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Mexican Association of Oil Companies
NOIA October 2017 Introduction of myself: Raymundo Piñones, Engineer by background, 12 years in the industry, roles in the UK, Denmark and the Persian Gulf, and now the first director of AMEXHI Disclaimer: whatever I say does not necesarily represents the opinión of any single oil Company Some of the infogrpahics are in Spanish Focus on E&P activities as proxy for Business opportunities
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Content Challenges Upcoming Today Past AMEXHI Who is AMEXHI?
Quick recap of what has happened in Mexico New? Where are we coming From? Round Zero Round 1 Part of Round 2 (where you left off past NOIA conference, and that my friend Helge elocuently presented) The New Mexican Energy Model? Regulators Upcoming opportunities Round 2.4 Round 3 Five-year plan Bilateral Challenges to the Industry NAFTA Renegotiation Mexican Navigation Law vs. Jones Act Policy Outstandings (not really bilateral)
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AMEXHI Challenges Upcoming Today Past AMEXHI Spend 1 minute Challenges
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Who is AMEXHI? AMEXHI the association of upstream operators & investors whose objective is to invest in exploration and production projects in Mexico. Arises from the need for an interlocutor between government and industry and its objective is to share best practices towards a safe, responsible and sustainable upstream industry in Mexico. AMEXHI aims to create a forum to promote the common interests of hydrocarbon companies in Mexico with the highest ethical standards. The association was founded on 26 February 2015 in Mexico City. It is a non-profit organization. Asociation of upstream companies Interlocutor between governemnr and industry Rises from the Reform of 2013 Defend interests as a Group, and promote safe, secure, transparent and sustainable practices Non Profit Challenges Upcoming Today Past AMEXHI
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Our Members 47 members many represented in here, and the companies in the panel represented Challenges Upcoming Today Past AMEXHI
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AMEXHI´s companies worldwide
Norway (1) China (1) UK (4) Netherlands (1) Russia (1) Canada (2) USA (10) Mexico (13) Colombia (2) Japan (1) Australia (1) Brazil (1) Argentina (2) Malaysia (1) Relvance is what it means to the government to interact with AMEXHI Bring real International experience Ability to provide comments based on 100+ years of experience Portugal (1) Spain (1) France (1) Germany (1) Italy (1) Challenges Upcoming Today Past AMEXHI
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AMEXHI Around the World
facilitating the learning curve of the government institutions Miembros de AMEXHI con operaciones Challenges Upcoming Today Past AMEXHI
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AMEXHI’s global experience
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What has happened so far?
Challenges Upcoming Today Past AMEXHI The milestones achieved so far as well as the history Run over the Rounds so far that took place before April 2017 (past NOIA) Challenges Upcoming Today Past AMEXHI
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Background on the NMEM 1993 NAFTA 1993 Petrochemical Reform 1996
Electricity Reform 2008 Hidrocarbons Reform New Mexican Energy Model Dec 2013 Energy Reform enactment Dec 2014 Call for bid R1.1 Mar 2015 ASEA starts operations Jul 2015 Bidding day R1.1 Sept 2015 Bidding day R1.2 Dec 2015 Call for bid R1.4 Aug 2016 Call for bid R2.2 Nov 2016 Mexico joined EITI Mar 2017 5 Year Plan Presentation Jul 2017 Bidding day R2.2&2.3 Sept 2017 Call for bid R3.1 Aug 2014 Secondary laws are enacted (9 new laws and 12 laws changed) Feb 2015 Call for bid R1.2 May 2015 Call for bid R1.3 Sept 2015 CNH signs first contracts with private companies R1.1 Dec 2015 Bidding day R1.3 Jul 2016 Call for bid R2.1 Nov 2016 Call for bid R2.3 Dec 2016 Bidding day R1.4 Jun 2017 Bidding day R2.1 Jul 2017 Call for bid R2.4 Challenges Upcoming Today Past AMEXHI
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Round Zero Meant to provide context, as you know we have our Mexican NOC This is what was assigned to Pemex as Round Zero Focus on numbers all requested in terms of resources and 68 of requested of prospective Challenges Upcoming Today Past AMEXHI
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Round 1.1 Shallow water Shared Production Contracts for the Exploration and Extraction of Hydrocarbons Awarded areas (2/14) Fly over the old rounds as they are not news to you any more The first ever tender for upstream projects in Mexico Challenges Upcoming Today Past AMEXHI
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Round 1.2 Shallow water Shared Production Contracts for the Extraction of Hydrocarbons Awarded áreas (3/5) Point on learning from authorities No longer news The Mexican government adjusted the awarding procedure Challenges Upcoming Today Past AMEXHI
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Round 1.4 Deep Water License Agreements for the Exploration and Extraction of Hydrocarbons No longer news Challenges Upcoming Today Past AMEXHI
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Round 2.1 Key Figures 15 Contractual áreas (10 awarded – June 2017)
