For the record: Mexico Energy Report

Author: ICIS Editorial

2019/04/10

ENGIE, Tokyo Gas to invest in renewables

ENGIE and Tokyo Gas will invest in Heolios EnTG, a 50/50 joint venture company to develop renewable energy projects in Mexico.

The companies said in an 8 April press release the joint venture calls for Heolios EnTG to develop, finance, build, own, operate and maintain six renewable energy projects in Mexico.

Two of the plants are onshore wind while the remaining four are solar photovoltaic, with peak capacity totaling 898.7 MW – enough to power 1.3m Mexican households.

The joint venture received approval on 28 March from Mexico’s federal competition commission, COFECE.

The projects received 15-year power purchase agreements through Mexican power auctions. One of the power plants, Tres Mesas 3, is a 50MW wind power facility that entered into commercial operation in February.

The remaining plants are under construction and scheduled to start commercial operation in 2019 and 2020, as described in the table below.

ENGIE, a French multinational utility company, is a component of the Euro Stoxx 50 market index. Tokyo Gas is Japan’s largest provider of city natural gas, serving more than 11 million customers.


Watco says June fuel terminal expansion

Watco Industries says it will begin operations on the second phase of its San Luis Potosi fuel terminal expansion in Mexico on 1 June.

The Terminal del Centro de Mexico (TCM) is a joint venture between Watco Industries, Kansas City Southern railroad (KCS) and Grupo Valoran. Watco Industries is the operator.

Two 150,000 bbl tanks will begin commissioning later this month, company officials said, placing 300,000 bbl of refined product storage capacity in service. The first phase of the project, which started up in 2017, brought online 40,000 bbl of transloading capacity. By 2028, the terminal will have 1.2m bbl of storage, according to company officials.

The terminal will only handle liquid fuels, like gasoline and diesel fuel. There are no plans in the works to handle propane or liquid petroleum gases (LPG), company officials told ICIS.

The facility will be connected to rail lines served by the Mexican subsidiary of KCS. A unit train can hold approximately 60,000 bbl of fuel, officials said.

The terminal expansion will serve the country’s growing demand for refined products. Since the country’s energy reforms were enacted several years ago, Mexico has opened its fuel market to foreign operators and investments.

Imports are expected to continue rising as domestic refining capacity is unable to fully meet Mexican demand.

According to statistics from state-run producer Pemex, imports of finished gasoline averaged 594,800 bbl/day last year, up 4% from 2017, and up 60% from 2014.


Government shows fiscal discipline

The new administration of AMLO appears to remain committed to fiscal discipline despite an anticipated economic deceleration, according to analysis by ratings agency Fitch.

The agency said in a 3 April press release that although the commitment could be tested when the majority Morena party proposes and implements specific spending cuts, the fiscal planning document sent by the finance ministry to the national congress confirms campaign promises to cut government spending.

Fitch pointed to the plan as a strong signal of the new administration’s fiscal policy.

The plan included a downward revision of growth estimates from around 2% to around 1.6%.

The plan forecasts 2020 growth at around 1.9%, a likely signal that energy consumption growth could be more measured in the short term.

Estimates for Mexico’s oil production, which provides a significant portion of government revenues, were revised down in the plan from 1.85m bbl/day to 1.78m bbl/day. The decrease resulted in oil revenue forecasts being lowered by 0.5% of national GDP.


Regulator publishes tariff calculations

Mexico’s energy regulator CRE published the rates and corresponding Memoria de Calculo spreadsheet for April power tariffs for Mexico’s state-run CFE Basic Service Supplier (CFE SSB) on 3 April.

April rates were little changed from the prior month, dropping 0.30%.

The complex corresponding Memoria de Calculo spreadsheet, intended to help consumers understand tariff calculations, was also published on the website of energy regulator CRE.

Initial analysis of the Memoria from Essentia Advisors shows generation costs are within 0.11% of the anticipated generation costs for the first quarter, leading to the nominal movements seen since December 2018.

CFE SSB is the regulated market retail arm of state-run utility CFE. ICIS Staff