070813 Diagnóstico de Sempra Energy del Sector Energético en México

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Estrategia establecida por Sempra Energy, para abordar su relación con las Instituciones Mexicanas, Funcionarios y Políticos mexicanos

Estrategia establecida por Sempra Energy, para abordar su relación con las Instituciones Mexicanas, Funcionarios y Políticos mexicanos

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  • 1. Strategic Workshop -Mexico’s Energy Sector-Workshop Prepared for Sempra Energy San Diego, California August 13, 2007
  • 2. Contents1. State of Play of Mexico’s Energy Sector • Key energy institutions • Regulations and legal framework • Where does Mexico’s energy sector stand and how it got there • Operational and financial constraints facing the industry2. Existing Business Lines Controlled by the State and Open to Private Sector • Who controls of different business lines and makes the decisions • Barriers to entry • Government intervention • List of private sector investments to date3. Key Stakeholders in Mexico’s Energy Reform and How Reform Could Evolve • New energy leaders and inter-play • Possible alliance and conflict maps • Consensus in defining energy reform • Legislative voting scenarios • Profiles4. Potential Strategies to Pursue • Opportunities that might emerge from reform • Future projects and priorities of CFE and PEMEX • Other investment opportunities and areas to consider5. Support Slides 2
  • 3. Stay of Play of Mexico’s Energy Sector8:30 am – 10:00 am 3
  • 4. Key Energy Institutions 4
  • 5. Mexico’s Current Energy Sector - Key Institutions SENER - Secretary of Energy - IMP -MexicanEnergy Regulatory Commission Petroleum Institute - IIE -Mexican Electric Energy Savings Commission Research Institute - CNSNS ININ – National Comision Nacional de Seguridad Institute of Nuclear Nuclear y Salvaguardias Research - State Owned Utilities 5
  • 6. Mexico’s Current Energy Sector - Key Institutions In summary:  Mexico’s 2007 Federal Budget totaled MXP 2,260 billion. This represents a 14.5% increase over the approved 2006 Federal Budget.  In total, Mexico spends 18% of its federal budget on energy with PEMEX accounting for 8%. As a % of Total 2007 Budget Number of Institution 2007 Federal (MXP Million) Employees Budget CFE 191,236.4 8.46% 79,969 PEMEX 182,298.0 8.06% 148,200 LFC 27,972.6 1.24% 40,478 SENER 520.8 0.02% 858 IMP 358.9 0.02% 6,700 ININ 349.0 0.02% 791 CRE 126.2 0.01% 131 IIE 123.3 0.01% 1,090 CNSNS 89.9 0.00% 201 CONAE 57.3 0.00% 95 TOTAL 403,132.3 17.83% 278,513 6Source: IPD Latin America, based on 2007 Federal Budget and information from government entities.
  • 7. Regulations and Legal Framework 7
  • 8. Pertinent Energy Regulations Articles 25, 27 & 28 of the Mexican ConstitutionELECTRIC SECTOR HYDROCARBONS SECTOR The Public Service Regulatory Law of Constitutional Article 27 in PEMEX Electric Energy Law Organic (PSEEL) The CRE Act the Field of Petroleum (RLCA27-FP) Law PSEEL Regulation Natural PEMEX RLCA27- Oil Gas Organic FP LPG Activities Regulation Law PSEEL Regulations Regulation Regulation Regulation Regulation with Regard to ContributionsNOM’s, Guidelines and NOM’s, Directives, Resolutions and Standards Resolutions 8
  • 9. Pertinent Energy Regulations - Mexican Constitution  Mexican energy legal framework starts at the constitutional level from which all other relevant laws and regulations are derived. Electricity Hydrocarbons • Grants the State the exclusive ownership and control of all strategic areas defined inArt. 25 Article 28. • Grants the nation the exclusive • Grants the State direct ownership of all responsibility of generating, hydrocarbon resources located in Mexican transmitting, transforming and territory.Art. 27 distributing electricity intended for • Defines ownership as an absolute and public service*. unassailable right. • Establishes that in these areas, no • Establishes that no concessions or risk-sharing concessions or risk-sharing contracts can be granted. contracts can be granted. • Establishes that exploitation will be undertaken accordingly to secondary regulations. • Defines oil, natural gas, refined products, basic petrochemicals and electricity asArt. 28 “strategic” areas strictly reserved to the State. The State will control and undertake these activities through two public utilities (PEMEX, CFE and LFC). * Article 4 of the Public Service Electric Energy Law defines “public service” as activities related to the operation, maintenance and planning of the National Electricity System and of the generation, transmission, transformation and marketing of electricity. 9
  • 10. Pertinent Electricity Regulations - ElectricityThe Public Service Electric Energy Law (PSEEL) The PSEEL establishes the basic legal framework for the power sector, detailing the implementation of Constitutional Articles 25, 27 and 28. Grants the State the exclusive responsibility of generating, transmitting, transforming and distributing electricity intended for public service, through CFE (the PSEEL acts as CFE‟s Organic Law). Defines the modalities under which private participation is allowed (as a result of 1992 reforms).PSEEL Regulation: Implements the PSEEL and specifies the regulations that will apply to those activities reserved to CFE (Public Service) and those open to private participation.PSEEL Regulations with Regard to Contributions: Specifies the events and conditions under which state governments, municipalities, etc. have to make economic contributions for the development of work associated with the provision of electric power service. 10
  • 11. Pertinent Electricity Regulations - ElectricityElectricity Legal and Regulatory Framework in Summary: Generation Transmission Distribution National National CFE & LFC Transmission Transmission Grid Private Third Parties Self-use Others Participation Cogeneration Imports Self Supply Reserved to State (Public Service) IPPs Open to Private Participation Imports Exports Regulated by the CRE 11
  • 12. Pertinent Energy Regulations - HydrocarbonsRegulatory Law of Constitutional Article 27 on Petroleum This law details how Constitutional Articles 27 and 28 are applied. Among other things, it: • Entrusts PEMEX as the sole entity responsible for the exploration, exploitation, transportation, storage and distribution of petroleum, as well as those “strategic” areas defined in Article 28. • Clarifies - PEMEX is allowed to sign service contracts in the oil & gas sector for work to be performed by private sector companies as long as:  Remuneration is always in cash and under no circumstances payments are linked to the production and/or results derived from the services rendered. The regulatory law was amended in 1995 to allow private sector participation in natural gas distribution, storage, transportation, exports and imports. 12
  • 13. Pertinent Energy Regulations - HydrocarbonsPEMEX Act Defines the role of PEMEX and its four subsidiaries. Entrusts PEMEX with the central planning and direction of all strategic activities related to the hydrocarbons industry. Allows PEMEX and its subsidiaries to sign contracts with private companies in order to successfully complete their activities.Natural Gas Regulation Implements the Regulatory Law of Constitutional Article 27 on Petroleum. Clarifies the specific regulations governing natural gas in the areas of FHS, transportation, distribution and storage activities. Establishes CRE‟s authority and the essential legal framework that applies to the issuance of natural gas and electricity permits. 13
  • 14. Pertinent Energy Regulations - Hydrocarbons Hydrocarbons Legal and Regulatory Framework in Summary:  Current legislation allows private participation in the downstream segment of the industry, while the upstream continues to be under exclusive direct control of the State. UPSTREAM MIDSTREAM DOWNSTREAM Exploration Refining Petrochemicals Production Natural Gas LDC PipelinesMexican Constitution reserves all Refining Petrochemical industryupstream activities to the State.  100% controlled by PEMEX, (artificially divided)  State owns the resources - entrusts through its Pemex Refining  Basic Petrochemicals 100% (PR) subsidiary. controlled by PEMEX. PEMEX to undertake all E&P Pipelines  Secondary PetrochemicalsHydrocarbon regulatory laws permit open to private participation.PEMEX to sign Service Contracts with  PGPB maintains monopoly Natural Gas LDCprivate sector. over Nat‟l Pipeline System  1995 legal reforms allowed  Transport, storage, distribution,  Payments must be in cash and private sector to construct, imports and exports open to under no circumstances can be own and operate pipelines. private participation. linked to production or profit. Note: Storage includes LNG 14 Reserved to State Open to Private Participation
  • 15. Pertinent Regulations – The CRE Act The CRE Act: In 1995 the CRE Act transformed the regulatory commission from a power advisory entity (based on a 1993 decree) in to a decentralized administrative agency in charge of regulating the natural gas and electricity industries (oil does not have a regulator in Mexico): Electricity Natural Gas • Issue private sector generation permits for the • Establishes First Hands Sales (FHS) – activities allowed under PSEEL. Although the intention was to govern the • Review and approve the criteria for setting sale of all natural gas, the regulation only fees related to public electricity service. pertains to the sale of gas from PGPB to third-parties within Mexico. • Participate in setting tariffs for wholesale and final sale of electricity. • Evaluation and award of transportation, storage and distribution permits. • Verify that CFE and LFC purchase electricity at the lowest cost and also offer optimum • Non-discriminatory open access. stability, quality, and safety of electric service. • Unbundling of services. • Approve the methodologies for: • Establishes natural gas and LPG prices • Calculating payments for the purchase and rates (electricity rates are set by of electricity used in public service. Ministry of Finance (Hacienda)). • Calculating payments for electricity transmission, transformation and delivery services. 15
  • 16. State of Mexico’s energy sector? 16
  • 17. Snapshot of Mexico’s Energy Sector The Energy Sector in the Mexican Economy  In 2006, the energy sector accounted for: • 17% of GDP • 30% of total exports* • 37% of Federal Revenues Source: SENER, PEMEX and IPD Latin America * Based on Pemex Outlook, July 2007 RATINGS Moody’s S&P Fitch MEXICO Long Term Foreign Currency Baa1* BBB* BBB** PEMEX Long Term Foreign Currency Baa1 BBB* BBB- CFE Long Term Foreign Currency N/A BBB* N/A * Upgraded January 2005, ** Upgraded December 7, 2005 17Source: IPD Latin America, based on SENER, PEMEX and INEGI
  • 18. Snapshot of Mexico’s Energy Sector Energy Trade Balance 2006 - Imports vs. Exports - $40 Petrochemical . Exports $30 Oil Exports $6.88 Total Exports: $20 $34.71 USD$ 41.59 Billion $10 USD Billion $- Petrochemicals -$10 -$14.40 Fuel Oil -$0.23 -$20 Natural Gas Total Imports: -$2.08 -$30 LPG and Diesel USD$ 28.92 Billion Gasoline -$1.19 -$40 -$11.01 ENERGY BALANCE: S12.67 Billion Average Mexican Oil Export Basket Price: 1998: 10.18 dollars per barrel 2006: 53.04 dollars per barrel 18Fuente: IPD Latin America
  • 19. Snapshot of Mexico’s Hydrocarbons Sector 2000* 2005 2006 2007** Total Revenue (Billion) US$ 48.9 US$ 86.1 US$ 97.6 US$ 47.1 PEMEX Total CAPEX (Billion) US$ 7.5 US$ 10.8 US$ 13.8 US$ 15.4 Financial Oil Basket Price US$24.8 US$ 42.7 US$ 53.0 US$ 52.3 Statistics Total Debt (Billion) US$14.9 US$ 49.9 US$ 52.3 US$ 50.8 Labor Liabilities (Billion) US$11.2 US$ 33.2 US$ 41.8 US$ 44.8 * Based on PEMEX 20-F **Unaudited results as of June 30, 2007 3.4 3.4 Crude Oil 3.3 3.3 Production 3.2 Crude Oil Reserves (MMB) 3.2 3.1 - As of Jan 1, 2007 - (MMBD) 3.0 Proven 11,047.6 2000 2001 2002 2003 2004 2005 2006 2007* Probable 11,033.9 5.9 5.4 Natural Gas 4.7 4.5 4.4 4.5 4.6 4.8 Possible 9,827.3 Production (BDFD) 2000 2001 2002 2003 2004 2005 2006 2007(*) 19Source: IPD Latin America, based on PEMEX data * Results as of June 30, 2007
  • 20. Snapshot of Mexico’s Electricity Sector 2000 2005 2006 2007 CFE Capacity (MW) 35,385 45,576 47,857 49,834*Operating Generation (TWh) 190.00 215.63 221.90 111.777*Statistics Transmission Lines (Km) 35,271 45,767 47,485 47,884** Distribution Lines (Km) 579,300 642,700 653,200 655,700** Substations Capacity (MVA) Transmission 107.8 134.7 137.0 137.5** Distribution 31.7 39.7 41.0 41.7** * Information as of July 2007; ** Information as of March, 2007 Source: IPD Latin America, based on CFE2007 Capacity: 49,834 MW 2007 Generation: 111.777 TWh 23% 29% 77% 71%CFE: 38,377 MW IPPs: 11,457 MW CFE: 78.847 TWh IPPs: 32.929 TWh 20
  • 21. Impetus to the Energy Sector’s CurrentState of Affairs 21
  • 22. Hydrocarbons Sector 22
  • 23. Hydrocarbons – All Trends Moving in the Wrong Direction PEMEX has faced years of under-investment: Average 1980’s 1990’s 2000- 2007* Oil ProductionCAPEX CAPEX MMBDUS$ Billion 3.27 3.22 10.2116 (US$ Billion) 4.0 Oil Production 2.49 2.77 3.2214 (MMBD) 3.5 15.4 *Note: 2007 values are estimates.12 13.8 3.0 10.810 2.5 10.1 10.1 8 8.3 2.0 7.8 6 6.8 6.9 1.5 6.4 5.8 5.5 5.1 4 4.2 1.0 3.1 3.1 2.5 2.8 3.0 2 0.5 2.0 1.8 1.6 1.9 2.1 2.0 1.6 1.0 1.1 0 0.0 2004 2006 2002 1980 1986 1988 1982 1984 1990 1992 1994 1996 1998 2000 23Source: IPD Latin America, based on PEMEX and SENER
  • 24. Hydrocarbons – All Trends Moving in the Wrong Direction 72,500 70,000 66,450 Total Hydrocarbon Reserves 65,000 58,204 - At the Beginning of the Year- 60,000 (MMBECO) 45,376.4 55,000 50,000 45,000 2007* 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 Total Crude Oil & Gas Proven Reserves - At the Beginning of the Year- Crude Oil (MMB) Natural Gas (BCF) 24,700 23,660 50,000 45,063 41,383 20,000 40,000 15,123 15,000 12,882 30,000 11,047 21,626 20,433 18,957 10,000 20,000 5,000 10,000 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007* 1999 2000 2001 2002 2003 2004 2005 2006 2007*Source: IPD Latin America, based on PEMEX 24*Note: 2007 estimated data
  • 25. PEMEX – Trends All Moving in the Wrong Direction Thousand B/D Mexico’s Projected Crude Production 4,000 Without Major New Discoveries 3P Reserves Discovered (MMBECO) 3,500 3,383 3,000 2,445 2,500 916 950 966 2,000 612 709 313 216 1,500 2000 2001 2002 2003 2004 2005 2006 1,000 500 - 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1P and 3P Replacement Ratio Cantarell Other Fields Threat of significant crude production 2000 2001 2002 2003 2004 2005 2006 declines without major E&P efforts3P 21% 14% 41% 45% 57% 59% 60%1P -1% -19% -614% 26% 23% 26% 41%Note: The majority of the 2006 1P and 3P increases come fromreserves reclassification and not because of new discoveries 25 Source: IPD Latin America, based on PEMEX data
  • 26. Operational ConstraintsPRODUCTION CONSTRAINTS: Cantarell has started to decline (in 2006 it declined 12%, and in 2007 it is expected to decline around 12% - 14%)* Lifting costs continuing to rise (@ $4.2/b at year end 2006 vs. $3.8/b in 2004. Chicontepec extraction cost is believed to be in the range of $14/b). Continued decline in hydrocarbon reserves Principal production focus: “low-hanging fruit” & enhanced recovery Major infrastructure investment needed for enhanced recovery efforts PEMEX lacks technology, know-how and financial resources to pursue riskier/ complicated projects on its own (deepwater, marginal fields, Chicontepec) Deepwater efforts only starting (Lakash: 935 meters, Q4 – 2006 -- Noxal: 951 meters, Q4 - 2005 -- Nab-1: 681 meters, discovered Nov. „04); besides technology, lack risk capital Natural gas demand continues to outstrip supply* According to Morales Gil comments, when presenting the Development Plan 26
  • 27. Operational ConstraintsPOWERFUL AND COSTLY UNIONIZED WORKFORCE:  Over 148,000 employees and growing; approximately 80% are unionized.  Collective bargaining agreement contains provisions that shares increased windfall with union when oil prices increase.  5 of 11 PEMEX Board members are union representatives.  PEMEX‟s retired employees or their survivors receive same benefits as existing union workers under all ongoing labor negotiations.  Historically limited flexibility to move unionized workers to other regions/projects, e.g. Poza Rica; Only local field experience is created.  Total pension liabilities as of June 30, 2007 have quadrupled when compared to the level registered in 2000. 27
  • 28. Operational ConstraintsABSENCE OF CUTTING EDGE RESEARCH & DEVELOPMENT:  Mexico‟s hydrocarbons R&D department (IMP – Instituto Mexicano del Petróleo) is quasi-independent of PEMEX but receives no direct funding from it; has functioned more as an academic and privileged early retirement destination for senior technical PEMEX staff.  IMP not known as a world-class lead technology developer.  Functions more as a workforce contracting agency for PEMEX than anything else.  IMP not allowed to initiate new initiatives on its own (only permitted upon PEMEX request/ agreement).www.imp.mx  IMP lacks sufficient funds to carry out long-term R&D efforts.  Attractive retirement and post-retirement benefits have created a brain drain of senior technical PEMEX staff; coupled with massive workforce leads to delayed and pyramid decision making. 28
  • 29. Financial Constraints PEMEX’s Punitive Tax Burden:PEMEX remains largest single tax contributor – more than 1/3 of government revenues Budgetary constraints have limited investment in new technologies and exploration Budgetary constraints have dictated focus on crude oil projects over non-associated natural gas projects CAPEX investment increasingly dependent on use of debt Severe under-investment across all PEMEX business lines Increased Unfunded Labor Obligations 29
  • 30. Financial Constraints Taxes and Duties paid by PEMEX (1998 – 2007*) $60 $53.69 $53.55 $50 $42.11 $40 USD Billions $34.04 $30.69 $29.11 $30 $28.47 51.81 25.28 $21.84 37.25 25.66 $20 $16.43 23.42 18.70 17.37 12.60 9.31 $10 9.24 10.41 11.10 7.12 7.27 8.37 4.86 1.88 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 IEPS Hydrocarbon Duties and othersSource: IPD Latin America, based on PEMEX 30*Note: 2007 figures are estimates as of June 30, 2007
  • 31. Financial Constraints$60 $52.32 $50.83 $49.80$50 $40.16 PEMEX Consolidated Debt$40 $32.87 (US$ Billion)$30 $24.33 $18.61$20 $14.91 $12.46$10$- 1999 2000 2001 2002 2003 2004 2005 2006 2007* Peso-denominated debt Debt in other currencies $50 $44.8 $41.8 $40 $34.9 $27.1 PEMEX Labor Liabilities $30 $25.7 $25.4 (US$ Billion) $20 $14.5 $11.2 $8.7 $10 $- 1999 2000 2001 2002 2003 2004 2005 2006 2007*Source: IPD Latin America, based on PEMEX 31*Note: 2007 figures are estimates as of June 30, 2007
  • 32. Financial Constraints PEMEX Equity vs. Total Sales (US$ Billion) 120 97.6 100 86.2 Total 80 69.7 Sales 58.8 60 50.0 50.0 52.5 36.3 Equity 40 20 17.0 15.7 13.4 9.8 4.3 3.0 3.7 0 1999 2000 2001 2002 2003 2004 2005 2006 -20 -2.5 Mexican Oil Price Average Price (US$/barrel)PEMEX 2007 data (As of June 30):Total Sales: US$ 47.4 billion 1999 2000 2001 2002 2003 2004 2005 2006 2007*Equity: US$ 6.7 billion 15.57 24.79 18.61 21.52 24.78 31.05 42.71 53.04 52.32Source: IPD Latin America, based on PEMEX 32*Note: 2007 figures are estimates as of June 30, 2007
  • 33. Electricity Sector 33
  • 34. Operational ConstraintsPRODUCTION ISSUES:  A sizeable portion of CFE‟s generating capacity is quite old and inefficient (around 15% of CFE capacity is more than 30 years old).  Reserve margin currently exceeds 42% as a result of lower economic growth and high rainfall that has increased the amount of hydro power required. The Calderon Administration is exercising increasing pressure to lower reserve margin capacity through shutting down obsolete power plants.  Lack of fuel supply alternatives.  The real issue, natural gas supply. 60.00% 50.00% Minimum Reserve 40.00% Margin: 27% 30.00% 20.00% Minimum Operating Reserve Margin : 6% 10.00% 0.00% 2008 2009 1995 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2010 2011 2012 2013 34
  • 35. Operational Constraints  CFE latest planning scenarios (2007-2016) call for the construction of 66 new power plants that amount to 27,037 MW.  12,184 MW of natural gas-fired combined cycle power plants.  CFE has now recognized that most of the “undesignated” power plants will have to be fueled by natural gas, adding an additional 6,021 MW of natural gas. Thus, total natural gas dependency will be 67%. CFE’s Future Installations Gas Turbine, 379 MW Others, 519 MW Wind and Geothermal, 747 MW Coal, 3,478 MW Combined Cycle, Hydro, 3,709 MW 12,184 MW Undesignated, 6,021 MW 35Source: IPD Latin America, based on CFE
  • 36. Operational Constraints GROWING DEPENDENCE ON NATURAL GAS (NG):  Mexico‟s power sector has become increasingly dependent on NG. CFE‟s projections indicate that by 2012 around 65.5% of power generation will come from NG. Mexico has been unable to increase its own NG production. As a consequence, NG supply will not be met by domestic production for the foreseeable future. 8.38 8.63 8.66 7.68 8.03 7.22 7.43 Total National 6.55 6.67 6.73 Demand: 5.89 6.99 7.05 7.01 Natural 6.74 6.87 6.82 6.64 Total National 6.27 6.48 Gas 5.68 Balance Production 5.05 2005 - 2015 (BCFD) 2.66 2.98 3.22 3.44 3.50 1.68 1.99 1.91 2.04 2.37 2.44 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Electric Sector Demand National Production Others Natural Gas Deficit (MMCFD) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 844 867 399 246 488 441 628 1,020 1,511 1,814 2023Source: CFE, March 2007. 36NOTE: The graph does not include natural gas imports.
