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First, they benefit Pemex and are designed to pipeline network would have to be expanded to
bolster the state-owned company’s position bring US-produced gas to the LNG plant. Doing
as the leading player in oil and gas operations. so is likely to be expensive, she pointed out. (As
They make no provisions for opening the of press time, though, Mexico’s government did
downstream sector up to any privately owned not appear to have finalised any financial or
or foreign operators. Rather, they reflect Lopez logistical plans for carrying out the necessary
Obrador’s conviction that what benefits Pemex expansion work.)
benefits Mexico. Meanwhile, the other two gas projects are
Second, they focus on downstream oper- also downstream-oriented. They will encompass
ations. They do not include any upstream the building of a fertiliser plant in Camargo, a
elements that might benefit exploration and city in Chihuahua State, and the construction of
production activities, despite the fact that Mexi- an ethane terminal in Pajaritos, a port in Vera- “
co’s oil output has been trending downwards for cruz State. Neither is significant in scale. The president has
more than 15 years. Instead, they reflect Lopez Barrios, for her part, described all of the gas
Obrador’s belief that the best way to help Pemex projects as “unfortunate.” She explained to Platts said explicitly
involves expanding domestic refining capac- that she did not see any of the three as among the
ity in order to create jobs and to boost internal highest priorities for the country’s energy sector. that state-run
demand for locally produced crude. Mexico would have done better to concentrate entities will
on fuel storage and electricity transmission, she
Natural gas asserted. need more
Lopez Obrador’s interest in downstream
operations is also evident in the government’s Public vs. private support than his
approach to gas. As with the refinery projects, none of the gas
Once again, the presidential administra- initiatives aims to weaken or break Pemex’s administration
tion is not looking to build up the country’s monopoly. Instead, all are premised upon the can provide
gas exploration and production capacity. Even assumption that the NOC must continue to
though Mexico’s gas output has been trend- occupy the leading position in Mexico’s oil and
ing downwards for more than 10 years while gas industry.
domestic consumption levels have continued to Even so, the government appears to have no
climb, the current government is not focusing intention of shutting private-sector players out
on upstream operations. entirely. It anticipates most of the financing for
Instead, it is looking to support projects that the infrastructure project will come from private
are decidedly more downstream in nature, such companies, according to Reuters. Moreover, the
as the construction of an LNG plant in Salina president has said explicitly that state-run enti-
Cruz – a southern port that is, as it happens, also ties will need more support than his administra-
home to Pemex’s largest oil refinery – for a price tion can provide.
of MXN25.2bn ($1.18bn). This scheme accounts “The public sector alone could not reacti-
for all but MXN3.7bn of the remaining budget vate the economy as needed,” he commented on
for energy projects. It is also likely to involve October 5, according to Platts.
using gas imported from Permian basin fields in Lopez Obrador did not say what approach
Texas as feedstock for the gas liquefaction plant, he intended to take to independent and for-
which will turn out LNG for export. eign companies. His administration has had
In contrast to the plans for Pemex’s refiner- a somewhat rocky relationship with privately
ies, the Salina Cruz facility will focus on exports, owned oil and gas operators, not least because
turning out LNG that can be sold to customers it has signalled that it wants to retreat from most
in Asia even as Mexico’s domestic gas demand of the reforms enacted by the last president,
continues to rise. It may also have to do so with- Enrique Peña Nieto, in 2013-2014. That reform
out guaranteed access to adequate feedstock. programme gave private companies more
Rosanety Barrios, an independent Mexican opportunities to invest in the oil and gas sector
energy consultant, pointed out to S&P Global and somewhat loosened Pemex’s hold over the
Platts earlier this week that the country’s gas industry. ™

Total: Oil demand to peak in 2030

Faced with gloomier prospects for oil, the French giant is doubling down on gas and renewables

THE French oil major Total has joined other oil This represents a more bullish forecast than
companies predicting that peak oil demand will that of UK peer BP, which recently warned that
arrive in the coming decade, forecasting an end oil consumption would peak in the early 2020s,
to consumption growth in 2030. if it has not done so already.

Week 40 08•October•2020 www. NEWSBASE .com P5