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“There is no solid commitment to either develop Mexican natural gas or seek the most cost-efficient sources. This is surprising...”
Yes it is, Grunstein. Very surprising. Awesome freaking article.
I love Penny’s quote of Ward, “Mirage is a chicken shit company.” Haha
My dad essentially says that all of the time, even though he himself owns a 100,000 shares. He really hasn’t researched it AT ALL and has had his nuts handed to him on several investments in the past, so he’s skeptical and lacks information. He’s lucky I have hounded him to stay in for the long haul.. and I’m lucky to even be here on this board. I just SO HAPPENED to be at his house, and he just SO HAPPENED to be on the phone talking about Mirage for a split second. Curious, I asked him about it. His response was, “Some broke pipeline company that supposedly is building a line from Texas to Mexico.. don’t worry about it. I wouldn’t waste your money.” I threw $500 at it just in case. That was in June. October 8th came along and the interconnect agreement was announced and I unloaded.
Penny has on a couple occasions, in person and on the board, likened this opportunity to a parable in the scriptures spoken by Jesus about the Kingdom of God:
The kingdom of heaven IS LIKE unto treasure hid in a field; the which when a man hath found, he hideth, and for joy thereof goeth and selleth all that he hath, and buyeth that field.”
Matthew 6:44
I essentially have done just that. After hours upon hours of pounding mounds of research..right, wrong, or indifferent; I have now sold 80% of my portfolio to buy Mirage. And just to clear the air, I myself nor Penny feel blasphemous in likening this opportunity to that parable. Mirage is that treasure in the field, and this IS LIKE unto the Kingdom of God. The Lord himself used business constantly to teach us of even greater truths. I hope through this opportunity, I handle the realities of the gospel with far more care and intentionality than I have ever given to Mirage in this season of life. Because as important as this opportunity is, it pales in comparison to the truth of Jesus. It’s not even close. And I praise God already for this opportunity, because even if i end up losing everything in this investment, I learned something far more valuable. As I have taken the time to contemplate in great detail what I will do with the millions that I will make from Mirage; it ended up having a way of magnifying the treasure that I already had in my heart. Our stock hasn’t left to dollar land yet, but I’m already rich. Its like I’m clearly super excited for this to run my account to the 7 digits, but it just kind of made me realize how much more I’m actually excited to embrace the one that died for me.. and rose.. forever! Man, God is so good!
This “chicken shit company” and my “outdated bible” have a lot in common. I’m buying the field!
MRGE$$$
Miragechaser, which article?
Is there a specific contested tidbit you mind pointing out please?
Is it the article I posted this morning, post #11130? URL:
https://www.dineroenimagen.com/maricarmen-cortes/infraestructura-en-energia-fines-de-febrero/119313
Yessir.
Lift up your heads, Mirage Chasers (its a great name, I had to).
Look at this way: Each postponement has been shorter in duration than the one prior. Examples:
-In November, we were told January
-On February 6th, we were given the specific date: 14 de Febrero.
- On February 11th, we were told by the end of the month.
Energy Projects Announcement Postponed
Energy infrastructure: at the end of February?
The very important announcement about energy investment projects was postponed again. Originally, the 130 projects were contemplated in the agreement on infrastructure investment that was announced at the end of November, but they were left out at the last minute for lack of an agreement with Rocío Nahle, Secretary of Energy.
Since then, intense negotiations have been held in multiple meetings led by the new head of the Economic Cabinet, Alfonso Romo, Carlos Salazar Lomelín, president of the CCE, and Antonio del Valle, president of the Business Council, which Rocío Nahle also attends.
First it was said that the energy announcement would be announced in December, then in January, but it was changed to next Friday, February 14, but both Salazar Lomelín and Romo confirmed that it was postponed at the end of this month.
Salazar Lomelín insists that negotiations are on the right track and will be, he says, an agreement that does generate investments in infrastructure in the energy sector. However, skepticism prevails, because it is already confirmed, and not only by Nahle but by President López Obrador, that neither the oil rounds nor the farm outs of Pemex will resume .
