“Mexico last year started hedging in late May as oil prices peaked after a soft start to the year. This time, however, oil prices are declining after a relatively strong start to 2017. Brent crude, the global benchmark, peaked at $57.10 a barrel in early January and approached those highs in April. But since then it has weakened to trade below $48 on Friday.”“Repsol SA, Spain’s biggest oil company, is studying Mexico’s nascent fuel market as it considers whether to open gas stations in the country, people familiar with the plans said.”
“Repsol could make a decision as soon as next month, one of the people said. A Repsol press officer declined to comment. A spokeswoman at Mexico’s energy regulatory commission, or CRE, said that some commissioners met with Repsol in February.”
“If it proceeds, Repsol would be following in the footsteps of companies such as Exxon Mobil Corp., BP Plc, and Glencore Plc, that have recently announced plans to invest in Mexico’s fuel retail market, taking advantage of rules allowing firms other than state-owned Petroleos Mexicanos to import fuel since April 2016. “
“The Madrid-based firm, which has a refinery and network of more than 400 service stations in Peru, is only likely to be interested in markets where it can have a five percent share or more, one of the people said.”
“Mexico’s recent energy industry opening was designed to lure investment and bring competition to a market formerly controlled by Pemex. However, the gradual elimination of fuel subsidies this year has also sparked social unrest as prices at the pump increased by as much as 20 percent in some regions in January.”
“The slow pace of new regulations and infrastructure hurdles has meant that companies continue to rely on Pemex’s pipeline and terminals to transport and store fuel, as well as to supply it in many cases.”
“Repsol has had a rocky relationship with Pemex, which sold a stake of about eight percent in the Spanish firm in 2014, valued at $2.8 billion. The sale followed a lengthy dispute between the companies’ boards of directors, with Pemex citing differences over corporate governance as one of the factors that led to the fallout, according to a statement at the time. “
By Oil & Gas 360 – Jun 03, 2017, 12:00 PM CDT
The Comisión Nacional de Hidrocarburos (CNH), which will conduct the lease sale, has listed a total of 25 groups that have successfully pre-qualified for the Round 2.1 sale. As might be expected, supermajors are prominent among the companies involved. Chevron (ticker: CVX), ConocoPhillips (ticker: COP) and Shell (ticker: RDS.A) have each pre-qualified. Other major international companies include Eni (ticker: E), Repsol (ticker: REP) and Total (ticker: TOT).
Several NOC’s have also applied, including CNOOC, Pemex, Lukoil, Petronas, Colombia’s Ecopetrol and India’s ONGC. International E&P’s that have signed on include Noble (ticker: NOG), Premier (ticker: PMO) and Ophir (ticker: OPHR). Five consortiums have also applied, accounting for a total of 11 companies.
A total of 15 offshore lease blocks will be offered in this sale. According to CNH, these 15 blocks contain a combined 1.6 BBOE of recoverable resources. Block 11, in the southern section offshore from Tabasco, has the largest prospective resource of any block with a P50 of 300 MMBOE.
Interest in Mexican offshore properties is increasing as the overall oil industry recovers. Mexico’s recent deepwater offshore lease sale was highly successful, with eight out of ten blocks sold.
First private offshore oil well in 80 years recently began drilling
A major milestone was achieved in May, as a JV between Premier Oil, Talos Energy and Sierra Oil & Gas began drilling the Zama-1 offshore well. This is the first time in nearly 80 years that a private company has drilled an offshore oil well in Mexico. Each of these companies has pre-qualified for the most recent lease sale.
Privately-held Talos Energy is the operator of the well, with a 35 percent stake. Premier owns 25 percent, while Sierra holds the remaining 40 percent. According to Premier, the Zama-1 well has a P90-P10 gross unrisked resource range of 100-500 MMBOE.
Premier expects Zama-1 will take about 90 days to drill, and will have a total cost to the company of $16 million.
Tudor Pickering & Holt, however, predict that this resurgence will not have an effect for some time.
While the firm does expect shallow water production to be the next material near-term contributor to Mexican production, it will not have a significant effect for several years. TPH predicts Mexican production will decline by about 5 percent per year through the end of this decade.
From Bloomberg, by Mohammed Sergie,Tsuyoshi Inajima, and Anthony Dipaola
“Qatar, the world’s biggest seller of liquefied natural gas, can still access shipping routes to deliver oil and gas to buyers after Saudi Arabia and other neighboring states barred the emirate from exporting through their territorial waters.”
