Tag Archive for: México

Mexico to Discuss Security With U.S. in Parallel to Nafta

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From: Bloomberg / Eric Martin / 11 de Diciembre de 2017

 

Mexico’s top diplomatic and interior officials will visit Washington this week to discuss security cooperation with their U.S. counterparts at the same time that negotiators work to overhaul Nafta, according to four people familiar with the plans.

 

The visit by Mexican Foreign Relations Minister Luis Videgaray and Interior Minister Miguel Angel Osorio Chong to meet with Secretary of State Rex Tillerson and Homeland Security Secretary Kirstjen Nielsen on Thursday is a follow-up to meetings in May, according to the people, who asked not to be named before the agenda is made public. It’s aimed at coming up with strategies to combat transnational criminal organizations, the people said. The press office of the Mexican Foreign Ministry and the U.S. State Department declined to immediately comment.

 

The meetings coincide with a sitdown by negotiators from the U.S., Mexico and Canada to update the North American Free Trade Agreement at the demand of U.S. President Donald Trump, who says the deal is responsible for hundreds of thousands of lost manufacturing jobs in the U.S. In an interview last month, Videgaray said that if the Nafta renegotiation encounters trouble, it could impact other areas of cooperation with the U.S. such as security and immigration. Mexico this year has seen homicides surge to the highest levels of this century, surpassing the previous record levels of the drug war from 2010 to 2012.

“It’s good for Mexico that we cooperate with the U.S. on security and also on migration and many other issues,” Videgaray said in the interview in Vietnam on Nov. 11. “But it’s a fact of life and there is a political reality that a bad outcome on Nafta will have some impact on that,” he said. “We don’t want that to happen, and we’re working hard to get to a good outcome.”

Videgaray told reporters last month that Mexico is prepared for the end of Nafta if it can’t reach a deal with the U.S. and Canada that benefits the nation. The three countries in August began talks to rework the pact after Trump pledged during the 2016 campaign to overhaul or end it.

This Week’s Talks

The latest meetings to revamp Nafta, taking place at the Mayflower Hotel, will run through Friday, largely out of the spotlight. Cabinet-level officials aren’t scheduled to attend for the second time since negotiations began, and the Trump administration is preoccupied with efforts to push through tax cuts by year-end and avoid a government shutdown. Videgaray’s portfolio includes the broad bilateral relationship with the U.S., while a team led by Economy Minister Ildefonso Guajardo has been focused on the commercial details of the Nafta negotiation.

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From: Bloomberg / Eric Martin / 11 de Diciembre de 2017

German firms more upbeat on Mexico, wary on NAFTA collapse – survey

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From Euronews / Dave Graham, Andrew Hay / 5 de Diciembre de 2017

German companies are more upbeat about the business outlook in Mexico than they were a year ago, but more than two-thirds believe that an end to the NAFTA trade deal would hurt their business there, a survey showed on Tuesday. The poll by the German-Mexican chamber of industry and commerce (CAMEXA) showed that more companies planned to invest and increase staffing than they did when surveyed a year ago, shortly after U.S. President Donald Trump’s election victory.

Some 54.6 percent of firms said they would boost staffing levels in 2018, a rise of nearly 10 percentage points from a year earlier. Almost 68 percent said they planned investment in the coming year, an increase of some 6 percentage points. The survey, which was carried out at the end of November, showed that 69 percent of firms believed that a collapse in the North American Free Trade Agreement (NAFTA) would have a negative impact on their business in Mexico. A total of 130 companies took part, CAMEXA said. Trump has repeatedly threatened to withdraw from NAFTA if he cannot rework it to the advantage of the United States. Negotiations between the United States, Mexico and Canada to rework NAFTA have made only halting progress so far, and many major points of disagreement remain with the Trump administration seeking to promote his America First agenda. The three nations have vowed to continue talks to overhaul the almost 24-year-old trade deal through March, when the Mexican 2018 presidential campaign begins in earnest.

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From Euronews / Dave Graham, Andrew Hay / 5 de Diciembre de 2017

Trade turnover between Russia and Mexico grows by more than 40%

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From: TASS / MEXICO CITY, October 23

Trade between Russia and Mexico demonstrates a positive trend in 2017, Russian Export Center CEO Petr Fradkov said on Monday at the opening of a business mission in Mexico City.

“In 7 months of 2017, the trade turnover between our countries has grown quite actively,” said Fradkov, adding that the growth surpassed 40%. He noted that out of $1.5 bln of trade turnover for this period, almost $1 bln accounts for non-resource exports.

This includes exports of machinery, food products and other non-oil and gas materials,” Fradkov added.

