U.S.- MEXICO CHAMBER OF
COMMERCE
DALLAS, TX SEPTEMBER 23, 2008
INDEX
1.-National Development Plan
2.-CFE
Background
National Electric System
Energy Demand
Investment opportunities
3.-PEMEX
Reforms
Investment opportunities
Gas, LPG pipelines
Cogeneration
4.-Private Industry
5.-Conclusions
SEPTEMBER 2008
Mexico’s National Development Plan establishes the basis of using
natural resources for actual generations without affecting future
generations.
Development shall be from now on clean, preserving environment and
with the reconstruction of ecological systems.
Objective is to achieve a human and social development in harmony with
nature.
Main strategy is to stop and revert water, air and soil contamination.
According to these principles SEMARNAT(Ministery of Environmental)
together with CFE, PEMEX and private companies have been working in
a project of new environmental norms to be applied to current and any
new industrial installations.
PEMEX, CFE and private industry will develop future projects and those
related to existing plants accordingly.
2.
CFE
Background
Two vertical integrated companies comprise the Mexican industry. CFE and
Luz y Fuerza del Centro (LFC) have traditional held control over electricity
production, transmission, distribution and sale to the public, as set forth in
the Constitution.
Over several decades, a State monopoly was the most adequate scheme
for integrating the country’s electricity grid and expanding coverage
throughout the national territory. The available technology and the scale
of projects, as well as the required sources of investment, called for the
centralization of the electricity industry in the public sector as the natural
foundation for the consolidation of infrastructure. Under these conditions,
the electricity industry became a strategic area exclusively run by the
State.
The 1992 amendments to the Ley del Servicio Publico de Energía Eléctrica
(Public Electricity Service Act) provided for limited private domestic and
International participation in the sector. This change came about as a result
of the need to add private efforts to the government’s in order to increase
electricity supply in view of budgetary constrains. As a result of these
reforms, the private sector participates in electricity generation under the
following modalities:

Self-supply. The generation of electricity to meet an industrial facility’s own energy
needs.

Cogeneration. Electricity generated simultaneously with steam or other types of
secondary thermal energy to be used in an industrial process, or the generations of
electricity form the surplus thermal energy of an industrial process.

Independent power producer (IPP). Generation of electricity to be sold to CFE under
a power purchase agreement (PPA).

Small production. Generation of a capacity under 30 MW to be sold to CFE in its
entirety.

Export of electricity produced under the cogeneration, IPP or small
production modalities.

Import of electricity exclusively for self-supply purposes.

Emergency electricity generation during public service breakdowns.
The State still holds the exclusive right to generate electricity for
public service; the private sector is not allowed to sell energy to end
users.
NATIONAL ELECTRIC SYSTEM
TOTAL INSTALLED CAPACITY
Total Installed Capacity Operated by CFE
IPP
22.95%
Eolic
0.171%
Nuclear
Hydroelectric
2.73%
22.14%
Coal
5.21%
Termoelectric
44.87%
Geothermal
1.93%
Total Installed Capacity Operated by CFE
Termoelectric
22,404.69 MW
Hydroelectric
11,054.90 MW
Coal
2,600.00 MW
Geothermal
964.50 MW
Eolic
85.48 MW
Nuclear
1,364.88 MW
IPP
11,456,90 MW
Total
49,931,34 MW
ENERGY DEMAND-INVESTMENT OPPORTUNITIES
Expected growth in energy demand during period 2007-2016 will be 4.8%
yearly. Nevertheless in the period 2006 – 2007 was lower.
From December 2006 to December 2017 total installed capacity will grow
form 48,759 MW to 69,004 MW. (These figures doesn’t include auto supply
and Cogeneration) (Privates)
CFE will install in that period 63 new generation plants with a total
capacity of 24,775 MW Investment will de 20,000 MMUSD.
CFE will invest an average of 5,000 MMUSD per year during the
next ten years in electrical infrastructure.
CFE will try to have no more of 40% of electrical capacity based in
natural gas. Following years will use conventional technologies, like
combined cycles using natural gas and coal plants. Some eolic
plants will be added.
CFE (National Power Company) has an installed generation capacity in
excess.
The generation installed capacity has growth above the power demand.
Nevertheless currently five new power plants and a LNG Terminal are under
construction:
La Yesca (Hydroelectric)- 750 MW
Pacifico II (coal)- 651 MW
Planta Norte (Durango)- 450 MW
Baja California-272 MW
San Lorenzo (conversion to CC)-116 MW
The above due to following reasons:
Some power plants are coming to the end of useful life
Increase of use of natural gas in those plants using fuel oil.
CFE will also invest in emission control projects in Mazatlan, Guaymas, Tula
and Tuxpan.
This after the Punta Prieta emission control project was a success.
3. PEMEX
New Generation of Reforms.
The natural gas reform initiated during 1995 was aimed mainly at
establishing adequate conditions to promote private investment in storage,
transportation and distribution activities. For that purpose, restrictions to
foreign trade were eliminated, and marketing activities were opened to
private participation not subject to regulation due to its competitive potential.
Although the reform was successful in this regard since the private sector is
now the prime participant in Mexico’s infrastructure development significant
drawbacks still prevail due to Pemex’s dominating position in the market.

