Energy Reform Analysis, Implementation and Compliance › content › dam › Deloitte ›...

Energy Reform

Analysis, Implementation

and Compliance

Reform’s key aspects

Pemex and CFE

will be granted with greater autonomy an a new character as State Productive

Enterprises (Empresas Productivas del Estado).

© 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 2

Hydrocarbons in the

subsoil will remain as

property of the Mexican

Nation.

Reform’s Key Aspects

The State will control the following:

• Hydrocarbons exploration and extraction

• Planning and control of the National Electricity System

• Electric Power transmission and distribution

The private companies will be able to participate in activities such as:

• Hydrocarbons exploration and extraction, by means of 4 contract modalities.

• Refining, gas processing, transportation, storage and distribution, having the appropriate

permits.

• Electric Power generation, having the appropriate permits.

• Electric Power transmission and distribution under contracts with CFE/ State.

• The State Productive Enterprises and the private companies will be able to report, for

financial and accounting purposes, the assignments and contracts, as well as their

expected benefits. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 3

Mexican Energy Industry

Under the New

Constitutional

Amendments

4 © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C.

Electricity


Electricity Industry

CFE is responsible for Power Generation, either

directly or by purchases to third parties.

Constitutional amendments in terms of electricity

Previous Model

The CENACE belongs to the CFE’s Operations

Department.

There are modalities of Public Service and Self

Supply.

Operation and construction of the transmission and

distribution network belongs to the CFE.

CFE is a decentralized public entity subject to the

federal budget.

Power Generation is subject to free competition.

The private companies are allowed to participate in

power generation and sale of electricity in the

Wholesale Market, just as the CFE.

The CENACE becomes a body of the Federal Public

Administration.

Self Suppliers operational restrictions disappear,

allowing the sale to third parties.

The operation of the transmission and distribution

network is reserved to the Mexican State.

CFE will be transformed into a State Productive

Enterprise.

REFORM CHANGES IN

THE LAWS

Oil and Gas



Oil and Gas

PEMEX administers the hydrocarbon resources (+)

service and performance contracts with private

companies.

Constitutional amendments in terms of hydrocarbons

PREVIOUS MODEL

Refining and basic petrochemical activities are

exclusive of PEMEX.

Transportation, storage and sale of refined

products is exclusive of PEMEX.

Private companies can perform distribution

activities.

Tax regime structured as a fixed rights scheme.

SEMARNAT, SENER and CNH are responsible in

terms of environmental protection and industrial

safety.

The Federal Executive administers the hydrocarbon

resources. Assignments to PEMEX (+) 4 different

types of contracts with private companies.

Private companies participate in refining and basic

petrochemical activities.

Private companies are allowed to participate in

transportation, storage and sale of refined products.

New tax regime for exploration and production of

hydrocarbons. Balanced and more flexible.

The National Agency for Industrial Safety and

Environmental Protection of the Hydrocarbons

Sector strengthens the State’s regulation and

supervision capabilities.

REFORM CHANGES IN

THE LAWS

Entities Involved in the Energy Reform

Regulatory and operational (Acronyms in Spanish)


CNH

Comisión Nacional de

Hidrocarburos (National

Hydrocarbons

Commission)

CRE

Comisión Reguladora de

Energía (Energy Regulatory

Commission)

CENAGAS

Centro Nacional de Control

de Gas Natural (National

Center for Natural Gas

Control)

CENACE

Centro Nacional de

Control de Energía

(National Center of

Energy Control)

ANSIPMASH

National Agency for Industrial Safety

and Environmental Protection

(Hydrocarbons Sector)

FMPED

Fondo Mexicano del Petróleo para

la Estabilización y el Desarrollo

(Mexican Petroleum Fund for the

Stabilization and Development)

SHCP

Secretaría de Hacienda

y Crédito Público (Ministry of

Finance)

SENER

Secretaría de Energía

(Ministry of Energy)

Estimated

Timeline

Energy Reform


March

April

September

December

April

December

Reform Timeline


Responsible party/

Topic

Natural days established by law Deadline

ROUND ZERO

Amendments to secondary laws (Congress)