The Russian delegation includes Minister of Industry and Trade Denis Manturov, President of United Aircraft Corporation (UAC) Yuri Slyusar, and representatives of a number of companies from various industries.

 

 

From: TASS / MEXICO CITY, October 23

Mexico Seeks New Home for Its Oil as Gulf Coast Turns to Canada

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by Sheela Tobben and Amy Stillman

“Shipments of crude to the U.S. from Mexico fell to a new low last week, extending a trend that go back to when the Energy Information Administration began compiling preliminary weekly import data in June 2010.

Imports totaled 290,000 barrels a day in the week ended April 14, a 43 percent weekly drop that may have been triggered by weather-related closings at Mexico’s key export ports this month. But the shipments have been sinking for years. The 52-week average through April 14 was 561,000 barrels a day, down from about 630,000 a year earlier.

“The latest import levels are continuing a long trend,” Court Smith, director of research with shipbrokers MJLF & Associates, said by instant message from Stamford, Connecticut. “This is because of a combination of recent rise in refinery rates and historically declining production in Mexico.”

Production in Mexico has declined for 12 years in a row and this year will be less than 2 million barrels a day, the lowest level since 1980, according to Petroleos Mexicanos, the state producer, hurting sales of the benchmark Maya heavy crude.

“Pemex’s six refineries are also using more of the crude, lessening the need for exports. They processed 930,400 barrels a day in February, the most since June of last year, according to Mexico’s Energy Information Agency. The company expects to raise rates further to boost gasoline supply in the near term.

Refiners on the U.S. Gulf Coast, which are the primary users of Mexican crude, have been turning north for supplies, said Andy Lipow, president of Lipow Oil Associates, a Houston-based consulting company. Canadian imports averaged 3.16 million barrels a day over the 52 weeks through April 14, up from about 3.02 million a year earlier.

“Canadian crudes are making more headway into the U.S judging from the full pipes coming down from Canada,” Lipow said by phone Friday. “We do expect to see more heavy crude from Canada when projects like Suncor Energy Inc.’s Fort Hills mine come online toward end of the year.”

Mexico has increasingly turned to Europe and Asia to make up for the U.S. demand shortfall. While overall Mexican crude exports fell in the first half of April, sales to Spain have increased since February, according to estimates from vessel-tracking and U.S. bills of lading data compiled by Bloomberg oil-market specialist Bert Gilbert. Exports to India, South Korea, Japan and China also grew in February, Mexico customs data compiled by Bloomberg show.

“While U.S. Gulf refineries were in maintenance, heavy crude oil producers have had to send their shipments to other regions, such as Asia, where heavy crude has recently strengthened thanks to the OPEC cut,” said Ixchel Castro, an analyst at Wood Mackenzie in Mexico City. “Greater shipments of Maya to Asia allows Pemex to achieve better margins for its exports.”

Mexico crude imports may pick up as gasoline demand rises for summer and refinery maintenance ends, Castro said in an emailed response to questions.

“This is the season where we would normally expect more heavy crude imports for U.S. Gulf Coast coking plants,” she said.

Pemex didn’t respond to requests for comment.”

21 de abril de 2017 16:05 GMT-5 updated  22 de abril de 2017 6:00 GMT-5

Bloomberg

 

Exclusive: Mexico plans second deepwater oil tie-up in Maximino, Nobilis areas – sources

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Reporting by Adriana Barrera, Additional reporting by Alexandra Editing by Dave Graham and and Peter Cooney

“Mexican state-run oil company Pemex plans a second deepwater “farm-out” joint venture in the Maximino and Nobilis areas in the Gulf of Mexico where super light crude has been found near the U.S. border, two people familiar with the matter said.

Speaking this week, the people said Pemex [PEMX.UL] would likely seek approval in June from the National Hydrocarbons Commission, or CNH, the industry regulator, to launch a tender for partners with the aim of announcing a winner in December.

“Maximino-Nobilis may be assigned in December and we hope the CNH will announce it in June,” said one of the sources. The people spoke on condition of anonymity because the plans are not yet public.

A Pemex spokesman said the firm was looking for a partner to develop Maximino and Nobilis, and that the proposal would be submitted for approval by the board in the next few days. The CNH would then need to decide on the time frame, he added.

The farm-outs are a central pillar of the government’s efforts to lure investment to Mexico since Congress opened up the country’s long-closed oil and gas industry to private investment in a legislative drive between 2013 and 2014.

Under the farm-outs, Pemex cannot choose which company would help it develop each project. The ultimate decision lies with the CNH following a round of competitive bids.

The process allows Pemex to share the risks and rewards of expensive deepwater oil development projects.

