It has been a year of surprising elections so far. A historic change in Malaysia. Imran Khan in power in Pakistan. And Mexico veering left by electing Andres Manuel Lopez Obrador – also known as AMLO – embracing nationalistic and socialist policies after Peña Nieto embarked on a liberalisation drive that busted open long-held monopolies.
The election presages possible changes in Mexico’s energy sector, threatening to undo the gains triggered when former President Nieto broke state-owned Pemex’s dominance in both upstream and downstream. The result? Foreign investment soared. The retail sector was the first to see major change – Shell, BP and even Glencore have set up fuel networks. Pipelines were next, with American firms rushing to connect the US Gulf Coast to energy-hungry Mexico. Net imports of fuel are rising, but that is a symptom of an ageing and ailing refining industry. In upstream, Mexico has offered up blocks for auction to private players over the past two years, attracting plenty of interest from firms like ExxonMobil and Chevron, especially in the deepwater Gulf.
That may change now. AMLO is more protectionist, and indications of his policies when he assumed Presidentship on 1 December 2018 show that he wants to reinstate (some) power to Pemex. He originally vehemently opposed the breakup of the state’s stranglehold on the energy sector, and though he has moderated his position, he still wants the state to play a bigger role than envisaged under Nieto. AMLO reportedly wants to suspend all oil auctions for two years, possibly up to six years, after two successful auctions with high foreign participation. He also wants to review all 107 E&P contacts already awarded, weaken the new technocratic approach at the national regulator, make Pemex the sole marketer of all fuels (included volumes privately-produced) and allow Pemex to choose its upstream private-sector partners, rather than be paired up with the highest bidders. In short, AMLO wants to turn Pemex from Pertamina to Petronas.
It could go even further. AMLO also wants to roll back the new oil and gas laws, a change that would go beyond adjusting current legislation to creating a new law. That is a lot tougher, as it requires a change to the constitution, which is difficult given the fragile state of politics in Mexico. Raising local content rules is also in the works. This is a move that always rankles foreign investors, taking Pemex in the direction of Petrobras – once lauded, but beset with graft scandals brought about by corruption practised between domestic players; but unlike Petrobras, Pemex does not have the lure of vast pre-salt deposits.
This could be a disaster. The supermajors and majors began re-entering Mexico after a long absence in 2017 because Peña Nieto created an environment conducive for them. Rolling back those changes could drive them away, and their much-needed capital. Pemex, like Pertamina, is in no position to fund AMLO’s ambitious plans for Mexican energy. It needs foreign expertise, and crucially, foreign money. To take Pemex towards the standard of a Petronas or Saudi Aramco is a great and laudable ambition; AMLO’s policies are not the way to achieve that.
AMLO’s targets for Mexican energy
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Headline crude prices for the week beginning 9 December 2019 – Brent: US$64/b; WTI: US$59/b
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In the U.S. Energy Information Administration’s (EIA) International Energy Outlook 2019 (IEO2019), India has the fastest-growing rate of energy consumption globally through 2050. By 2050, EIA projects in the IEO2019 Reference case that India will consume more energy than the United States by the mid-2040s, and its consumption will remain second only to China through 2050. EIA explored three alternative outcomes for India’s energy consumption in an Issue in Focus article released today and a corresponding webinar held at 9:00 a.m. Eastern Standard Time.
Long-term energy consumption projections in India are uncertain because of its rapid rate of change magnified by the size of its economy. The Issue in Focus article explores two aspects of uncertainty regarding India’s future energy consumption: economic composition by sector and industrial sector energy intensity. When these assumptions vary, it significantly increases estimates of future energy consumption.
In the IEO2019 Reference case, EIA projects the economy of India to surpass the economies of the European countries that are part of the Organization for Economic Cooperation and Development (OECD) and the United States by the late 2030s to become the second-largest economy in the world, behind only China. In EIA’s analysis, gross domestic product values for countries and regions are expressed in purchasing power parity terms.
The IEO2019 Reference case shows India’s gross domestic product (GDP) growing from $9 trillion in 2018 to $49 trillion in 2050, an average growth rate of more than 5% per year, which is higher than the global average annual growth rate of 3% in the IEO2019 Reference case.
Source: U.S. Energy Information Administration, International Energy Outlook 2019
India’s economic growth will continue to drive India’s growing energy consumption. In the IEO2019 Reference case, India’s total energy consumption increases from 35 quadrillion British thermal units (Btu) in 2018 to 120 quadrillion Btu in 2050, growing from a 6% share of the world total to 13%. However, annually, the level of GDP in India has a lower energy consumption than some other countries and regions.
Source: U.S. Energy Information Administration, International Energy Outlook 2019
In the Issue in Focus, three alternative cases explore different assumptions that affect India’s projected energy consumption:
EIA’s analysis shows that the country's industrial activity has a greater effect on India’s energy consumption than technological improvements. In the IEO2019 Composition and Combination cases, where the assumption is that economic growth is more concentrated in manufacturing, energy use in India grows at a greater rate because those industries have higher energy intensities.
In the IEO2019 Combination case, India’s industrial energy consumption grows to 38 quadrillion Btu more in 2050 than in the Reference case. This difference is equal to a more than 4% increase in 2050 global energy use.
Cumulative U.S. installed onshore wind capacity exceeded 100 gigawatts (GW) on a nameplate capacity basis as of the end of September 2019, according to the U.S. Energy Information Administration’s (EIA) Preliminary Monthly Electric Generator Inventory. More than half of that amount has been installed since the beginning of 2012. The oldest wind turbines still operating in the United States came online as early as 1975.
Source: U.S. Energy Information Administration, Preliminary Monthly Electric Generator Inventory
As of the third quarter of 2019, 41 states had at least one installed wind turbine. Texas had the most capacity installed, at 26.9 GW, followed by Iowa, Oklahoma, and Kansas. These four states accounted for half of the total U.S. installed wind capacity.
In the United States, wind turbines tend to come online late in the year. Based on information reported in the Preliminary Monthly Electric Generator Inventory, EIA expects that an additional 7.2 GW of capacity will come online in December 2019. EIA also expects that another 14.3 GW of wind capacity will come online in 2020. If realized, the United States would have about 122 GW of wind capacity by the end of next year.