Page 6 - LatAmOil Week 01 2020

LatAmOil M E X I C O LatAmOil
AMLO calls for re-routing of gas pipeline
MEXICAN President Andres Manuel Lopez Obrador has said he wants Canada’s TC Energy to change the route of the natural gas pipeline it is building between Tuxpan and Tula.
Lopez Obrador explained his position by saying that the planned route would take the pipeline through the Sierra Norte, an area that indigenous communities in the central Mexican state of Puebla consider to be holy. “Even if we have to pay, the gas pipeline will not go through the sacred hills ... We’re going to propose other routes that don’t affect the sacred areas,” he said during a rally in Pahuatlan, a town in the north-western part of the state.
As of press time, TC Energy had not com- mented on the president’s remarks.
The Canadian company struck a deal for the construction of the 286-km Tuxpan-Tula pipe- line with Mexico’s Federal Energy Commission (FCE) in 2015, but it has yet to finish the pro- ject. It suspended work on the 90-km Hidalgo section of the link in 2018, following a series of protests by local activists and the issuance of injunctions by municipal authorities in Pahuat- lan and Tlacuilotepec. It is still waiting for the Energy Ministry (known locally as SENER) to wrap up talks with indigenous groups in Puebla.
Gonzalo Monroy, a prominent Mexican energy consultant, has expressed support for Lopez Obrador’s position, which he called a “very pragmatic decision.” He told Natural Gas Intelligence after the event in Pahuatlan that re-routing was probably the best way to ensure that the pipeline could be finished quickly. This would benefit CFE, which is eager to switch its combined-cycle thermal power plants (TPPs) in Hidalgo, Puebla and Veracruz states from heavy fuel oil to gas, he said.
Monroy acknowledged that none of the par- ties involved had revealed what the new route
might be. They have also not said how additional rights of way might be secured, he said.
No auctions in 2020
In related news, the president said on January 8 that he had no intention of resuming efforts to auction oil and gas blocks off to private investors this year.
Speaking during his daily press briefing in Mexico City, Lopez Obrador ruled out a new licensing round in 2020. “It’s not contemplated,” he said bluntly.
He justified this stance by arguing that most of the companies that had won the auctions held by the previous government had not done much to bring Mexico’s oil production up. The winners of those bidding contests have yet to prove their ability to meet their commitments with respect to investment and development, he said.
“Of the 1.735mn barrels [of oil] that were extracted yesterday [in Mexico], only 10,000 were extracted by the companies that received the contracts,” Reuters quoted him as saying.
Hacienda Hedge
The president was speaking less than a week after Mexico’s Finance Ministry reported that the government had completed its annual oil price hedging programme.
On January 3, the ministry said in a state- ment that it had locked in oil prices at $49 per barrel for 2020. This is the same level specified in this year’s budget, it noted.
In a departure from previous years, the state- ment did not say exactly how much the Mexican government had paid to arrange the hedge deal with Wall Street banks. The hedging programme typically consists of about $1bn worth of put options covering about 200-300mn barrels of crude oil. ™
The Tuxpan-Tula pipeline will deliver gas to power stations in Hidalgo, Puebla and Veracruz (Image: CFE)
P6
w w w. N E W S B A S E . c o m Week 01 09•January•2020