Energy Profile of Mexico

The structure of the mexican energy sector

The Mexican energy sector is structured as shown in Figure 1. The Energy Secretariat coordinates the sector; it is organized in three large areas.

The oil & gas subsector has as its main organization the state own company PETROLEOS MEXICANOS (PEMEX), which is composed of five subsidiaries: PEMEX Exploración and Producción (PEP), PEMEX Refinación (PR), PEMEX Gas y Petroquímica Básica (PGPB), PEMEX Petroquímica (PP), and PEMEX International (PMI). The Instituto Mexicano del Petróleo (IMP), also a public entity, offers technical support to PEMEX.

Besides these public entities, according to the Natural Gas Regulation published in 1995, an important number of private companies participate in the gas transport, its distribution and the re-gasification of imported liquid natural gas.

The electricity subsector has as its principal utility, Comisión Federal de Electricidad (CFE), which generates and transmits close to 100% of the electricity in the country, and distributes approximately 75% of the kWh sold. Luz y Fuerza del Centro (LyFC), also a public utility, basically distributes the other 25%% of the kWh, mainly in the center of the country. According to the 1992 revision of the Public Service Law of Electricity, at present there are several private companies that generate electricity for CFE (Independent Power Producers – IPP); it also allows the import and export of electricity by this type of companies. The Instituto de Investigaciones Eléctricas (IIE) offers technical support to CFE, LyFC, as well as PEMEX and other public and private industry, in the area of electricity.

Also, there are another three entities in the central government that regulate or/and promote different aspects of the energy sector. The Comisión Reguladora de Energía (CRE), the Comisión Nacional de Seguridad Nuclear y Salvaguardias (CNSNS), and the Comisión Nacional de Ahorro de Energía (CONAE). There is also the Instituto Nacional de Investigaciones Nucleares (ININ), which carries out research and development activities in the area of the peaceful applications of nuclear energy.

Figure 1. Energy Sector of Mexico

The energy balance

The energy balance of the country is summarized in Table 1. One of its main features is the strong dependency of the economy on the oil&gas resources (92%), including the oil exports. On the other hand, in relation to final consumption, the transport sector is the largest consuming sector (42%, excluding the energy sector). This percentage is more important than that of the industrial sector which is only 29%.

Table 1. Energy Balance 2005

Renewable energies, as shown in Table 2, have played a complementary role in the last few years to the production of primary energy. The variations that are observed are due to the variability of the climatic conditions that affect the electricity production in large hydroelectric units.

Table 2. The Renewable Primary Energies in the Energy Balance of Mexico (PetaJoules)

Reserves and production of primary energy

In Table 3, the various reserves and productions of the primary energies used in the energy mix are presented, including the parameter reserves/production ratio (R/P) for non-renewable energy resources which indicates the number of years that the reserves will last at the actual rate of production of that specific energy resource.

Table 3. Reserves and Production of Primary Energies in Mexico

References:
- Anuario Estadístico Pemex 2006.
- Compendio de información del Sector Energético. Reporte Interno. Programa Universitario de Energía. UNAM.

Between 1985 and 2005, significant changes took place in the oil sector; partially as a result of the reduction in investment for exploration activities, the reserves to production ratio, R/P, diminished significantly. If only the proven reserves are taken into consideration (11.83 x 109 barrels), the 2005 R/P is only 9.7 years. This parameter seems to be low as compared to the older one: yet it really is not. It is not efficient from the economic point of view to invest indefinitely a large amount of financial resources in exploration to increment its value, since they become non-productive resources. What is important to ascertain is to maintain along a certain period of time the R/P value within an adequate range determined by the financial requirements of the company, as reserves are looked upon as collateral guaranty. This is done incorporating new reserves to replace those oil barrels produced in the year. The large oil&gas private companies keep R/P values in the range of 10 to 15.

Production and infrastructure of the oil&gas sector

From Table 4, one observes that the refining capacity has been constant in the last eight years. Important increases are shown in the processes related to the naphta conversion and hydrodesulphurization, which generate less polluting fuels.