*Not the whole article is posted above*
https://www.dineroenimagen.com/maricarmen-cortes/infraestructura-en-energia-fines-de-febrero/119313
I've been translating the comments into english.. Haven't seen any discussion relating to energy yet. Really wishing I had paid more attention in high school spanish haha
Just realized, if Ward is in Mexico for two full weeks starting 2/3, then he will likely be present for the announcement tomorrow.
I can’t imagine how excited he must be. For me, not sure I’ll sleep tonight haha
Cheers all.
China - investing $600 million in the Dos Bocas Refinery
I agree - the total estimated cost of the projects.
There is a discrepancy in the two articles about how much the 137 energy projects cost.. probably due to the translation to English. The correct number is 100 Billion USD.
The first phase for 147 civil infrastructure projects cost $44 Billion.
The second phase for 137 energy infrastructure projects costs $100 Billion.
Gives us an idea of the magnitude of these projects. Wow.
2/12/2020 Update on Energy Projects Announcement Timing:
We continue working on energy projects: CMN
However, the president of the Mexican Business Council does not know when they will be presented
The president of the Mexican Business Council (CMN), Antonio del Valle, said that businessmen and government are still working on defining the energy projects of the private sector infrastructure program, but he does not know when they will be presented.
When questioned by this newspaper about the reasons for the delay in the presentation of the projects, the businessman said that it is a subject of the office of Alfonso Romo, head of the Office of the Presidency.
"We continue working and until something is presented," the businessman told El Sol de México upon his arrival at the National Palace for a dinner offered by President Andrés Manuel López Obrador to the private sector.
Last November, the Business Coordinating Council (CCE) and the Presidency of the Republic presented the first part of the National Private Sector Infrastructure Investment Agreement.
At that time they promised to present projects in the energy sector at the end of January, a commitment that Alfonso Romo reiterated at the beginning of the year in a meeting with Mexican consuls and ambassadors.
However, the official commented at the end of January, during the Energy Mexico 2020 congress, that there will be 137 projects that will require private investment close to one hundred billion dollars, although the President discarded the version a day later.
The head of the Office of the Presidency then changed the date to present the projects for this month of February, although the business sector does not know the day.
The CMN president said they will continue working, although he did not want to mention at what stage of the process they are.
https://www.elsoldemexico.com.mx/finanzas/empresarios-gobierno-trabajando-proyectos-energeticos-antonio-valle-cmn-consejo-mexicano-de-negocios-alfonso-romo-4828342.html
_________________________________________________________________
Powerful voice from billionaire, Carlos Slim:
Mexican businessman Carlos Slim, considered one of the richest men in the world, called on Tuesday to accelerate infrastructure projects in his country, as a measure to return the local economy to the path of growth.
"We have a security problem that we all know, and it is very important, but, on the other hand, what is needed, from the economic point of view, is investment," Slim told reporters after attending the event "Social Dimension of Business".
"There are infrastructure projects, resources, we need to accelerate these investment projects, more agility to start the economy as quickly as possible," added the magnate.
https://www.americaeconomia.com/negocios-industrias/magnate-mexicano-carlos-slim-pide-acelerar-proyectos-de-infraestructura-para
2/6/2020 General Info Regarding Energy Projects Announcement:
Mexican infrastructure would rise due to large investments, experts say
By Luis Rojas
Infrastructure projects in Mexico, with high expectations in the plans in the area of energy, are in the prelude to being recipients of an important flow of investments, which could give some relief to the Economy, according to experts.
The administration of the Mexican president, Andrés Manuel López Obrador, launched in November last year the National Infrastructure Agreement, an alliance between the public and private sectors that commits some 859,000 million Mexican pesos (about 43,000 million dollars).
The measure includes 147 projects in the transport, telecommunications, basic services and tourism sectors, but there is still a second chapter in the area of energy, which could be more attractive for investment once it is announced.
"The interesting thing will be to see what are the projects in the energy sector that are going to be included, both of electric energy and hydrocarbons or clean energy, that is where we would have the possibility of having very important investment for our country," said the director General of the Bursamétrica firm, Ernesto O'Farrill.
The expert added, in statements to Xinhua, that "there are other countries that only by setting the goal in terms of clean energy, already generate an investment boom, an economic boom."
He described as "essential" for Mexico to have infrastructure plans, given that national and foreign investment could accelerate local economic growth, which has stagnated at an annual average of 2.3 percent in the last 30 years.
