Mexican Government Cuts 2016 Budget by $13 Billion amid Slumping Oil Prices

Latin American Herald Tribune: The government is cutting the 2016 budget by 221 billion pesos ($13.12 billion) to maintain economic stability amid a challenging global situation, Mexican Finance and Public Credit Secretary Luis Videgaray said.

“The spending planned in the budget for the year 2016 reflects a reduction of 221 billion pesos ($13.12 billion), that is 1.15 percent of the gross domestic product (GDP) less than in the planned spending for last year,” Videgaray told Congress.

Consortium Signs Contracts Awarded in Historic Mexico Oil Auction

Latin American Herald Tribune: The consortium that won two shallow-water exploration blocks in July’s first phase of Mexico’s historic Round One oil auction has signed the corresponding contracts with the government, officials said.

John Ashland Shepherd and Bill Moss, representatives of Houston-based oil company Talos Energy; Timothy Lloyd of Britain’s Premier Oil; and Salvador Beltran del Rio and Ivan Sandrea of Mexico’s Sierra Oil & Gas inked the contracts Friday on behalf of the consortium.

Ship Belonging to Government-Seized Mexican Oil Services Firm Reported Missing

Latin American Herald Tribune: A ship considered key to the financial restructuring of Mexican oil services firm Oceanografia, which the government seized last year after it allegedly defrauded U.S. financial giant Citigroup’s local unit out of hundreds of millions of dollars, has gone missing, a judge said.

“The vessel Caballo Maya has been taken from its place of storage, and its whereabouts is unknown,” Mexico City-based federal Judge Felipe Consuelo, who is presiding over Ciudad del Carmen, Mexico-based Oceanografia’s bankruptcy proceedings, said Thursday. Read more. 

Mexico’s economy was supposed to soar. It’s starting to flop.

The Washington Post: Largely lost amid the frantic scramble after drug lord Joaquín “El Chapo” Guzmán’s dramatic prison escape, one of the biggest leaps of faith for the Mexican economy landed with a flop.

At the first auction last month to sell the rights to drill for oil in Mexico — as the country opens its oil industry to foreign investment for the first time in eight decades — the government sold just two of its 14 blocks. The disappointing showing for President Enrique Peña Nieto’s signature economic reform prompted the government last week to modify the terms of the contracts for next month’s auction and added to what has been a noticeable string of bad news for Latin America’s second-largest economy. Read more. 

The good oil boys club

Peak Oil: It should have been a day of high excitement. A public auction on July 15th marked the end of a 77-year monopoly on oil exploration and production by Pemex, Mexico’s state-owned oil company, and ushered in a new era of foreign investment in Mexican oil that until a few years ago was considered unimaginable.

The Mexican government had hoped that its first-ever auction of shallow-water exploration blocks in the Gulf of Mexico would successfully launch the modernisation of its energy industry. In the run-up to the bidding, Mexico had sought to be as accommodating as its historic dislike for foreign oil companies allowed it to be. Juan Carlos Zepeda, head of the National Hydrocarbons Commission, the regulator, had put a premium on transparency, saying there was “zero room” for favouritism. Read more. 

Mexico imports gasoline as thefts cause shortages

AFP: Mexico is importing 75,000 extra barrels of gasoline per day in an "unprecedented" move to mitigate shortages in several states caused by illegal pipeline taps, authorities said.

An official at the state-run energy firm Pemex said the "extraordinary measures" were needed to supply service stations in several cities. Read more. 

Pemex confirms Gulf oil platform accident, impact unclear

Reuters: Mexico's state-run oil company, Pemex, confirmed on Monday there was an accident on an oil platform at one of its major operations in the southern Gulf of Mexico, but added any impact on output remained unclear.

The company said the accident was caused by an oil and gas leak and three workers performing routine inspections had been evacuated. It said there were no reports of any injuries on the platform, which was uninhabited and operated remotely. Read more. 

BP Sued By Mexican Fishing Businesses for Deepwater Horizon Spill

CorpWatch: British Petroleum (BP) has been sued by some 25,000 Mexican fishing businesses over the 2010 Deepwater Horizon disaster in the Gulf of Mexico. The company says it has paid $1.8 billion in compensation to U.S. businesses but has yet to offer money to those affected south of the border.

Deepwater Horizon was a floating rig built by Hyundai Heavy Industries of South Korea and leased by Transocean of Louisiana to BP to explore for oil 4,000 feet below the surface in the Macondo Prospect some 41 miles off the coast. On April 20, 2010, methane gas from the well forced its way to the surface and caused the well to blow out. The resulting fire killed eleven workers and burned for three months before it was capped, but not before an estimated 4.9 million barrels of oil were spilled. Read more. 

Theft Surge Prompts Pemex to Halt Gasoline Shipments by Pipe

Bloomberg: Petroleos Mexicanos is losing so much money to people pilfering from its pipelines that the state-owned oil producer has decided to remove the temptation.

Pemex will stop using pipelines to transport refined fuel that can be put directly into engines, the Mexico City-based company said in an e-mailed statement Tuesday. Instead, Pemex will remove a key chemical and use pipelines to send the partially processed gasoline and diesel to storage terminals, where the fuel will undertake final processing. Read more. 

