Mexico: Highlights - LBCG · • PEMEX operation as the only producer of hydrocarbons in the country has changed by a new model of open competition. • PEMEX can take advantage of

Mexico: Highlights

1 Source: INEGI. Census of Population and Housing, 2010 Basic Questionnaire. 2 Source: World Bank. 3 Source: Bp Statistical Review of World Energy June 2015. http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-full-report.pdf 4. Source: Iea.org, Key World Energy Statistics 2014.

TOTAL  POPULATION:     112.3  MILLIONS1   309.3  MILLIONS  

GDP:   USD  $1,039  MILLON  2   USD  $14,582  MILLION2  

ELECTRICITY PRODUCTION FROM FOSSIL FUELS - NATURAL GAS (2012)4

COUNTRY USA RUSSIAN

FEDERATION JAPAN IRAN MEXICO ITALY EGYPT SAUDI ARABIA THAILAND KOREA

REST OF THE WORLD WORLD

TWH 1265 525 397 170 151 129 125 121 112 117 1988 5100

8TH PLACE IN NATURAL GAS WORLD CONSUMPTION 3,029 BCF 3

13TH PLACE IN NATURAL GAS WORLD PRODUCTION 2,051 BCF 3 35TH PLACE IN NATURAL GAS WORLD PROVED RESERVES 12.3 TCF 3

MEXICO USA

Natural gas consumption by sector Consumption Distribution By Sector (August 2015)

PEMEX 2,159

INDUSTRIAL 894

DISTRIBUTORS 388

ELECTRICITY 1,410

SELF-GENERATION 141

40%

17% 7%

26%

3%

COMMERCIALS 352

7%

1,262

390

187

320

SOURCE: BDI, SEPT 2015

Pemex Exploración y Producción

Pemex Refinación

Pemex Gas y Petroquímica Básica

Pemex Petroquímica

Industrial demand of natural gas & manufacturing GDP growth

•  In the last decade , the growth of natural gas consumption in the industrial sector has shown an annual average growth of 5.4 percent, well above the 1.9 percent rate that obtained the manufacturing GDP figure the same period

8.42

2.57

-1.30

-11.08

15.50

7.11 4.59 4.98

10.16

16.38

4.5

1.0 -1.0

-8.4

8.5

4.6 4.1 1.0

3.7 1.8

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Industrial Demand (MMcfpd) Manufacturing GDP (Billion Pesos 2008)

Estimate trends for mexican industrial demand of natural gas

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Industrial 1,240 1,366 1,590 1,713 1,804 1,910 1,973 2,033 2,100 2,166 2,234 2,304 2,383 2,462 2,546 2,630

-

500

1,000

1,500

2,000

2,500

3,000 M

Mcf

pd

Source: SENER “Prospectiva de gas natural y gas LP 2014-2028”

Natural gas forecast demand in Mexico

Source: SENER “Prospectiva de gas natural y gas LP 2014-2028”

MMCFPD

0  

2,000  

4,000  

6,000  

8,000  

10,000  

12,000  

14,000  

2015   2016   2017   2018   2019   2020   2021   2022   2023   2024   2025   2026   2027   2028  

Pemex  producAon   Imports  -­‐  exports   Total  Demand  

Connecting Mexico with better markets

THE MEXICAN PIPELINE EXPANSIONS ARE

GIVING THE POSSIBILITY TO

ACCESS IN CHEAPER MARKETS IN THE U.S.

