Unlocking Mexico’s Oil and Gas Potential

CHAIR Jesús Reyes Heroles - Executive President StructurA

María de Lourdes Melgar Palacios - Undersecretary of Hydrocarbons

Ministry of Energy

Francisco Salazar (Diez de Sollano) - Chairman Energy Regulatory Commission

(CRE), Mexico

Vinicio Suro Pérez - Director General Instituto Mexicano Del Petroleo

UNLOCKING MEXICO’S OIL AND GAS POTENTIAL

• Who are the key players to take advantage when fields are opened for bidding?

• How is Mexico structuring the future opportunities?

• Who are the decision-makers managing reforms and investments?

• Mexico’s energy reform has no precedent worldwide

• Hydrocarbons:– Pemex’s exclusivity in every stage of the productive chain is over.

– Private parties are welcome to participate actively.

– Pemex is able to partner with whomever it wants in every stage of the productive chain.

• Electricity:– Private parties can participate in power generation for third parties.

– Private parties can also participate in financing, installation, maintainance, management, operation and expansion of the transmission and distribution infrastructure, by means of contracts with CFE.

• GOM is already developing several gas pipeline projects connecting to the US, to eliminate, as soon as possible, supply shortages in Mexico. Reyes-Heroles

• E&P:

– Constitutional and legal reforms were concluded.

– Pemex is moving forward to migrate incentivized service contracts into new contracts with

the government.

– Pemex is to resolve about “migration” of incentivized contracts as early as next December

– GOM will initiate Round One next month. Commitment to announce first results next May.

– GOM will publish the call for bids for shallow water of Round One next November

Reyes-Heroles

• Midstream:

– 18 projects for natural gas transportation.

– Large number of projects for the transportation and storage of fuels, for Pemex and new

participants. Regulations to be announced by CRE next January.

• Downstream:

– Investment opportunities in everything: gas processing, refining, commercial

infrastructure, retail, …

Reyes-Heroles

Unlocking Mexico’s Oil and Gas Potential

María de Lourdes Melgar Palacios

Undersecretary of Hydrocarbons

Ministry of Energy

Hydrocarbons in the subsurface belong to the Nation.

Market access and fair competition amongst state-owned enterprises

and private companies.

Strengthening of regulatory bodies.

Fundamental principles of Mexico’s Energy Reform:

3

Transparency and accountability.

Sustainability and environmental protection.

Maximizing State’s revenue for the Nation’s long-term development.

1

2

4

5

6Melgar

The institutional framework is modernized with the creation of specialized entities, the strengthening of existing ones,

the enactment of clear rules, the definition of specific mandates and enhanced interaction between entities to ensure checks

and balances.

New and reinforced regulatory agencies

Technical bodies in charge of creating new

markets

State Productive Enterprises

Government bodies

with new powers

Oil income management

Melgar

Offered blocks: 109 for exploration and 60 for

production.

Total area: 28,500 km2 ≈ 7,042,503 acres

Estimated annual investment: 8.5 billions USD

from 2015 to 2018.

Including Pemex farm-outs: 12.6 billions USD.

Total 2P reserves and prospective resources:

18.4 Bboe.

Deepwater prospective resources: 4.8 Bboe.

The proposal for Round 1 contains a wide and diverse selection of areas and fields with different characteristics.

Round 1 in Numbers

Melgar

November

1st half

December

1st half

January

1st half

February

1st half

March

1st half

Terms and Conditions,

Contract model and

prequalification

requirements

SW: Bolontikú, Sinan, Ek

EHO: Ayatsil-Tekel-Utsil

Rodador, Ogarrio, Cárdenas-Mora

Kunah-Piklis, Trion, Exploratus

January

1st half

February

1st half

March

1st half

April

1st half

May

1st half

Shallow Water

Extra-heavy Oil

Chicontepec and Unconventional

Onshore

Deepwater

Participants’ registration

Data room openingNew areas and fields PEMEX Farm-outs

Melgar

Unlocking Mexico’s Oil and Gas Potential

Vinicio Suro Pérez

Director General

Instituto Mexicano Del Petroleo

The entire portfolio of Pemex Farm Outs and Ministry of Energy bids is competitive

Ministry of Energy

• Prospective resources to be offered reach 14.6 bboe

• Out of this total, 33 % is located in deep water (4.8 bboe) and 62 % (9.1 bboe) is located in Chicontepec and non conventionals

• There are 3.9 bboe 2P reserves located in Chicontepec (69 %) and the rest in mature on-offshore fields Pemex Farm Outs

• 3P reserves to be farmed out are about 2.7 mmmboe

• About 1 bboe in 3P reserves are already discovered fields in deep water

• 1.4 bboe are mature fields in shallow water

• The remaining reserves are located in mature onshore fields

Suro

New Execution

CapacityNew Projects New Practices

The Mexican Energy Sector will change rapidly and higher efficiency will be achieved

RegulationSuro

Unlocking Mexico’s Oil and Gas Potential

Francisco Salazar (Diez de Sollano)

Chairman

Energy Regulatory Commission (CRE), Mexico

Market Structure & Regulated Activities (Natural Gas)

PipelineCNG/LNG TransportRegulated Activities

Storage

CNG/LNG Stations

Distribution Network

Gas Well

Oil Well Refinery

Gas Processing Plant

Imports

Transport Mainlines Transport Network

Final Users

Upstream

Midstream

Downstream

Salazar

Market Structure & Regulated Activities (Oil & Gas Liquids)

Storage

Service Stations & Direct Retail

Distribution Network (LPG)

Distribution Plant

Gas Well

Oil Well Refinery

Gas Processing Plant

Imports

Transport Mainlines Transport Network

Final Users

Upstream

Midstream

Downstream

PipelineOther Means of TransportRegulated Activities

Salazar

WSMGoods & Services

Generator

Marketer

Ancillary Services

Capacity

Energy

FTRs

RECs

Others

Retail Supplier

Power Plants

Exempt Generator (<0.5 MW)

REC Holders

FTR Holders

Last Resource Supplier

Retail Supplier

Wholesale Supplier

Eligible User

Non-eligible Users

Transmission & Distribution

Supply Demand

Eligible User Without Supplier

Demand Response

Demand Response

Wholesale Electricity Market

Salazar