Mexican economic growth, O'Farrill said, could rise to at least an annual average of 3.5 percent, with the acceleration of the infrastructure plan.
"The Mexican economy is equivalent to 25 billion pesos, so the fact that almost one billion pesos goes to these projects because it is of great relevance, but it could be double," he said.
On the expected energy plan, which could be announced in the coming weeks, he said "China is willing to participate, along with other economies such as Singapore, Norway and even some countries in the Middle East."
The López Obrador administration plans to begin in February the first tender phase of the "Mayan Train" project, one of the main infrastructure works of its government.
The ambitious work integrates 1,500 kilometers of rail logistics, from the archaeological zone of Palenque, in the state of Chiapas (southeast), to the popular Mexican resort of Cancun, in the Yucatan Peninsula.
In addition, the Mexican government integrated on January 29 a special cabinet to stimulate economic growth and the arrival of investments, which could be accelerated with the launch in the future of the Mexico-United States-Canada Treaty (T-MEC) of free trade.
The head of the cabinet, Alfonso Romo, who is also the head of the office of the Presidency and liaison of the president with the national business, said that at least 137 energy projects are prepared, up to 100,000 million dollars.
The Government National Bank of Public Works and Services (Banobras) has another 227 new projects to be developed in infrastructure, and open to the participation of the private sector, both local and foreign.
"We have plans in different sectors but also in different stages of the project life cycle, we usually classify them in four stages," said Mauricio Vázquez, director of project information for Banobras, one of the government's financial support institutions.
"It is not necessary the participation of us as a development bank to be in the projects, the percentage of what we finance is even up to less than 5 percent," the official added to Xinhua.
Banobras even has a section on "sustainable infrastructure" together with the Inter-American Development Bank (IDB) and with Gesellschaft für Internationale Zusammenarbeit (GIZ), the German government agency specializing in technical cooperation for sustainable development worldwide.
The Mexican government enabled the platform "www.proyectosmexico.gob.mx" where interested investors can track the projects to decide their participation, with information that seeks to facilitate compression to foreign participants.
"This, for Chinese companies or Chinese financial institutions that are not familiar, for example, with the issue of health in Mexico, can find more detail in English of the prospectus in the portal," said the Deputy Director of Investor Relations at Banobras, Luis Ampudia.
Meanwhile, the commercial director in Mexico of the Bank of China, Liu Yuxuan, explained that the Asian institution is "monitoring" the various infrastructure plans that are developed in the country, to consider their participation together with other Chinese partners and even Mexicans
"The Bank of China wants to be an investment bridge between Chinese and Mexican companies, we hope that with our efforts we can promote the realization of projects between teams," said the director on the sidelines of a public investment promotion event.
http://spanish.peopledaily.com.cn/n3/2020/0206/c31617-9654806.html
THE SMALLEST?!!!
I was thinking the Storage facility would for sure be the largest by a mile. I’m literally cracking up. If you’re right, my plans to get out around $3 are cancelled. Hahaha
News will blow 20 cents out of the water.
Good point!!!!
Post 11062
You’ll have to translate to English if you use the link:
https://www.milenio.com/negocios/hacienda-energia-uno-de-los-temas-prioritarios-de-amlo
Good morning, all.
Macod, I sure hope so!
I am reminding myself, however, that the undersecretary of the Treasury , Gabriel Yorio, said just 1 week ago that no date had been determined for the announcement yet. Which, this was stated two weeks after the other journalist gave the “could be” about 14 de Febrero.
Thanks, Macod!
Good observation.. I guess that rules out the Storage facility haha
However, surely there is a chance Mirage could be a player in oil as well? Obviously, it would have to be very small in scope compared to the natural gas projects.
Either way, I appreciate the word of caution to not get our hopes up. We need to remember that this is an announcement for only 100 additional projects. There are a whopping 1,600 projects in total for the Infrastructure Plan, and only 147 have been announced so far. So, any projects announced on Friday are really only a drop in the bucket. And especially with these projects not dealing with natural gas, our odds of a mention are even lower.
At least we know the ball is rolling.