USA TETCO REX

Agua Dulce Henry Hub

Tennesse zone 4-300 Leg

NGPL

La  Laguna  

El  Encino   Colombia  

Escobedo  

Naranjos  Tuxpan  

Topolobampo  

Durango  

Cempoala  

Los  Ramones  

JálApan  

Salina    Cruz  

Tamazunchale  

V.  Reyes  

Guadalajara  

Aguascalientes  

Sásabe  

Tapachula  

San  Isidro  

Guaymas  

Puerto  Libertad  

El  Oro  Camargo  

Samalayuca  

Mazatlán   Altamira  

Apaseo  el  Alto  

Lázaro  Cárdenas  

Acapulco  Nuevo  Pemex  

Ciudad  Pemex  

Huexca  

Tula  

Zacatecas  San  Luis  Potosí  

NaAvitas  

Current Interconections to the Mexican Border

Argüelles Reynosa

Tennessee Reynosa

Kinder Morgan Border

Tennessee Río Bravo

Río Bravo

San Fernando

Est. Nº19

Los Ramones

Monterrey

Chihuahua

Cd. Juárez Tetco

Enterprise

Rosarito

El Paso

North Baja Kinder Morgan

Texas

GDR

OneOk/OkTex

Kinder Morgan GN

México

Gasoductos de Tamaulipas

Mier

Hermosillo

El Paso-

Wilcox

El Paso-Naco

Bajanorte Naco

LNG

Net Mex Pipeline

GDN

Camargo

Firm Capacity

Interruptible capacity

Samalayuca GDCH

Tarahumara

Transport system Firm Capacity MMBtu

Net Mexico Pipeline (Texas) 1,000,000

Kinder Morgan Border (Texas) 230,000

Kinder Morgan Texas (Texas) 525,000

Tennessee Gas Pipeline (Texas) 243,000

El Paso Natural Gas (Arizona) 10,661

El Paso Natural Gas (Texas) 54,790

Crude  Oil     HeaAng  Oil   Propane   Natural  gas   Fuel  oil   Gasoline  

Related market prices HYDROCARBONS* ORIGINAL PRICES EQUIVALENT PRICES

CRUDE OIL (WTI, CUSHING OKLAHOMA NYMEX) $46.14 USD/BARRIL $7.9 USD/MMBTU HEATING OIL (DIESEL, NYMEX NEW YORK HARBOR) $1.5 USD/GAL $11 USD/MMBTU PROPANE (MONT BELVIEU, TX.) $43.8USD/GALÓN $4.8 USD/MMBTU NATURAL GAS (HENRY HUB, NYMEX) $2.5 USD/MMBTU $2.5 USD/MMBTU FUEL OIL (HIGH SULFUR FUEL OIL, NYMEX) $212 USD/GAL $5.4 USD/MMBTU GASOLINE (NYMEX) $1.27 USD/GAL $10.1 USD/MMBTU

Information as of Oct 19, 2015 *Reference Prices

Prices of Natural Gas

USD/MMBtu

Elaborated by Pemex Gas y Petroquímica Básica using Thomson Reuters prices.

International prices

Mexico prices

7.9 7.9

11

24

4.8

7.5

2.5

5.4

10.1

24.8

Natural gas international prices Prices as October 14th 2015 (USD/MMBtu)

* Prices in green are from a previous week

Source: Elaborated by Pemex Gas y Petroquímica Básica using Platts International Gas Reports.

$2.57/2.58  So  Cal  

$  2.52/2.52  Nymex  Henry  Hub  

$2.45/2.46    Reynosa  

$  5.37/3.50  Algonquin  

$6.23/6.06  UK  NBP  

$6.04/6.02  Dutch  TTF  

$6.64/6.68  Italian  PSV  

$6.65/6.60  India  

$6.45/6.40  China  

$6.65/6.60  Japón  

$6.65/6.60  Corea  del  Sur  

EUROPA

ASIA

$6.06/6.04  Germany  EGT  

$7.16/7.16    Perú  

Net exports from us to Mexico (2014-2015) PGPB only

1

2

NET EXPORTS 2014-2015 (MMBTU/D) 2014 2015

1. WESTTEXAS 299,339 45,940 2. SOUTH TEXAS 979,800 1,227,949

2014 2015

WEST TEXAS, AZ. CALIF. MMBTU/D

SAMALAYUCA 89,718 0 CHIHUAHUA-CDJ 117,965 38,796 NACO 34,801 7,144

NORTE II 56,855 0 NORTH BAJA 0 0

TOTAL: 299,339 45,940

SOUTH TEXAS TRANSPORTATION SOUTH TEXAS (MMBTU/D) 2014 2015

TENNESSEE (1999) 215,398 67,652

K.M. BORDER (2000) 216,192 173,816

K.M. TEXAS (2003) 422,316 452,441

TENNESSEE RB (2003) 73,768 0

TETCO (~ 1950) 41,818 2,712

NET (2014) 10,308 531,328

TOTAL: 979,800 1,227,949

Source: BDI, Sept 2015.