References:
- La Refinación en México. Ing. Gerardo Bazán Navarrete. Reporte Interno, Programa Universitario de Energía, UNAM, mayo 2006.
- Anuario Estadístico Pemex 2006.

In Table 5, the production values of the three main fuels - gasoline, diesel and fuel oil – are shown comparing 1998 with 2005. Gasoline production has increased by 10% and diesel production by 9.6%. Fuel oil production has been reduced due to the initiation of the revamp process of the six refineries which includes the installation of coke production, thus reducing the fuel oil production capacity. The increase in gasoline production was not enough to satisfy the increase in demand, resulting in imports of this fuel; in 2005, it was equivalent to 33% of the demand.

References:
- Informe Estadístico de Labores Pemex 2005
- Anuario Estadístico 2006 Pemex

In Table 6, the oil&gas pipeline transport infrastructure of PEMEX up to 2004 is shown; it reflects the important investment that has been made in the past.

Table 6. Hydrocarbon Transport Infrastructure (kilometers)

References:
- Informe Estadístico de Labores Pemex 2005
- Anuario Estadístico 2006 Pemex

Generation and infrastructure of the electricity sector

In Table 7, the installed capacity and the electricity generation in Mexico is shown. As observed for 2005, fossil fuels (coal, natural gas, oil products) dominate in the installed capacity (72% ) as well as in the generation (79%). Between 1998 and 2005, the expansion of the installed capacity was based on natural gas combined cycle technology, which is also reflected in the electricity generation. In the area of renewable energies, the increase is mainly due to an increase in the hydroelectric generation and a slight increase in the utilization of geothermal resources.

Table 7. Electricity Generation and Installed Capacity [ GWh y (MWe)]

Reference: Prospectiva Sector Eléctrico 2006-2015. SENER

As for the transmission and distribution capacity, Table 8 shows that the first has significant changes (28%) between 1998 and 2005, most of it carried out by CFE. As for the increase in capacity for Luz y Fuerza del Centro (LyFC), apparently it is mainly in the area of distribution.

Reference: Prospectiva Sector Eléctrico 2006-2015. SENER

Outlook to 2015

In Table 9, the projected additions in capacity for the electrical sector are shown. Although there is a modest increase of hydroelectric capacity, the increase is mainly due in technologies related to the utilization of fossil fuels; fuel oil utilization will decrease, but natural gas increases dramatically. Of the projected additional installed capacity, 5,279 MWe have no specific technology attached to them. It would be highly desirable that these could be based on alternate fuels to fossil fuels, in order to diversify the overall energy mix as well as reduce the emission of greenhouse gases.

Table 9. Electrical Sector Installed Capacity Projections to 2015 (MWe)

Reference: Prospectiva Sector Eléctrico 2006-2015. SENER

In Table 10, the projections for the natural gas subsector are presented. A substantial increment in its use is observed, with 25% of the required supply corresponding to imports. Approximately 8% of these are expected to occur in gaseous form, which implies transport by pipeline from the USA, where all the known projections indicate that this country will have a deficit in its supply/demand balance, as its local production is on a continuous decline.

Table 10. Natural Gas Balance to 2015. Base Demand and Medium Supply
(millions of cubic feet per day)

The data on Table 11 shows the expected production and imports of oil products. The local production of gasoline and diesel will increase substantially in the next ten years. Local production will be the main source. Gasoline imports will decrease and diesel imports will disappear.

Table 11.Oil Products and Imports
(thousand barrels per day)

References:
- La Refinación en México. Ing. Gerardo Bazán Navarrete. Reporte Interno.
- Programa Universitario de Energía, UNAM, Mayo 2006.
- Anuario Estadístico Pemex 2006.
- Prospectiva de Petrolíferos 2006-2015, SENER.

The increase in nominal capacity for refining processes corresponding to the same period, 2006 to 2015, are presented in Table 12.

Table 12. Nominal Incremental Capacity in Refining Processes 2006 - 2015
(thousand barrels per day)

Prepared by:
Gerardo Bazán PUE-UNAM and Pablo Mulás IIE
07/03/07