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www.gob.mx/cre @CRE_Mexico
Meney de la Peza Regulation Unit
Mexico’s Energy Regulatory Commission
NAESB Board of Directors Dinner Houston, Texas December, 2016
First Power Auction: 2.6 billion USD Second Power Auction: 4 billion USD Generation: 98.7 billion USD * Transmission: 15.3 billion USD * Distribution: 17.7 billion USD *
Mexico’s landmark energy reform is now a reality, creating significant investment opportunities throughout the entire value chain
Round 1: 1st Tender: 2.7 billion USD 2nd Tender: 3.1 billion USD 3rd Tender: 1.1 billion USD 4th Tender: 4.4 billion USD per block Trión: 11 billion USD
Round 2: 1st Tender: 11.3 billion USD 2nd Tender: 5 billion USD
Seismic data: 2.5 billion USD
Gas pipelines: 16 billion USD Petroleum Products: 7.8 billion USD*
Hydrocarbons “Rounds One and Two”
Natural Gas and Petroleum Products Power Sector
*Total expected investment throughout 2030. Source: Mexico’s Ministry of Energy, 2016.
243 billion dollars: Public and Private Investment
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2012 2016
El Encino
Aguascalientes
Zacatecas
Puerto Libertad
Los Ramones
Guaymas
Huexca Ciudad Pemex
Nuevo Pemex
Nativitas
2019
Cempoala
Acapulco
Lázaro Cárdenas
El Oro Topolobampo
Mazatlán
Apaseo el Alto
San Luis
Potosí
La Laguna
Tuxpan Tula
Samalayuca
Jáltipan
Salina Cruz
Guadalajara
Durango
Source: Five Year Gas Pipeline Plan 2015-2109, http://www.gob.mx/sener/acciones-y-programas/plan-quinquenal-de-gas-natural-2015-2019
“El Cabrito” Compression Station, included in the Plan
Regasification Terminal
Operating Gas Pipeline
Concluded Gas Pipelines (2013/2014/2015)
Gas Pipelines under Construction (2015/2016)
Strategic Gas Pipelines included in the Five Year Plan
Escobedo
Altamira
Naranjos
Tapachula Centroamérica
Social Gas Pipelines, included in the Plan
Interconnections
Naco Cd. Juárez
KM Monterrey Reynosa Argüelles Río Bravo Piedras Negras
Camargo
Sur de Texas
Sásabe
Colombia
Los Algodones Los Algodones bis
San Isidro
Ojinaga
Mexicali
Nogales
Agua Prieta Gloria a Dios
Cd. Acuña
Mexico’s Gas Pipeline Network will expand considerably from 2012 to 2019
New transportation infrastructure by 2019, according to the Five Year Gas Pipeline Plan: • 10 new strategic gas pipelines • 2 social coverage gas pipelines • 7 interconnection points with the US • 1 interconnection with Central America
16 billion dollars
Total expected investment 1
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Pipelines*
Kinder Morgan (operating) KM Gasoductos de Chihuahua (operating) Sempra Energy Transportadora de Gas Natural de Baja California (operating) Sempra Energy Gasoducto Rosarito (operating) Sempra Energy Gasoductos del Noreste (operating) Sempra Energy Gasoducto de Aguaprieta (operating) Sempra Energy Gasoductos de Tamaulipas (operating) Sempra Energy Gasoducto de Aguaprieta- Sonora (operating) Sempra Energy TAG Pipelines Norte (operating) Sempra Energy/Pemex Arguelles Pipeline (operating) Energy Transfer Partner Gasoducto de Aguaprieta -San Isidro- (operating) Sempra Energy Gasoducto de Aguaprieta –Ojinaga- (operating) Sempra Energy Midstream de México (operating) Howard Midstream Energy Partners
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*Participation of American capital in Mexico’s Gas Pipeline Network 3
Hyd
roca
rbon
s El
ectr
icity
Exploration / Extraction
Refining / Processing
Transportation Storage Distribution Retailing & Commercialization Transportation
Generation System and Market
Operation (ISO)
Transmission Distribution
Retailing & Commercialization
System Operator
The Energy Regulatory Commission (CRE) has effectively become the regulator of the mid and downstream segments of the oil and gas value chain, as well as the entire electricity supply chain
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1. Enhance natural gas availability throughout the country
2. Separate pipeline
transportation from natural gas
commercialization
3. Establish open access and pipeline capacity
reserve conditions
4. Issue asymmetric
regulation for participants with
high market concentration
5. Publish volumes, prices,
discounts, locations and trade information for
retailing and commercialization of
natural gas
The energy reform laid the foundations for an open and competitive natural gas market, contributing to:
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To manage SISTRANGAS
available capacity
To implement capacity reserve for all of SISTRANGAS users
Manager
Transporter
To conduct SISTRANGAS open
seasons
To monitor daily balance for the
optimum use of the facilities
To provide transport and storage services
To establish restrictions to
maintain the system balance
The energy reform established the creation of CENAGAS (National Center for the Control of Natural Gas) as the country’s pipeline network (SISTRANGAS) owner and operator.