WEST TEXAS

Net exports from US to Mexico (2014 - 2015) PGPB only

NET AVERAGE EXPORTS 2014 – 2015 (MMBTU/D) 2014 2015*

1,279,139 1,273,889

* Jan-Sep 2015

MMBTu/day 2015 2014

1,139,254

1,318,019 1,285,747 1,286,183 1,324,219

1,422,843

1,424,591 1,380,998 1,402,086

1,307,756

1,051,378

1,011,832 1,108,041

1,168,491

1,208,740

1,133,078

1,270,997

1,368,500

1,486,642 1,447,268 1,488,615

Ene Feb Mar Abr May Jun Jul Ago Sep Oct Nov Dic

2014  

2015  

Jan Apr Aug Dec

Source: BDI 2015 September

Natural gas transport infrastructure 2015

PRIVATE PIPELINES PEMEX GAS PIPELINES PEMEX GAS IMPORTS PRIVATE IMPORTS PEMEX GAS COMPRESSION STATION PRIVATE COMPRESSION STATION

i

5,825 MILES OF NATURAL GAS PIPELINES1

15 COMPRESSION STATIONS: - 402,115 HP - 265,725 HP: PEMEX GAS - 136,390 HP: PRIVATES

5,0122 MMCFPD TRANSPORT CAPACITY IN THE NGS (NATIONAL GAS SYSTEM) AND 90 MMCFPD IN NACO – HERMOSILLO PIPELINE.

i

1 Source: Memory tasks 2012 (9,038 km). It includes Jáltipan Salina Cruz 12” pipeline and Los Ramones Project Phase I, which will provide 71.46 miles in December 2014. 2 Reference: Capacity in accordance with Resolution 204 of 2010 of the Energy Regulatory Commission.

El Sauz

Aguascalientes

Gloria a Dios

El Sueco

GDT

Tejas Gas

S.L.P.

Mayakan

Chávez

Kinder Morgan

LNG Altamira

i LNG Manzanillo

i

i

Valtierrilla

i i

i i

Guadalajara

i

i

i

Zacatecas

Tamazunchale

LNG Ensenada

i

Altamira

Naco

Sásabe

Los Ramones

Guaymas

Tucson

Natural gas infrastructure projects 2015-2019

LNG regasification terminals  Pipelines in operation Concluded Pipelines (2013/2014/2015) Pipelines in construction (2015/2016)  Pipelines included at “Plan Quinquenal” Compression Station “El Cabrito”

Pipelines 1. San Isidro- Samalayuca (CFE) 2. Sur de Texas – Tuxpan (submarino) (CFE) 3.  Tula – Villa de Reyes (CFE) 4.  Tuxpan – Tula (CFE) 5.  Samalayuca – Sásabe (CFE) 6.  Colombia – Escobedo 7.  Jáltipan – Salina Cruz (PEMEX) 8.  Los Ramones – Cempoala 9.  Villa de Reyes - Ags. – Guadalajara (CFE) 10.  La Laguna – Aguascalientes (CFE) 11.  Lázaro Cárdenas – Acapulco 12.  Salina Cruz – Tapachula

Source: SENER. Plan Quinquenal de Transporte y Almacenamiento Nacional Integrado de Gas Natural 2015-2019.

La Laguna

El Encino Colombia

Escobedo

Naranjos

Tuxpan

Topolobampo

Durango

Cempoala

Los Ramones

Jáltipan

Salina Cruz

Tamazunchale

V. Reyes

Guadalajara

Aguascalientes

Sásabe

Tapachula

San Isidro

Guaymas

Puerto Libertad

El Oro

Camargo

Samalayuca

Mazatlán Altamira

Apaseo el Alto

Lázaro Cárdenas

Acapulco

Nuevo Pemex

Ciudad Pemex Huexca

Tula

Zacatecas San Luis Potosí

Nativitas

1

2

3 4

5

6

7

8

9

10

11 12

Natural gas infrastructure projects 2015-2019

Project   Sponsor   Lenght  (kms)  