Valentine's Day Announcement Source
*** A gift for those who love MRGE$$ ***
Countdown to arm energy package
THE FOURTH TRANSFORMATION
BY DARÍO CELIS ESTRADA JANUARY 23, 2020
The government and the private sector prepare a list of more than 100 projects in oil and electricity, with a public and private investment of at least 10 billion dollars, which can be the trigger for economic competitiveness and infrastructure development most important of the last decades.
Since July last year, the federal government and business leaders, particularly the CCE, CMN and Concamin, have carefully chosen and prepared the list of private investment projects that could be announced next February 14 at the National Palace, as part of the National Infrastructure Program .
Some of those projects were commented yesterday to President Andrés Manuel López Obrador, Alfonso Romo, Arturo Herrera, Rocío Nahle, Octavio Romero and Manuel Bartlett for the private sector, represented by Carlos Salazar, Antonio del Valle Perochena, Francisco Cervantes and Armando Garza Sada.
After the presentation, it is expected that regulatory bodies, such as CRE, CNH and ASEA, present their technical opinion and be put to public tender.
In the last meetings between government-government (Pemex-CFE-SE-Office of the Presidency)) and private sector (CCE-CMN-Concamin-Canacintra-Coparmex-Concanaco) projects have been listed in which only the government can participate and those that private capital has a hand, as well as those where co-investment can be made.
On the way to the announcement of February 14, the amounts of private investment in the projects, the terms of the tenders in the coming months and the rules of operation will be defined.
In the meeting yesterday López Obrador asked the attendees to accelerate the step in the mooring of each project and announce them if necessary as soon as possible.
https://www.debate.com.mx/opinion/Dario-Celis-Estrada-La-Cuarta-Transformacion-Cuenta-regresiva-para-armar-paquete-energetico-20200122-0341.html
Thanks!
Excellent article from 6 days ago. I apologize if this has already been posted.. However, its worth reading again! Bring on the energy package!! MRGE$$$
Energy, one of AMLO's priority topics: Finance
2/6/2020
The undersecretary of the Treasury , Gabriel Yorio , indicated that the issues of the energy sector are a priority for President Andrés Manuel López Obrador , as well as strategic , so it is being analyzed with the private sector where they can participate more actively, so Soon there will be an announcement to report this. After his participation in the inauguration of the expansion of the National Numismatic Museum , the official explained that the President wants energy independence , especially in refineries, which is why refining initiatives are being seen in Dos Bocas, Tabasco.
However, the official said, the areas in which they can participate are also being analyzed with the private sector, so guidelines have already been generated in terms of petrochemicals and storage. He added that in the energy package that will be announced, it will be detailed where the private parties will participate and what is considered strategic and a little more control of the State will be maintained.
"In that sense, the dialogue is progressing quite fast, tomorrow we have a short meeting with the Business Coordinating Council (CCE) , we still have not defined the date (of the announcement)."
https://www.milenio.com/negocios/hacienda-energia-uno-de-los-temas-prioritarios-de-amlo
We will have a much better idea once details are provided. If they get what they had bargained for under the MOU w/ MOD, that’s $50-$60 million a year after 18 months of construction, right? Plus, the facility won’t reach its maximum storage capacity for 10 years!!! Based on this one project alone, assuming they are still contracted for the $50-$60 million annually from the storage facility, I personally think we will have a parabolic run over the first 6 months of construction trading between $2 - $3, with a spike for a limited amount of time to around $4 and a chart correction to the $2 range. Once the facility is in service after 18 months, trading consistently around $3 is very realistic, in my opinion! Of course, its likely there are several other projects.. who knows how they may impact my above stated expectations that are based solely upon the storage facility.
Very possible it slides below 5 cents along with the passing time as we wait.
Word of encouragement and expectation for when news is finally released:
When Mirage was releasing info regarding the Brasil Storage Facility in the first 2 quarters of 2017, this stock was trading between $1.50-$2.05.
In the early 2000's when Ward's company, Tidelands, originally began working on this project (which, correct me if I'm wrong, was placed on hold due to administration changes and their unfavorable energy policies) the company between the years of 2003-2005 traded with much volatility between $1-$2 and even hit a high of $3.89.
