Regulatory roundup: Private investment in Mexico, Petrobras gas supply, Colombia gas plan and more

Why Pemex needs partnerships to secure Mexico's energy sovereignty

When Mexico's president-elect Claudia Sheinbaum takes office on October 1, one of the greatest challenges she will face will be to restore the fortunes of the energy industry and of national oil company Pemex in particular.

While Sheinbaum has pledged to continue with the policies of the current president and her mentor, Andres Manuel López Obrádor, and to use Pemex and state-owned electricity company CFE to ensure national energy sovereignty, she may have little choice but to be more welcoming to private initiatives.

"This administration has spent a lot of money on Pemex and that money has been basically lost, particularly in the refining area," Miriam Grunstein, founding partner of Brilliant Energy Consulting, told BNamericas.  

"What Pemex really has to do is look for business opportunities. What is not useful has to be cut, but Pemex has to expand its range of businesses."

Brazil moves to curb gas prices

Brazil’s oil and gas regulator ANP ordered federal company Petrobras to contract a larger maximum capacity of around 13Mm3/d (million cubic meters per day) at the Caraguatatuba gas treatment unit (UTGCA) reception point, in São Paulo state.

Currently, Petrobras contracts 7.6Mm3/d. The aim is to reduce the impact of the increase in the rate for the use of the gas transportation system operated by Nova Transportadora do Sudeste (NTS) as a result of the company's capacity offering process.

As Petrobras is the largest capacity contractor, the reduction in its demand has a significant impact on the NTS system, whose rate is basically calculated by dividing the value of infrastructure by contracted capacity, meaning the rate rises when demand falls.

The expectation is that the mandated change in capacity contracted by Petrobras at UTGCA will reduce the current NTS rate by around 10%.

Brazil's new oil frontier, the rise of Guyana and the future of Venezuela 

Petrobras is unlikely to receive an environmental license for exploration drilling in the Foz do Amazonas offshore basin for at least another 18 months, a BNamericas video podcast was told. 

Petrobras has, until now, been denied the chance to drill its Foz do Amazonas acreage, which it secured at an auction in 2013, because of concerns about the impact on local ecosystems.

"The mines and energy ministry and president [Luiz Inácio Lula da Silva] want the Equatorial Margin to be explored but the environment ministry is against it," João Montenegro, BNamericas' oil and gas correspondent in Rio de Janeiro, said in the Oil and Gas 2024 Capex video podcast. 

The key takeaways of Colombia's gas supply plan 

Colombian mines and energy ministry planning unit UPME published the definitive version of its 15-year natural gas supply plan, which seeks to guarantee the country's energy security amid dwindling reserves of the fossil fuel. 

Recommendations include: greater clarity related to project costs and remuneration; the adoption of priority projects, including LNG and pipeline infrastructure; and closer supply-demand monitoring amid rapidly changing market dynamics. 

Prior consultation comes under the spotlight in Ecuador

The one-year deadline given by Ecuador’s constitutional court for the national assembly to dispatch a law on prior consultation expires in November.

The requirement complies with the constitutional provision in force since 2008 for extractive projects of non-renewable resources that are carried out in indigenous territories.

With only five months left until the deadline, experts see it as unlikely that legislators will comply with the court's mandate, especially considering that politicians have their sights set on the presidential and legislative elections next February.

In May, the president of the national assembly, Henry Kronfle, presented a bill to regulate the process of prior, free and informed consultation, but it has made no progress in the legislature.

On July 2, the country's largest indigenous organization, Conaie, planned to present its own prior consultation bill to the assembly.

Conaie has traditionally opposed oil and mining activities and its prior consultation proposal would require the mandatory consent of indigenous communities for extractive projects.

Argentine investment regime an ‘incentive’ for export-oriented Vaca Muerta projects

The approval of Argentine President Javier Milei’s economic reform bill could trigger energy sector investment, which would likely be led by midstream hydrocarbons infrastructure projects planned by seasoned local players. 

Foreign energy investors will probably observe from the sidelines for now, awaiting further improvements in the business environment or at least clearer signals regarding macroeconomic stability and exchange controls.

A key pillar of Milei’s deregulation-focused bill – known as Ley Bases, or framework law – is an investment-promotion regime known as Rigi, targeting projects with a required outlay of US$200mn-900mn.

“The main impact on investment is expected to come from Rigi, which grants certain tax benefits and exchange control exceptions for 30 years to large projects carried out by special purpose vehicles and enforceable by international arbitration,” says Francisco Romano, partner and lead energy lawyer at the Pérez Alati, Grondona, Benites & Arntsen law firm.  

Private investment to return to the energy sector in Sheinbaum's government, deputy says

Public-private partnerships, oil rounds and electricity auctions will return to the agenda of investment projects in the energy sector with the new Mexican government of Claudia Sheinbaum, assured Alfonso Ramírez Cuéllar, deputy-elect of the Morena party and part of the core group of the president-elect. 

Ramírez explained that the idea is to get out of the current impasse in which the industry finds itself without ceasing to strengthen the productive companies of the State: Pemex and CFE. 

"All of this is already allowed by the constitution, the rounds and the associations [PPPs]. I believe that it is something normal, something natural is also going to happen in the case of Pemex with the associations, the auctions and the electric power generation permits are also already allowed by law," he said.