Introduction of LNG into Mexico: Regulatory Issues to Consider April 25, 2003 Long Beach, California

Transcription

1 LNG: When East Meets West LNG Express Introduction of LNG into Mexico: Regulatory Issues to Consider April 25, 2003 Long Beach, California

2 Index I. Regulatory Framework II. Natural Gas Market III. LNG Projects in Mexico IV. Final Remarks 1

3 I. Regulatory Framework 2

4 Institutional Framework The Energy Regulatory Commission (CRE) is the body responsible for regulating public and private activities in the electricity and natural gas industries Regulation GOVERNMENT CRE Ministry of Energy Private Sector National and International Investment Public Sector Pemex CFE LFC Energy Policy and Operations 3

5 Activities Open to Private Participation Since 1992, private companies can generate or import electricity Generation Transmission Distribution Nuclear, Public Service Cogeneration, Selfconsumption, IPP, Export Interconnected to National Transmission Grid Not interconnected to National Transmission Grid Imports for self-use Reserved to State Open to Private Participation 4

6 Permits Granted Since 1994, the CRE has granted 214 Power related permits for a total capacity of 19,733 MW Type Permits Capacity (MW) Investment (USD million) Self-Supply 153 6,310 4,581 Cogeneration 35 2,158 1,204 IPP s 17 9,277 5,102 Import Export 6 2,186 1,388 TOTAL ,973 12,288 5

7 Activities Open to Private Participation Since 1995 downstream activities are open to private investment Exploration and Production Processing Transportation First Hand Sales Storage Distribution Reserved to the state Open to private participation 6

8 Permits Granted The CRE has granted 123 permits that represent more than USD 2.5 billion in investment commitments in the Natural Gas Industry Type Permits Length (miles) Estimated Investment (million USD) Transport 102 7,180 1,588 Open Access 16 6,790 1,385 Self-use Distribution 21 16, TOTAL ,491 2,576 7

9 Pemex s Transmission and Private Open Access Pipeline 9 11 MEXICALI Nogales 10 Santa Ana Imports Naco Cananea HERMOSILLO GUAYMAS EMPALME CD. JUAREZ CUAUHTEMOC ANAHUAC Imports 2 CHIHUAHUA Jiménez Escalón Delicias Cd. Camargo Gómez P. Cd. Lerdo Torreón Química del Rey Parras Castaños RAMOS ARIZPE SALTILLO PIEDRAS NEGRAS Imports Monclova Hidalgo Pandura Miguel Alemán NUEVO LAREDO Imports REYNOSA 1 Camargo 6 RIO MONTERREY Cadereyta BRAVO Sn. ARTEAGA Fernando MATAMOROS PERMITTEES Midcon Gasoductos de Chihuahua Igasamex Bajío Energía Mayakán Tejas Gas de Toluca FINSA Energéticos Transportadora de Gas Zapata Gasodutos del Baío Transportadora de Gas Natural de Baja California Ductos de Nogales Gasoductos Baja Norte PACIFIC OCEAN GULF OF BAJA CALIFORNIA Sn. Luis Potosí ALTAMIRA C.F.E. Colinas TAMPICO Campo Tam. CD. MADERO GULF OF MEXICO Geographic Zone Potential Geographic Zone Pemex transmission system PrivateOpenAccessPipeline Point of injection ISLAS MARIAS AGUASCALIENTES Guadalajara C.F.E. El Verde LEON IRAPUATO L. Cárdenas 8 SILAO SALAMANCA CELAYA 3 SN. JUAN DEL RIO TOLUCA 5 Tlalchinol Tula QUERETARO Sta. Ana DF PUEBLA 7 PACHUCA TLAX. Poza Rica Cd. Mendoza T. Blanca Veracruz Minatitlán 4 Atasta Nvo. Teapa Cactus y Nuevo Pemex MERIDA Valladolid CAN CUN 8

10 TIJUANA, TECATE MEXICALI Natural Gas Geographical Distribution Zones ENSENADA JUAREZ HERMOSILLO CHIHUAHUA VALLE CUAUTITLAN - TEXCOCO PACHUCA TLAXCALA GUAYMAS EMPALME CUAUHTEMOC DELICIAS PIEDRAS NEGRAS TOLUCA DF CUERNAVACA PUEBLA NUEVO LAREDO GOMEZ PALACIO TORREON LERDO RAMOS ARIZPE SALTILLO REYNOSA MONTERREY ARTEAGA RIO BRAVO MATAMOROS DURANGO ZACATECAS AGUASCALIENTES SN. LUIS POTOSI TAMPICO ALTAMIRA CD. MADERO Geographical zone Other Geographical zones GUADALAJARA LEON SILAO QUERETARO IRAPUATO SALAMANCA CELAYA SN. JUAN DEL RIO PACHUCA TOLUCA TLAXCALA DF PUEBLA CUERNAVACA VERACRUZ MERIDA 9

