Spanish oil company Repsol enters the Mexican market

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FROM: El Sol de México / The Yucatán Times / 20 April 2018

Seven gas stations in Baja California Sur will start operating soon under the brand name of the Spanish company “Repsol”. These openings are added to others in Mexico City, State of Mexico, Veracruz and Puebla.

In total, Repsol will be opening more than 60 stations, in addition to those already operating in the CDMX.

The company has proposed to invest 8 billion pesos in the opening of 250 service stations per year until 2022. The objective, according to the company, is to reach a market share of 8 to 10% in five years, which includes the opening of gas stations and invest in the development of new oil industry infrastructure.

Of the 11, 925 service stations operating in the country, 22% (2,651) are already working under 39 new brands, as announced by the commissioner president of the Energy Regulatory Commission (CRE), Guillermo García Alcocer

At the beginning of March, Repsol opened its first 10 service stations in Mexico City and already has agreements for the opening of 25 additional stations, in the CDMX metropolitan area.

Im alliance with OctanFuel group, formed by more than 300 local entrepreneurs, Repsol will open their first gas stations in Veracruz and Puebla.

As other companies have done, Repsol will offer Neotech fuels in its stations, a formula that, according to the company itself, will bring the accumulated experience in the most demanding motor competitions, such as the World Motorcycle World, the Dakar or the Formula 1 Championships.

Repsol assures that they have installed new own manufactured pumps in their gas stations, where they have installed the Repsol Safe Station System for volumetric control, to reinforce billing and remote monitoring of the pumps.

In addition to distributing its lubricants, in the area of ​​exploration and production of hydrocarbons six exploration blocks were awarded to Repsol in the oil bidding rounds, in partnership with local companies.

FROM: El Sol de México / The Yucatán Times / 20 April 2018

Trudeau meets with Mexican president at critical time in NAFTA talks

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From: Lee Berthiaume / The Canadian Press / Times Colonist / 13 April

 

LIMA, Peru — Two of the three political leaders with the most at stake at the NAFTA table huddled Friday behind closed doors, their most senior trade lieutenants alongside, in hopes of unlocking a mutually beneficial solution to the cross-border conundrum posed by U.S. President Donald Trump.

Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto gathered on the sidelines of a major international summit in Peru’s capital, along with Foreign Affairs Minister Chrystia Freeland and Mexico’s economy secretary Ildefonso Guajardo.

 U.S. Trade Representative Robert Lighthizer pulled out of the summit at the last minute, sending his deputy, C. J. Mahoney, in his place.

The sit-down, the first face-to-face between the two leaders since November, comes at a critical time, with Canada, Mexico and the U.S. all looking for a breakthrough in the ongoing effort to update the North American Free Trade Agreement — and Trump’s wild-card trade strategies doing little to clear the air.

It was also a chance for Trudeau to take stock of Mexico’s position — and perhaps share strategies — before the prime minister heads into a meeting Saturday with U.S. Vice-President Mike Pence.

Pence is in Peru instead of Trump, who was originally scheduled to attend but decided against it at the last minute, ostensibly to deal with the American response to a chemical attack in Syria. Earlier this week, Trump said he was prepared to “renegotiate forever” to get a good NAFTA deal.

Trudeau and Pena Nieto made small talk as members of the media captured the start of their meeting.

But the presence of several senior Mexican trade officials, as well as Freeland — Trudeau’s most trusted point person on NAFTA — left little doubt about the subject that would dominate the agenda once the doors were closed.

Trudeau’s meetings with Pena Nieto and Pence come as the three are attending the Summit of the Americas, which is held every four years and brings together leaders from across the Western Hemisphere.

The prime minister started his day Thursday by meeting Peruvian President Martin Vizcarra, who served as Peru’s ambassador to Canada before the previous president was forced to resign over a scandal last month.

Trudeau delivered a 10-minute address to business leaders from across the Americas encouraging them to invest in Canada, noting that the country has free trade agreements with dozens of countries around the world.