The developing story alone pushes the stock to these ranges. How much more news announced that the ink is dry and the shovel is in the dirt! Its been a long time coming for him and many of you here. Praise God the opportunity is being seized and the many that will benefit, both in this stock and in the poverty stricken areas of Mexico.
Isn't the Brasil field on the SW side of Matamoros, Tamaulipas? Anybody have feedback on this?
Tamaulipas State Said ‘Open for Business,’ as Governor Calls for Return of Natural Gas Bid Rounds
Andrew Baker February 11, 2020
Mexico’s Tamaulipas state is “open for business,” Gov. Francisco Javier García Cabeza de Vaca said Friday, citing the state’s immense unconventional natural gas and oil resources, pipeline and port infrastructure, geographic location, and recent progress in improving security.
Nestled in the country’s northeastern corner, Tamaulipas shares a 230-mile border with Texas and has about 250 miles of coastline on the Gulf of Mexico, García Cabeza de Vaca noted during an event at Rice University’s Baker Institute for Public Policy.
Tamaulipas contains the largest portion of the Burgos Basin, Mexico’s most prolific natural gas producing basin not tied to oil production, i.e. non-associated gas.
Daily Coverage, Analysis, & Price Data for Mexico's Emerging Natural Gas Market
The Burgos Basin is the southern extension of the Western Gulf Basin in Texas, which encompasses the Eagle Ford Shale, the U.S. Energy Information Administration (EIA) said in 2017. “High levels of production” in the Eagle Ford “could indicate similar production levels in the Burgos Basin region.”
The Eagle Ford “does not stop at the waters of the Rio Grande,” García Cabeza de Vaca said.
The U.S. portion of the Eagle Ford is expected to produce 1.48 million b/d of oil and 4.93 Bcf/d of natural gas in February, according to analysis last month by the EIA.
The entire country of Mexico, meanwhile, produced 1.71 million b/d of oil and 3.91 Bcf/d of gas in December, according to CNH.
About 57% of Mexico’s prospective hydrocarbon resources are in unconventional areas, namely the Burgos, Tampico-Misantla and Sabinas-Burro Picachos basins, according to upstream regulator Comisión Nacional de Hidrocarburos (CNH).
CNH bid rounds 3.2 and 3.3, which were canceled by President Andrés Manuel López Obrador, would have made available both conventional and unconventional gas-rich blocks, mostly in Tamaulipas.
Although López Obrador publicly opposes drilling using hydraulic fracturing, state oil company Petróleos Mexicanos (Pemex) has been employing the technique in-country for years, García Cabeza de Vaca noted.
He said Mexico should take advantage of the experience and technical know-how of unconventional operators working in Texas.
“We’re strongly in favor of” the bid rounds, he said. Mexico has “decided to put a pause on that” but “the way I see it is that they’re going to open up. They have to open up because we need the gas, we need the oil…”
He said Pemex and the federal government do not have the funds or experience needed to develop the unconventional resources of Tamaulipas.
“I have talked to the president,” García Cabeza de Vaca said. “I told him, ‘Sir, we need those investments. We need the gas, we need the oil...Let the private sector invest.”
ALTAMIRA ENERGY HUB
The port city of Altamira, meanwhile, is home to one of Mexico’s three liquefied natural gas terminals and also serves offshore operators, including those targeting the Mexico portion of the prolific Perdido Foldbelt ultra-deepwater oil and gas province.
Altamira also is one of three delivery points for the 2.6 Bcf/d Sur de Texas-Tuxpan natural gas pipeline, which entered service in September and spans from Brownsville, TX, to Tuxpan, Veracruz in Mexico.
Nearly 60% of U.S.-Mexico trade under the potentially soon-to-be-revamped North American Free Trade Agreement flows through Tamaulipas, the governor said.
Altamira services 42 shipping companies, and is the the deepest-water port on Mexico’s east coast, García Cabeza de Vaca said, as well as Mexico’s leading receipt point for natural gas liquids for the petrochemical industry.
“The priority that we’re giving to this port is of an energy hub” for the petrochemical, hydrocarbon and power generation segments, he told the audience, highlighting Altamira’s “unbeatable” geographic position.
