Mexicos Energy Reform & PEMEX as a State Productive Enterprise August 2014
Content Industry Evolution Constitutional Reform and Secondary Legislation PEMEX Today PEMEX as a State Productive Enterprise Financials 2
Industry Evolution Mexican Industry 1901-1938 1938 1958 1995, 2003 and 2008 The Energy Reform of Participation of the Expropriation Contracts are Reforms to the industry 2013 brings up to par private sector in allow limited…
Mexico has become less energy independent Production and Consumption of Natural Gas Production and Imports of Gasoline Million cubic feet per day (MMcfd) Thousand barrels per day (Mbd) 8,000 900 811 6,839 75% of domestic 7,000 800 752…
The O&G Evolution in other LATAM countries (Mbd) 3,500 3,371 3,022 3,000 Mexico 2,577 2,538 2,500 Counter-refom in Brazil in 2010 2,054 2,000 1,937 The outcome of 1,536 2,108 Reform in reforms in other 1,500 Brazil in 1997 countries…
Mexicos Productive Basins1 MMMboe (billion barrels of oil equivalent) Prospective Oil and Gas Reserves Cum. Resources Gas Basin Prod. 1P 2P 3P Non Conv. (90%) (50%) (10%) Conv. Southeastern 46.5 11.8 17.0 23.4 16.8 Tampico…
Content Industry Evolution Constitutional Reform and Secondary Legislation PEMEX Today PEMEX as a State Productive Enterprise Financials 8
Energy Reform On December 20, 2013 a constitutional reform was Constitutional enacted. Reform The Reform represents a paradigm shift in the management of Mexicos natural resources. The secondary legislation, approved on August…
5 Guiding Principles of the Energy Reform The Constitutional Reform enacted on December 20, 2013 includes modifications to constitutional articles 25, 27 and 28, as well as 21 transitory articles 5 Guiding Principles…
The Reform Timeline Constitutional Reform December 20, 2013 The Ministry of Energy prioritized PEMEXs request for March 21 August 13 Round Zero & exploratory blocks and producing fields, and defined their 2014 Resolution…
Round Zero Resolution 2P Prospective 2P Reserves Total prospective resources Conventional Reserves Resources MMMboe MMMboe resources Unconventional Area MMMboe MMMboe 100% = 24.8 resources Conventional 20,589 18,222 112.2 22.1 17%…
Round 1 and Migration Timeline 2014 2015 Aug / Nov 14 Nov 14 / Jan 15 08/13/14 Round One announcement Pre-Bid Package Feedback on announced areas. publication Feb / May 15 May / Sep 15 (CNH1) Sale of Bid Contract adjudication Aug…
Secondary Legislation To consolidate a new legal framework in the energy sector, 9 new laws were approved and 12 laws were amended. 1. Hydrocarbons Law1 12. Acquisitions, Leases and Services Agreements Law2 2. Foreign Investment Law2…
Updating an Outdated Energy Model A clear distribution of roles: owner, regulator, operating entities and operating companies The Ministry of Energy dictates the energy policy The Ministry of Finance manages resources and…
Distribution of Roles Define exploration and exploitation areas, as well as the type of contract awarded (licenses, production sharing, profit sharing, or a combination of the previous). Award assignments, including Round Zero.…
Quick take on the new energy sector in Mexico Assignments* Regulated by the Ministry of Energy and the CNH Migration PEMEX to 1. Production-sharing continue 2. Profit-sharing commercialization Contracts + Third Parties 3.…
Hydrocarbons Revenue Law Assignments Duties Fund Migration Recognition of a greater proportion of exploration and production costs Signing Contractual Fee for the Licenses Bonus Exploratory Phase Royalties Income…
Fiscal Regime for Assignments Duties and Royalties Hydrocarbon Extraction % of the value of extracted hydrocarbons (% based Duty (Royalty) on the hydrocarbon price levels) Hydrocarbon Fixed amount per km2 (amount increases with time)…
National Content and National Industry Minimum E&P Avg. National preference will be Public Trust to Develop granted when similar 35% (2025)1 National Suppliers and conditions are being Contractors offered (price, quality and timely…
Content Industry Evolution Constitutional Reform and Secondary Legislation PEMEX Today PEMEX as a State Productive Enterprise Financials 21
A Snapshot of PEMEX Today Exploration and Production Downstream International Crude oil production: 2,480 Mbd1 Refining capacity: 1,690 Mbd1 Crude oil exports: 1,136 Mbd1 Natural gas production: 5,785 Strategically positioned 3rd…
Production and Reserves Profile Crude Oil Production (Mbd) Natural Gas Production2 (Bcf) 8.0 3,000 2,4361 5.71 6.0 Onshore Non-associated 2,000 4.0 Off-shore 1,000 2.0 Associated 0 0.0 Jan-00 Sep-03 May-07 Jan-11 Jun-14…
Heavy Developed Infrastructure in the Campeche Sound (Southeastern Basins) CAYO DE ARCAS YUM KK TAKUNTAH NAB FPSO TAKUNTAH KU S YUM KK NAB KU S KU A KU H AKALJ Competitive Advantages NOHOCH A ABKATUN AKALC 87% of 1P…
Downstream and Midstream Production Capacity Producer Zone Refinery Refining Petrochemical Center Atmospheric distillation capacity 1,690 Mbd Gas Processing Center Gas Processing Sour Nat Gas 4.5 Bcf Camargo Sales Point…
Mexicos Next Production Frontiers Deepwater Competitive Advantages PEMEX has acquired significant information from deep and ultra-deepwater oil fields in the Gulf of Mexico: United Gulf of States 3D seismic acquisition: 124,790…
Mexicos Next Production Frontiers - Shale Competitive Advantages Bakken Eagle Ford and Woodford have continuity Antrim across the border Bakken Niobrara Marcellus Bakken and Haynesville are analogues of Bakken Antrim…
Content Industry Evolution Constitutional Reform and Secondary Legislation PEMEX Today PEMEX as a State Productive Enterprise Financials 28
PEMEXs transformation The legal framework was Flexible legal framework comparable to: governed by the Mexican Postal principles of private law. Service The Ministry of A special regime for: Education acquisition and procurement,…
Main Characteristics of an SPE1 State Productive Enterprise Corporate Regime Compensation Recruitment Governing Law Performance Procurement Commercial Law2 Evaluation Budget vs. Administrative Economic Debt Law3 objectives…
Becoming an SPE Composition of New Board of Directors State SENER SHCP Independent Members Representatives1 10 members New Corporate Structure PEMEX will E&P Finance have additional (Upstream) flexibility to Unified…
Migration Process on Assignments Promote PEMEXs development as a State Productive Enterprise to promote generation of value Expected 2P Reserves Investment (MMboe)1 (USD billion) Fields First stage: First block 569 2.6 Poza…
Round One Provide the potential to increase crude oil and natural gas production in the short term, incorporate reserves, and seek new areas to increase Mexicos prospective resources. Reserves (MMboe) Fields 1,5911 Perdido Area…
Benefits & Opportunities New New Industry Business Scheme Environment State Productive Enterprise Transfer of technology and know- Operational and efficiency Management and how metrics budgetary autonomy Collaboration with…
Content Industry Evolution Constitutional Reform and Secondary Legislation PEMEX Today PEMEX as a State Productive Enterprise Financials 35
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