Even as his government struggles to deal with a pipeline crisis at home, one that has forced him to return to Canada on Sunday before resuming his travels to Europe, Trudeau pitched his country as a great place to invest, telling hundreds of business leaders “that big things can get done in Canada.”

More than half the countries with which Canada has free trade agreements are in the Americas, Trudeau said, and the hope is to add a deal with Latin America’s largest trading bloc, Mercosur, to that tally.

“Even in this age where the value of trade is being questioned by some, we have successfully negotiated landmark agreements with Europe and with Asia,” Trudeau added — a not-so subtle dig at protectionists like Trump.

The prime minister went on to emphasize Canada’s skilled labour force, low unemployment and debt-to-GDP ratio, recent federal investments in infrastructure and a new investment agency as proof that Canada is open for business.

The message appeared well received, and Kenneth Frankel, president of the Canadian Council for the Americas, said the region offers a natural opportunity for Canada — particularly as it looks for a northern partner who isn’t Trump.

Yet Siegfried Kiefer, president of Calgary-based engineering firm Atco Ltd., said Latin American leaders have told him they need massive new investments in infrastructure to grow their economies first.

On that front, Canada’s own record on infrastructure and “national-interest projects” has room for improvement, Kiefer said, including Kinder Morgan’s Trans Mountain pipeline, which is at the centre of a fierce battle between the Alberta and B.C. governments.

“The business community is generally looking for proof in the pudding,” he said.

“The public unrest relative to some of these projects is really what you’re trying to deal with. And that in my mind deals with how do you gain the trust of the people of the country that you have looked at the merits of the project objectively.”

Trudeau’s day also included hosting a lunch with representatives from the 15-country Caribbean Community, where he announced $25 million in new funding to help the region deal with natural disasters such as hurricanes.

The prime minister is also scheduled to meet with Chilean President Sebastien Pinera, who took office in March and whose country is an important political and trade partner with Canada.

From: Lee Berthiaume / The Canadian Press / Times Colonist / 13 April

International Energy Forum: Mexico eyes strong energy ties with India

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From:Jyoti Mukul  / Business-standard / 12 April 

Mexico is looking to enhance its energy ties with India through greater participation of Indian companies, especially in meeting its gasoline deficit.

The Latin American country will conduct its first shale auction in September, but before that it will carry out another round of auction of onshore conventional blocks in July, in which Indian companies are likely to take part. Mexico is among the top five crude oil suppliers to India.

In an interview with Business Standard, Aldo Flores-Quiroga, deputy minister for hydrocarbons, Mexico, said, “Indian companies can participate in the full value chain. We have investment requirement in upstream, mid-stream and downstream. Mexico has opened up the sector through a competitive and transparent process.”

Mexico’s shale blocks are in Burgos Basin, in the northwestern border state of Tamaulipas, where state-owned oil company Pemex has drilled some 20 exploratory wells. The Mexican basin is considered an extension of America’s Eagle Ford basin, which revolutionised shale gas and oil production. Flores-Quiroga said Mexico was a net importer of natural gas and gasoline (petrol). “Mexico is the sixth largest market for petroleum products in the world, and it imports 60-70 per cent of its gasoline requirement. So there is an opportunity for investment,” he said.

Almost three years ago, Mexico started opening up the oil sector after 60 years. “Response from inside and outside Mexico has been amazing. We had one company that was in charge of the full value chain. Now, we have over 150 national and international companies in the oil sector. Those companies have announced investment commitment close to $200 billion so far, of which $150 billion is in upstream,” he said, adding, “Should they reach the commercial stage, we will see $150 billion invested over the life of project.”

The minister said it was a similar story in the mid and downstream sectors. Its natural gas market has over 60 registered participants and 24 companies engaged in daily transactions. “The gasoline market, where we would like India to participate, has also been transformed. We had one gasoline brand, now we have 40,” he said.

The country, he said, still needed to “find depth in storage and distribution segment”. “We have a lag in the energy infrastructure. With this opening, we expect to see more investment to improve the logistics segment.”