  • 37. Financial Constraints  High subsidies in electricity tariffs 2005 2006 Average Price Price/Cost Subsidies Average Price Price/Cost Subsidies TARIFF of Electricity Ratio (MXP Million) of Electricity Ratio (MXP Million) (MXP/KWh) (MXP/KWh)CFE TOTAL 1.00 0.70 63,660 1.08 0.69 77,068 Residential 0.91 0.42 45,117 0.95 0.40 53,399 Commercial 2.09 1.11 0 2.28 1.09 0 Services 1.45 0.82 1,481 1.54 0.79 2,011 Agriculture 0.44 0.28 8,740 0.42 0.25 10,171 Industrial 0.94 0.92 8,321 1.04 0.92 11,487LFC TOTAL 1.17 0.53 31,111 1.16 0.54 33,064 Residential 0.99 0.28 16,033 1.07 0.32 15,148 Commercial 1.97 0.59 5,284 1.92 0.60 5,163 Services 1.55 0.69 1,305 1.64 0.81 794 Agriculture 0.50 0.20 148 0.42 0.14 159 Industrial 1.20 0.68 8,341 0.96 0.66 8,800 Source: IPD Latin America, based on CFE and LFC data 37
  • 38. Financial Constraints Distribution of Electricity Sales Distribution of Electricity Sales by Sector 1995 – 2005 by Sector 2005 (GWh) Agricultural Residential 42,531 5% Residential 24% Commercial 12,989 Services 6,450 Industrial 99,720 Industrial Commercial 59% 8% Agriculture 8,067 Services Total 169,757 4% CFE and LFC Results 2005 2006 - Thousands of MXP - CFE LFC CFE LFC Revenue (loss) before government transfers (11,894,447) (28,294,486) 1,953,094 (32,074,561) Government transfers 69,879,995 25,207,263 51,910,250 33,530,681 Net Revenue (loss) 5,030,548 (3,087,223) 2,080,381 1,456,120Source: CFE and LFC 38
  • 39. Existing Business Lines Controlled by theState and Open to Private Sector(10:15 am – 12:15 pm) 39
  • 40. Mexico’s Energy SectorOil, Gas & Power Industries – Existing Business Lines 40
  • 41. Mexican Energy Sector – Public Sector Players  The Mexican Constitution states that the production, distribution, and marketing of energy supplies are (with a few exceptions) under the control of the State, which undertakes operation of these activities through two* state-owned utilities: PEMEX: this state monopoly is responsible for all the exploration, exploitation, production and commercialization of Mexican hydrocarbons, and most of its derivatives. CFE: this state monopoly is responsible for all generation, transmission and distribution of electrical power in the country. In order to attract investment and free up public resources in the 1990‟s, the government started a process of “liberalization” in the energy sector, opening up certain areas for private participation.* Although LFC is also an electricity state owned utility , it is basically in charge of distributing electricity in Mexico Cityand the surrounding Estado de Mexico, Hidalgo, Morelos and Puebla. 41
  • 42. Who controls which business lines  In 1992 PEMEX was divided into four decentralized subsidiaries that are coordinated by PEMEX Corporate PEP (Pemex PGPB (Pemex Exploration and Gas and Basic PR (Pemex PPQ (Pemex Production) Petrochemicals) Refining) Petrochemicals)Exclusively responsible 1) Exclusively responsible 1) Exclusively 1) Manufacturesfor all exploration and for processing all domestic responsible for converting and marketsproduction of Mexico‟s natural gas and liquids; oil into gasoline, jet fuel, secondarycrude oil and natural 2) Transports, distributes diesel fuel, fuel oil and petrochemicalsgas and markets basic LPG; along with the petrochemicals* 2) Distributes and private sector markets these products * Methane and natural gas liquids: ethane, propane, butane and condensates 42
  • 43. Who controls which business lines – Crude Oil All hydrocarbons are the exclusive property of the nation • PEMEX is responsible for the exploration, exploitation and commercialization of Mexican hydrocarbons. However, there are options for private companies to work along with PEMEX: Reserved to the STATE  Ownership of Resources: Mexico  Ownership of Resources: Mexico  Responsible Entity : PEP  Revenues from Production: PEMEX  Private sector participation:  Responsible Entity : PMI (PEMEX • Service Contracts: Drilling, Seismic, International Trading) Infrastructure supply, future Alliance Contract • Technical Exchange agreements 43
  • 44. Who controls which business lines – Oil & Gas  PEP uses a significant number of service companies as subcontractors. Hydrocarbons produced by subcontractors are not differentiated from production from PEMEX.  Given that PEMEX does not function as a corporation but rather a state- owned entity, PEMEX does not have full control of all of its activities. What PEP controls? What PEP does not control?  Exclusive right to explore  Pricing of its products is set by the (determine location, timing, etc.) Ministry of Finance  Once financing has been obtained,  Debt issuance is made in PEP has a large amount of coordination and with approval of flexibility in how it allocates those the Ministry of Finance resources  Marketing of its products is done  Perform all FHS of domestically by other PEMEX subsidiaries produced products  Cannot negotiate directly with its  Once a project is implemented, union PEP leads all planning efforts 44
  • 45. Who controls which business lines – Natural Gas Reserved to the STATE Open to PRIVATE PARTICIPATION Activities Regulated by the CRE Responsible Entity: • E&P: PEP  Reforms to the Regulatory Law of Article 27 on • Processing and First Hand Petroleum (1995) allowed private sector Sales: PGPB participation Private sector participation: Private Participation in Natural Gas and LPG • Service Contracts: Drilling, Seismic, Infrastructure supply • 21 LDCs • Multiple Service Contracts • 17 major private sector open access (MSC) pipelines • Technology transfer • 3 LNG projects under way agreements • 350+ LPG Disco’s (controlled by 5 families) 45
  • 46. Electricity Industry Structure In 1992, the Electricity Public Sector Law (LSPEE) was amended to allow private participation in generation under the following schemes: Generation Transmission Distribution National National CFE & LFC Transmission Transmission Grid Grid Private Third Parties Self-use Others Participation Cogeneration Imports Reserved to State Self Supply Independent Prod (IPPs) Open to Private Participation Imp / Exp CRE Regulated 46
  • 47. Who controls which business lines – Power As a result of the 1992 amendments to the Constitution and the LSPEE, over 336 generation permits have been authorized by the CRE.  IPP‟s: 21 projects accounting for 11,457 MW (equivalent to 23% of CFE‟s total generation capacity)  Cogeneration: 35 projects accounting for 1,685 MW  Self-supply: 246 projects accounting for 4,685 MW  Import and Export: there are 35 projects combined, accounting for 1,830 MW Private Projects – Installed Capacity Import - Export 9% Self-supply 24% IPP 58% Cogeneration 9% 47
  • 48. Mexico’s Energy SectorWho really makes the decisions in Mexico? 48
  • 49. Key Players in the Mexican Energy Sector SENER, SEMARNAT, Hacienda and the Presidency Office  SENER is in charge of planning. State-owned utilities provide opinions only.  Hacienda is responsible for approving the financing scheme to be undertaken for every government-sponsored energy project.  Hacienda is also responsible for establishing transfer prices among PEMEX subsidiaries.  SEMARNAT is in charge of enacting the environmental regulations and establishing the mitigation measures to be followed by each project.  The Presidency Office, defines the priority of each of the projects to be undertaken, based on suggestions made by the President‟s Cabinet. 49
  • 50. Other Key Players in the Mexican Energy Sector  Each of the Mexican SHCP: funding, states issues a state transfer prices among development plan, PEMEX subsidiaries which is SENER: planning & renewed/updated energy policy Federal every time a new State administration takes SEMARNAT: office. environmental  State authorities and regulations governors oversee CNA : water use and land use, i.e. discharges industrial, farming, etc. Municipal  Municipal authorities issue the construction permits, as well as manage the public recording of land use in the area. 50
  • 51. Mexico’s Energy SectorBarriers to Entry 51
  • 52. Barriers to Entry – Crude oilLegal barriers in the oil sector include:  Ownership of all hydrocarbons extracted and produced in Mexico is restricted to the State, to be exclusively developed by PEMEX.  Mexican Constitution does not allow any form of PSAs, or any contract that ties performance or production with final payment.  Consequently, PEMEX is only able to enter service agreements and not JV’s, within Mexican territory.  After the catastrophe seen in the reconfiguration and upgrade of the Cadereyta and Madero refineries, the Mexican government started restricting participation in certain projects to companies based in countries with signed FTAs with Mexico. 52
  • 53. Barriers to Entry – Crude oilLegal barriers in the oil sector include:  Special drilling projects require that the potential investor has previous work experience with PEMEX.  Minimum local content requirements (10%- 50%).  Rigidity in submitting bid proposals  PEP‟s restricted bids and direct assignments (FSO, FPSO, seismic, nitrogen injection, etc.) 53
  • 54. Barriers to Entry – Natural GasPipelines:  The permanent FHS regime has not been implemented, allowing the following dynamics:  No real open access to the National Pipeline System (NPS);  PGPB controls all cross-border interconnection points;  No real Chinese Walls between PGPB‟s marketing and transportation companies.  As a result, PGPB‟s has a de-facto monopoly over the natural gas industry as it can offer bundled-service packages including supply and transportation.*  Other barriers to entry related to development, include a poor, deficient, public land record, which creates further uncertainty when negotiating ROW‟s with local landowners.* Plus an “administrative charge” in addition to the established tariffs. 54
  • 55. Barriers to Entry – Natural GasPipelines:If a FHS regime were fully-implemented, the following activities would follow:  An open season on the NPS would take place  PGPB would have to offer unbundled natural gas services  Any private company in Mexico could purchase natural gas at the border or at PGPB‟s processing centers (Reynosa or Cd. PEMEX) and have it delivered to a location of its convenience  A natural gas user (industrial, LDCs, IPPs) would still have the ability to purchase natural gas from PGPB and have it delivered at location of its choice (as currently takes place)  Purchase of domestically produced gas would still only be made through PGPB 55
  • 56. Barriers to Entry – Natural Gas Local Distribution Companies (LDC’s):  Regulation based on maximum-income tariffs.  Disloyal competition with LPG.  LPG has enjoyed substantial subsidies  Local distribution companies are “enforcers” of their market share.  Given subsidies and familiarity, natural gas has not fully accepted as the fuel of choice by households and industry. 2,500,000 14.3% average 1,945,382 2,000,000 growth since 2001 1,500,000 Users 1,000,000 852,348 500,000 33,388 - 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 56Source: CRE
  • 57. Barriers to Entry – Natural GasNatural gas storage:  Under the existing regulation, LNG is considered a storage activity.  LNG projects, to date, are dependent on anchor clients, which due to the credit ratings and volume required can only be offered by state-owned utilities.  Similar to what the pipeline business has experienced, the lack of a reliable public land record creates uncertainty and excessive costs to obtain site  Injunctions  Limited ability to sell excess capacity to third parties.  Complex process to undertake open-season procedures to seek additional customers/capacity.  Who should pay? And can the cost be passed through? 57
  • 58. Barriers to Entry – PowerIPPs:  No ability to sell to third-parties (all capacity is committed to CFE)  Obscure dispatch rulesSelf-Supply & Cogeneration:  Limited ability to sell excess capacity to third-parties; Max: 20% of the installed capacity  No true access to the electricity grid  Wheeling Charges - A Black Box  Unattractive back-up supply contracts have to be signed with CFE; can make a project uneconomic 58
  • 59. Mexico’s Energy SectorGovernment Intervention in the Sector 59
  • 60. Government Intervention in E&P activitiesPEP does not function as a company but rather as a state-owned entity. As such,many different government agencies are involved in PEP operations.  All marketing, planning activities are controlled 100% by the state.  SENER, in conjunction with PEMEX (and Congress) determines the production and export platform.  The Ministry of Finance (Hacienda) dictates the level of debt to be raised in capital markets.  Hacienda requires PEMEX to pay guaranteed taxes on a monthly basis.  State and local government influence and intervention often results in political vs. economic decision making.  All these perverse dynamics have forced PEMEX to focus almost singularly on exploitation efforts to the detriment of exploration and other business activities. Given its lower profitability, natural gas E&P activities play second fiddle to crude oil projects. 60
  • 61. Government Intervention in the Natural Gas Sector  Relatively low natural gas prices.  No use of risk management techniques by majority of large consumers. Natural gas prices escalated, and consumers looked for government relief.1997 2000 2001 2003 2005 Residential subsidy: In April 2005, the January 2001, the government offered a “4 X 3 scheme”  In November 2003 PGPB sliding scale subsidy starts offered three “real” hedging based on options depending on a consumption. customers view of prices and appetite for risk. 61
  • 62. Government Intervention in the Natural Gas Sector• Natural gas prices reached US$ 9.57/ MMBTU in January 2001. Price escalation resulted in massive outcry by industrialists and large consumers.• Artificial price of US$ 4/MMBTU for a 3 year term established by the CRE in February 2001, retroactively enacted from Jan. 1, 2001 until Dec. 31, 2003. Gas Price (HH) vs. 4x3 Scheme $12.00 $10.00 $8.00 US /MMB T U $6.00 $4.00 $2.00 $0.00 Apr-00 Apr-01 Apr-02 Apr-03 Jan-00 Jul-00 Oct-00 Oct-01 Oct-02 Oct-03 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 62
  • 63. Government Intervention in Electricity and LPG The government also provides significant subsidies to CFEs customers as we have discussed: Subsidies to CFE’s Electricity Tariffs Tariff Subsidies 2001 2002 2003 Industrial 14% 11% 12% Residential 59% 51% 58% Agriculture 71% 70% 73% Services 11% 2% 7% Another example of government intervention can be found in LPG prices. • Since March 2001, LPG prices paid by final consumers have been subject to a price cap mechanism set by the Economy Ministry. (LPG FHS are set by the CRE and based off of Mont Belvieu). • The argument used for justifying this intervention was that LPG is consumed by 70% of Mexican homes, and as such, its price affects the national economy. 63
  • 64. Government Intervention – In Sum As can be concluded from the previous examples provided, government intervention is common practice in Mexico‟s energy sector. Government intervention is always focused on the end consumer. Political objectives maintain a government focus on short term relief over long term viable solutions. The one interesting exception is gasoline. However, this results from the direct impact it has on PEMEX budget and SHCP tax take. Mexico has had the luxury to subsidize its energy sector to date but this may not be the case on a go-forward basis given social demands. As long as CFE and PEMEX continue as monopolies, we do not foresee a change in the government’s use of this strategy 64
  • 65. List of Private Sector Investment to Date 65
  • 66. CFE – Increasingly Important Player in Natural Gas CFE is the main driver behind LNG projects 4,000 3,500 8.4% demand 3,000 growth per year 2,500 MMCFD 2,000 3,439 3,496 3,215 1,500 2,975 2,664 2,371 2,435 1,000 1,991 1,913 2,036 1,680 500 - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 66Source: Eugenio Laris presentation in La Jolla, May 2007
  • 67. Natural Gas – Natural Gas Infrastructure 9 MEXICALI Constructed Open Access Pipelines IMPORTS IMPORTS 1 Kinder Morgan 11 2 Gasoductos de Chihuahua 10 12 . CD JUAREZ 2 Nogales 3 Igasamex Bajío Naco 4 Energía Mayakán Santa Cananea Ana 5 Tejas Gas de Toluca IMPORTS 6 FINSA Energéticos HERMOSILLO CUAUHTEMOC CHIHUAHUA 7 Transportadora de Gas Zapata ANAHUAC Gasodutos del BajíoEnergia GUAYMAS Delicias PIEDRAS NEGRAS 8 EMPALME 9 TGN Costa Pto. Libertad Cd. Camargo NUEVO Azul Química 10 Pemex Gas y Petroquímica Básica Jiménez del Rey LAREDO Pandura IMPORTS 11 Gasoductos Baja Norte Escalón Miguel 1 14 Castaños Alemán 6 12 Ductos de Nogales Gómez P. MATAMOROS RAMOS REYNOSA RIO 13 Gas. de Tamaulipas (San Fernando) Cd . Lerdo Parras MONTERREY Topolobampo Torreón ARIZPE Cadereyta Sn. BRAVO 16 14 El Paso Gas Transmission de México SALTILLO ARTEAGA Fernando 13 15 PGPB (National Pipeline System) 15 16 Gasoducto del Rio ALTAMIRA 17 Gas Natural de la Huasteca C.F.E. ColinasGeographic Zones Sn. TAMPICO Campo Tam . Luis PotosíPEMEX National Pipeline System 8 17 CD. MADERO Altamira CAN CUNOpen Access Private Pipelines AGUASCALIENTES 3 ValladolidInjection Points Guadalajara Tlalchinol Poza MERIDA LEON SILAO Rica IRAPUATO C.F.E. El Verde Tula SALAMANCA Sta .Potential LDCs CELAYA Ana PACHUCA 5 TOLUCA DF TLAX. 4 LNG In Operation PUEBLA Atasta Manzanillo 7 Nvo . Teapa Cactus y LNG Under Construction Nuevo Pemex LNG Proposed Site 67
  • 68. Natural Gas - Transport Open Access Transportation Permits Granted by the CRE COMPANY LENGTH CAPACITY INVESTMENT (km) (MMCFD) (US$ Million)1. Kinder Morgan Gas Natural 137.2 374 82.02. Gasoductos de Chihuahua (El Paso (50%) – PGPB 38.0 328 18.2(50%))3. Igasamex Bajío 2.5 13 0.34. Energía Mayakan Pipeline 710.0 285 276.9(Gaz de France (67.5%) GE (22.5%))5. Tejas Gas de Toluca (Alliance between Westpark 123.2 96 31.0Resources and Grupo Fermaca)6. Finsa Energéticos 8.0 8 0.27. Transportadora de Gas Zapata (OneOk International (38%), Williams International Ventures 164.2 166 75.9 (37%) Compañía Mexicana de Gas Natural (25%)8. Gasoductos del Bajío (TCPL (95%), GUTSA (5%)) 203.0 90 56.59. Transportadora de Gas Natural de Baja California (Gasoducto Rosarito (99%) and Sempra 36.0 300 28.2 (1%))10. Pemex-Gas y Petroquímica Básica (Naco- 339.0 110 22.1 Nogales) 68
  • 69. Natural Gas - Transport Open Access Transportation Permits Granted by the CRE COMPANY LENGTH CAPACITY INVESTMENT (km) (MMCFD) (US$ Million) 11. Gasoducto Bajanorte (Sempra) 217 400 124.6 12. Ductos de Nogales (Compañía Energética de México 14.9 15 4.1 (48.57%), Operadora de Empresas y Servicios (50%)) 13. Gasoductos de Tamaulipas (Gasoductos de Chihuahua 114.2 2,460 238.7 100%) 14. El Paso Gas Transmission de México (El Paso, 100%) 12.5 215 6.6 15. Pemex-Gas y Petroquímica Básica 8,704.0 5,107 436.5 16. Gasoductos del Río (EDF International 99%) 57.9 410 39.3 17. Conceptos Energéticos Mexicanos (Integrated Gas 1.6 9 0.8 Services de Mexico (60%), International Project Opportunities Group (40%))* 18.Transportadora de Gas Natural de la Huasteca (TCPL 198.0 339 225.7 100%)* 19. Tejas Gas de la Península* 234.5 300 139.5 20. Terranova Energia (Tidelands)* 256.9 1,200 N.A. TOTAL 11,573.9 12,437.8 1,807.1*Permits have been awarded but construction has not started yet 69
  • 70. Natural Gas – Distribution – 21 Concessions Awarded TIJUANA, TECATE MEXICALI 1 ENSENADA CANANEA 18 JUAREZ 10 SONORA VALLE 14 PACHUCA CUAUTITLAN - HERMOSILLO CHIHUAHUA TEXCOCO 5 3 TLAXCALA 2 DF 13 GUAYMAS CUAUHTEMOC PIEDRAS TOLUCA 20 DELICIAS NEGRAS EMPALME 6 NORTE DE CUERNAVACA PUEBLA NUEVO TAMAULIPAS LAREDO 9 12 GOMEZ PALACIO REYNOSA MATAMOROS TORREON RAMOS MONTERREY (2) MONTERREY ARIZPE RIO LERDO LERDO 7-8 BRAVO SALTILLO SALTILLO LA LAGUNA 17 ARTEAGA 4 ARTEAGA DURANGO DURANGO ALTAMIRA ZACATECAS 19 SN. LUIS SN. LUIS TAMPICO RÍO PÁNUCO POTOSI 11 CD. MADERO AGUASCALIENTES 16 21 LEON SILAOQUERETARO 15 IRAPUATO SN JUAN DEL RIO GUADALAJARA SALAMANCA VERACRUZ CELAYA SN. JUAN PACHUCA DEL RIO PACHUCA TOLUCA TLAXCALA 6 DF 13 20 MORELIA PUEBLA CUERNAVACA Distribution Zones Distribution Zones not awarded 70Source: CRE
  • 71. Natural Gas - Distribution Distribution Permits Granted by the CRE Average Investment Length Expected Users LDC Owner Volume (US$ (km) after Yr. 5 (m3/ d) millions)* DGN de Mexicali, S. de R.L. de C.V.1. Mexicali 465 25,003 25,346 18.14 (Sempra)2. Piedras Negras Cía. Nacional de Gas, S.A. de C.V. 336 6,992 25,608 0.7 DGN de Chihuahua, S. de R.L. de3. Chihuahua 1168 51,242 51,453 46.42 C.V. (Sempra)4. Saltillo-Ramos Arizpe- Gas Natural México, S.A. de C.V. 656 26,309 40,027 39.03Arteaga (Saltillo) Gas Natural del Noroeste, S.A. de5. Hermosillo 505 15,185 26,250 21.4 C.V. (SourceGas) Gas Natural México, S.A. de C.V.6. Toluca 595 68,263 47,279 31.6 (Toluca)7. Monterrey Cía. Mexicana de Gas, S.A. de C.V. 921 115,020 50,079 11.26 Gas Natural México, S.A. de C.V.8. Monterrey 7239 123,743 557,052 184.1 (Monterrey)9. Nuevo Laredo, Gas Natural México, S.A. de C.V. 366 6,463 25,029 11.22 Tamaulipas (Nuevo Laredo) Gas Natural de Juárez, S.A. de10. Ciudad Juárez 1828 35,209 129,045 12.74 C.V. Gas Natural del Río Pánuco, S. de11. Río Pánuco 335 51,559 28,338 14.3 R.L. de C.V. (Suez Energy) 71
  • 72. Natural Gas - Distribution Distribution Permits Granted by the CRE Average Investment Length Expected Users LDC Owner Volume (US$ (km) after Yr. 5 (m3/ d) millions)* 12. Norte de Tamaulipas Tamauligas, S.A. de C.V. (GdF) 861 22,354 36,447 23.7 Comercializadora Metrogas, S.A. 13. Distrito Federal 2619 153,160 439,253 109.04 de C.V. ( Gas Natural Mexico) Consorcio Mexi-Gas, S.A. de C.V. 14. Valle Cuautitlán-Texcoco 3517 268,533 374,698 199.7 (GdF) Distribuidora de Gas de Querétaro, 15. Querétaro 870 64,434 50,001 47.2 S.A. de C.V. (Suez Energy) 16. Bajio Silao-León- Gas Natural México, S.A. de C.V. 788 24,332 72,384 27.1 Irapuato (Bajío) 17. Torreón-Gómez Palacio- DGN la Laguna-Durango, S. de R. 1030 38,647 50,084 35.4 Ciudad Lerdo-Durango de C.V. (Sempra) Distribuidora de Gas de Occidente, 18. Cananea, Sonora 120 1,413 6,684 35.4 S. A. de C.V. Gas Natural México, S. A. de C.V. 19. Zona Bajío Norte 719 43,755 55,715 34.55 (Bajío Norte) 20. Puebla-Tlaxcala NATGASMEX, S. A. de C.V. (GdF) 919 93,054 68,196 34.81 Distribuidora de Gas Natural de 21. Guadalajara 2185 257,797 180,558 83.6 Jalisco (Suez Energy)* Total investment during 5 yr. build on 72
  • 73. Power Projects Independent Power Producers (IPPs) to date Effective Price Investment Project Owner Capacity Start-up operation (Usc/kWh) (US$ millions) (MW) AES Merida III (Nichimen1. Merida III Corp. - AES Corp. - Grupo 484 2.85 June 9, 2000 230 Hermes)2. Hermosillo Union Fenosa 250 3.605 October 1, 2001 1643. Saltillo Electricité de France (EdF) 248 2.865 November 19, 2001 152.64. Tuxpan II Mitsubishi 495 2.754 December 15, 2001 281.15. Rio Bravo II EdF 495 2.565 January 18, 2002 2206. Bajio (El Sauz) Tokyo Gas 495 2.94 March 9, 2002 4507. Monterrey III Iberdrola 449 2.387 March 27, 2002 2508. Altamira II EdF (51%) – Mitsubishi (49%) 495 2.90 May 1, 2002 2789. Tuxpan III - IV Union Fenosa 983 2.78 May 23, 2003 61610. Campeche TransAlta 252 3.09 May 28, 2003 21611. Mexicali Intergen 489 3.19 July 20, 2003 33512. Chihuahua III TransAlta 259 3.49 September 9, 2003 19213. Naco Nogales Union Fenosa 258 3.44 October 4, 2003 13514. Altamira III - IV Iberdrola 1,036 2.60 December 24, 2003 59015. Rio Bravo III EdF 495 2.953 April 1, 2004 29016. La Laguna II Iberdrola 498 3.5012 March 15, 2005 346 73
  • 74. Power Projects Independent Power Producers (IPPs) to date Effective Price Investment Project Owner Capacity Start-up operation (Usc/kWh) (US$ millions) (MW)17. Rio Bravo IV EdF 500 2.9328 April 1, 2005 29018. Valladolid III Mitsui 525 3.599 June 27, 2006 32019. Tuxpan V Mitsubishi 495 MXc 43.65 September 1, 2006 30020. Altamira V Iberdrola 1,121 MXc 43.60 October 22, 2006 55021. Tamazunchale Iberdrola 1,135 MXc 43.62 June 21, 2007 490 74
  • 75. Power Projects Private Cogeneration and Self-supply projects to date Installed Project Owner Fuel Capacity (MW)Arancia Arancia Corn Products 29 Natural GasEnertek Iberdrola 120 Natural GasMicase Grupo Minsa - Endesa 11 Natural GasIberdrola Monterrey Iberdrola 619 Natural GasEnergia Azteca VIII Integen 131 Natural Gas(La Rosita)Energia y Agua Puta de Cozumel Local consortium 32 Fuel OilTermoelectrica del Golfo CEMEX 250 Pet CokeTermoelectrica Peñoles Grupo Peñoles 260 Pet CokeHidroelectricidad del Pacifico Inelec – Comexhidro 8 HydroImpulsora Mexicana de Energia Condumex – Almexa 24 DieselBioenergia de Nuevo Leon Nuevo Leon state entities 7 BiogasVitro Suez Energy 284 Natural GasAgrogen Endesa 10 DieselProveedora de Electricidad de Occidente Grupo Infra 19 HydroItalaise Endesa 4 Diesel 75
  • 76. Key Stakeholders Map and PerceivedReform Evolution12:30 pm – 3:30 pm 76
  • 77. New Energy Sector Leaders & Inter-Play Agustin Carstens Secretary of Finance Unions Governors Central Decision Makers Felipe Calderon President of Mexico Congress Juan C. Mouriño President’s Chief of Staff Jesus Reyes Heroles Administrators Georgina Kessel, PEMEX Director General Secretary of Energy Other Sources of Influence: Universities, Business Chambers, 77 Key Individuals, Oil & Gas Service Companies, etc.