Resolution on the assignments requested by

PEMEX

Legal framework adjustments regarding environmental protection and

transition strategy to use cleaner technologies and fuels (Congress)

Creation of the National Center for Natural Gas Control and

the National Center of Energy Control (Executive)

Transition to become State Productive Enterprises

2014

90

120

270

365

485

730

2015

Dece

mb

er

20

, 2

01

3

Global Players’ Potential

Interest in

Mexico


Mexico’s Oil and Gas Potential

(Estimated CAPEX)


2012 2013 2014 2015 2016 2017 2018 2019 2020 Total AGR

Pemex CAPEX 23 25 25 29 30 30 31 31 31 254 3.6

Private investment

Mature fields 1 1 2 2 2 3 5 6 22

Deep water 1 2 5 6 8 9 22

Shale gas 2 3 6 9 12 17

New refining capacity 2 3 5 6 18

Gas processing and fractionation 1 1 2 2 2

Gas pipelines 1 2 2 3 4 5 5 16

Cogeneration projects 1 1 1 1 1 1 5

Petrochemicals 1 1 1 1 1 2 3 4 13

Midstream 1 2 2 3 4 5 16

Total private investment 1 2 3 7 12 20 29 40 50 130

Pemex + private investment 24 27 28 35 41 49 60 71 80 384 16.2

GDP current prices (Billion USD) 1,207 1,220 1,269 1,320 1,433 1,491 1,550 1,612 1,677 12,966 4.2

Pemex CAPEX/ GDP (%) 1.92 2.05 1.97 2.18 2.07 1.99 1.98 1.93 1.83 1.96

Pemex + PI/ GDP (%) 2.01 2.19 2.20 2.69 2.88 3.31 3.84 4.38 4.79 2.96

Billion USD

Source: Marcos y Asociados

Mexico’s Oil and Gas Potential

(Estimated CAPEX)


23 25 25 29 30 30 31 31 31

1 2 3 7 12 20 29 40 50

1.92 2.05 1.97 2.18 2.07 1.99 1.98 1.93 1.83

2.01 2.19 2.20

2.69 2.88

3.31

3.84

4.38

4.79

0.00

1.00

2.00

3.00

4.00

5.00

6.00

0

10

20

30

40

50

60

70

80

90%

Pemex CAPEX

Total private investment

Pemex CAPEX/GDP

Pemex+PI /GDP

Bill

ion U

SD

2012 2013 2014 2015 2016 2017 2018 2019 2020

GD

P

Source: Marcos y Asociados

Interest from Companies

around the World

Asian firms expect to participate mainly

in upstream activities, as they pursue

long term supply security to meet the

growing demand in their countries.

The International Oil Companies IOCs

across Europe and America look to

expand and diversify their reserves,

while, most O&G service companies

seek to expand their business in key

O&G Shale plays across the border.


America


O&G Equipment and

Services

Integrated

Operations

Upstream

O&G E&P

Integrated O&G O&G Equipment and Services

Downstream

Infrastructure and Transportation

Europe


O&G Equipment and

Services

Integrated

Operations

Upstream

Downstream

O&G E&P

Integrated O&G O&G Equipment and Services


Asia


O&G Equipment and

Services

Integrated

Operations

Upstream

Integrated O&G

O&G Equipment and Services

O&G E&P

Upstream Trading


Downstream

Gas

Oil

Industry Players

Oil, Gas, Refining and Petrochemical Industry


Exploration: Petrobras, Repsol, Sinopec, Petronas

Integrated Operators: EXXON, Chevron, BP, Shell

Builders and Infrastructure: Carso, Oro Negro

Water Treatment Plants: EPM

Equipment and Services: GE, Tubacero

Integrated Operators: Gazprom, GDF SUEZ

Builders and Operators: Enagas, Sempra Energy

Power Plants: PEMEX Gas / State Governments

Petrochemical Industry

Refining Industry

Industry Players

Oil, Gas, Refining and Petrochemical Industry


Integrated Operators: Shell, Amoco, Texaco, Penzoil

Builders: ICA, ODERBRETCH

Independent Producers and Distributors: Bardahl, Hidrosina, Oxxo

Biofuel: Honeywell, BASF, Petrobras

Integrated Operators: Mexichem

Derivatives and Raw Materials: Tigre, INEOS, Dupont

Equipment and Services: Honeywell, SIEMENS

Preliminary Analysis

Opportunities


SENER’s View


Hydrocarbons Exploration and

Production Equipment

• Drilling, seismic

• Valves, pumping, etc.