Entering the Mexican market, however, could be tricky, as a change in the political regime is scheduled for July. The front-running Left leaning party said it would review the liberal investment policy in the oil sector. The deputy minister, nonetheless, ruled out any change in policy, stating it was supported by the country’s constitution. Besides, there are independent trade commissions.

 

From:Jyoti Mukul  / Business-standard / 12 April 

Mexico’s Sureste Basin Returns To Super Basin Spotlight

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From: Hartenergy / 6 April

HOUSTON—The flurry of bidding activity from oil and gas companies willing to shell out millions of dollars for drilling rights in the shallow waters of the Gulf of Mexico (GoM) during Mexico’s latest bidding round showed there must still be something special about the Sureste (Southeast) Basin.

“I’ve never seen a structure like it in my career,” Mark Shann, subsurface director for Sierra Oil and Gas, said of Sureste during the AAPG’s recent Global Super Basins Leadership conference.

The multiplay basin, which includes prolific sub-basins such as Sonda de Campeche and Chiapas-Tabasco, spans about 65,000 sq km and is believed to hold 50 billion barrels of recoverable oil in the GoM’s shallow water and beyond. Its oil-prone prowess gained prominence in 1976 with Mexico’s game-changing Cantarell oil field discovery. Since then the basin has served as the main hydrocarbon-bearing province for Mexico, which is working to reverse declining production with global players eagerly chomping at the bit in search of oil.

RELATED: Southeast Basin Lures Oil Companies To Mexico’s Shallow Water

The historic Zama discovery made in 2017 by a Talos Energy-led consortium that includes Sierra and Premier Oil and another discovery—Amoca—by Italy’s Eni in 2017 have kept the basin in the spotlight, indicating it still has more to give. The Zama well, the first well drilled by the private sector since Mexico opened its doors to foreign investors, hit 170 m to 200 m (558 ft to 656 ft) of net oil pay in Upper Miocene sandstones. Initial gross original oil in place estimates ranged from 1.4 billion barrels (Bbbl) to 2 Bbbl.

Some would call it the rebirth of a super basin.

Shann said the basin—along with neighboring Tampico-Misantla—has all the qualities of a super basin.

“If you’re going to go into a super basin, you need at least one fantastic source rock and it has to be a mature source rock,” Shann said. He added that multiple reservoirs are also needed. “Having multiple reservoirs takes away the dependency of one reservoir working out or not, and you need seals to hold back hydrocarbons in their reservoirs.”

Having a diversity of traps is fantastic, he added, noting other attributes also define a super basin. These include having a regulatory framework in which to make the entire business work and super data, something Shann said Sureste Basin has plenty.

“Four years ago when we started our company we couldn’t get all seismic data from the country. Today you can access all the seismic,” Shann said. “You can access any well that is older than two years, and there are 39,000 wells in the country. The ability mine data and therefore to compete on an equal level playing field is hugely important,” especially for a small company competing against supermajors.

Sierra has picked up 11,000 sq km of wide azimuth data from Schlumberger and source rock is visible, he said. “The super data has really helped to underpin a story of success in one of the world’s greatest super basins.”

Today Sierra is focused mainly on Sureste, which Shann said extends beyond shallow and into deepwater.

The company said on its website that Sureste’s original oil and gas in place is about 220 Bboe, and the fact that it has numerous mature fields—including Ku Maloob Zaap and Sihil—and little reinvestment signals “significant opportunity for growth.”

Its reservoirs are associated with structural, salt tectonics, stratigraphic and combined traps, and the main structural styles include normal faulting with rotated blocks (Late Miocene-Holocene), salt cored anticlines and salt rollers and diapirs (Jurassic-Late Cretaceous), according to Mexico’s National Hydrocarbons Commission.

In terms of source rock potential, Shann said “we’re definitely in a super basin.” He spoke about how the Zama discovery shed more light on source rock thickness. Taking into account a conservative 50% migration loss among other factors, the company was able to determine the source rock must be about 200 m thick.

Shann said the company and its partners’ plan to test the Jurassic next year.

“Sureste is one of those amazing salt-related basins,” he added, speaking highly of the carbonate potential of the basin in Mexican waters and on the U.S. side. “I think we can still find some big carbonate fields in the Campeche Slope.”

