to a free discussion were sharply felt by the panelists and audience.
100054 • Aug 25, 10 Outlook for Natural Gas Storage in Mexico 32 This market note briefly surveys the unmet expectations related to natural gas storage that have been experienced by policymakers and prospective investors in the fifteen years since this industrial activity was opened to private investment as part of the natural gas legislation of the mid-1990s. The project launched in 2005 between CYDSA and SalTec International is given attention.
762 • Aug 13, 10 Outlook for Corporate Governance in Pemex 109 This report assesses the outlook for corporate governance in Pemex in the light of the controversial appointments in July 2010 to the boards of directors of the Pemex operating units. The report is also informed by the findings of the OECD report on Pemex corporate governance which were contained in a report released in late June 2010.
100052 • Jul 23, 10 Risk Factors in Pemex Debt 31 This market note identifies risk factors associated with Pemex debt that are not reported in Pemex's Form 20-F. There are three exhibits from Pemex’s filing dated June 29, 2010.
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100051 • Jul 22, 10 Staffing the Boards of Directors of Pemex's Operating Units 16 This market note reviews the committee assignments of the three new outside board members of Pemex subsidiaries that were appointed July 1, 2010. The report gives special attention to the appointment of Jaime Zabludovsky to the Procurement Commitee of Pemex E&P; it is this committee that will have to first approve the new upstream contract model. (Includes 5 tables.)
100049 • Jun 12, 10 British Chamber Energy Day 2010: Program Ideas for the Fall Conference 12 This Market Note proposes ideas for the annual fall seminar that is sponsored by the British-Mexican Chamber of Commerce in Mexico City. As the single, memorable event of the year in the oil industry in which a British firm is involved is the accident at BP’s Macondo well in the U.S. Gulf of Mexico, the fall program should focus on safety: One panel by government regulators, a second panel by major oil companies. This recommendation was accepted, in part, by the inclusion of a panel on safety.
100048 • Jun 08, 10 Jun 20, 10 The Key Lesson from BP-Macondo: Changing the Culture of Silence 12 What stands out most from the public record of the days and hours before the blow-out is the passivity of the rig crew, contractors and well owner. Everyone onboard the rig knew that there were serious problems; but no response rose above the level of griping and sarcastic barbs. The key problem, press reports suggest, is that each party took its point of view personally: there was no objective, independent assessment of the danger to which everyone was exposed. This culture of dangerous silence is what, fundamentally, needs to change. Here are two ideas for changing it.
100047 • Jun 03, 10 Pemex's 5-year business plan, 2010-2014: What are the Drivers? 01 This report asks about Pemex’s use of the term “business plan.” The reference is to a 500-page, confidential plan for the period 2010-14. The public summary and press release, instead of listing decisions that had been made, listed 23 “challenges” in relation to which future decisions would be made. Pemex says nothing about the lines of business that it wishes to enter or leave, the assets which it hopes to acquire or divest, or the commercial relationships that it aspires to change or create, at home or abroad.
100046 • May 28, 10 Rig Governance Model in Doubt 21 Most the controversial decisions that were taken by BP on April 18, 19 and 20-some, it is reported, with the concurrence of the MMS-were done with the knowledge--and foreboding-- of senior managers from contractors, including Transocean, the rig owner. This report notes critical moments and decisions in the final phase before the well blow-out on April 20. (The New York Times report published on Dec. 26, 2010, is instructive, to be complemented by the several other studies that have been released.)
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100045 • May 25, 10 Trade and the Energy Sector: An Evolutionary Perspective 04 This report extends the arguments on the importance of trade in human evolution (as published in two articles in The Wall Street Journal on May 22-23, 2010). The idea is that trade is about the exchange and circulation of goods, people and trade. There can also be "retrograde" moments in evolution, moments in which trade is suspended--as in Mexico's the expropriation of the oil industry in 1938, which effectively took Mexico out of the “trade routes” of people, ideas and the community of oil companies.
100044 • May 22, 10 Macondo Blowout: Safety Violations or Negligence? 12 Among the many unfolding ramifications of the blowout at BP's Macondo Prospect in Block 252 of the Mississippi Canyon a new legal dispute could arise over the definitions of negligence and prior knowledge. This report examines ambiguities in conventional understandings of these two legal concepts. Much is at stake, as BP’s partner Anadarko has refused to pay a proportional share of the Macondo losses, alleging “gross negligence,” the meaning of which the courts of law and public opinion will have to decide.
100043 • May 19, 10 Macondo Lessons for Mexico and Cuba 02 The lessons that should be derived from the yet-uncontrolled oil spill at BP's Macondo Prospect have importance for Mexico and Cuba as much as for the United States. All three countries share the waters of the Gulf of Mexico, and all are affected by any damage to their shared marine environment. The report asks about the institutional and commercial safeguards needed to prevent the repetition of an accident of this scale.
100042 • May 05, 10 Oil Spill Costs, Benefits and Lessons 01 Written just three weeks after the well blowout at BP-Macondo, this commentary asks about the benefits to be derived from an oil spill, including, in Mexico’s case, a rethinking of the country’s inward-looking Oil Narrative.
100041 • Apr 30, 10 Oil spills in the Gulf of Mexico, 1979 vs. 2010 01 This report contrasts the public response in Mexico to the Ixtoc-I well blowout in 1979 to that of the American response to the blowout at BP’s Macondo Prospect in 2010. It is noted that the U.S. public is largely indifferent to the nationality of the oil company that operates in the Gulf of Mexico. In the U.S. media BP was “an oil firm based in London” and Transocean was a “Swiss company.” In Mexico, there is a sharp line drawn that separates Pemex from “foreign” oil and service companies.
755 • Apr 29, 10 May 25, 10 Toward a Hybrid Oil Fiscal System in Mexico 87 This report examines the logic for and against the Technical Service Agreement (TSA) as an oil fiscal system in the light of the intent by Pemex to offer a hybrid fiscal system that offers partial cost recovery and a per-barrel service fee that is tied to indirect market indicators. The report asks about the considerations in favor of as well as against the adoption of a Service Agreement as a country’s petroleum fiscal system.
100040 • Apr 27, 10 Rumaila and Chicontepec: Two Versions of a TSA 23 This report examines the similarities and differences between the contract by the BP-led consortium in Iraq in the Rumaila field and the contractual model under development by Pemex for Chicontepec.
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100039 • Apr 20, 10 Feb 15, 11 The State of Investigative Journalism in Mexico 16 This report examines the lack of investigative journalism in the mainstream print and electronic media in Mexico. Reporting on the energy sector is carefully circumscribed to conform to current government policy. With few exceptions, the opposition press avoids the expense and risk, legal and otherwise, of investigative journalism, instead relying on contrarian interviews. Update 1 concerns the Aristegui Affaire of February 2011, in which Mexico’s most prominent radio journalist was terminated for an alleged breach of ethics.
100038 • Apr 08, 10 Sustainable upstream development: Missed Opportunity for Reform 12 This report examines the Oil Reform of 2008 from the perspective of sustainable upstream development. In this regard, the Reform is seen as a missed opportunity, in that it failed to empower Pemex with the legal mandate to be a minority partner in joint ventures, instead requiring Pemex to serve as a contract administrator.
100036 • Mar 31, 10 Pemex’s Performance Contracts: What Story Can Pemex Sell? 151 This report consists of an introductory page in PowerPoint and 15 pages of a hypothetical Pemex slide presentation the purpose of which would be to “sell” the Pemex story about the upcoming performance contracts.
100032 • Mar 27, 10 Aug 24, 12 Petróleos Mexicanos vs. the English Language: Translating a Square Peg 07 This report examines the principal terms used in the energy sector of Mexico and provides suggestions for standard English translations of some 20 common terms used in Mexican government and energy circles. Most of these terms cannot receive a direct, literal translation. An example is órgano desconcentrado, which is here translated as “Ministerial Agency.”
100035 • Mar 26, 10 Petroleum Day 2010 01 This report comments on the protocol of addresses by officials at the March 18th Petroleum Day ceremony in Mexico, going back to 1995. The speeches of March 18, 2010, took place at the Pemex refinery in Tula, in the State of Hidalgo, where a major refinery upgrade is planned. This report also comments on the topics that were not mentioned by the speakers.
100034• Mar 24, 10 Aug 12, 10 Glitches in the Mexican Oil Sector: An Introduction In this report, glitches of three kinds are identified: gaps, ambiguities and inconsistencies. They are found at all levels of government and all levels of law: constitution, law, regulations, statutes and administrative dispositions. Such glitches negatively impact the efficient operation of the petroleum value chain, from exploration to regulation.
100033 • Mar 21, 10 Legal Structure of the Mexican Energy Sector: Demystified 22 This report provides a simplified (and demystified) description of public administration in the energy sector. The goal is quickly arrive at vantage point from which the legal and institutional landscape in which the upcoming public tenders for Pemex's performance contracts may be seen.
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100031 • Mar 09, 10 Educating the press regarding Mexican oil and gas 01 This report examines the themes that circulate in stories in the Mexican and international press in March, Mexico's "Oil Month." The themes of a story published in The New York Times of March 9, 2010, is taken as an example of how the traditional oil narrative gets replayed. The press fails to report on the steps taken to close the gaps between Pemex and global practices.
100030 • Mar 05, 10 Questioned Pemex Appointments: Criticism in the Senate 01 This report comments on the practice of high-level appointments in Pemex of politicians and the politically-connected who have no prior experience in the oil industry. On. March 2, 2010, this common practice was sharply criticized by Sen. Francisco Labastida in relation to the appointment of three officials: Carlos Treviño, Jordy Herrera and Mario Avila.
100029 • Mar 04, 10 Energy and Drugs 11 This report inquires into the relationship between illegal drugs and the energy market in Mexico. It is observed that in order to launder money efficiently, drug cartels need cash-based businesses to give the appearance of a legitimate business reason for depositing, daily, large amounts of cash. For this reason, cash-based business such as LPG distribution, gasoline franchises, hotels and massage parlours are ideal businesses for drug cartels. The strong LPG opposition to the expansion of NG should be seen in this light.
100028 • Mar 03, 10 Pemex’s 4th Quarter 2009 Conference Call 01 This report comments on the topics covered and omitted from Pemex's 4th Quarter Earnings Report in a conference call to portfolio investors. Attention is given to the so-called "Field Labs" in Chicontepec that Pemex is awarding to major service companies on a sole-source basis.
100027 • Feb 27, 10 Sep 18, 10 Pemex vs. Mexican History: A Revisionist Approach to Reconciling the Oil 31 The general argument is that Mexico is trapped in its orthodox petroleum narrative. The report includes a 3-page revisionist approach to Mexican history in which the Oil Narrative emerges in a form that permits the adoption of global standards for upstream investments.
100024 • Feb 26, 10 Extra-Judicial Fixes to Procurement Guidelines 02 This report comments on the back-room negotiations between the PT (Labor Party), PRI and PAN in relation to the Pemex procurement rules that had been issued Jannuary 6, 2010, the constitutionality of which had been questioned by the PT.
100026 • Feb 01, 10 Pemex vs. Global Practices 02 How to understand Pemex's position in the global oil industry? Paradoxically, little is to be learned by analyzing Pemex in Mexican terms. Most of Pemex’s limitations may be understood only by reference to global norms that are not being followed in Mexico. This report notes eleven areas where Pemex operates at a disadvantage compared to IOCs and market-driven NOCs and three areas where Pemex is changing.
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100025 • Jan 31, 10 Mexico energy brass meet prospective deepwater operators in Davos 01 This report comments on the meeting in Davos of top Mexican officials and the heads of major oil companies. In Mexico, an often-heard speculation is that in any winning consortium for deepwater projects one of the members will need to be either Statoil or Petrobras, as both are National Oil Companies with a majority state ownership.
100023 • Jan 10, 10 Pemex Special Procurement Rules 12 This report gives a preliminary assessment of the new procurement rules (known as DAC, the Spanish acronym) that were issued January 6, 2010, and that permit Pemex to devise contract models outside the terms of the Public Works Law.
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759 • Dec 23, 09 From MSCs to Deepwater: The Evolution of Pemex Upstream Contracts 107 This report examines the history and direction of Pemex’s upstream contracts, starting with the Multiple Service Contract that was launched in December 2001. The report draws on industry presentations by Pemex through December 2009.
758 • Dec 17, 09 Structural Reform and/or Electoral Strategy: Calderón’s Risky Play against 1615 This report analyzes the foreground and background to the crisis in the labor movement that was provoked by the government’s seisure of the installations of Mexico City’s power utility and by its orders to liquidate the company and eliminate the jobs of some 44,000 employees.
100022 • Dec 08, 09 Popular Support for the SME vis-à-vis the Calderón Government 01 This report probes a century of Mexican political narrative to explain the popular support in Mexico for the terminated workers of the SME, the labor union of LFC, the government-closed power utility. The government’s justification for the "declaration of war" against the Electricians' Union is questioned in public opinion surveys
120109 • Dec 01, 09 Houston: Carrefour de l'Or Noir 01 This article by George Baker appeared in a special issue a Paris-based journal SCIENCES HUMAINES. The edition featured global cities. The article described Housotn as the intersection of oil, space and medicine, the common thread of which was requirement for greater data processing. Trimestriel No. 17 (Déc. 2009-Jan.-Fév. 2010), p. 46. L’histoire de Houston est intimement liée a celle de l’industrie pétrolière. . . la ville condense tout ce que la planète peut compter de compagnies pétrolières et gazieres.
100021 • Nov 25, 09 IEA World Energy Outlook 2009 01 This report touches on the highlights of a presentation at the Baker Institute of Rice University on Nov. 24, 2009, at which Richard H. Jones, the deputy director of the IEA, presented his institution's World Energy Outlook for 2009. The outlook considered two cases: the Reference Scenario and the 450 Scenario, where the latter refers to the ppm of carbon dioxide in the atmosphere.
100020 • Nov 10, 09 Government Emergency Reaction to Court Ruling in SME Complaint 01 This report provides highlights of the government's position on the closure of LFC, the state-owned electric utility. An emergency press briefing was held on Sunday, November 8th, in response to a ruling by the Labor Arbitration Board (JFCA). The government depicted the demands of SME, the LFC labor union, as "a judicial adventure ride," and insisted that the collective labor agreement was defunct.
• Oct 30, 09 Pemex’s 3rd Quarter 2009 Earnings Report 01 This report provides the summary operating statistics given in Pemex's 3rd Quarter Earnings Report to lenders and bond-holders. The Pemex speakers were Carlos Morales and EstebanLevín. The report cites their comments in relation to topics such as Chicontepec and Pidiregas.
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100016 • Oct 15, 09 Suárez Coppel Testifies to Congress 01 This report offers a critique of the testimony given by Juan José Suárez Coppel on Oct. 14, 2009, in his first appearance as director general of Pemex. The report notes that in contrast to his initial comments of Sept. 7, 2009, when he had no positive remarks to make about his predecessor; on Oct. 14 he testified to the Congress that everything in Pemex was in order. There is a link to 50 pages of transcript on the web portal of the Lower House: http://cronica.diputados.gob.mx.
100015 • Oct 14, 09 President Calderón Liquidates Luz y Fuerza del Centro 01 This report examines the political background to the decision by President Calderón to close Luz y Fuerza del Centro (LFC), the power company with a 100-year-old, radicalized labor union. Observers speculated that the decision to close the company was, in the background, a decision to attempt to eliminate a radical, anti-government labor union that certainly would have been in the opposition in the 2012 general electons.
757 • Sep 26, 09 Juan José Suárez Coppel in Pemex: Change Agent? 412 This report examines background and policy agenda behind the unexpected appointment of Juan José Suárez Coppel on Sept. 7, 2009, as director general of Pemex. This report examines the cases against Reyes Heroles and the concerns in circulation about the ability of Suárez Coppel to make a meaningful difference in implementing the reform legislation and in pushing the energy policy agenda of President Calderón.
100014 • Sep 22, 09 Incremental Steps Toward Greater Pemex Regulation 02 This report takes note of the new requirement that the SENER establish a National Hydrocarbons Database with four registries. The report offers a skeptical assessment of the benefits to be obtained by such databases or by the requirement that the CRE and CNH carry out on-site inspections.
100012 • Aug 31, 09 Calderón Presidency at the Half-Way Point 01 This report, published the day prior to the annual State of the Union Address, briefly notes the accomplishments and shortcomings of the Calderón administration in each of the years 2007, 2008 and 2009.
100011 • Aug 12, 09 Oil Ring Seals from Pemex but Gets Partial Reimbursement from US 11 This report is a critique of the Wall Street Journal report published on Aug. 12, 2009, about a smuggling ring that traded in stolen Pemex refined products. The story ends with the statement that the U.S. Government will pay Mexico US$2.4 million “in restitution” for the oil stolen from Mexico.
081009 • Aug 10, 09 Mexico, Brazil, Norway Upstream Readiness Weighed 23 This article, published in Oil & Gas Journal, presents tables and a summary discussion of the competititvess variables that bear on a country’s “upstream readiness.” Mexico is compared with Brazil and Norway, using rankings that were developed by the World Economic Forum. The artticle draws on the findings presented in MEI Report No. 756 (July 31, 2009).
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756 • Jul 31, 09 Upstream readiness: Is Mexico prepared to follow Brazil & Norway? 59 On July 16, 2009, the Mexican Institute of Competitiveness (IMC0), presented its report on the economy. The presentation to 500 invited guests took the the form of a long “virtual dialog” consisting of fragments of interviews with some 40 national figures. The report contained several radical proposals, including 1) opening the upstream to private investment and 2) consideration of a proposal that Mexico should join NATO, 3) gradual legalization of selected drugs.
100010 • Jul 30, 09 Pemex’s 2nd Quarter Earnings Report to Lenders and Bond-holders 01 This report focuses only on the Q&A sessions, in Spanish and English, of the 2nd Quarter Earnings Call to lenders and bondholders. The report also notes the topics that were not mentioned, including the pending refinery location, Pemex's crude hedging program, or the cancelled PIDIREGAS financing program.
100009 • Jul 25, 09 Pemex Refinery Selection Process 03 This report speculates that one result of the delays, confusion and politization of the site selection for a Pemex refinery may be the replacement of the director general of Pemex, Jesós Reyes Heroles. The reports names hypothetical replacements, but in this list Juan José Suárez Coppel--who was named the new director general six weeks later was not mentioned. The report also inquires into the feasibility of building and financing a new refinery, given that the option of private investment was nixed in the reform.
100008 • May 31, 09 Why Is Mexico Mexico? 01 This report succinctly asks about why Mexican economic policy requires complete control over energy prices in oil products and electricity. The answer that is suggested is that Mexico suffers from a weak tax system.
100007.1 • May 29, 09 Jan 25, 11 The National Energy Council: Membership Profiles 21 This report briefly examines the membership profile the National Energy Council, a 16-member advisory body within the Energy Ministry that was created by the 2008 Energy Reform. Table 1 lists the original members; Table 2 sorts the members by the years of exprience in the energy sector. Of the 16 members, only 3 had professional experience of 25 years or more, while 6 had a background of three years or fewer.
100006 • May 26, 09 Press Interview with George Baker Regarding the National Hydrocarbons 02 This report provides a summary of a telephone interview with a Mexico City-based journalist, consisting ofquestions and responses by George Baker regarding the new appointees to the National Hydrocarbon Commission (CNH) and the mandate of the commission itself. The conversation revolves around the question of Mexico eventually having a true upstream regulator.
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100005 • May 21, 09 The Perfect Monopoly in Energy 11 Fig. 1 of this report plots 14 oil producing countries along two axes: 1) commercial control of energy production (X axis: STATE vs. PRIVATE) and 2) Popular opposition to the State’s ole in the energy sector (Y axis: HIGH vs. LOW). Mexico is plotted in the quadrant of HIGH STATE, LOW OPPOSITION, and, as such, may be the only perfect monopoly in energy. The report asks about the opportunity cost to Mexico of the government’s considerable investment in maintaining a broad consensus on the state’s role in energy.
752 • Apr 04, 09 Outlook for a Mixed Procurement System in Pemex 1310 This report reviews the procurement rules and concepts in the Pemex Administration Act of 2008, noting the gap between Articles 51 and 52 relating to the definition of mission-critical activities. The first allows Pemex to step outside the rules of the Public Works Law, devising procurement rules of its own. The limitation is that these rules apply only to core activities, as established by Article 3 of the Petroleum Law. The report points out that this article says nothing about core activities.
100004 • Mar 21, 09 PemexWeek, March 18-20, 2009 02 This report comments on two public events related to the present situation and future of Pemex. The March 18th commemoration of the oil expropriation of 1938 is the central element in Mexico’s petroleum narrative. This year, the special topic concerned the siting of a new refinery. The report notes that President Calderón said that he wanted “advice” from governors, but no mention was made of input from Pemex. The second event was Pemex’s report on the status of hydrocarbon reserves.
100003 • Mar 12, 09 Softball in the Mexican Senate: Confirmation Hearings of Pemex Outside 02 This report comments on the Senate confirmation hearings of the four nominees that had been proposed by President Felipe Calderón on February 20, 2009. The report notes that the questions asked by senators were soft ones, and that a nominee’s views on hard questions were avoided (we list five hypothetical quesitons that could have been asked, such as a candidate’s views on joint development of cross-border oilfields and his views on the role, if any, of IOCs in developing deepwater resources in Mexico.
100002 • Mar 03, 09 Pemex 4Q 2008 Conference Call to Portfolio Investors: Critique of Q&A and 02 This market note, published on the same day as the Pemex 4th Quarter Conference call to lenders. The Pemex speakers were Esteban Levín and Vinicio Suro. The report reviews the basic operational and financial forecasts; and goes on to examine Pemex replies given to questions from financial institutions. The report notes that the meaning of “loss” in Pemex accounting is not comparable to that of other companies in Mexico.
744 • Jan 16, 09 Outlook for a Natural Gas Market in Mexico: Impediments and proposals 417 This report identifies factors in play that, together, have resulted in the absence of an open natural gas market in Mexico. These impediments are grouped into eight categories (see outline), and, for each, there is an explanation of the nature of the problem as well as suggestions for policy or institutional corrections.