  • 78. Felipe Calderon – President of Mexico BACKGROUND  Law Degree from Escuela Libre de Derecho  Masters degree in Economics from ITAM and a Masters degree in Public Administration from Harvard’s School of Government OTHER POSITIONS  Dec 2006 – Dec 2012: President of Mexico  2005: PAN presidential candidate  Sep 2003 - May 2004: Secretary of Energy  Feb 2003 – Sep 2003: Director of the National Bank of Public Works and Services (Banobras)  2000-2003: Lower House Deputy, PAN Leader in the Lower House and President of the Lower House Political Coordination Counsel SUPPORTERS  1996 – 1999: PAN Party President  Business community  1993: Secretary General of the PAN  Financial sector  1991-1993: Lower House Deputy  PAN (recent consolidation)  1986: President of the PAN’s youth movement President Calderon has constructed his economic platform Profile: based on a market oriented view, where strong institutions and rule of law will play a significant role. During the first P PM T PBP= Politician months of his administration, he has centralized power,PM: Energy Policy MakerT: Technical Energy attacked organized crime, addressed social issues andExpert negotiated pension reform. He appears to have a clearPB: Pro-Business    reform agenda he wants to pursue. 78
  • 79. Juan Camilo Mouriño – President’s Chief of Staff BACKGROUND  Degree in Economics from the University of Tampa, Florida  Masters degree in Accounting from La Universidad Autónoma de Campeche OTHER POSITIONS  Dec 2006 – to date: President Calderon’s Chief of Staff  2005: Coordinator of Felipe Calderon’s transition team  2004: Undersecretary of Electricity in SENER, when Felipe Calderon was head of the ministry  2000 - 2003 : Federal Deputy and president of the Lower House Energy Commission (not entire term)  2000: Coordinator of Fox’s presidential campaign in the Yucatan peninsula, Profile: achieving important gains for the party P PM T PBP= PoliticianPM: Energy Policy MakerT: Technical EnergyExpert SUPPORTERSPB: Pro-Business    Reactive Active  Felipe Calderon   Regional support in Yucatan Power Manage Mr. Mouriño is perceived to be the most relevant political closely operator in the Calderon Administration. He is extremely close to the President and is going to play a major role in any decision making in the administration, including defining the extent of reforms that will be pursued. -  79 Level of Interest
  • 80. Agustín Carstens – Secretary of Finance BACKGROUND  Degree in Economics from ITAM (Instituto Tecnológico Autónomo de México)  PhD in Economics from the University of Chicago OTHER POSITIONS  Dec 2006 – to date: Secretary of Finance  2003 - Oct 2006 : Deputy Managing Director of the International Monetary Fund (IMF)  2000-2003: Undersecretary of Finance and Public Credit  1999 - 2000: Executive Director at the IMF (representing Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Spain and Venezuela) Profile:  Before first stint at the IMF, Carstens worked at Banco de México P PM T PBP= PoliticianPM: Energy Policy Maker SUPPORTERST: Technical EnergyExpert  Felipe CalderonPB: Pro-Business    Francisco Gil Reactive Active  Financial markets  Power Manage Carstens’ appointment as Secretary of Finance has been viewed closely as very positive by both national and international markets. He is widely expected to continue Mexico’s adherence to the disciplined fiscal and monetary policies seen over the past decade. Broadening and better enforcement of tax collection will be -  Carstens’ biggest challenge in his new post. 80 Level of Interest
  • 81. Georgina Kessel - Secretary of Energy BACKGROUND  Degree in Economics from ITAM (Instituto Tecnologico Autonomo de Mexico)  PhD in Economics from Columbia University, New York OTHER POSITIONS  Dec 2006 – to date: Secretary of Energy  Jan 2002 - Dec 2006: General Director of “Casa de Moneda” (Mexico’s National Mint)  Jul 1997 - Jan 2002: Secretary of Finance: In charge of Investment Office and Decentralization of Mexico’s state-owned utilities.  Jan 1994 - Jan 1995: First Energy Regulatory Commission (CRE) President Profile: SUPPORTERSP= PoliticianPM: Energy Policy Maker P PM T PB  Felipe CalderonT: Technical Energy  Agustin CarstensExpertPB: Pro-Business    Francisco Gil Diaz  Santiago Levi  Power Reactive Active  Fernando Sanchez Ugarte Manage closely Kessel has a strong economic background, but not a technical or political one. We do not see her leading the negotiations for structural reforms but implementing them. Her background will -  be crucial for discussing important issues such as PEMEX mounting debt and fiscal contributions, among others. 81 Level of Interest
  • 82. Jesus Reyes Heróles – PEMEX Director General BACKGROUND  Degree in Economics from ITAM  PhD in economics from the Massachusetts Institute of Technology OTHER POSITIONS  2001: Founder of GEA (Grupo de Economistas Asociados)  1997 - 2000: Mexican Ambassador to the United States  1996 - 1997: Secretary of Energy  1994 - 1995: Director of Banobras (Mexico’s Social Development Bank) SUPPORTERS  Felipe Calderon Profile:  Guillermo Valdez  Ernesto ZedilloP= PoliticianPM: Energy Policy Maker P PM T PB  Agustin CarstensT: Technical Energy Reactive Active  LabastidaExpertPB: Pro-Business    He has considerable experience as a public servant and is no  stranger to the energy sector. His financial experience is also Power noteworthy and reinforces the fact that finance will be a central Manage tenant of reform. Reyes Heróles has a particular interest in closely increasing PEMEX operating efficiencies, regarding manpower and bureaucratic issues. However, he is not a technical person with petroleum operating experience. As a negotiator, his focus -  will be on strengthening PEMEX, implementing reform, discussions with the union and improving operating efficiencies. 82 Level of Interest
  • 83. Impetus for ChangeThe decision making process of the current administration is extremely centralized. All important negotiations are being handled directly through the office of the President. Negative Positive Centralizing all discussions Calderon has a well-defined runs the risk of slowing down reform agenda and appears to be the reform process employing a clear political strategy The reform agenda and priorities have been defined. In addition to security and rule of law reforms, which are currently being discussed, the top economic reforms are as follows: 1. Pension Reform (already approved) 2. Fiscal Reform (in process) 3. Energy Reform (pending) Energy reform will be be highly contingent on the outcome of fiscal reform negotiations, and in particular, on the negotiations and agreements reached between the PRI and the PAN. 83
  • 84. Impetus for Change – Mexico’s Hydrocarbons Piñata Increasing Increasing Social Spending & Lack of Competition Imports Needs PIDIREGAS InsufficientUnsustainability Job Creation Production Challenges Financial Drain of PEMEX Access to Technology Hydrocarbons Reform Economic Vested Crisis Interests Access to Capital Labor Declining Drop in Crude Liabilities Reserves Production 84
  • 85. Drivers for Change  The hydrocarbons reform ultimately introduced will depend on the drivers and goals being sought by the Calderon Administration and the terms being negotiated with other actors: DRIVERS OBJECTIVE TYPE OF REFORM Maintaining Status Quo: Partial • PEMEX = government cash cow • Amend secondary laws (stretch • PEMEX retains full oversight of E&P legal framework for upstream) • Need increased investment; opt for more • Preservation of status quo in private participation in upstream, methods of inviting and AVOID CRISIS downstream & non-strategic areas awarding of contracts AND ENSURE • Goal: sustain production levels FISCAL RENT Partial Upstream Participation: Partial Plus(MYOPIC VIEW) • Need increased investment & production • Amend secondary laws (signif- • Opening up spaces for private icantly stretch legal framework) participation in E&P (expanded service • Creation of expanded service contracts) contracts • Goal: sustain production levels/ attract • Preservation of status quo in better technology methods of inviting and awarding of contracts Creating a Dynamic Hydrocarbon Industry Comprehensive • Full opening of the hydrocarbons sector • Constitutional reforms (Art. 27ENGLIGHTED, • Optimize exploitation of resources & 28; also requires secondary LONG TERM • Demand use of best technology legislative changes)VIEW FOR THE • Ensure a state role in the sector • Create a fully independent • Develop a dynamic domestic service regulator INDUSTRY • Create a new tax regime industry and create local know how • Increase tax revenue & economic activity • New contracting, labor & environmental laws 85
  • 86. Possible Alliances and Conflicts Maps 86
  • 87. Presidency - Support Map Dionisio Perez - Jácome Juan Camilo Jordy Herrera Mouriño Alejandra Ernesto Sota Cordero Felipe Calderon Maximiliano Cesar Cortázar Nava Germán Martínez 87
  • 88. Policy Makers Support Map (Presidency) - Hydrocarbons Reform Felipe Calderon David FranciscoMaldonado Labastida Juan C. MouriñoPEMEX SENER SHCP J. Reyes Georgina Agustin Romero Heróles Kessel Carstens Deschamps Esteban Raúl Aldo Levín Livas Flores Ricardo Aldana Carlos Mario G. Jordy Ernesto Alejandro Fernando Morales G. Budebo Herrera Cordero Werner Sanchez Vinicio Sergio Rafael Suro Guaso Alexandri* * No longer in SENER Personal Relationship / Alliance Negotiated / Imposed 88 Strictly Working Relationship
  • 89. Policy Makers Support Map (Inter-Institutional) David Francisco Romero Ricardo Maldonado Labastida Deschamps AldanaPEMEX SENER SHCP J. Reyes Georgina Agustin Heróles Kessel Carstens Esteban Raúl Aldo Levín Livas Flores Carlos Mario G. Jordy Ernesto Alejandro Fernando Morales G. Budebo Herrera Cordero Werner Sanchez Vinicio Sergio Rafael Suro Guaso Alexandri* * No longer in SENER Personal Relationship / Alliance Negotiated / Imposed 89 Strictly Working Relationship
  • 90. Policy Makers CONFLICT Map - Hydrocarbons Reform Juan C. Mouriño Francisco Romero Ricardo Labastida Deschamps AldanaPEMEX SENER SHCP J. Reyes Georgina Agustin Heróles Kessel Carstens Esteban Raúl Aldo Levín Livas Flores Carlos Mario G. Jordy Ernesto Alejandro Fernando Morales G. Budebo Herrera Cordero Werner Sanchez RafaelVinicio Sergio Alexandri* Suro Guaso * No longer in SENER 90 Personal Conflict Professional Conflict Potential Conflict
  • 91. SENER Support Map - Hydrocarbons Reform Georgina Kessel Mauro Aldo Díaz Flores M. Gabriel Jordy Budebo Herrera Rafael Juan C. Cesar Diego Emiliano VerónicaAlexandri* Zepeda Baldomero Arjona Pedraza Irastorza Personal Relationship / Alliance Negotiated / Imposed Strictly Working Relationship Isolated * No longer in SENER 91
  • 92. SENER Conflict Map – Hydrocarbons Reform Georgina Kessel Mauro Aldo Díaz Flores M. Gabriel Jordy Budebo Herrera Rafael Juan C. Cesar Diego Emiliano VerónicaAlexandri* Zepeda Baldomero Arjona Pedraza Irastorza Personal Conflict Professional Conflict Potential Conflict Isolated 92 * No longer in SENER
  • 93. PGPB Support and Conflict Map Roberto Ramírez Soberón PGPB General Director Armando Victor Felipe Luna Miguel Salvador Agustin Arenas Dominguez* Bueno* Ortiz Castro Natural Gas Production Pipelines Deputy LPG and Planning Management Deputy Deputy Director PPQ Deputy Deputy and Finance Director Director Director Director Deputy Director * Acting Deputy DirectorSupport : Personal Relationship / Alliance Negotiated / Imposed Strictly Working RelationshipConflict : 93 Personal Conflict Professional Conflict Potential Conflict Isolated
  • 94. Natural Gas and LNG Decision Makers - CFE Alfredo Elias Ayub General Director Eugenio Laris Director for Third-Party Nestor Moreno Francisco Santoyo Operations Director Finance Director Financed Projects Alberto Ramos Jesus Buentello Deputy Director for Fuel Manager Project Development Juan Guillermo Francisco De la Parra Granados Fernandez Natural Gas ManagerManager, Projects Legal Coordinator Project Development Operations Eduardo Buendía Legal and Financial Jr. Manager 94
  • 95. Consensus in Defining Energy Reform? 95
  • 96. Proposed Legislative Reforms to Date – Policy Makers Calderon SHCP SENER PEMEX Old Guard PEMEX New Mgmt Executives Union Consolidation of PEMEX into one single entity Neutral Neutral   Neutral XOPERATIONAL Allow PEMEX more flexibility in how it buys goods/services Neutral Neutral Neutral    Administrative and operational autonomy Neutral Neutral Neutral   Neutral Creation of a regulatory body  Neutral  Neutral X X Increased standards of transparency and efficiency     X X Giving more money to PEMEX/ Allow it to retain more money Neutral X Neutral   FINANCIAL Corporate governance  Neutral   X X PEMEX budgetary autonomy Neutral X Neutral    PEMEX stock issuance     X X Private sector investment in refining     Neutral X Private sector Investment in     Neutral XOPENING petrochemicals     Opening private participation in non associated natural gas X X PEMEX entering JVs in E&P     Neutral X   96 Competition in E&P   X X
  • 97. Proposed Legislative Reforms to Date - Political PAN PRD PRI General Public Consolidation of PEMEX into one single entity    Neutral OPERATIONAL Allow PEMEX more flexibility in how it buys goods/services Neutral   Neutral Administrative and Neutral Neutral Neutral Neutral operational autonomy Creation of a regulatory body  X   Increased standards of transparency and efficiency     Giving more money to PEMEX/ Allow it to retain more money Neutral  Neutral Neutral FINANCIAL Corporate governance  X   PEMEX budgetary autonomy Neutral Neutral Neutral Neutral PEMEX stock issuance  X  ? Private sector investment in refining  X Neutral Neutral Private sector Investment in  X Neutral Neutral OPENING petrochemicals  Opening private participation in non associated natural gas X ? Neutral PEMEX entering JVs in E&P  X ? ?  97 Competition in E&P X ? ?
