Total Energies will develop an exploration project in Mexico in partnership with Qatar Petroleum and PEMEX. Meanwhile, the NOC faces challenges in the US as it is facing a lawsuit in Texas regarding a fire in the Deer Park refinery.
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Total Energies' subsidiary gained CNH's approval for an ambitious hydrocarbon exploration project in Mexico. The venture, backed by a US$87.23 million investment and in partnership with PEMEX and Qatar Petroleum, will explore untapped hydrocarbon reservoirs off Tabasco's coast.
Shell and PEMEX are facing a lawsuit from the Texas attorney general over a chemical plant fire at the Deer Park refinery. The lawsuit alleges violations of environmental laws during firefighting efforts. Each violation could incur fines of up to US$25,000 per day for each contaminant released. The fire emitted black smoke and water used to extinguish it entered the Houston Ship Channel. Shell is investigating and aiming to repair the damaged unit by 4Q23.
CNH has approved a US$440 million investment increase in PEMEX's Ek-Balam field development plan. This revised plan aims to cover losses from recent incidents, enhance duct networks and boost production. Nearly half of the budget will go towards activities like drilling, terminations, duct construction, repairs and addressing leaks. PEMEX seeks to recover oil and gas production following a pipeline leak and fire.
Mexico will continue to rely on fossil fuels until 2060, with oil-centric infrastructure development being crucial. The country aims to decrease its reliance on foreign suppliers by constructing more refineries. However, Minister of Energy Rocío Nahle envisions Mexico transitioning away from fossil fuels by 2060, through technological innovation and clean energy storage, requiring the mining sector for critical minerals extraction.
Fitch Ratings expects the Mexican government to continue providing significant financial support, around US$15 billion annually, to PEMEX. While this aids the state-owned company's debt repayments, it could adversely impact the country's sovereign credit rating if support escalates. Despite these efforts, concerns linger over declining profitability, revenue and the company's credit rating.
Mexico's June heatwave drove natural gas purchases from the US to a record 6.8Bcf/d, as demand surged due to higher energy needs for cooling. This situation underscored Mexico's dependence on imported gas, even as its domestic production increased by 14% in 2022. This growing reliance on imports, which supply around 90% of gas used by Mexico's electricity sector and national industry, raises concerns over national sovereignty and energy security.
PEMEX's perpetual bonds, initially listed on the Luxembourg Stock Exchange, will now be available on the Mexican Stock Exchange through the International Quotations System (SIC). These bonds, issued in 2010 for US$1 billion with a 6.625% annual coupon, are perpetual, lacking a predefined maturity date.
PEMEX has halted its plans to refinance more debt with Goldman Sachs, following a recent federal capital injection of about US$4 billion in July. Despite government aid, the company's deep-rooted structural issues, governance concerns and sustainability challenges continue to affect its bond market performance.
Mexican fuel imports showed minor fluctuations in June. While PEMEX's gasoline and diesel imports increased, private imports also slightly rose. President López Obrador aims to reduce imports for energy self-sufficiency, but refining delays and demand challenges persist. Economic concerns arise from discrepancies between high fuel prices and oil prices, potentially impacting inflation rates and prompting governments to consider subsidies.
President López Obrador emphasized his defense of Mexico's oil ownership during USMCA negotiations when asked about the status of the energy dispute with Canada and the US. The disputes previously involved concerns over Mexico's energy policies favoring state-owned companies. Although ongoing disagreements exist on transgenic matters, the president aims to avoid formal panels for resolution.