11 II. Natural Gas Market 10

12 Balance in the Energy Sector ( ) and Investment Requirements Supply-Demand of energy products in Mexico (average annual percent change) Domestic Demand History Domestic Supply Domestic Demand Prospective Domestic Supply Electricity Natural Gas Natural Gas (Excluding Pemex) LPG Investment Requirements US$ bn ( ) Natural Gas Refining Power Sector E&P TOTAL 11

13 Natural Gas Estimates 8 Historic Forecast 7.4% 7 6 Demand 1.9 bcfd 5 Imports 5.9% Bcfd Supply

14 Regional Growth in Natural Gas Demand (Bcfd) Tijuana Mexicali Rosarito Naco Cd Juarez Northwest Chihuahua Reynosa Monterrey Matamoros Northeast Burgos Cd Madero Center-West Toluca Center D.F. Poza Rica Cd. Pemex South-Southeast 13

15 Mexico s Energy Sector Demand ( ) Natural Gas Demand by Sector (million of cubic feet per day) 9,000 8,000 7,000 5% 43% 6,000 5,000 4,000 3,000 2,000 1,000 1% 27% 27% 45% 24% 28% Petroleum Industrial Electric Others 1 Others: Residential, services and transport 14

16 Fuel Consumption for Power Generation ,369 Terajoules/day 6,184 Terajoules/day Coal 14.6% Natural Gas 26.8% Diesel 1.2% Natural Gas 59.1% Fuel Oil 17.3% Diesel 0.6% Fuel Oil 57.4% Coal 23.0% 15

17 Baja California U.S.A. Tijuana Tecate Rosarito Mexicali Ensenada CFE Plants Self Supply Distribution Zone Open Access Transport Self Use Transport LNG Terminals Exports Imports Independent Production 16

18 Natural Gas and Electricity Markets Prospective in Northwest Region Natural Gas Demand Growth (million of cubic feet per day) Electricity Capacity Growth (MW) 10,000 8,000 6,000 4,000 2,000 6,196 9,

19 III. LNG Projects in Mexico 18

20

21 LNG Receiving Terminals Tijuana Mexicali Rosarito Naco Cd Juarez Baja California bcfd Chihuahua Reynosa Monterrey Matamoros Burgos Altamira bcfd Cd Madero Poza Rica Toluca D.F. Cd. Pemex Lázaro Cárdenas 0.5 bcfd? 21

22 LNG in Mexico Advantages: Additional supply Expantion of combined cycle generation plants Regional development Controls eventual peaks Stabilizing prices 20

23 ...LNG in Mexico Companies have expressed their interest in building LNG terminals in Mexico Investors will take all the risk without government guarantees The goverment has adapted the regulatory framework in order to provide certainty to investors 21

24 Regulatory Framework The main points for LNG regulations are: Safety Open Access Tariffs Regulatory Consistency 22

25 LNG Future Projects in Baja California 1) Gas Natural Baja California (GNBC) Permit Adittional Application Information GNBC Delivery Admission to Formal Review and Publication Proposal Evaluation Permit 08/05 09/09 09/26 April 03 2) Energía Costa Azul (ECA) Permit Application ECA Adittional Information Delivery Admission to Formal Review and Publication Proposal Evaluation Permit 09/06 10/24 11/12 May 03 23

26 ...LNG Future Projects 3) Chevron-Texaco de México Permit Adittional Application Information Chevron- Delivery Texaco Admission to Formal Review and Publication Proposal Evaluation Permit 10/07 12/10 Pending June 03 4) Shell Baja California Permit Adittional Application Information Shell Delivery Admission to Formal Review and Publication Proposal Evaluation Permit 11/12 12/18 01/17 July 03 24

27 V. Final Remarks 25

28 Final Remarks Mexico needs to: Satisfy the growing demand for natural gas and electricity Diversify its sources of natural gas Ensure the efficient use of natural resources, with the least possible harm to the environment Expand the pipeline network and reinforce the national grid Develop gas storage capacity to supply peaking requirements Guarantee competitive conditions in the marketplace 26

29 ...Final Remarks In the next 10 years the energy sector will recquire investments for over 157 billion dollars Mexico s energy regulatory framework is permanently adapting to current trends LNG projects will become an alternative supply of gas for the North America Market 27

30