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745 • Dec 17, 08 Our 2006 Critique of the Oil Sector in Mexico: Impact Assessment 417 This report reexamines the terms and concepts of the oil reform of 2008 in the light of our diagnosis that was published in the spring of 2006 in both Spanish and English editions (and subsequently posted on energia.com). This report also considers, comparatively, the concepts contained in the Petroleum Law of 1925, 1958 and 2008, in relation to the roles permitted to private oil companies. This report contains 45 technical and bibliographical notes.
120108 • Dec 01, 08 The OIl Reform in Mexico 03 This article by George Baker discusses the strong points of the 2008 Energy Reform, noting also, omissions, such as measures to involve the expertise of oil companies in deepwater E&P and making the tenure of the corporate director general of Pemex at the pleasure of the Pemex board. WORLD OIL (Dec. 1, 2008).
112808 • Nov 28, 08 Las artes marciales 01 This article offers a critique of the organizational structure of exploration in Pemex. The article suggests that a future reform would contemplate two options: one, with a VP of Exploration with line authority; two, with exploration separated from PEP and made into a separate subsidiary. REFORMA, Nov. 28, 2008.
110808 • Nov 08, 08 Los costos de oportunidad 01 An dialogue between Pedro and Pepito in which they cynically discuss the ways that some economic interests benefit by the absence of energy reform and the blocking of some of the measures that President Calderón had proposed, such as authorizing private investments in product pipelines and storage. REFORMA Nov. 8, 2008.
742 • Nov 06, 08 Oct 5, 09 Outlook for oil exploration in Mexico: Institutional and legal issues 2117 This report seeks to assess the institutional, organizational and legal issues that affect--positively and negatively--the outlook for exploration in Mexico. Toward this end, we contrast Pemex and the International Oil Companies (including market-driven NOCs) in relation to those issues that affect their prospects. Update 1 examines the situation in relation to cross-border fields as it is understood and debated in Mexico, drawing on Pemex documentation and public testimony to the Senate on June 5, 2008.
743 • Oct 29, 08 Mexico’s Petroleum Pipeline Fix 910 Mexico in 2008 is more powerfully in the grip of a de facto monopoly in natural gas transportation and marketing than it was in 1991 when market liberalization began. Gas distribution has seen mixed results of government policies. Although some success has been achieved in attracting private investment in the areas of transportation and storage and in LPG transportation lines, it has not achieved a market dynamic. The report offers ideas for how to correct the distortions in transportation, distribution and storage.
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102208 • Oct 22, 08 Mexico's agenda for Exploration and Reserve Growth, 2008-2020 19 This report, originally designated MEI Discussion Paper 08-001, evaluates the energy reform legislation of 2008 from the perspective of oil exploration. The question is raised about the extent to which Mexican authorities have learned the lessons of the oil-market collapse of 1985-87. It is noted that in these years, when IOCs cut staff--by as much as a million workers industry-wide--Pemex’s staffing level grew.
740 • Jul 31, 08 Calderón Energy Proposals Reexamined 310 This report examines the likely effects of the Mexican government's proposals for the energy sector on Pemex, policy agencies, regulators and industry. The report places the five proposals in a coherent, hierarchical order, and shows how-in theory-they would affect the operation of the oil sector. The report also identifies a basic weakness that the government would face in trying to "establish, conduct and supervise" oil policies in Mexico, especially in the upstream.
736 • May 31, 08 Deepwater Motivations: The Logic of Partnerships 110 The logic of partnerships in deepwater ventures responds to the interests not only of the oil companies but also to those of society: all parties want new oil supplies and optimized value-generation. In Mexico's case, Pemex has told the government that it cannot develop the deepwater areas of the Gulf of Mexico alone. The current energy debate hinges largely on this one statement. A new window into the debate in Mexico is offered by the experience of IOCs for whom such associations are routine.
735 • Apr 30, 08 Benefit analysis of Calderón’s legislative proposals for oil sector 36 This report examines the benefits and shortcomings of the Mexican government's proposals for new legislation in the oil sector that were made public April 8, 2008. As to benefits, we find only two in the category of High Value, but many in the category of Directionally Correct. We find just one proposal in the category of Direcctionally Incorrect, namely, the one-company model for deepwater development in the Mexican Gulf of Mexico.
734 • Apr 12, 08 MEI Journal: Pemex Diagnostic vs. Calderón Proposals 54 By design, an MEI report deals with only one topic. An upstream subscriber asked for reports that cover multiple topics. The MEI Journal comments on DIAGNOSTIC report of Pemex, also of the Usumacinta accident, also of the interview with Juan Carlos Collado re the CRE.
733 • Mar 18, 08 MEI Journal: The Energy Counter-Reform Begins 04 A MEI Journal Report comments on multiple topics, including the counter-movement against Calderón’s energy reform proposals; the 70th Oil Expropriation Celebrartion; and Pemex’s deepwater media campaign.
030108 • Mar 01, 08 La sociología petrolera y el reto de los yacimientos transfronterizos 13 This report addresses the need to have a regulatory environment for cross-border oilfields that promotes a dual dynamic of cooperation and competition. It was published in Spanish in ENERGIA A DEBATE (March 2008). http://www.energiaadebate.com/Articulos/marzo2008/Bakermarzo2008.htm
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732 • Feb 08, 08 Mar 13, 08 Congressional energy reform in 2008? 210 This report examines the current political dynamic in Mexico in relation to the many topics for energy reform that have been proposed since 2000. Many observers believe that Calderón will push for a short menu of topics for energy reform in the spring session of Congress in 2008; others believe that the voices and forces against reform of any kind will prevail, pushing the time-table to the LXI Congress that begins Sept. 1, 2009. The report provides a list of 16 hypothetical bills that could be passed into law this term.
012208 • Jan 28, 08 El Informe de Sancho (Critique of Mexico in WEF Comparisons) 01 This is a tongue-in-cheek, Cervantine dialog that comments about the remarks at a breakfast meeting sponsored by the British Chamber of Commerce of Mexico at which the speaker was Guillermo Ortiz, the director of Mexico's Central Bank. His presentation, which was based on the rankings of Mexico in the World Economic Forum, excluded consideration of oil in Mexican economy, Outside the Hotel Sheraton on Ave. Juárez, naked and semi-clad protesters were posted. Published in REFORMA (Jan. 28, 2008).
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714 • Dec 31, 07 Feb 22, 08 Energy reform in Mexico: The Cárdenas Factor 1011 This report examines the extraordinary influence of Cuauhtémoc Cárdenas in shaping-and limiting-public discussion of energy policy in Mexico. His policy views, articulated in speeches, interviews and writings, define the politically safe space which the Calderón administration can occupy in formulating its own energy program for 2007-12. The report compares the agenda of Cárdenas with those of the National Development Plan and the Senate Energy Committee.
716 • Dec 30, 07 The upstream procurement sytstem in Mexico: organization and outlook 128 This report examines the system of upstream procurement of goods, services and technology by Pemex and offers a look into how such procurement might look under liberalized policies. One of the seemingly intractable questions in Mexico in recent years has concerned what is called "access" to deepwater technology by Pemex. The report gives special attention to the role of SIDOE as the upstream facilities department; then looks at options and organizations for a future that could involve IOCs.
702 • Nov 27, 07 Dec 18, 07 First year as president: Calderón vs. Fox 512 This report, in comparing the first year accomplishments of Vicente Fox and Felipe Calderon in the energy sector, seeks to discover the possibilities that lie ahead for Calderon. By its appointments of outsiders to the key slots in Pemex and the Energy Ministry, the Fox administration was sending signals of change. The report asks how, and in what directions, can the Calderon government generate the excitement that was in the air six years before. Where--if at all--is free-market, policy innovation possible?
717 • Oct 03, 07 Mar 12, 09 Peak Oil in Mexico: Outlook of production and exports to 2015 2011 This report examines the hypothesis that the moment of Peak oil in Mexico has already happened. The report inquires into the meaning of the great reversal in upstream outlook that took place in the Fox administration of 2000-06. In this report we focus on Cantarell and present oil production statistics and several decline projections to 2012 and 2020. We include the regression equations in the charts. We ask: Are there alternatives to a decline in oil production in Mexico? What is necessary? Or was 2004 Peak Oil?
731 • Aug 20, 07 Third Parties 55 Midway in the Fox administration senior executives in Pemex began speaking of the need for changes in the Mexican constitution in order to remove doubts about the legality of the newly introduced figure of the Multiple Service Contract (MSC). Three years later, they had worked out a much broader view of the role of third parties in the areas of E&P, refining, gas and chemicals. For this, regulatory and constitutional changes would be needed to give substance to the concepts of "strategic alliance" and "participation contract." This report examines and critiques this broader view.
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080107 • Aug 01, 07 Mexico Ponders Cross-Border Strategy for Deepwater GOM Fields 22 This article by George Baker concerns the institutional and regulatory limitations in Mexico and the U.S. for the development of protocols for the unitization, metering and taxation of cross-border fields. WORLD OIL (Aug. 1, 2007).
730 • Jul 28, 07 Mar 6, 08 Mexico’s energy counterculture 108 This report examines the arguments of individuals and groups who, in diverse media, affirm that the direction of energy policy in Mexico is profoundly mistaken. We use the term “energy counterculture” to capture both the people, organizations and arguments. In its current orientation, the energy counterculture seeks to protect the state oil and power sectors from the privatizing and pro-American impulses of the Mexican government as well as from the ambitions of international companies in the energy sector.
729 • Jun 25, 07 Jul 6, 07 Transparency and insider trading in Pemex 515 This report offers an overview of the decades-old practices in Mexico's energy sector that could be described as insider trading, where, by this term, we mean the use of privileged information or institutional or political power for private gain or advantage. The body of the report asks about a Mexico-City based consultancy that facilitated the leasing by Pemex of an FPSO from Bergesen Worldwide, a Chinese-owned conglomerate, as well as about means to limit insider trading.
061307 • Jun 13, 07 La OTC y el logotipo de PEMEX (Pemex’s missing presence at OTC) 01 This op-ed article laments that in OTC 2007 the only place where the logo of Pemex could be found was on the scale model of the FPSO that was being refitted for Pemex’s use. The article urges Pemex to increase its presence in OTC, sending mid-career professionals to extend their networks outside of Mexico. Published in REFORMA (June 13, 2007).
726 • May 13, 07 Rethinking regulation and public oversight in the electric sector 79 This report examines the drivers for change in the regulatory framework and public oversight of the electric sector in Mexico. The report reviews proposals for the electric sector in Mexico since 1999, some of which have called for constitutional changes, others for only changes in the law and regulations. The report focuses on the bill pending in the Congress that upgrades the CRE’s role in the electric sector, setting an example for expanded public oversight throughout the energy sector.
701 • Apr 26, 07 Apr 30, 07 Mexico’s energy sector: Paralysis by analysis? 29 This report examines the value of energy-sector seminars and workshops in Mexico as mechanisms that promote consensus regarding energy, industrial and investment policy and regulatory institutions. The report provides highlights from a number of conferences and workshops, from the 10-year CRE conference in the fall of 2005 to the workshop at the ITAM in 2007. The report identifies the weaknesses of such exercises, noting that panelists tend to speak in code-language that affirms the policy status quo.
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727 • Mar 13, 07 Mar 26, 07 Exploration risk, business development and energy policy in Mexico 118 This report examines cultural factors that affect discussions in the public and private sectors about energy topics in Mexico. The report considers the use of quantified data and the issues of language. In relation to styles of communication, the report notes differences between the sensibilities found in Mexico City and those found in Monterrey, the United States and Europe. In relation to quantified data, the report notes that data in the oil sector are typically not comparable with data in global databases. These features make exploration, business and policy costly and problematic.
725 • Feb 13, 07 Mar 10, 08 Damage control of reports of Cantarell field decline 212 Since early 2004, the most sensitive topic in the energy sector has been the decline of Cantarell, Mexico's largest oilfield. Pemex's position is that the rate of decline has been foreseen and is being managed. Reports to the contrary are met with a sharp rebuttal. This report examines the events set in motion by the Wall Street Journal story run on Jan. 27, 2007 that Cantarell's decline was more serious than had been reported. The report analyzes the information and messages of the press briefing held on Feb. 7 of Pemex’s new Director General, Jesús Reyes Heroles.
724 • Jan 12, 07 Jan 27, 07 Freakonomics of the competitiveness of market-listed oil companies 118 This report explores the underlying economics of the operations of oil companies, private and national, whose shares are listed in stockmarkets that are open to international investors. The report argues that there are other factors that make IOCs (private and national) more competitive--by as much as $17.00/bbl (Table 1)--than an unlisted national oil company (NOC) that in the upstream operates in just one country.
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723 • Dec 22, 06 Jan 25, 07 Why López Obrador lost in 2006 012 This report examines identifies a dozen factors at play in the elections of 2006 that, together, defeated the once, sure-to-win Andrés Manuel López Obrador, the presidential candidate of the coalition led by the PRD. The working hypothesis is that the ultimate outcome of the voting on July 2 was visible by June 2. The report draws on conversations with Mexican voters, political analysts and industry observers in Mexico and the United States during the period Dec. 5-16, 2006.
722 • Dec 05, 06 Feb 17, 07 Pemex proposes reforms for cross-border development 412 This report examines proposals by Pemex to address the challenges of joint development of oil and gas fields that straddle the U.S.-Mexico border. Pemex proposes changes in the legal environment in which it does business. The report also discusses changes that will be needed in the mandate of U.S.-side regulators for cross-border projects to go forward. We comment on the challenges that Pemex and the new government face to bring about this change in upstream policy.
692 • Nov 27, 06 How serious is the opposition to Calderón's presidency? 015 The report distinguishes between opposition to the likely policies of the new administration and opposition to the person of Felipe Calderón as President of Mexico. This report examines attitudes in Mexico toward Calderón during the weeks that culminated in the self-described inauguration on Nov. 20 of his principal opponent, Andrés Manuel López Obrador. The report is based on a series of interviews with voters and observers in Mexico City as well as on a survey of the Mexican and international press.
688 • Nov 21, 06 Calderon’s first energy crisis: Natural gas pricing 112 This report predicts that there will be a crisis in public policy over natural gas pricing in the first 100 days of the Calderón administration. The report examines the often-voiced complaints of Mexican residential and industrial consumers that natural gas prices in Mexico are too high. The analysis supports this conclusion, but for reasons not commonly heard in Mexico. The report offers an analysis of the steps needed to lower prices in the short- and medium-terms. It also identifies ideas that are not deemed workable in Mexico.
721 • Oct 31, 06 Calderón's transition team vs. oil policy 1012 This report seeks to reconstruct the upstream briefings given to the Calderón transition team by Pemex executives and Energy Ministry officials. The report also takes note of advice by experts and political groups opposed to private investment in the oil sector. The situation facing the new administration is examined in the context of trends affecting the oil industry worldwide. The report reviews parameters of selected oilfields as they might be understood by economists and MBAs in the transition team. Update 1 discusses what energy officials did not tell the team.
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720 • Oct 18, 06 Mar 19, 08 Political and institutional undercurrents in Mexico’s energy sector 212 This report evaluates concerns and speculations in the final two months of the Fox administration. The report is based on observations, conference presentations and discussions in Mexico City during the first half of October, 2006. Topics concern the future staffing of key positions in Pemex, the outlook for oil production and the postures of the political parties in the Congress. The report includes an informal survey during the week of October 9-13 of political views about the post-election situation. Tables provide titles of relevant press items during the period covered.
718 • Sep 25, 06 Apr 16, 07 New perspectives on government procurement in the energy sector 813 This report describes the background and present situation in government procurement in the energy sector, taking note of both regulated and unregulated procurement in Pemex and CFE. The report reviews the legal, policy and institutional obstacles to global integration and competitive, value-based procurement. The analysis proposes a definition for procurement in the energy sector to include all measures that add value, be they through commercial transactions, treaties or strategic alliances.
08242006 • Aug 24, 06 Natural Gas as a Factor of Regional Development 016 A PowerPoint presentation given by George Baker as a guest lecturer at the business school of the University of Guadalajara on Aug. 24, 2006.The paper argued that the Houston price of natural gas included a “social wrapping” that was not included in the CRE calculation of the Mexican price. The paper also argued the the fully burdend cost of LPG service is much higher than the fully burdened cost of natural gas. The audience was upwards of 50 people, including LPG representatives (in the front row).
715 • Aug 18, 06 Sep 7, 06 Electoral outlook to January 1, 2007 514 This report examines claims of institutional bias and voting irregularities in the election of July 2, 2006. It offers an outlook for the period leading up to Dec. 1, 2006, the date set by law for the transfer of power to the new president. The report also offers an outlook for electoral and political developments in probability-weighted scenarios. Central to political forecasting is a sober pondering of the effect that the demands and strategy of civil disobedience of the PRD may have on the outcomes.
713 • Jul 12, 06 Why the PAN lost in 2006 39 This report examines arguments and points of view voiced in Mexico City during the period July 1-3, 2006,as to why the PAN would lose the presidential elections of July 2, if not numerically, then morally by the lack of a clear mandate to govern. The arguments revolved mainly round the expected boomerang effects of actions and policies taken by the Fox administration, the PAN campaign, and the academic, media and industrial Establishment.
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712 • Jun 29, 06 Jul 5, 06 Political endgame, 2006 210 This report views the elections of 2006 as a referendum on two topics: the performance of Vicente Fox as president and the readiness of Mexico to accept a government from the Left. The report draws on six months of interviews in Mexico City and elsewhere with prospective voters. The report argues that the election boils down to voting for--or against---López Obrador. A list of reasons for each choice is provided.
711 • Jun 26, 06 Sep 5, 06 English, culture and leadership in Mexico’s oil sector, 2006-12 117 This report identifies, as key issues for the new government, the topics of English, culture and leadership in Mexico's petroleum industry. The report discusses little-examined features of Mexico's oil sector that have limited the ability of the state oil company to keep abreast technologically, replace reserves and operate in deepwater. The report suggests ideas for requirements to be used in executive recruitment in the oil sector.
710 • Jun 20, 06 Why the PRD will win in 2006 39 This report examines the new political situation in Mexico that arose after the televised debate on June 6, 2006, among presidential candidates. The report concludes that the electoral dynamics of the new situation, reinforced by predictable patterns of undecided voters, point to a victory by the PRD presidential candidate on July 2.
709 • May 20, 06 Jun 28, 06 Why the PAN will win in 2006 014 This report examines the similarity between the successful electoral strategy employed by the PRI in the elections of 1988 and 1994 and the strategy employed by the PAN and PRI since 2004. The report concludes that the strategy that worked well in 1994 in Mexico and in 2004 in the United States will deliver a PAN victory in 2006.
708 • Mar 31, 06 Pemex's regional reserve replacement record 136 This report, based on public data, examines the performance at the regional level of Pemex's exploration and field development programs. Calculations for crude oil and natural gas provide values for the "integral" reserve-replacement ratios. Some of the results are higher, others lower, than the ratios reported by Pemex for the national average. 13 tables.
707 • Mar 24, 06 Oct 25, 06 Anti-globalism in Mexican oil politics 137 This report examines, in detail, an example of the anti-globalist sentiment voiced in populist movements in Latin America, from Mexico to Bolivia. In the present instance, a coalition of diverse groups has issued a call for the "re-expropriation" of Mexico's oil industry from the allegedly privatizing intentions of neoliberal administrations. The authors call for the cancellation of contracts involving foreign companies, the elimination of the CRE, and other measures. The original and an English translation is appended.
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10013 • Mar 16, 06 Las Políticas de Petróleo y Gas en México: Análisis de los Marcos 16 This 7-page white paper (of which an English version was subsequently issued) was prepared as a multi-client effort to set forth ideas for oil policy reform by the new administration that would come to office as a result of the outcome of the elections to be held in July of 2006. Many of the ideas in this paper were taken up in the Energy Reform of 2008, notably the strenghtening of both the board of Pemex and the authority of the director general of Pemex and of the Energy Ministry.
706 • Feb 20, 06 Aug 2, 07 The search for solutions in Cantarell: 2006 and beyond 112 This report offers two interpretations, technical and political, of the internal Pemex study that was leaked to the Mexican press in November 2005 and which described the possibility that a decline in the output of the Akal field of the Cantarell Complex could occur sooner and more rapidly than had previously been believed. While the study's review of geophysical data has the look and feel of scientific rigor, its presentation will not influence policymakers and timing of the leak suggests a political agenda.
10014 • Jan 19, 06 Public Policy Perspective No. 10014: Rethinking Oil Policy in Mexico 013 This bilingual report offers a perspective on industrial, institutional and policy issues related to Mexico’s oil and gas industry. The report concludes that the four operating divisions of Pemex have performed below expectations for a quarter-century; and that institutions and laws are inadequate for a market-oriented, competitive and transparent administration of the oil sector.
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700 • Dec 21, 05 Mar 28, 06 Energy regulation in North America: Toward a trilateral consensus 216 This report considers the scope and seriousness of the proposal by the Bush administration to engage the governments of Mexico and Canada in conversations about coordinated energy policies for the region. The North American Energy Working Group was established in 2002 but it seems to have been superceded by a new initiative in early 2005, the Security and Prosperity Partnership of North America. Energy proposals for Central America raise the question: How valid is a trilateral approach?
705 • Dec 08, 05 Dec 15, 05 Proposals to restructure Pemex, 2000-05 210 This report examines the background to new proposal in the Mexican Congress to restructure Pemex in a way that eliminates the four operating units and that does away with international benchmarks for transfer prices. The highlights of the November 2005 bill in the Lower House to reorganize Pemex are discussed and possible advantages and disadvantages of the proposed reorganization are itemized.
704 • Dec 02, 05 Apr 27, 06 If Fox were a candidate? Voter preferences regarding the reelection of 09 This report summarizes interviews with Mexican voters in Mexico City and Houston during the period Nov. 2005-April, 2006. Voters were asked, If Vicente Fox were among the candidates for president for the period 2006-12, would you vote for him? They were also asked to rank Fox in the order in which they would vote for him were his name on the ballot. The survey gives a glimpse of how voters see Fox's administration, and may point to differences in perspectives between voters in Mexico and voters in the United States.
120105 • Dec 01, 05 El monopolio y el precio del gas 02 This report examines alternative views about the pricing of natural gas in Mexico, including one by the Natural Gas Association (AMGN) that urges a cost-based, pricing system.