Es>mated  Investment  (MMUSD)  

Es>mated  date  of  Bidding  

Es>mated  Opera>onal  

Date  

1   San  Isidro  -­‐  Samalayuca   CFE   23   109*   2015   2017  2   Sur  de  Texas  –  Tuxpan  (submarino)   CFE   800   3,100   2015   2018  3   Tula  –  Villa  de  Reyes   CFE   295   420   2015   2017  4   Tuxpan  –  Tula   CFE   263   400   2015   2017  5   Samalayuca  –  Sásabe   CFE   650   571*   2015   2017  6   Colombia  –  Escobedo   To  be  define   300   N/A   2016   2018  7   JálApan  –  Salina  Cruz   PEMEX   247   643   2015   2017  8   Los  Ramones  –  Cempoala   To  be  define   855   1,980   2017   2019  9   Villa  de  Reyes  -­‐    Aguascalientes  –  Guadalajara   CFE   355   555   2015   2017  10   La  Laguna  –Aguascalientes   CFE   600   1,000   2016   2017  11   Lázaro  Cárdenas  –  Acapulco   To  be  define   331   456   2016   2018  12   Salina  Cruz  –  Tapachula   To  be  define   440   442   2016   2018  13   El  Cabrito  Compression  StaAon   PEMEX   N/A   60   2015   2016  

*Amount of investment estimated by the winning bidder of the project

Firm export capacity of natural gas from US to Mexico 2014-2016

2014   2015   2016  

1.588  

1.988  

2.520  

0.300  

1.115  

1.974  

Bcf/D   MGS  

CFE  

Energy reform THE OPERATION OF PEMEX AS UNIQUE PRODUCER OF HYDROCARBONS IN THE COUNTRY HAS BEEN MODIFIED BY A NEW MODEL OF OPEN COMPETITION:

DECENTRALIZED PUBLIC ENTITY §  PRODUCTIVE COMPANY OF THE STATE (PEMEX). §  PRODUCTIVE SUBSIDIARIES ENTITIES (PEP, TRI & LOGISTICS).

PEMEX BEFORE (OLD MODEL)

PEMEX NOW (NEW MODEL)

§  COMPETITIVE COMPANY WHOSE PURPOSE IS TO CREATE ECONOMIC VALUE. RESOURCE MANAGER

§  MARKET SHAREHOLDER. §  SENER IS ON CHARGE OF ENERGY SECURITY, IN SUPPLY

MATTERS. RESPONSIBLE OF SUPPLY ASSURANCE

§  PERMIT REGULATION FOR ALL ACTIVITIES OF THE VALUE CHAIN.

PERMIT REGIME FOR SOME ACTIVITIES

New Business Models - Downstream PEMEX has developed successful strategic alliances in downstream activities.

GAS PIPELINES

PEMEX’S PARTICIPATION

OBJECTIVE NATURAL GAS AND LPG

TRANSPORTATION TO POWER PLANTS IN THE NORTHERN

REGION OF MEXICO

OPERATIONS STARTUP 1997

TO DEVELOP INFRASTRUCTURE

PROJECT “AGUA DULCE-FRONTERA”

2013

TO DEVELOP INFRASTRUCTURE PROJECT

“LOS RAMONES II NORTH AND SOUTH”

2013

TO DEVELOP INFRASTRUCTURE

PROJECT “TUCSON-SÁSABE”

2013

JOINT VENTURES

COMPANY El Paso Natural Gas (1997)

Sempra Energy (2010) (partner)

NET (partner) MGS & MGE (subsidiaries) / GCh (investee) / GDF Suez

(partner)

Kinder Morgan/ Mitsui (partners)

Conclusions •  PEMEX, as a Productive State Enterprise aims to maximize economic value and profitability

for the Mexican state, by improving its productivity to maximize oil and gas revenues and contribute to national development.

•  PEMEX operation as the only producer of hydrocarbons in the country has changed by a new model of open competition.

•  PEMEX can take advantage of the opportunity to establish new legal framework with strategic partners to consider alliances or joint ventures.