Located about 37 miles offshore, Zama is between Eni’s Amoca appraisal well in the Lower Pliocene and Pan American’s Hokchi 2 in the Middle Miocene.

“Between the three of us, we’re exploiting different parts of this basin, which helps the industry’s understanding of the whole basin,” Talos CEO Tim Duncan told Hart Energy’s Oil and Gas Investor last summer.

RELATED: Talos Energy CEO Talks About Historic Zama Well

Talos, which will merge with Stone Energy, said in its March 15 fourth-quarter earnings release that the company is in the appraisal planning stages for the Zama-1 discovery. Zama-1 is located in Block 7 of the Sureste Basin at a water depth of about 165 m.

Other exploration opportunities exist, according to Talos.

Talos holds a 35% participating interest with Sierra holding 40% and Premier, 25%.

From: Hartenergy / 6 April

 

Mexico’s economy minister says odds of a Nafta deal ‘in principle’ at 80%

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From: Market Watch / 9 April

Mexico’s economy minister, Ildefonso Guajardo, said in a TV interview on Monday that the likelihood of signing a renegotiated pact ‘in principle’ on the North American Free Trade Agreement is about 80%. Guajardo, however, said he didn’t expect a Nafta deal would be struck this week, but would likely be signed around the first week of May. He speculated that the U.S. and would be inclined to complete a deal ahead of coming midterm elections. Nafta negotiators are currently meeting in Washington, D.C., for their eighth round of talks. Last week, President Donald Trump said he was looking for a deal in principle at the Summit of the Americas in Lima, Peru, next week. The Mexican peso USDMXN, -0.3324% which started Monday’s session weaker, climbed 0.2% higher versus the dollar, with one buck fetching 18.2450 pesos. The iShares MSCI Mexico ETF EWW, +1.29% was up 0.5% in response.

From: Market Watch / 9 April

 

 

Full list of U.S. products that China is planning to hit with tariffs

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FROM: Usatoday / 5 de abril  de 2018

China announced additional tariffs on 106 U.S. products Wednesday, in a move likely to heighten global concerns of a tit-for-tat trade war between the world’s biggest economies.

The effective start date for the new charges will be revealed at a later time, though China’s Ministry of Commerce said the tariffs are designed to target up to $50 billion of U.S. products annually.

More: Stocks fall as China tariff threat hits Boeing, Ford shares as trade war fears intensify

More: Brewing trade war looms over oil markets as tariff battle escalates

Below is the full list of products that are set to be subject to duties.

