Cycles
&
Trends 2017
Mexico Energy reform in motion
How to do business in Mexico
Where, When, with Whom,
Norwegian Energy Partners
Business Mission to Mexico, 8 – 11 May, 2017
Background:
The investment in the oil and gas offshore market in Mexico is expected to grow on the coming years.
On December 20, 2013, President of Mexico has signed the Constitutional Amendment on the Energy
Reform, avoiding monopoles in Oil & Gas Industry. This has been a depth and historical change since
1938. To get a Constitutional change or amendment is needed to have 66 % + 1 of the votes in the
Congress (Two Chambers: Senate and Representatives), and 50 % + 1 of the 32 local Congresses.
On August 11, 2014, it has been signed the Decree to modify and adapt 21 Secondary laws, in order to
have coincidence with the new text of the Constitution. Those secondary laws, are including the new roll
of National Oil Company; on the Safety Authority, the National Hydrocarbon Commission, similar to the
Directorate in Norway, a Petroleum Fund, on Hydrocarbons Taxes, Budget, among other important topics.
Once Constitution Energy Reform was approved, Mexican government has implemented five rounds to
allocate blocks for exploration and production; their results represent new business opportunities for
Norwegian industry. Round Zero: Pemex only, Rounds: One: exploration shallow water; Two; production,
shallow waters; Three; On-shore – mature fields; Four: Deep waters.
Farm-Outs: A first one for Pemex on December 2016.
On going process: to migrate existing multiple services contracts to direct assignment to private
companies, similar to exploitation licenses.
Norwegian Energy Partners
Business Mission to Mexico, 8 – 11 May, 2017
Round Zero: On 2014, SENER (Mexican Energy Ministry) has awarded Pemex 489 assignments, 108 for
exploration and 381 for extraction, that allows to the company continue carry out exploration and
extraction activities in the short, medium and long term. It has been assigned to Pemex a total area of
90,000 square kilometers. PEMEX, has obtained 100% of their 2P bids, which represent 83% of the
country’s overall 2P reserves, and they were also granted 67% of their bids in terms of prospective
resources, which represent 21% of Mexico’s total prospective resources. This would be an estimate of
over 20 billion BOE.
Round 1.1: On exploration shallow waters. Two contracts for blocks 2 and 7, were awarded in a shared
production model to companies: Sierra Oil & Gas, S. de R.L. de C.V. in Consortium with Talos Energy,
LLC and Premier Oil, PLC
Round 1.2: On Extraction shallow waters. Three contracts for blocks were awarded in a shared
production model to companies: Eni International B.V. Pan American Energy LLC, in consortium with E&P
Hidrocarburos y Servicios S.A. de C.V., Fieldwood Energy LLC, in consortium with Petrobal.
Norwegian Energy Partners
Business Mission to Mexico, 8 – 11 May, 2017
Pemex is working on new alliances and Farm Outs – the first of which occurred last December.
BHP Billiton won the rights to tie-up with Pemex on its light oil Trion field, less than 50 miles from USMexico maritime border, under license model. Exploratory studies and wells will provide more certainty of
the Trion field’s 3P reserves, currently estimated by Pemex at 485 million barrels of oil equivalent, and
likely to be increased.
Round 1.3: December 2015. On-shore and mature fields. Most of companies are local and it is their first
time working as operators.
Round 1.4 In December 2016 blocks 1 and 3 in the Saline Basin were awarded to a consortium
consisting of Statoil (33.4%), BP (33.3%) and Total (33.3%). Statoil is the operator of the consortium and
will in dialogue with partners and Mexican authorities decide on the way forward.
New regulators: National Hydrocarbons Commission, (CNH) has been organizing bids for hydrocarbons
blocks; ASEA, (Safety Authority); CRE, regulating hydrocarbons, fuels and electricity.
Business Mission Preliminary Program
Date
Sunday 7th
Monday 8th
Items:
Lobby Hyatt Hotel, Polanco. Campos Eliseos Street
AMEXHI & SENER meeting.
Objective: To have a global panorama on progress for current
and coming O&G projects, from private as government views
Statoil Mexico
PETROBAL
Reception and networking
Tuesday 8th
Wednesday 10th
Thursday 11th
Flight down to Ciudad del Carmen
Meeting with Pemex Offshore shallow waters
Meeting with Norwegian companies, already established in
Ciudad del Carmen
Flight down Mexico City
Meetings with Grupo CARSO
Pemex, E&P
Venue and remarks
Welcome to Mexico
AMEXHI, which is a Mexican Organization (Industrial
Chamber) having 50 Operators –non services companies-,
including Statoil, Pemex, ENI, Shell, BP, Exxon, Lifting
among others
Statoil Mexico’s Head Quarters
Operator, have been awarded with one offshore block
Embassy of Norway in Mexico, will invite companies
included into our Agenda, like international and local
operators, PEMEX, service companies, EPC, and regulators,
among others.