Infrastructure Sector

• Pipelines, ports

• Roads, bridges, etc.

Associated Services

• Offices, administration

• Education, accommodation, etc.

Processing

Refining

• Gasoline, diesel

• Kerosene, jet fuel, and others

Petrochemical

• Methane

• Ethane (light olefin)

• Naphtha (aromatic)

Derivatives

• Ammonia, ethylene, methanol,

propylene, toluene, and others

Downstream

Transportation

• Pipelines, tanker trucks,

railroad, ships

Storage

• Port management, terminals

• Centers, tanks

• Underground

Distribution

• Pipelines, wheels, cylinders

• Gas stations, ports

Electricity Generation

Combined cycles

• Gas, diesel

Renewable

• Hydraulic, wind, solar, biomass,

geothermal energy, and others

Alternate Technologies

• Re- pumping and storage

• Capture, storage and use of CO2

Electrical Coverage

Transmission

• Equipment, right-way,

infrastructure

Low and medium voltage

• Intelligent networks

• Distributed generation

Administration

• Commerce, centers, load

balancing

Regional Development

• Industrial parks

• Education, training

• Finances and marketing

• Property tax, rights, etc.

• Clusters (Several municipalities)

• Centers/ poles of development

(Several States)

Research and Tecnological Innovation

Energy Efficiency

Environmental Protection and Water Use

Challenges and Specific

Opportunities


Oil

• State Productive Enterprises

• New technologies

• Internal and external transparence

• Reorganization of Pemex and Subsidiaries

• Improve the financial reports

• Lack of qualified HR


Alliances to compete

Use of resources, land

and water

Analysis and

Understanding of the

Energy Reform

-Alliances to compete

-Use of resources, land and

water

-Equity, debt

-Joint Venture

-Analysis of tax regime

-Infrastructure

management and control

-Secondary laws analysis

Publication of

Secondary Laws (April

2014)

-Equity, debt

-Joint Venture

--Alliances to compete


water

- Infrastructure management

and control

-Tax regime

implementation

-Reserves valuation

-Secondary laws design

and application

Implementation of the

Energy Reform

-Equity, debt

-Joint Venture



water

-Infrastructure


-Reserves valuation

-Compliance with tax

regime

-Contractual disclosures

-Request of permits for

assignment transfer to

private parties

-Compliance with

secondary laws

Compliance with the

Reform and the

Secondary Laws

• Regulatory external audits

• High dependency on CNH in bidding

• Revenue Assurance

• Sustainability

• Corporate Governance

Challenges and Specific Opportunities

Challenges and Cross-Cutting Opportunities


• State Productive Enterprise


• Internal and external transparency


• Improve financial reports




Use of resources, land and

water

Analysis and


Energy Reform



water

-Equity, debt

- Joint Ventures

-Analysis of the tax regime

-Infrastructure


-Water treatment plants

-Reserves evaluation


Publication of


2014)

-Equity, debt

- Joint Ventures




water

-Infrastructure management

and control

-Tax regime

implementation

-Reserves valuation


and application


Energy Reform

-Equity, debt

-Joint Ventures


-Compliance with the

secondary laws


water


and control

-Reserves valuation

-Compliance with tax

regime


-Request of permits for

assignment transfer to

private parties

-Compliance with

secondary laws

Compliance with the

Reform and the Secondary

Laws


• High dependency on CNH in biddings


• Sustainability


• CRE grants storage and transportation

permits

• Supply assurance

• CENEGAS receives assets transfers

• Need to create the strategic reserves

for the country

• Eliminate gas deficit

• Access control regulation

Gas







• Improve the financial reports





water

Analysis and


Energy Reform



water

-Capital, debt

- Joint Venture


-Infrastructure



-Site location

-M&As


Publication of


2014)