The report was published in Spanish in ENERGIA A DEBATE (December 2005). http://www.energiaadebate.com/Articulos/dic_2005/george_baker.htm
703 • Nov 27, 05 Mexico's undiscovered petroleum resources: the science and the politics 28 This report provides new information and commentary on Pemex's 2005 estimate for undiscovered petroleum resources. The estimate is also to be understood in the light of political and cultural traditions relating to the use of quantified data in Mexico. The Pemex estimate is contrasted with research findings reported by the Rand Corporation in 1980.
699 • Oct 26, 05 Oct 30, 05 Setbacks in policy, regulation and industrial organization in Mexico's energy 015 This report concentrates on the setbacks in policy as well as industrial performance in the energy sector in Mexico since 1989. Discussion is in two main parts: chronological, by presidential period, and topical, by industrial activity. Topics include power, chemicals, oil and gas, regulation and legal framework. The report itemizes policy and institutional features that have not worked. The analysis offers a basis to better understand the policy positions of the parties and candidates in the 2006 elections.
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698 • Oct 12, 05 Nov 16, 05 Energy debate in the 2006 elections 412 This report examines recent positions taken regarding the energy sector by principal presidential candidates. On Sept.12 President Fox offered ten proposals for the energy sector, including one constitutional reform. In the same month PRD candidate Andrés Manuel López Obrador announced his policy agenda. His ideas for the energy sector were sharply rebutted by PRI policy analyst Adrián Lajous. There are signs that energy in the election debates will become more than exercises in flag-waving.
697 • Aug 30, 05 Pemex crude oil reserve statistics, 1997-2005 810 This report asks about Pemex's ability to replace annual crude oil production with new proved reserves. The original aim of the inquiry was to document Pemex's proved reserve-replacement ratio for crude oil. During the period 1997-2005 the rules and methods for booking oil and gas reserves changed three times: What was a proved oil reserve in 1999, may not have been in 2000 or 2003. Tables show reserve levels under the three systems. In doubt is Pemex's ability to achieve its goal of 100% replacement.
695 • Aug 18, 05 Pemex performance deflated for population growth, 1993-2004 75 This report examines selected measures of Pemex performance during the period 1993-2004 and poses the question, How well has Pemex kept up with Mexican population growth and the implied demand for products and tax revenue? In some areas, crude exports, for example, Pemex is ahead of the population curve; in other areas such as petrochemicals, refining and crude production net of Cantarell, Pemex is behind. Viewing Pemex data scaled to population gives new clues about sustainability and problem areas.
696 • Jul 08, 05 Feb 6, 06 Why the PRI will win in 2006 612 This report examines arguments and data bearing on the outcome of the presidential elections of July 2, 2006. While surveys indicate that the prospective candidacy of the PRD's Andrés Manuel López Obrador is ahead of any PAN or PRI candidate, voters will likely follow traditional patterns, which, by default, give the elections to the PRI. The report draws on results of a poll of voters conducted in May 2005 by the Institute of Marketing and Opinion. The implications of a PRI victory in 2006 for energy policy are explored.
694 • Jun 23, 05 Aug 6, 06 Indirect and social costs of LPG and natural gas service 1216 This report inquires into the total cost of service of LPG and natural gas for residential and commercial customers in Mexico, taking into account costs and risks for the customers and communities beyond those of the regulated prices for each product. Example: consumer fraud in LPG cylinder service has been estimated at US$500 million annually. This report identifies components of costs and risk for both LPG and natural gas service. Translated titles from the Mexican press provide a glimpse into developments in the Fox administration.
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693 • May 21, 05 May 31, 05 Outlook for new petrochemical capacity in Mexico 1517 This report examines the outlook for new petrochemical capacity in Mexico, with special reference to Pemex's proposed Project Fénix, a million-ton ethylene complex based on liquids feedstock. The report places Mexico's situation in the light of regional and global market trends, as discussed in the 29 April 2005 Gulf Coast petrochemical conference sponsored by the Global Energy Management Institute of the University of Houston. Table 11 provides a glimpse into the state and national politics of Project Fénix in Mexico with a chronology of titles translated into English.
685 • Apr 23, 05 May 17, 05 Mexican energy in 2004 and its impact for 2005-06 1117 The year began with optimism both for developers and public officials in government and in the state-owned energy companies. In LNG, for example, Chevron, Marathon and Tractebel were poised to see their projects move forward, but, at year end, only Chevron’s survived. In the heated political climate, Energy Minister Felipe Calderón lost his job, as did four senior executives in Pemex, including CEO Raúl Muñoz. This report reviews events and trends of 2004 with special reference to the energy sector.
690 • Mar 20, 05 EXITEP 2005: ¿Apertura? 112 This report reviews Pemex's upstream technology conference held in Veracruz Feb. 20-23, 2005. One highlight was an address by Pemex CEO Luis Ramírez Corzo in the presence of President Vicente Fox in which he said that Pemex needed an "apertura" (opening) to private capital. The report is a 5,300-word critique of the organization and program content of the mega-event and includes recommendations derived from off-line comments from delegates, exhibitors and presenters.
691 • Mar 18, 05 Mar 31, 05 100 years of Mexican oil: A new debate? 08 This report reviews the arguments voiced--and unvoiced--during the public presentation of a new book on the first 100 years of the Mexican oil industry. On March 15, 2005, a panel was assembled in the Club de Industriales: Enirque Krauze raised political and cultural issues, Dr. Héber Cinco cited oil statistics and Dr. Roca, Commercial Director of Schlumberger's Mexico operations, who was the general editor of the volume, told about how the book was compiled. Some wondered, Is there a new debate ahead?
686 • Feb 16, 05 Sep 11, 07 Oil and gas pipeline safety crisis in Mexico 1212 This report examines the deteriorating public confidence in pipeline safety in Mexico in the oil and gas industry. Institutional weaknesses are made visible by industrial accidents like oil spills, pipeline ruptures, well blow-outs and explosions at facilities. The oil spill in Veracruz on Dec. 22, 2004, is taken as a case in point. The report discusses safety programs in Pemex as well as on regional and national press reporting. The accident frequency points to challenges within Pemex and the federal and state governments.
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687 • Feb 01, 05 Myths and realities in Mexican deep water development 02 This report examines six common but erroneous assumptions about the importance and outlook for deepwater development in Mexico. Special attention is given to the controversy surrounding the need to change the Constitution. This report was published in Spanish in ENERGIA A DEBATE (February 2005)
http://www.energiaadebate.com/Articulos/febrero_2005/george_baker.htm
689 • Jan 31, 05 Mar 2, 05 Management turnover in Mexico’s energy sector, 2002-05 310 This report examines the frequency of, and rationale for, the turnover of senior staff in Pemex and the Energy Ministry during the Fox Administration. More changes and forced retirements are expected. Table 1 is a list of key positions in Pemex with the names of incumbents in each of the years 2002-04. Table 2 is a selective list of the names of persons who either left Pemex or who were rotated in 2004-05. Table 3 lists the names of managers who--according to rumors as of late January--have an uncertain future in 2005.
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684 • Dec 15, 04 Outlook for world oil and gas markets: Lessons for Mexico 09 This report draws on presentations and discussions at the conference held in Houston on Dec. 9, 2004 sponsored by the local chapter of the IAEE. The speakers and moderators were from the public and private sectors, including the University of Houston, the Oxford Institute of Energy Studies and the Reserve Bank of Dallas. Speakers concentrated on oil and gas prices and LNG markets in Europe, North America and Asia. Lessons and implications for Mexico's energy sector are noted.
681 • Nov 30, 04 The Mexican press: Guide for energy market and policy analysts 214 This report examines the state of Mexican print and online journalism, and the politics and economics of news reporting. An appreciation of biases and passions helps explain the news coverage of Mexico's energy sector. The media serve both as interpreters and commercial facilitators of the power struggles over institutions, policies and budgets. Comments on the political allegiances of specific publications; and examines, as a case study, the alleged electoral motivation for the change in the director general of Pemex on Nov. 1, 2004.
682 • Nov 19, 04 Jun 6, 06 Assessment of the performance of Raúl Muñoz in Pemex 013 This report, based on a review of the Mexican press and interviews with diverse sources in Mexico City, provides a preliminary evaluation of the performance of Raúl Muñoz Leos as Director General of Pemex. Insinuations that he had overstepped legal requirements or procedural rules are untrue; but there are other arguments that, individually and taken together, could made a case for a change of command in Pemex. What is the main lesson of Muñoz's tenure in Pemex?
680 • Nov 04, 04 Nov 15, 04 Luis Ramírez Corzo is Pemex CEO 615 This report examines the causes and business messages of the change in the top leadership of Pemex when, on Nov. 1, 2004, Luis Ramírez Corzo, the E&P director, was named CEO of Pemex in substitution of Raúl Muñoz Leos. The report examines factors that led to the departure of Muñoz and the challenges the new director will face. Six tables provide the titles of the Mexican press coverage of the event.
679 • Oct 25, 04 Sep 12, 06 Pemex's future production in deepwater: What is Plan B? 113 This report reviews the arguments and rhetoric heard in Mexico throughout the Fox administration that favor strategic associations for deepwater production. Such arguments have not been convincing in the Congress. Pemex, meanwhile, is advancing its knowledge of deepwater basins, and its conversations with oil companies are leading to an understanding of the technological challenges ahead. What, then, are Pemex's plans A and B?
678 • Oct 22, 04 Natural gas pricing and procurement controversies in Mexico, 1993-2004 28 This report surveys the landscape of proposals and practices for natural gas pricing, storage and transportation since NAFTA came into effect Jan. 1, 1994. The successes and shortcomings of public and private tenders and direct negotiations are examined in relation to projects in gas, power and refinery upgrades. The report retraces some of the early history of the 1990s as background for developments during the Fox administration.
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669 • Sep 21, 04 Oct 6, 06 Market and political dynamics of West Coast LNG 18 This report surveys the commercial and political environment in which proposed LNG projects will operate in market areas here labeled NW Periphery, Greater Southern California and SW Periphery, and which extend from British Colombia to Michoacán. The report concludes that LNG projects are vulnerable, if not from commercial and regulatory issues, then from political ones.
677 • Aug 29, 04 Aug 31, 04 Mexico’s energy sector: Summer 2004 713 This report reviews developments in the institutions in Mexico that are involved in Mexico’s energy sector: Pemex, CFE, CRE, SENER, ASF, Supreme Court and Congress. The summer is memorable for the high prices caused by supply uncertainties in Iraq and Venezuela. In Mexico the second round of Multiple Service Contracts was launched amidst growing controversy. Other controversies in the summer were LNG terminals and consumer fraud allegations at Pemex-branded gasoline stations.
676 • Aug 18, 04 Pemex’s MSC Round Two: Mexicanization 812 This report asks about the purposes, postures and features of the Second Round of Pemex's Multiple Service Contracts. Attention is given to the MSC press briefing of July 29, 2004 as well as to the arguments of critics of the Fox administration in the PRI and PRD. The report features hyperlinks to related documents and to others by opponents in the Mexican congress.
668 • Jul 27, 04 Feb 23, 07 NAFTA: a mixed success at 10--abrogated at 15? 39 This report reviews the first ten years of NAFTA, and asks if the agreement in its present form will reach a 15th anniversary. As measured, regional trade expansion has been substantial, but wages are flat or declining. Some controversies, like trucking, energy and softwood lumber, defy resolution. Mexican industry is generally opposed to any further opening of the economy. Is regional convergence of the kind seen in Europe an option? If so, the premises and terms of NAFTA will need to be replaced by a broader vision.
675 • Jul 08, 04 The rising cost--and backlash--of insecurity in Mexico 114 Insecurity in the Federal District and in border cities such as Tijuana and Cd. Juárez is increasing the cost of doing business in Mexico. The same insecurity is reducing the quality of life in these cities, as average residents and business visitors are often in fear of their personal safety and that of their families. The report narrates experiences of several crime victims, describes the anti-crime protest march of June 27 in Mexico City, and draws lessons for policymakers, businesses, residents and tourists.
674 • Jun 30, 04 The “impertinence” of foreign public officials toward Mexico 19 Foreign public officials occasionally seek to instruct the Mexican public and government authorities. The topic of instruction may be anything: investor rights, water, law enforcement, drugs, oil and gas policy. Predictably, such instruction is poorly received-both by the host government and by the international business community in Mexico. Texas Gov. Rick Perry's visit to Mexico in June 2004 is a case in point.
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673 • May 25, 04 The risk of virtual expropriation: Metalclad and Marathon Oil 59 This report examines the risk to investors in infrastructure projects in Mexico from indirect or regulatory expropriation. The cases heard in the first ten years of NAFTA leave serious doubts about the remedies available under its Chapter 11. This report examines two virtual expropriations: that of Metalclad Corp. in 1997 and that of Marathon Oil in 2004. Two questions are asked: What went wrong? and What are the lessons?
672 • Apr 30, 04 May 6, 04 Pemex financial reporting: For whom? 18 This report provides an introduction Pemex's financial reporting practices, noting advances and unresolved issues related to transparency. Table 1 examines and critiques the report of preliminary results as of December 31, 2003.
671 • Apr 29, 04 Petroleum Day 2004: Open Season on Oil Policy and Pemex 315 This report examines the politics of Petroleum Day in Mexico, with reference to the celebrations of 2003 and 2004. Under President Fox the event is undergoing political engineering and its future importance in Mexican politics is in doubt. The report reviews the addresses and arguments of Cuauhtémoc Cárdenas on March 17 and those of Raúl Muñoz Leos and Felipe Calderón on March 18.
667 • Mar 31, 04 Mexican energy in 2003. Year of natural gas 313 This report highlights major developments in Mexico's energy sector in 2003, making special note of advances and setbacks in natural gas, power and energy policy. The report takes note of personnel changes during the year, and contains tables that document the Metrogas pipeline safety controversy in Mexico City and the CRE's five-year review of natural gas distribution permits.
670 • Mar 10, 04 LNG politics and permits after expropriation in Baja 210 This report examines the logic of due diligence in Mexico's energy sector in the light of the unexpected interruption of negotiations between the State of Baja California and Marathon Oil Company. Marathon's proposed project was the most far-reaching regional development project proposed for the state in a generation. What lessons are to be drawn for regulators and the remaining and future LNG developers in relation to projects in Mexico?
666 • Feb 23, 04 Mexican elections 2006: Andrés Manuel López Obrador 010 This report, the second in a series on the presidential elections of 2006, draws on the presentation given by political scientist George Grayson to the Houston World Affairs Council on Feb. 11, 2004. Dr. Grayson noted that the popular mayor of Mexico City would win the 2006 presidential elections in Mexico if they were held on that date. Grayson pointed to the potentially negative effects of a López Obrador presidency--negative for international investors and Mexican politicians who seek structural reforms in energy, taxes and labor.
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658 • Feb 10, 04 The business valuation, politics and organizers of Mexico energy seminars 310 This report identifies thirty-five organizations, both commercial and nonprofit, that sponsor conferences on Mexico’s energy sector. These venues are described and scored by the highest rank of the government, Pemex or CFE official that is likely to participate as a speaker. The business and professional reasons for attending these conferences vary, and are both simple and complex. In the latter category exist policy lobbying, Pemex and CFE loyalty and competitor research.
660 • Jan 27, 04 Jan 11, 05 New actors in LNG politics in Baja California 19 This report reviews the increasingly unpredictable contest in Baja California that is unfolding on two levels: the first between the three commercial competitors and the second between the federal government and local authorities. The shift occurred in Dec. 2003 when Shell joined Sempra, and ChevronTexaco secured federal support for an offshore siting that bypasses local jurisdictions.
661 • Jan 19, 04 Sep 5, 06 MSCs: Retrospect and outlook 213 This report examines the motives––for and against–participating in the first round of Pemex’s Multiple Service Contracts. Up to 1958 production sharing and equity rights to oil production were permitted in Mexico. A comparison of the Oil Law of 1958 (which governed the MSCs) with those of the prior law of 1941 suggests that major oil companies would have been more motivated to participate in the MSCs under the earlier framework. By August 2006 Pemex had developed new models of the MSCs.
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659 • Dec 30, 03 Pemex’s offshore platform program, 2003-07 66 This report provides an overview of Pemex’s ambitious offshore platform program for the second half of the Fox administration. Table 1 provides a breakdown of planned investments in platforms and pipelines, by Pemex region. Tables 2-4 give a 10-year outlook for Ku-Maloob-Zaap. Table 5 provides a preliminary list of proposed platforms in all regions.
650 • Dec 02, 03 Dec 8, 03 Fox administration at midterm: Performance and criticism 214 This report assesses the situation of the Fox administration at the midpoint of its term, taking into account the unexpected challenges associated with the global recession and the difficult relationship with the United States. Special attention is given to the events of the third anniversary of his presidency, including the megamarcha of Nov. 27, 2003.
662 • Nov 26, 03 Policy dialogue with Mexican senators 312 This report describes the challenges facing any international analyst or company representative who might have the occasion to enter into a discussion of energy policy with senior Mexican political figures. One of the challenges is the proper measurement of the state of U.S.-Mexico relations; another challenge is finding a suitable topic and a style of presentation that fits within the scope of current debates over energy policy.
663 • Nov 21, 03 Dec 6, 03 The logic and politics of cogeneration in Mexico 213 This report reviews the history and politics of cogeneration in Mexico, focusing on the media and legislative attention given to this topic in October 2003. Table 1 of the report is a chronology of events associated with cogeneration that includes hyperlinks to the original documents. Fig. 1 is the table of contents of the hearing of the Senate Energy Commission on Oct. 7, 2003.
656 • Oct 29, 03 Nov 3, 03 Reform proposals in the hydrocarbon-to-power value chain 25 This report analyzes two legislative proposals which would have the effect to strengthen Mexico’s electric power infrastructure and generation capacity. A PRI proposal submitted on Aug. 27, 2003 by Deputy Jorge Chávez Presa contemplates a constitutional change to permit private investment in nonassociated gas fields to guarantee an adequate supply for power generation. A second proposal, announced Oct. 8, 2003 by PRD Sen. Demetrio Sodi, would have Pemex Refining responsible for building 2-4 Gw of additional cogeneration capacity—enough to last to 2010?
657 • Oct 10, 03 Pemex’s uncertain future--David Shields 16 This report reviews the book in Spanish by David Shields, Pemex, un futuro incierto (2003) and comments on the choices ahead for Pemex and Mexico in the oil sector.
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651 • Sep 30, 03 Sep 21, 09 Gas distribution in Mexico: LPG vs. natural gas 312 This report examines the ongoing struggle by natural gas distribution companies (LDCs) to extend their pipeline system within their franchise areas. LDCs face anonymous and neighborhood opposition believed to be organized by LPG distributors. In relation to public policy, the report notes the lack of public education at the local level related to matters of energy policy, such as the advantages of natural gas compared to LPG.
655 • Sep 23, 03 Oct 3, 03 Altamira LNG: Has the other shoe dropped? 211 This report reviews the unusual history of LNG promotion in Altamira, Tamaulipas, and asks if the award on Sept. 11, 2003 of an international tender to the sole bidder, Gas del Litoral, ends--or fuels--controversy about public policy in relation to gas supply and pricing in Mexico.
652 • Sep 04, 03 Crystal-balling the winners of the MSC tenders 310 This report identifies qualitative factors that could favor the outcome of the tenders for Pemex’s first round of tenders for the Burgos Multiple Service Contracts. The predictions are based on the relative interest shown by prospective bidders at site visits, taking also into account Pemex’s traditional preferences in out-sourcing services by international companies.
648 • Aug 19, 03 China as test case for basket pricing of natural gas 38 Direct foreign investment in Mexico peaked in 2001, but fell in 2002 and again in 2003. Mexican industry in a letter to President Fox dated July 1, 2003 argued that jobs and markets were being lost because Mexico’s competitors enjoyed lower input costs for power, natural gas and refined products. They proposed to internationalize Mexico’s gas prcing to include a basket of countries. This report inquires about the feasibility of this approach in the case of China.
645 • Aug 15, 03 Apr 21, 04 MSCs: Congress pushes back––but too late? 113 This report examines Pemex's original arguments supporting the MSCs and the criticism, doubts and concerns that have come to surround them. The MSC program is seen as a catalyst that has opened Pemex's political culture. This report was updated on April 21, 2004 after the vote in the Lower House not to proceed with a request for a constitutional review by the Supreme Court.
649 • Aug 08, 03 Fox’s off-grid energy policy 011 This report examines the ad hoc negotiations and initiatives that have passed for energy policies in the first half of the Fox administration. In chronological order, since December 2000, topics include natural gas pricing, electric reform, Multiple Service Contract, lubricants market liberalization, LNG regulations, petrochemical investments (Project Fénix)—and again, in August 2003, natural gas pricing.
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647 • Jul 25, 03 Natural gas pricing crisis in Mexico 112 This report discusses the widening gulf between Pemex and Mexican industry in relation to gas pricing philosophy. The 36-month period of a special "Mexico price" for industrial consumers ends in December 2003. Pemex proposes a return to U.S.-indexed pricing while industry wants a formula price based on a basket of gas prices that includes those paid by Mexico's trading partners outside of the U.S. and Canada, especially China.
646 • Jul 04, 03 Mexico’s midterm elections: The invisible political machinery 912 This report outlines the history and electoral machinery of elections in Mexico. An upcoming policy struggle over energy reform appears in the tea leaves of the profiles of PRI candidates for congress and governors in the midterm elections of July 6, 2003. The report explains and details the institutions of conscription and plurinominal, and provides a list of the top-listed candidates for each conscription and party.
063003 • Jun 30, 03 Outlook for Energy Cooporation in the U.S.-Mexican Border Region 016 This essay was based on a seminar paper for a conference on "Trade, Energy, and the Environment: Challenges and Opportunities for the Border Region, Now and in 2020," Rio Rico, Ariz. April 30-May 2, 2001. The papers were published as The U.S.-Mexican Border Environment (San Diego State University Press, 2003). For the essay by George Baker, see pp. 247-63).
641 • Jun 23, 03 Risk exposure in the permitting process in Mexico 212 The problematic character of permits is one that confronts all business activities in Mexico, from office space to industrial facilities. In a number of instances, permits have ignited controversy instead of resolving issues. Contractors with federal permits occasionally find themselves facing municipal and state opposition in addition to opposition from landowners, citizen groups and NGOs.
644 • Jun 11, 03 Legal reform as trigger event in Mexico’s energy sector? 111 This report asks if the Fox Administration is planning a reengineering of the legal foundation of the Mexican State. The report mentions two seminars held in April and May 2003, one at Harvard and the other at the Iberoamericana University. The policy issues discussed in these seminars present a preview of possible future developments in the energy sector.