Altamira also is among the country’s main petrochemical clusters, accounting for 72% of thermoplastic resins nationally, he noted. He also cited the port’s “capability to establish a large storage system for hydrocarbons coming from deep and shallow water production.”
The governor said a port under development at the coastal city of Matamoros, Tamaulipas, south of Brownsville, TX, would be able to better serve offshore operators in the Perdido, namely Australia’s BHP, which operates the Trion field in a partnership with Pemex.
Although Tamaulipas has been a hotbed of violence and organized crime, the governor said his administration’s security strategy “has reduced crime by two-thirds in the past three years.”
“Today Tamaulipas has been singled out as the third out of 32 Mexican states with the best security performance in 2019, with substantial advantages in fighting crime.”
https://www.naturalgasintel.com/articles/121018-tamaulipas-state-said-open-for-business-as-governor-calls-for-return-of-natural-gas-bid-rounds
Right - further implying there are plans to transport natural gas from the north? And not only that, but the compressor station is owned by Cenegas, whose pipeline system (Sistrangas) will be fed with sweet Texas natural gas via Mirage’s 42” Concho Pipeline.
Today in Mexico
These excerpts from the below article, published today, provide further evidence of AMLO’s dedication to stimulating the economy in Mexico’s poor southeast. Today was focused on hospitals in the area.. Energy developments are necessary to keep those lights on.
This is the very area the Brasil Storage facility and the Whistler Pipeline will help provide natural gas to at a 1/3 of the current cost. With plans already announced to build at least two power plants in the Yucatan peninsula, where will the extra gas come from? New supply and storage are needed to power these new plants and prevent the current power outages.
https://www.elsoldemexico.com.mx/mexico/politica/sigue-la-agenda-de-amlo-este-11-de-febrero-4819562.html
“Specialties hospital will open in Oaxaca President Andrés Manuel López Obrador said that next March 20 he will visit Tlaxiaco, Oaxaca, to open a hospital where new specialties will be offered. On March 20 we will inaugurate a hospital with specialties, specialties are expanded in Oaxaca in Tlaxiaco, which guarantees the right to health In addition, he recalled that last week a hospital was already opened in Tekach, Yucatán, and in the next few days they will open one more in the same region of the southeast.”
“AMLO promises to reopen truncated hospitals in past six years
The federal government announced the inauguration and reopening of hospitals that had been truncated in the past six years.”
“President Andrés Manuel López Obrador said that it was previously "build by build" and recalled that they have already started in the southeast of the country.”
“It was build by build. They told him at Hacienda he accepts this contract with this company, they were even relatives”
New Yucatan Projects Bring Questions Along with Much-Needed Gas Supply Solution
Eduardo Prud'homme February 7, 2020
Editor’s Note: NGI’s Mexico Gas Price Index, a leader tracking Mexico natural gas market reform, is offering the following column as part of a regular series on understanding this process, written by Eduardo Prud’homme.
Prud’homme was central to the development of Cenagas, the nation’s natural gas pipeline operator, an entity formed in 2015 as part of the energy reform process. He began his career at national oil company Petróleos Mexicanos (Pemex), worked for 14 years at the Energy Regulatory Commission (CRE), rising to be chief economist, and from July 2015 through February served as the ISO chief officer for Cenagas, where he oversaw the technical, commercial and economic management of the nascent Natural Gas Integrated System (Sistrangas).
The opinions and positions expressed by Prud’homme do not necessarily reflect the views of NGI’s Mexico Gas Price Index.
Daily Coverage, Analysis, & Price Data for Mexico's Emerging Natural Gas Market
The Mexican government has made a lot of noise trying to highlight a new private investment opportunity in the Yucatan Peninsula. The general theme is that the president’s energy policy is about to reverse the “neoliberal abandonment” of the peninsula. The plan, which is good news for the market however you spin it, includes investment of $220 million between now and 2024. This includes a 193-kilometer (km) power transmission line. State power firm CFE subsidiary CFEnergía will also anchor a new pipeline, Cuxtal II, which will extend the Mayakán pipeline from Valladolid to Cancun. At 158 km, the new route will have the capacity to transport up to 240 MMcf/d and according to official data, will be ready in 25 months. This extension also involves a shorter segment at the other end of the Mayakan system. Known as phase I of the Cuxtal pipeline system, when complete later this year, the 17-km pipeline will connect Mayakan with the Sistrangas national pipeline grid and the Cactus gas processing plant, increasing input capacity of the system from 240 MMcf/d to 500 MMcf/d. The new flow is destined for two new 493 MW power plants being built by CFE in Merida and Cancun, which will enter operation in 2023 and 2024.
