México Proposed Reforms for the O&G Industry. Antonio Juárez Director AMESPAC

Transcription

1 México Proposed Reforms for the O&G Industry Antonio Juárez Director AMESPAC 1

2 AMESPAC Was created in 2009 to bring together private companies that perform O&G services for Pemex Looks to concur, integrate and promote the views and proposals of its associates to improve its positioning in the industry Asociación Mexicana de Empresas de Servicios Petroleros A.C. Main initiatives: Promote local content Encourage the development and improvement of the supply chain Support the creation of local technical resources Sponsor the formation of regional clusters Look for competitive financial terms for local companies Since the Mexican O&G constitutional amendments were enacted, it has kept an active role with congress, government agencies and private organizations to promote its initiatives One of its key targets is to drive capable local companies to become industry operators 2

3 Mexican oil and gas production BCF /day Crude Oil peak production MMB/day Natural Gas peak production Bcf/day MMB /day Mexico s average oil monthly production has plummeted 28% since it s peak in May Natural gas production has dropped 12% since December *Excludes nitrogen Source: Pemex 3

4 Mexico s oil and gas products trade balance US Billion Dollars Mexico s trade balance of O&G products is narrowing * Exports Imports Balance 4

5 Mexican hydrocarbon resources and Round 0 Mexico Hydrocarbon Resources under Round 0 Cumulative Prospective Certified Reserves up to 2013 Production resources Total 1P 2P 3P Billion Boe Total resources Pemex proposal Round Resources to be contracted Percentages Pemex proposal Resources to be contracted Pemex proposal for Round 0 is still under consideration by SENER and CNH In addition, there are other plays with hydrocarbons potential that have not been explored so far: Baja California, Mar de Cortés, Chihuahua, Sierra Madre Oriental, Sierra de Chiapas y Progreso Oil & Gas Plays 5

6 Secondary laws proposed amendments 21 new Laws or Law amendements Energy Hydrocarbons Ley de Hidrocarburos* Ley de Inversión Extrajera Ley Minera Ley de Asociaciones Público Privadas Ley de la Agencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos* Ley de Petróleos Mexicanos* Regulatory Agencies Electricity Ley de Industria Eléctrica* Ley de Comisión Federal de Electricidad* Ley de Energía Geotérmica* Ley de Aguas Nacionales Ley de los Órganos Reguladores Coordinados en Materia Energética* Ley Orgánica de la Administración Pública Federal Ley del Fondo Mexicano del Petróleo para la Estabilización y el Desarrollo* Federal Administration State Productive Companies Ley Federal Empresas de las Entidades productivas Paraestatales del Estado Ley de Ley Adquisiciones, Federal de las Arrendamientos Entidades y Servicios del Paraestatales Sector Público Ley de Ley Obras de Adquisiciones, Públicas Arrendamientos y Servicios Relacionados y Servicios con las del Mismas Sector Público Ley de Obras Públicas y Servicios Relacionados con las Mismas Fiscal Ley de Ingresos sobre Hidrocarburos* Ley Federal de Derechos Ley de Coordinación Fiscal Federal Budget Ley Federal de Presupuesto y Responsabilidad Hacendaria Ley General de Deuda Pública *Indicates a new Law 6

7 Regulatory agencies SENER Selects contractual E&P areas Defines terms and conditions of E&P contracts Issues refining & gas processing permits CNH Issues E&P bidding and awarding rules Organize bidding rounds Assigns, manages and supervise contracts CRE Issues Permits for oil derivatives, NG, NGL s and petrochemicals storage & transportation National Commission Oil Promotes improvement of O&G Exploration and Production practices Mexicana Oil Fund Collects revenues from all O&G sales Covers costs to contractors and transfers a % of royalty income to Government Surplus revenues channeled to other funds CENAGAS Will manage the National Pipeline System presently owned by Pemex Finance Ministry (SHCP) Sets economic and fiscal conditions for contracts Revises and audits fiscal compliance HSE Agency Regulates health, safety and environmental matters within the O&G industry 7

8 Schemes Mexican State retains whole ownership of all underground hydrocarbon resources O&G Exploration and Production Assignments (Pemex) and Contracts CNH Oil & Gas processing Permits SENER Oil derivatives, Natural Gas, NGL s, LNG & petrochemicals storage and transportation Permits CRE 8