Yellow soybean
Black soybean
Corn
Cornflour
Uncombed cotton
Cotton linters
Sorghum
Brewing or distilling dregs and waste
Other durum wheat
Other wheat and mixed wheat
Whole and half head fresh and cold beef
Fresh and cold beef with bones
Fresh and cold boneless beef
Frozen beef with bones
Frozen boneless beef
Frozen boneless meat
Other frozen beef chops
Dried cranberries
Frozen orange juice
Non-frozen orange juice
Whiskies
Unstemmed flue-cured tobacco
Other unstemmed tobacco
Flue-cured tobacco partially or totally removed
Partially or totally deterred tobacco stems
Tobacco waste
Tobacco cigars
Tobacco cigarettes
Cigars and cigarettes, tobacco substitutes
Hookah tobacco
Other tobacco for smoking
Reconstituted tobacco
Other tobacco and tobacco substitute products
SUVs with discharge capacity of 2.5L to 3L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for SUVs (4 wheel drive)
Vehicles with discharge capacity of 1.5L to 2L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 1000ml, but not exceeding 1500ml for SUVs (4 wheel drive)
Passenger cars with discharge capacity 1.5L to 2L, 9 seats or less
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 1000ml, but not exceeding 1500ml for 9 passenger cars and below
Passenger cars with discharge capacity of 3L to 4L, 9 seats or less
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 3000ml, but not exceeding 4000ml for 9 passenger cars and below
Off-road vehicles with discharge capacity of 2L to 2.5L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2000ml, but not exceeding 2500ml for off-road vehicles
Passenger cars with discharge capacity of 2L to 2.5L, 9 seats or less
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2000ml, but not exceeding 2500ml for 9 passenger cars and below
Off-road vehicles with discharge capacity of 3L to 4L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 3000ml, but not exceeding 4000ml for off-road vehicles
Diesel-powered off-road vehicles with discharge capacity of 2.5L to 3L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for diesel-powered off-road vehicles
Passenger cars with discharge capacity of 2.5L to 3L, 9 seats or less
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for 9 passenger cars and below
Off-road vehicles with discharge capacity of less than 4L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement not exceeding 4000ml for off-road vehicles
Other vehicles which are equipped with an ignited reciprocating piston internal combustion engine and a drive motor and can be charged by plugging in an external power source
Other vehicles that are equipped with a compression ignition type internal combustion engine (diesel or semi-diesel) and a drive motor, other than vehicles that can be charged by plugging in an external power source
Other vehicles which are equipped with an ignition reciprocating piston internal combustion engine and a drive motor and can be charged by plugging in an external power source
Other vehicles that are equipped with a compression-ignition reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source
Other vehicles that only drive the motor
Other vehicles
Other gasoline trucks of less than 5 tons
Transmissions and parts for motor vehicles not classified
Liquefied Propane
Primary Shaped Polycarbonate
Supported catalysts with noble metals and their compounds as actives
Diagnostic or experimental reagents attached to backings, except for goods of tariff lines 32.02, 32.06
Chemical products and preparations for the chemical industry and related industries, not elsewhere specified
Products containing PFOS and its salts, perfluorooctanyl sulfonamide or perfluorooctane sulfonyl chloride in note 3 of this chapter
Items listed in note 3 of this chapter containing four, five, six, seven or octabromodiphenyl ethers
Contains 1,2,3,4,5,6-HCH (6,6,6) (ISO), including lindane (ISO, INN)
Primarily made of dimethyl (5-ethyl-2-methyl-2oxo-1,3,2-dioxaphosphorin-5-yl)methylphosphonate and double [(5-b Mixtures and products of 2-methyl-2-oxo-1,3,2-dioxaphosphorin-5-yl)methyl] methylphosphonate (FRC-1)
38248600a articles listed in note 3 to this chapter containing PeCB (ISO) or Hexachlorobenzene (ISO)
Containing aldrin (ISO), toxaphene (ISO), chlordane (ISO), chlordecone (ISO), DDT (ISO) [Diptrix (INN), 1,1,1-trichloro-2 ,2-Bis(4-chlorophenyl)ethane], Dieldrin (ISO, INN), Endosulfan (ISO), Endrin (ISO), Heptachlor (ISO) or Mirex (ISO). The goods listed in note 3 of this chapter
Other carrier catalysts
Other polyesters
Reaction initiators, accelerators not elsewhere specified
Polyethylene with a primary shape specific gravity of less than 0.94
Acrylonitrile
Lubricants (without petroleum or oil extracted from bituminous minerals)
Diagnostic or experimental formulation reagents, whether or not attached to backings, other than those of heading 32.02, 32.06
Lubricant additives for oils not containing petroleum or extracted from bituminous minerals
Primary Shaped Epoxy Resin
Polyethylene Terephthalate Plate Film Foil Strips
Other self-adhesive plastic plates, sheets, films and other materials
Other plastic non-foam plastic sheets
Other plastic products
Other primary vinyl polymers
Other ethylene-α-olefin copolymers, specific gravity less than 0.94
Other primary shapes of acrylic polymers
Other primary shapes of pure polyvinyl chloride
Polysiloxane in primary shape
Other primary polysulphides, polysulfones and other tariff numbers as set forth in note 3 to chapter 39 are not listed.
Plastic plates, sheets, films, foils and strips, not elsewhere specified
1,2-Dichloroethane (ISO)
Halogenated butyl rubber sheets, strips
Other heterocyclic compounds
Adhesives based on other rubber or plastics
Polyamide-6,6 slices
Other primary-shaped polyethers
Primary Shaped, Unplasticized Cellulose Acetate
Aromatic polyamides and their copolymers
Semi-aromatic polyamides and their copolymers
Other polyamides of primary shape
Other vinyl polymer plates, sheets, strips
Non-ionic organic surfactants
Lubricants (containing oil or oil extracted from bituminous minerals and less than 70% by weight)
Aircraft and other aircraft with an empty weight of more than 15,000kg but not exceeding 45,000kg

