|Happy New Year and welcome to the first installment of Energy Panorama for 2019.
We are very pleased to share this month’s featured report LNG and the Panama Canal: Should Another Expansion Already Be on the Drawing Board? The report was prepared during the fall 2018 quarter as part of a research project by Melisa Uzcategui-Ebner, Timona Ghosh, and Edgar Kelly-Garcia, graduate students at UC San Diego’s School of Global Policy & Strategy (GPS).
The Panama Canal’s third set of locks opened in June 2016. By the end of the canal’s fiscal year last September, LNG transits had contributed significantly to a record-setting year of 442.1 million tons crossing its waters. Beyond an assessment of the current state of LNG usage in the canal, the report analyzes a series of elements associated with the possibility of another expansion using the third set of locks as a reference. Where the Panama Canal fits in the larger geopolitical outlook could be greatly determined by its future expansion, how such an additional expansion is financed and if LNG continues to grow in importance for the canal’s operations and financial well-being.
Our webinar series kicked off the year with Mexico Oil Outlook 2019 and a new format with a virtual panel. It was a lively discussion and debate with John Padilla, Managing Director, IPD Latin America and Gonzalo Monroy, Managing Director, GMEC with insights and analysis on the issues of oil production, refining, fuels infrastructure and investment as the new year unfolds in Mexico.
Our podcast series delved into fuels and finance in Mexico in an interview with Marco Cota, CEO of Talanza Energy.
Following up on our Roundtable in Bogota last year and podcast with energy ministry officials in December, we published an analysis of the outlook for renewable energy in Colombia as the first auction takes place. We also contributed our insights to understanding the changes in Argentina’s energy secretariat as the new year arrived.
Our webinar series continues on February 6 with Mexico: Natural Gas Outlook 2019. John McNeece, the author of a two-part analysis of US-Mexico natural gas trade will present his research and particularly the risks to Mexico presented by its growing reliance on imports from the US, and how those risks may be mitigated. He will be joined by Veronica Irastorza, Associate Director at NERA Economic Consulting in Mexico City.
We head to Mexico City for our first Roundtable of the year on February 28/March 1 and Buenos Aires on March 27-28 for our annual Energy Roundtable.
Opinion & Analysis
In the News
Colombia’s first large-scale renewable energy auction is scheduled to take place Feb. 26. What are the most important terms that the government is offering, and will they succeed in attracting bidders?
For more information contact Jacqueline SanchezPRESENTATION PDF
For many years there has been discussion of “gasifiying” the energy matrix in Mexico. Through policies and market developments, there have been important gains made particularly in the usage of cleaner burning natural gas in the country’s electric sector. Related to those advances and increased consumption has been a boom in US-Mexico natural gas trade over the last several years. Mexico’s own production of natural gas has not kept up with demand, and imports from the US have made up the difference. Estimates of US natural gas deliveries to Mexico have been consistently overtaken by the spiking cross border trade. Indeed, last September the Comisión Nacional de Hidrocarburos forecasted that if current trends continue, Mexico in 2030 would import 94% of all the natural gas that it consumes. Substantially all of those imports would come from the United States.
The increasingly heavy reliance by Mexico on imported natural gas, particularly from the United States, has created a debate and discussion on the risks associated with the current market. In two papers published by the Institute of the Americas last year, John McNeece identified the key concerns as availability risk, pricing risk and political dependency risk.
Relying on data and forecasts from the US Department of Energy, the analysis shows that availability risk and pricing risk are manageable. Political dependency risk – i.e. the risk that the US President would threaten a cut-off or cutback of natural gas deliveries to pressure Mexico – is limited by US political constraints, legal restrictions and treaty obligations.
McNeece concludes that considering the benefits to Mexico of US natural gas imports, the Mexican government could reasonably conclude that the risks presented are acceptable. At the same time, if the Lopez Obrador administration seeks to increase Mexico’s own production of natural gas and reduce its dependence on imports, McNeece’s research indicates that Mexico has a reasonably secure supply of natural gas through imports while it makes the transition to increased self-sufficiency.
Join us for a webinar and discussion with John B. McNeece III, Senior Fellow at the Center for US-Mexican Studies, University of California, San Diego and Veronica Irastorza, Associate Director at NERA Economic Consulting in Mexico City and a former Deputy Secretary of Energy for Planning.
McNeece and Irastorza will share further insights from the papers and analysis on the issues of Mexico’s natural gas imports, risk management, the role of natural gas for energy self-sufficiency as well as Mexico’s broader natural gas outlook and investment environment as the new year unfolds in Mexico.
The webinar and virtual panel will be held Wednesday, February 6 at 10:00am San Diego (12:00 pm Mexico City time; GMT/UTC – 8 hours). Their formal presentation will be followed by a live Q&A session with the audience.
For more information contact Jacqueline Sanchez
The administration of Andres Manuel Lopez Obrador and his energy team hit the ground running after the inauguration last December. To date, they have unveiled a series of proposals for the energy sector including a national electricity program, a national refining plan and a plan aimed at boosting oil production. The announcements underscore the longstanding overarching narrative of the new administration and their outlook for energy centered on the issue of energy self-sufficiency. But dominating headlines since we all returned from the holidays has been the government’s efforts to combat illicit fuel theft, the so-called huachicoleo.
The plans released for the nation’s energy sector suggest myriad avenues aimed at energy self-sufficiency during the sexenio. Perhaps most important are the interconnected issues of oil production, fuel imports and infrastructure. The economic and investment implications are critical to understand as well.
Join us for a lively discussion and debate with John Padilla, Managing Director, IPD Latin America and Gonzalo Monroy, Managing Director, GMEC. Padilla and Monroy will share insights and analysis on the issues of oil production, refining, fuels infrastructure and investment as the new year unfolds in Mexico.
The webinar and virtual panel will be held Thursday, January 31 at 2:00pm San Diego (4:00 pm Mexico City time; GMT/UTC – 8 hours). The session will be delivered in a discussion format and incorporating Q&A with the audience.
For at least the past 500 years, the need to improve the efficiency of international trade has prompted businesses and governments to challenge the status quo in order to converge and align their interests. Their determination to make trade more efficient has enabled both to accomplish great things. The expansion of the Panama Canal is one example of how such determination can make monumental infrastructure projects come together.
Argentina will hold presidential elections in October, but public dissatisfaction with President Mauricio Macri’s energy policies could hinder his ability to win re-election.