Australian mining and energy company BHP Billiton (BHP.AX) in December won the right to partner with Pemex in the first deepwater farm-out for the Trion light oil field, less than 50 miles (80 km) from the U.S.-Mexico maritime border.

A separate, shallow water farm-out auction for the Ayin-Batsil field is due to take place in October.

Pemex has sunk two wells in Maximino at a depth of 3,000 meters (9,840 feet), discovering super light crude.

In September 2016, Pemex said it had found super light crude in its Nobilis-1 well, also at some 3,000 meters.

Both areas lie in the Perdido fold belt, like Trion.”

Thu Apr 20, 2017 | 6:57pm EDT

REUTERS

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Mexican Peso’s Top Analyst Says Worst Is Over Even If Nafta Dies

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“Mexico’s peso won’t return to the record lows it reached this year even if the U.S. makes good on threats to undo the trade agreement that transformed Latin America’s second-largest economy into an export powerhouse, according to the currency’s top forecaster.

The selloff that sent the peso plunging to 22 per dollar in the days before Donald Trump’s inauguration was overdone despite the threat to Nafta, said Scott Petruska, a foreign-exchange adviser for Silicon Valley Bank who was the most accurate analyst in the first quarter according to Bloomberg rankings. He correctly predicted that the currency would recover from the rout to become one of the best performers in the world this year.

“The Trump administration seems to have Mexico in its cross hairs which makes everybody very nervous, whether it’s negotiating Nafta or slapping some sort of tariff or border tax on imports from Mexico,” Petruska, who was also the top forecaster for Canada’s dollar, said from Boston. “But we can appreciate that Mr. Trump’s bark is often times worse than his bite.”

The peso plunged 15 percent from Trump’s surprise election win to when he took office as investors speculated he would damp foreign investment and suppress exports to the U.S., the destination for 75 percent of the goods Mexico sends abroad. It erased some of those losses in the first quarter as the central bank raised interest rates and U.S. officials indicated they probably wouldn’t seek to scrap Nafta entirely. Mexico central bank Governor Agustin Carstens said Wednesday that the peso — at about 18.8 per dollar — is still undervalued.

Petruska sees the peso weakening to 20 per dollar by September as traders overreact to whatever trade negotiations get underway, but says it will quickly recover to trade at 19 by the end of the year. The currency will gain to 18.3 per dollar by the end of 2018, he said.

With a benchmark lending rate of 6.5 percent, Mexico offers a higher return on local bonds than peers such as India, Peru and Chile. Volatility in the peso, meanwhile, has plummeted in the last few months and “speculators will feel comfortable going into the carry trade,” Petruska said.”

by Isabella Cota / Bloomberg

6 de abril de 2017 4:00 GMT-5

 

 

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Down 10%, Mexico Oil Reserves Gone in 9 Years without New Finds

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“Mexico’s existing oil reserves are dwindling so fast the country could go dry within nine years without new discoveries.

That’s the message from the National Hydrocarbons Commission, which said Friday that the reserves fell 10.6 percent to 9.16 billion barrels in 2016, from 10.24 billion barrels a year earlier. Once the world’s third largest crude producer, Mexico’s proven reserves have declined 34 percent since 2013.

The decline in proven reserves is driven by record-low drilling activity the last three years, according to CNH Commissioner Hector Acosta. State-owned producer Petroleos Mexicanos drilled 21 wells last year, a record low, after averaging 31 per year since 2010.

“If there isn’t drilling, it is going to be difficult to incorporate new finds,” Acosta said. “The production figures and indicators that we are observing, tell us that there are flaws in the drilling activities being carried out by Pemex.”

The diminished production comes from a combination of reduced investment and the continued maturation of fields, said Cesar Alejandro Mar, Adjunct Director of Reserves. He set 8.9 years as a time frame for the reserves to run out if no new exploration occurs.

Pemex, meanwhile, said in an e-mailed statement that it added 684 million barrels of probable crude to the reserves last year, and “will continue working to increase reserves and restitution rates to higher levels.”

Monopoly End

Mexico ended Pemex’s production monopoly in 2013 to let private operators develop oil in the country for the first time since the 1930s. Production is set to fall below 2 million daily barrels this year, the lowest levels since 1980, Pemex has said. Overall, crude production has declined every year since 2004.

Given increased crude development activity anticipated in the deep waters of the Gulf of Mexico by private producers, the country’s production is forecast to climb to 3.4 million barrels a day by 2040, according to a report by the International Energy Agency.

Italian producer Eni SpA, which won rights to develop a Gulf of Mexico field in 2015, recorded the country’s offshore find by a foreign company in more than seven decades on March 23.