Pemex offices
Venue: Fiesta Inn
Companies: BW Offshore, DeepOcean, ApiTech, Seadrill
CARSO is having shipyards, operator company, EPC
Meeting with Director of Strategic Alliances
Meetings with International Operators
I.e ENI, Chevron, Exxon (TBD)
Mexican Petroleum Institute
Technip
ICA
Meetings with Engineering and EPC companies, having
experience as contractors for Pemex, and now looking to
provide to new operators. This would a vehicle to get
contracts from operators, via Engineering companies.
Hyatt Hotel
Closing remarks and further steps
Energy Reform generates a new paradigm
Transition from a monopoly model to a competency model
Monopoly energy market
Hydrocarbons Sector
Before
2014
After
Open energy market
Hydrocarbons Sector
+
44 private oil companies
Electricity Sector
Electricity Sector
+ 35 private electricity companies
Oil products and gas pipelines
Oil products & gas pipelines
+
112 companies with 179 contracts and committed investments for
more than 70,000 million dollars (MMusd) participate in Mexico
Energy Reform attracts large amounts of
foreign and local investment
In last 3 years of energy reform implementation, great advances have been made on this
regard: 4 Bids, 1 farm-out, exploration permits, 2 electric public auctions, liberalization of
electric and oil market, awarded of contracts for gas pipelines construction, among other
measures and national programs.
213,000 million US dollars (MMusd) of investment in energy sector
Exploration & Extraction
Round 1
1st Bid: 2,700 MMusd
2nd Bid: 3,100 MMusd
3rd Bid: 1,100 MMusd
4th Bid: 34,000 MMusd
1st Farm-out: 7,500,000 MMusd
Seismic: 2,500 MMusd
Natural Gas & Oil Products
Electricity
Gas pipelines: 16,000 MMusd
1st Public auction: 2,600 MMusd
2ndPublic Auction: 4,000 MMusd
Oil Products: 7,800 MMusd *
Generation: 98,700 MMusd *
Transmission: 15,300 MMusd *
Distribution: 17,700 MMusd *
* Estimated investments in following 15 years
National Hydrocarbons Commission (CNH) has concluded 1st Round with
39 contracts and investments for more than 48,000 MMusd
Bid tender
RESULTS ROUND 1 and FARMOUTS
Model
Awarded
Contract date
N° of
Contracts
Companies
Years
1.1 Exploration
Shallow waters
2
Shared
Production
3
15-07-2015
25
+ 2 periods of 5
years
1.2 Extraction
Shallow waters
3
Shared
Production
5
30-09-2015
25
+ 2 periods of 5
years
1.3 Extraction
Mature Fields
25
License
22
15-12-2015
25
+ 2 periods of 5
years
1.4 Extraction
Deep waters
8
License
11
01-03-2017
35-50
Farm-out
1
License
1
01-03-2017
35-50
* Shared Production
** License Contract
 The State is co-owner of produced
hydrocarbons
 Contractor shall be entitled to onerous
transmission of the hydrocarbons produced
 It considers compensation over operating
profit
 It considers compensation over gross profit
 It considers cost recovery
 Adjustment mechanism with base on
profitability
 It does not consider cost recovery
 Adjustment mechanism with base in
production volume and prices
National Hydrocarbons Commission
has launched Round 2 Bids
On July 2016, National Hydrocarbons
Commission approved tender of 15 blocks in
shallow waters of the Gulf of Mexico
On August 2016, National Hydrocarbons
Commission has published bid tender of 14
terrestrial areas
Round 2. Bid 1
Round 2. Bid 2
It comprises 15 contractual areas located in
shallow waters of the Gulf of Mexico, within
provinces Tampico-Misantla, Veracruz and
Cuenca del Sureste oil provinces.
 License contracts for
30-40 years
It comprises 12 contractual areas. 9 areas are
located in Cuenca de Burgos, 2 areas in Cinturon
Plegado de Chiapas and 1 in Cuencas del
Sureste.
 License for 30 years
 Dry and wet gas
 Light crude oil and
natural gas
 Maximum production in
2025: 100,000 barrels
daily equivalent
 Water depth between
10 to 500 meters
 1st production in 2018
 1ª production in 2020
 Estimated investments of
5,000 MMusd, that will
create 5,300
employments
 Estimated investments
of 11,250 MMusd
August, 2016
Data Room Opening
May 19, 2017
June 19, 2017
Bidding terms and conditions & contract
Contract awarding
September, 2016
Data Room Opening
March 8, 2017
April 7, 2017
Bidding terms and conditions & contract
Contract awarding
Mexico will revert its oil production fall
A recovery in Mexico's oil production is expected in the medium and long term with
private companies participation in addition to PEMEX's strategic alliances with
large international and national corporations.
