New Perspectives & Opportunities in the Oil & Gas Sector in Mexico. March 2014

Transcription

1 New Perspectives & Opportunities in the Oil & Gas Sector in Mexico March 2014

2 Agenda: - Timetable after Energy Reform - New distribution of roles - Future investment opportunities in Mexico s energy - Opportunities for PEMEX - Takeaway points 1

3 After the Energy Reform, what now? 90 days 03/21/2014 Round Zero The Ministry of Energy (SENER) will prioritize PEMEX s requests for exploratory blocks and producing fields and define its dimensions 120 days 04/20/2014 New Regulatory Framework Approval and amendments to the secondary legislation Detailed distribution of responsibilities Structure and awarding of contracts 12 months 12/21/2014 New entity in charge of the operation of transportation pipelines and natural gas storage (CNCGN) 24 months 12/21/2015 PEMEX 1 as a state productive enterprise (1) PEMEX will be able to receive assignments and contracts during these 24 months. 2

4 The new role distribution will ensure that players compete on a leveled playing field and also that resources are distributed where most needed Define exploration and exploitation areas; as well as the type of contract awarded (licenses, production sharing, profit sharing, or a combination of the aforementioned) Award assignments, including round zero Technical design of contracts Definition of economic and fiscal terms of each contract Carry out public tenders according to the terms established by SENER and the Ministry of Finance (SHCP) Authorize recognition and surface exploration works The National Hydrocarbons Information Center will maintain and carry out seismic and geological studies Regulate and grant storage, transport and pipeline distribution permits The National Agency for Industrial Safety and Environmental Protection 1, as a decentralized body of the Ministry of Environment and Natural Resources, will regulate and supervise operational safety and environmental protection The National Center for Natural Gas Control 1 will operate the national transport pipelines and storage system (natural gas) The Mexican Petroleum Fund for Stabilization and Development 1 will manage and distribute the national oil income proceeding from assignments and contracts, such as duties and royalties, with the exception of taxes (1) A new entity. 3

5 Downstream Upstream Under the new Reform, Mexico s Energy Sector will become an open and competitive one Type of Contract Compensation Services Profit Sharing Production sharing Cash % of profits % of production PEMEX and operators will register and report projects being developed in Mexico, as well as the expected benefits. PEMEX will be able to migrate to these new contract schemes or to operate under the current scheme. Licenses Onerous transfer of property Permits will be granted in: Refining Gas Processing Petrochemicals Transport, storage and distribution of hydrocarbons and petroleum products (1) Comes into effect on December 21,

6 and this will generate numerous E & P opportunities for players willing to invest in the country Producing Basins MMMboe (billion barrels of oil equivalent) Oil and Gas Gas Basin Acum. Prod. 1P (90%) Reserves 2P (50%) 3P (10%) Prospective Resources Conv. No Conv. Southeastern Sabinas Burgos Tampico Misantla Tampico- Misantla Deep Sea Exploration Gulf of México Yucatán Platform Burgos Veracruz Sabinas Veracruz A significant portion of Mexico s great potential lies on conventional hydrocarbon reserves Southeastern Deep Waters Yucatán Platform 0.5 Total Reserve/ Prod (yrs.) Development and Exploitation Projects Exploratory Projects 5

7 As witnessed in other countries experience, Mexican companies will now be able to become important players in the Oil & Gas industry If secondary legislation passes as expected, Mexico will attract a vast amount of investment, and a good portion of it will proceed from domestic players Same as in in other latitudes, a substantial number of domestic firms will venture into the energy sector This will help the country s Gross Domestic Product (GDP) growth rate in the mid-term Increase in GDP (%) Colombia had similar restrictions to those currently in place in Mexico up until 2003, when it decided to embark in sector reforms The country has gone from producing 550 thousand barrels per day in 2003, to around 1 million barrels per day in 2013 Nowadays, some of the biggest oil companies in Colombia are formed, entirely or partially, by local players Canacol Energy Perenco Colombia Limited Petrobras Colombia Limited Hocol Petrominerales Colombia Equion Energía Mansarovar Energy Occidental de Colombia Meta Petroleum Limited Ecopetrol 10 biggest oil producers in Colombia (2011) 0 100, , ,000 Bls/day 6

8 With this, a growing number of opportunities will also be generated in Downstream activities Ample input supply Gas and oil Large and growing domestic market Gas processing (Avg growth %; imports/demand: 34%) Gasoline (Avg growth : 5.1%; imports/demand: 49%) Petrochemicals (Avg growth : 7.4%; imports/demand: 65%) Growing downstream activity Growing opportunities in: Transport Storage Distribution 7

9 For PEMEX, partnering up will be a natural choice doing business, same as other countries around the world Partnerships are the most prevalent method of investing in the oil and gas industry 71% of total remaining proven and probable reserves in the world are held in partnership They are the preferred form of investment for supermajors, NOCs and independents alike China Russia Algeria Brazil Colombia Malaysia US UK Indonesia Australia Canada Angola Norway Partnership Share of Total Remaining Reserves 0% 20% 40% 60% 80% 100% Global Acreage holding Total Remaining Reserves JVs and JOAs hold 35% of Contracted Acreage and 71% of Total Reserves 65% 35% Partnership Sole Ownership 71% 29% Sole ownership Partnership 8

10 Also, in order to better take advantage of the company s purchasing power, PEMEX will centralize its purchases through a new Direction With this new Direction, PEMEX will be able to: Generate savings PEMEX Procurement Before After Develop standardized, agile and transparent processes Follow the steps of other major companies, such as ExxonMobil, Statoil, Shell, Ecopetrol and Kuwait Petroleum PEMEX Procurement & Provision The functions of the new Procurement and Provision Direction will be to centralize all PEMEX purchases related to goods, services and operational and public works leasings This measure will enable PEMEX to have a closer relationship with its suppliers and will make PEMEX purchasing a much more efficient process 9

11 ,794 If we take full advantage of the new framework, E & P activities could exceed the present CAPEX (made entirely by Pemex) by more than its double OIL Annual average (mbd) Baseline INVESTMENT Annual average (mmusd) 4,083 24,329 Baseline Escenario base Full potential 62,267 Máximo Full potential Potencial GAS Annual average (mmcfd) 6,081 Baseline 9,079 Full potential 10

12 Takeaway Points The new context in the Mexican oil & gas sector opens important opportunities both for PEMEX and for new players. PEMEX will have the opportunity of making strategic alliances. PEMEX is strategically positioned and has significant competitive advantages. There are attractive investment opportunities for a large number of new players in E & P, midstream and industrial processing of hydrocarbons Mexico s oil and gas industry will be highly dynamic in the foreseeable future 11