Mexico looks the other way as contractors fleece oil giant Pemex

Reuters: The state-owned petroleum giant Pemex paid $9 million in 2011 to have an oil rig towed halfway round the world, from the United Arab Emirates to the Gulf of Mexico. When government auditors looked at the contract, they turned up some problems.

The rig had the wrong equipment for the assignment, according to a report by Mexican congressional auditors. And the tow job itself was a fiction: The rig didn’t need to be moved. It was already in the Gulf of Mexico. Read more. 

Mexico's Light Crude, Shunned For U.S. Shale, Sails East

Reuters: Mexican crude oil is sailing to the U.S. East Coast at the highest rate in over a decade, according to customs data reviewed by Reuters, in a sign deepening discounts help crack open new markets as domestic shale inundates Texas.

Delta Air Lines-owned Monroe Energy received nearly 500,000 barrels of light-sour Mexican crude in September and a similar cargo in October at its 185,000-barrel-per-day refinery in Trainer, Pennsylvania, according to U.S. Energy Information Administration data. It was the refiner's first imports from Mexico since 2009, the furthest the data go back. Read more. 

Canadian Oil Boom Reaches U.S. Gulf, Puts Mexico on Defensive

Yahoo: A price war is brewing between Canada and Latin America over who will satisfy U.S. Gulf Coast refiners' hunger for heavy oil.

The new Seaway Twin pipeline will almost double the amount of heavy Canadian crude coming to Gulf terminals and plants to about 400,000 barrels a day starting in January, according to Calgary-based based ARC Financial Corp. The shipments are growing even without the Keystone XL pipeline, which has been delayed for six years because of environmental opposition. Read more. 

Oil price falls to lowest level in five years

BBC World: Oil prices fell to the lowest price of the last five years.

According to the reference, a barrel of Brent, the price is below $ 60 a barrel for the first time since July 2009.

Analysts say the slowdown in emerging economies has affected the demand in a time when supplies have increased.

The oil price has almost halved since hitting in June the maximum price of $ 115 per barrel.

Translation: Americas Program

Mexico unveils first phase of historic oil reform

AFP: Mexico unveiled rules Thursday for the first phase of its historic opening of the oil sector to foreign investors, pledging transparent auctions in July for 14 shallow-water fields.

The highly-anticipated guidelines were made public four months after Congress gave final approval to legislation allowing foreign companies to drill for oil for the first time since 1938. Read more. 

Crude gas war pushes prices down, but not in Mexico

El Universal: The battle in the oil markets Producers Between two blocks is pushing prices down for the Consumers, According to George Baker, from Mexico Intelligence consulting company. For example, a regular gasoline in the US is selling for 2.71 dollars the gallon, ITS LOWEST level since 2010, as a result of the fall, According to data from the consulting company based in Houston, Texas.

But while Canada and the UK Also saw a fall in the prices, in Mexico the situation is different. Even if the Local crude ended Friday with a fall of 0.75 dollars, ending in 59.98 dollars per barrel, the policy of "gasolinazo", the monthly Increase to the price of gasoline, Applied since 2008, means That the price of regular gas ended in 13.31 pesos per liter, approximately 3.50 dollars per gallon. Read more. 

Mexican cartels steal billions from oil industry

AP: Mexico overcame 75 years of nationalist pride to reform its flagging, state-owned oil industry. But as it prepares to develop rich shale fields along the Gulf Coast, and attract foreign investors, another challenge awaits: taming the brutal drug cartels that rule the region and are stealing billions of dollars' worth of oil from pipelines.

Figures released by Petroleos Mexicanos last week show the gangs are becoming more prolific and sophisticated. So far this year, thieves across Mexico have drilled 2,481 illegal taps into state-owned pipelines, up more than one-third from the same period of 2013. Pemex estimates it's lost some 7.5 million barrels worth $1.15 billion. Read More. 

For Mexico, good economic times are always just out of reach

McClatchyDC

BY Tim Johnson

The central bank chief calls it a “temporary pothole.”

Whatever the term, Mexico’s economy has hit some turbulence - despite the most ambitious overhaul to its business structure in decades.

Tax hikes have dampened consumer confidence, retail sales remain stagnant, and low U.S. demand for Mexican-made cars and televisions slowed the economy earlier this year to its lowest point in four years. Mexico grew at a sluggish 1.8 percent rate in the first quarter of 2014, forcing the government to ratchet down its forecast to 2.7 percent growth for the year.