  • 98. Proposed Legislative Reforms to Date – Other Players IOC’s Service Carlos Monterrey Business Companies Slim Industrials Chambers Consolidation of PEMEX into one single entity Neutral X Neutral Neutral Neutral OPERATIONAL Allow PEMEX more flexibility in how it buys goods/services    Neutral Neutral Administrative and operational autonomy Neutral   Neutral Neutral Creation of a regulatory body  X Neutral  Neutral Increased standards of transparency and efficiency  X X    Giving more money to PEMEX/ Allow it to retain more money Neutral  Neutral Neutral FINANCIAL Corporate governance  X *   PEMEX budgetary autonomy Neutral   Neutral Neutral PEMEX stock issuance Neutral Neutral  Neutral Neutral Private sector investment in refining  Neutral * Neutral Neutral Private sector Investment in  Neutral * Neutral Neutral OPENING petrochemicals  * Opening private participation in non associated natural gas Neutral Neutral Neutral PEMEX entering JVs in E&P  Neutral * Neutral Neutral 98 Competition in E&P  Neutral * Neutral Neutral
  • 99. Potential Consensus Based on Proposals to Date Broad Consensus (all parties)  Fiscal reform  PEMEX consolidation  Transparency and efficiency  Reform of Public Works & Acquisition Laws Broad Consensus (PRI/ PAN)  Corporate governance  Stock issuance  Creation of a regulator Potential Consensus  Private participation in refining and petrochemicals  Opening private participation in non-associated natural gas  JVs and competition in E&P Potential Consensus Broad Consensus (PRI/ (PAN/ PRD) PRD)  Allow PEMEX more flexibility in Give more money to PEMEX/ how it buys goods/services Allow it to retain more money 99
  • 100. Legislative Voting Scenarios 100
  • 101. Lower House Composition – LX Legislature (2006 – 2009) POLITICAL PARTY DEPUTIES AS % PAN 206 43% PRD 127 25% PRI 106 21% PVEM 17 3% CONVERGENCIA 17 3% PT 11 2% NUEVA ALIANZA 9 2% ALTERNATIVA 5 1% WITHOUT PARTY 2 0% TOTAL 500 100% 101
  • 102. Lower House Scenarios – Simple Majority Scenario # 1 Scenario # 2 Without Party Without Party 206 (100%) 0 (0%) 150 (73%) 0 (0%) 13 (12%) 0 (0%) 77 (73%) 0 (0%) 0 (0%) 9 (100%) 0 (0%) 7 (73%) 17 (100%) 5 (100%) 12 (73%) 4 (73%)Without Party 1 (100%) Total 251 (50.14%) Without Party 1 (100%) Total 251 (50.28%) 102
  • 103. Lower House Scenarios – Super MajorityScenario # 1 206 (100%) 0 (0%) 106 (100%) 0 (0%) 0 (0%) 9 (100%) 17 (100%) 5 (100%) Without Party 1 (100%) Total 344 (68.80%)Scenario # 2 200 (97%) 0 (0%) 103 (97%) 0 (0%) 0 (0%) 9 (97%) 16 (97%) 5 (97%) Without Party 1 (100%) Total 344 (66.74%)Scenario # 3 177 (86%) 4 (25%) 91 (86%) 3 (25%) 32 (25%) 8 (86%) 15 (86%) 4 (86%) Without Party 1 (100%) Total 335 (67.00%) 103
  • 104. Lower House Scenarios – Reforma Poll Reforma Poll Scenario : Support for Constitutional Changes 203 (98%) 6 (38%) 61 (58%) 5 (38%) 48 (38%) 9 (98%) 17 (98%) 5 (98%) Without Party 1 (71%) Total 354 (71%)Source: IPD Latin America based on the Reforma Poll conducted from February 6 through April 2,2007. The poll consisted of a survey involving 280 Lower House deputies (56 percent of the 500member body) that were asked whether or not they would support constitutional changes in terms ofenergy.NOTE: IPD extrapolated the percentages highlighted in orange based on survey results, since thesupport for parties other than PAN, PRD and PRI were only shown in aggregate form. 104
  • 105. Senate Composition – LX and LXI Legislatures (2006 – 2012) POLITICAL PARTY SENATORS AS % PAN 52 41% PRI 33 26% PRD 26 20% PVEM 6 5% CONVERGENCIA 5 4% PT 5 4% WITHOUT PARTY 1 1% TOTAL 128 100%Source: IPD Latin America, based on Lower House and Senate 105
  • 106. Senate Scenarios – Simple Majority Scenario # 1 Scenario # 2 Without Party Without Party 52 (100%) 0 (0%) 36 (70%) 0 (0%) 5 (16%) 0 (0%) 23 (70%) 0 (0%) 0 (0%) Without Party 1 (100%) 0 (0%) Without Party 1 (100%) 6 (100%) Total 64 (50.22%) 4 (70%) Total 65 (50.55%) 106
  • 107. Senate Scenarios – Super MajorityScenario # 1 Without Party 52 (100%) 0 (0%) 33 (100%) 0 (0%) 0 (0%) Without Party 1 (100%) 6 (100%) Total 92 (71.88%)Scenario # 2 Without Party 48 (93%) 0 (0%) 31 (93%) 0 (0%) 0 (0%) Without Party 1 (100%) 6 (93%) Total 86 (66.90%)Scenario # 3 43 (83%) 1 (25%) 27 (83%) 1 (25%) INDEPENDENT 7 (25%) Without Party 1 (100%) PT CONVERGENCIA 5 (83%) Total 86 (66.82%) 107
  • 108. States and Super Majority Vote Constitutional reforms require a super-majority vote in Congress, which implies a two-thirds vote in both the Lower House and the Senate; it also requires approval by a simple majority from Mexico’s 31 state legislatures, each with a simple majority vote (i.e. 16 states must pass the constitutional reforms by 51% or more). We would note that Mexico City (the Federal District) is not treated as a state and would not vote on constitutional matters.  The PRI controls the largest number of seats in 20 of the 31 state legislatures (it shares this position in two states with the PAN and in two states with the PRD). Of these 20 states, the PRI has a 50% or more majority in 10 of the 31 state legislatures.  The PAN holds the largest number of seats in 9 of the 31 state legislatures (two shared with the PRI). Of these 9 states, the PAN has a 50% or more majority in 5 state legislatures.  Based on our analysis, if the PAN were able to secure the full support of the PRI, it would be able to secure at least a simple majority in 17 states (this does not include simple majorities formed via PAN-PRI coalition support).  The PRD, on the other hand, only has the largest number of seats in 6 state legislatures, of which two are shared with the PRI. The PRD holds a super majority position in one state legislature, Baja California Sur; it holds no simple majority positions. 108
  • 109. Items to Consider 109
  • 110. Convergence • Party fracturing / Individual or group • Ability to substitute Calderon current dependence on PRD interest(s) PEMEX tax revenue • Social pressure for change contribution • Economic crisis • Demand for increased • Ignorance Society economic growth • Jobs • Threat of economic crisis • Win political spaces • Excessive political PRI • Economic crisis cost • Political negotiations PEMEX Non-NegotiableOld Guard • Perceived increased energy Business • More business opportunities prices from reform Chambers • Economic growth • Maintaining existing subsidies • PEMEX financial crisis • Excessive political PAN Union cost • Reach agreement with union leadersStatus Quo Partial Reform Comprehensive Reform 110
  • 111. Hydrocarbons Reform Key Players POWER Lower HouseHigh and Senate President Calderon/ Energy Juan Camilo Mouriño Commissions PEMEX Secretary of Energy/ senior and Secretary of Finance/ mid-level PEMEX Director executives Governors Unions SENER senior and mid- Oil & Gas service level executives companies Influential business leaders Keep satisfied Manage closely Business CFE Director Chambers: Media and CONCAMIN, C NGOs OPARMEX IOCs Public IMP Universities Monitor (Minimum effort) Keep informed LEVEL OF INTERESTLow High 111
  • 112. Profiles Other Relevant Players1. Political Parties2. Governors3. Others Universities Industrial Chambers Oil & Gas Service Companies Influential Business Leaders4. Support Profiles 112
  • 113. Issues to Consider  Is the time for comprehensive hydrocarbons reforms here? (Pre-midterm vs. Post-midterm elections?)  Do the rules of the past still apply?  Is there a hydrocarbons reform champion?  Are all of the elements in place for sustainable hydrocarbons reform?  Is there a need to re-evaluate approach and philosophy?  Where is your time and money best spent? And with whom? 113
  • 114. Political Parties 114
  • 115. Andres Manuel Lopez Obrador - AMLO BACKGROUND  Degree in Public Administration from the National Autonomous University of Mexico (UNAM) OTHER POSITIONS  2007 – to date: Leader of a civil resistance movement contesting the results of the 2006 presidential election. AMLO proclaimed himself as Mexico’s “legitimate president”  2005 – 2006: Presidential Candidate of Mexico  2000-2005: He was elected Mexico City Major Profile:  1996 to 1999: PRD president P= Politician  1994: Ran for the governorship of his native state, Tabasco, losing to Roberto Madrazo PM: Energy Policy Maker  1989: Joined the PRD (He left the PRI in 1988 to support the presidential campaign of T: Technical Energy Expert Cuauhtémoc Cárdenas. He joined the PRI in 1976). PB: Pro-Business SUPPORTERS P PM T PB  Carlos Slim*  Marcelo Ebrard* Reactive Active  Camacho Solis  Despite the fact that AMLO has lost considerable strength since losing  the 2006 presidency, he continues to be relevant due to his support by anPower important fraction of the PRD. He will strongly oppose any attempts at Manage energy reforms calling them further stages of privatization and will ally closely himself with unions to further his views/ cause. AMLO can be expected to deploy the masses to maintain the emotional psychology that still surrounds PEMEX. He will also use the media. AMLO will almost certainly -  make a bid for the 2012 presidency. He continues to travel the country on a regular basis to gain and maintain popular support. 115 Level of Interest
  • 116. Cuauhtémoc Cardenas BACKGROUND  Degree in Civil Engineering from the UNAM OTHER POSITIONS  2000: Third time Cardenas ran for Mexico’s presidency  1997-1999: Cardenas became the first elected Mayor of Mexico City  1994: Second time Cardenas ran for Mexico’s presidency  1989: Cárdenas forms the PRD political party. In 1987 he attempted to form a leftist caucus within the PRI to oppose the emergence of the party’s technocrats and their efforts to open-up the economy and he failed to do so.  1988: First time Cárdenas ran for Mexico’s presidency.Profile:  1980-1986: Governor of the state of Michoacán  1976-1982: Senator for the state of MichoacánP= Politician SUPPORTERSPM: Energy Policy Maker  Moderate PRD P PM T PBT: Technical EnergyExpertPB: Pro-Business Reactive Active   Cardenas remains one of the most important figures of the  Power Mexican left, and still enjoys a great deal of popularity within Manage the PRD’s traditional base. In the energy context, due to his closely symbolic importance -- both as the son of the president who nationalized the energy industry and created PEMEX, and the moral leader of the left -- his support of any sort of energy -  reform could be crucial as it relates to the PRD. 116
  • 117. Marcelo Ebrard BACKGROUND  Degree in International Relations from El Colegio de México OTHER POSITIONS  2006-2012: Ebrard was elected of Mexico City Major  2000-2006: Ebrard served under AMLO’s Mexico City mayoral administration first as Secretary of Public Security and then as Secretary of Social Development  1997-2000: Ebrard successfully ran as an independent Lower House deputy  1995: Ebrard left the PRI with Manuel Camacho Solis to found the now-extinct Party of the Democratic Center (Partido del Centro Democratico – PCD)  1992: Mexico City’s general secretary of government under Manuel CamachoProfile: Solis’ mayoral termP= Politician SUPPORTERSPM: Energy Policy MakerT: Technical Energy P PM T PB  Segments of PRDExpert  Camacho SolisPB: Pro-Business   * Reactive Active  Local interest groups  Power Ebrard could become the new face of the PRD and is Manage closely likely to vie for Mexico’s presidency in 2012. He has distanced himself from AMLO and wants to be perceived as a suitable and more rational and progressive alternative than his predecessor. -  117 Level of Interest
  • 118. Beatriz Paredes BACKGROUND  Degree in Sociology from UNAM OTHER POSITIONS  2007: She was elected president of the PRI  2006: She unsuccessfully ran for Mexico City Mayor  2001 - 2002: Lower House deputy and Coordinator of the PRI legislators in the Lower House  1994 - 2000: She held a senate post  1993: She served as Undersecretary of the Interior  1987 - 1992: She was elected Governor of the State of TlaxcalaProfile:  1976: Paredes joined the PRIP= Politician SUPPORTERSPM: Energy Policy MakerT: Technical Energy P PM T PB  PRI basesExpert  PRI governors*PB: Pro-Business   Reactive Active  Heladio Ramirez Power Paredes has proved to be a good negotiator capable of reaching Manage agreements with her political opponents. She and Felipe Calderón closely have worked together in the past, when both served together as coordinators of their respective political factions in the Lower House. As President of the PRI, she will play an extremely relevant role in defining and projecting her party’s stance regarding energy. -  Level of Interest *With the exception of: Coahuila, Nuevo Leon, Quintana Roo, Sinaloa, 118 Sonora and Veracruz
  • 119. Manuel Bartlett BACKGROUND  Degree in Public Law from the University of Paris  PhD. in Political Sciences from UNAM OTHER POSITIONS  2000-2006: Held a senate position  1993- 1999: He was elected governor of the state of Puebla  1988-1992: Secretary of Education during Carlos Salinas de Gortari administration  1982 – 1988: Secretary of Interior during President Miguel de la MadridProfile: administrationP= Politician SUPPORTERSPM: Energy Policy MakerT: Technical Energy P PM T PB  Traditional PRIExpert  AMLOPB: Pro-Business  Reactive Active  Ricardo Monreal   Arturo Nuñez Power Manage closely Bartlett has been one of the most fervent opponents to opening up the energy sector, particularly regarding electricity. As a senator, he vehemently opposed any foreign participation in Mexico’s hydrocarbon resources. -  His statements continue to have a media impact, and as Level of Interest such he remains relevant. He is a highly seasoned and opportunistic politician. 119
  • 120. Elba Esther Gordillo BACKGROUND  Originally a teacher and social worker OTHER POSITIONS  2006: Gordillo was expelled from the PRI due to her involvement in the creation of Nueva Alianza, and for not acting in her party’s best interest  2002-2005: PRI Secretary General  2004: Gordillo becomes the national leader of the SNTE  1997-2002: PRI General Secretary of the Council on National Organizations  1989: Gordillo was elected General Secretary of the SNTE and became its national leader in March 2004  1986-1987: Secretary of the PRI National Executive Council  1960: Gordillo joins the PRI, also becoming a member of the National Education Workers’ Union (SNTE)Profile: SUPPORTERSP= Politician  CalderonPM: Energy Policy MakerT: Technical Energy P PM T PB  SNTEExpert Reactive Active  PANAL leadershipPB: Pro-Business  In 2006, La Maestra proved her political muscle by openly  sabotaging Roberto Madrazo’s presidential campaign using Power Manage her influence in the SNTE to backing Felipe Calderon. closely Despite the fact that her leadership has been eroded as a result of the internal conflicts with some factions of the union, she continues to enjoy wide support by the majority of the union, and will continue to play a very relevant role in -  Mexican politics and the negotiation of future reforms. 120 Level of Interest
  • 121. Manuel Espino BACKGROUND  Degree in Business Administration from Universidad del Noroeste de Sonora OTHER POSITIONS  2005-to date: President of the PAN  2002-2004: Secretary General of the National Executive Committee from PAN president in Sonora  1978: Joined the PAN SUPPORTERS  Vicente FoxProfile:  Santiago CreelP= Politician  Most conservative fractionsPM: Energy Policy MakerT: Technical Energy P PM T PB Reactive Active of the PANExpertPB: Pro-Business   In 2005 Manuel Espino became president of the PAN. At that time the party was defining who their presidential candidate was going to be and Espino openly supported Santiago Creel,  creating tensions with Felipe Calderon. Power Espino has openly criticized Calderon, stating he wants to Manage closely control the party. This has created factions within the PAN and recently has alienated Espino, who now appears to have lost all relevant support within the party as Calderon has consolidated his. -  121
  • 122. Governors 122
  • 123. Governors - New Generation of Key Players  Because of the economic impact that any hydrocarbons reform would have on individual states, we expect governors to play a more proactive role as discussions move forward. These are some of the most relevant states to keep in mind, either because of their economic relevance or because of their participation in terms of hydrocarbons production. Interestingly, but perhaps not surprisingly, they are all governed by PRI governors. Governor José Natividad González Parás, Nuevo Leon Governor Eugenio Hernandez, Tamaulipas Governor Fidel Herrera, Veracruz Governor Andrés Granier , TabascoNew Elected GovernorJose Guadalupe Osuna Millan Governor Jorge Carlos Hurtado, 123 Campeche
  • 124. José Guadalupe Osuna Millán – Elected Baja California Governor BACKGROUND  Economics degree from the Universidad Autónoma de Baja California  Masters Degree in Economic Sciences from the Instituto Politécnico Nacional OTHER POSITIONS  He joined the PAN in 1992  2007– 2013: Elected governor of Baja California  2003 – 2006: Federal deputy in the LIX Legislature  1998 – 2000: Director of Baja California Water Commission  1995 – 1998: Mayor of Tijuana Too early to say  1990 – 1995: Director of Tijuana’s Public Services State Commission (CESPT) SUPPORTERS Profile:  Eugenio Elorduy P= Politician  Manuel Espino Reactive Active PM: Energy Policy Maker T: Technical Energy P PM T PB Expert  PB: Pro-Business  Power Manage closely It is still too early to speculate what kind of governorship Osuna is interested in exercising. That said, addressing the state’s increasing violence and social unrest related to crime, drug trafficking, poor education levels and insufficient job creation is a -  MUST if the PAN wants to maintain control of the state. 124 Level of Interest
  • 125. Baja California – General Overview Population* 2,844,469 State Contribution to National GDP 3.35%  Trade, restaurants and hotels play a major role in the state’s economy contributing with 28% of the state’s GDP.  Manufacturing plays the leading role in Baja California’s economy, making up 22% of the state’s GDP.  Other major sectors are service industry, which State Main Activities accounts for 18% of the state’s GDP. Governor (2007 – 2013) José Guadalupe Osuna Millán (PAN – PANAL Partido Encuentro Social) Current State Congress Composition – OTHERS DIRECTLY ELECTED 2 (13%) 14 (88%) 0 (0%) 0 (0%) SEATS**Source: IPD Latin America based on INEGI, BANCOMEXT and Tamaulipas Government*Based on INEGI’s 2005 Census** On August 5, 2007 only 16 local congressmen were directly elected. At this time, there is no indication of exactly how the 125remaining 12 congressional seats assigned via proportional representation will be distributed among the political parties.
  • 126. Oil and Gas Production Contribution by State Oil Production Natural Gas Production Chiapas - 5.61%Tamaulipas, 1% Nuevo Leon - 7.43% Chiapas, 1% Veracruz - 16.00%Veracruz, 2% Tamaulipas - 18.00% Tabasco – 25.93% Campeche – 26.74% Tabasco 18% Campeche, 78% 126
  • 127. Nuevo Leon – General Overview Population 4,199,292 State Contribution to 7.33% National GDP (3rd place after D.F. and EDOMEX)  Manufacturing plays the leading role in Nuevo Leon’s economy, making up 25.5% of the state’s GDP.  The state is home of powerful conglomerates, including: Cemex, Bimbo, Maseca and Banorte  Other major sectors are service industry and trade (25.2%), restaurants and hotels (18.7%). State Main Activities Governor (2003 – 2009) José Natividad González Parás, Nuevo Leon (PRI/PVEM) Current State Congress OTHERS Composition 23 (55%) 11 (26%) 1 (2%) 7 (17%) State Contribution to Oil: 0% Gas: 7.4% Oil and Gas productionSource: IPD Latin America based on INEGI, BANCOMEXT and Nuevo Leon Government 127
  • 128. José Natividad González Parás - Nuevo Leon Governor BACKGROUND  Law degree from the Universidad Autónoma de Nuevo León  PhD in Political Sciences from the University of Paris, France OTHER POSITIONS  He joined the PRI in 1967  2003 - 2009: Governor of the state of Nuevo Leon  For some years he served as Undersecretary of political development at the Mexican Secretariat of the Interior during the Ernesto Zedillo administration (2000 – 1994)  1991 – 1985: Nuevo Leon secretary general Profile: SUPPORTERSP= PoliticianPM: Energy Policy Maker P PM T PB  Monterrey industrial baseT: Technical Energy  Eugenio Hernández (TamaulipasExpertPB: Pro-Business   Reactive Active Governor)  Senator Eloy Cantú  Power In terms of energy reforms, Mr. González Parás could be relevant Manage for gaining support within the PRI. Although he is not considered closely to be close to Beatriz Paredes (PRI president), he is a practical man that has been outspoken regarding the importance of undertaken crucial structural reforms, including: comprehensive fiscal reform, energy reform (ensuring access to competitive -  prices), and labor reform (greater flexibility in the hiring process). 128 Level of Interest
  • 129. Tamaulipas – General Overview Population 3,024,238 State Contribution to National GDP 3.3%  Trade, restaurants and hotels play a major role in the state’s economy contributing with 22% of the state’s GDP. Manufacturing contributes 21.3%; service industry , 17.6%; transportation, warehousing and communications, 14.6%.  The State also has petro-chemical industries and State Main Activities refinery facilities in Ciudad Madero. Governor (2005 – 2011) Eugenio Hernandez Flores (PRI) Current State Congress OTHERS Composition 19 (59%) 9 (28%) 2 (6%) 2 (6%) State Contribution to Oil: 0.57% Gas: 18% Oil and Gas productionSource: IPD Latin America based on INEGI, BANCOMEXT and Tamaulipas Government 129
  • 130. Eugenio Hernandez - Tamaulipas Governor BACKGROUND  Degree in Civil Engineer from Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) OTHER POSITIONS  2005 - 2011: Governor of the state of Tamaulipas  2000 – 2003: Federal Deputy  He served as President of the Mexican Chamber of the Construction Industry (CMIC: Cámara Mexicana de la Industria de la Construcción) and is an active member of COPARMEX. Profile: SUPPORTERSP= PoliticianPM: Energy Policy Maker P PM T PBT: Technical Energy  Natividad Gonzalez Paras (Nuevo LeonExpertPB: Pro-Business   Reactive governor) Active  Some groups within PEMEX union  Mr. Hernandez is a progressive politician with experience in the Power business world. Back in 2000, he served as campaign manager for Manage Francisco Labastida’s presidential campaign in the State of closely Tamaulipas. Hernandez could be relevant for gaining support for energy reforms within the PRI. As nephew of La Quina, he maintains good relations with a portion of the unions. However, being pro- -  business, he could serve as an important bridge in any PEMEX reform discussions. 130 Level of Interest
  • 131. Veracruz – General Overview Population 7,110,214 State Contribution to National GDP 4.14%  The service industry plays an important role in Veracruz, contributing 19.9% of the state’s GDP, followed by trade, restaurants and hotels (15.9%), and financial services, insurance and rental activities (15.7%).  In the manufacturing industry, food products, beverages, tobacco, chemicals and basic metal State Main Activities substances are the main products. Governor (2004 – 2010) Fidel Herrera Beltrán (PRI) Current State Congress OTHERS Composition 21 (42%) 21 (42%) 6 (12%) 2 (4%) State Contribution to Oil: 1.98% Gas: 16% Oil and Gas productionSource: IPD Latin America based on INEGI, BANCOMEXT and Veracruz Government 131
  • 132. Fidel Herrera Beltrán - Veracruz Governor BACKGROUND  Law degree from the UNAM (Universidad Nacional Autónoma de México) OTHER POSITIONS  2004 - 2010: Governor of the state of Veracruz  2003 -2004: Senator in the LIX legislature  1997 – 2000: Lower House deputy  Fidel Herrera was also PRI representative before the IFE Profile: SUPPORTERSP= PoliticianPM: Energy Policy Maker P PM T PBT: Technical Energy  Miguel Alamán VelazcoExpertPB: Pro-Business   Reactive Active  Traditional priistas  Power Mr. Herrera will play an important role in terms of reforms, simply Manage because he governs the third most populated state of the country. closely Although he is an old school priista, he will not necessarily follow his party line, he is an opportunist. During his administration, he has been severely criticized for excessive spending on promoting his image and having a personal agenda. -  132 Level of Interest
  • 133. Tabasco – General Overview Population 1,989,969 State Contribution to 1.15% National GDP  Tabasco is the most important state in terms of oil and gas production.  The service industry accounts for 25.9% of the state’s GDP while mining represents 17.4%; trade, restaurants and hotels, 15.2%; financial services, insurance, real estate and rental activities, 14.8%. State Main Activities Governor (2007 - 2012) Andrés Granier Melo (PRI) Current State Congress OTHERS Composition 14 (40%) 14 (40%) 3 (9%) 4 (11%) State Contribution to Oil: 18.36% Gas: 25.93% Oil and Gas productionSource: IPD Latin America based on INEGI, BANCOMEXT and Tabasco Government 133
  • 134. Andrés Granier Melo - Tabasco Governor BACKGROUND  Masters in State and Municipal Public Administration from Universidad Nacional Autónoma de México (UNAM) OTHER POSITIONS  2000 to 2003 He served as Mayor of Centro, a municipality in Tabasco  1995 – 1997: Director of Social Development of the Centro a municipality in Tabasco that has its municipal seat in Villahermosa, the capital city of the state  In 1982 he worked in the Tabasco General Attorney’s Office on health related issues. Profile: SUPPORTERSP= PoliticianPM: Energy Policy Maker P PM T PBT: Technical Energy  Roberto MadrazoExpertPB: Pro-Business   Reactive Active  Power Manage Because of the importance the state plays in terms of closely hydrocarbons, we believe Mr. Granier could play an important role in future energy negotiations. -  134 Level of Interest
  • 135. Campeche – General Overview Population 754,730 State Contribution to 1.19% National GDP  Extraction is the major industry in Campeche, representing 55.4% of the entity’s GDP.  The service industry as a whole accounts for 17.4% of the state’s GDP; trade, restaurants and hotels account for 9.7%. Regarding industry, there are important sugar, wheat flour and cookie producing companies as well as soft State Main Activities drink bottling enterprises. Governor (2003 - 2009) Jorge Carlos Hurtado Valdez (PRI) Current State Congress OTHERS Composition 16 (46%) 13 (37%) 3 (9%) 3 (9%) State Contribution to Oil: 77.91% Gas: 26.74% Oil and Gas productionSource: IPD Latin America based on INEGI, BANCOMEXT and Campeche Government 135
  • 136. Jorge Carlos Hurtado Valdez - Campeche Governor BACKGROUND  Degree in Public Accounting from Universidad Autónoma del Sudeste  Degree in Political Sciences and Public Administration from Universidad Autónoma del Sudeste OTHER POSITIONS  2003 – 2009: Governor of Campeche  2000 – 2002: Mayor of Campeche  1997 – 2000: Secretary of Public Works and Communication for the state of Campeche Profile: SUPPORTERSP= PoliticianPM: Energy Policy Maker P PM T PBT: Technical Energy  Alfredo del MazoExpertPB: Pro-Business   Reactive Active  Arturo Montiel  Enrique Peña Nieto  Power Hurtado is a progressive politician. As governor of Tabasco he Manage faces the challenge of increase funds and infrastructure closely development for his state. We believe that he could support an energy reform if it could translate in more resources for his state. -  136 Level of Interest
  • 137. Other Relevant Players 137
  • 138. Universities The most relevant universities that to some extent influence the energy debate are: The COLMEX is considered one of Mexico’s best institutions. Increasingly, it is participating in energy related seminars and conferences, raising relevant issues for debate. Among the professors interested in the subject, we find: • Isabelle Rousseau • Alejandro Castañeda The UNAM produces the highest amount of research in the country and as the national university, it is relevant in terms of public opinion. It receives major funding from Carlos Slim. UNAM The UNAM comprises a group of analysts that oppose energy reform and advise the PRD in matters of energy, including: • Victor Rodríguez Padilla • Fabio Barbosa Cano • Rocio Vargas The ITAM is considered to be one of the best universities in economic related topics. Several members of the current cabinet are ITAM alumni, including: • President, Felipe Calderon • Secretary of Finance, Agustin Carstens • Secretary of Energy, Georgina Kessel • PEMEX General Director, Jesús Reyes Heróles 138
  • 139. Industrial Chambers In our view, industrial chambers and organizations could play an increasingly relevant role in energy reform discussions. Since Mexico’s balance of power shifted from a powerful presidential figure to a more “balanced” system in which negotiations are essential, having a more proactive business community that is vocal on issues that matter is extremely beneficial and is an important component of a mature democracy. Because of their influence, two of the most relevant chambers are: CONCAMIN is the Mexican Confederation of Industrial Chambers. COPARMEX is the Mexican Employers Association. Both chambers host Mexicos most influential business men and they have been strongly linked to the PAN, with many of the party’s leaders coming from these organizations.Factions of both COPARMEX and CONCAMIN have been pushing in favor of energy reform, arguing that the lack of competition in the sector negatively affects thecompetitiveness of Mexico’s industry as a whole. However, there remains a lack of broad consensus in favor of energy reform within both of these chambers. 139
  • 140. Oil and Gas Service Companies During the first four months of 2007 PEMEX tendered 127 contracts related with services to the industry, governed under the Public Works law. This contracts represent investments of MX$ 46,765 million pesos. Unlike almost every other country involved in hydrocarbons development that has a large domestic market, foreign companies dominate most of the Mexican Oil and Gas service industry.Main Service Companies Operating with PEMEX: Dowell - Schlumberger (50% Schlumberger, 50% Dow Chemical) : A subsidiary of Schlumberger, Dowell Schlumberger is an oilfield services company with substantial experience in-country that supplies technology, project management and information to the oil and gas industry. (Schlumberger operates in 80 countries worldwide. In 2006 the company reported USD$19.23 billion in operating revenue). Halliburton de México: A subsidiary of Halliburton, one of the worlds largest providers of products and services to the petroleum and energy industries. The company specializes in works related with exploration, drilling and development, fluid systems and production optimization. (Halliburton operates in 70 countries worldwide. In 2006 the company reported USD$12.9 billion in revenue). Weatherford International: One of the world’s largest diversified upstream oilfield service companies. In 2006, the company reported USD $6.1 billion in revenue. Weatherford International has approximately 30,100 employees working in over 100 countries. 140
  • 141. Oil and Gas Service Companies Baker Hughes: The company provides oil and natural gas industry products and services for drilling, formation evaluation, completion and production. (Baker Hughes operates in over 90 countries worldwide. In 2006 the company reported USD$ 1.36 billion in operating profit). COMESA (Compañía Mexicana de Exploraciones, S.A. de C.V.): The Company was established in 1968 as a combination of government and private investment (PEMEX 60% and Schlumberger (defined as the technology partner) 40%). The goal was to assist PEMEX in their exploration efforts. COMESA is a significant player in the provision of 2D, 3D, 4D seismic studies for PEMEX. The company enjoys preferential treatment in garnering these works for PEMEX. In addition to COMESA’s executives, its board includes Mexico’s Secretary of Energy, Secretary of Finance and Secretary of Public Function. D&S Petroleum: A subsidiary of Grupo Diavaz, a local Mexican company with more than 30 years of experience providing technical and engineering services. D&S Petroleum in a consortium with Petrobras (Brazil) and Teikoku (Japan) called PTD Servicios Multiples was awarded and operates two MSCs in the Burgos Basin: Cuervito and Fronterizo. 141
  • 142. Oil and Gas Service Companies Swecomex: A subsidiary of Grupo Carso’s Infrastructure and Construction Division, Swecomex serves the oil, chemical and petrochemical sectors.Industrial Perforadora de Campeche (IPC): A Mexican owned company and a subsidiary ofGrupo R, IPC is dedicated to developing gas production and transport projects. IPC, through aconsortium with Tecpetrol and Techint, was awarded the MSC Monclova block in Burgos. IPCalso won the Pandura – Anahuac Block in Burgos through a consortium with Compañía deDesarrollo Petrolero. The interest of domestic service companies in Mexico is to increase or at least maintain their current power position in the industry. As such, if reforms are not accompanied by clauses that involve higher national content and incentives to develop a national service industry, they could oppose reform. 142
  • 143. Oil and Gas Service Companies Public Works Contracts Awarded by PEP June 12, 2003 – March 31, 2007 AMOUNT COMPANY # CONTRACTS (US$ Million) Dowell Schlumberger 56 2,650.86 Halliburton de México 62 1,932.40 Industrial Perforadora de Campeche 2 964.10 Swecomex 9 873.91 Constructora Subacuatica Diavaz 11 562.42 Baker Hughes de México 16 255.71 Weatherford de México 8 74.56 COMESA 55.70 3Source: IPD Latin America based on PEMEX. 143Note: The totals were calculated using an average exchange rate of 11.0049 based on Banco de México data.