FROM: Usatoday / 5 de abril  de 2018

 

 

Mexico’s Pemex signs shale gas exploration deal with Lewis Energy

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FROM: Hydrocarbons-Technology / 5 de abril  

 

State-owned company Petróleos Mexicanos (Pemex) has signed a contract with US-based Lewis Energy to explore and extract shale gas from the Olmos field in the Mexican state of Coahuila.

The parties also intend to assess and develop the Eagle Ford formation in Mexico.

The deal will see an investment of $617m, targeting daily production of 117 million cubic feet of natural gas (BTU) by 2021. The Olmos field comprises an estimate of 800 billion BTU.

In a statement, Pemex said: “Pemex is actively using the tools and flexibility the energy reform has granted the company to share financial and operating risks with third parties and increase the strategic investments that will maximise the value of its hydrocarbon production.”

“Pemex is actively using the tools and flexibility the energy reform has granted the company, to share financial and operating risks with third parties.”

Lewis Energy operates unconventional fields in the south of Texas, US, and has drilled in excess of 500 wells in Eagle Ford to produce natural gas.

The company has provided services for the Olmos field under a public works contract for the past 14 years.

This latest contract is expected to enable Pemex to increase profitability in line with its business plan for the 2017-2021 period.

Earlier this month, Pemex and a consortium involving Tecpetrol and Grupo R signed a contract to explore and extract hydrocarbons from the Misión block, which is located in the states of Tamaulipas and Nuevo León.

 

FROM: Hydrocarbons-Technology / 5 de abril  

 

 

A closer look at round seven of the NAFTA negotiations

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FROM: Lexology / Dentons / 19 de marzo de 2018

 

Round seven of the NAFTA negotiations concluded in Mexico City on March 5, 2018. The talks ended with United States Trade Representative, Robert Lighthizer, indicating that the US is prepared to walk away from NAFTA and replace it with separate bilateral agreements. He urged the parties to finish the negotiations quickly, “Now our time is running very short…I fear the longer we proceed, the more political headwinds we will feel.”1 Lighthizer alluded to several ‘political headwinds’ that could impact the future of negotiations, including the presidential election in Mexico, provincial elections in Ontario and Quebec, and the US midterm elections.

The talks were impacted midweek by an announcement from President Trump that his Administration would impose tariffs on steel and aluminum imports. The proposed tariff would be 25% for steel imports and 10% for aluminum imports.

The proposed tariff triggered controversy within the Republican Party and the Administration itself. US House Speaker Paul Ryan, backed by a number of Republicans who support the President, has urged President Trump to back away from threats of a tariff, fearing that it could spark a trade war.2 In a letter to the President, 107 House Republicans wrote, “We urge you to reconsider the idea of broad tariffs to avoid unintended consequences to the U.S. economy and its workers.”3 On March 6, Gary Cohn, President Trump’s economic advisor, resigned. Cohn was a voice of free trade in a White House that is ambiguous at best on trade agreements.4

While the tariffs announced by President Trump ultimately excluded Canada and Mexico “for now”, the threat of tariffs proposal loomed over the remainder of the negotiations. Reportedly, the proposed tariff was the starting point for many discussions and was often referred to as “the elephant in the room”.5 The tariff proposal further impacted negotiations when President Trump linked the tariffs to the NAFTA negotiations. On March 5, he tweeted “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed”.6 Canadian Trade Minister Chrystia Freeland responded in her closing remarks by saying “Canada would view any trade restrictions on Canadian steel or aluminum as absolutely unacceptable.”7 Mexican Economy Minister Ildefonso Guajardo responded by tweeting “Mexico shouldn’t be included in steel & aluminum tariffs. It is the wrong way to incentivize the creation of a new and modern #NAFTA”.8 On March 7, President Trump announced that he would initially exclude Canada and Mexico from the proposed tariff. However, the exemption could be rescinded if Canada and Mexico do not agree to an updated NAFTA.9