An economically efficient energy strategy in which costs, benefits and risks are assigned to multiple agents through the market does not seem to be the central axis of current energy policy. Although the construction of critical segments of the project will be undertaken by France’s Engie, which owns and operates the isolated Mayakan pipe, President López Obrador emphasized in his speech promoting the project that the strength of the plan will lie in the coordination between state giants CFE and Petróleos Mexicanos (Pemex). In his narrative, the Yucatan’s energy woes are a result of bad policies focusing investment in the north of the country and in deep waters, when everyone knew that the wealth of hydrocarbons in Mexico is in the southeast and its shallow waters. Those bad decisions of the past only benefitted foreign private companies, the argument goes. Now, with the change of regime, projects will seek to benefit the population and will be based on commitment and loyalty of the tens of thousands of workers at Pemex and CFE.
In a video prepared by CFE that explains the scope of the project, several things illustrate some recognition of the commercial and operational reality of the Mexican energy system. The Cuxtal I pipeline will be a bridge that will allow the Yucatan Peninsula to have access to the "cheapest gas in the world" that will arrive thanks to the marine pipeline and NET system. Although today the connection to the Cactus processing center is being billed as the supply solution, the underlying solution lies in having a constant, reliable source of gas. And today, in the diminishing supply conditions prevailing in the Mexican southeast, Pemex cannot guarantee sufficient production to meet demand. In essence, CFE will seek its solutions independently from Pemex. If Pemex is part of the solution, great. If it is not, other options are in place.
Cuxtal I is a necessary but insufficient condition to achieve continuity and growth in gas supply to the Yucatan. Its construction diversifies the injection sources for Mayakan. But it is pertinent to mention that this exercise is not the first time changes to the system have been made. In 2013, Mayakán had an extension of its system to add the Nuevo Pemex processing center as an injection point given the drop in production and output pressure of the processed gas in Ciudad Pemex. This extension was a temporary solution that worked briefly, but in recent years, there were days when gas flow was interrupted for several days due to a lack of gas in Nuevo Pemex or balance dilemmas in which Pemex chose to send gas to the center of the country and not to Yucatan.
Balance conditions in the southeast have achieved some stability in the past thanks to a programmed, physical exchange of regasified LNG delivered in Altamira for gas produced in Cactus, typically transported westward by Sistrangas through Cenagas capacity management. This exchange often drums up operational problems and administrative coordination that transcends the commercial roles of the parties involved. Although the physical exchange occurs between Pemex as a marketer of the gas that is injected into the Sistrangas in Cactus and CFE as a marketer of the imported LNG in the Altamira Terminal, the implementation of this exchange requires rigid institutional agreements not only between the marketing parties but also between processing centers and transport systems, and this is where Cenagas as pipeline operator comes in.
As users of Sistrangas, although CFE injects gas from Altamira LNG to various plants in the coastal areas of the Gulf and the center of the country, for swap purposes, CFE does not alter the handling of the corresponding routes in its transportation contract with Cenagas. In contrast, Pemex routes are used to implement the exchange. In particular, routes that would take Cactus gas to consumption centers in the southeastern part of the country and center of the country will not be fully used to supply the destinations. This action allows Pemex to stop injecting gas into Cactus associated with these routes. The gas that is no longer injected into the Sistrangas can be injected from Nuevo Pemex to the Mayakan system. The imbalance caused by this operation leaves Pemex's supply in the southeast and center of the country incomplete. The way in which the balance is returned corresponds to CFE with a replacement of gas delivered to the Altamira terminal.
However, CFE does not necessarily have routes with the extraction points that Pemex serves as a marketer in its contracts. That is, although the exchange of the molecule can be resolved between Pemex and CFE, the assurance that a balance in transport capacity management occurs is still pending. The way it is resolved is through imbalance payment or reimbursement to the pipeline, an operation known as payback. This operation, if properly nominated, confirmed and scheduled by CENAGAS, leaves the system commercially in balance. The payback is requested by Pemex, and the gas is delivered by CFE on behalf of Pemex.