643 • May 30, 03 Oct 27, 03 Presidential Elections, 2006 18 The midpoint in the Fox presidency is an inflection point for aspirants to his job for the period 2006-12. This report reviews the political culture of Mexico under the PRI and comments on the strengths and weakness of the three major parties as well as the persons who appear to be the leading presidential candidates: Francisco Barrio, Roberto Madrazo and Andrés Manuel López Obrador.
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640 • May 02, 03 May 22, 03 Pemex MSC Technical Workshop 96 Pemex’s final orientation workshop for prospective bidders and contractors for the upcoming tenders of the Multiple Service Contracts (MSC) was held at its Data Room in Reynosa on April 28-29, 2003. This report provides an overview of topics discussed (and not discussed), tables and two approximate maps showing the political divisions in which the blocks are located. A partial list of participating companies, by category, is also included.
639 • Apr 27, 03 Jul 18, 08 Risk exposure for contractors in the Mexican upstream 013 Contractors and subcontractors face an array of normal business risks in pursuing business opportunities in Mexico’s upstream. Risks are those contained within the terms of the contract as well as other types of risk that arise from the operating environment. This report contrasts the perceptions of risk by oil companies and oilfield service companies in relation to MSCs. It also considers risks in relationships and contracts with local companies in Mexico.
637 • Apr 16, 03 Apr 17, 03 Aftershocks in NAFTA over Iraq 07 This report comments on an address given on April 8, 2003 by Peter Godsoe, chairman of Scotiabank, to the Canadian Chamber of Commerce of Mexico. The banker expressed concern about possible future reprisals against Canada and Mexico for their respective decisions not to support the Bush Administration’s position regarding Iraq.
636 • Apr 07, 03 Apr 18, 03 Pemex, S.A. 110 This report provides an overview of a legislative proposal presented by two PRI congressmen in mid-December 2002 to reorganize Pemex into a "public interest corporation" where 10% of the stock would be open to Mexican investors and retirement fund managers. The proposal has far-reaching implications, as its goals would require new measures of transparency and accountability. The outline and text of the bill, with English headings, is appended.
635 • Mar 31, 03 Oil Expropriation Day 2003 19 This report treats the annual commemoration held on March 18th of the expropriation of the oil industry in Mexico in 1938. For the first time, the event in 2003 was held without the presence of the president of Mexico.
633 • Mar 26, 03 Greenfield petrochemical projects in Mexico: Case studies 615 This report provides an overview of two attempts during 1998-2001 by the Mexican developer Serbo Corp. Corp. to implement its vision of a new urban complex consisting of an industrial park for investors in petrochemical plants, commercial facilities and surrounding residential housing and services. The billion-dollar project, had it succeeded, would have resulted in Ciudad Altamira. Serbo’s vision is scheduled to be reborn in 2003 as Project Phoenix, with the difference that the developer and anchor customer will be Pemex’s chemical unit.
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634 • Mar 13, 03 Mar 14, 03 Mexico's vote on the Security Council regarding Iraq 05 This report examines the logic of Mexico's vote in the United Nations Security Council regarding the use of force in Iraq. Mexico has additional reasons to support the U.S. independently of Mexico’s views on Iraq.
622 • Mar 07, 03 Mar 8, 03 Why can’t Mexico communicate in English? 16 This report offers reflections on the closing on December 31, 2002, of two Mexico City newspapers, Novedades and The News. In the case of The News, its political function was to promote Mexico’s image to English-speaking tourists and business visitors.
631 • Mar 06, 03 Pemex Upstream Technology Week, 2003 67 This report provides a critical assessment of Pemex's upstream technology week, which was held in Veracruz, February 13-19, 2003 and included technical courses, trade exhibits and professional papers. The events provided a forum for distinct stakeholders in Mexico's energy sector to express their views, report scientific and technological results and, for exhibitors, sell their products and services.
632 • Feb 28, 03 MEI 619, corrections and critique of George Baker report 310 This report presents the original report MEI 619 prepared by Fernando Ramírez and offers a critique of the apocryphal report that was actually sent to subscribers by George Baker. It also questions the ethical values of George Baker who changed the contents, scope, purpose and conclusions of the original report without ever asking me of such changes.
627 • Feb 17, 03 Integration of LNG and IPP projects in Mexico 312 This report provides an overview of the history of the idea of an LNG regasification terminal in Mexico. The concepts and impact of the CFE's tender issued on December 24, 2002, are discussed, particularly in relation to the rescheduling of IPP projects in the Altamira region. Risks faced by policy and economic actors are identified.
628 • Feb 04, 03 Dec 12, 03 Business correspondence in Mexico’s energy sector 010 This report documents some of the unwritten rules of written as well as spoken communication in Mexico’s public sector. It describes standard conventions in business correspondence in Mexico’s energy sector, and points out eight measures to avoid personal and corporate embarrassments. A discussion of Mexico City’s “courtly” manners provides the background for understanding the institutional forms and attitudes found and required to succeed in Mexico’s public sector.
629 • Feb 03, 03 Sep 4, 03 Odyssey of Pemex’s Multiple Service Contracts, 1991-2003 110 This report traces the unpublished highlights of the evolution of the MSC strategy from the early 1990s through August 2003, and identifies some of the pluses and minuses of the concept from the point of view of prospective bidders for whom to bid or not to bid is the question. Update 1 (Sept. 5, 2006) examines the revised version of the concept as promoted by the Fox administration in the final months of its term.
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624 • Jan 24, 03 A guide to data publications on Mexico’s oil and gas industry 06 This report provides a guide to statistical publications on Mexico's oil and gas sector. The information that is publicly available provides a starting point for any serious evaluation of industrial, commercial and policy issues.
623 • Jan 10, 03 Statistics on Mexico's power sector 05 This report provides a short, annotated bibliography of the public and semi-public publications that provide statistics on Mexico's power sector. Such publications often hide more than reveal; but, in the land of the blind, the one-eyed statistician is king.
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621 • Dec 30, 02 Dec 31, 03 Mexican energy in 2002: A year of unfinished business 213 This report looks at the year 2002 through the lens of advances and delays in both energy policies and markets. Delays are measured in their months or years of standby status (some going back to 15 years). Topics discussed include LNG, Multiple Service Contracts, electric reform, Mexlube, LPG and petrochemicals.
619 • Dec 29, 02 Dec 30, 02 Natural gas price fixing in Mexico 19 In the context of a larger discussion of gas pricing, this report describes the CRE’s repairs to the formula governing natural gas prices in Mexico. The need arose when in November 2002 the U.S. price index for gas that had been used to benchmark Mexican prices was not published, owing to suspicions that U.S. price data had been fraudulently manipulated by traders.
620 • Dec 26, 02 Dec 27, 02 Blunders, faux pas and booby traps in English-Mexican Spanish translation 16 This report notes difficulties both sides have with the problem of false cognates in translating from Mexican Spanish into English and from English into Mexican Spanish. Consider the adequacy of “subsided organism” as an English translation of organismo subsidiario. In some cases, translation errors may pass into blunders of strategy or public relations.
618 • Dec 18, 02 Dec 19, 02 NAFTA and North America Energy: Mexico’s relative gains, 1980-2010 58 Since 1980 Mexico, Canada and the U.S. have expanded energy supplies and markets, but at different rates. This report evaluates the advances of Mexico and Canada during the historical period of 1980-2000 using the U.S. as a benchmark. A forecast for the period 2000-2010 illustrates expectations for the three countries.
617 • Dec 17, 02 Cross-border gas pipelines: regulators, markets and policies 07 This report builds on discussions with the Railroad Commission of Texas of topics such as its collaboration with Mexico's CRE. The Commission anticipates expanded cross-border gas trade and infrastructure and foresees Mexico as a future exporter of gas.
609 • Dec 04, 02 Dec 5, 02 NAFTA and North America Energy 155 On Mid-2002, the North America Energy Working Group published their first study “The Energy Picture”. This report provides a description of the NAEGW group and presents the main conclusions of their energy study in the framework of NAFTA. The energy supply and demand by country for 1980, 1990, 2000 and a forecast for 2010 are presented.
612 • Dec 03, 02 Dec 19, 02 Petrochemical sector: evolution and developments 1110 This report reviews the history of Mexican legislation and policy in the chemical sector. An analysis of leading statistical indicators for the period 1990-2001 indicates trends in capacity, production, sales and trade. Comments on Pemex’s efforts to improve efficiency and attract private investment in new capacity.
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615 • Dec 03, 02 Dec 13, 02 Raúl Muñoz Leos in the University of Texas at Austin 06 A review of the issues addressed in the lecture given by Pemex CEO Raúl Muñoz Leos at the University of Texas in Austin on November 21, 2002. The topics of the presentation included upstream, refining, petrochemicals and multiple service contracts.
614 • Nov 21, 02 6th CBI conference on Mexican energy 06 The 6th annual conference on Mexican energy policy and markets was held in Houston 28-29th, 2002. This reports offers an overview of key presentations and a critique of the underlying agenda of the event.
613 • Nov 14, 02 Dec 10, 02 Advances and delays in Pemex’s Multiple Service Contracts 36 This report asks about the real reasons for the postponement on October 14, 2002, of the first international tenders of Pemex’s Multiple Service Contracts (MSC). At the CBI conference on Mexican energy held in Houston Oct. 28-29, 2002 a Pemex representative gave an estimate of the cost advantage of MSC gas over imported gas in the year 2006.
611 • Nov 07, 02 LNG in Mexico: two steps forward, one step back 07 This report comments on advances in LNG policy in Mexico, and questions the wisdom of a CFE tender for LNG in Altamira. The viability of an LNG project in Baja California would also be strengthened by the passage of the Fox power reform initiative.
610 • Nov 06, 02 Electricity prices in Mexico: low, high or debatable? 58 Are Mexico's electric tariffs higher or lower than tariffs in the U.S.? In Mexico, this question alone is a political debate. In this report arguments about electricity prices in Mexico are tested using data on electricity prices for Mexico and the U.S. for the years 1994-2001.
608 • Nov 05, 02 Fuel oil markets in Mexico 117 This report reviews the market, statistics and government outlook for fuel oil in Mexico. The view that CFE and most of industries (that use fuel oil) will switch to natural gas from fuel oil in the period 2002-2010 is questioned.
599 • Oct 31, 02 State of Texas agencies in Mexico’s energy sector 37 This report describes activities and programs of state of Texas agencies that promote business, policy and technical relationships in Mexico’s energy sector. The agencies mentioned are the General Land Office, the Railroad Commission, Bureau of Economic Geology, University of Houston, University of Texas, Austin and the Mexico City representative office of economic development.
604 • Oct 29, 02 Oct 31, 02 Proposed market design in Fox’s electric reform initiative 07 Analysis of market design in the Fox electric reform proposal. Who will be the new stakeholders in the new power market in Mexico? How will the new power market be organized and regulated?
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605 • Oct 28, 02 Fox’s energy statistics package for the Congress: Review and critique 1110 A review of the trends indicated in the statistics on the oil and power sectors provided by President Fox in his September 1, 2002 address to the Mexican Congress. It includes a review of historical and macroeconomic issues affecting the energy sector. The data from selected tables are referenced, and major trends are shown in graphs.
607 • Oct 03, 02 Energy Security Roundtable for Mexico 48 This report provides an overview of the discussions held on September 27, 2002 in Washington, DC at an invitation-only seminar attended by analysts from academia, industry and government. Not-for-attribution discussions centered on the status of structural reforms in Mexico’s oil, gas and power sectors.
576 • Sep 20, 02 Pemexgate: [PRI & Oil Union] vs. [Fox & Pemex] 07 This report analyzes the politically complex story behind "Pemexgate," the scandal associated with the alleged money-laundering of Pemex funds to support candidates of the official party (PRI) in the elections of 2000. The scandal is that such practices should have become a scandal. The good news is that by addressing the issue, Fox is advancing one of his policy goals.
603 • Sep 20, 02 Regime change in Mexico: Fox’s Address to the Congress 015 In Mexico, the psychological and moral equivalent of the terrorist attacks of September 11th is the earthquake that struck the capital on September 19, 1985. This report traces its political aftershocks up to Fox’s State-of-the-Union address of September 1, 2002.
575 • Sep 06, 02 Project management capacity in Pemex: From Cantarell to MSC 19 The report asks about the history and future of the outsourcing of project supervision in Pemex, taking Cantarell development projects and the proposed MSC program as examples. The report concludes that to the extent such outsourcing is needed at all, then it applies to oil projects more than to gas basins.
602 • Aug 30, 02 Components of Fox reform for the electric sector 010 The Fox reform package for the electric sector submitted to Congress on August 21, 2002 includes amendments to the Constitution, existing legislation as well as the creation of new laws. The purpose of the reforms is to open the sector to private investment and create a partially deregulated power market which the Fox administration expects will be attractive for private capital.
601 • Aug 27, 02 Oct 16, 03 Due diligence in Mexico’s energy sector 012 This report discusses the challenge of carrying out due diligence in Mexico’s energy sector both by public sector organizations and by private companies. Grounds for shareholder complaints about management failure to carry out due diligence are itemized, and ideas for improving management performance are offered.
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600 • Aug 26, 02 Fox’s electric power reform: Fuss vs. philosophy 17 The reaction in Mexico City to President Vicente Fox’s August 16th proposed reform for the power sector caused an electric storm of controversy. This report sorts out philosophical, policy and polemical issues, and assesses the politics of congressional action.
597 • Aug 15, 02 Challenges of U.S. ambassadors to Mexico: Dwight Morrow to Tony Garza 26 On the occasion of President Bush’s nomination of Texas Railroad Commissioner Tony Garza as U.S. ambassador to Mexico, this report examines the performance of several prior U.S. ambassadors to Mexico. If confirmed, Amb. Garza will perform his duties in a culture that distrusts Americans of Mexican descent. He also will face a politically tense moment in Mexican politics, when energy policy in power, gas and refining is the object of impassioned debate.
598 • Aug 13, 02 Managing business intelligence services regarding Mexico 17 This report examines intellectual challenges facing the manager responsible for business development in Mexico. What is the role of business intelligence subscription services in a world in which managers complain of redundancy and information overload?
590 • Aug 08, 02 Aug 16, 02 Will Pemex Refining keep up with demand? 148 This report reviews statistics and rumors relating to the performance and outlook for Pemex's refining subsidiary. A critique of the Energy Ministry's forecast for the period 2001-2010 is provided. Rumors concern the eventual role of private investment in the refining sector.
584 • Aug 01, 02 Costs of delay in electric power reform: A preliminary analysis 57 A commonplace observation regarding the delays in electric power reform in Mexico is that the economy will pay a higher price at some point in the future. This report takes an experimental approach of applying the theory of real options (taken from finance) to the analytical problem of quantifying the dollar value of delays in the CFE investment program as a result of failure to introduce structural reforms.
589 • Jul 24, 02 Evolution of projects in Burgos: from Pidiregas to MSC 55 This report provides a comparison between two development programs and budgets for the Burgos Basin: one of the Zedillo administration in 1996 for the period 1997-2012 and another, of the Fox administration in 2001 for the period 2002-2021. The Fox program suggests a much greater degree of difficulty and risk than had been foreseen previously.
594 • Jul 21, 02 Jul 22, 02 LNG in Mexico: New actors, new drama 06 This report is an update on LNG developments that have been made public. Pemex Gas has withdrawn from the list of prospective anchor customers for an LNG terminal in Altamira, and has been replaced by CFE. This change introduces a new dynamic into Mexican gas and power markets. The market logic and drama varies from one prospective LNG site to another. An LNG terminal in Baja California will be affected by California environmental standards.
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593 • Jul 19, 02 From lightbulb to wellhead: Upstream philosophy under Fox 17 Since early 2001 Pemex has been working on a new development strategy for gas-prone basins. To call this strategy “new” is only partly true, as the Mexican government, since 1992, has sought to create activity niches for private capital. This report examines the background and criticism of philosophy of the Multiple Service Contracts.
577 • Jul 11, 02 Review of Pemex operating statistics, May 2002 94 This report reviews basic indicators in Mexican petroleum industry during the period May 2001 to May 2002, including data on hydrocarbon production, crude oil exports, natural gas exports and imports and domestic sales for most relevant products.
588 • Jul 10, 02 Sep 9, 02 The Bushes, Mexico and Iraq 15 This report speculates on the implications for Mexico in regard to the Bush administration’s foreign policy toward Iraq. How will Mexico be affected by a major disruption in international oil markets brought about by a war in the Middle East?
587 • Jun 27, 02 Base Oil Black Market in Mexico 44 A look at the lucrative black market for base oils in Mexico and the measures taken by the government to control it.
586 • Jun 26, 02 Upstream gas conference: Concepts and body language 05 This report provides an overview of the Mexican gas conference held in Mexico City June 20-21, 2002. Emphasis is given to the basic concepts presented by Pemex and to the coded messages contained in a number of the presentations.
595 • Jun 17, 02 Jun 24, 02 The politics and socioeconomics of LPG markets in Mexico 16 For most Mexican households, which operate without consumer credit for the purchase of goods and services, fuel used for heating and cooking is liquid petroleum gas (LPG). This product is sold on a cash-and-carry basis by street vendors who travel through neighborhoods shouting “gas!” The Government’s idea, which was launched formally in 1995, is to switch large parts of the residential market to natural gas. How realistic is this objective?
585 • Jun 15, 02 Draft MSC model of June 13, 2002: Finessing objections 04 On June 12, 2002, the Fox administration sent to the Congress its generic contract in draft form. The next day Pemex Exploration & Production (PEP) posted this draft on its web site. This report briefly examines the way that the draft document handles several of the items and issues of controversy.
592 • Jun 15, 02 Government’s outlook for LPG market in Mexico, 2001-2010 104 At the end of 2001 Mexican authorities published its second LPG statistical overview. This report, which draws from our longer LPG market study, reviews market performance during 1993-2000 and provides highlights of the forecast for the period 2001-2010. The view that LPG demand will be flat is questioned.
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061002 • Jun 10, 02 México: Provedor, No Socio Energético de EU 23 A rambling interview with George Baker by staff reporter Luis Carriles. The main topic discussed is the impossibility of a North American Energy Market. The changing attitudes of President Bush and Fox are also mentioned in relation to Iraq and Venezuela. The article features two memorable, staff photos, one of Baker being attended by his regular barber in Mexico City. MILENIO SEMINAL, June 10, 2002.
591 • Jun 06, 02 MSCs: new questions and concerns 06 In late May and early June 2002 new questions arose about the proposed Multiple Service Contracts for dry gas production in the Burgos Basin. Some of these concern the legality of the Multiple Service Contract (MSC) framework, others with the commercial attractiveness of that framework considered in the light of the disappointments and write-offs associated with comparable programs in Venezuela. This report itemizes concerns among prospective contractors abroad and legislators in Mexico.
570 • May 22, 02 PRI’s proposal for the electric sector 12 In March 2002 the PRI submitted to the Congress its initiative of reforms for the electric sector. The proposal, which is based on seven principles, aims at reinforcing the status quo of state ownership and operation of the electric system to provide the public service of electricity. A summary and critique of the proposal principles is presented.
583 • May 22, 02 Two views on electric sector reform 12 This report provides an overview of the striking differences in perspective between traditionalists and reformers in relation to the challenges ahead in Mexico’s electric sector. Only to the extent that the reformist perspective (now in the minority) gains influence in the Mexican public and Congress will there be greater private investment in electric power generation and distribution.
582 • May 14, 02 May 16, 02 Outlook for LNG and MSC: Aftermath of Supreme Court Ruling 07 This report reviews the principal arguments of the Mexican Supreme Court related to its ruling of April 25, 2002 in relation to electric power. Two questions are asked about the future: How do these arguments affect other energy policy innovations, such as LNG and Multiple Service Contracts? What is needed for a sustainable division of powers to exist in Mexico?
581 • May 08, 02 Judges Reject Fox Energy Reform 04 According to critics, President Fox sought private investment in the electric sector by means of changing the law through modifications to regulations. On April 25, 2002, the Supreme Court invalidated Fox’s decree of May 22, 2001. This report analyzes the logic, reactions and implications of the Court’s ruling.
580 • Apr 12, 02 Drivers of natural gas demand in Mexico, 2001-2010 96 This report analyzes three drivers of natural gas demand in Mexico: global economy, the internal market and a mix of both effects. This report presents scenarios of natural gas demand, by economic driver, for the period 2001-2010.
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579 • Apr 10, 02 May 19, 02 The Mexican Women’s Initiative 26 Guadalupe Loaeza, a well known Mexican novelist whose main characters are upper-class women, spoke at the annual meeting of a nonprofit association of Hispanic women in Houston. The occasion prompted a discussion of the guarded, indirect speech characteristics of Mexican society and its relation to freedom of expression in the Mexican press.
578 • Apr 06, 02 Apr 8, 02 The Dan Yergin Show 25 A major event in public television is the 3-part series, "Commanding Heights," produced by prize-winning author and oil market consultant Daniel Yergin, the first segment of which was aired on April 3, 2002. Flashbacks of major events in the twentieth century trace the rise of the globalized economy. The treatment of the Mexican debt crisis of 1995 is controversial.
569 • Mar 29, 02 Apr 4, 02 Chambers of industry, commerce and influence in Mexico’s business culture 27 This report profiles the principal industrial and commercial associations in Mexico (including Pemex’s oil union), and assesses their significance for the energy sector. The history, leaders and web sites of the main chambers of commerce are provided in a separate table.
571 • Mar 27, 02 LNG wars in Baja California 15 This report reviews what is, as of late March 2002, the most contested business opportunity in Mexico’s energy sector: building an LNG terminal in Baja California to supply the California market with power and gas.
572 • Mar 23, 02 May 19, 02 Carlos Salinas in Houston; seeks political rehabilitation 03 After seven years, Carlos Salinas de Gortari, returns armed with a 1,400 page memoir in English. He was in Houston on March 15, 2002 in an effort to seek political rehabilitation. He spoke at two events: a breakfast with members of the Mexican Business Council and a presentation at the Baker Institute of Rice University.
574 • Mar 02, 02 The future of Multiple Service Contracts in Mexico: 3 readings 04 International observers cite multiple reasons why Pemex's proposal for a contractual framework to attract operating companies to develop natural gas basins (discussed in Oil & Gas Journal, Feb. 11, 2002) may never get off the ground. This report identifies three of these reasons.