“Mexico isn’t the only country that has seen its reserves diminished during a difficult time for the industry worldwide,” said Juan Carlos Zepeda, a CNH Commissioner, when the numbers were released. “International oil companies are just now starting to return to an improved investment rhythm.”

by Adam Williams /  Bloomberg

31 de marzo de 2017

 

 

 

 

Mexico ETF Begins to Rebound Follow Trump Punishment

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After being punished last year on speculation that now President Donald Trump could win the 2016 presidential election, the iShares MSCI Mexico Capped ETF (NYSEArca: EWW) is rebounding in earnest this year.

EWW, the largest Mexico ETF trading in the U.S., is higher by more than 9% year-to-date and has surged almost 7% over the past month.

With the peso also sliding in the wake of Trump’s win, the Mexico’s central bank could move forward with more rate hikes to stem the currency’s slide.

Although Mexico’s central bank said the first rate hike earlier this year was not the start of a new tightening cycle, the central bank surprised global investors last month when it boosted borrowing costs by 50 basis points to 4.75%, which is good for the country’s highest interest rate since 2009.

However, some investors believe Mexican stocks still offer value, particularly for investors willing to be patient with EWW.

“The central bank will hold its first $1 billion auction of non-deliverable forward contracts on Monday, offering a way for businesses with expenses in dollars but revenue in local currency to hedge against further declines in the peso. Fitch Ratings has said companies including America Movil SAB and TV Azteca SAB are among the most vulnerable to a weaker peso as their overseas debt gets more expensive in local-currency terms,” reports Isabella Cota for Bloomberg.

Investors who believe the Mexican peso may continue to depreciate but anticipate the markets will improve can look to currency-hedged ETF strategies to diminish the currency risks. For instance, the Deutsche X-trackers MSCI Mexico Hedged Equity Fund (NYSEArca: DBMX) and the recently launched iShares Currency Hedged MSCI Mexico (NYSEArca: HEWW) provide exposure to the Mexico’s market without the added currency risk of a depreciating peso currency.

The peso is an important part of the Mexico investment thesis because exports account for over a third of GDP in Latin America’s second-largest economy. So are oil prices because Mexico is one of the largest non-OPEC producers in Latin America.

The peso is “trading near the average price of the past 200 days — a technical indicator that, when breached, may indicate more gains. Trading volume is lower than average ahead of the auction, according to traders,” reports Bloomberg.

 

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Tom Lydon / ETF TRENDS

March 6, 2017 at 10:29 am

 

Proposed border tax could harm U.S.-Mexico energy trade: official

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A border tax floated by aides to U.S. President Donald Trump is “not a good idea” for bilateral energy trade, a senior Mexican official said on Wednesday, also confirming that Mexico’s second-ever deepwater oil auction would happen this year.

A 20 percent border tax on Mexican imports to the United States has been pitched by the Trump administration as one way to force Mexico to pay for a new border wall, a top campaign promise.

Separately, a so-called border adjustment tax has been proposed by the new administration and its Republican allies in Congress that in theory would tax imports but not exports.

Both proposed taxes face opposition from U.S. oil refiners and automakers, among other sectors, warning they would raise consumer prices.

“We don’t see this kind of a tax as a good idea,” said Aldo Flores, Mexico’s deputy energy minister for hydrocarbons.

“Our position continues to be that free trade and the free flow of these goods has benefited both countries, strengthening the energy security of both,” he said.

Relations between the United States and Mexico are especially tense as Trump has threatened to upend nearly a quarter century of free trade, deport millions of illegal immigrants and build his signature border wall while getting Mexico to pay it, something the Mexican government has said it will not do.

For decades, the two neighbors have nurtured a robust cross-border energy trade, with crude oil produced by state company Pemex sold to U.S. refiners, while American producers sell natural gas and fuels like gasoline and diesel to Mexican buyers.

Last year, the total value of U.S. energy exports to Mexico totaled $20.2 billion, while Mexico exported mostly crude oil worth $8.7 billion to the United States, in a reversal of the historic balance of energy trade between the two countries, according to U.S. Energy Information Administration data.

Similarly, Mexico’s crude shipments could be pressured if the United States approves the new Trump-backed permit for TransCanada’s (TRP.TO) proposed Keystone XL pipeline and the project brings new supplies of Canadian heavy crude to U.S. refineries.

“Supposing that (the pipeline) is completed, that changes the competitive playing field for Mexican crude,” said Flores, adding that producers of oil in Mexico would have to be more creative in how they market their output.