The amount available for swap via LNG from Altamira was limited not only by the general operational restrictions that Cenagas may impose, but also by limitations in regasification capacity. This scenario changes significantly with the entrance into operation of the marine pipeline given the enabling of the interconnection with the Sistrangas in Montegrande, in the area of Tuxpan, Veracruz. In the coastal area of the Gulf, the supply coming from Cactus can be complemented or replaced by imported gas, which will have the price of the Agua Dulce area plus the cost of transportation, that is, significantly less than the price of LNG. With this change in operating conditions, Pemex and CFE are in a position to establish an exchange agreement for 240 MMcf/d.
This Sistrangas trunk is not yet ready to send large quantities to the Southeast area. Once the reconfiguration of the Cempoala compressor station, which is operated by Cenagas, is achieved, the transportation of gas from north to south to points in the Southeast area will replace Cactus. Therefore, the gas produced by Pemex can be substituted to a greater extent in the Minatitlan area and larger volumes can be redirected to the Yucatan Peninsula in the Mayakan pipeline. If the Cuxcal pipeline is connected to the Sistrangas and an adequate management of the pressure differentials is achieved, it will be possible for the gas received in Montegrande via the marine pipeline to reach Yucatan. This suggests in a veiled way that the intention of CFE is that its interconnection with Sistrangas is its exclusive solution, not that of the market.
Needless to say, due to the relevance of the projects, the natural organizer of them should be Cenagas. Throughout this text we see that in the implementation of the physical exchange solution, daily work is carried out by Cenagas programmers in the nomination and confirmation cycles. But it is CFE who is being tasked with the project. In other words, President López Obrador has endowed the Director of CFE, Manuel Bartlet, with an incontestable leadership in the gas sector. Cuxtal is great news for gas supply in the Yucatan, but not necessarily for the gas market and the electricity market on the whole.
EXACTLY
Ward is in Mexico the rest of this week, so perhaps the first part of next week is the best time to discuss with him.
Penny and Ward spent a significant amount of time together several weeks ago. He ought to call on our behalf if he’s willing.
In the meantime, why do you investors suppose he’s “back to Mexico”?
Get in, Sherman! I hope the best for you pal. Love your enthusiasm and confidence. In the grand scheme of things, we are in extremely early.
Macod, I was thinking about this very thing over the weekend. I’m thankful this is not a pump and dump. We truly will see great gains once projects are announced, but it’s only the beginning. I hope with patience to stay in the race. Apart from financial reward, this has been a fun journey with friends and family.
Macod, thank you for taking the time to write that up.
Can someone please share why next week is suspected?
I agree, but that really is just the beginning. Imagine as the projects actually develop. And more importantly, as the revenue streams start coming in. Which, we really have no idea what the revenue will even look like for the Brasil Storage Facility anymore, let alone other projects Mirage is likely involved in. Does Ward have a better deal worked out than he had for the MOU that fell through? It’s probably similar, which was 5% equity of a $1.2 billion dollar project.
State it.. what’s the realistic price target?
You’re Eeorye
There’s a lot of talk about the $2 range because of the 2017 prices; however, even that range was reached when the deal wasn’t yet solidified. Imagine with the actual news... I keep reminding myself of these words and intend to trade the whole way there:
“It will go to $3-$4 rather quickly”
- Michael Ward -
Macod, can you explain the meaning of this please? Thanks!
Also, it was post 560.
And in the post, I explicitly said they were moving towards the *cultivation* of CBG.
Not at all what has been accomplished through the agreement with HemptownUSA.
It was my dad that told me Andrew sounded optimistic.
I can’t remember where I learned Exactus was working towards CBG.. maybe an Emiliano interview?
Why do I feel like you want to sniff something out? Have you any stake in the company or are you just here for
it’s demise?
Hemptown USA looks solid. I love the focus on the lesser known cannabinoid, CBG.. its far superior to CBD for daytime use, as the world is quickly realizing. Looking forward to trying the cbg/cbd gum! Great job, Exactus.
https://hemptownusa.com/