568 • Feb 28, 02 Sturm und Drang in Mexico’s natural gas markets 26 This report questions the need for new natural gas supplies in Mexico as the U.S. and Mexican economies continue to show signs of weakness. The report follows up on earlier analysis (MEI 529) that predicted lower gas demand in Mexico.
567 • Feb 27, 02 Who’s Who? in the Mexican Congress in energy policy 63 This report provides a brief discussion of the issues and agendas in energy legislation, and includes a profile of senators, federal deputies and advisors who are involved in reviewing legislative and contractual proposals for the energy sector.
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566 • Feb 27, 02 Sep 10, 09 Introduction to the Mexican Congress 28 Business development managers in the power and oil and gas industries are waiting for the outcome of congressional debates on new proposals in the energy sector in Mexico. This report provides an overview of the enigmatic Mexican parliamentary system, with observations about the political and institutional dynamics affecting energy policy and proposals.
565 • Jan 25, 02 Enron and Pemex: similarities and differences 07 This report discusses points of comparison and difference between Enron and Pemex in matters of environmental liability, financial reporting and political connections.
564 • Jan 11, 02 Review of Pemex operating statistics, November 2001 83 This report reviews basic indicators in Mexican petroleum industry during the period November 2000 to November 2001, including data on hydrocarbon production, crude oil exports, natural gas exports and imports and domestic sales for most products (2 pages, 5 tables, 3 charts).
563 • Jan 09, 02 Jan 2, 03 Year-end wrap-up for 2001 24 A review of the high points in energy policy and markets in 2001, including a month-by-month analysis of events. A list of MEI reports, by quarter, is provided for reference.
562 • Jan 04, 02 Mexican media events: Akemashite Omedetou Gozaimasu 04 A public relations fire broke out on January 2, 2002, the day after New Year’s Day when most senior government officials and Pemex executives had not yet returned from holiday. The “fire” concerned a story published in Tokyo that JNOC, a Japanese state-owned oil company, had received exclusive production rights in the Chicontepec Basin. Two independent readings (lecturas) emerge as to its origin and meaning.
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561 • Dec 31, 01 UNAM Seminar on Natural Gas 13 On Dec. 3, 2001 the Energy Studies Program of the National University in Mexico City (UNAM) organized a 3/4 day conference on upstream, midstream and downstream issues on natural gas. This report provide highlights of the presentations.
560 • Dec 30, 01 Social engineering of business development meetings in Mexico 23 Sales calls in Mexico’s energy sector are not only about the features and benefits of a proposed technology, project or service; they also have an intelligence-gathering function. The report provides a checklist of protocol and intelligence issues for meetings with formal presentations.
544 • Dec 29, 01 Jun 6, 02 LNG progress and challenges 17 This report reviews developments in the regulatory development cycle of the last five months of 2001 (and first five months of 2002) that affect LNG operations in Mexico. The report also examines issues that surpass the regulatory authority of the CRE and that could negatively affect the success of an LNG project.
559 • Dec 29, 01 Basic Transfer Pricing for Energy Companies in Mexico 113 An introduction to the theory and practice of transfer pricing, with an emphasis on energy firms. This 12-page report provides an overview of the regulatory framework governing transfer pricing rules in Mexico and an appendix that describes the associated paperwork and reporting requirements of Mexican tax authorities.
557 • Dec 26, 01 Mar 30, 02 Off-balance-sheet investments (PIDIREGAS) in energy sector 44 Pidiregas is an off-balance sheet financial framework developed by the Mexican government to attract private capital with minimum changes in the law and the Constitution. This report provides an overview of this program. The main body of the report is in Spanish with an introduction and summary in English.
558 • Dec 24, 01 Feb 7, 02 Competition in Mexico’s motor oil market? 28 Analysis of the legal and economic arguments of Mexlub in relation to the Federal Competition Commission resolution against Pemex’s refinery unit for monopolistic practices in the motor oil and lubricants market. Update of the legal and financial status of Mexlub.
556 • Dec 18, 01 Virtual upstream opening in Mexico 18 This report reviews points of law, politics, history and language related to the breakfast presentation on December 6th of the Multiple Service Contract (MSC) by Pemex and the Energy Ministry. What was presented in bureaucratic language as business as usual (but with a twist of lemon) is the beginning of an upstream opening in Mexico.
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555 • Dec 11, 01 Pemex’s Multiple Service Contracts: Preliminary analysis of policy, legal and 17 This report reviews the highlights of the proposed Multiple Service Contracts (MSC) that are intended to bring oil and gas companies into Mexico in an operational role. The report includes a comparison of the features and context of the new dry gas initiative with those of the legal figure of the Independent Power Producer (IPP).
554 • Nov 20, 01 Mexican Government Energy Program, 2001-06 14 The report reviews the contents of the 150-page document issued in October by the Energy Ministry. The report gives an annotated table of contents and an assessment of its contribution to the debate over energy policy in Mexico.
553 • Nov 16, 01 Pemex corporate strategy as seen in the public record 06 This report consolidates information made public by Pemex about its strategic directions and programs. The logic of the “multiple service contract” is described, and the political obstacles to success are identified.
551 • Nov 09, 01 NIMBY a la mexicana 27 This report notes that local politics in Mexico can stop major projects, such as a golf course in Tepoztlán, for example. Local politics can also affect energy projects, as LNG terminal developers in Baja California have discovered. Several examples of popular opposition to commercial projects are cited.
552 • Nov 08, 01 CBI’s 5th Annual Mexican Energy 2001 05 This report reviews highlights from the industry conference on the outlook for Mexico’s energy sector that took place in Houston November 1-2, 2001.
548 • Nov 04, 01 Benchmarking Rumors on Multiple Service Contracts 07 This report brings together a number of the press leaks and comments given in industry and academic forums in recent months in relation to the new round of "multiple service contracts” that, for the first time, are intended to attract investments by oil and gas operating companies.
549 • Oct 29, 01 Global business intelligence in IOCs and Pemex 06 This report reviews a presentation by an International Oil Company (IOC) to Pemex senior staff on the subject of corporate governance in the areas of global business intelligence and community, government and media relations.
547 • Oct 26, 01 International investors in Mexico’s gas and power markets 113 This report examines economic and market data associated with the permits granted by the Energy Regulatory Commission (CRE) in the areas of gas and power. The analysis focuses on the concentration of market power by international companies, mainly European.
546 • Oct 24, 01 Second Annual ITAM/AMDE Seminar on Energy and Law 05 This report comments on the industry and policy seminar that was held in Mexico City Oct. 11-12, 2001 and cosponsored by the ITAM and the AMDE (www.amde.com.mx).
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545 • Oct 22, 01 Mexican reaction to terrorist attacks of September 11, 2001 05 This report examines the impact on Mexico of the September 11, 2001, terrorist attacks on the United States. The report is based in part on the author’s having spent three of the first five weeks after the attacks in Mexico City.
543 • Oct 19, 01 Will there be a role for oil companies in Mexico, 2001-25? 018 This report is based on the oral presentation given at the Energy & Law conference co-sponsored by the ITAM and the Mexican Academy for Energy Law, which was held in Mexico City at the ITAM campus on October 11-12, 2001.
541 • Oct 03, 01 IMP address: World Oil after New York: Case of Mexico 7 This report reconstructs the main points of the presentation given by George Baker to the Mexican Petroleum Institute on September 19, 2001. The Spanish PowerPoint slides are also available.
092401 • Sep 24, 01 El Mundo de Petróleo después de Nueva York: Caso México 01 On September 20, 2001 (only a few days after international flights had been resumed in the United States after 9/11), George Baker gave a presentation at the Mexican Petroleum Institute (IMP) on the implications of the terrorist attacks for Mexico and Mexican oil. The speaker, who had visited Afghanistan 15 years before, discounted the idea that there would be an economic uplift from a military conflict. There was a 30-min. Q&A. Gaceta IMP, 2nd Series IV (No. 128), p. 7, Sept. 24, 2001 (includes a photo). The talk had been arranged Paulino Cárdenas, head of Pemex GIRP.
540 • Sep 16, 01 Internet and other resources for energy sector data 3 This report introduces the problem of data research in Mexico’s energy sector and notes key web sites, authors and books.
539 • Sep 11, 01 Mar 14, 03 Triangulated upstream messages: Preview of Multiple Service Contracts 05 This report comments on the presentation at the Houston Geological Society on August 28, 2001 by Alfredo Guzmán, a senior Pemex geologist, on the subject of “Exploration and Production in México: Opportunities and Challenges.” The presentation included an overview of Pemex’s proposed Multiple Service Contracts.
538 • Sep 07, 01 Family values in Mexican business culture 03 This report provides anecdotal data about ways in which family values and relationships in Pemex and CFE can enter into and affect business activities and outcomes.
529 • Aug 31, 01 Modeling natural gas demand in an economic slow-down 54 This report examines the combined effect of U.S. and Mexican economic slow-down on Mexican natural gas demand for the period 2001-2009. This conclusions of the report differ from the Government’s official forecast for this period.
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535 • Aug 28, 01 Logic supporting LNG terminal in Altamira 04 This report identifies economic and policy factors that support the concept of an LNG terminal in Altamira.
537 • Aug 27, 01 Field trip to Pemex infrastructure 07 This report reviews highlights of visits to Pemex facilities, including a trip to the Cantarell Project infrastructure on August 17, 2001. The trip included a visit to Akal-C, the FSO ship Ta’kunah and the onshore nitrogen plant.
536 • Aug 27, 01 Intellectual challenges of the Mexico Business Development Manager 04 Through the literary vehicle of a partly-fictionalized dialog with a new-to-country manager, basic ideas about the nature of the information challenge in Mexico are presented. The report identifies several subtle difficulties facing business development managers in Mexico.
534 • Aug 25, 01 Wellhead-to-lightbulb integration? Advances in LNG and beyond 3 This report comments on the regulatory advances and pending issues in several areas of Mexico’s energy sector: LNG, IPPs, midstream, upstream.
533 • Aug 24, 01 Dec 27, 02 Unwritten rules in the Mexican business environment 05 This report provides guidelines for professional and corporate survival in Mexico’s business environment, with special reference to unwritten rules and the language of Mexico’s oil patch.
532 • Aug 14, 01 Mexican economy: How to anticipate growth, decline and energy 15 This report touches on the impact of the U.S. economy on the Mexican economy and its demand for natural gas and power. The report identifies shortcomings in the macroeconomic modeling of the Mexican economy.
531 • Aug 13, 01 LNG terminal in Altamira: Optical illusion? 07 This report questions the logic of building an LNG terminal on the Mexican Gulf Coast. U.S. LNG terminal capacity would seem adequate to supply incremental demands, and LNG marketers will prefer U.S. prices and markets to those in Mexico.
530 • Aug 08, 01 Opportunity costs of a closed natural gas market 04 Comments on the economic and political costs to Mexico of having a closed natural gas transportation market in Northern Mexico.
528 • Jul 31, 01 Reinvention of Mexican politics 04 Provides contrasting views of performance of Fox Administration in relation to the economy and the legislative and judicial branches.
526 • Jul 30, 01 Jan 23, 03 Energy Sector Information Act 09 This report analyzes the lack of market discipline in energy sector reporting, and proposes measures to standardize reporting, units of measure and access to people, seminar presentations and data. The idea of an Energy Sector Information Act for Mexico is explored.
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527 • Jul 29, 01 LNG press bulletin 02 Reflections on the Energy Ministry press bulletin of June 28 about an LNG terminal in Altamira in which Energy Minister Ernesto Martens seemed to contradict Pemex Gas in relation to the procurement process.
524 • Jul 27, 01 Pemex product imports in 2000 35 Review of Pemex gasoline and diesel imports, by region and customs district, in the year 2000.
525 • Jul 21, 01 Jul 21, 02 CRE decree on LNG: Progress to July 2001 03 A report on the progress of CRE in regulating LNG activities in Mexico, including comments on a meeting held at the CRE on July 27, 2001 with some 50 prospective developers.
515 • Jul 18, 01 AMEE Conference, June 13-14, 2001 03 Comments on an energy conference held in Mexico City at the CIDE June 13-14, 2001.
523 • Jul 13, 01 Presidential decree in the Electricity Sector Laws 02 Reactions to Presidential decree issued by President Fox and Ministry of Energy Ernesto Martens regarding the purchase of surplus capacity and energy by the CFE.
521 • Jul 12, 01 LNG tender for Altamira 02 Review of history of Pemex Gas’ interest in promoting an LNG terminal in Altamira.
520 • Jul 07, 01 CFE compliance with environmental regulations 2 Environmental policy and compliance of CFE fuel oil-fired plants. The CFE Tuxpan steam plant has been blocked by 300 fishermen affiliated to a cooperative. The blocking is a protest for the pollution generated by the power plant that directly affects the fishermen’s catch.
519 • Jul 06, 01 Jul 17, 02 Energy Ministry promotion of LNG in Altamira 02 Comments on press announcements related to LNG projects: 1) May 23, 2001, that an agreement had been reach between El Paso Energy and Pemex Gas to build an LNG terminal in Altamira, 2) June 28, 2001 announcing an agreement between El Paso and Shell for the same. A year later, in May 2002, the players had changed.
504 • Jul 05, 01 Pemex statistics through April 2001 1 Pemex operational volumes and prices through April 2001.
518 • Jul 02, 01 Oct 21, 02 Avoiding mistakes about energy policy “openings” 03 An analogy is made about the two types of errors of statistical reasoning in relation to corporate strategy in Mexico’s energy sector. An update of MEI 00-460 of December 12, 2000.
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517 • Jun 29, 01 Corruption in Mexico––old and new faces 03 The old face of corruption is seen in allegatons in relation to Pemex’s Oil Union have circulated for decades; the new face of corruption is seen in the the names of public officials accused of being on the payroll of the drug cartels. Not only have state governors been accused of criminal complicity at the end of the Zedillo administration, the country’s anti-drug czar, Gen. Jesús Gutiérrez Rebollo, was discovered to be in the pay of the cartels. In one incident, the nortorious La Quina accused his successor in the Oil Union of misappropriating billions of pesos.
516 • Jun 28, 01 “Green Economist” Overture: gas market forecasting in Mexico 02 Comments on potential effect of slow-down in U.S. economy on rate of growth of Mexican natural gas demand.
512 • Jun 27, 01 MEI guidelines for organizing Mexico energy seminars & events 01 A set of proposed guidelines for the organization of academic and industry conferences on the Mexican energy sector.
511 • Jun 26, 01 Dec 16, 03 Baker Institute and Mexico 03 Review of the politics of a program held at Rice University on June 22, 2001, attended by Raúl Muñoz Leos, CEO of Pemex, José Antonio Ceballos, SVP Operations, Thomas F. McLarty, Amy Jaffed and others. It was on this occasion that the Pemex CEO said “Pemex has to learn to be more ambitious.”
514 • Jun 25, 01 Raúl Muñoz’s vision of Pemex, Rice University, June 22, 2001 04 PEMEX CEO speaks at the Baker Institute at Rice University, outlining his idea that the traditional concept of service contract should be “stretched” to motivate private investors.
513 • Jun 24, 01 CRE rethinks LNG 02 In May 2000 the CRE’s position was that LNG was an unregulated activity, open without CRE involvement. A year later, the CRE is rethinking its role, and is in the process of developing regulatory and permitting guidelines.
510 • Jun 15, 01 CFE Schedule of Project Tenders for 2001 12 Summary of the projects to be awarded through public tender by the CFE in 2001.
509 • Jun 07, 01 Thermal efficiency of CFE’s fossil fuel plants 312 CFE statistics on fuel consumption, generation and thermal efficiency for 1998.
508 • Jun 06, 01 Obituary of Santos Figueroa 01 Obituary of Santos Figueroa, one of Mexico’s early geophysicists, trained by Shell before the Expropriation in 1938.
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507 • Jun 05, 01 Mexican outreach to Canada in the energy sector 02 Reviews recent interest by Fox Government to engage Canadian oil, gas and power companies.
501 • Jun 04, 01 Newest Pemex Board of Directors 12 Report on new Pemex Board of Directors after May 7, 2001.
505 • May 31, 01 Shell-Pemex Maya II refinery upgrade; Cadereyta mirror image 06 Report on the refinery upgrade at the facility in Deer Park, Texas joint ventured between Shell and Pemex, with comments on the progress and problems of the “twin plant” at Pemex’s Cadereyta Refinery.
506 • May 30, 01 Country and project risk in Mexico 05 Analysis of cultural and political issues that, together, lead to country and project risk in Mexico.
503 • May 17, 01 Border conference on energy & environment 03 A report of a 2 1/2 day conference in Rio Rico organized by the Southwest Center for Environmental Research and Policy.
502 • May 15, 01 Participation in energy conference in Rio Rico, Arizona 9 Trip report of discussions and impressions during 2 1/2 day conference on energy and environmental policy on U.S. Mexico border.
500 • May 08, 01 Gaining the competitive edge in Mexico’s energy sector 04 A review of corporate strategies over the past 20 years for gaining contracts and corporate advantage in Mexico’s energy sector. Identifies a new form of competition: the virtual tender.
499 • May 05, 01 Review of Pemex operating statistics, February 2001 54 This report reviews basic indicators in Mexican petroleum industry during the last 12 months. The attached 5 tables include data on hydrocarbon production, crude oil exports, natural gas exports and imports and domestic sales for the most relevant products.
498 • May 04, 01 PGPB Investment Program for 2001 and Outlook 911 Required investments in PGPB for the 2001-2006 period. Production and demand forecast for the 2001-2010 period.
495 • Apr 30, 01 Outlook for energy cooperation on U.S.-Mexico border 016 Seminar paper for conference on "Trade, Energy, and the Environment: Challenges and Opportunities for the Border Region, Now and in 2020,” Rio Rico, Ariz. April 30-May 2, 2001. The papers were later published as The U.S.-Mexican Border Enviornment (San Diego State University Press, 2003). The essay by George Baker (pp. 247-63) is entitled “Outlook for Energy Coorporation in the U.S.-Mexico Border Region.”
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493 • Apr 27, 01 Trip report, Pemex Commemoration Ceremonies (Cd. del Carmen, March 012 Field report of meetings with Pemex, March 17-19, 2001, in Ciudad del Carmen and Mexico City, including the Pemex Expropriation Ceremony in Cd. del Carmen with President Fox.
497 • Apr 20, 01 Rumor of revocation of Pemex $4 gas contracts in Sonora 02 Reports on rumors of a possible revocation of Pemex’s $4 gas supply contracts in Sonora.
496 • Apr 18, 01 Outlook for natural gas markets in Mexico 03 Review of Pemex statistics and Government forecasts relating to natural gas supply and demand. Examines Pemex’s dominant role in the natural gas market in 1999-2000.
491 • Apr 17, 01 Pemex’s chemical business: recent performance 1 Recent performance analysis of Pemex’s chemical unit.
494 • Apr 17, 01 Frustrated gas market opening under Zedillo 03 Review of the events of Nov. 5, 1995 when President Zedillo’s policy for the liberalization of the natural gas market was unveiled. Comments on Pemex’s negative reaction.
492 • Apr 16, 01 Natural gas market outlook, 2000-2009 58 Survey of Pemex ‘s statistics for natural gas production and sales. Asks about the likelihood that Pemex will meet supply targets of Energy Ministry for 2009.
490 • Apr 15, 01 Overview of Pemex programs 08 Survey of Pemex operations in the upstream and midstream from the perspective of business development. Reviews the EXITEP Pemex industry exposition. Includes Pemex PowerPoint slides.
488 • Mar 30, 01 Profile of Pemex petrochemical output, sales and trade, 1995-2000 14 A survey of aggregate statistics and selected individual products for Pemex’s petrochemical operations, 1995-2000.
486 • Mar 28, 01 Overview of Pemex monthly indicators for 2000 02 A month-by-month survey of Pemex’s production, sales and trade statistics for petroleum products during year 2000.
487 • Mar 26, 01 March 18, 2001 Commemoration of Expropriation Day in Mexico 4 Field report on President Fox’s first appearance at Oil Day in Mexico, at a ceremony held in Cd. del Carmen, Campeche on March 18, 2001.
489 • Mar 22, 01 Pemex drilling philosophy for Burgos Basin 02 Comments on Pemex’s new development program for the Burgos Basin.
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485 • Mar 16, 01 Pemex E&P Investment Program for 2001 24 Analysis of Pemex E&P investment program presented at the Annual meeting of the energy and industrial sector of the Mexican Chamber of the Construction Industry, held in the city of Monterrey on February 17, 2001.
484 • Mar 13, 01 PEMEX as “best oil company in the world” 02 Critique of President Fox’s statement that he wants to make Pemex “the best oil company in the world.” Deconstruction of myths of Pemex’s importance in the Mexican economy.
483 • Mar 12, 01 ITESM seminar “One Day of Energy” (Monterrey, Feb. 28) 03 Comments on the industry-academic seminar held February 28, 2001 in Monterrey sponsored by the Energy Studies program of Monterrey Tech (ITESM). The keynote speaker was Ing. Ernesto Martens, the new energy minister.
481 • Mar 09, 01 LNG outlook for Mexico 03 Comments on recent interest in LNG infrastructure in Mexico in the light of high natural gas prices in Mexico and the gas and power crisis in California.
482 • Mar 09, 01 Oil Union in Mexican politics 01 Comments on the back-room role of the Oil Union in Mexican politics and the possible role it may have in current energy-policy controversies such as the naming of private-sector representatives to Pemex’s Board of Directors.
480 • Mar 07, 01 Fox names outside members to corporate Board of Directors of Pemex 06 On February 13, 2001, President Fox named four prominent Mexican Business leaders to Pemex's Board of Directors––thereby igniting a firestorm ofcontroversy about the wisdom, legality and even constitutionality of the nominations.Two of the four business leaders named were brought to fame during the controversial Salinas Administration (1988-94): Carlos Slim of Telmex and Alfonso Romo of GrupoPulsar. In addition, Lorenzo Zambrano of Cemex and Rogelio Rebolledo of Frito-Lay Latin America.
477 • Feb 15, 01 Feb 6, 03 Pemex Upstream Technology Conference, 2001 16 The report describes the events and themes of Pemex’s second upstream technology conference, held in Mexico City, February 4-7, 2001. For all participants, EXITEP 2001 was a major event both for Pemex and for current and prospective suppliers (as well as critics).
