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Mexico’s Energy Reform:
Midstream & downstream
2015 Louisiana Gulf Coast Oil Exposition (LAGCOE) Industry Briefing:
“Oil and Gas Mexico Seminar”
The Cajundome & Convention Center
Lafayette, LA
Francisco Xavier Salazar Diez de Sollano
Chair
Description of the reform
Private investment opportunities
before the reform (natural gas)
Upstream
Gas Well
Keys:
Pipelines
LNG/CNG
Closed to private
investment
Open to private
investment
Imports
Transport
Distribution
Service Stations
Final users
Gas Processing
Transport
Oil Well
Storage
Refining
Midstream
Downstream
Private investment opportunities
after the reform (natural gas)
Upstream
Gas Well
Keys:
Pipelines
LNG/CNG
Closed to private
investment
Open to private
investment
Imports
Transport
Distribution
Service Stations
Final users
Gas Processing
Transport
Oil Well
Storage
Refining
Midstream
Downstream
Natural gas:
Authorities
Upstream
Gas Well
Pipelines
LNG/CNG
CRE
Sener
CNH
ASEA
Transport
Distribution
Service Stations
Final Users
Refining
Midstream
Keys:
Imports
Gas Processing
Transport
Oil Well
Storage
Downstream
Private investment opportunities
before the reform (LPG)
Upstream
Gas Well
Keys:
Pipelines
Other
Closed to private
investment
Open to private
investment
Imports
Transport
Distribution
Service Stations
Retail (Other)
Gas Processing
Transport
Oil Well
Storage
Refining
Midstream
Final Users
Downstream
Private investment opportunities
before the reform (liquids)
Upstream
Gas Well
Keys:
Pipelines
Other
Closed to private
investment
Open to private
investment
Imports
Transport
Distribution
Service Stations
Retail (Other)
Gas Processing
Transport
Oil Well
Storage
Refining
Midstream
Final Users
Downstream
Private investment opportunities
after the reform (LPG & liquids)
Upstream
Gas Well
Keys:
Pipelines
Other
Closed to private
investment
Open to private
investment
Imports
Transport
Distribution
Service Stations
Retail (Other)
Gas Processing
Transport
Oil Well
Storage
Refining
Midstream
Final Users
Downstream
LPG & liquids:
Authorities
Upstream
Gas Well
Keys:
Transport
Distribution
Service Stations
Retail (Other)
Refining
Midstream
Pipelines
LNG/CNG
CRE
Sener
CNH
ASEA
Imports
Gas Processing
Transport
Oil Well
Storage
Final Users
Downstream
Basic characteristics of the
regulatory framework
General
Natural gas
Others
• Transitory assymetric
regulation imposed on Pemex
as a dominant player in all
markets:
- Vertical unbundling
- Price controls
- Mandatory open access
- Market caps
• Regulation for other players
according to market
characteristics
• Pemex pipelines transfered to
CENAGAS, who will also act as
independent operator of the
“integrated” system
• Stricter regulation:
- Mandatory open seasons
(limits to proprietary
pipelines)
- Use it or loose it principle
- Electronic bulletin boards
- Regulated tariffs
• Lighter regulation. Flexibility
on:
- Vertical integration
- Proprietary infrastructure
- Open seasons
- Tariffs
• More flexibility on
infrastructure linked to
upstream and storage
• Less on LPG, pipelines and
airport infrastructure
Principles for regulation of prices
and rates
•
•
•
•
•
•
•
Competitive sectors are not regulated ex-ante (hands off policy). Anticompetitive
behavior sanctioned by COFECE (Competition Authority).
Incumbent prices are regulated based on opportunity cost (netback to relevant
markets).
Rates for networks and essential facilities regulated based on incentive schemes
Competition for the market is preferred over rate setting (when public bids are an
alternative, CRE reviews and approves the terms of reference).
Rates are reviewed every 5 years but initial CAPEX and ROE are maintained. Additional
investments and OPEX are evaluated during the corresponding rate case.
Regulated ROE is set based on CAPM methodology updated every year (country &
market risk series). Debt level approved according to the project.
Assets base as well as O&M are subject to benchmarking.
Opportunities
Private investment in natural gas
infrastructure to 2019
LNG Terminals (existing)
Previously operating pipelines
New operating pipelines
(2013/2014/2015)
Pipelines under construction
(2015/2016)
Pending pipelines
Sásabe
San Isidro
Puerto
Libertad
Samalayuca
El Encino
Colombia
Guaymas
Topolobampo
Camargo
El Oro
La Laguna
Escobedo
2019
Los Ramones
Mazatlán
8920,
45%
Durango
Altamira
Tuxpan
11071
, 55%
Guadalajara
Huexca
Lázaro
Cárdenas
Other (Private)
CENAGAS
Tula
Zempoala
Cd. Pemex
Acapulco
Salina
Cruz
Tapachula
Private investment in natural gas
infrastructure to 2019
LNG Terminals (existing)
Previously operating pipelines
New operating pipelines
(2013/2014/2015)
Pipelines under construction
(2015/2016)
Pending pipelines
Sásabe
San Isidro
Puerto
Libertad
Samalayuca
El Encino
Topolobampo
2761,
24%
Colombia
Guaymas
Camargo
El Oro
La Laguna
Escobedo
2014
Los Ramones
Mazatlán
Durango
Altamira
Tuxpan
Guadalajara
8920,
76%
Huexca
Lázaro
Cárdenas
Other (Private)
Tula
CENAGAS
Zempoala
Cd. Pemex
Acapulco
Salina
Cruz
Tapachula
More investment is needed in
infrastructure for liquids
6 Refineries
77 Storage facilities
Rosarito
Mexicali
Cd. Juárez
10 Maritime operation facilities
(5 port terminals)
~ 9000 km of Pipelines
Magdalena
Hermosillo
Guaymas
Nuevo Laredo
Culiacán
Current situation:
~ 50% imports
Reynosa/Matamoros
Durango
Topolobampo
La Paz
Mazatlán
Sta. Catarina
Zacatecas
Madero
Qro. Pach.
León
> 90 uptime in pipelines
< 6 days of autonomy in
maritime terminals
S.L.P.
Aguas.
Manzanillo
Progreso
Tuxpan
Lerma
Azcap.*
Morelia
Pajaritos
Toluca
Cuern.
Lázaro C.
Cuautla
Acapulco
T. Blanca
Tehua.
Salina C.
Tuxtla Gutiérrez
Tapachula
Current infrastructure in storage for
oil products
Days of storage by fuel type
30
25
20
Large amounts of money need to be invested in pipelines and storage tanks to
satisfy demand growth (~3.5%) and increasing strategic stocks (15-30 days)…
15
10
5
0
2007
2008
2009
Gasoline
2010
Diesel
2011
2012
Infrastructure related to Round 1
(E&P)
Unconventional
Existing Pemex infrastructure
More infrastructure needed
Perdido Area
Unconventional
& mature
13
8 9
10
7
4
3
2
1
5
6
11
Deep Water (South)
12
14
Chicontepec
Heavy crude
Shallow
waters
VERACRUZ
Thanks!
[email protected]
www.cre.gob.mx