Crude oil production in Mexico, 2009-2021
Crude oil production and liquids in Mexico, 20002040
(Thousand barrels daily)
4
3,000
2,601 2,577 2,553 2,548
(Million barrels daily)
3.8
3.5
2,522
2,500
3.5
2,429
3.0
2,267
2,130
2,196
Aguas
profundas
Deep water
3
2,037 2,072
1,944 2,006
2.6
2.6
2,000
3.4
3.2
2.4
2.5
Aguas
someras
Sallow
water
2
1,500
1.5
1,000
En tierra
Onshore
1
500
0.5
0
2009
2010
2011
2012
2013
2014
2015
PEMEX Business Plan, 2017-2021
2016
2017
2018
2019
2020
2021
0
2000
2005
2015
2020
2025
2030
2035
2040
International Energy Agency, Mexico Energy Outlook
1st and 2nd Public auctions on clean energies at long term
Results of electric auctions have been committed investments of $ 6.6 billion by 34
companies from 11 countries to build 52 new clean energy plants.
Investments on clean energies at long term by entity
Source of Investment
Sonora
Chihuahua
Tamaulipas
Coahuila
1,060,949
Coahuila
Solar
1,019,874
Yucatán
895,561
Aguascalientes
Nuevo León
Wind
technology
Solar-Wind
790,426
Solar
Guanajuato
524,475
Solar
Sonora
517,297
Solar
Yucatán
Baja California
Norte
Tamaulipas
San Luis Potosí
389,732
Oaxaca
Baja California
Sur
Aguascalientes
368,392
Wind
San Luis Potosí
Nuevo León
Puebla
Jalisco
Solar
Eólica
Hidroeléctrica
Solar-Eólica
Solar
331,760
Chihuahua
307,800
Jalisco
Guanajuato Morelos
Oaxaca
135,000
Wind
Solar
Solar
Puebla
97,828
Hydro
Morelos
94,500
Solar
Baja California Norte
50,535
Baja California Sur
31,050
0
200,000 400,000 600,000 800,000 1,000,00 1,200,00
Solar
Solar
Mexico will increase its electric offering
Power plants will be built in most of the country's
entities. States of Veracruz, Nuevo León,
Tamaulipas, Oaxaca, Sonora and Chihuahua,
together will concentrate 47% of the new capacity
to be developed in following 15 years
Estimated investments by electric segment, 2016-2030
(MMusd y %)
Increments in power generation capacity by
type of clean energy (MW), in following 15
years
42,643
Ciclo
Combinado
24,043
16,976
Hidroeléctrica
12,489
Transmisión, 15,300
MMusd,
12%
75%
growth in
capacity of
combine
cycle (natural
gas)
2030
2015
Distribución, 17,700
MMusd,
13%
200%
15,101
Eólica
growth on
installed
capacity of
clean
energies
2,805
Generación, 98,700
MMusd,
75%
7,627
Generación
Eficiente
583
6,905
Development Program of National Electric System. (PRODESEN) 2016-2030
Solar
56
0
10,000
20,000
30,000
40,000
50,000
Extension of Gas Pipeline National System
Two years after Energy Reform, 78% of pipeline kilometers planned for 2019 are registered, with a
total investment in process of 12 billion dollars (MMUSD). Goal was to move from 11,000 to
21,000 kilometers (km)
Regasification terminal
Gas pipelines in operation
Gas pipelines concluded (2013-2015)
Gas pipelines in construction (2015-2016)
Gas pipelines in Five Year Plan
To 2019:
21,000 Km of gas pipelines
10,000 Km additional
16, 000 MMusd of
investments, 2016-2019
Compression in Five Year Plan
Social Gas pipeline in Five Year Plan
Interconnections
New gas pipelines
infrastructure, accordingly
Five Year Plan 2015-2019:
10 gas pipelines
2 social gas pipelines
7 interconnection points with
US
1 interconnection point with
Central America
Progress:
In operation: 2,386 Km
In construction: 1,278 Km
In development process: 4,098 Km
12,000 MMusd
Investment opportunities in whole energy sector
value chain
Downstream
Upstream
Exploration and
exploitation of oil
and natural gas
National Hydrocarbons Commission (CNH)
granted-permits:
35 Authorizations for Recognition and Surface
Exploration in the Gulf of Mexico
Oil Bid Public Tenders
1st Round (completed)
2nd Round (in process)
3rd Round
4th Round
5h Round
PEMEX Farm-outs
Migration of PEMEX CIEP’s (Comprehensive
Contract for Exploration and Production) to license
contracts with private companies
Midstream
Gas pipelines expansion (auction and gas open seasons)
Commercialization of natural gas and LPG
Regasification plants by imports and export of gas
Fuels transportation by rail, ships and trucks
Energy Regulatory Commission (CRE) granted-permits in
oil, petroleum products and petrochemicals:
1,644 Transport
269 Distribution by other means than pipelines