  • 144. Influential Business Leaders 144
  • 145. Influential Business Leaders Carlos Slim Helú Carlos Slim is the richest man in the world according to Forbes. He runs Mexicos largest cellular phone company, América Movil and has the virtual monopoly on landlines through Telmex. He is also owner of Grupo Carso, one of the most important business conglomerates in Latin America, which includes the following companies:  Industrial Branch:  Commercial Branch: • Condumex • Grupo Sanborns • Porcelanite • Mixup • Cigatam • Sears  Infrastructure and Construction (CICSA): • Swecomex • Grupo PC Constructores • Cilsa • Precitubo Slim has shown growing interest in Mexico’s energy sector and particularly in PEMEX. Since 2003 Swecomex, one of its companies, has been involved in theinstallation of deep sea platforms in the Campeche Sound and has built 10 out of the 45 platforms acquired by PEMEX over the last 3 years. Slim has also been actively lobbying government and PEMEX officials and has stated that the needs of PEMEX can be addressed without opening the sector to foreign participation. 145
  • 146. Influential Business Leaders Monterrey Businessman Leaders  Monterrey is home of important business conglomerates such as: CEMEX (Cement), FEMSA (Coca-Cola Latin America), Alfa (petrochemicals, food, telecommunications and auto parts), Axtel (telecommunications), Vitro (glass), Gruma (food), and Banorte (financial services) among others.  Some of the most important and influential businessmen and families in the country either reside or were born in the state, including: • Garza Sada, (Grupo FEMSA, Vitro and Grupo Alfa) • Zambrano (CEMEX) • Muguerza (Grupo Muguerza – related with Healthcare)The Monterrey industrial base has been extremely outspoken about the necessity ofhaving lower energy prices in the country. This does not necessarily mean that theywill support energy reform, because their main interest is lower prices notcompetitiveness of the sector. During President Fox’s tenure, this became evidentlyclear, as the federal government bowed to Monterrey pressure regarding natural gasprices and provided healthy subsidies. Given the Monterrey Industrial base’s closeaffinity with the PAN, Calderon will have his work cut out to eliminate subsidies as hehas discussed while still preserving this source of support.We do not see the most important families entice by new business opportunities inthe oil and gas sector with any opening. Supporters are likely slightly smallerbusinesses/ families. 146
  • 147. Francisco Salazar Diez de Sollano - CRE President BACKGROUND  BSc in Chemical Engineering from the Universidad Autónoma de San Luis Potosi  MSc in Public Financial Policy from the London School of Economics and Political Science OTHER POSITIONS  2003 – 2005: Chairman of the Energy Commission in the Lower House.  1997 – 2000: Federal Deputy  Businessman in the LPQ Group, a partnership company oriented to the import and distribution of chemical products. Profile:P= PoliticianPM: Energy Policy Maker P PM T PBT: Technical Energy Reactive ActiveExpertPB: Pro-Business     As president of the Energy Commission of the Lower Power House, Mr. Salazar flourished with a dynamic personality Manage and strong political skills that earned him the respect of closely many. He successfully negotiated - gaining multi-party support - for important initiatives, such as the 2006 PEMEX Fiscal Regime. Will remain a key political actor -  with a strong interest in energy. 147 Level of Interest
  • 148. Influential Business LeadersAdrian Lajous Adrián Lajous is an economist from UNAM and Cambridge University. He is a former PEMEX General Director (1994 – 1999), having joined the state company in 1983. He held a series of key executive positions, including:  Executive Coordinator for International Trade  Corporate Director of Planning  Corporate Director for Operations  Director for Refining and Marketing.Lajous is now chairman of the Oxford Institute for Energy Studies, president of Petrométrica,SC and a non-executive director of Schlumberger, Ternium and Trinity Industries. He is a seniorenergy advisor to McKinsey & Company.In 2003–2004, he was a senior fellow at the Harvard University Kennedy School of Governmentand a visiting fellow at the University of Notre Dame Kellogg Institute during the first quarter of2005.Viewed as a respected and experienced professional in Mexicos hydrocarbonsindustry, Lajous has re-emerged over the past couple of years to play a relevant rolein the sector. He is not in favor of reforms in the sector and uses every opportunityhe has to state that PEMEX would not be facing the problems it is currentlyexperiencing if the company would simply have access to a greater portion of theeconomic profits it generates. 148
  • 149. Potential Strategies to Pursue3:45 pm – 5:00 pm 149
  • 150. Opportunities that May Emerge fromEnergy Reform 150
  • 151. Defining Energy Reform - What are the Alternatives?Constitutional Reform Secondary Laws Reform Path Path  Full downstream opening (NG & petrochemicals)  Adjustment to Redefine “strategic”  Strengthening CRE remuneration and/or & “priority” performance clauses  Implementation of FHS activities of the  Increased competition in state (Art. 28) gas supply  Adjustments to Public Overhaul Articles 27 Works and Acquisition  Spurs investments in & 28 of the Laws petrochemical and Constitution refining sectors Is this enough? NO. These are meaningful NO. Highly likely to be changes with economic contested in Supreme YES impact but they are not Court. Will stretch legal comprehensive. framework and spirit of Buys government time. Constitutional Art. 27 & 28 What do you get?Broad-based upstream Broad-based downstream “Super” Service Contracts.investment and investment & competition (You do not get JV’s or riskcompetition capital; interests remain 151 misaligned)
  • 152. Opportunities – Path of Least Resistance • Implement FHS No Constitutional • Modify natural gas pricing policy (Hacienda) or legal changes • Increase Pemex/ CFE budget for natural gas projects (no congressional involvement required) • Modify the Foreign Investment Law • Changes to Regulatory Law of Article 27 • Reform to the contracting laws* • Fiscal and tax reform Changes to Secondary • Strenghten the regulator Laws (simple majority in Congress required) Reform of Constitutional Articles 27 & 28 Opportunities from making Constitutional Reform changes to the natural gas (super majority in Congress plus business model: Pipelines half of the local legislatures) LDCs LNG Third-party marketing Power plants Refining* Service and Acquisitions Law and Public Works Law Petrochemicals 152
  • 153. Future projects and priorities for CFE & PEMEX 153
  • 154. New projects and priorities - CFE Objective: Ensure the continuous supply of electricity at the cheapest cost possible. Under this premise, CFE has expanded its mandate, and has gained more ground regarding the contractual conditions for the fuels the state-owned utility uses to generate electricity. Diversification of the fuel mix is a CFE priority but it has limited options 2005 2016 Nuclear Nuclear Geothermal 2% Geothermal Undesignated 3% 2% 2% 9% Hydro Hydro Natural Gas 21% 23% 34% DieselDiesel 3% 0% Natural Gas Wind Fuel Oil 44% 1% 11% Fuel Oil Coal 28% 10% CoalWind 9% 0%Source: CFE; POISE 2007-2016 154
  • 155. Renewable Energy Over the next decade, CFE expects to add over 539 MW in wind power. At present, CFE is bidding the 101 MW La Venta III wind power under its IPP scheme. But there are certain interesting features worth noting:  Access to the grid: 100% CFE guarantee, based on the lowest short-term marginal cost (based on its fuel supply and associated infrastructure)  Payment: Payment will be based on the actual electricity delivered to the grid, instead of the installed capacity as happens in typical IPPs.  International Support: Environmentally-friendly projects have found momentum in the international arena, securing attractive financing from developers and operators  La Venta III will receive a GEF subsidy for the first 5 years of the project.  Innovative legislation: CFE has created pioneering features to guarantee land and air Rights of Way (ROWs). Results of La Venta III are likely to influence how CFE will carry out future wind projects. Solar power has thus far only been a component add-on to larger projects (Agua Prieta II). 155
  • 156. New projects and priorities - CFE …..However, for planning purposes, CFE will continue to rely heavily on fossil fuel projects.  BIG WINNER: Natural Gas In order to secure more competitive bids, CFE has become the fuel supplier to IPPs.  This has eliminated mismatches between the PPA and fuel supply contract. CFE Fossil Energy Requirements (by fuel) 7,000 6,000 Coal 5,000 TeraJoules / Day 4,000 Diesel 3,000 Natural 2,000 Gas 1,000 Fuel Oil - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Source: CFE; POISE 2007-2016 156
  • 157. New projects and priorities - CFE LNG Power Plants Natural Gas - PipelinesTransmission Lines Substations Coal imports 157
  • 158. New projects and priorities - CFE Generation Project Location Fuel Scheme Capacity Start-up (MW) Topolobampo I-II-III * Sinaloa, Pacific Coast Coal OPF 2,100 2014 – 2016 Conversions from fuel oil Central Mexico Natural gas OPF 2,248 2009 – 2013 to natural gas La Parota Guerrero, Pacific Coast Hydro OPF 900 2015 La Yesca Nayarit, Pacific Coast Hydro OPF 750 2012 Guadalajara I – II Jalisco, Western Mexico Natural gas IPP 1,290 2013 – 2014 Oaxaca I-II-III-IV Oaxaca, Southern Mexico Wind IPP – OPF 404 2010 Manzanillo I upgrade Manzanillo, Pacific Coast Natural gas OPF 916 2011-2012 Manzanillo II upgrade Manzanillo, Pacific Coast Natural gas OPF 816 2013-2014 Norte II Chihuahua, Northern Mexico Natural gas IPP 652 2011Source: CFE; POISE 2007-2016 and National Infrastructure Plan 2007-2012 158
  • 159. New projects and priorities - CFE Generation Project Location Fuel Scheme Capacity Start-up (MW) Cogeneration plant in Steam / the Nuevo Pemex Gas Tabasco, Southern Mexico OPF (?) 300 2010 Residual fuel Processing Center Rio Moctezuma Central Mexico Hydro OPF 139 2013 Baja California Baja California, Northern Natural gas IPP (?) 259 2009 (Presidente Juarez) Mexico San Lorenzo conversion Puebla, Central Mexico Natural gas OPF 139 2009 Baja California, Northern Cerro Prieto V Geothermal OPF 107 2010 Mexico Baja California, Northern Presidente Juarez Natural gas OPF 93 2010 Mexico Humeros Puebla, Central Mexico Geothermal OPF 51 2010 – 2011Source: CFE; POISE 2007-2016 and National Infrastructure Plan 2007-2012 159
  • 160. New projects and priorities - CFE Natural Gas Capacity Type Project Location Start-up (MMCFD) Natural Gas Supply for CFE‟s Manzanillo power plants Manzanillo, Up to 500 as well as new IPPs in Guadalajara and July 2011 Pacific Coast MMCFD (LNG) Central Mexico. Natural Gas Supply for CFE‟s power plants in Up to 750 Northern Mexico Undefined* Chihuahua, Durango and Torreon MMCFD (LNG or pipeline) Transportation Manzanillo – Guadalajara pipeline Western Mexico 500 MMCFD 2011-2012 Transportation Tamazunchale – Palmillas pipeline Central Mexico 480 MMCFD 2012 Samalayuca-Chihuahua & Chihuahua- Transportation Northern Mexico 480 MMCFD Undefined* Torreon pipelines Storage LNG Terminal and associated Sinaloa, Pacific Up to 750 Undefined* infrastructure in Topolobampo Coast MMCFD (LNG) Storage Tidelands, through a Mexican subsidiary, Tamaulipas, has approached CFE to make use of a 55 BCF Undefined* Northern Mexico (depleted well) depleted well in Northern MexicoSource: CFE; POISE 2007-2016 and National Infrastructure Plan 2007-2012 160
  • 161. New projects and priorities - PEMEXExploration & Production Manage the decline of the massive Cantarell field  Implementation of horizontal wells  Increase use of N2 to maintain pressure  Major workovers to be performed  Shutdown of selected wells Increase production from Ku-Maloob-Zaap (KMZ) and Crudo Ligero Marino (CLM)  Maximize use of the FPSO in KMZ  Add 15 platforms in KMZ (10 exploitation wells)  CLM will add new reserves of lighter oils, as well as enhancing the quality of the Mexican crude oil basket  CLM is estimated to provide up to 700 MMCFD by 2009-2010 Increase gas production from Burgos and Veracruz  Maintain production from Burgos (PEP operations and MSCs)  Add new reserves and production coming from the non-associated gas fields in Veracruz  Development of Chicontepec reserves 161
  • 162. New projects and priorities - PEMEX Natural Gas Objectives: 1. Retain monopolistic position in the natural gas industry, via its control of the National Pipeline System (NPS) and the cross-border interconnection points. 2. Increase the availability of dry gas in the NPS. As a result, PGPB is focused on increasing its capacity in all of its gas processing centers. Processing Capacity Expected Processing Capacity -in MMCFD Variation 2006 2012Sweeting capacity 4,547 5,502 21% Liquids recovery 5,598 6,885 23% Liquids fractioning 486 549 13% (thousands b/d)Sulfur recovery (tons) 3,368 3,839 14% The majority of PGPB investment will be focused on adding new cryogenic units in its gas processing centers. 162
  • 163. New projects and priorities - PEMEXNatural Gas For 2007, PGPB received MXP$ 7,714 million, none of which will be invested in new projects and only 4.2% to be invested in existing project completions or expansions. As owner of the NPS, and due to weak regulation, PGPB seeks to strengthen its dominant position in natural gas marketing and transportation. PGPB investment in pipelines will continue to be made through additional compression. National Pipeline System Capacity Macarela 7,000 Omealca, El Dorado El Sueco II Chavez- Chavez-Chihuahua 6,500 Durango Santa Catarina II Santa Ana 6,000 MMCFD 5,500 Emiliano Zapata 5,000 4,500 4,000 2006 2007 2008 2009 2010 2011 2012 163
  • 164. New projects and priorities - PEMEXNatural GasGiven the growing demand in certain regions, PGPB feels it important toadd the following transportation projects: 1. Durango – Topolobampo 2. Torreon – Topolobampo 3. Torreon – San Luis Potosi 4. Zacatecas – Durango 5. Juarez – Torreon 6. Manzanillo – Guadalajara (CFE-sponsored project) 7. Tamazunchale – Palmillas (CFE-sponsored project) 8. Piedras Negras – Reynosa (interconnection)No indication of the scheme that is being contemplated to implement theseprojects at this time.Given the historically insufficient resources that have been available to it,PGPB has entered into joint venture with private companies (i.e. Gasoductosde Tamaulipas & Gasoductos de Chihuahua with El Paso) 164
  • 165. Natural Gas – Natural Gas Infrastructure 1. Durango – Topolobampo MEXICALI 2. Torreon – Topolobampo IMPORTS IMPORTS 3. Torreon – San Luis Potosi 4. Zacatecas – Durango . CD JUAREZ 5. Juarez – Torreon Nogales Naco 6. Manzanillo – Guadalajara (CFE-sponsored project) Santa Cananea Ana 7. Tamazunchale – Palmillas (CFE-sponsored project) IMPORTS 8. Piedras Negras – Reynosa (interconnection) CUAUHTEMOC CHIHUAHUA HERMOSILLO ANAHUACEnergia Delicias PIEDRAS 8 5 GUAYMAS NEGRAS EMPALME Costa Pto. Libertad Cd. Camargo NUEVO Azul Jiménezc Química del Rey LAREDO Pandura IMPORTS 2 Escalón Castaños Miguel Alemán Gómez P. REYNOSA MATAMOROS RAMOS RIO Cd . Lerdo Parras MONTERREY Topolobampo Torreón ARIZPE Cadereyta Sn. BRAVO SALTILLO ARTEAGA Fernando 1 Durango. 3 ALTAMIRA Altamira 4 C.F.E. ColinasGeographic Zones Sn. TAMPICO Campo Tam . Luis Potosí CD. MADEROPEMEX National Pipeline SystemOpen Access Private Pipelines AGUASCALIENTES 7 Valladolid CAN CUN PozaPotential Pipelines (private) Guadalajara LEON SILAO Tlalchinol Rica MERIDA IRAPUATO C.F.E. El Verde Tula SALAMANCA Sta .Potential Storage CELAYA Ana PACHUCA 6 TOLUCA DF TLAX. PUEBLA Atasta LNG In Operation Manzanillo Nvo . Teapa Cactus y LNG Under Construction L. Cárdenas Nuevo Pemex LNG Proposed Site 165
  • 166. Other Opportunities 166
  • 167. Other areas of opportunity - LNGDue to the lack of certainty about domestic supply, as well as itsenvironmental benefits, LNG is becoming the Mexican fuel of choice.There are, however, some issues that still need to be resolved: State-owned utilities continue to be the main anchor client to secure supply. Until some of Mexico‟s contracting laws are changed, rigidity in the commercial relationships required with state-owned utilities will continue to be present. Due to PGPB‟s monopolistic position, there is limited ability to sell excess gas.  PGPB can accept /reject excess gas at its own discretion and on its terms. As a consequence, the Mexican off-take market is substantially less attractive to potential suppliers, particularly given offtake dynamics being seen in Asia. Asia is willing to pay a premium for LNG. Mexican non-government natural gas users are likely to continue seeking some form of government intervention to influence price and commercial conditions as long as energy monopolies are retained. 167
  • 168. Other areas of opportunity - LNG MEXICALI IMPORTS IMPORTS . CD JUAREZ Nogales Naco Santa Cananea Ana In the worst case scenario, IMPORTS PEMEX fails to add natural gas HERMOSILLO CUAUHTEMOC ANAHUAC CHIHUAHUA reserves and production in the Energia GUAYMAS EMPALME Delicias PIEDRAS NEGRAS near future, forcing the country Costa Cd. to become a major LNG Camargo NUEVO Azul Jiménezc Química del Rey LAREDO importer (1.8 BCFD by 2015) Pandura IMPORTS Escalón Miguel Alemán Castaños Gómez P. REYNOSA MATAMOROS RAMOS RIO Cd . Lerdo Parras ARIZPE MONTERREY Cadereyta BRAVO Torreón Sn. SALTILLO ARTEAGA Fernando Durango. Geographic Zones PEMEX National Pipeline System Open Access Private Pipelines Sn. ALTAMIRA C.F.E. Colinas TAMPICO Altamira Campo Tam . Luis Potosí CD. MADERO LNG In Operation AGUASCALIENTES Valladolid CAN CUN Guadalajara Tlalchinol Poza MERIDA LEON SILAO Rica LNG Under Construction C.F.E. El Verde IRAPUATO Tula SALAMANCA CELAYA Sta . Ana Dos Bocas PACHUCA TLAX. TOLUCA DF LNG Proposed Site – PEMEX sponsored project PUEBLA Atasta Manzanillo Nvo . Teapa Cactus y L. Cárdenas Nuevo PemexLocation of PEMEX-driven LNG terminals would be dictatedby its infrastructure in place and internal gas demands Salina Cruz 168 168
  • 169. Other areas of opportunity - LNGThe story definitely changes if PEMEX successfully taps its known reserves andefficiently ramps up domestic natural gas production. PEMEX does it alone – NO JVs PEMEX does it with partners – JVs  Pipeline imports would be reduced  Pipeline imports would be eliminated.  Production could allow Mexico to be a  Extra production and investment would net exporter (via pipeline) allow Mexico to become a net exporter (via pipeline or LNG)  New pipeline projects arise.  New pipeline projects arise, both for the  Current LNG deals are likely to be Mexican market as well as cross-border. honored, due to:  Current LNG deals could potentially be  Expensive termination costs broken/modified:  Reputation  Strategic regional position  Trade-off with JV‟s to compensate termination costs.  Opportunity cost covered  Regional leadership 169
  • 170. Other areas of opportunityLDCs Future LDC‟s: CRE expects to bid out the following LDCs by 2008-2009 if there is enough interest:  Veracruz (2nd bid)  Pachuca (Central Mexico)  Cuernavaca (Central Mexico)  Merida (Yucatan Peninsula)Others: Underground storage (depleted wells or salt domes): Due to price and supply volatility, a supplier could offer better terms to natural gas consumers (CFE, industrials, PEMEX, etc). Hedging services to CFE / IPPs Environmental: Given that Mexico is designated as a Kyoto Protocol Tier 2 country, there are numerous projects emerging that represent real opportunities. 170
  • 171. Natural Gas –New Projects Contemplated ENSENADA JUAREZ Chihuahua HERMOSILLO CHIHUAHUA(3) PIEDRAS GUAYMAS CUAUHTEMOC NEGRAS EMPALME DELICIAS NUEVO LAREDO GOMEZ PALACIO REYNOSA Altamira TORREON RAMOS MONTERREY ARIZPE RIO LERDO SALTILLO ARTEAGA DURANGO ZACATECAS (2) Tamazunchale TAMPICO SN. LUIS POTOSI Merida CD. MADERO Open Access Transport: AGUASCALIENTES Las Palmillas (1) Manzanillo QUERETARO LEON SILAO IRAPUATO (2) Tamazunchale GUADALAJARA SALAMANCA CELAYA SN. JUAN VERACRUZ (1) DEL RIO PACHUCA TOLUCA PACHUCA TLAXCALA (3) Chihuahua DF PUEBLA MORELIA CUERNAVACA New Distribution Zones Manzanillo CUERNAVACA LNG Terminals 171Source: CRE
  • 172. Support Slides1. Section 12. Section 23. Section 3 172
  • 173. Section 1 173
  • 174. Secretary of Finance - SHCP The Secretary of Finance plays an important role in the energy sector and participates in the following activities: 1. With SENER’s input, SHCP has the final say over the annual budgetary process for PEMEX, CFE and LFC. 2. SHCP sits on the administrative boards of the state owned utilities. 3. SHCP oversees the implementation of all projects and activities approved by Lower House. 4. SHCP monitors and evaluates the economic results of the sector via public accounting reports called the “Informes de la Cuenta Publica”.SHCP is also responsible for (de facto responsibilities): 1. Creating general guidelines for the operation of PEMEX, CFE and LFC and supervising compliance with these guidelines. 2. Creating the debt policy of the sector and authorizing any foreign financing. 3. Authorizing all the operations that require the use of public credit. 4. Establishing and reviewing tariffs (diesel, gasoline and residential electricity). 174
  • 175. Secretary of Finance - SHCPRESOURCES  In 2007, SHCP had 6,226 employees  In 2007, SHCP was authorized federal resources of MX$ 3,822,268,035  Budget Resources/Employee: MX$ 613,920 PERCEIVED GOALS  Maintain its control of the sector’s purse strings and its sphere of influence  Maintain overall economic stability and macroeconomic indicators  Increase tax collection  Promote an integral fiscal reform 175