-Equity, debt

-Joint Ventures



water


and control


-Tax regime

implementation


and application

Implementation of

the Energy Reform

-Equity, debt

-Joint Ventures



water


and control


--Compliance with tax

regime

-Several contractual

disclosures

-Compliance with the

secondary laws

Compliance with the

Reform and the

Secondary Laws


• Supply Assurance


• Sustainability


• The CRE grants storage and transportation

permits

• Customs

• Eliminate raw materials deficit and

decrease imports


Petrochemical





• Internal and external transparence


• Improve financial reports




water

Analysis and


Energy Reform



water



water

-Equity, debt

- Joint Ventures


-Infrastructure



-Site location

-M&As


Publication of Secondary

Laws (April 2014)



water

-Equity, debt

- Joint Ventures


-Infrastructure



-Site location

-M&As


-Equity, debt

-Joint Ventures



water


and control


-Tax regime

implementation


and application


Energy Reform

-Equity, debt

-Joint Ventures



water


and control



regime


-Compliance with

secondary laws

Compliance with the

Reform and the

Secondary Laws

-Equity, debt

-Joint Ventures



water


and control



regime


-Compliance with

secondary laws



• Sustainability


• The CRE grants storage and transportation

permits

• Customs

• Eliminate the gasoline and derivatives

deficit

• Access regulation control


Refining






• CFE reorganization • Improve the financial reports




water

Analysis and


Energy Reform



water


-Equity, debt

-Joint Ventures

-Infrastructure



-Site location

-M&As


-Privatization of water

systems

-PEMEX and the State

governments could

participate in Power

generation

-CENACE regulations

analysis

Publication of


2014)

-Equity, debt

-Joint Ventures



water


and control


-Tax regime

implementation

-PEMEX and the State

governments could


generation

-Design and application of

the CENACE regulations


and application


Energy Reform

-Equity, debt

-Joint Ventures



water


and control

-Compliance with the tax

regime


- PEMEX and the State

governments could


generation

-Compliance with CENACE

regulations

-Compliance with

secondary laws

Compliance with the

Reform and the

Secondary Laws


Energy Reform



• Sustainability


• Energy costs reduction to privates

• Customs

• Eliminate periodic energy reserves

deficit s



Electricity


Deloitte refers to Deloitte Touche Tohmatsu Limited, a private company limited by guarantee (“DTTL”) in the United Kingdom, and it also refers to its network

of member firms, each of them as a unique and independent legal entity. Know in www.deloitte.com/mx/conozcanos, the detailed description of the legal

structure of Deloitte Touche Tohmatsu Limited, and its member firms.

Deloitte provides professional audit, tax, consulting, financial advisory, risk management and related services to public and private clients of different

industries. With a global network of member firms in more than 150 countries, Deloitte provides world class capacities and high quality services to its clients,

giving the necessary experience to face the most complex challenges in business. It has approximately 200,000 professionals, all committed to be excellence

models.

As it is used in this document, “Deloitte” means Galaz, Yamazaki, Ruiz Urquiza, S.C., which has the exclusive legal right of getting involved in, and that limits

its business to, the provision of audit, tax, consulting, financial advisory and other related professional services in Mexico under the name of “Deloitte”.

This publication contains only general information and neither Deloitte Touche Tohmatsu Limited, nor its member firms or any of its respective affiliates

(together the “Deloitte Network”), provides advisory or services by means of this publication. Before making any decision or taking any measures that may

affect your finances or business, you must consult a qualified professional advisor. None of the entities of Deloitte Networks will be responsible for the losses

that any person or entity that consults this publication might suffer.

29

Contacts:

Gonzalo Gómez, Partner of Tax and Legal Services

+52 66 46227950

[email protected]

David Chen Chung, Partner of Chinese Services Group

+52 65 66886568

[email protected]

Amy Liang, Manager of Chinese Services Group

+52 55 50807659

[email protected]

Xiao Cheng, Senior Specialist of Chinese Services Group

+52 55 50807338

[email protected]

mailto:[email protected]




Energy Reform Analysis, Implementation and Compliance › content › dam › Deloitte ›...

Documents

Transcript of Energy Reform Analysis, Implementation and Compliance › content › dam › Deloitte ›...