Mexico Looks To Strengthen Energy Sector

(Energy Analytics Institute, 18.Feb.2021) — Mexico’s President Andrés Manuel López Obrador said the recent Texas freeze that saw many residents in the state lose power and water service, demonstrated why his country needed to strengthen its energy sector.

Highlights:

The Texas storm that commenced Friday night 12 February 2021 froze wells and gas pipelines, and forced Mexico to declare a state of emergency. The state of emergency went into effect Saturday 13 February, Mexican officials announced during a joint press conference with Obrador.

What follows are highlights from Obrador’s daily presser with local media and various executives from select Mexican entities such as the Federal Electric Commission (CFE by its Spanish acronym).

Comments from Andrés Manuel López Obrador:

— Despite a lack of piped natural gas imports from Texas, Mexico has been able to substitute the lack of gas with other fuels including diesel and fuel oil.

— The Pacific Coast was most impacted by cuts in gas imports as pipelines froze and gas could not enter Mexico from the US, generating peak demand situations.

— Mexico learned an important lesson, which relates to the error of relying on gas from only one source.

— “The lessons learned from this situation teach us that we need to strengthen Mexican public companies and give them priority. ”

— The Texas freeze again showed us the importance of integration from exploration, production, refining and petrochemicals and the electric sector. Mexico is changing energy policies so the sectors to work together throughout the entire hydrocarbon sector.

— “We can’t depend on one fuel for the generation of electric energy, we need to use all of them.”

— “We need to strengthen CFE and Pemex. We should not depend on gas, gasoline or diesel purchased abroad, but produce it in our country, produce what we consume. This is our politics.”

— “Mexico plans to continue with its committment to not increase the price of electric energy even with speculation and increases in gas prices in Texas and the US.”

— “Pemex has agreed in the past to supply fuel to the CFE at a just price so it can produce electric energy.”

— All Mexican citizens need to assist the country reduce demand between 6 pm and 11 pm during peak hours. “All Mexican citizens should help by consuming less.”

— “I have the information that the proposal from Texas’ governor [to cut gas exports to Mexico] was not approved. So, this doesn’t mean it has been canceled. This doesn’t only affect Mexico, but other states in the America union. That’s why it wasn’t approved. We are doing our diplomatic work.”

— “They [Texas] think they can protect themselves by keeping their gas.”

Comments from CFEnergia Director Miguel Reyes Hernandez:

— Electric power service across Mexico was 100% restored

— “For the good of Mexico, we must regain our energy sovereignty. We have our own energy in various plants: hydroelectric, geothermal, solar, wind, combined, nuclear, fuel oil, coal, diesel, and natural gas. To regain energy self-sufficiency, we need to strengthen CFE and Pemex.”

— Infrastructure started to freeze: wells, deposits, pipelines, and production fell significantly while gas prices rose after Texas Governor Greg Abbott declared the situation an emergency.

— Gas cuts and prices during the perfect Texas freeze:

Feb. 12: Gas cuts (0%); Waha ($11/MMBtu); HSC ($11/MMBtu); OneOk ($76/MMBtu).

Feb. 14: Gas cuts (16%); Waha ($153/MMBtu); HSC ($180/MMBtu); OneOk ($368/MMBtu).

Feb. 16: Gas cuts (61%); Waha ($153/MMBtu); HSC ($180/MMBtu); OneOk ($368/MMBtu).

Feb. 18: Gas cuts (45%); Waha ($208/MMBtu); HSC ($400/MMBtu); OneOk ($944/MMBtu).

Source: CFE

— Approximately 64% of electricity generation in Mexico comes from natural gas, followed by renewables (12%), petroleum (9%), hydroelectric (6%), coal (5%) and nuclear (4%).

____________________

By Jared Yamin. © Energy Analytics Institute (EAI). All Rights Reserved.