Image credits: PEMEX
Weekly Roundups

Forged Letter Claims Citizens’ 401Ks Would Pay For Dos Bocas

Fri, 05/14/2021 - 06:20

An official document that was later found to be falsified claimed that money to be used for the Dos Bocas refinery would come from the 401K retirement funds from Mexican citizens and that these would be nationalized, reports Forbes. The document was an internal memo sent by lawmaker Edelmiro Santiago Santos Díaz which detailed his plan to appropriate the funds in these accounts and use them to inject capital into the administration’s flagship projects, such as Dos Bocas. An image of the document circulated social media and created quite an uproar, so much so that the lawmaker himself had to make a public statement specifying that the letter was false and that he had never proposed anything of this sort. No motive or source is yet known for the distribution of the image. 

Ready for More? Here’s the Week in Oil & Gas!

PEMEX will renegotiate hydrogen plant agreements 

Octavio Romero, Director of PEMEX, said the NOC is aiming to buy two hydrogen plants that were sold by the previous government. The plants are essential for producing clean fuels. Romero noted that the government has paid US$49 million and US$27 million for each plant over three and a half years and for this reason, President López Obrador has instructed PEMEX to renegotiate the deals related to the plants with the goal of repurchasing them. "We are rebuilding the oil industry. For the first time in 14 years, the fall in oil production has stopped. We are already rehabilitating refineries, processing more oil, building the new refinery, and in 2023, we will stop buying gasoline from abroad."

“Energy Reform has had negative effects on gas prices”: Romero

Pemex Director Octavio Romero stressed that the liberation of LP gas prices in Mexico has not reduced costs but rather it has increased corruption. Romero explained that LP gas prices are very expensive in the country due to the Energy Reform. Prices were liberated in 2017. "This generated abuses by many distributors who have increased their profit margin in a barbaric way. Over time this has not helped at all; on the contrary, it has widened the gap," said Romero.

Colonial Pipeline Restarts Operations After Cyberattack

On May 7, the Colonial Pipeline, a large artery pipeline for refineries in the Gulf of Mexico to the south and east of the US, was forced to shut down operations after its IT systems fell victim to a cyberattack. The pipeline restarted operations Thursday at about 5 p.m. EST, given the shortage caused by the shutdown. The Colonial Pipeline supports roughly 45 percent of the gasoline, coal, home heating oil, jet fuel and military supplies of the East Coast. Its shutdown led many to believe that a fuel shortage would be coming, leading many to panic and buy fuel.

PEMEX Reserves Continue To Increase

PEMEX’s latest report to Congress claims the NOC has increased its 1P oil and gas reserves for the second year in a row throughout 2020. The NOC reported a total of 7,382MMboe added to its portfolio from January 1st 2020 to January 1st 2021, which represents an annual increase of 4.8 percent, reported Forbes. Romero wrote in the dossier that these numbers represented “a reserve-production relationship of 8.7 years for 1P reserves.” From a financial standpoint, 1P reserves are of the greatest importance, since they represent a 90 percent probability of being extracted, as opposed to 2P and 3P reserves, which represent a 50 and 10 percent probability, respectively. With these results, PEMEX computes a reserve replacement rate of almost 120 percent. This number goes past Moody’s predictions which claimed that it was unlikely for PEMEX to reach a reserve replacement rate of 100 percent given what it characterized as the NOC’s “lack of investment strategies and appropriate cash flow, coupled with a weak market affected by various global crises.”

The data used in this article was sourced from:  
MBN, Forbes
Photo by:   PEMEX