Private Companies Challenged By Mexico Policies

Private Companies Challenged By Mexico Policies

  • By Jim Bentein
  • Monday, January 13, 2020, 1:40 PM MST

 

Since socialist-leaning Andres Manuel Lopez Obrador (AMLO) was elected Mexican president in 2018, it’s been challenging for privately-owned companies like Vancouver-based Renaissance Oil Corp. to operate in the country.


AMLO has reserved policies under former market-friendly President Enrique Pena Nieto, who had sold off Pemex assets to companies from juniors like ROC to super majors like Exxon Mobil Corporation, and had encouraged private sector partnerships with Pemex.

Last week AMLO reiterated his pro-Pemex stance, announcing that his government is not planning to reopen oil and gas auctions this year, ending hopes his government might spur private sector investment in the energy sector.

But despite the heavy debt load Pemex carries, AMLO’s government continues to be determined to renew its past glories, when it produced about three million bbls daily, mostly from shallow offshore finds.

This has made it difficult for companies like ROC, which entered the country in 2014, subsequently gaining ownership of three former Pemex properties in the southern state of Chiapas and forming a partnership with Lukoil to win rights to develop the 243-square kilometre Amatitlan block in central Mexico.

The company planned a 10-well program, initially targeting Chicontepec sands with the potential to produce thousands of bbls/d of oil, mostly using unconventional production methods.

But the real prize on the property is the Upper Jurassic shales under the entire block where the company sees the potential for several “elephants.”

However, the only way to develop those assets is through fracking, which AMLO is opposed to amidst a growing anti-fracking movement in Mexico.

Kevin Smith, ROC spokesperson, said the company believes it still has a promising future in Mexico, despite the policy reversal of the AMLO government.

“The home run opportunity is still in the Amatitlan block, but we think we can still be a substantial producers from our Chiapas blocks,” he said.

The company is continuing its negotiations with Pemex involving ownership stake and production approaches.

The political difficulties in Mexico aside, ROC, which is not yet profitable, has been able to raise millions from wealthy investors. Last March, for example, it announced it had raised $5 million from selling shares at 25 cents each to a wealthy Mexican family.

However, despite the lack of enthusiasm for the company’s shares from retail investors, it has been able to attract interest from well-heeled investors. Recently it had issued 6.57 million common shares, at 20 cents each, to an unidentified investor, raising $1 million, who was revealed to be Pierre Lassonde, chairman of Canadian-based mining and oil and gas giant Franco Nevada Corp.

Meanwhile ROC is concentrating on its Chiapas properties.

“We still think there’s a large role for us in Mexico,” he said.

The company is producing about 1,260 boe/d from the three Chiapas blocks — Mundo Nuevo, Topen and Malva — and has plans for an aggressive drilling program this year.

“We have plans to drill four wells and do three workovers on the blocks this year,” he said. “We think we can increase production by five times.”

Mexico Refineries showing some signs of life as production numbers rise

Mexico Refineries showing some signs of life as production numbers rise

 

February 27, 2019

Crude oil processing, fuel production showing increases

Mexico’s six petroleum refineries are showing new signs of life: fuel production and crude processing capacity are up and unscheduled stoppages have been reduced to zero.

State oil sector reports seen by the newspaper El Universal show that production of regular and premium gasoline in the third week of February was 86.7% higher than in the first week of January.

Diesel and aviation fuel production also increased, by 98.3% and 68.7% respectively in the same period.

The month-over-month figures are not quite as impressive but positive nonetheless.

Daily gasoline production this month has averaged 192,000 barrels per day (bpd) compared to 128,000 bpd last month – a 50% increase – and 153,000 bpd in December. Diesel production was up 32% to 131,000 bpd in February compared to 99,000 bpd last month.

While the signs are promising, the National Refining System (SNR) is still a long way from getting back to production levels seen a decade ago when they reached their highest point in 29 years.

During the last two weeks of this month, automotive fuel production has averaged 213,000 bpd – just 42.3% of the average daily production of 504,100 bpd in January 2009.

With regard to crude oil processing, the six oil refineries achieved an average capacity of 484,000 bpd during January but this month, the figure has increased by 15.7% to 560,000 bpd.

Looking at figures for the first week of last month and the third week of February, the increase is even more impressive.

Crude processing has increased from 309,500 bpd to 664,00 bpd in the period, a 114% surge. However, the figure represents less than 40% of the refineries’ combined processing capacity if they were operating at an optimal level.

Another good result for the oil sector is that there hasn’t been a single work stoppage at refineries this month compared to 40 in January and 48 in December.

According to the oil sector reports, Mexico’s oil production and processing problems were, as of the end of the third quarter last year, primarily linked to “operational problems” at the refineries in Ciudad Madero, Tamaulipas, and Minatitlán, Veracruz.

At the time both facilities were only operating at a minimal capacity.

To improve production and processing capacity across the SNR, an oil sector report said, it was “essential to continue general maintenance and preventative programs” at all refineries.

Petroleum production has been declining in Mexico for years.

Earlier this month, President López Obrador announced a 107-billion-peso (US $5.5-billion) rescue plan for Pemex aimed at reducing the state oil company’s financial burden and strengthening its capacity to invest in exploration and production.

He has pledged to reduce Mexico’s dependency on petroleum imports and part of his rescue plan for the sector includes the construction of a new refinery in Tabasco.

But while the president is optimistic, financial institutions rejected the government’s plan, describing it as insufficient and disappointing, while Fitch Ratings warned that it doesn’t insulate the state oil company against future cuts to its credit rating, which it currently rates at just one notch above junk.

Source: El Universal (sp) 

New Era As Canada Enters Cannabis Legalization; Workplace Implications Outlined

By Jim Bentein Wednesday, October 17, 2018, 7:05 AM MDT     A senior manager of a company specializing in drug and alcohol testing at worksites says he’s concerned about impediments to implementing legislation and practices that will prevent workplace deaths. Provinces across Canada enter a new era today with the legalization of cannabis. It’s something industry has been preparing for, for some time. Dan Demers, who specializes in drug and alcohol testing for CannAmm Occupational Testing Services, which has offices in Edmonton and North Bay, Ont., said he doesn’t believe governments have taken enough steps to protect Canadians, at worksites and on roadways, as marijuana becomes legal countrywide today. And Demers thinks the sheer size of the marijuana sector, with companies such as Canopy Growth Corporation having stock market capitalizations in the billions, will prevent governments from moving ahead on needed legislation and marijuana research. “I worry that the cannabis producers will outspend energy … Continue reading