Notwithstanding the short term exemption on steel, supported by the Steelworkers and Speaker Ryan, President Trump again tweeted on March 5 on the Canadian farm system and how Canada “must treat [US] farmers much better.” Thus, US agricultural demands remain on the table, while Canada continues to steadfastly defend its agricultural sector, including the supply management system. Whether and how the negotiators will successfully bridge this issue remains to be seen.

Limited progress was made in other areas, such as the rules of origin provisions. Jason Bernstein, the US negotiator for rules of origin, was called back to Washington on February 26 to consult with US industry representatives, thus halting negotiations. Talks amongst technical experts are scheduled to resume in advance of the next formal round of negotiations. Similarly, investor-state dispute mechanisms and the proposed sunset clause were not emphasized this round.

With respect to energy, we understand there is agreement to include both a standalone chapter on energy as well as energy related sections in other chapters. The standalone chapter, because it will likely include Mexico unlike certain energy provisions in the current NAFTA, will focus on “more interconnectivity across the networks of energy in North America” and will seek to recognize the changes Mexico has made to allow for foreign investment in its energy sector. 10

Negotiators did close a number of smaller chapters, including regulatory practices, sanitary and phytosanitary measures, and telecommunications. Additionally, Steve Verheul, Canada’s chief negotiator, commented that the parties were close to completing sections on technical barriers but required more time on sections regarding the environment.11 While reportedly half of the chapters are between 80-90% settled, Lighthizer commented that only 6 of NAFTA’s 30 chapters have been officially closed.

With respect to the sanitary and phytosanitary chapter that governs food safety, negotiators have settled on a fast-track system that would prioritize requests between the US, Mexico and Canada. This system is a first of its kind in international food safety agreements. Minister Guajardo said the chapter will help facilitate agricultural trade and it “guarantees animal and vegetable sanitation based in science.”12Additionally, sector annexes on proprietary food formulas and chemicals were closed this round. The annex protects the intellectual property of certain mixes and ingredients and allows for more regulatory cooperation for the use of chemicals. 13

The eighth round of NAFTA talks is expected to take place in Washington in April, subject to availability of Ministers who are traveling for other international meetings, including the upcoming Free Trade Area of the Americas summit.14

 

 

FROM: Lexology / Dentons / 19 de marzo de 2018

Energy Reform Could Generate $1T in Foreign Investment for Mexico by 2040

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FROM:  Natural Gas Intelligence / Ronald Buchanan / 19 de marzo de 2018

 

Mexico’s energy reform could generate $1 trillion of direct foreign investment by 2040, said leaders of the industry lobby, Mexican Association of Hydrocarbon Companies, earlier this month.

The association, known by its Spanish acronym Amexhi, was presenting its Agenda 2040, a huge volume that reviews the industry’s past, from its origins at the beginning of last century; the present, including current uncertainties; and a future through 2040 that would “transform Mexico.”

Amexhi President Alberto de la Fuente admitted that the investment goal is ambitious.

The Agenda presupposes that power and hydrocarbons would account for  4% of gross domestic product by the target date. And, de la Fuente emphasized, it would require accurate instrumentation of the reform’s precepts, “as well as the resolution of challenges that are a legacy of the previous model.”

The defense of the Agenda would require four watchwords, he added: “Steadfastness, competence, transparency and knowledge.”

Amexhi has taken pains to remain neutral during the current campaigns for Mexico’s July 1 presidential election.

“All the candidates have shown interesting elements in their policy statements,” said Enrique Hidalgo, president of ExxonMobil Exploracion y Produccion Mexico, and the coordinator of Agenda 2040.

Some of the industry group’s sympathizers, however, have claimed that the pronouncements of the current leader in the race, Andres Manuel Lopez Obrador, who helms the left wing nationalist Morena party, has been less than steadfast in support of the reform. They also claim that his proposal for new refineries show a lack of understanding of the industry.