479 • Feb 14, 01 New model for Mexican energy sector? 12 This report reviews conversations held early in the Fox administration in Norway and in Mexico City between Mexican energy officials with Statoil executives and government counterparts from Norwary.
478 • Feb 12, 01 Recentralization of Pemex governance 02 A report of Pemex plans for reorganization, with emphasis on Raúl Muñoz’s proposal for a centralized model of governance.
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476 • Feb 01, 01 Questioning the “Mexico Price” for natural gas 02 On January 13th, Government and Industry settled on a $4 price for natural gas for 3 years, in effect dumping the CRE’s pricing formula.
469 • Jan 28, 01 Past, prospective and future Pemex CEOs 04 A review of the process by which the new head of Pemex was selected and by which others were passed over.
475 • Jan 21, 01 Review of Pemex operating statistics, November 2000 01 Survey of Pemex operating statistics, Nov-Nov 2000.
474 • Jan 19, 01 Pemex press briefing Jan. 12, 2001 14 Comments on content and style of press breakfast by Pemex CEO Raúl Muñoz Leos. Includes copy of Spanish text, with English section titles.
472 • Jan 12, 01 Dec 30, 02 Natural gas pricing crisis in Mexico 06 An appraisal of short- and long-range options to move Mexico’s natural gas sector from a command economy to a market-based economy. The cover letter to Energy Minister Ernesto Martens is dated January 11, 2001, at the peak of the controversy in Mexico regarding natural gas pricing, which became the first policy crisis of the new Fox administration.
471 • Jan 05, 01 Energy policy dilemma: How to price natural gas in Mexico? 012 In December, 2004, a major controversy erupted between the Government and Monterrey industry over natural gas prices. This report reviews the reactions to Pemex’s proposal to finance gas purchases over $4/MMBTU.
473 • Jan 02, 01 NG pricing disputes 03 Discussion of recent demands by Mexican industry over the natural gas pricing policies (Houston netback pricing).
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470 • Dec 30, 00 Year-end wrap-up for 2000 010 This report notes high points in energy policy, markets and staffing in 2000, including three changes of directors general at Pemex.
468 • Dec 29, 00 U.S.-Mexico relations, 1995 and 2001 02 A review of the Clinton “Rescue Package” of 1995, making a comparison with current developments in U.S.-Mexico relations.
458 • Dec 28, 00 Electric power market and CFE infrastructure in Baja California 810 A review of CFE generation infrastructure and trends in Baja California power market.
467 • Dec 27, 00 Crisis in natural gas pricing in Mexico 03 A review of the history and current developments related to the pricing of natural gas in Mexico. The history of the effort to link natural gas prices in Mexico to those of a benchmark in theUnited States is only partially known. One version is that the idea began with American companies,who,during the negotiations in 1991-92 that eventually led to NAFTA, argued that they wanted protection against an uncertain gas pricing policy of Pemex. In 1995, the CRE, headed by Héctor Olea, approached former mentors at Rice and asked for an economicanalysis of natural gas pricing in Mexico.
457 • Dec 21, 00 Competition in Mexican lubricants market 06 Recent developments in the lubricants market in Mexico include a commercial and legal controversy surrounding Mexlub, the holding company of the wholesale Pemex franchise. Bardhal and other reformulators want to see their brands sold in Pemex gasoline stations.
466 • Dec 20, 00 Estimation of Pemex hydrocarbon production, by basin 24 A summary report of Pemex oil and gas production by basin.
465 • Dec 18, 00 Initial reactions to Fox Administration 04 A survey of views on the performance of President Fox and the outlook for his Government, as of the first 10 days in office.
464 • Dec 15, 00 Fox Cabinet - business vs. social agenda? 14 Preliminary discussion of the Fox Cabinet.
463 • Dec 14, 00 CRE call for public comments on gas industry - scope and politics 02 Report of discussions in CRE regarding scope of call for public comments on natural gas industry. Discussions held with CRE commissioners during the period December 7-14 have highlighted the possibilities as well as the limits of the Commission’s call for public comments on the natural gas industry in Mexico. The call for public comments initially was scheduled to expire December 1, but the deadline was extended to January 31 at the request of trade associations and other parties. (About a dozen comments were submitted by the initial deadline, including one by MEI.)
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461 • Dec 12, 00 President Fox’s inauguration 04 A review of the day’s events related to the inauguration of Vicente Fox as president of Mexico. The day began at the Basilica of Guadalupe at 7 a.m. and ended past midnight at the Castile of Chapultepec.
462 • Dec 12, 00 Midstream proposal to CRE to improve efficiency of natural gas industry 09 Document submitted to the CRE on November 30, 2000 in response to a call for public comments on the natural gas industry. Topics concern midstream gas issues of policy and pricing.
460 • Dec 11, 00 Outlook for change in private investment policy 02 There are positive indicators of changes toward market liberalization in both the upstream and downstream. This report analyses the two ways that business analysts may be wrong in Mexico’s energy sector.
459 • Nov 28, 00 Fox’s new energy cabinet (Part 1) 02 Initial impressions of Fox’s energy cabinet: Ernesto Martens and Raúl Muñoz Leos.
455 • Nov 22, 00 Mexico Energy 2000 conference • Oct. 26-27, 2000 02 Highlights of the industry seminar organized by the Center for Business Intelligence that took place Oct. 26-27 in Houston.
454 • Nov 19, 00 Seminar on Mexican economy sponsored by Federal Reserve Bank 03 An overview of the 2-day conference held Nov. 2-3 in El Paso on “Political Economy and Free Markets,” sponsored by the El Paso Branch of the Federal Reserve Bank of Dallas. Comments about pitfalls in macroeconomic modeling of the Mexican economy.
456 • Nov 17, 00 Fox Cabinet appointments 16 MEI database output of names rumored as candidates for the Fox cabinet, organized by policy area.
451 • Oct 25, 00 ITAM/AMDE Seminar on Energy & Law 27 An overview of the two-day program, with special attention to the sections on natural gas markets and regulation. (MEI-453 reports on the upstream panels and discussions of this program.)
453 • Oct 23, 00 Upstream discussions in ITAM/AMDE seminar on Energy & Law 04 A review of the upstream presentations and discussions of panelists and others at the Energy & Law Seminar held in Mexico City Oct. 12-13, 2000.
452 • Oct 20, 00 Policy trial baloons in Fox’s Transition Team for Energy 02 This report analyzes press leaks on October 13, 2000, about policy ideas being floated internally in the Fox Transition Team for Energy.
450 • Oct 18, 00 Petrochemical industry forum in Mexico City, October 16 02 This report provides highlights of the industry forum held in Mexico City on Oct 16, 2000 sponsored by Pemex and the PUE (www.unam.mx/pue). Speakers voiced their opposition to natural gas pricing based on the HSC.
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449 • Oct 05, 00 Estimating unit costs in Pemex’s Strategic Gas Program (PEG) 2 Analysis of cost and cash-flow projections of Pemex Exploration & Production for its Strategic Gas program, 2000-2014.
448 • Oct 04, 00 Position paper by Fausto Alzati re oil policy 07 Translation and review of position paper by Fausto Alzati.
447 • Sep 30, 00 Pemex Strategic Gas Program (Pt. 3). Interview Dr. Pedro Silva 1 Cites interview published in Pemex bulletin Sicori (Sept. 2000) with director of Pemex Strategic Gas Program (PEG), Dr. Pedro Silva.
446 • Sep 28, 00 Morelia seminar on energy policy in Mexico 02 A summary of the panel discussion in Morelia about policy options and strategy in Mexico in the hydrocarbon and power sectors.
445 • Sep 12, 00 Pemex’s Strategic Gas Program (Pt. 2) Overview 68 Reviews basic production and import- substitution goals of 8-year program.
444 • Sep 08, 00 Fausto Alzati heads Fox Transition Team for energy 01 Biographical sketch -- Head of Fox Transition team for energy.
443 • Sep 04, 00 Pemex General Terms and Conditions (Pt. 1): VPM rules 01 Initial critique of the long-awaited GT&C for natural gas transportation.
442 • Aug 29, 00 Monterrey gas markets: Consolidation vs. Competition 03 This report considers the request by Gas Natural México (GNM) to the Federal Competition Commission (CFC) to expand its market presence in Monterrey by acquiring full control of one of its local competitors, Compañía Mexicana de Gas (CMG). GNM recently acquired its seventh natural gas distribution company and is now looking to buy its eighth. Therefore, the decision by the CFC to approve or deny the merger will sharply affect the outlook for competitive markets and infrastructure investments in natural gas markets.
441 • Aug 10, 00 Energy profile of the Industrial sector, 1965-97 53 Survey of long-term industrial demand for energy, by sector.
439 • Aug 09, 00 Second Lectura: Fox was helped by PRI neoliberals 08 Thesis that PRI neoliberals intentionally blocked PRI populists and traditionalists from utilizing strong-arm tactics to guarantee a PRI victory.
440 • Aug 08, 00 Sep 29, 03 Energy demand in the residential sector, 1965-97 33 This is the first of a series of MEI reports on energy consumption by sector; other reports will deal with the industrial and transportation sectors during the period 1965-97. This report deals with the residential sector. Energy consumption by the residential sector in the period 1965-1997 has been concentrated in five products: electricity, kerosene, LPG, natural gas and wood.
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438 • Aug 07, 00 Calculating Pemex’s natural gas transportation & service charges 89 Analysis of structure of Pemex’s gas distribution and transportation prices.
437 • Aug 03, 00 Challenges in energy policy for the incoming Fox Government 01 Discussion of energy policy bottlenecks unresolved by Zedillo Administration. Proposed 4 steps for the Fox administration: 1) To create real competition in natural gas transportation and marketing; 2) To get real information about Mexico's petroleum resource base; 3) To implement the Zedillo electric power restructuring initiative; 4) To sell off Pemex's petrochemical units.
436 • Aug 01, 00 Natural gas pricing crisis (du jour) and future policy options 01 Monterrey industry protests to Government about high natural gas prices. CRE grants a 25% discount on benchmark for customers with hedging contracts.
435 • Aug 01, 00 Jun 11, 03 Year 2000 elections (Part 13): July 2 election observer’s report 026 This report comments on the use of election observers, the results of the elections and provides George Baker’s extensive report (with observations and analysis) as an official election observer in Tijuana on July 2, 2000.
434 • Jul 14, 00 Energy Ministry briefing for Fox Transition Team? 02 Questions ability of Energy Ministry to give adequate explanation of real issues facing new government.
433 • Jul 12, 00 Jun 3, 03 Year 2000 elections: Three interpretations of the Fox victory 03 Part 12 of the series on the year 2000 Mexican elections. Analyses the meaning of President Zedillo’s role on election night, and speculates how his actions worked against the PRI electoral machinery.
432 • Jul 11, 00 Year 2000 elections (Pt. 11): Bulletproofing the July 2 elections 03 Asks if Mexican Government has bulletproofed itself against national and international reaction to a perceived electoral fraud by the PRI. The surprising turn on election night was the TV appearance of President Ernesto Zedillo around 11 p.m.: The next president of Mexico, he said, will be Vicente Fox. The announcement was stunning news for Mexicans who believed that the PRI would never peacefully give up office--even if defeated at the polls (which is the reading that most observers give to the controversial elections of July 6, 1988).
429 • Jun 29, 00 Natural gas distribution franchises, 1996-2000 15 Discussion of the history of the CRE’s awards of gas distribution franchises and database output on the awards. The CRE’s award of the Guadalajara natural gas franchise on June 21 to Tractebel was the last of the of the
Zedillo Administration. Tractebel’s price cap offer (Po) of US$0.25/Gcal narrowly beat that of Gaz de France’s of $0.28/Gcal.
430 • Jun 27, 00 CFE fossil-fuel regional capacity (database output) 527 Database output of CFE fossil fuel power generation capacity, by region, facility and unit.
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431 • Jun 26, 00 Year 2000 elections (Pt. 10). Téllez visit to Rice U., June 26, 2000 03 Report on visit to Houston of Luis Téllez to give briefing at Rice on the election procedures and safeguards.
427 • Jun 16, 00 Year 2000 elections (Part 9): Scenarios 03 3 scenarios for outcome of July 2 elections: PRI wins by a narrow margin, Fox wins by a narrow margin, PRI wins by a narrow margin that is reversed by international pressure on Zedillo government.
428 • Jun 15, 00 Upstream outlook, 2000-2002 01 Reviews the upstream policy agenda for the next government. With the change of government scheduled for Dec. 1, 2000, the eternal questions reappear: (1) Will there be a spontaneous change of heart about upstream policy?, (2) Is there anything to be done in the next 12 months to facilitate the implementation of any actual change of heart regarding the upstream, midstream or downstream? While the answer to the first question is a qualified “no,” the answer to the second is a qualified “yes.”
423 • Jun 14, 00 Pemex’s Strategic Gas Program (PEG). Attached article re Macuspana 69 Article by Fabio Barbosa on Pemex’s strategic gas program, translated by James L. Wilson.
426 • Jun 13, 00 Northern Baja Gas Pipeline Consortium 01 Discussion of announcement by Sempra Energy to build a natural gas pipeline across northern Baja California, thereby carrying out a physical bypass of its own pipelines system in Southern California.
425 • Jun 12, 00 III Congress of Mexican Assoc. of Energy Economists May 25-26 012 Review of 2-day conference at IMP headquarters on energy technology and policy. The three broad themes of the conference were energy technology, energy policy and energy markets. Speakers on policy issues consistently echoed official perspectives; little room on the program was set aside for alternative views of the proposed restructuring of electric power, for example.
424 • Jun 08, 00 Mexican gasoline price trends and issues, 1997-99. Analysis of rack-to-pump 6 Analysis of recent trends in gasoline prices in Mexico, noting movements relative to producer price index.
422 • May 30, 00 Notes for Pemex’s 10 year plan, 2001-2010 021 A Pemex-centric view of markets and Mexican governmental and regulatory agencies.
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421 • May 29, 00 Y2K elections (Part. 8). TV debate May 26 03 Report of the second televised presidential debate in Mexico which took place following an outburst of protest by PAN candidate Vicente Fox about the scheduling of the event. Each candidate was given 3 minutes to speak to a topic, then 4 1-minute opportunities in a freestyle discussion of the topic. The topics were singularly Mexican in tone and flavor: impunity, corruption, social equality, education and the like. There were no substantive topics like energy policy, “narcodemocracia,”, the place of Mexico in the world economy or the state of U.S.-Mexico relations.
418 • May 18, 00 Mar 24, 06 Pemex natural gas pricing, by marketing region 315 This report examines the logic of traditional bundled prices, using original Pemex data of June 1998 for illustration. There are some two dozen pricing regions or sectors, a few of which, like Monterrey, have subsectors (Monterrey and Monclova, in this instance). The report includes database output of bundled prices of natural gas in Pemex’s principal markets, noting differences for each class of service (e.g., firm annual, firm monthly, interruptible).
420 • May 11, 00 Y2K elections (Part. 7). Attack ads against Fox 13 Recently, there have been full-page attack ads in the Mexico City press against Fox. In the 2000 elections Cárdenas is still on the campaign trail, but the tables have turned considerably: It is as if Cárdenas is collaborating with the PRI to discredit Vicente Fox. One of the strategies (as noted in MEI 419) is to try to disassociate Fox from the mainstream of his own political party..
411 • May 10, 00 Jan 2, 03 Evaluation of Mexico’s energy sector and MEI reporting, 1996-1999 36 Review of principal developments in the Mexican energy sector since 1996 noting in parallel the changes that have taken place in energy sector reporting by MEI as one of the sources of data and analysis available to Mexican and international companies and government organizations.
419 • May 09, 00 Vicente Fox & Mexican Oil: Pemex to be privatized under PAN? 04 Discussion of the controversial remarks of Fox in 1996 to the effect that under PAN there would be dramatic changes in Pemex and the oil sector.
417 • May 01, 00 Oil and gas output in 1999, by basin and selected fields 01 Database output of Pemex’s data for some 30 fields for oil and gas production in 1999.
416 • Apr 28, 00 Presidential TV debates in Mexico, April 26, 2000 01 A report and commentary on the first televised debate between the three principal candidates, Vicente Fox, Cuauhtémoc Cárdenas and Francisco Labastida.
414 • Apr 17, 00 Unpublished history of the 1938 oil expropriation in Mexico? 01 Reflections on the unpublished history of U.S. involvement in the Iranian Revolution of 1953 and speculates about a possible parallel history in the Mexican Oil Expropriation of 1938.
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415 • Apr 15, 00 LPG market and infrastructure (1999 data) 36 Analysis of LPG production, market data and infrastructure.
413 • Apr 13, 00 Luis Téllez briefing in Houston (part 2). Political agenda 01 Review and critique of the off-the-record comments of Energy Secretary Téllez at Rice University to a largely industry audience. The report asks about the underlying agenda of the event, which took place less than three months before the July 2000 presidential elections.
412 • Apr 13, 00 Luis Téllez briefing to Houston industry April1 12 01 Initial report of a behind-doors address by Energy Secretary Luis Téllez at Rice University to an industry audience. Topics included Mexico’s negotiations with OPEC regarding oil cuts and prices.
408 • Apr 06, 00 SICORI cartographic services 01 This reports comments on the services provided since 1992 by Pemex’s cartographical unit, SICORI (SIstema CORporativo de Información Cartográfica), that is part of Pemex Corporate offices. The uses and limitations of the pipeline information obtained from SICORI maps are discussed.
410 • Apr 05, 00 Two Pemex CEO resignations: Díaz Serrano & Lajous 02 A comparison of the management performance of 2 Pemex CEOs, Jorge Díaz Serrano and Adrián Lajous
409 • Apr 04, 00 Mexican Academy for Energy Law (meeting of Mar. 30) 01 Report of inaugural meeting of the Mexican Academy for Energy Law (AMDE). A turning point in the evolution of Mexican energy policy took place on March 30 with the initial meeting of the Mexican Academy for Energy Law. The meeting, organized by energy lawyer Nicolás Borda, took place at the elite Club de Industriales in the upscale Polanco neighborhood of Mexico City. About 150 people, mainly from industry, law and government, were in attendance. The press, however, was not invited.
407 • Mar 28, 00 Pemex Gas’s natural gas pipeline system map set for customers 12 Pemex's SICORI is preparing maps with Pemex Gas infrastructure, including pipelines.
406 • Mar 27, 00 Pemex administration under new CEO Rogelio Montemayor 01 Discusses the possible upcoming changes of key personnel in Pemex under the tenure of Rogelio Montemayor. Also reviews the role of the Oil Union in the forthcoming presidential elections.
402 • Mar 24, 00 Mar 26, 03 Problems of financial closing in energy projects in Mexico 02 This report briefly discusses problems associated with the financing of energy projects in Mexico, especially those of the CFE and IPP projects. The potential adverse effect of the April 25, 2002 ruling by the Supreme Court is noted. Conclusions itemize issues that developers must address.
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405 • Mar 23, 00 Liberalization of the Mexican media; George Baker on radio program 01 Interview of George Baker on Radio ACIR in Mexico City about energy issues for the next presidential term. The question of the interview was about the energy agenda for the next president of Mexico. Baker, speaking in Spanish, made four points. Here is the first: 1) The next president will need to inform himself about the realities of the oil, gas, power and petrochemical industries in Mexico, as the information that the Government currently receives from PEMEX and CFE is inadequate to reach independent assessments of policy options.
404 • Mar 23, 00 Year 2000 elections (part 6). Vox populi 03 In the Mexican political context, it is more important to build scenarios of the present than it is to build ones for past or future events. Field interviews in March 2000 illustrate three distinct scenarios of the presidential election process.
403 • Mar 22, 00 Resignation of Adrián Lajous from Pemex (Part 4) 12 Discusses the different views in Mexican energy circles, including Pemex, about the resignation of Adrian Lajous as head of Pemex.
401 • Mar 01, 00 Mexico’s OPEC policy; visit of Sec. Bill Richardson to Mexico 01 Reports on the controversial visit of US Energy Secretary Bill Richardson to Mexico.
400 • Feb 29, 00 Pemex operational statistics, Dececember 1998-1999 14 Reports monthly statistics of Pemex production, sales and trade for 1999.
399 • Feb 24, 00 Inventory of sedimentary formations by hydrocarbon basin 95 This report provides a tabulation of Mexico’s petroleum producing formations, by basin. This report provides tables on Mexico’s petroleum-producing formations. A geological formation is a stretch of rock long enough to be mapped with properties that are associated with a common depositional history and environment. A knowledge of Mexico’s real oil and gas potential therefore will not be provided by Pemex or the Government, as such an estimate would require factoring in the production efficiencies of private sector producers, an intellectual exercise that today is off-limits.
398 • Feb 16, 00 Río Bravo III project (CRE Memorandum) 01 Discussion of the IPP tender for Rio Bravo III project and the consequences of the project being built in the US side.
397 • Feb 04, 00 Río Bravo III project (U.S. side plant option) 01 This report discusses the Mexican Government’s proposal in February 2000 to promote cross-border power infrastructure.
396 • Feb 03, 00 CFE power tenders for 2000. 47 Details of CFE tenders for 2000 including generation and transmission projects.
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395 • Feb 02, 00 Coalbed Methane gas (CBM)
394 • Feb 01, 00 Mexican industry’s electric power strategy 1 Discussion of how the security of energy supplies to Mexican industry is undermined by the monopolistic positions of CFE and Pemex in power and natural gas, respectively.
393 • Jan 28, 00 LPG panic buying in Mexico 1112 Reviews the facts that led to LPG shortages in Mexico in the last weeks of 1999 and Pemex reaction to the crisis.
392 • Jan 19, 00 Criticism of management performance of Adrían Lajous at Pemex. 01 Discussion of Lajous resignation and management of Pemex and its main projects. The resignation of Adrián Lajous as CEO of Pemex on December 14, 1999 deserves analysis, not only in terms of its origins, political messages and implications for the July 6, 2000 presidential elections [MEI 00-391], but also in relation to (a) the management of Pemex and (b) Government strategy vis-à-vis OPEC.
391 • Jan 18, 00 Political messages in the removal of Lajous from Pemex? 010 Discussion of the political messages behind the resignation of Adrian Lajous from Pemex. The attached report attempts to apply a general rule of Mexican politics that changes in key personnel contain political messages to the topic of the resignation of Adrián Lajous from Pemex on December 14, 1999.