  • 176. Secretary of Energy - SENER BACKGROUND  The Secretary of Energy is in charge of leading the national energy policy, as well and the activities undertaken by PEMEX, CFE and LFC.OBJECTIVES Ensure consistency of the national energy policy Undertake medium & long term planning efforts in order to guide the development of the sector Supervise the activities of PEMEX, CFE and LFC Ensure energy supply and optimization use of country’s hydrocarbon reserves Promote a regulatory and legal framework that provides certainty to public & private investment RESOURCES In 2007, SENER had 858 employees In 2007, SENER was authorized federal resources of MX$ 520.78 million Budget Resources/Employee : MX$ 606,969 PERCEIVED GOALS  Sustain a healthy and viable energy sector  Given current dynamics, promote a sector restructuring (includes tax reform)  Increase efficiency of the energy sector via public or private sector investment  Obtain greater oversight of PEMEX  Promote energy diversification 176
  • 177. PEMEX PEP (Pemex PGPB (Pemex Exploration and Gas and Basic PR (Pemex PPQ (Pemex Production) Petrochemicals) Refining) Petrochemicals) Exclusively responsible 1) Exclusively responsible 1) Exclusively 1) Manufactures and for all exploration and for processing all domestic responsible for converting markets secondary production of Mexico‟s natural gas and liquids oil into gasoline, jet fuel, petrochemicals hydrocarbons 2) Transports, distributes diesel, fuel oil and LPG (private sector able and markets basic 2) Distributes and to fully participate in petrochemicals* markets these products this sector) RESOURCES PERCEIVED GOALS  As of Dec 31, 2006 PEMEX had  Retain monopoly approximately 148,200 employees (80%  Retain greater portion of its earnings (larger are unionized CAPEX or decreased tax burden)  In 2007, PEMEX was authorized federal  Management and operational autonomy resources of MX$ 182,298 million  Liberalize contracting laws (public works law,  Budget Resources/Employee : acquisitions law) MX$ 1,230,083  Gain technology, know-how and risk capital to access increasingly complicated production 177* Methane, ethane, propane, butane, condensates and other natural gas liquids
  • 178. IMP – Mexican Petroleum Institute BACKGROUND  The IMP was created in 1965 to be Mexico’s hydrocarbon R&D arm. However, due to insufficient funding it has functioned more as an academic and privileged early retirement destination for senior technical PEMEX staff. Today, the IMP serves more as a human resources group than an R&D one.OBJECTIVE Hydrocarbon research, technology development and technical assistance including personnel deployment to PEMEX RESOURCES In 2006 the IMP had 6,700 employees In 2007, the IMP was authorized federal resources of MX$ 358,900,000 Budget Resources/Employee: MX$ 53,567 PERCEIVED GOALS  Develop a comprehensive deepwater program  Strengthen role (increased funding and say over PEMEX R&D decisions)  Be or play a prominent role with respect to the creation of a hydrocarbons regulator 178
  • 179. CRE - Energy Regulatory Commission BACKGROUND  Created in 1995 as a result of the natural gas reforms enacted that same year. The CRE is a decentralized administrative agency of the Energy Ministry, withOBJECTIVE technical and operational autonomy. Regulating the natural gas and electric industries. Activities include:  First Hand Sales, evaluation and award of transportation, storage and distribution permits; non-discriminatory open access and unbundling of services; import-export permits for electricity and natural gas, power generation permits, etc. RESOURCES In 2007, the CRE had 131 employees In 2007, the CRE was authorized federal resources of MX$ 126,345,116 Budget Resources/Employee: MX$ 964,466 STRUCTURE PERCEIVED GOALS  There are five commissioners that vote as a collective body on all  Strengthen CRE in terms of economic regulatory matters: and personnel resources 1. Francisco Salazar (President)  Expand scope of oversight (includes say in electricity tariff setting) and 2. Adrian Roji gain enforcement powers (collect and 3. Noe Navarrete retain increased fees and penalties) 4. Francisco Barnes de Castro  Become or play a prominent role in a 5. Israel Hurtado Acosta new “hydrocarbon” regulatory agency 179
  • 180. Mexico’s Energy Sector INSTITUTIONAL GOAL: CONAE is responsible for promoting energy savings and the use of renewable energies in Mexico. CONAE is independent of SENER. 2007 Budgetary Resources: MX$ 57,288,919 Energy Savings Commission Personnel: 95 employees Budget Resources/Employee: MX$ 603,041 INSTITUTIONAL GOAL: Ensure security in nuclear related activities. CNSNSComisión Nacional de Seguridad 2007 Budgetary Resources: MX$ 89,869,142 Nuclear y Salvaguardias Personnel: 201 employees Budget Resources/Employee: MX$ 447,110 INSTITUTIONAL GOAL: Undertake research and technological development projects for the electrical sector. IIE -Mexican Electric Research Institute - 2007 Budgetary Resources: MX$ 123,326,484 Personnel: 1,090 employees Budget Resources/Employee: MX$ 113,143 INSTITUTIONAL GOAL: Undertake research and technological ININ – National development projects related to the nuclear energy industry. Institute of Nuclear Research - 2007 Budgetary Resources: MX$ 348,984,905 Personnel: 791 employees 180 Budget Resources/Employee: MX$ 441,194
  • 181. Mexico’s Energy Sector INSTITUTIONAL GOAL: Generate, transmit and distribute electrical power within Mexico. CFE provides electrical power services to 24.2 million customers or nearly 80 million Mexicans. 2007 Budgetary Resources: MX$ 191,236,366,860 Personnel: 79,969 employees Budget Resources/Employee: MX$ 2,391,381 INSTITUTIONAL GOAL: Distributes electricity in Mexico City and the surrounding Estado de Mexico, Hidalgo, Morelos and Puebla. 2007 Budgetary Resources: MX$ 27,972,600,000 Personnel: 40,478 employees Budget Resources/Employee: MX$ 691,056 181
  • 182. Section 2 182
  • 183. Upstream Businesses Open to the Private Sector  Given legal restrictions governing the upstream sector, PEP has turned to the private sector companies for the supply of oil services and machinery.  Through service contracts, PEP is able to subcontract a variety of work activities, including: • Well location identification, seismic, drilling and geotechnics. • Integral or turnkey projects where the contractor is responsible for everything from the design of the project to its total completion. Technology transfer may be included. • Supply of all related oil sector infrastructure from marine pipelines to turbines to platforms to rigs. 183
  • 184. Upstream Businesses Open to the Private Sector  The principal business lines that have been open to the private sector to date include: • Service Contracts • Multiple Service Contracts (MSC) • Alliance Contracts (in development) • Enhanced recovery plants (nitrogen, water, CO2) and nitrogen removal* • Gas compression plant* • Rigs and platforms • Seismic • Supply of all related oil industry technology and services *Can be owned by the private sector; e.g. Cantarell Nitrogen Injection and Campeche Gas Compression 184
  • 185. FHS Regime - Pricing Hubs and Arbitration Point Permanent FHS Regime Transitional FHS Regime (Non- (Power Plants) electricity natural gas users) PFHS = HSC – D + TF PFHS = TETCO PCd. PEMEX = PFHS + TPR-A – TPCP-A PCd. PEMEX = PFHS + TPR-A – TPCP-A Cd. Juárez Relevant South Texas Index (HSC or TETCO) Chihuahua Burgos Basin Reynosa Los Ramones Monterrey (+) Madero Guadalajara Lankahuasa (–) Cd. Pemex Lazaro Cardenas 185
  • 186. Natural Gas – LNG Projects ALTAMIRA LNG TERMINALGeneral Information: • Size and Tenor: 500 MMCFD; 15 years• Owner: Shell (50%), Total (25%), Mitsui (25%) • Estimated Investment: US$ 370 Million• Location: Port of Altamira, Tamaulipas • Starts Operation: 2006Supply:• Potential sources: Nigeria, Qatar, Atlantic LNG in Trinidad, Venezuela, Angola, Egypt, and Norway.• Shell has a 25.6% ownership stake in Nigeria LNG Ltd.; Total has 15%. Total has a 10% interest in Qatar LNG; Mitsui has a 7.5% stake. Shell also has a 30% stake in Mariscal Sucre LNG (Venezuela).Offtake:• CFE expects to supply 3 IPP‟s: Altamira V, Tamazunchale and Tuxpan V (combined capacity 2,469 MW; combined consumption 425 MMCFD)• Pricing: Henry Hub index plus a constant of US$ 0.179975/ MMBTUPermits Received:• CFE undertook the environmental impact assessment study and the corresponding risk analysis.• CRE Permit: July 31, 2003Outstanding Issues / Next Steps:• Potential competition from pipeline imports. Also, influence of PGPB will likely be a market barrier to industrial sales in nearby consumption centers• Limited options for sourcing of LNG in the Atlantic Basin through 2008 or 2009• Close to major northern Mexico gas production areas 186
  • 187. Natural Gas – LNG Projects ENERGIA COSTA AZUL (ECA)General Information: • Size: 1 BCFD• Owner: Sempra (Terminal); Shell – 50% supply • Tenor: 14.5 years (starting 2008) and offtake rights• Location: Ensenada, Baja California • Estimated Investment: US$ 1.4 billionSupply:• Sempra: 20 year SPA with BP–led Tangguh LNG for 500 MMCFD or 3.7 MM tons/year of LNG• Shell: 20 – year SPA with Sakhalin Energy for 37 million tons; 500 MMCFD (2008-2011) and 200 MMCFD thereafter, likelyOfftake:• CFE awards its Baja Natural Gas Supply contract to Sempra on Jan. 11, 2005 (130 MMCFD avg.)• Pricing: SoCal less $0.04/ MMBTU for Fixed Capacity• Balance of supply (avg. of 370 MMCFD initially) to be moved into US marketPermits Received:• CRE Permit: Aug. 7, 2003• Environmental permit awarded: April 9, 2003• Local land use permit awarded: August 12, 2003Outstanding Issues / Next Steps:• Potential expansion 187
  • 188. Natural Gas – LNG Projects Manzanillo LNG – Supply contractGeneral Information:• Location: Cuyutlan Lagoon, in Manzanillo, Colima. Mexican Pacific coast.• Size: up to 500 MMCFD• Supply: Under bidding. Potential sources include Camisea LNG (Peru), Sahkalin (Russia), Gorgon and Darwin (Australia), Tangguh (Indonesia), as well as South Par (Iran)Offtake:• Expected to Western and Central Mexico• Anchor client will remain CFE for, at least, 15 years.Permitting Status:• Land use permit, granted by the State and municipal authorities, awarded in June 2005.• CRE Permit: winner of the LNG terminal contract (500 MMCFD for 20 years) will be only permit evaluated.• SEMARNAT Permit: expected to be granted by mid-September 2007.Outstanding Issues / Next Steps:• Supply contract will receive bids on September 4, 2007.• If supply contract is awarded, LNG Terminal will receive bids on January 3, 2008.• Master Program, to be proposed by the Secretariat of Communications and Transportation (SCT), to relocate existing railroad, telecommunications and water facilities has not be finalized. 188
  • 189. Section 3 189
  • 190. PEMEX Support Map - Focus on Decision makers and PEP Jesús Reyes Heróles Roberto Ortega Lomelín Raúl Esteban Rosendo Ernesto Livas Levín Villareal Ríos Carlos Morales GilJ. Hernández Sergio Vinicio Antonio Teódulo San Juan Guaso Suro Escalera Gutierrez A. Jorge Jorge Javier Pedro Serrano Fernandez Hinojosa Silva Lozano Venegas Puebla López Personal Relationship / Alliance Negotiated / Imposed Strictly Working Relationship 190
  • 191. PEMEX Conflict Map - Focus on Decision Makers and PEP Jesús Reyes Heróles Romero Deschamps Roberto Ortega Lomelín Raúl Esteban Rosendo Ernesto Livas Levín Villareal Ríos Carlos Morales GilJ. Hernández Sergio Vinicio Antonio Teódulo San Juan Guaso Suro Escalera Gutierrez A. Jorge Jorge Javier Pedro Serrano Fernandez Hinojosa Silva Lozano Venegas Puebla López Personal Conflict Professional Conflict Potential Conflict 191 Isolated
  • 192. Support Profiles1. Presidency2. Secretary of Finance3. SENER4. PEMEX PEMEX Corporate PEMEX Career Engineers PEMEX PEP PEMEX PGPB5. CFE5. Unions6. Congress Lower House Commissions: Senate Commissions : Presidency Presidency Energy Energy Budget Finance Finance Constitutional Affairs Constitutional Affairs 192
  • 193. Presidency 193
  • 194. Felipe Calderon – President of Mexico BACKGROUND  Law Degree from Escuela Libre de Derecho  Masters degree in Economics from ITAM and a Masters degree in Public Administration from Harvard’s School of Government OTHER POSITIONS  Dec 2006 – Dec 2012: President of Mexico  2005: PAN presidential candidate  Sep 2003 - May 2004: Secretary of Energy  Feb 2003 – Sep 2003: Director of the National Bank of Public Works and Services (Banobras)  2000-2003: Lower House Deputy, PAN Leader in the Lower House and President of the Lower House Political Coordination Counsel SUPPORTERS  1996 – 1999: PAN Party President  Business community  1993: Secretary General of the PAN  Financial sector  1991-1993: Lower House Deputy  PAN (recent consolidation)  1986: President of the PAN’s youth movement President Calderon has constructed his economic platform Profile: based on a market oriented view, where strong institutions and rule of law will play a significant role. During the first P PM T PBP= Politician months of his administration, he has centralized power,PM: Energy Policy MakerT: Technical Energy attacked organized crime, addressed social issues andExpert negotiated pension reform. He appears to have a clearPB: Pro-Business    reform agenda he wants to pursue. 194
  • 195. Juan Camilo Mouriño – President’s Chief of Staff BACKGROUND  Degree in Economics from the University of Tampa, Florida  Masters degree in Accounting from La Universidad Autónoma de Campeche OTHER POSITIONS  Dec 2006 – to date: President Calderon’s Chief of Staff  2005: Coordinator of Felipe Calderon’s transition team  2004: Undersecretary of Electricity in SENER, when Felipe Calderon was head of the ministry  2000 - 2003 : Federal Deputy and president of the Lower House Energy Commission (not entire term)  2000: Coordinator of Fox’s presidential campaign in the Yucatan peninsula, Profile: achieving important gains for the party P PM T PBP= PoliticianPM: Energy Policy MakerT: Technical EnergyExpert SUPPORTERSPB: Pro-Business    Reactive Active  Felipe Calderon   Regional support in Yucatan Power Manage Mr. Mouriño is perceived to be the most relevant political closely operator in the Calderon Administration. He is extremely close to the President and is going to play a major role in any decision making in the administration, including defining the extent of reforms that will be pursued. -  195 Level of Interest
  • 196. Cesar Nava – President Calderon Private Secretary BACKGROUND  Law degree from Univeridad Panamericana  Masters in law from Harvard University OTHER POSITIONS  Dec 2006 – to date: Private Secretary of President Calderon  2005: Deputy Secretary General of the PAN (Secretario General Adjunto) and Calderon spokesman during presidential campaign  2004 - 2005: PEMEX’s Chief Counsel and SENER’s General Director of Legal Affairs  2000-2003: Lower House Deputy; coordinated PAN legislative procedures Profile: SUPPORTERS P PM T PBP= PoliticianPM: Energy Policy MakerT: Technical Energy  Felipe CalderonExpertPB: Pro-Business   Reactive Active  PAN traditional wing  Manage Power closely Despite the fact that Cesar Nava is one of the closest collaborators of Calderon, we do not see him playing a very visible role in terms of hydrocarbons reform. His position now is more political and administrative than centered on defining policies such as energy. -  196 Level of Interest
  • 197. Dionisio Perez-Jácome –Chief of Advisors BACKGROUND  Degree in Economics from ITAM  Masters in International Management (Dirección Internacional) from ITAM and a Masters in Public Policy from John F. Kennedy School, Harvard University OTHER POSITIONS  Dec 2006 – to date: President Calderon’s Chief of Advisors  2005: Director and partner of Mercer Management Consulting; left to join Calderon’s campaign (economic and public policy team)  2000 - 2005: President of the Energy Regulatory Commission (CRE)  1998 - 2000: Chief of Investment Promotion Unit in SENER Profile: SUPPORTERS P PM T PBP= PoliticianPM: Energy Policy MakerT: Technical Energy  Felipe CalderónExpert  Juan Camilo MouriñoPB: Pro-Business   Reactive Active  Luis Téllez  Manage Power closely Perez-Jácome works directly with Juan Camilo Mouriño and as part of the administrative team of Calderon. Given his background, we expect him to have a say in energy reform discussions. -  197 Level of Interest
  • 198. Margarita Zavala – President Calderon’s Wife BACKGROUND  Law Degree from Escuela Libre de Derecho  Program in Women’s Political Studies at Harvard University OTHER POSITIONS  2003 - 2006: Federal Lower House Deputy for the PAN  1999 – 2003: Secretary for Women’s Political Participation in the PAN  1994-1997: Mexico City (Federal District) legislator  Manage Power closely Profile: P PM T PBP= PoliticianPM: Energy Policy MakerT: Technical EnergyExpertPB: Pro-Business   -  Reactive Active Level of Interest Ms. Zavala is a career politician who has focused her efforts on women’s rights and gender equality. Married to Felipe Calderon since 1993, they have three children together. She is considered to be a conservative catholic. In contrast to her predecessor Martha Sagun, Ms. Zavala will not play a highly visible public role during Calderon’s administration. Her influence will be more behind the scenes. Given her areas of interest, we do not see her playing much of a role in hydrocarbons reform. 198
  • 199. Secretary of Finance 199
  • 200. Agustín Carstens – Secretary of Finance BACKGROUND  Degree in Economics from ITAM (Instituto Tecnológico Autónomo de México)  PhD in Economics from the University of Chicago OTHER POSITIONS  Dec 2006 – to date: Secretary of Finance  2003 - Oct 2006 : Deputy Managing Director of the International Monetary Fund (IMF)  2000-2003: Undersecretary of Finance and Public Credit  1999 - 2000: Executive Director at the IMF (representing Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Spain and Venezuela) Profile:  Before first stint at the IMF, Carstens worked at Banco de México P PM T PBP= PoliticianPM: Energy Policy Maker SUPPORTERST: Technical EnergyExpert  Felipe CalderonPB: Pro-Business    Francisco Gil Reactive Active  Financial markets  Power Manage Carstens’ appointment as Secretary of Finance has been viewed closely as very positive by both national and international markets. He is widely expected to continue Mexico’s adherence to the disciplined fiscal and monetary policies seen over the past decade. Broadening and better enforcement of tax collection will be -  Carstens’ biggest challenge in his new post. 200 Level of Interest
  • 201. Alejandro Werner – Undersecretary of Finance BACKGROUND  Degree in Economics from ITAM  PhD in Economics from the Massachusetts Institute of Technology OTHER POSITIONS  Dec 2006 – to date: Undersecretary of Finance  2003 – 2006: He worked in SHCP as head of the Economic Planning Office  1999 - 2003: Director of Economic Studies at Banco de Mexico  1996: He began working at Banco de Mexico  1995 – 1996: He worked at the International Monetary Fund Profile: SUPPORTERS P PM T PBP= PoliticianPM: Energy Policy MakerT: Technical Energy  Felipe CalderonExpert  Agustin CarstensPB: Pro-Business   Reactive Active  Francisco Gil Diaz  Georgina Kessel  Power Manage Dr. Werner has extensive experience in the Mexican economy and closely as undersecretary of finance he will play an important role in any energy reform discussions. He is super pragmatic. During his previous position as head of Economic Planning Office in SHCP -  he was directly involved in the budgetary approval process of PEMEX. 201 Level of Interest
  • 202. Fernando Sanchez Ugarte - Undersecretary of Federal Income BACKGROUND  Degree in Economics from ITAM  PhD in Economics from the University of Chicago OTHER POSITIONS  Dec 2006 – to date: Undersecretary of Federal Income  2000 – 2005: President of the Federal Competition Commission  1988 – 1994: He worked at the Ministry of Trade and Industry Promotion (now Ministry of Economy). In 1994, he was appointed Undersecretary of Industry  1983 – 1988: General director of Income Policy in SHCP Profile: SUPPORTERS  Felipe Calderon P PM T PBP= PoliticianPM: Energy Policy MakerT: Technical Energy  Agustin CarstensExpertPB: Pro-Business   Reactive Active  Francisco Gil Diaz  Georgina Kessel  Power Mr. Sanchez Ugarte has extensive experience in the Mexican Manage closely economy. As Undersecretary of Federal Income, he will play an important role in any energy reform discussions. As former president of the Federal Competition Commission, Mr. Sanchez Ugarte sat on the boards of PEMEX and CFE. Although he is not a -  specialist in energy matters, he does have a broad understanding of the sector. 202 Level of Interest
  • 203. Ernesto Cordero - Undersecretary of Expenditures BACKGROUND  Actuary degree from ITAM  Masters degree and PhD in Economics from the University of Pennsylvania OTHER POSITIONS  Dec 2006 – to date: Undersecretary of Expenditures  2005: Undersecretary of Energy Planning and Technological Development in the Ministry of Energy  Previous experience at the former Secretary of Energy and Mines (involved in the design of the CRE)  Worked in BANOBRAS when Calderon headed the bank. Profile: SUPPORTERS P PM T PBP= PoliticianPM: Energy Policy Maker Active  Felipe CalderonT: Technical Energy ReactiveExpertPB: Pro-Business   Ernesto Cordero is one of Calderon’s closest  Power collaborators and Calderon’s insider in SHCP. He Manage worked as Calderon’s top economic advisor during the closely presidential campaign. Cordero spearheaded the creation of Calderon’s economic platform and is a staunch proponent of energy liberalization. He has a -  broad understanding of the energy sector due to his experience as undersecretary. 203 Level of Interest