“State producer Qatargas told Japan’s Jera Co. that it would keep supplying LNG as normal in spite of the Saudi-led severing of diplomatic ties with Qatar, Jera spokesman Atsuo Sawaki said by phone. Jera is Japan’s biggest buyer of Qatari LNG under long-term contracts, according to data compiled by Bloomberg.”
“The escalation of tensions in the energy-rich Persian Gulf probably won’t disrupt LNG supplies to Qatar’s main customers in Asia, according to Robin Mills, head of Dubai-based consultant Qamar Energy. “In principle Qatar should still be able to export via its own waters, Iran and Oman,” Mills said.”
“Saudi Arabia and three allied Arab countries cut ties with Qatar on Monday, escalating a crisis that started over the emirate’s relationship with Iran, a Saudi rival in the region. The governments of Saudi Arabia, Bahrain, the United Arab Emirates and Egypt said in statements they will suspend air and sea travel to and from Qatar. “
“Qatar exported 79.62 million tons of LNG last year, or 30 percent of global supply, according to the International Group of Liquefied Natural Gas Importers, known by its French acronym GIINGL. State-run Qatar Petroleum, the world’s fourth-largest oil and natural gas producer, has only five Middle Eastern customers for its gas — Kuwait, Oman, Jordan, the U.A.E. and Egypt. LNG exports to these countries comprised about 10 percent of Qatar’s total shipments in 2016, GIINGL data show.”
““I presume LNG exports to the U.A.E. will stop,” Qamar Energy’s Mills said. “The U.A.E. will have to use other suppliers, but there are plenty of cargoes around at the moment.””
“Qatar, like Saudi Arabia and the U.A.E., is also a member of the Organization of Petroleum Exporting Countries. The emirate is the group’s third-smallest producer, pumping 620,000 barrels a day of crude oil in May, data compiled by Bloomberg show, and ships most of its crude and condensate to Asia.”
“Aside from sending LNG and oil by ship, Qatar exports natural gas through a pipeline operated by Dolphin Energy, which is owned by Abu Dhabi’s Mubadala Development Co., Total SA and Occidental Petroleum Corp. The link supplies gas to the U.A.E. and Oman and can send 3.2 billion cubic feet per day, though it only uses about two-thirds of that capacity.”
“Gas continues to flow normally through the Dolphin pipeline to the U.A.E. and Oman, according to two people with knowledge of the matter. There is no sign that supplies will be cut, they said, asking not to be identified because the information isn’t public.”
“A potential shutdown of the pipeline would cause a “severe problem” in the U.A.E. as demand for electricity peaks in the summer, Mills said. But he played down the likelihood that either country would halt supplies due to the hardship this would cause the U.A.E. and the damage it would inflict on Qatar’s reputation as a reliable energy provider.”
“Qatar Petroleum, Qatar’s LNG producers Qatargas and RasGas, and Dolphin Energy didn’t immediately respond to requests for comment.”
May 25, 2017 Updated: May 25, 2017 4:10pm
From: Express News
By Rye Druzin rdruzin@express-news.net @druz_journo
“Investors at an energy expo in Mexico City last week got a sneak peek at San Antonio-based Valero Energy Corp.’s plans to spend $200 million building new fuel storage across the border.”
“Valero executives at the Onexpo conference May 17-19 said their investment would pay for 1.6 million barrels of storage in three locations. The largest terminal would store 925,000 barrels in the Gulf Coast city of Altamira in Mexico’s Tamaulipas state and would supply refined fuels into Mexico, according to reporting by Mexican newspaper Milenio.”
““Valero representatives recently met with potential clients about proposed plans to distribute Valero-branded fuels in Mexico,” Valero spokeswoman Lillian Riojas said in an email. “The plans are in the works and continue to evolve as we hone our strategy to further serve the Mexico market.””
“Valero will also build a 325,000-barrel terminal in Monterrey and one in San Luis Potosi. The largest U.S. refiner will also allow its brand to be licensed by Mexican gas station owners.”
“Official’s with Energy Regulation Commission confirmed that Valero has applied for a permit to sell gasoline in Mexico, but said no further details were available.”