01022000 • Jan 02, 00 Hacia una contabilización de los recursos petroleros mexicanos por cuenca 12 This article by George Baker was published in the journal Economía Informa, published by the Economics Department of the National University (UNAM) in the February 2000 issue (No. 284), pp. 51-53. Whereas Pemex published only sanitized data by administrative region, this article, using Pemex reserve data for Jan. 1, 1999, provides a sorting, by geological basin, of Pemex’s 1, 2 and 3P reserves, noting also comulative production, depletion from the original volume and proved reserves recovery ratio.
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388 • Dec 31, 99 End-of-millennium reflections on Mexican outlook 01 End-of-millennium reflections on Mexican outlook. A December 28 New York Times editorial argued that the outlook for economic growth in the next millennium is highest in countries with democratic values and a free-market economy. Individual freedom of choice is the common thread linking political and eco- nomic values. How would Mexico score on an individual freedom index? Considerations on the reasons for such a political situation are included.
390 • Dec 30, 99 MEI reporting in 1999 21 Summary of MEI activities during 1999. In 1999 MEI published 85 field and analyst reports (Table 1). Field reports draw on meetings, discussions––and rumors––, while analyst reports draw on published and internal data). These reports, which since March have been issued in both PDF and print versions, cover some 20 topics: the most frequent topics were Upstream (14), Electric power (11), Energy policy (8) and Pemex monthly statistics (7) (Table 2).
389 • Dec 29, 99 Energy sector publications of interest to Mexico watchers 01 This report discusses four commercially available publications of interest to the Mexico energy community. One of these, EL FINANCIERO INTERNATIONAL, has closed. Other publications mentioned include ENERGY OUTLOOK, LA CARPETA PURPURA and PETROLEO Y ELECTRICIDAD.
387 • Dec 28, 99 1999 energy policy balance: market advocates vs. central planners 01 Summary of energy policy balance during 1999: market advocates vs. central planners.The Mexican energy sector is one that is in transition from a command to a market economy. In 1999 the management of the sector was the scene of a struggle between state planners and market advocates. With few exceptions, the state planners and their political and institutional allies held their ground. One result is that the outlook for business deve- lopment favors projects in which private investors operate as contractors to the State-owned energy companies; the outlook for a role for private industry as competitors is problematic.
385 • Dec 20, 99 Pemex natural gas production, by basin and reported field, 1989-98 29 This report provides an analysis of Pemex natural gas production, by basin and reported field, 1989-98. As Pemex does not provide production information by basin, this report is based on our internal matching of fields and basins.
386 • Dec 15, 99 Resignation of Adrían Lajous as CEO of PEMEX 01 Discussion of the possible motives of the resignation of Adrian Lajous as CEO of Pemex. Three scenarios are analyzed.
384 • Dec 10, 99 Houston Access Mexico 99 conference on NAFTA 01 "Mexico Access" symposium, sponsored by the Greater Houston Partnership and the Consulate General of Mexico, among others, was held in Houston December 6-7. The theme of this year’s conference was "The Five Years of Nafta. Past and Future."
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383 • Dec 09, 99 Rice U. panel: Can the effect of competition be imported? 01 Reviews the discussions about natural gas pricing in Mexico during the electricity panel at the NAFTA conference of Dec. 6-7.
381 • Nov 18, 99 Pemex Sept. statistical report 02 Report on Pemex production and trade statistics for crude oil, petroleum products and natural gas for September 1999.
382 • Nov 18, 99 Legal and Institutional Issues Afecting Power Restructuring 11 Discussion of presentations on the power sector given at a panel held in New Orleans on November 5th sponsored by the Mexico Committee of the American Bar Association. The third panelist, from the private sector, focused on legal, regulatory and market obstacles standing in the way of a real market opening in the electric power sector. The paper began with a critique of the pending neoprotectionist legislation regarding Government procurement and public works.
380 • Nov 17, 99 Two meanings of PRI for Mexican voters 01 An analysis of why mexican voters have not tossed out the PRI from government in 70 years.
378 • Nov 14, 99 Outlook for natural gas storage 01 Natural gas storage was opened to private investors in the presidential decree of November 5, 1995; but, to date, it has been an investment opportunity without investors. On July 26, 1996, an explosion at Pemex’s major gas processing facility at Cactus took some 1.0 Bcfd of burner tip gas out of the market for more than a week (MEI 96-127). The offshore, associated gas was flared. Pemex on that day certainly wished that it had invested in gas and LPG storage or had encouraged others to do so.
376 • Nov 13, 99 Topic: Year 2000 Elections (Part 5): Outcome of PRI primary elections 01 Discussion of the outcome of the PRI presidential primary elections and the outlook for energy policy in the case of a PRI victory.
379 • Nov 13, 99 Gas "self-supply" associations as LDC competitors 01 Analysis of the regulatory concept of self-supply organizations in natural gas and their impact on competition. The Mexican concept of “auto-abastecimiento” (self-supply) is a peculiar feature of Mexican energy regulations, one probably created at the instance of industrialists from Monterrey, where the largest self-supply associations in gas and power are found. The feature permits companies to band together to either petition Pemex, in the case of gas, for service, where, otherwise, any one company’s load might be too small to be seen in Pemex’s searchlight.
377 • Nov 12, 99 CRE vs. Pemex in future gas sales 01 Report on the CRE search for regulatory models of natural gas markets to have open access on PGPB pipeline system. CRE commissioners are pondering a regulatory and legal dilemma: They have been warned by outside academic consultants that unless Open Access takes place on Pemex’s pipeline system the entire market reform in both natural gas and electricity is in jeopardy. They are asking themselves the question, Should we be following the Argentine or the American model of gas deregulation?
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375 • Oct 26, 99 Oil production, by basin, 1989-98 35 Report on oil production statistics by geological basin for the period 1989-1998. The tables were presented at the 1999 Energy Day sponsored by the British Chamber of Commerce of Mexico.
374 • Oct 22, 99 Transition to a market economy in the energy sector: obstacles 04 British Chamber of Commce address by George Baker: “Transition to a market economy in the energy sector: obstacles”
372 • Oct 18, 99 Government procurement in the energy sector 01 Review of the delays in the Cadereyta refinery upgrading and government procurement in the energy sector.
373 • Oct 10, 99 Zedillo Energy Scorecard 12 Discussion of the progress made by the Zedillo adminitration in opening the natural gas and LPG markets.
100399 • Oct 03, 99 Zedillo Score Card in Energy 12 This a summary of a keynote address at the British American Chamber of Commerce in Mexico City on Energy Day, Oct. 5, 1999. The address analyzed indicators of a transition in the energy sector from a command economy to a market economy. A table lists segments of the energy value chain and asks if a market proposal had been submitted and, if so, implemented. Published in the newsletter of the Chamber, pp. 16-17.
371 • Sep 22, 99 Information policy as a constraint on investment in the energy sector 35 This report draws on an internal database that reports Pemex’s published data on reserves for selected fields for the Northern Region by geological basin and sub-basin.
370 • Sep 13, 99 Presidential electoral politics and energy policy 33 This report describes the uncertainty surrounding the selection of the PRI candidate for the presidential elections of 2000, and comments about the competition between Roberto Madrazo and Francisco Labastida. The accomplishments and shortcomings in energy policy of presidents Carlos Salinas and Ernesto Zedillo are itemized.
369 • Sep 04, 99 Pemex July 1999 statistics 02 Report on Pemex’s production and trade statistics for crude oil, petroleum products and natural gas for July 1999.
368 • Sep 03, 99 Pemex Board of Directors 02 Analysis of the organization of Pemex’s Board of Directors and its limited role in energy policy design.
366 • Sep 02, 99 Mexican critique of Pemex (Ramirez de la O) 02 Press article criticizing the oil sector organization in Mexico.
367 • Sep 02, 99 Presidential, business and project cycles 02 Analysis of Mexican presidential cycles and the derived business cycle.
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365 • Aug 21, 99 Outlook for regulated tariffs 1 Forecast of CFE regulated tariffs until 2009 using MEI software tool, KWMex.
364 • Aug 20, 99 Year 2000 election (Part 4). Gary Hart of Mexican politics? 01 Discussion of the race to presidential candidacy by PRI pre-candidates.
363 • Aug 19, 99 Availability of upstream data 01 Discussion of Pemex policy about releasing information and data corresponding to the upstream.
362 • Aug 09, 99 Anti-dumping complaint before US ITC. Resolved. 02 Resolution on the oil anti-dumping complaint before the US ITC.
361 • Aug 07, 99 Pioneers in Mexican geophysics after 1938 02 Profile of Santos Figueroa, a prominent figure of Pemex’s initial exploration efforts.
360 • Aug 06, 99 “Mexico’s Energy Sector: Challenges for 21st Century’” 0 Analysis of a paper presented by Energy Undersecretary Jorge Chavez at the luncheon program sponsored by the Interamerican Chamber of Commerce, held in Houston on August 6, 1999.
359 • Aug 05, 99 Anti-dumping complaint before US ITC. Settlement outlook 01 Discussion of a possible settlemnt in the anti-dumping complaint before the US ITC.
358 • Aug 04, 99 Petrochemical privatization outlook 02 Review of attempts to upgrade and privatize Pemex Petrochemicals (PPQ) assets.
356 • Jul 29, 99 Anti-dumping complaint before US ITC. Likely economic consequences 01 Discussion of the possible economic consequences of the anti-dumping complaint before the US ITC.
357 • Jul 29, 99 MEI inventory of Pemex oil and gas fields: Northern fields 114 This report is a preliminary output from an MEI database of Pemex oil and gas fields. The 164 fields are those of the Burgos Basin and Sabinas Basin, which, in the database, are grouped together under the heading of Northern Border E&P Region. The goal of this database is to capture data on the basic geology, location, type, discovery year and cumulative production of each field..
355 • Jul 24, 99 New LPG regulations 03 On June 28, 1999 the Mexican government published in the Diario Oficial the long awaited revisions to regulations governing the trade, transportation, storage and distribution of LPG. The new regulations replace those of 1993.
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354 • Jul 23, 99 Media crisis over Cantarell Project 01 Report about the rumors and allegations of poor management and corruption in the development of the Cantarell project.
353 • Jul 13, 99 Anti-dumping complaint before US ITC. Alarm sounded 01 Comments on the anti-dumping complaint raised before the US ITC.
352 • Jul 02, 99 Natural gas import duty -- Reverse engines 01 Report on the mexican government decision to postpone the lifting of the natural gas import duty in reaction to the anti-dumping suit against Mexico.
347 • Jun 26, 99 Alphabetical listing and classification of Pemex fields 01 Presents MEI’s classification of Mexican oil and gas fields in a form useful to the explorationist.
351 • Jun 24, 99 Mexican “communism” in the electric sector 1 Discussion of address at , by Rosendo Flores, representative of the Mexican Electricians’ Union, speaking at the 87th meeting of the International Labor Organization, held in Geneva in June 1999. The topic of his address as the failure of neoliberal economic policies. An English translation of his remarks is provided.
349 • Jun 22, 99 Pemex CEO talk to AAPG on Mexican oil reserves 0 Analysis of a document presented by Adrian Lajous before a joint meeting in Mexico of the AAPG and AIPM (Asociación de Ingenieros Petroleros de México) in mid-April.
350 • Jun 22, 99 Change in CFE rules for IPPs to allow private power marketing 01 Analysis of the CFE ruling that, for the first time, permits bidders in an IPP tender to build additional capacity for direct power sales to parties other than the CFE.
348 • Jun 21, 99 Management record of Adrián Lajous 01 Review of the acomplishments of Adrián Lajous during his career in Pemex.
346 • Jun 10, 99 FERC Order 636 in Mexico? 01 Report on the CRE’s terms and conditions of the use of PGPB’s national pipeline system.
345 • Jun 06, 99 Year 2000 Presidential Elections (Pt 3): Labastida is next president 01 MEI’s prediction that Francisco Labastida Ochoa will be the PRI candidate to the presidential elections.
344 • Jun 04, 99 Mexican critiques of Zedillo power restructuring initiative 01 Review of the positions and arguments against the power restructuring proposal of president Zedillo.
343 • Jun 03, 99 Pemex market and trade statistics for April 1999 01 Report on Pemex’s production and trade statistics for crude oil, petroleum products and natural gas for April 1998.
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342 • May 26, 99 Mexican Government to lift gas import duty July 1 01 Analysis of the effects of the agreement reached to eliminate the import duty on natural gas by July 1, 1999.
341 • May 25, 99 “Lajous Doctrine” of the Mexican upstream 01 Discussion of a WSJ article about business practices in Pemex and the outlook for privatization.
340 • May 20, 99 Year 2000 Presidential Elections (Part 2): Priminary elections rules 01 Discussion of PRI’s new rules to select its presidential candidate.
339 • May 14, 99 Robert E. Rubin and Mexico 01 Discusses the role of former Secretary of the Treasury, Robert E. Rubin, in the financial rescue package for Mexico at the beginning of the Zedillo administration.
337 • May 13, 99 Neoprotectionist turn in procurement and public works regulations 09 Discussion of modifications to government procurement laws and their impact on international OEMs.
338 • May 11, 99 Pemex production, market and trade statistics, February 1999 0 Report on production and trade statistics for crude oil, petroleum products and natural gas for February 1999.
335 • Apr 26, 99 Trade unionism in Mexico: Ben S. Stepansky & V. Fox 04 Report about trade unionism in Mexico: Ben S. Stepansky and V. Fox.
336 • Apr 22, 99 Pemex’s new 2-volume study of Mexico’s hydrocarbon reserves 1 Report on new publication by Pemex on reserves by 3-P system.
334 • Apr 14, 99 Gasoline “markets” in Mexico 4 Review of recent disputes and controversies over gasoline pricing in Mexico.
333 • Apr 10, 99 LPG markets in Mexico 4 Outlook for deregulation in Mexico’s LPG markets.
332 • Apr 04, 99 Delay in Congress regarding Zedillo Power Restructuring Initiative 01 Discussion of the opposition to president Zedillo’s power sector restructuring proposal. The opposition parties had agreed not to put up for a vote the Government’s proposal of February 3 to privatize the state-owned power industry.
331 • Apr 03, 99 Pemex and CFE investment programs 01 Conference proceedings of the 5th annual symposium on energy and construction. A new publication includes the text as well as the view graphs and the clarity of the photocopy is better than the earlier texts. The presentations given in Villahermosa January 15-16 cover the investment programs of the government energy agencies for the next three years.
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330 • Apr 02, 99 Natural gas price behavior 2 Discussion of the behavior of natural gas prices in Mexico and analysis of key drivers.
329 • Mar 31, 99 New Pemex oil and gas reserve estimates 7 Report on the recently issued volumes on Pemex’s reserves.
328 • Mar 30, 99 Power savings outlook analysis by Rafael Friedmann 0 Document by Refael Friedman on the outlook for power savings derived from demand-side management policies.
327 • Mar 14, 99 Downward values for Pemex’s oil reserves 01 This report discusses the first downward revisions to Pemex’s oil and gas reserves during the time of Adrián Lajous as Director General.
326 • Mar 04, 99 PEMEX procurement pitfalls 01 Discussion of Pemex procurement practices.
325 • Mar 02, 99 Crude Oil reserve assessments 01 Comments on the philosophy and practice of resource management of hydrocarbons in Mexico.
324 • Mar 01, 99 Lajous comments on private investment outlook 01 Analysis of Lajous views about private investment in the upstream.
323 • Feb 28, 99 AMGN presentation Natural Gas Market Hou 1/25 0 Report on the presentation by the president of the Mexican Natural Gas Association (AMGN) on January 25, 1999 in Hosuton.
322 • Feb 16, 99 PEMEX Petrochemical investments program 1999-2001 0 Report on the presentation by Pemex Petrochemical to the Construction Industry on January 15, 1999.
321 • Feb 15, 99 PEMEX Refining investments program 1999-2001 0 Review of the presentation by Pemex Refining (PR) to the Construction Industry on January 16, 1999.
320 • Feb 13, 99 New energy forecast to 2007 by sector by region 52
Analysis of the Energy Ministry forecast of natural gas consumption to 2007.
318 • Feb 08, 99 Restructuring the electric power sector: soft issues 12 This report discusses the politics of President Zedillo’s initiative of February 1999 to restructure Mexico’s state-managed power sector.
319 • Feb 08, 99 Pemex production, market and trade statistics, December 1998 0 Report on production and trade statistics for petroleum products and natural gas for December 1998.
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317 • Feb 06, 99 LPG production and market outlook 5 In its slide presentation on January 15, 1999 in Villahermosa (MEI 99-316), Pemex Gas (PGPB) provided a forecast of LPG balance for the period 1998-2001. This report provides the highlights of the presentation.
316 • Feb 05, 99 PEMEX Gas investment program 01 Reports Pemex Gas presentation at the annual Energy and Industry congress held January 15-16, 1999 in Villahermosa, Tabasco.
314 • Feb 02, 99 Alfredo Elias Ayub - new head of CFE 02 The sudden replacement of the CFE’s head, Dr. Rogelio Gasca Neri, by Lic. Alfredo Elías allows for two broad interpretations (or “lecturas” as political tea-leaf reading is called in Mexico). Policy conflict. The easiest interpretation is that there was a policy conflict between Gasca Neri and the Energy Ministry led by Luis Téllez over the management of the electric power sector. What is still surprising is that, at least outwardly, the historically weak ministry should have prevailed over the CFE in a matter of policy.
313 • Feb 01, 99 CFE investment program 1999-2007 01 Highlights of the CFE’s investment program presented at the annual congress organized by the Mexican Construction Industry Chamber of Commerce.
315• Feb 01, 99 PEMEX E&P investment program
Reviews the Pemex E&P investment program presented at the annual Energy and Industry congress held January 15-16, 1999 in Villahermosa, Tabasco.
312 • Jan 30, 99 Has the CRE admitted defeat in natural gas marketing? 01 Discussion of the CRE’s view of regulatory policy in natural gas markets in Mexico, as presented at the Economist Energy Summit in Houston.
310 • Jan 12, 99 Pemex production, market and trade statistics, November 1998 0 Reports production and trade statistics for petroleum products and natural gas prices for November 1998.
311 • Jan 12, 99 Outlook for Open Access in natural gas markets 01 Some thoughts about the present and future of Open Access in Mexico.
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309 • Dec 22, 98 Review of MEI activities in 1998 02 Summary of MEI reporting, programs and activities during 1998.
305 • Dec 19, 98 Falling oil prices and mexican economy 1 Decrease in oil prices, energy policy and the importance of the informal sector in the mexican economy.
306 • Dec 19, 98 Morelos Complex bid 01 Tender for a minority 49% share in Pemex’s Morelos Petrochemical complex.
307 • Dec 19, 98 Privatization outlook to year 2000 and beyond 0 Report on developments and trends affecting investments and operating environment in Mexico’s energy sector.
308• Dec 19, 98 ISO 9002 awarded Pemex refinery tank farms *MC
302 • Nov 29, 98 Mar 6, 03 EXITEP98 Petroleum Technology Trade Show 02 Pemex’s first upstream technology and trade show (EXITEP98) featured an award ceremony for Mexico’s petroleum engineers, a series of plenary sessions and technical papers and a trade show.
304 • Nov 29, 98 PEMEX EOR project: comparative economics 02 Economics of the EOR project for nitrogen injection in Cantarell field.
303 • Nov 25, 98 PEMEX gasoline price increases 02 Gasoline price increases and energy products pricing and taxation policy in Mexico.
301 • Nov 13, 98 Mexican energy policy in 2008: Scenario analysis 1 Scenario analysis presentation on upstream policy at the Pemex’s upstream technology conference.
300 • Nov 05, 98 Petroleum resouces as “tribal lands” 02 Explanations advanced by Mexican sources for the restriction on private investment in the upstream.
299 • Nov 03, 98 Energy demand/capita, 1956-1996 2 Statistics on energy consumption for Mexico and the US.
298 • Oct 28, 98 PEMEX monthly statistics 09/98 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for September 1998.
296 • Oct 26, 98 Aug 15, 02 Mexican-Americans in public service 02 Mexican-Americans in US government and relations with Mexico.
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297 • Oct 26, 98 Laura Itzel Castillo (PRD), Joaquin Hernandez (PRD) 02 Discussion of why congressmen in Mexico are not engaged in proposals, analysis and evaluation of policies.
293 • Oct 21, 98 Characteristics of Mexican crude oils 1 Description of the characteristics of mexican crude oils.
295 • Oct 20, 98 Industry roundtables for energy policy discussions 02 Industry roundtables for energy policy discussions with a focus on upstream policy.
294 • Oct 18, 98 PEMEX’s chemical trade balance 1993-1998 6 Statistics on petrochemical trade balance and outlook.
291 • Oct 05, 98 Year 2000 Presidential Elections (part 1) 02 Prospects for energy policy liberalization for the next presidential term.
292• Oct 05, 98 PEMEX monthly statistics 08/98 *MC
290 • Sep 21, 98 Introduction of product/tech. to Mexican market 1 Comments on qualitative issues governing product or project introduction in Mexico.
289 • Sep 19, 98 MEI meeting with Energy Commission 02 MEI staff meeting with Energy Commission officer during his visit to Houston.
287 • Sep 08, 98 National Energy Balance: Final energy consumption 5 Statistics on Mexico’s final energy consumption by sector from National Energy Balance.
288 • Sep 08, 98 PEMEX monthly statistics 07-98 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for July 1998.
286 • Aug 17, 98 LPG markets 11 A discussion of the outlook for for LPG market deregulation in Mexico.
285 • Aug 10, 98 PEMEX monthly statistics 06/98 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for June 1998.
284 • Aug 07, 98 Apr 24, 03 Regional LPG Markets 32 This report reviews historical data of regional LPG market demand and prices from 1991-97.
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283 • Jul 23, 98 Mar 14, 03 The greenfield option for chemical investors 02 In the early 1990s, with NAFTA appearing on the policy horizon, Pemex undertook a review of its petrochemical assets and businesses. Consulting firms such as ADL, SRI and ChemSystems were contracted to assess Pemex’s infrastructure, technology and market outlook under more competitive conditions.