Marketing. Pemex currently exerts a legal monopoly over natural gas
production and a natural monopoly with respect to the National Pipeline
System (SNG).

Transportation. Although the development of natural gas transportation
infrastructure is open to private participation, Pemex has continued to build
transportation pipelines, primarily related to electricity projects.
Investment Opportunities
PEMEX will bid following projects
during 2008-2009
Natural Gas Pipelines.
Next projects:




Punta Piedra-Poza Rica-Santa Ana
Tamazunchale-San Luis de La Paz.
Manzanillo-Guadalajara.
San Isidro-Chihuahua.
LPG Pipelines.
Next Projects:




Juárez-Chihuahua.
Chihuahua- La Laguna.
Abasolo.
Poza Rica-Atotonilco.
Besides the project in progress Reconfiguration of Minatitlán
Refinery, Pemex has already published bid for the project “Clean
Gasolines” for Tula and Salamanca refineries.
Also a new refinery is planed for Tuxpan or a site in the Pacific coast
along with the reconfiguration of Salina Cruz refinery probably for
2009.
Cogeneration.
Congress approved cogeneration reform in January 2006 allowing
PEMEX to develop cogeneration projects for self supply.
First project announced by PEMEX was Nuevo Pemex to be build in
the complex with the same name in state of Tabasco located
southeast México. Bid is due January 2009.
Potential of cogeneration projects in PEMEX is around 3,000 MW.
COGENERATION PROJECTS
PEMEX
PLANT
CAPACITY
Nuevo Pemex
300 MW
Salamanca
350 MW
Salina Cruz
350 MW
Tula
350 MW
Cangrejera
400 MW
Morelos
350 MW
Madero
350 MW
Cadereyta
350 MW
Atasta
100 MW
Prívate Industry
Opportunities are found mainly in mining sector, bererages, food,
steel manufacturing.
CONCLUSION
Mexican market offers a wide spectrum of investment or
project execution opportunities in fields like power
generation, oil exploration, oil refining, gas pipelines etc.
Decline of oil production from Cantarell opens an
opportunity to enter to deep waters exploration. We
expect the energy reform that has heen studied in the
Congress will be approved during 2009.
International companies working in power generation.
like Iberdrola, Abener, Isolux, Union Fenosa,Techin, etc. have been
working in the country since several years.
Other companies like Petrobras, Sinopec, have joined with mexican
companies (Diavaz, parent company) to develop projects in
PEP(Pemex Exploration Production).
Current situation in Mexico is similar to that in Brasil some years ago