9 E&P assignments, contracts and authorizations Assignments: Issued by SENER exclusively to Pemex and State Productive Companies (SPC s) Pemex has the right to choose prospective fields for development through Round 0 Exploration and Production contracts (Round 1 and subsequent) Issued by CNH under a bidding process May be assigned to PEMEX, SPC or private companies PEMEX and SPC s will be allowed to partner or establish alliances with private companies The State may have a share of up to 30%: 1) in international bordering plays; 2) when there is a need to access state of the art technologies; 3)Where there is an strategic interest PEMEX and SPC s will have a mandatory share of at least 20% on contracts developed along international border limits CNH could hire PEMEX, a SPC or a private company to trade oil and gas produced through contracts Companies may report expected economic profits for financial and accounting purposes Authorizations: Contract holders should apply for a permit from CNH to: I. Drill exploratory wells II. Drill deep and ultradeep wells III. Develop well design models Licenses Contract types Production and profit sharing Services E&P activities will also require CNH authorization 9

10 Fiscal terms for contracts Licenses Government revenue: Signature bonus Contractual quote for exploratory works Royalties An income rate over net operative profit (after deducting royalties, costs and expenses) considering the hydrocarbons contractual value Contractor benefits: Net income on hydrocarbons sales after Government intake Production & Profit Sharing Contracts State revenues Contractual quote for exploratory works Royalties A percentage over net operative profit (after deducting royalties, costs and expenses) Contractor benefits: Recovery of costs Remaining operative profit after deducting the government intake Contratos Service Contracts de Servicios Cash payments for services provided 10

11 Local content policy and supply chain for the O&G industry The policy is focused on setting local content minimums in E&P contracts Average local content shall increase from 2015 to reach at least 25% by 2025 Specific local content goals for each contract or permit, will be included in the bidding rules The Economy Ministry (SE) will develop the methodology to measure local content SE will define strategies to promote a local supply chain and develop a suppliers registry A public fund to finance local suppliers will be established 11

12 Relevant dates for implementing the reform Actions Term O&G contracts After the Laws are enacted Mid and down stream permits After the Laws are enacted State control on gasoline and diesel prices Up to December 2019 Permits to private companies for gasoline and diesel retailing From January 2017 Permits to private companies for gasoline and diesel trading From January

13 13 Mexico s shale gas potential

14 Eagle Ford production and economic impact Economic Impact Production value MMUSD 61,162 89,469 Employment Thousands Salaries MMUSD 4,691 6,477 Regional Gross Product MMUSD 28,437 41,751 Local taxes MMUSD 1,017 2,099 State taxes MMUSD 1,248 2,212 Texas RRC. Eagle Ford Shale Task Force Report

15 Shale investment opportunities Products E&P Crude oil Condensates Natural gas Gathering &Storage Crude oil Condensates Natural gas Processing Crude oil Condensates Natural gas Transportation Crude oil Refined products Natural gas NGL s Storage Crude oil Refined products Natural gas NGL s Sales& trading Crude oil Refined prod. Natural gas NGL s LNG Systems & Operations Exploration services Geological Seismic Production: Drilling Fracking Mud logging Well development Cementing Well servicing Maintenance Gathering and storage systems Roads Refining Separation Stabilization Sweetening Fractionation Pipelines Rail systems Transload facilities Tank farms Underground storage Distribution facilities Marine terminals LNG facilities Critical Supplies & Services Drilling equipment Water Sand Chemicals Transport Lodging& food Pipes Tanks Trucks Tank cars Road & rail infrastructure Engineering Plant design Process equipment Construction Engineering Construction Pipes Rail tracks Tank cars Trucks Engineering Construction Structures Tanks Engineering Plant design Structures Tanks Docks Construction 15

16 Conclusions Mexico has important hydrocarbon prospective resources that should be used to improve its economy However the oil and gas industry under the Pemex monopoly is facing a growing decline that imperils its future To reverse this trend, the Mexican government has proposed to open the industry to private capital and technology, through a series of legal amendments still under discussion at Congress It is almost certain that this initiatives will be approved by Q This radical changes will unlock numerous opportunities for the participation of US and Mexican companies along the O&G sector value chain Mexican northeastern shale plays represent the most attractive short term option for private participation, due to proximity to Eagle Ford and lower investment requirements per well It is expected that Pemex will keep a discrete presence in this fields due to other investment priorities However, there are numerous challenges that will have to be addressed prior to any investment decisions, such as land use, water availability, personal security and lack of infrastructure in the area 16