To operate and mantain SISTRANGAS facilities
Capacity reserve for State Productive
Enterprises (EPE, for its Spanish acronym)
CRE determined the maximum capacity that
Pemex and CFE may reserve in the pipeline
network for their transformation and
generation activities, respectively
Open Season of pipeline network
CRE approved CENAGAS’s open
season proposal, which is currently being
implemented
Import Pipelines CRE has worked
coordinately with SENER and CENAGAS to design
a mechanism that enables CENAGAS to
manage the interconnection
pipelines currently contracted by Pemex
and CFE
Flexibilization of First-Hand Sales
Prices CRE will determine the regions where price will be set by the market as of 2017, as well as the
applicable price methodology for the
areas where the maximum price will be
maintained
CAPACITY RESERVE COMPETITION IN COMMERCIALIZATION/MARKETING
2016 2017 4T
Gas Release Program
CRE is designing the procedure to implement
the release by Pemex of up to 70% of its natural gas commercialization
volume
4T 1T 2T 3T 3T
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In July 2016, the Energy Ministry (SENER) announced a comprehensive public policy for the implementation of a natural gas competitive market. In line with this public policy, CRE has had an active role in the following short and medium term actions:
SISTRANGAS open season has the following characteristics:
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• Open season guarantees open access and non-discriminatory principles for all users. • All users, including state productive enterprises, will compete under equal circumstances.
• Open season gives preference to current holders of capacity rights.
• The open season procedure will be carried out through an auction mechanism.
• Allocation criterion guarantees all users pay the same price.
• The terms of the service agreements shall be for one year (to allow the market to adjust). • The agreements may be renewed after the first year if capacity is actually used by its holders.
CENAGAS will manage the interconnection pipelines currently contracted by Pemex and CFE
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• CENAGAS will manage capacity through an electronic board.
• CFE and PEMEX must publish their available capacity in the electronic board.
• CENAGAS will auction available capacity.
• Capacity will be assigned to participants offering the highest price.
• Participants must have a capacity reserve in SISTRANGAS.
• CENAGAS will publish
results in the electronic board.
• CFE and PEMEX will maintain their contractual relationship with the US transporter.
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Pemex must:
As a result of asymmetric regulation, Pemex will have to release to the market at least 70% of its natural gas sales contracts in the following two years
All traders will be able to:
Offer users at least the same conditions as those provided by
Pemex
Seek and negotiate with
users
Reserve capacity for themselves in the
open season and use it to provide the service to their
customers
Publish its commercialization
conditions and keep them for the duration
of the program
Have a standard commercialization
contract
Establish a clause of non-onerous
exit in all contracts
All users will be able to:
Accept offers from private traders and sign contracts with any of them
from the start of the program
Reserve capacity for themselves in the open season
and transfer it temporarily to any trader in order to receive
the service
Self-supply
Continue with Pemex (non-default option)
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First Hand Sales Prices are currently regulated by CRE throughout the country. The methodology seeks to reflect the opportunity cost of gas in the international market.
Sur de Texas (ST)
Henry Hub
Houston Ship Channel
Reynosa
Punto de Arbitraje Ciudad Pemex
ST ≈ (HH,HSC)
+ Transporte ST Reynosa
(TF)
±Netback Reynosa Arbitraje
Arbitraje Cd. Pemex
. PRICE IN REYNOSA =
PRICE IN CIUDAD PEMEX =
Transportation cost in US to
Mexico Border Price in SouthTexas
Price in Reynosa Adjusted transport cost
Natural gas traders (companies with CRE permit) will report every day transactions to CRE through the Natural Gas Daily Trading System. Anyone will be able to check daily the average price of gas registered in 14 regions, through an interactive map.
It plans to start operating early 2017
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• 2015-2019 Natural Gas Prospective published by SENER projects natural gas consumption for 2029 to be
10,390.3 bcf and national production to be 6,451.9 bcf at the most, which implies imports will represent more than one
third of national consumption and around three times the current imports from the US.
• SISTRANGAS expansion plan will allow the country’s natural gas pipeline network to accommodate higher levels of
natural gas imports from the US. The plan proposed 12 pipeline additions and a new compression station, increasing
the existing network capacity and adding more than 3,200 miles of new pipeline through Mexico.
• Contracts have been awarded for 7 of the 12 pipeline projects. The largest and most expensive of the awarded projects
is the Sur de Texas-Tuxpan pipeline, which aims to supply the Mexican states of Tamaulipas and Veracruz with natural
gas from southern Texas via an underwater route through the Gulf of Mexico. The pipeline will extend nearly 500 miles
and provide a total transport capacity of 2.6 Bcf/d. The remaining projects are under review and will move forward if
market conditions support their economic viability.
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Mexican imports of US natural gas are projected to continue growing in future years
• The country is meeting its growing electricity demand with generation from new
natural gas-fired plants, using mainly natural gas imported by pipeline from the
US.
• The Energy Transition Law, approved in December 2015, sets a target of 35% of
electricity generation from clean energy by 2024.
• The International Energy Agency’s special report “Mexico Energy Outlook”
projected that both gas and renewables increase their share in electricity
generation in the following decades.
Growth in Mexico’s domestic electricity consumption has been a primary driver of the country’s natural gas usage, and will continue to be so
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• Harmonization of standards supporting trans-border transactions
• Best practices regarding operational protocols or network codes
• Standardization of contracts
The CRE is looking forward to continued collaboration with NAESB on several topics
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