Former director at Mexicanos Contra la Corrupción y la Impunidad
- Mexican energy sector overview and impact of Lopez Obrador’s presidency
- Pemex’s assets, downstream investment strategy and project assessment
- State of Mexican refinery assets and efforts to increase production
- Credit outlook and impact of lower oil prices on finances, plus deleveraging opportunities
- Macro outlook, including potential nationalisation of energy assets, regulatory hurdles and risks
Could you provide an overview of the Mexican energy sector, including how much is exported and imported? What are the main fuels for electric generation?
You mentioned the introduction of the presidency of Lopez Obrador. What else do you see as his most important changes as a political figure operating in the energy space? What key things has he both accomplished and targeted on his agenda over the last few years?
How much has changed for Pemex with the new political order since President Obrador came to power? How has the company’s strategic vision changed with that political shift?
Does the current energy environment change the outlook for the ability to get profit sharing from Pemex? Even though production hasn’t increased, are you seeing significantly higher revenues now that the oil and gas prices have increased?
One of the things that has been on the table for Pemex and the government has been a crude oil export ban. Do you think the current energy environment would change the thinking around that, or how do you see an export ban such as that affecting the company and the energy sector?
You mentioned the recent Bloomberg article covering Pemex. Something the article highlighted is that import of refined products has also increased, and that struck me as a little bit counter-intuitive. Could you comment on that? Given that there’s been a lot of emphasis on the refining sector, why are those imports continuing to increase?
Moody recently downgraded Pemex’s credit rating. What do you think drove this and what effect will this have?
Where does Pemex primarily operate drilling and production?
What is geologically unique about oil fields in Mexico? Do they have analogous fields elsewhere in the world? What distinguishes them?
What do you think it would take for Pemex to get the expertise for offshore production, without political changes to how things are approached and the introduction of private players? Is that feasible for the company? Is it simply a matter of spending money on the human capital or hiring the right service companies? What is stopping it from doing that?
Who are the key service companies operating with Pemex in Mexican oil fields?
Is the government looking at the hole in Pemex’s finances with a lot of fear? It seems this could become a bit of a scary obligation for the government, with credit conditions going the way they are going. What else can the government do here?
You mentioned the Mexican electrical utility. How does that fit into the picture? I think Mexico has invested in some natural gas plants. Is there some hope that there’s synergy in the future, maybe more so between the natural gas production and local electrical system? What else is relevant there?
Could there be a plan to build the infrastructure for Pemex’s associated offshore gas production ? Would it be possible to reduce flaring and use that gas productively, or do you not see that happening?
What do you think explains the decline in Mexican refinery utilisation over the past couple of decades?
Given how refining works, is it very difficult to come back from low utilisation rates? What condition are Mexico’s refining assets in after having been run at low throughput for a long time? What challenge does that pose?
You mentioned the condition of Mexico’s refinery assets being pretty old, and, as a result, the mix of products is tilted towards fuel oil. What investments would be required to change that output mix, and would it be feasible to invest in those existing refineries just to change their output?
How else is the government responding to the state of Mexico’s refineries strategically, given the challenges you highlighted? Aside from the petroleum coke processing plant plan, is there anything else on the table to shift and change the refining sector?
What do you think are the primary factors causing the budget increase for the new refinery in Tabasco? Is it just the supply chain issues? You hinted that, even before the supply chain issues and the cost inflation, experts were already saying it was USD 14bn. Are the challenges primarily related to personnel or scheduling? Is it design flaws? What do you think are the key bottlenecks here?
Given the Mexican government’s emphasis on the refining sector, what is its response to people pointing out the electrification and the EV transition? Is there a worry about sinking this money into assets that, 15 years down the line, may be significantly less profitable than they are now? How do you view that argument?
Pemex’s Deer Park investment could potentially be very positive, especially as the US refining sector has been tight and running at high utilisations. Could having that asset potentially be a good source of cash over the next couple of years?
What is your macro outlook for the Mexican energy sector?
What are the benefits of the Mexican government’s strategy for the energy sector right now? What is it hoping for as the best-case scenario? Is it just that by emphasising the national energy sector so much, it can subsidise the rest of the economy? What is the best-case scenario?
If, in a certain circumstance, Pemex was able to increase production at a low cost per barrel in offshore or shale fields, would that improve the outlook for the refining sector significantly?
Is there anything else you’d like to highlight regarding Pemex?
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