October 23, 2013
If you love energy news this maybe a good read. Consider, the play within two weeks the roll out of two unique power plays. One can round it up to good fortune or a strategic competitive advantage? The answer, a little of both. Pemex, Mexican state oil producer is reported in growth mode as the company signed a memorandum of understanding with Korea Eximbank KEXIM.UL to open a $2 billion credit line for financing a range of projects. The capital leverage of “Mexico’s Pemex inks $2 billion credit line deal with Korea Eximbank,” reports Reuters.
“The credit would also be available to other companies providing services to the Mexican oil producer, Pemex said.” This finance option allows for the company and its partners or flow down partners “to realize new projects that will allow it to increase production and the profitability of the company,” Pemex said in the press release.”
The Mexican oil producer, Pemex, “is readying a series of structural changes in anticipation of revisions to national energy legislation, Chief Executive Officer Emilio Lozoya said. The creation of drilling and logistics companies will help maximize profitability and extend the company’s international reach, he said.”
The big natural gas play is not a U.S. phenomenon but, a good pump ad production phase in the energy mix. The news was the “financing deal comes the day after Pemex declared the tender void for the second phase of Mexico’s biggest natural gas pipeline project void after only one bidder made an offer on the $1.8 billion project, casting doubt on the country’s future supplies of cheap natural gas.”
Next, on the Pemex plate is “Pemex Plans Drilling, Logistics Companies as Energy Reform Looms” reports Bloomberg in which Petroleos Mexicanos plans to group drilling and logistics subsidiaries into single entities to streamline operations as the state-run company prepares for energy reforms that would end a 75-year-old oil monopoly” called, Petroleos Mexicanos.
The goal is to reduce inefficiencies and remove the gaps to service that monopolies produce by reducing competition and the drive for efficiency that more players in the sandbox encourages. “If Pemex put all its drilling subsidiaries into one entity, it would be the second-largest drilling company in the world,” Lozoya said at the Mexico Business Summit in Guadalajara. “It would be able to provide services to not only Pemex, but to other companies in the world.”
The next energy terrain is Mexico. As companies come to the U.S. for the natural gas play, Mexico is one more location to plant a flag as, “President Enrique Pena Nieto presented a bill to Congress on Aug. 12 that would permit foreign companies to pump crude from Latin America’s third-largest reserves for the first time since 1938.”