  • 204. SENER 204
  • 205. Georgina Kessel - Secretary of Energy BACKGROUND  Degree in Economics from ITAM (Instituto Tecnologico Autonomo de Mexico)  PhD in Economics from Columbia University, New York OTHER POSITIONS  Dec 2006 – to date: Secretary of Energy  Jan 2002 - Dec 2006: General Director of “Casa de Moneda” (Mexico’s National Mint)  Jul 1997 - Jan 2002: Secretary of Finance: In charge of Investment Office and Decentralization of Mexico’s state-owned utilities.  Jan 1994 - Jan 1995: First Energy Regulatory Commission (CRE) President Profile: SUPPORTERSP= PoliticianPM: Energy Policy Maker P PM T PB  Felipe CalderonT: Technical Energy  Agustin CarstensExpertPB: Pro-Business    Francisco Gil Diaz  Santiago Levi  Power Reactive Active  Fernando Sanchez Ugarte Manage closely Kessel has a strong economic background, but not a technical or political one. We do not see her leading the negotiations for structural reforms but implementing them. Her background will -  be crucial for discussing important issues such as PEMEX mounting debt and fiscal contributions, among others.205 Level of Interest
  • 206. Mario Gabriel Budebo – Undersecretary of Hydrocarbons BACKGROUND  Degree in Economics from ITAM (Instituto Tecnologico Autonomo de Mexico)  PhD in Economics from UCLA (University of California, Los Angeles) OTHER POSITIONS  Dec 2006 – to date: Undersecretary of Hydrocarbons  Feb 2003 - Dec 2006: President of Mexico’s National Pension Savings Commission, CONSAR (Comisión Nacional del Sistema de Ahorro para el Retiro)  Feb 2001 – Feb 2003: Chief of Staff of Secretary of Hacienda (Francisco Gil Díaz) Profile: SUPPORTERSP= PoliticianPM: Energy Policy Maker P PM T PB  Agustin CarstensT: Technical Energy  Francisco Gil DíazExpertPB: Pro-Business    Georgina Kessel Reactive Active  Power Dr. Budebo is an experienced public officer. Although he lacks Manage technical and operational experience in terms of energy, he is closely taking a prominent role in attempting to address PEMEX’s multi- dimensional challenges. Dr. Budebo has extensive experience in finance, having worked for -  over a decade in SHCP. 206 Level of Interest
  • 207. Jordy Herrera - Undersecretariat of Energy Policy and Technology Development BACKGROUND NO PHOTO  Degree in Economics from Universidad Iberoamericana AVAILABLE OTHER POSITIONS  Dec 2006 – to date: Undersecretary of Energy Policy and Technology Development, SENER  2004: General Director of the Investments Office in SENER  2001 - 2003: Director of Social Communications of the PAN Parliamentary Group in the Lower House  2000: Personal Secretary (Secretario Particular) of Felipe Calderon, when he was the parliamentary leader of the PAN in the Lower House  1996 - 1999: Personal Secretary of Felipe Calderon, when he served as Profile: President of the PAN National Executive CommitteeP= PoliticianPM: Energy Policy Maker P PM T PB SUPPORTERST: Technical Energy  Felipe CalderonExpertPB: Pro-Business    Reactive Active Manage  Power closely Mr. Herrera is close to Calderon and is his SENER insider. Not surprisingly, he is the political operator in charge of leading negotiations with Congress. He is also responsible for all natural gas activities, including LNG. Although he will not define the energy agenda, he will take his marching orders from the -  Calderon administration directly. 207
  • 208. Aldo Flores Quiroga – International Affairs BACKGROUND  Degree in Economics from Universidad Autónoma de Nuevo León  Masters in Latin-American Studies from University of California, Los Angeles  PhD in Political Sciences from the University of California, Los Angeles OTHER POSITIONS  June 2007 – to date: General Director of International Affairs at SENER  Jan 2007-June 2007: Consultant to the Secretary of Economy  2005-2006: External consultant for the Food and Agriculture Organization of the United Nations and of the Government of Dominican Republic Profile:  2003 –2006: Director General for Bilateral Economic Relations at the Foreign P= Politician Affairs Secretary PM: Energy Policy Maker SUPPORTERS P PM T PB T: Technical Energy Expert  Georgina Kessel PB: Pro-Business  Reactive Active  ManagePower closely Mr. Flores has no experience in the energy sector. He is a specialist in international affairs and has a solid academic background (he is also a professor). He recently joined SENER to lead the International Affairs Office, which will be restructured in the future (possible -  merger with the Investment Promotion Office). Perhaps Mr. Flores will be head of the new office. Level of Interest 208
  • 209. PEMEX Corporate 209
  • 210. Jesus Reyes Heróles – PEMEX Director General BACKGROUND  Degree in Economics from ITAM  PhD in economics from the Massachusetts Institute of Technology OTHER POSITIONS  2001: Founder of GEA (Grupo de Economistas Asociados)  1997 - 2000: Mexican Ambassador to the United States  1996 - 1997: Secretary of Energy  1994 - 1995: Director of Banobras (Mexico’s Social Development Bank) SUPPORTERS  Felipe Calderon Profile:  Guillermo Valdez  Ernesto ZedilloP= PoliticianPM: Energy Policy Maker P PM T PB  Agustin CarstensT: Technical Energy Reactive Active  LabastidaExpertPB: Pro-Business    He has considerable experience as a public servant and is no  stranger to the energy sector. His financial experience is also Power noteworthy and reinforces the fact that finance will be a central Manage tenant of reform. Reyes Heróles has a particular interest in closely increasing PEMEX operating efficiencies, regarding manpower and bureaucratic issues. However, he is not a technical person with petroleum operating experience. As a negotiator, his focus -  will be on strengthening PEMEX, implementing reform, discussions with the union and improving operating efficiencies. 210 Level of Interest
  • 211. Roberto Ortega – Chief of Staff of PEMEX Director General BACKGROUND  Law degree from UNAM NO PHOTO  Masters degree in public administration from the London School of AVAILABLE Economics OTHER POSITIONS  1997 – Jan 2007: He established Grupo de Asesoría Estratégica (GAE), an independent government relations firm in 1997  Public administrator (“Oficial Mayor”) of both the Health and at the Energy ministries  1994-1996: Vice-President of BANOBRAS  1989-1994: Mayor of the Benito Juárez delegation in Mexico City Profile:P= Politician SUPPORTERSPM: Energy Policy Maker P PM T PBT: Technical EnergyExpert  Jesús Reyes Heróles  Raul LivasPB: Pro-Business    Reactive Active  Power Mr. Ortega is very close to Reyes Heróles. They worked together Manage at BANOBRAS. Ortega is the author of several books on public closely administration, health, energy policy, and federalism. -  211 Level of Interest
  • 212. Raul Livas Elizondo – Chief Operating Officer BACKGROUND  Degree in Economics from ITAM NO PHOTO  Ph.D. in Economics from the Massachusetts Institute of Technology (MIT) AVAILABLE OTHER POSITIONS  2000 – 2006: He joined the private sector as Managing Director of Research and Investment Strategy in Vector Casa de Bolsa. He left Vector and became partner of MBD Desarrollo de Negocios, a private sector firm that provides services to foreign firms that want to develop business in Mexico.  1998-1999: PEMEX’s Chief Planning Officer  1997 - 1998: General Director of Pemex Petrochemical  1996 - 1997: Chief of Staff of former Secretary of Energy, Jesús Reyes Profile: Heróles, and head of the Energy Policy Unit of the Ministry of EnergyP= Politician SUPPORTERSPM: Energy Policy MakerT: Technical Energy P PM T PB  Jesús Reyes HerólesExpert  Roberto Ortega LomelínPB: Pro-Business    Reactive Active  Luis Tellez  Power Raul Livas is one of the closest collaborators of Reyes Heróles. Manage He has held a number of top advisory positions at several closely government agencies, including the Finance , Agriculture and energy ministries, as well as at PEMEX and BANOBRAS. He is one of the people Heróles trusts most and will be involved in -  any reforms going forward. 212 Level of Interest
  • 213. Carlos Morales Gil – PEMEX E&P General Director BACKGROUND  Degree in Petroleum Engineering from Universidad Nacional Autónoma de México (UNAM)  Master degree in Petroleum Engineering from Stanford University OTHER POSITIONS  Jun 1 2006 – to date: PEP General Director  Nov 2004 – Jun 2006: Acting PEP General Director  Dec 2001 – Nov 2004: PEP’s Sub-Director for the South Region  Mr. Morales has been a Member of Society of Petroleum Engineers (SPE) since 1990. He is also a member of Association of Petroleum Engineers of México (AIPM), Colegio de Ingenieros Petroleros where he holds the position of Vice President (CIPM) and he has been elected to the Mexican Profile: Engineering AcademyP= Politician SUPPORTERSPM: Energy Policy MakerT: Technical Energy P PM T PB  Oil and gas service companiesExpert  PEMEX structurePB: Pro-Business   Reactive Active  Power Mr. Morales has over 21 years of experience in PEMEX. He Manage began his career at the Mexican Petroleum Institute (IMP) and closely has held jobs in the private sector with Solar Turbines Co. and Transportación Marítima Mexicana (TMM). Although he has the technical background and understands the problems ahead of -  PEMEX we do not see him actively supporting energy reform. 213 Level of Interest
  • 214. Esteban Levín – PEMEX Chief Financial Officer BACKGROUND  Degree in Economics from the Instituto Tecnologico Autónomo de México (ITAM)  Master degree in Public Policy from John F. Kennedy School of Government at Harvard University OTHER POSITIONS  October 2006 – to date: PEMEX Chief Financial Officer  He entered PEMEX in 2002 holding several positions, including:  Managing Director of Finance and Treasury of PEMEX  Acting Managing Director of Financial Information Systems in PEMEX  Investor Relations Officer Profile:  Associate - Engagement Manager at MCKINSEY & CO  Advisor to the chief of staff of the President of México (Zedillo)P= PoliticianPM: Energy Policy MakerT: Technical Energy P PM T PB SUPPORTERSExpert  Agustin CarstensPB: Pro-Business    Juan Jose Suarez Coppel Reactive Active  Raul Livas  Manage Power closely As PEMEX Chief Financial Officer Mr. Levin will play a significant role in negotiating any new fiscal regime for PEMEX. Because of his background, it is fair to assume Mr. Levin will support reforms. However, he will not be able to gain support -  within PEMEX bases because he is perceived as a technocrat and outsider. 214 Level of Interest
  • 215. Ernesto Rios – Dir. Corporate Engineering and Project Development BACKGROUND  Degree in Chemical Engineering from Universidad Nacional Autonoma de Mexico (UNAM)  Masters degree from Cornell University, New York OTHER POSITIONS  December 2006 – to date: Interim Director of Corporate Engineering and Project Development in PEMEX (Encargado de Despacho)  May 2001 – December 2006: He was deputy director of Corporate Engineering and Project Development in PEMEX  1968- 2000: He worked in Grupo Bufete Industrial, an important Mexican engineering company were he develop. He held the following positions: Profile: EVP of Operations and VP of EngineeringP= Politician P PM T PBPM: Energy Policy MakerT: Technical Energy SUPPORTERSExpertPB: Pro-Business  Raúl Moñoz Leos  Reactive Active  ManagePower closely Although Mr. Rios has been in PEMEX for only 6 years, he has worked in energy related projects all his life. In Grupo Bufete Industrial he lead many projects involving PEMEX and CFE. He is a respected professional, and in his current position, he will influence the development of future projects in PEMEX. -  215 Level of Interest
  • 216. Jose Antonio Ceballos Soberanis, Director PEMEX Refining BACKGROUND  Degree in Petroleum Engineering from Universidad Nacional Autonoma de Mexico (UNAM) OTHER POSITIONS  December 2006 – to date: General Director of Pemex Refining  April 2006 – December 2006: Director General of the Mexican Petroleum Institute (IMP)  April 2001 – April 2005: Chief Operations Officer (Director Coorporativo de Operaciones) of PEMEX  January 1995-April 2001: Director of Pemex Exploration and Production Profile:P= Politician SUPPORTERS P PM T PBPM: Energy Policy MakerT: Technical Energy  Adrian LajousExpertPB: Pro-Business  E&P technical and regional staff    Reactive Active (including Heber Cinco Ley and Teodulo Gutierrez) Power Manage Mr. Ceballos has a long and successful professional career closely within PEMEX. In his current position he will not be leading any efforts regarding hydrocarbons reform. We perceive him as being much more open to private participation and reform than -  many of his peers. He led the nitrogen injection project at Cantarell. 216 Level of Interest
  • 217. PEMEX Career Engineers 217
  • 218. Héber Cinco Ley – Mexican Petroleum Institute BACKGROUND  Degree in Petroleum Engineering from Universidad Nacional Autonoma de Mexico (UNAM)  Master degree in Physical Engineering of Reservoirs from UNAM  PhD. in Petroleum Engineering from Stanford University OTHER POSITIONS  February 2007 – to date: General Director of the IMP  2003 – 2006: PEP’s Deputy Technical Director of Exploitation  Director General of Asesoría y Servicios Petroleros, a private company  Director General of Consultoría y Servicios en Ingeniería Petrolera Profile:  Director General of Aspetrol TestingP= Politician  1979-1993: Technical advisor in PEPPM: Energy Policy Maker SUPPORTERST: Technical EnergyExpertPB: Pro-Business P PM T PB  IMP  PEMEX technical   Reactive Active staffPower  Carlos Morales Gil Manage closely Dr. Cinco Ley has significant experience in the hydrocarbons sector, being well known for his fractured well behavior studies. Among his previous experiences in the sector, he used to be a -  technical advisor for PEP. We do not see him as an active supporter of reforms. 218 Level of Interest
  • 219. Teódulo Gutierrez Acosta - Deputy Technical Director of Exploitation BACKGROUND  Degree in Petroleum Engineering from Universidad Nacional Autónoma de México (UNAM)  Master degree in Physical Engineering of Reservoirs ( Ingeniería Física de Yacimientos) from UNAM OTHER POSITIONS  Jan 2007 – to date: Deputy Technical Director of Exploitation  Mr. Gutierrez has over 20 years of experience in PEMEX:  Served as Deputy Director of the South Region, Deputy Director of Human Resources, Competitiveness and Innovation in PEP, and Deputy Director for Reservoir Administration  He started his professional career at the IMP developing mathematical Profile: models, integral simulation systems and reservoir technology methods.P= Politician SUPPORTERSPM: Energy Policy MakerT: Technical Energy P PM T PBExpert  Carlos Morales GilPB: Pro-Business   PEMEX technical staff Reactive Active  IMP  Power Mr. Gutierrez is has been involved in the instrumentation of Manage artificial production systems in PEMEX designed to increase closely production and has also been involved in modernizing the technology used in the Marine Regions, implementing field simulation models at Ku Malob Zaap and Ek Balám. We do not -  see him as a promoter of reforms. 219 Level of Interest
  • 220. Antonio Escalera Alcocer - Deputy Technical Director of Exploration BACKGROUND  Degree in Petroleum Engineering from Instituto Politécnico Nacional  Master degree in Physics Reservoir Engineering (Ingeniería Física de Yacimientos) from UNAM OTHER POSITIONS  Jun 1 2006 – to date: PEP’S Deputy Technical Director of Exploration  He has held important positions in PEMEX, such as:  Administrator of the Burgos Complex  Administrator of the Reynosa Exploration Complex Profile: SUPPORTERSP= Politician  Sergio GuasoPM: Energy Policy MakerT: Technical Energy P PM T PB  Alfredo Guzman (former NorthExpert Reactive Active Region Director)PB: Pro-Business    North Region Management  Power Mr. Escalera has a long trajectory within PEMEX and is Manage recognized to have done a very good job as administrator closely of the Burgos Complex, with significant increases in natural gas production. That said, we believe Mr. Escalera is also part of the “traditional” PEMEX school of thought -  that will not favor reforms. 220 Level of Interest
  • 221. PEMEX PEP 221
  • 222. Vinicio Suro – Deputy Dir. for Evaluation and Planning BACKGROUND  Degree in Geophysics  PhD. in Geostatistics from Stanford University OTHER POSITIONS  Jun 1 2006 – to date: Deputy Dir. for PEP’s Evaluation and Planning  He has over 20 years of experience in PEMEX, holding relevant positions such as:  Associate Managing Director of Hydrocarbon Reserves of PEP  Chief of the Hydrocarbon Reserves Unit of PEP SUPPORTERS Profile:  Carlos Morales GilP= Politician  Oil and gas service companiesPM: Energy Policy Maker P PM T PBT: Technical Energy Reactive Active  Local industryExpert  PEP structure at a regional levelPB: Pro-Business   Power Suro is a capable technical professional, but he is not in favor of Manage supporting reforms or changes in PEMEX. Suro is part of closely PEMEX’s school of though that believes the company can maintain production and increase reserves on its own if more money is given to the company. He has centralized information -  flow from each of the regions through his office. 222 Level of Interest
  • 223. Jesús Hernandez San Juan BACKGROUND  Degree in Electrical Mechanical Engineering (Ingeniero Mecánico Electricista) from Universidad Veracruzana OTHER POSITIONS  2006 – to date: PEP’s Deputy Director of Distribution and Marketing  2006 – Feb 2007: PEP’s Deputy Director of Operations and Trading  Other positions held by Mr. Hernández in PEMEX include:  Associate Managing Director of Transport and Distribution of Hydrocarbons of PEP  Deputy Manager of Transport and Distribution of Gas and Condensates of PEP Profile:  Chief of the Compression Systems Department of PEP P= Politician PM: Energy Policy Maker T: Technical Energy P PM T PB SUPPORTERS Expert PB: Pro-Business   Carlos Morales Gil Reactive Active Power Manage Mr. Hernandez has a long time career within PEMEX. Among his closely responsibilities, he is now involved in the creation of PEMEX short term production projections. We perceive him as being more open to reforms and private participation in the sector. -  223 Level of Interest
  • 224. Sergio Guaso – New E&P Contracts Office BACKGROUND  Degree Economics from Universidad Autónoma Metropolitana  Master degree in Economics from El Colegio de México OTHER POSITIONS  July 2002 – to date: Director of the Multiple Service Contracts Office, now New E&P Contracts Office  Feb 2002 – June 2002: Associate Managing Director of Economic Analysis of PEP (Gerente de Análisis Económico PEP)  Feb 1998 – Feb 2002: Associate Managing Director of Investment Resources of PEP Profile:  Aug 1997 – Jan 1998: Economic Advisor of P.M.I. Holdings North America, Inc.P= Politician SUPPORTERSPM: Energy Policy MakerT: Technical Energy P PM T PB  Carlos Morales GilExpert  Antonio Escalera AlcocerPB: Pro-Business   Reactive Active  Jorge Fernandez Venegas  Power Sergio Guaso has been responsible for the design and Manage instrumentation of the Burgos Multiple Service Contracts. As closely head of the New E&P Contracts Office, we believe he will be actively involved in the design of any efforts that involve opening spaces for private sector participation. -  224 Level of Interest
  • 225. Jose Luis Sanchez Bujanos BACKGROUND  Degree in Geophysics Engineering from UNAM  Master degree in Reservoir Engineering from UNAM  PhD in Petroleum Engineering from the University of Texas at Austin OTHER POSITIONS  2006 – to date: Manager of Regional Studies, Technical Exploitation Directorate (Gerente de los Centros Regionales de Estudios de Explotación de la Subdirección de la Coordinación Técnica de Explotación). Leader of the Chicontepec “Aceite Terciario del Golfo” Project.  2003 – 2005: Worked in the Regional Studies and Field Development Profile: areas of the Technical Exploitation Directorate.  1996-2002: Coordinator, Technology of Naturally Fractured ReservoirsP= PoliticianPM: Energy Policy MakerT: Technical Energy P PM T PB SUPPORTERSExpert  Heber Cinco LeyPB: Pro-Business    Pedro Silva  Power Reactive Active Manage closely Sanchez Bujanos has been in PEMEX over 27 years. He has been involved in important projects including coordinating the Cantarell’s special studies group and feasibility studies for Akal. He -  has significant technical experience. 225 Level of Interest
  • 226. PEMEX Regional Deputy Directors North Region Northeast Marine Region - Jose Fernandez Venegas - - Javier Hinojosa Puebla - Degree in Petroleum Engineering from UNAM  Degree in Petroleum Engineering from University of MexicoOTHER POSITIONS:  Mr. Hinojosa has over 26 years of extensive Mr. Fernandez has specialized in enhanced experience in the oil industry. He has held recovery mechanisms for reservoirs. several positions at PEP, where he has built his He was former administrator of the Veracruz carrier starting as Operations Engineer. Prior to Complex and also production administrator for his current position, he was Southwest Marine the Luna and Bellota – Chinchorro fields. Region Deputy Director. South Region Southwest Marine Region - Jorge Serrano Lozano - - Pedro Silva Lopez - Degree in Petroleum Engineering from UNAM OTHER POSITIONS:OTHER POSITIONS:  Deputy Director of Operations Coordination of Mr. Serrano joined PEMEX in 1985 and prior to PEMEX that he used to work at the IMP.  Executive Director of PEP’s Strategic Gas 1998 – 2003: North Region Planning Manager Program 2003 – 2004: Burgos Basin Asset Manager  PEP’s Associate Managing Director of Strategic Planning 2004 – 2007: Samaria-Luna Asset Manager 226