“The announcement comes after San Antonio-based refiner Tesoro Corp. was given the first ever contract to lease storage and pipeline capacity in northwestern Mexico from Mexico’s state-run oil and gas company Pemex. Tesoro will supply gasoline and diesel into the region, which Tesoro’s President and CEO Greg Goff estimated had a daily deficit of 150,000 barrels of refined fuels.”
“Mexico has faced fuel shortages and rising prices since the government announced in 2013 its intention to open its state-controlled energy sector to competition after nearly 80 years.”
“Valero’s investment came the same week Exxon Mobil said it will invest $300 million into fuel infrastructure and gas stations in Mexico over 10 years. British Petroleum or BP announced plans to establish 1,500 BP-branded gas stations across Mexico over five years, and other oil and gas companies have made announcements that they are entering Mexico’s fuels market.”
rdruzin@express-news.net
@druz_journo
“BP Plc’s first foray into Mexico’s recently opened energy market is proving more promising than expected, and the government should offer more big projects to lure investment, the British oil major’s Mexico boss said in an interview.”
“Chris Sladen, country manager for Mexico, said BP expects to increase investment in everything from exploration to retail fuel sales, and looks forward to partnering with state oil company Pemex [PEMX.UL] after losing an early chance for a lucrative tie-up.”
“Mexico wants to attract major investors to reverse years of declining crude output and rising dependence on U.S. natural gas and fuel imports.”
“”To turn that ship around, you need a substantial number of large projects,” Sladen said at BP headquarters in Mexico City on Tuesday. “I would encourage Mexico to offer substantial numbers of large projects because that’s what it takes.””
“BP and others are expanding their presence in Mexico after a 2013 energy overhaul ended Pemex’s decades-long monopoly.”
“”The British firm is already involved in three offshore projects, two in the Gulf of Mexico’s deep waters and another in shallow waters. Sladen said initial company investment in all three could total many hundreds of millions of dollars.”
“”That investment would grow significantly, he added, if the projects are successful.”
“In 2015, Argentina-based Pan American Energy LLC [BPPAE.UL], which is 60 percent BP-owned, won the rights to develop the Hokchi field in the Gulf’s shallow waters.”
“Sladen said three of four committed exploration and appraisal wells have already been drilled there, and early data is promising.”
“”The initial results have suggested that the reservoir volume might be slightly higher than initially modeled. Perhaps it’s 20 percent higher,” he said.”
“During the auction for the Hokchi field, Mexico’s oil regulator estimated that the 15 square mile (40 sq km) area contained 334 million barrels in remaining oil resources.”
“At current prices for Mexico’s crude exports at around $46 per barrel, a 20 percent larger reservoir volume would mean more than $3 billion in additional value from nearly 67 million additional barrels.”
“Sladen said that data from the Hokchi wells is still being analyzed, and while the drilling program should be completed later this year, investment decisions are still “some months away.””
“Late last year, BP partnered with Norway’s Statoil [STLBR.UL] and France’s Total SA to win development rights for two deep water blocks in the southern Gulf of Mexico’s Salina basin.”
“Exploration plans for each of the blocks will be submitted to regulators by September, Sladen said.”
“While each of the three companies in the consortium has a one-third stake in both blocks, Statoil is the operator, responsible for development.”
“BP has maintained a presence in Latin America’s second-biggest economy dating back to the 1960s, and Sladen has been country manager since 2007.”
“The company narrowly lost out in December to Australian mining and oil giant BHP Billiton in its bid to partner with Pemex on its Trion deep water project, but Sladen still expects to tie up with Mexico’s former oil monopoly.”
“”I see a future of us co-investing with Pemex on major projects,” he said, without going into further detail.”
“BP is still evaluating a range of projects at oil auctions scheduled for later this year, as well as possible investments in ports or storage facilities needed to import fuel, he added.”
“The company has created hundreds of local jobs with hundreds more likely in the near future as it cements its status as Mexico’s first-ever integrated international oil firm, he said.”
“Beyond the three offshore projects, BP has recently won so-called open season rights to surplus capacity on some natural gas pipelines owned by Pemex, Sladen noted.”
“The company also launched Mexico’s first foreign-branded gas station, with plans to open some 1,500 stations over five years. Sladen said that by the end of this year BP could open 200 gas stations.”
“The first station, which opened in March just outside Mexico City, has already become one of the country’s top three retail sellers by volume, he added.”
“There are about 11,400 gas stations in Mexico.””