 

DEEPWATER AUCTION

Mexican and Canadian heavy crudes have competed for years for buyers among U.S. Gulf coast refineries.

While Mexico’s oil regulator is planning three new oil auctions later this year, covering shallow water and onshore fields, a new deepwater auction is also planned.

“It will be toward the end of the year,” said Flores, who also sits on the Pemex board and took over as deputy energy minister in August.

He declined to specify where the deepwater blocks would be located.

Flores added that a first-ever auction of shale oil and gas blocks would “probably” be scheduled, noting that necessary regulations would be published before the end of the year.

Last year, Mexico concluded four first-ever oil auctions, part of a landmark energy opening finalized in 2014 that ended Pemex’s decades-long monopoly, including a December deepwater auction that awarded 10 blocks to a wide range of international oil majors.

While Mexican crude output has declined over the past dozen years from a peak of 3.4 million barrels per day, Flores said he expected output to total 1.9 million to 2.0 million bpd in 2018, similar to a forecast of 1.94 million bpd for this year.

 

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David Alire Garcia and Adriana Barrera / Reuters

Wed Feb 15, 2017 | 8:09pm EST

Mexico, NAFTA and energy on the same side

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When it comes to NAFTA and energy, there is no doubt that Mexico gets the better end of the deal with a series of special carve outs for its national industry. The result has been an unbalanced, incongruous relationship between the United States, Mexico and Canada. In other words, when it comes to energy, NAFTA is anything but free trade .

Take the following examples from chapter six of NAFTA, addressing energy trade:

An American company is permitted to open a power plant in Mexico to generate power for Texas, but, according to the provisions carved out for Mexico’s nationalized energy industry, the power plant would have to sell all of its excess power to Mexico’s Federal Electricity Commission (CFE) at the rate negotiated by CFE. ( Annex 602.3(5) ) If a cogeneration plant is built in Mexico with the express purpose of providing power for a Canadian company’s factory in Mexico, then, according to NAFTA, it must sell any excess power to CFE. ( Annex 602.3(5)(b) ) In both cases, the American and Canadian operations face a disadvantage in price negotiations because they are required to sell excess power to CFE only.

When it comes to oil and gas exploration, NAFTA includes a provision requiring the three countries to maintain incentives to encourage companies to find new energy reserves. ( Article 608.1 ) However, in the special provisions, Mexico is exempted from incentivizing – or even permitting – private exploration and development. This special provision makes clear that “the Mexican State reserves to itself” all E&P, nuclear power, foreign trade, transportation, storage, distribution and electrical supply within its own borders. ( Annex 602.3(1) ). In the U.S. and Canada, free trade in energy exploration must be promoted. In Mexico, the government can do what it chooses .

Mexico is allowed to “restrict the granting of import and export licenses for the sole purpose of reserving foreign trade” in a variety of energy goods including (but not limited to): aviation fuel, gasoline, shale and tar sands, diesel oil, most forms of commercial gasses and kerosene. ( Annex 603.6 ). The U.S. and Canada must keep import and export licenses open.

These carve outs meant to favor Mexico’s national energy industries have not been kind to Mexico’s economy, energy supply or business development. Mexico has insisted one form or another of nationalized energy for almost a century . Basic tenants of capitalism explain that a closed, national energy regime prohibits competition, leading to misalignment of resources and prices. Absent a truly robust and well-managed system in Mexico, this is what happened.

In 2014, historically low levels of oil production, higher energy consumption and depleted oil reserves led Mexico amend its constitution to open Mexico’s state energy industries to foreign investment. These changes permitted the Mexican government to auction off certain oil and gas leases to foreign, private companies for development and to allow foreign companies to participate in owning pipelines, refineries, petrochemical plants and even electricity generation. Mexico also committed to bringing gasoline and natural gas prices in line with market prices rather than setting them artificially.

Although the process has not always been smooth – Mexico is experiencing gasoline shortages and spikes in gasoline prices, in part, as a result of these efforts – the overall trend towards liberalization in Mexico’s energy industry is promising. Many companies have bid for offshore leases to produce oil and gas in the Gulf of Mexico and the opportunities to invest in Mexican energy businesses are growing.

Since the Mexican state is no longer the only legal investor, owner, producer, buyer and seller of energy and energy products in Mexico, there is now a potential to renegotiate chapter six of NAFTA and eliminate the special provisions and carve outs for Mexico. This would not only help improve Mexico’s energy situation, but improve trade relations amongst the three North American trade partners.

Grupo México proyecta invertir en energía

Grupo México proyecta invertir en energía

Story by Ellen R. Wald, Ph.D. is a historian and scholar of the energy industry / Petroleumworld

02 17 2017