At the moment, the No. 2 in the race is Ricardo Anaya, leader of the National Action Party, the traditionally pro-business PAN. But Anaya has yet to issue any policy statements on energy.

Anaya also has embraced policies of left-wingers with whom he has formed an alliance. With them, he signed a statement of “No to the gasolinazo” — the liberation of gasoline prices.

Running third in the opinion polls is senior technocrat Jose Antonio Meade of the incumbent Institutional Revolutionary Party, the PRI. Meade was hand-picked by President Enrique Pena Nieto.

Meade’s loyalty to the energy reform has not been questioned. However, his loyalty to Peña Nieto has so far placed a political millstone around his neck. Pena Nieto is said to be the most unpopular Mexican president since political opinion polls were first published in the nation late in the 20th century as its democratic era began to dawn.

The democratic dawn has begun late for the former state monopolies of oil and natural gas, Petroleos Mexicanos (Pemex) and power, Comision Federal de Electricidad, the CFE.

Neither is free to set a budget, as Congress and the Finance ministry keep a tight grip on their spending. The Pemex and CFE unions, particularly that of Pemex, have corporate powers that go well beyond the defense of the interests of the workers in terms of pay and conditions.

The challenge are considerable, said senior analyst Arturo Carranza of Mexico’s National Institute of Public Administration. But, he added, the rewards are realistic.

Agenda 2040 proposes 15 bid rounds to lease oil and gas acreage. Since the 2013-14 reform was enacted, there have been two rounds featuring eight separate completed lease auctions. Three auctions are currently underway for the third round.

“But the pace has been stepped up and it can be pushed further,” Carranza said. “The country’s potential is beyond question for the industry. And the government has to do its part by identifying opportunities that the companies can grasp. In return, it can reap the benefits, such as royalties, on behalf of the nation.

“At the same time, the government has to cast off the restrictions on the budgets of Pemex and the CFE,” he added.

De la Fuente said at the presentation that about 80% of the nation’s oilfields are currently in decline, “but the best tool that’s available to revert the trend is the energy reform.”

 

 

FROM:  Natural Gas Intelligence / Ronald Buchanan / 19 de marzo de 2018

Mexico Economy Minister: NAFTA Must Remain Trilateral Accord

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FROM: Voa News / Reuters / 3 de marzo de 2018

MEXICO CITY — Mexico’s Economy Minister Ildefonso Guajardo on Tuesday rejected making a bilateral trade treaty with the United States, saying the North American Free Trade Agreement, which is currently being renegotiated, must remain a three-country accord.

On Monday, U.S. Trade Representative Robert Lighthizer said time to rework the deal was running “very short” and again raised the possibility of the United States pursuing bilateral deals with its partners, while stressing that Washington would prefer a three-way agreement.

NAFTA “has to be a trilateral accord, given the conditions of integration in North America,” Guajardo said in an interview with the Televisa network on Tuesday. “It must be that way.”

Lighthizer said on Monday that Mexico’s presidential election and the looming expiry of a congressional negotiating authorization in July puts the onus on the United States, Mexico and Canada to come up with a plan soon.

The latest round of talks have been clouded, however, by U.S. President Donald Trump’s plans to launch metals tariffs. On Monday, Trump tweeted that “tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.”

Guajardo said on Tuesday that if the U.S. government were to push ahead with metals tariffs that included Mexico, the country would be forced to respond with politically targeted tit-for-tat responses.

“There’s a list (of U.S. products) that we are analyzing internally, but we won’t make it public, we’re going to wait,” Guajardo said.

He also said that in a meeting in Washington last week, in which he met Commerce Secretary Wilbur Ross, he told the U.S. official that Mexico should not be included in the proposed tariffs.

“We’re allies in national security … our industries are highly integrated, we buy more (U.S.) steel than we sell, and so there’s no point in shooting oneself in the foot,” he said.

 

 

FROM: Voa News / Reuters / 3 de marzo de 2018