66 Provisional permits
Natural Gas permits:
249 Transport
38 Distribution
30 Compression and decompression
1 Liquefaction plant
1 Regasification plant
209 LPG Transport
1,206 LPG Distribution
2017
Fuel and diesel free
market
Petrochemicals production
Refining
Projects of power cogeneration in refineries
Infrastructure for oil products storage
Service stations for gasolines, diesel and gas
Energy Regulatory Commission (CRE) grantedpermits in storage, commercialization and service to
public:
11,801 Selling at gas stations
 148 Oil products and petrochemicals storage
402 Fuel import permits
27 Natural gas service station
3,248 Selling at public of LPG
199 Commercialization centers of oil products,
petrochemicals and gas
Electricity
Modernization of power plants from oil products to
natural gas
New centrals of combined cycle
New plants on renewables
Energy efficiency projects
Energy Regulatory Commission (CRE) grantedpermits in power generation, distribution and
transmission:
1,397 Power generation permits
2 Qualified users registration
19 Qualified supply permits
351 Load centers
In the first quarter, CENACE (National Center of Energy
Control) will carry out:
Third Long-Term Clean Energy Auction
First Medium Term Clean Energy Auction
Auction of the direct transmission line Oaxaca-Mexico
City
Mexican Government has carried out fast and important economic changes
during last two years due to structural reforms
Impact of reforms on GDP growth after 5 years of
implementation
“Pact for Mexico” reforms
0.0
Telecommunications
Electricity and gas
Oil
Employment protection
Tax structure
Legal reform
Additional Reforms
Judicial reform
Reforms in favor of formality
Women participation
OECD Economic Survey of Mexico
0.1
0.2
0.3
0.4
0.5
0.6
Early this year, International Monetary Fund (IMF), World Bank, and
private sector agencies have adjusted downgrade Mexico's economic
growth, due to uncertainties related to US policies.
Macroeconomic framework, 2017
SHCP, 2017-2018,
CGPE 2017
Mexican Economy Perspectives, 2017
775,000
1.92 barrels
42
daily
dollars MMbd
per barrel
(real GDP growth)
3.50%
3.00%
18.20 5.3%
pesos CETES
per dollar
3.00%
2.50%
2.50%
2.30%
2.00%
1.74%
3%
2%
3%
1.70%
1.80%
1.70%
1.50%
1.50%
1.20%
1.00%
1.00%
0.1%
0.50%
Crude oil Exports
Crude oil production
Oil price
Interest rates
Exchange rate
Public Deficit /GDP
Inflation
GDP
0.00%
Banamex BanamexBancomerPromedio FMI
(encuesta)
de diversas
corredurías
Banco
Mundial
OCDE Encuesta Banco de SHCP
Banco de México
México
Citibanamex, Bancomer, BBVA, Deutsche Bank, JP Morgan, Credit Suisse, OCDE, FMI,
Banco Mundial, Banco de México, Encuesta sobre las Expectativas de los Especialistas
en Economía del Sector Privado, SHCP
PEMEX Bid tenders and Contracts
The State Productive Company seeks to reduce contracting through
direct and restricted allocation (by invitation to 3 companies) and
increase public tenders, endorsing the best global practices
Currently PEMEX, through the Corporate Direction of Procurement and Supply (DCPA), is giving higher
priority to contracts and / or integral projects than to acquire a single good or service. It also supports
small and medium-sized Mexican companies to comply with national content of the new legislation, so
that international companies have sought alliances with local firms to take advantage of new legal
framework
Type of contract used by PEMEX subsidiaries, 2014-2015
(Percentage of total number and value of goods, services and leases)
100%
90%
22%
36%
80%
70%
Source:
Study on PEMEX public
procurement.
“Adapting to change in the Oil
Industry”
OECD, 2016
45%
41%
39%
Adjudicacion
Direct
Allocation
es
directas
5%
60%
60%
6%
6%
50%
Invitación
a
Restricted
por lo
allocation
menos 3
proveedores
(Invitation
27%
29%
40%
to 3 companies)
73%
9%
30%
55%
49%
20%
Licitación
Public tenders
Pública
37%
31%
30%
10%
0%
Cantidad
Quantity
Monto
Amount
$
Refineria
Refinería
Refining
Cantidad
Quantity
Monto$
Amount
Exploración
Producción
Exploration & yProduction
Cantidad
Quantity
Monto$
Amount
Gas
Gasy&Petroquímicos
Petrochemicals
Thanks for your attention
Contact: [email protected]
[email protected]