Bankers and economists still voice hope that Mexico is on the threshold of faster growth because of the opening of the energy, banking and telecommunications sectors. “We know that the reforms don’t have an immediate effect and that it is necessary to have patience and persevere,” a Spanish banker, Francisco Gonzalez Rodriguez, chief executive of Banco Bilbao Vizcaya Argentaria, or BBVA, told a forum this week. Read more

NYT Article Highlights US NSA Corporate Spying, Mentions Spying on Mexican Oil Company

New York Times, May 21,  "Fine Line Seen in U.S. Spying on Companies"
The New York Times ran an article today noting that the Chinese have accused the NSA of applying a double standard regarding spying on companies to obtain trade advantages. Although the article leaves a lot out and uses language like "digging into corporations" instead of infiltrating their communications, it is exceptionally bold in implying that a double standard exists:

In each of these cases, American officials insist, when speaking off the record, that the United States was never acting on behalf of specific American companies. But the government does not deny it routinely spies to advance American economic advantage, which is part of its broad definition of how it protects American national security. In short, the officials say, while the N.S.A. cannot spy on Airbus and give the results to Boeing, it is free to spy on European or Asian trade negotiators and use the results to help American trade officials — and, by extension, the American industries and workers they are trying to bolster.

Among the things the article almost says but steps back from the brink of actually documenting with existing information from the NSA leaks, is that:
1) NSA stolen data is used to help US companies compete in the global market. This violation of basic trade rules caused Brazil to snub Boeing and go with Saab for a long-coveted $4.5 billion contract for jet fighters shortly after the NSA scandal broke.

In the context of all we now know about NSA operations thanks to whistleblower Edward Snowden, the defense offered by national intelligence director James Clapper rings hollow indeed:

“What we do not do, as we have said many times,” James R. Clapper Jr., the director of national intelligence, said after some of the initial N.S.A. revelations last year, “is use our foreign intelligence capabilities to steal the trade secrets of foreign companies on behalf of — or give intelligence we collect to — U.S. companies to enhance their international competitiveness or increase their bottom line.”

2) NSA spying operations make a mockery of the US's draconian global intellectual property crusade.

3) The NSA defends its disregard for international or local laws abroad. The New York Times puts it  euphemistically: "The N.S.A. says it observes American law around the globe, but admits that local laws are no obstacle to its operations." That the law is no obstacle is a polite way of saying that it is wantonly disregarded.

All this is critical to Mexico as it reviews the implementing legislation on energy reforms. We have always known that PEMEX is among NSA targets--and not just for national security reasons. The agency is ascertaining reserves, the shape of reforms, conditions for investment. Glenn Greenwald says in an interview with CNN Español in September of last year:

There are documents that indicate that one of the issues they most spy on Mexico for is energy and oil. They (the NSA) are interested in these issues, not just national security or drugs like most people think. They are interested in economic and energy resource issues." (my translation)

 The Mexican government is carefully controlling information that could affect the future of the energy sector privatization legislation. Information that the Chinese will present regarding NSA spying to benefit U.S. corporations will not help to convince those who are already reluctant to relinquish Mexican natural resource management (and profits) to U.S. oil companies.

Oil: The Great Pitfall

La Jornada 

By John Saxe - Fernández

Americas Program Original Translation 

Diego Valadés, of the Institute of Legal Research of the UNAM, warned the Senate about the risk involved in opening Pemex when Mexico is part of NAFTA and could be forced to give preferential contracts to companies (U.S.), or risk involvement in an international controversy if they refuse. The matter takes on unusual importance and urgency if we consider that since October 2012 Mexico has been negotiating their participation in the Trans-Pacifc Partnership Agreement (TPP) which, according to leaked documents, grants rights and privileges to corporations in investment, land, natural resources, and industries in order to disable state enterprises, with the intention to reverse the vast and dynamic geo-economic and political projection of the Chinese state sector.

The notion of renegotiating the Mexico’s petro-electric clause in NAFTA protected by Articles 27 and 28 of the Constitution, had been placed in Peña Nieto’s agenda by John D. Negroponte ( JDN ), U.S. ambassador during the negotiation of NAFTA and former director of the National Intelligence Council , governing body of imperial espionage . In October 2010 Negroponte said from Toluca that it was time to seek new ways of working through the negotiation of a second phase (NAFTA) and that the... delicate matter ... needed to be put on the table. He was referring to the energy sector, a key card in the presidential succession processes for plundering the nation. EPN came to Los Pinos at the culmination of the intentional weakening of Pemex started in 1983, so that by the end of 2011 and to the delight of the White House and the greats (ExxonMobil, Chevron, etc.) during their U.S. tour, offered to open the energy sector, endorsing U.S. business design and national security.

Fight over revered ex-president’s image dominates Mexico’s oil reform debate

The Washington Post 
August 16, 2013

The son of Mexico’s most revered modern president, known for nationalizing Mexico’s oil industry, says his dad is rolling in his grave.

In fact, both sides in the heated debate over proposals to open Mexico’s oil industry to private companies are using the image of former president Lazaro Cardenas, roughly Mexico’s equivalent of Franklin D. Roosevelt.

Current President Enrique Pena Nieto has launched a blitz of TV ads that prominently feature photos of Cardenas, who expropriated foreign oil companies and nationalized the industry when he was president from 1934 to 1940.

Like FDR, who was known for helping pull America out of the depression with his ‘new deal’ public works programs, Cardenas is remembered for handing out land to poor farmers and standing up to the foreign oil companies that once took the lion’s share of profits from Mexican oil.  Read more.