Estimated USD 750 million investment / area Average area: 600 km2 Prospective resources: 1.6 bn boe Contract duration: Exploration: 4-6 years Evaluation: 2 years Development years National Content 15% during Exploration 17% during Evaluation 26%-35% during Development Somehow news it happened already but after the past NOIA 10/15 awarded with expected investments of USD 750 million / area Challenges Upcoming Today Past AMEXHI
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Round 2.1 Shallow Water Shared Production Contracts for the Exploration and Extraction of Hydrocarbons No longer news Challenges Upcoming Today Past AMEXHI
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Today – The New Mexican Energy Model
Challenges Upcoming Today Past AMEXHI Part is here, because regulation has just been completed and this is the world created Challenges Upcoming Today Past AMEXHI
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Structure of Ministries & Regulators
Bank of Mexico Mexican Oil Fund Executive Branch Secretaries (Ministries) SENER (Energy Ministry) ASEA (Safety & Environment Protection Agency) SHCP (Treasury) SEMARNAT (Environmental Ministry) CONAGUA (water use) SEMAR (Navy) Descentralized Entities CENACE (Electricity Market) CENAGAS (Gas Market) Intention to show how it is in the end a rather complex system, effort of the legislators to créate a model based on checks and balances and with segregation of duties among regulators. These are the entities oil companies somehow report to or have some sort of interaction State Owned Productive Companies PEMEX Policy makers Regulators Operational control Operators Financial Entity CFE Coordinated Independent Regulators CNH (Upstream) CRE Challenges Upcoming Today Past AMEXHI
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Upcoming E&P Opportunities
Challenges Upcoming Today Past AMEXHI And this is what is coming during the upcoming 6 months Challenges Upcoming Today Past AMEXHI
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Round 2.4 Key Figures 29 Contractual areas
Expected invesments USD 135 bn Average area: 2,290 km2 Prospective resources: bn boe Contract duration: Exploration: 4-10 years Evaluation: 3 years Development years National Content 3% during Exploration 4% during Evaluation 10% during Development Challenges Upcoming Today Past AMEXHI
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Round 2.4 – Deep water License Agreements for the Exploration and Extraction of Hydrocarbons 29 Bidding areas to be awarded in January 31st, 2018 64% Challenges Upcoming Today Past AMEXHI
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Round 3.1 Key Figures 35 Contractual areas
Estimated USD 1.1 bn investment / area Average area: 750 km2 Prospective resources: 2.0 bn boe Contract duration: Exploration: 4-8 years Evaluation: 2-3 years Development years National Content 15% during Exploration 15% during Evaluation 26%-35% during Development Challenges Upcoming Today Past AMEXHI
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Round 3.1 – Shallow water Shared Production Contracts for the Extraction of Hydrocarbons 35 Bidding áreas to be awarded in March 27, 2018 Challenges Upcoming Today Past AMEXHI
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SENER - Five Year Plan (2017)
Deep water Shallow waters Conventional onshore Unconventional onshore Areas in tender Awarded areas Challenges Upcoming Today Past AMEXHI
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Bilateral Industry Challenges
Upcoming Today Past AMEXHI I will briefly speak about Challenges Upcoming Today Past AMEXHI
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NAFTA Renegotiation After Mexico’s Energy Reform, NAFTA itself enabled much of the investment attraction, infrastructure development and a more intensive commercial exchange. The synergy between NAFTA and the Energy Reform in Mexico is essential to attract investments, develop integrated value chains and increase North America’s economic competitiveness”. - A. De la Fuente-Chairman of the BOD of AMEXHI Challenges Upcoming Today Past AMEXHI
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NAFTA Renegotiation Principles
NAFTA do no harm as pre-requisite Trilateral in nature Maintain tariff elimination Liberalized trade of hydrocarbons and products Rules of Origin Mobility of infrastructure and personnel Regulatory coherence Principles for upstream Trade déficit is not really a consequence of trade policy Current account deficit (trade and services balances) is the result of macroeconomic balances, namely the difference between aggregate income and aggregate spending. Between 1993 and 2011, while net private savings went from 4.7% of GDP to 7.6%, the fiscal deficit almost doubled from 5.9 to 10.7% Challenges Upcoming Today Past AMEXHI
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Efficient offshore operation looks like?
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Jones Act (US) and The Navigation and Maritime Trade Law (MX)
Merchant Marine Act of 1920 (Jones Act) Ley de Navegación y Comercio Marítimo US Owner Mexican Owner US Flag Mexican Flag US Crew Mexican Crew US Built Mexico Built Encouraged Challenges Upcoming Today Past AMEXHI
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Policy Outstandings Unitization
Implementation of unconventionals regulation Continuous improvement Onshore social licence Challenges Upcoming Today Past AMEXHI
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Mexico 2040
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Thank you! Raymundo Piñones de la Cabada Director General
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