2016 Oil and Gas Summit: Mexico's Energy Future

Following panels and presentations on upstream hydrocarbons, deepwater projects and natural gas ambitions, Guillermo García Alcocer, the President Commissioner of CRE closes Mexico Oil and Gas Summit with a presentation on the future of energy in Mexico.

Refocusing on investment opportunities he details the US$212 million of investment opportunities across exploration and exploitation, natural gas and distribution.

The CRE regulates everything outside the CNH and SENER’s ruling, explains García Alcocer. With regards to transport, storage, distribution, and commercialization of hydrocarbons, and transmission of electricity through the supply chain, and its distribution, the CRE is the main regulator of the market and system.

A mandate set by the CRE checks that all the forms of energy reach the industry, homes and businesses that need it in the correct quantities, and of the best quality at competitive prices.

Efficient transport and fair distribution are key in this process. In response to the search for fairness, the industry was opened up, to redistribute the monopoly enjoyed by PEMEX. 27 companies have joined the market to extract store, and transport the upstream, midstream, and downstream activities. BP, Atlantic Rim, and BHP Billiton top the list.

The increased in operators means the supply of gas and crude oil will increase in Mexico. In the past, a simple lack of gas supply, cost the country 0.25% of its GDP.

“We hope that by January of next year we will be able to separate services and establish open access to reserves, before fixing regulations that will ensure fair competition in the market,” declares García Alcocer.

The President Commissioner verbalizes the importance of publishing all information and prices, discounts and volumes, in the interests of transparency. Above all the industry will see a change following PEMEX handing over fields in which it has fewer competitive advantages.

Moving on to describe the distribution zones within the country, with pipes covering 52,000km of distribution space. The expansion of pipelines will push toward better supplying the south of the country, wherein natural gas is lacking.

García’s presentation informs the audience of many permissions that CRE has distributed to expand natural gas supply. The fuel service stations with all permissions in order total 11,514 and storage spaces 142. This area has been pointed out as an area of opportunity for investors and expanding companies in Mexico, as storage of treated products is lacking country-wide. “The broadening of this market has attracted new investors in the energy sector in Mexico,” reveals García Alcocer.

Hidrosina already has a service station in Mexico City, and PetroSeven, Gulf, and LaGas are establishing gas stations throughout other states in Mexico.

PRODESEN’s second edition of outlines by the SENER, is published to show projects planned. These total US$131.6 million, stated to be invested in the next 15 years. PRODESEN foresees 200% growth in capacity of the sector.

Green energy takes two forms principally in Mexico, Solar and Wind power.

With regards to electricity prices, CFE wanted to start with a price of US$60 per MWh and this was successfully auctioned, and bartered down to US$40 per MWh.

Moreover, in wholesale electric market, the CRE dictates the necessity for Registered Users with certification. Electric consumption had not always reflected the true consumption levels of entities. CRE acts as a middle man between these qualified users and the CFE to remove any doubt.

The regulatory commission of energy also pushes for transparency, as CNH discussed in depth in the first day of Mexico Oil and Gas Summit. All information about electricity distribution is available online, divided by charging station and postcode.

“An increase in tariffs in previous months was followed by a 21% drop in prices for the industrial sector, and 19% for medium-sized enterprises.”

CRE also regulates the SCT and IFT to emit access regulations to the electricity network, for system operators in the telecommunications sector, discloses García Alcocer.

To date, only 9 qualified users are registered, of a potential 4000. This shows the incredible room for improvement and growth in the sector, under CRE’s watchful eye.

Installed capacity and potential capacity shows a broad gap for companies to generate more clean energy. A large amount of companies hold authorization from the CRE and could generate bilateral agreements, and participate in auctions to generate this energy.

The CRE aims to reduce red tape, and that all paperwork must be electronic, and completely automatized. Sticking to the legal framework the Commission oversees both petroleum and the electricity supply chain.

Moreover, paperwork for permissions has simplified, and in only eight days, a service station can obtain permissions to open new locations. Workshops explaining how to solicit and obtain permissions are being held, and online tutorials showing necessary steps contribute to the transparency actions.

The new administration of CRE pushed the quantity of women leaders in the commission from 19 percent to 33 percent. García Alcocer expresses his belief that no other regulator or authority can compete with this ratio of women to men.