Valero In Talks With AMLO; CNH Rejects Lakach PlanBy Conal Quinn | Thu, 09/22/2022 - 09:15
Among this week’s top stories, President López Obrador engaged in talks with Valero Energy in an attempt to stop fuel smuggling after inflated invoices were discovered by the authorities. In other news, clashes between PEMEX and CNH over the rejected development plan for the Lakach deepwater gas field may have led to the resignation of Rogelio Hernández.
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President López Obrador confirmed this week that the government has initiated talks with US firm Valero Energy over reports concerning inflated invoices for fuel imports. The revelation was announced following discussions with a US delegation led by Secretary of State Antony Blinken concerning ongoing trade disputes between US companies and the Mexican government.
In a press conference following the meeting with Senator Blinken, López Obrador assured the media that the talks relating to USMCA were both “productive and amiable” and that his administration had managed to reach an agreement with most of the 18 US companies that had raised concerns over investment issues. The president added that should US companies be found to have engaged in fuel smuggling in Mexico, they will face severe penalties.
Mexico's oil regulator CNH and state company PEMEX are at odds over how to develop a deepwater natural gas project, threatening to stall a US$1.5 billion energy venture. Officials at CNH have raised questions about whether PEMEX can shoulder the massive project. The Lakach field holds up to 937Bcf of gas reserves but rising costs have hindered development. Now, a PEMEX proposal to revive development with US liquefied gas company New Fortress Energy (NFE.O) is at issue. The project's fate could depend on the choice for Chief Commissioner at CNH left by Rogelio Hernandez, who resigned last week.
Energy Minister Rocío Nahle took to Twitter to share a video reporting the progress at the Dos Bocas refinery, the latest in a series of SENER-sponsored video updates on the refinery. Nahle commented on the most recent works completed to get the refinery up and running: “The 18 processing plants, including a co-generation facility, are already being integrated into the central rack that connects the oil tankers with storage units. Each plant must be integrated with all the different products transported across the different pipelines, which make up this huge structure,” Nahle noted.
PEMEX CEO Octavio Romero took to social media to defend his company’s environmental record. In a Twitter video, Romero provided commentary from a helicopter flying over a platform belonging to PEMEX’s star Ku-Maloob-Zaap field cluster, refuting the claims made by a report that the NOC caused an ultra-emission event. “We are here at Ku-Maloob-Zaap, at the processing center for Zaap-C to be more precise. A few days ago, a very irresponsible report was published that huge quantities of methane were emitted right here at this processing center which contributed to high levels of pollution. We want to set the record straight: this record is totally false. We have been able to confirm that methane emissions did not reach even 5 percent of what was reported,” Romero claimed.
For some time now, the Gulf of Mexico has been regarded as one of the great frontiers for oil and gas exploration, with Mexican deepwater in particular viewed as an untapped goldmine. While the American Gulf saw production peak at over 2MMb/d in pre-pandemic 2019, Mexico has failed to produce a single barrel of oil from deepwater plays. In 2004, then president Vicente Fox launched a tirade which gave voice to what can only be described as a national anxiety that Mexico is missing out on a major opportunity when he accused US oil companies of sucking up hydrocarbons from Mexican waters. Almost two decades on and little progress has been made. With a production target of 2.5MMb/d set for 2024, the vast resources of Mexican deepwater must be harnessed if any talk of energy sovereignty is to be feasible long-term.
Between political uncertainty putting off investors, the price of oil dropping to historic lows in 2015 and 2016 and a worldwide pandemic that paralyzed operations, initial production targets and investment plans from the bidding rounds held under the presidency of Enrique Peña Nieto have failed to come to fruition. However, 2022 gave the sector cause to celebrate when the 21 private companies active in Mexico collectively surpassed the 100Mb/d production milestone in May. While this figure still accounts for only 6 percent of total domestic output, and is a far cry from the 280Mb/d figure set by López Obrador upon assuming the presidency in 2018, the performance of Italian IOC Eni, in particular, has offered some room for optimism.
The oil and gas industry is one of the key drivers of the Mexican economy. Since the beginning of his administration, President López Obrador pledged to make its development a priority. At this year’s Mexico Oil & Gas Summit, industry leaders met to discuss some of the key events of the past year, as well as some of the biggest projects set to take place over the next 12 months.
Uganda President Yoweri Museveni said that if TotalEnergies does not show full commitment to the US$20 billion oil project in the country, due to pressures from the EU, he will find another investor.
Germany announced that, Rosneft Deutschland GmbH (RDG) and RN Refining & Marketing GmbH (RNRM) have been placed under the fiduciary management of country’s Federal Network Agency, assuming control over RDG’s shares in PCK Schwedt, MiRo (Karlsruhe) and Bayernoil (Vohburg) refineries. This measure became effective on Sept. 16 and will remain for six months.
Nigeria and Morocco signed an agreement that takes them one step closer to a gas pipeline between the two countries, opening up the possibility of a new energy route for West Africa and Europe. The agreement follows European countries’ need for a new energy supplier following the Russia-Ukraine conflict.