Italian oil company Eni has temporarily paused its production at the Amoca-Miztón-Tecoalli shallow water fields while facing a regulatory hurdle. In other news, US Ambassador to Mexico Ken Salazar criticized the government’s energy reform proposal and PEMEX are feeling the strain of an increased demand for their product in the Northernmost states of the Republic.
Here is this week’s roundup of the biggest stories in Oil and Gas!
Eni Stops Production in Mexico Due to Regulatory Stoppage
Italian oil giant Eni stopped production at three of Mexico’s most promising fields under private development this March 31, as the IOC works to clear a regulatory hurdle required for the export and sale of its crude.
Due to a missing permit, Eni has not been able to export its first crude oil shipment, which forced the company to temporarily halt production at the Amoca-Miztón-Tecoalli shallow water fields as of March 31. The trio of fields represents one of the country’s most promising privately developed oil prospects and is located near the coast of Tabasco in the Gulf of Mexico.
Demand for PEMEX’s Products Increases
In Monterrey, Nuevo Leon, PEMEX is experiencing an excessive demand for its fuel due to the elimination of the Special Tax on Production and Services (IEPS) and additional incentives, which generated service stations to buy from PEMEX over the usual other oil and gas importers.
At the beginning of April 2022, the NOC reported that high diesel prices combined with an increase in fuel demand deteriorated its capacity to supply diesel. Importers and marketers began to suspend imports because of skyrocketing prices caused by the war between Russia and Ukraine. Nonetheless, the aid implemented by the government has resulted in higher demand for PEMEX’s products to relieve fuel buyers.
Oil Exports May Not Drop Enough Toward Energy Sovereignty
The 2023 Preliminary General Economic Policy Guidelines (PCGPE), published on April 1 by the Ministry of Finance and Public Credit (SHCP), revealed that contrary to the government’s aim, the country will not be ready to stop exporting crude oil by 2023. Although oil exports will gradually decrease, a research institution asserts that this will not suffice, as Mexico must rely on imports to meet fuel demand.
Emilio Lozoya, Former PEMEX Director, Will Not Walk Free Just Yet
It was widely reported that former PEMEX Director Emilio Lozoya would walk free this Tuesday, having reached an agreement to repay the NOC the funds he misappropriated between 2012 and 2016. However, the plea deal went awry at the last minute. The figure reported of US$10.7 million dollars included US$7.385 million dollars for the Obredecht scandal and another US$3.4 million for the inflated market price purchase of Alonso Ancira Elizondo’s Agronitrogenados fertilizer plant. In exchange, both criminal proceedings were to be dropped and Lozoya was supposed to walk free from Reclusorio Norte. Before talks emerged of an agreement,Lozoya was facing the prospect of a 46-year prison sentence for the charges of bribery, money laundering and criminal association.
Minor Oil Spill Reported in Puebla
PEMEX successfully sealed off a faulty pipeline that had been leaking from the early hours of April 2, having been alerted by a local landowner. While the leak’s risk for the local population was relatively minor, it did threaten to damage subsoil, recalling environmental concerns regarding the NOC’s pipeline integrity.
PEMEX Expands Oil and Gas Prospecting in Veracruz and Tabasco
The National Hydrocarbons Commission (CNH) greenlighted PEMEX to commence preparatory drilling at Racemosa. The NOC hopes that the crude obtained will be extra-light 45° API. On Tuesday past, PEMEX also announced that it is setting aside US$54.5 million to reassess the potential of the onshore discovery at Tum, Veracruz.
US Ambassador to Mexico Ken Salazar Criticizes Electricity Reform’s reactivation
President López Obrador applauded the decision taken by the Supreme Court of Justice (SCJN) regarding the electric reform, qualifying it as “historic and patriotic.” The electricity sector faced a major breaking point at the SCJN, as ministers were set to decide on the constitutionality of the Electric Industry Law (LIE), a decision that will shape the future of Mexico’s energy industry. Notably, the LIE does not seek to absorb independent regulator CNH into the energy ministry.
US Ambassador Ken Salazar, meanwhile, said that if approved the Electric Reform would cause his country to take lawsuit action since it could hamper US companies´ investments in Mexico, also in the oil and gas sector.
International
Oil Price Remains Above US$100
International oil prices remain above US$100/b, as the International Energy Agency (EIA) cut its estimates for global crude demand while China indicated that it will likely use monetary policies to stimulate economic growth. As of this morning, WTI crude stands at US$102.12/b, whereas Brent crude clocks in at US$106.5.