282 • Jul 22, 98 Feb 24, 11 Mexican power lunches ¿Con quién comiste? 03
This report, originally published in 1998 when the PRI was in its sixth decade of power, discusses the unwritten rules of power-positioning in the context of business lunches in Mexico. Mexicans have techniques for finding out how close someone is to centers of power in national political life. The process is called “Social Arm-Wrestling,” and the result will be that each contender will know who is the closest to Power.
281 • Jul 08, 98 Risk Contracts in Mexico? 02 This report inquires into the state of the discussion about risk contracts for resource development in Mexico. In relation to risk contracts for oil & gas development projects in Mexico, two questions are often asked by international observers: (1) Why is this policy option not seriously considered? (2) Why is it almost impossible to hold even a hypothetical conversation in Mexico about this subject with officials in the Government or in Pemex?
280 • Jul 07, 98 “Chinese Vase” approach to information-gathering in Mexico 02 “Chinese Vase” approach to obtain information on energy policy and operating environment in Mexico.
279 • Jul 06, 98 Personal safety measures in Mexico City 0 Precautionary and personal safety recommendations for travelers to Mexico City. The atmosphere of Mexico City today is very much colored by a concern for personal safety. There is probably no one in the middle and upper classes who does not personally know someone who has been mugged or robbed (or worse) in the past three years.
278 • Jul 03, 98 PEMEX monthly statistics 05/98 11 This report provides the highlights the statistics on production and trade of crude oil, petroleum products and natural gas for May 1998.
277 • Jul 02, 98 Press relations of energy companies 01 Management of press relations in Mexico for international energy companies.
276 • Jun 19, 98 Thermal efficiency of CFE plants 21 MEI’s computation of thermal efficiencies for CFE’s plants. MEI is currently developing a CFE Power Plant Database. It includes basic information about each plant, such as location, year put into service, type of technology and capacity. Annual operational data are provided for generation, fuel consumption and thermal efficiency. The database will provide reports on topics such as regional patterns of generation, fuel consumption and thermal efficiency.
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274 • Jun 05, 98 Finance Minister Gurría in Houston 02 Finance Minister Gurria comments on Mexico’s energy policy during his visit to Houston.
273 • Jun 03, 98 Pemex monthly statistics 04/1998 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for April 1998.
272 • Jun 01, 98 Competitive bidding for the Rosarito IPP? 02 Tenders for a power plant and natural gas pipeline in Rosarito.
271 • May 29, 98 US-Mexican relations 1 Issues in US-Mexico relations that may affect business development plans.
270 • May 18, 98 USTR to reject Mexican offer re tariff? 02 Negotiations to eliminate the duty on the imports of natural gas into Mexico. Since 1996, no one has made use of the Open Access option, for the principal reason that the existence of Mexico’s import duty on natural gas made the option of importing gas too expensive, especially in view of the pitch made by Pemex Gas Marketing (PGM) that customers do not have to pay the import duty on gas imported by Pemex.
269 • May 17, 98 Pemex Gas proposed General Terms & Conditions 0 Analysis of the General Terms and Conditions proposed by Pemex Gas.
268 • May 08, 98 Pemex Production and Trade Hightlights for March 1998 11 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for March 1998. Oil Production in March increased for the fourth consecutive month, reaching a new historic record at 3.16 MM b/d. Crude exports at 1.9 MM b/d increased by 300 K b/d from the previous month. The sharp increase in exports is explained mainly by an increase in exports to the US by 288 K b/d, from 1.35 MM b/d in February to 1.64 MM b/d in March 1998, which shows increased competition for the US market.
267 • May 07, 98 Analysis of power market cooperatives 02 Analysis of the development of PEGI, a private power cooperative in Monterrey.
266 • Apr 28, 98 Effects of NG pricing mechanism 02 Discussion of some issues in the natural gas pricing mechanism.
265 • Apr 27, 98 Analysis of NG pricing formula 01 Analysis of mechanism for natural gas pricing in Mexico.
264 • Apr 26, 98 Environmental Activism in Mexico City 02 The Government of the Federal District, led for the first time in more than a century by an elected official, Ing. Cuauhtémoc Cárdenas, is working up a tender for a contractor to convert some 500 city vehicles to natural gas.
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262 • Apr 25, 98 New Government Initiative in chemicals 01 New proposal for privatization of Pemex chemical units.
263 • Apr 24, 98 Pemex monthly statistics 02/1998 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for February 1998.
260• Apr 17, 98 Crude oil statistics, 1993-98 Crude oil production statistics for 1993-1998.
261 • Apr 16, 98 Pemex investment budget for 1998-2000 in chemicals 12 This report comments on the investment program for Pemex chemical plants and recent speculation about their privatization. In mid-April, 1998, the Mexican press reported that the Energy Ministry was developing a policy paper that advocated the elimination of the 49% ceiling on private ownership of the once-to-be-privatized chemical units. In view of the political volatility of the subject, it is understandable that no one in the Ministry wanted to take credit for the policy paper––even to the point of refusing to confirm its very existence.
259 • Apr 09, 98 Essay on resource development models. 12 Essay by George Baker about alternative models of hydrocarbon resource development for Mexico. He argues that the future of petroleum policy in Mexico should be shaped by a careful appraisal of alternative models of resource development, namely, the current statist model, a co-development in which both the state and private capital are engaged in industrial activities, and a purely regulatory model in which the state withdraws from industrial activities altogether.
257 • Apr 08, 98 Negotiations to Eliminated Mexico’s Natural Gas Duty 02 Negotiations to eliminate the duty on natural gas imports into Mexico. The Mexican Commerce Department (SECOFI) has made an offer to trade its natural gas import duty on natural gas in exchange for an elimination of the U.S. duty on PTA (purified terephthalic acid), an input into the production of polyester and PET, used for making plastic bottles.
258 • Apr 08, 98 Burgos Basin geology 1 Discussion of Pemex’s reporting practices of reserves and elaboration of basin maps.
256 • Apr 03, 98 Power outage in Monterey, 3/19/98 01 Power outage in Monterrey and the prospects for cogeneration and IPP projects.
255 • Mar 31, 98 PEMEX gas balance, 1995-97 4 Discussion of Pemex natural gas utilization and balance reporting practices.
254• Mar 23, 98 Crude oil production curtailments Agreement between Mexico, Saudi Arabia and Venezuela to cut crude oil production and exports.
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253 • Mar 20, 98 Natural gas outlook 1997-2006 31 Analysis of Energy Ministry’s forecast for natural gas consumption for the 1997-2006 period. According to the SE, domestic consumption of NG is expected to grow by some 160%, from 2.6 Bcfd in 1997 to 6.7 Bcfd in 2006. More than half of that increase is explained by NG consumption in the electric power sector (Fig. 1). In turn, these expectations are supported by the programmed conversion of several CFE plants to NG and new public and private (IPP) capacity powered by gas in order to meet new air quality regulations.
252• Mar 19, 98 Crude oil markets Comments on current conditions in crude oil markets.
251 • Mar 16, 98 Pemex monthly statistics 01/1998 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for January 1998.
250 • Mar 02, 98 Standard conditions of measure:US v MX 3 Some issues on the measurement of energy and standard conditions of energy products in the US and Mexico.
249 • Feb 27, 98 New study of hydrocarbon for Reforma region 0 Preliminary information on the new study of hydrocarbon reserves in Reforma region.
248 • Feb 26, 98 Pemex role in power markets 3 Review of the role of Pemex in the generation of electricity in Mexico.
245 • Jan 31, 98 Presentation in Puebla, Jan. 16-17, 1998 0
Presentation of Pemx Refining investment program.
246 • Jan 31, 98 Presentation in Puebla, Jan. 16-17, 1998 02
Presentation of Pemex Gas investment program.
247 • Jan 30, 98 Pemex Capital Budget Briefing, Puebla, Jan. 16-17, 1998 02 A review of Pemex E&P investment program and projects. Of the total Pemex investment budget, some 70% will be dedicated to E&P projects (an increase over the typical 60%). The investment budget of Pemex exceeds the ability of the Mexican construction, equipment and service companies to meet the requirements of a $7-8 billion dollar investment budget. This concern was not echoed in our conversations with the CFE in January, but the sheer size of the Pemex budget is likely to result in a shortage of Mexican suppliers and contractors for the CFE
243 • Jan 08, 98 Recent changes in top gov’t personnel 02 Description of recent changes in Zedillo’s cabinet.
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244 • Jan 06, 98 Pemex export revenues 02 Effects of lower prices of crude oil on government spending and Pemex’s projects.
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242 • Dec 31, 97 1997 wrap-up and outlook 12 1997 year-end wrap-up and outlook.
240 • Dec 23, 97 Release of “La Quina” and Mexican labor union politics 02 Release of “La Quina” and labor union politics in Mexico.
241 • Dec 23, 97 Pemex Output and Trade Highlights for November: Crude Export Basked Fell 0 Pemex$ statistics on production and trade of crude oil, petroleum products and natural gas for November 1997. Oil production in November stayed flat, at slightly below 3.1 MM b/d. Crude exports rose 155,000 b/d from the previous month, to 1.8 MM b/d. The average price of crude exports during November fell to $16.08/bbl from October’s $17.36/bbl, below the year-to-date average of $16.73.
239 • Dec 20, 97 Outlook for Upstream Business Development: 1998-2002 02 NAFTA, which was then being negotiated, was a complete failure from the perspective of U.S. and Canadian producers who hoped that there might be some negotiated mechanism that would offer them business opportunities as producers. Nevertheless, the Procurement Chapter of NAFTA established mechanisms that gave international equipment vendors and contractors a better future as suppliers to Pemex and the CFE. Producers, then as now, are left out of the picture.
238 • Dec 19, 97 Mexican nontransportation energy prices, 1990-97 2 Relative price behavior of nontransportation energy products in Mexico, 1990-1997.
234 • Dec 18, 97 DOE’s outlook for natural gas to 2015 02 US DOE’s Annual Energy Outlook and Mexican natural gas markets in the medium term.
120897 • Dec 08, 97 Mixed Messages in Mexican Gas Markets 01 This article,published in Oil & Gas Journal, discusses the contradictions in Mexico’s natural gas policies: On the one hand, the government in its Natural Gas Act of 1995 and the CRE Establishment Act of 1995 signaled its intent to foster market conditions in which there would be natural gas transportation lines that competed with those of Pemex; on the other hand, it signed into NAFTA a 10% tariff on natural gas imports, the effect of which is to make any new pipeline to Mexico non-competitive.
12081997 • Dec 08, 97 Mixed Messages in Mexican Gas Markets 11 An article by George Baker and published in Oil & Gas Journal (Dec. 8, 1997). NAFTA was supposed to open Mexican natural gas markets to pipeline developers and marketers; but the government, under pressure from Pemex, included a 10% duty on natural gas imports (to decline 1% annually). Then, in the summer of 1997, when Pemex was supposed to divest itself of its industrial accounts in the Monterrey gas franchise zone, it changed its mind (and the CRE, which is supposed to care about markets) went along.
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237 • Dec 03, 97 CRE bid evaluation process of Cost Proposals; Monterrey bid 02 Analysis of CRE’s bid evaluation process.
236 • Dec 02, 97 Gas sales contracts: lessons from the early 80’s 0 Discussion of the law and diplomacy of the gas purchase contracts between a U.S. buyer consortium and Pemex in the early 1980s.
235 • Nov 28, 97 Pemex monthly stats. 10/1997 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for October 1997.
233 • Nov 22, 97 Draft bibliography of energy sector publications 0 An introduction to the principal publications and data sources on the energy sector in Mexico.
232 • Nov 12, 97 Mexico’s natural gas import duty 0 Status of the negotiations to reduce and eliminate the import duty on natural gas.
231 • Nov 11, 97 Competition between fuel oil and natural gas 02 Analysis of the competition between fuel oil and natural gas.
228 • Oct 30, 97 SE report on investment opportunities in nat gas 0 Energy Ministry report on investment opportunities in the natural gas sector.
229 • Oct 30, 97 SE report on investment opportunities in electric power 0 Energy Ministry report on investment opportunities in the electric power sector.
230 • Oct 29, 97 Pemex Production and Trade Highlights for September 02 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for September, 1997. Oil production surpassed 3.1 MM b/d and established an historic record for the sixth consecutive month. Crude exports at 1,815 M b/d fell short of the year highest level of April by only 1 M b/d. Average prices of crude exports at $16.09/bbl, still below the annual average of $16.74/bbl, decreased slightly compared to their August ‘97 level of $16.27/bbl.
227 • Oct 24, 97 Houston seminar: Mexico Energy Access ‘97 0 Houston seminar “Mexico Energy Access ‘97”.
226 • Oct 23, 97 Luis Téllez is new Energy Minister 02 Dr. Luis Tellez Kuenzler is named Energy Minister.
225 • Oct 17, 97 Pemex monthly stats. 08/1997 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for August 1997.
223 • Sep 23, 97 Rumors of personnel change 02 Rumors of government personnel changes in energy sector related positions.
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224 • Sep 23, 97 Assurances to investors in new guidelines 02 New guidelines for the privatization of Pemex Petrochemical assets.
221 • Sep 22, 97 Maquiladora industry - critique 0 Challenging of conventional wisdom about the economic benefits that Mexico receives from the operations of transnational manufacturing companies in Mexico
222 • Sep 22, 97 CRE gas franchise award in Río Pánuco 0 Two companies challenge the CRE decision of awarding the Rio Panuco LDC to NorAm-led consortium.
220 • Sep 15, 97 CRE award in Tampico/Madero/Altamira 02 The CRE awards the Tampico-Madero-Altamira franchis zone for natural gas LDC to a consortium led by NorAm.
219 • Sep 13, 97 CRE ruling in Monterrey re: Pemex Gas pipelines 01 A critique of the policy decision of the CRE announced on August 25 to permit direct-connects by Monterrey industrial companies to Pemex Gas pipelines.
216 • Aug 29, 97 Pemex monthly stats. 07/1997 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for July1997.
217 • Aug 28, 97 Pemex monthly stats. 07/1997 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for July1997.
218 • Aug 28, 97 SECODAM tender listings on Web site 01
Office of the Comptroller General (SECODAM) role in tenders related to energy projects.
213 • Aug 22, 97 Strategic choices ahead for Pemex Gas 1 Discussion of Pemex Gas strategies for the long run.
214 • Aug 22, 97 Exchange rate subsidy in energy policies 02 Peso overvaluation and subsidy to prices of energy products.
215 • Aug 22, 97 Upstream production contract consultants 02 A discussion of upstream production practices and policies in Mexico.
212 • Aug 12, 97 Analogy with China and resistance to Fair Trade 0
An analogy of Mexico’s reticence to changes in energy policy with China’s resistance to fair trade.
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211 • Aug 06, 97 Monterrey air quality in 1999 1 Discussion of the Cadereyta project, its impact on air quality in Northeastern Mexico and compliance with NOM-085.
209 • Aug 01, 97 TIPRO wish list from 1992 1 Proposal from (TIPRO) of items to be changed in Mexico’s energy sector under NAFTA.
210 • Aug 01, 97 Gov’t strategy vis-a-vis the Congress 0 Review of recent changes in energy related government positions.
208 • Jul 31, 97 Pemex monthly stats. 06/1997 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for June1997.
205 • Jul 25, 97 Democracy & energy policy 01 A discussion of mid-term elections results, democracy and energy policy in Mexico.
206 • Jul 25, 97 Controversial decisions (e.g., Mty pipelines) 02 Review of recent controversial decisions of the CRE regarding natural gas markets.
207 • Jul 25, 97 Burgos Basin development program 02 Review of Pemex E&P program for the development of the Burgos basin.
204 • Jul 24, 97 Material balance vs. pricing 2 Outlook for heavy fuel oil production and displacement by natural gas in Northeastern Mexico.
202 • Jul 23, 97 Price perceptions affecting natural gas infrastructure 2 Price perceptions and import duty affecting the development of competition in natural gas markets in Northeastern Mexico.
203 • Jul 23, 97 Natural gas import duty - recent developments 01 Status of the natural gas import duty reduction and elimination negotiations.
201 • Jul 03, 97 Fuel oil prices 1 Analysis of pricing mechanisms for Pemex heavy fuel oil.
199 • Jun 20, 97 Pemex monthly stats. 04/97 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for April1997.
200• Jun 20, 97 Energy conversion factor card Energy conversion factor card.
197 • Jun 09, 97 Appointment of a new US ambassador 0 Discussion of the appointment of a new US ambassador to Mexico.
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198 • Jun 09, 97 Amoco profile in Mexico 0 A description of Amoco profile in Mexico.
196 • Jun 08, 97 Appointment of a new US ambassador 0 Discussion of the appointment of a new US ambassador to Mexico.
195 • Jun 02, 97 Mexico and the US democratic bias 02 A discussion of Mexican politics, elections, democratic process and the relation to policy and operating environment in the energy sector.
193 • May 30, 97 Comparison of monthly energy prices 2 Energy products pricing policies and statistical analysis.
194 • May 30, 97 Chameleon theory of Mexican politics 02 Exposition of the “Chameleon” theory of Mexican politics.
191 • May 21, 97 Delay in the award of the Cadereyta project 1 Postponement of the award of the Cadereyta project to a general contractor.
192 • May 21, 97 New MEI Co-ordinator 01 New MEI Co-ordinator announcement.
189 • May 20, 97 Clinton’s visit of May 5-7 and the midterm elections of July 6 0 Candidates for Mexico City mayor elections and Clinton’s visit to Mexico.
190 • May 20, 97 Monterrey Center for Environmental Quality Research 0 Monterrey Tech Center for Environmental Quality Research study of the impact of natural gas imports on air quality in Mexico.
188 • May 15, 97 Hermosillo LDC award 0 CRE awards the LDC franchise in Hermosillo and surrounding areas to KN Energy.
187 • May 14, 97 Natural gas import duty - recent developments 0 Status of the negotiations to eliminate the natural gas import duty.
185 • May 01, 97 Futurology of NE Mexico 1 Analysis of the probable growth of the natural gas market and availability for Northeastern Mexico.
186 • May 01, 97 Pemex monthly stats. for 03/1997 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for March 1997.
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05011997 • May 01, 97 Mexico's Gas Import Tariff: Roadblock to Investments and Recovery 23 This article by George Baker sharply criticizes the Mexican government's 6% import duty on natural gas for its effect of doubling the gas transporation cost from Houston to the border. As events would come to show, the import duty efficiently discouraged Monterrey industry from supporting MidCon's proposal for an independent gas pipeline to Monterrey. This article appeared the May, 1997, issue of NATURAL GAS (pp. 16-18), a monthly publication of John Wiley & Sons.
184 • Apr 22, 97 Petrochemical privatization; import duty on natural gas 0 A critique of the approach used to privatize Pemex Petrochemical assets and of the existing import duty on natural gas.
182 • Apr 15, 97 6% duty on natural gas imports 01 Schedule for the reduction and elimination of the duty on natural gas imports.
183 • Apr 15, 97 Burgos Basin and the Rule of 9% 02 Announcement of the winner for drilling and infrastructure contract for the Burgos basin project.
181 • Apr 14, 97 Energy Ministry market forecast for 1996-2005 01 Analysis of Energy Ministry’s 10-year forecast of the natural gas market (Prospectiva del Mercado de Gas Natural 1996-2005).
179 • Apr 07, 97 Northern gas strategy--at what cost to Pemex? 1 E&P program for the Burgos basin and drilling and infrastructure contracts.
180 • Apr 06, 97 Annual operations report for 1996 0 Description of Pemex’s annual operations report and statistical appendix for 1996 (Memoria de Labores 1997).
178 • Apr 01, 97 PRI preliminary candidates and outlook for energy policy 0 PRI preliminary candidates and outlook for energy policy.
176 • Mar 27, 97 List of who’s who in the energy sector 02
Summary of the annual Petroleum Day ceremony held this year at the Cadereyta Refinery near Monterrey.
177 • Mar 27, 97 Assessment of current mix of politics and economics 0 Assessment of the mix of risk and opportunity in the new policy framework for the privatization of Pemex's chemical units.
173 • Mar 17, 97 From where do bad business ideas about Mexico arise 0 A discussion of sources of bad ideas for energy projects in Mexico.
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03171997 • Mar 17, 97 On Colosio and Kennedy: Remembering the Assassination 01 This article is a comparative meditation of how the assassinations of Luis Donaldo Colosio and J. F. Kennedy are perceived, respectively, in Mexico and the United States. The article includes recollections of a visit to the Dallas site where Kennedy was killed. Where Colosio has a monument, Kennedy’s name does not appear on a plaque on a “site of historical interest.” EL FINANCIERO INTERNATIONAL, March 17-23, 1997 p. 5. (The international edition, published in Los Angeles, was later discontinued.)
175 • Mar 14, 97 Cantarell (NE offshore) oil and gas recovery factors 21 New Pemex methodology for hydrocarbon reserves in the Campeche area.
172 • Feb 26, 97 Overview and reactions to the newest framework 0 Review of the proposed new framework for the privatization of Pemex Petrochemical’s assets.
170 • Feb 25, 97 CRE role in markets for gas 0 Natural gas markets in Mexico and the role of the CRE in introducing competition.
171 • Feb 14, 97 IAEE Address of Energy minister in Houston 2/12 0 Summary of an address given by Energy Secretary Jesús Reyes Heroles in Houston on February 12.
169 • Feb 12, 97 Pemex monthly statistics for December 1996 0 Pemex statistics on production and trade of crude oil, petroleum products and natural gas for December 1996.
168 • Feb 10, 97 Effect of geopolitics on Mexico’s upstream policy 02 Mexico’s upstream policy in the light of the Oil Proceeds Facilities Agreement of February 1995.
167 • Feb 02, 97 Year-end wrap up for 1996 2 Wrap-up of energy sector performance for 1996, by area of industrial activity.
166 • Jan 29, 97 Oil proceeds agreement 01 Lessons from the Bailout Agreement between Mexico and the US during the beginning of the Zedillo administration.
01011997 • Jan 01, 97 Taking a Closer Look: Strengths and Limitations of Local Reps 02 This article, written in 1996 by George Baker in collaboration with Mexico City industry consultant Albert Antebi, offers international management cautionary tales about how to avoid the misallocation of resources (and prematurely optimistic expectations) in relation to the outlook for business development in Mexico. Published in a special edition of BU$INESS MEXICO, a monthly publication of the American Chamber of Commerce in Mexico (Vol. VI (12)/Vol. VIII (1), 1997.
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