  • 227. PEMEX PGPB 227
  • 228. Roberto Ramírez Soberón – PGPB General Director BACKGROUND  Degree in Chemical Engineering from Universidad Nacional Autónoma de México (UNAM)  PhD in Economics from the University of New York OTHER POSITIONS  June 2006 – to date: PGPB’s General Director  2005 – June 2006: Acting Deputy Director of PGPB (Encargado de Despacho)Profile: P= Politician PM: Energy Policy Maker  1997-2005: PGPB’s Deputy Director of Planning T: Technical Energy  Other PGPB’s possitions held: Commercial Associate Managing Expert PB: Pro-Business Director and Associate Managing Director of Urban Distribution P PM T PB SUPPORTERS  Jose Antonio Ceballos  Reactive Active Mr. Ramirez Soberón has worked in PEMEX for over  ManagePower closely 20 years. Although he has vast experience in the sector, he is not perceived as a strong leader with a clear view of how to address PGPB’s numerous challenges. -  228 Level of Interest
  • 229. PGPB Deputy Directors Deputy Director of Production since 1996 ARMANDO OTHER POSITIONS ARENAS BRIONES  Associate Managing Director and Superintendent of Nuevo Pemex petrochemical complex  General Coordinator of Acquisitions Engineering of PEMEX Acting Deputy Director of Pipelines since 2007 OTHER POSITIONS VÍCTOR  Associate Managing Director of Planning and Evaluation of PGPBDOMÍNGUEZ  Deputy Manager of Planning of PGPB CUELLAR  General Superintendent of Electromechanic Processes and Public Works of PEP  Member of the following boards : Gasoductos de Chihuahua, Gasoductos de Tamaulipas, Gasoductos Servicios and TDF Deputy Director of Natural Gas since 1996LUIS FELIPE OTHER POSITIONSLUNA MELO  Commercial Representative in Tokyo and Deputy Manager of Analysis of PMI  President of PMI Northamerica 229
  • 230. PGPB Deputy Directors Acting Deputy Director of Liquefied Gas and Basic Petrochemicals since 2007 MIGUELFRANCISCO OTHER POSITIONS BUENO  Associate Managing Director of Operations of PGPBFERNANDEZ  Associate Managing Director of Business Planning of PGPB  Associate Managing Director of Liquefied Gas Trading of PGPB Deputy Director of Planning since 2007 OTHER POSITIONSSALVADOR  General Coordinator of Mining of the Ministry of Economy ORTIZ VERTIZ  Assistant Director and Deputy Director of Sectorial Studies for Grupo Fiananciero Banamex-Accival  Senior Advisor to Energy Sector and Basic Industries of Grupo Financiero Banamex-Accival Deputy Director of Management and Finance since 2006 OTHER POSITIONS AGUSTIN CASTRO  Commercial Associate Managing Director of Evaluation and Information of PEREZ PGPB  Associate Managing Director of Programming of PGPB  Deputy Manager of Information of PGPB  Member of the Gasoductos de Chihuahua board 230
  • 231. CFE 231
  • 232. Alfredo Elias Ayub – CFE General Director BACKGROUND  Degree in Civil Engineering from the Universidad Anáhuac  MBA from Harvard University OTHER POSITIONS  Director of Airports and Ancillary Services  Executive Coordinator of the Secretariat for Urban Development and Public Works of the Government of the State of Mexico  Director General of the Mexican Fund for Social Activities (FONAPAS)  Private Secretary of the Government of the State of Mexico Profile: SUPPORTERSP= Politician P PM T PBPM: Energy Policy MakerT: Technical Energy  Felipe Calderon  CFE personnelExpertPB: Pro-Business     Reactive Active  PRI “Technocracy”  Power Mr. Elias Ayub is a very experienced public servant that has Manage proved to have strong leadership skills and a pro- business closely approach. With his ratification, Mr. Elias Ayub begins his third and consecutive term as head of the CFE, a position he was first appointed to in January 1999 under former President Zedillo. -  232 Level of Interest
  • 233. Eugenio Laris Alanis – Director of Third-Party Financed Projects BACKGROUND  Degree in Civil Engineering from the Universidad Nacional Autonoma de Mexico (UNAM)  Masters degree in “Mecanica de Suelos” from UNAM OTHER POSITIONS  1999 – to date: Director of Third-Party Financed Projects CFE  1994 – 1998: Vice-president of Hydraulic Infrastructure in Grupo Tribasa  1988 – 1991: General Director of Altos Hornos de Mexico  1986 – 1988: Undersecretary of Public Companies Industry (Industria Paraestatal) in the Secretary of Energy, Mines and State Companies Industry Profile: (now SENER) SUPPORTERSP= Politician P PM T PBPM: Energy Policy MakerT: Technical Energy  Alfredo Elias Ayub  CFE structureExpertPB: Pro-Business    Reactive Active  Power Mr. Laris has been in charge of the development of natural gas Manage projects within CFE. He has been responsible for all IPP closely development, including natural gas transportation contracts with private companies. His current principal focus is on LNG supply and terminals, and in particular the Manzanillo LNG project. -  233 Level of Interest
  • 234. Francisco Santoyo Vargas – Finance Director BACKGROUND  Law Degree from the Escuela Libre de Derecho OTHER POSITIONS  Secretary of the Advisory Commission of Foreign Financing for the Public Sector  1978 – 1986:  Chief of Advisors of the Finance Undersecretary  Director of National Credit Institutions  General Director of Development Banking Profile: SUPPORTERSP= Politician P PM T PBPM: Energy Policy MakerT: Technical Energy  Alfredo Elias Ayub  CFE structureExpertPB: Pro-Business  Reactive Active  Power As finance director, Mr. Santoyo is responsible for managing Manage all the investment programs and private sector investments closely in the sector. -  234 Level of Interest
  • 235. Nestor Moreno Díaz – Operations Director BACKGROUND  Degree in Communications and Electronics Engineering from the University of Guadalajara  Masters in Business Administration from Universidad Anahuac OTHER POSITIONS  May 2007 – to date: Director of Operations  2002 - 2007: Manager of Transmission and Transformation  2000 - 2002: Deputy Director of Transmission, Transformation and Control  1975: Begins his career at CFE Profile: SUPPORTERSP= Politician P PM T PBPM: Energy Policy MakerT: Technical Energy  Alfredo Elias Ayub  CFE structureExpertPB: Pro-Business  Reactive Active  Power Nestor Moreno was appointed Operations Director in May Manage 2007. Despite the fact that he is not a public figure, he has closely worked in CFE for over 30 years and has extensive knowledge about the division he now leads. Mr. Moreno has worked his way up in CFE over the years. -  235 Level of Interest
  • 236. Unions 236
  • 237. Unions - Mexico’s Energy Sector  Unions have played a very visible and powerful role in Mexico over the last century. From the PRI’s inception, unions have been an integral part of the party’s political machine that historically allowed it to secure votes, keep inflation in check and unemployment down. The dynamics between unions and the PRI have increasingly changed since the PRI lost the presidency in 2000. Certain union factions now support the PRD. Left unchecked, unions have actually gained increased levels of power and control since the 2000 presidential elections.  According to the American Chamber of Commerce, approximately 30% of the Mexican workforce is unionized. Most of these unions are affiliated with the Labor Congress (“Congreso del Trabajo”), which represents 85% of all unionized workers. The main official association of unions, the Mexican Confederation of Workers (CTM) is believed to have around 8 to 10 million members.  In terms of the energy sector, there are three relevant unions: 1. Pemex Union (STPRM; Sindicato de Trabajadores Petroleros de la República Mexicana) 2. CFE’s Union (SUTERM; Sindicato Único de Trabajadores Electricistas de la República Mexicana) 3. LFC Union (SME; Sindicato Mexicano de Electricistas)STPRM & SUTERM are affiliated with the CTM. SME has maintained its independence. 237
  • 238. STPRM - PEMEX Union  The STPRM was officially established in 1938, after President Lázaro Cardenas nationalized the oil industry. The government (PRI) used PEMEX and its union as a substantial source of cash flow (still does) and as a tool for political gain and control In return, PEMEX and its union received economic privileges. (Under the Mexican Labor Law, unions are not subject to government audits) Carlos Romero Deschamps - STPRM General Secretary  Entered PEMEX in 1961. Became leader of the union in 1993; was recently re-elected to serve as General Secretary from 2007 – 2012.  He has been a PRI senator and deputy on several occasions.  He was accused (and cleared) for his role in funneling US$ 127 million from PEMEX to finance the PRI’s campaign in the 2000 presidential elections (PEMEX-Gate). 238
  • 239. STPRM - PEMEX UnionWhere does STPRM’s power reside?  80% of PEMEX workforce is unionized  5 out of 11 PEMEX Board members are union representatives  Due to the lack of competition in the industry, unionized workers continue to receive unparalleled benefits. Under the collective contract: • PEMEX’s retired employees or their survivors receive the same benefits as existing union workers from all ongoing labor negotiations • PEMEX has historically had limited flexibility to move unionized workers within regions/ projects • Bargaining agreement contains provisions that shares increased windfall with union when oil prices increase  Despite the PRI’s loss of the presidency, the PEMEX union continues to be an extremely monolithic structure.  Traditionally, support from the union has come through economic privileges. With PEMEX labor liabilities of nearly US$ 43 billion, this arrangement is becoming increasingly jeopardized.  Any type of alliance between PEMEX and the private sector will need to address how to deal with PEMEX’s unionized workers. Any reforms will need to have, to some extent, buy-in from the union 239
  • 240. Secretary – Luis Ricardo Aldana GENERAL DETAILS  Political Party: PRI  State: Veracruz  Current Secretary of the Energy Commission and member of the Navy Commission and the Labor and Social Works Commission BACKGROUND  Electrical/ Mechanical Engineer OTHER POSITIONS  PEMEX Union Treasurer since 1978 Profile:  Council of the PRI National Council (2004 – 2006) P= Politician  Federal Senator (2000 – 2006) PM: Energy Policy Maker T: Technical Energy Expert PB: Pro-BusinessIn 2002, Aldana was accused of illegally transferring atleast US$ 70 million from PEMEX to the PRI during the P PM T PB2000 presidential campaign through the PEMEX Union (PEMEX-Gate scandal).  Aldana understands that the status-quo cannot be sustained. He is likely to be willing to negotiate. 240
  • 241. Congress 241
  • 242. Lower House 242
  • 243. Lower House Presidency 243
  • 244. María Elena Álvarez Bernal GENERAL DETAILS  Political Party: PAN  ***President of the Lower House Executive Legislative Board “Mesa Directiva” BACKGROUND  PhD in Political Sciences from Universidad Nacional Autnóma de México (UNAM) OTHER POSITIONS  2003-2006: Executive Secretary in the Women’s National Institute  2000-2003: Lower House Deputy 1997-2000: Senator and Vice-president of the Senate 1994-1997: Lower House deputy 1977-1980: Lower House deputy 1964-1966: PAN’s National Secretary for Women’s Political Participation Profile: 1958-2006: PAN’s National Adviser (“Consejera Nacional”) P= Politician PM: Energy Policy Maker T: Technical Energy Expert PB: Pro-Business Ms. Alvarez is a long time panista. Wife of Abel Vicencio Tovar, one of PAN’s most prominent members (two time Secretary General and President of the Party during the late seventies). She has built her career within the party lines and has extensive legislative P PM T PB experience. *** Once Jorge Zermeño resignation becomes official. 244
  • 245. Hector Larios Cordoba GENERAL DETAILS  Political Party: PAN  PAN leader in the Lower House and President of the Political Coordination Council (Junta de Coordinación Politica) BACKGROUND  Degree in Engineering OTHER POSITIONS  2000-2006: Federal Senator, acted as the PAN leader from 2005 to 2006  1997-2000: Lower House deputy  1994-1997: Local congressman of the State of Sonora Profile: Larios is a well known politician and political operator, P= Politician especially in the northern state of Sonora. He is PM: Energy Policy Makerconsidered an established, pro-business politician, who T: Technical Energy Expert is conservative with a strong sense of loyalty to party PB: Pro-Business ideology. Based on his previous legislative positions, Larios has shown a strong propensity to negotiate withother political forces and to forego the attempt to impose P PM T PB his conservative party ideals on other political parties.   245
  • 246. Emilio Gamboa GENERAL DETAILS  Political Party: PRI  Leader of the PRI group in the Lower House BACKGROUND  Degree in Industrial Relations from Univesidad Iberoamericana OTHER POSITIONS  2000-2006: Federal Senator 1998-1999: Undersecretary of Communications in the Ministry of the Interior 1994-1995: Director of the National Lottery 1993-1994: Secretary of Communications and Transportation (SCT) 1991-1993: Director of the Mexican Institute of Social Security (IMSS) 1988-1990: Director of the National Workers’ Housing Fund (INFONAVIT) 1982-1988: Private Secretary of President Miguel de la Madrid Profile: P= Politician PM: Energy Policy Maker Gamboa is an experienced politician, highly known for his T: Technical Energy political use of media. He served as coordinator of the failed Expert PB: Pro-BusinessPRI 2000 presidential campaign of Francisco Labastida. He has been accused of having close relationships with the powerful Mexican media groups and the families that own them to P PM T PB ensure favors.   246
  • 247. Javier Gonzalez Garza GENERAL DETAILS  Political Party: PRD  Leader of the PRD group in the Lower House BACKGROUND  Degree from the Univesidad Iberoamericana OTHER POSITIONS  1999-2000: Mexico City Undersecretary of Government during Cuauhtémoc Cardenas administration  He served as Electoral Secretary (Secretario del Comité de acción electoral) of the PRD, where he was in charge of supervising all electoral processes that the PRD was involved in.  1994 – 1997: Lower House deputy Profile: P= Politician PM: Energy Policy Maker Gonzalez Garza is a senior, traditional perredista, T: Technical Energy identified as part of former presidential candidate Expert PB: Pro-Business Cuauthemoc Cardenas’ inner circle. He is perceived to be more of a moderate, as opposed to hardlinerssuch as former Zacatecas Governor and AMLO’s right P PM T PB hand man, Ricardo Monreal. As leader of the secondmost important party in the Lower House, he will play  and important role in negotiations. 247
  • 248. Energy Commission 248
  • 249. Lower House Energy Commission PRESIDENT - David Maldonado Gonzalez (PAN) Secretaries Robinson Uscanga Cruz Alonso Manuel Lizaola (PAN) Luis Ricardo Aldana (PRI) (Convergenicia)María de Jesús Guerra (PAN) Ramón Félix Pacheco (PRD) José Ascensión Orihuela (PRI) José Antonio Arévalo (PVEM) Other Members • Salvador Arreondo Ibarra (PAN) • Jose Antonio Almazan Gonzalez (PRD) • Juan Enrique Barrios Rodriguez (PAN) • Moises Felix Dagdug (PRD) • Dolores De María Manuell-Gómez Angulo (PAN) • David Mendoza Arellano (PRD) • Luis Alonso Mejia Garcia (PAN) • Rafael Elias Sanchez Cabrales (PRD) • Oscar Miguel Mohamar Daintin (PAN) • Antonio Soto Sanchez (PRD) • Raul Alejandro Padilla Orozco (PAN) • Monica Fernandez Balboa (PRD) • Rolando Rivero Rivero (PAN) • Pedro Landero Lopez (PRD) • Juan Jose Rodriguez Prats (PAN) • Yadhira Tamayo Herrera (PAN) • Horacio Duarte Jaquez (PRI) • Marco Antonio Bernal Gutierrez (PRI) • Arturo Martinez Rocha (PRI) • Joaquin Humberto Vela Gonzalez (PT) • Mariano Gonzalez Zarur (PRI) • Alberto Amador Leal (PRI) 249
  • 250. Lower House Energy Commission Integration 12 members (40.0%) PRD 8 members (26.7%) PAN PRI 7 members (23.3%) 1 member (3.3%) PVEM 1 member (3.3%) Convergencia PT 1 member (3.3%) 250
  • 251. President – David Maldonado GENERAL DETAILS  Political Party: PAN  State: Baja California  Current President of the Energy Commission and member of the Radio, Television and Cinematography Commission BACKGROUND  Electrical - Mechanical Engineer  Postgraduate studies in Pubic Administration OTHER POSITIONS  1999 – 2001: Undersecretary of Social Development for the State of Baja California  2001 – 2005: Private Secretary to Governor Eugenio Elorduy of Baja California P= Politician P PM T PB PM: Energy Policy MakerProfile: T: Technical Energy Expert Reactive Active   PB: Pro-Business  Power Manage Although he has technical training, he has focused his closely professional career on politics. He was supported for his deputy position by Baja California Governor, Eugenio Elorduy, and if the PAN is able to win the 2007 gubernatorial election, he is likely to return to his home state. Maldonado is practical and pro-active and appears open to energy reforms, understanding change is needed. -  251 Level of Interest
  • 252. Secretary – Ramón Félix Pacheco GENERAL DETAILS  Political Party: PRD  State: Federal District  Current Secretary of the Energy Commission and member of the Radio, Television and Cinematography Commission and the Labor and Social Works Commission BACKGROUND  Chemical Engineering OTHER POSITIONS  1975 - 1988: He worked in Luz y Fuerza del Centro as a Lab Technician  Since 1988 he has been working in the Mexican Electrician Union (Sindicato Mexicano de Electricistas)Profile: Reactive Active P= Politician PM: Energy Policy Maker P PM T PB  Power T: Technical Energy Manage Expert PB: Pro-Business  closely It is highly unlikely to see Mr. Pacheco favoring pro- reform efforts or initiatives intended to change the status – quo. -  252 Level of Interest
  • 253. Budget Commission 253
  • 254. President - Raul Padilla Orozco GENERAL DETAILS  Political Party: PAN  State: Jalisco BACKGROUND  Degree in Public Accounting  Master degree in Business Management (Alta Dirección)OTHER POSITIONS 2003-2006: President of CONACANACO (Confederación de Cámaras Nacionales de Comercio, Servicios y Turismo) 2001-2003: President of the Guadalajara Chamber of Commerce (Cámara Nacional de Comercio de Guadalajara) 1982-2003: General Director of Grupo Vinotecnia Profile: P= Politician PM: Energy Policy Maker T: Technical Energy Raul Padilla is considered an established, pro- Expert business man, although he has limited political PB: Pro-Business experience. In addition to presiding over the budget commission, he is a member of the energy and finance commissions P PM T PB   254
  • 255. Secretary - Joel Ayala GENERAL DETAILS  Political Party: PRI  State: Baja California BACKGROUND  Degree in Economy from Universidad Nacional Autnóma de México (UNAM)OTHER POSITIONS 2000-2006: Federal Senator 1998 – to date: General Secretary of the State Workers Union Federation (Federación de Sindicatos de Trabajadores al Servicio del Estado (FSTSE)) 1997-2000: Lower House deputy Profile: P= Politician Joel Ayala’s career has always been associated PM: Energy Policy Maker T: Technical Energywith his activities within the FSTSE union. He is an Expert PB: Pro-Business experienced politician and an old guard,traditional priista. He’s opportunistic and will seek to take advantage of his position within the unions. He needs to be managed closely. Arch- P PM T PB rival of Elba Esther Gordillo.  255
  • 256. Secretary - Jorge Emilio Gonzalez GENERAL DETAILS  Political Party: PVEM (Partido Verde Ecologista de Mexico)  State: Federal District  President of the PVEM, and son of the founder of the party BACKGROUND  Degree in Business Administration from Universidad del Valle de MéxicoOTHER POSITIONS Profile: P= Politician 2000-2006: Federal Senator PM: Energy Policy Maker T: Technical Energy 2001 – to date: President of the PVEM party Expert 1997-2000: Lower House deputy PB: Pro-Business The PVEM’s relevance has revolved around its P PM T PB repeated indifference to selling its support to the highest bidder (to date, has been the PAN and the  PRI). Jorge Emilio Gonzalez, as party president lackscredibility as a politician and has been associated with scandals of corruption. It is likely that the PVEM will support reforms if the price is right. 256
  • 257. Secretary -Alejandro Chanona GENERAL DETAILS  Political Party: Convergencia  State: Federal District  Leader of the Convergencia Lower House fraction BACKGROUND  Degree in International Relations from Universidad Nacional Autnóma de México (UNAM)  Master degree in European Political Studies from the University of Essex, UK  PhD in Political Science from the University of Essex, UK OTHER POSITIONS  2003-2006: Secretary General of Convergencia  1996-2000: General Secretary of UNAM’s Faculty of Political and Social Sciences  1995-1996: Chief Advisor to the Secretary of Foreign Affairs under President ZedilloMr. Chanona is a former priista and part of Dante Delgado’s Profile: (Convergenica party founder) inner circle. We believe that P= Politician PM: Energy Policy MakerConvergencia may continue to stay fairly tight with the PRD, T: Technical Energy as the relationship between the two parties has been Expert PB: Pro-Businessmutually beneficial. That said, the party has started to draw some distance between itself and AMLO, as seen in the P PM T PB recent Yucatan elections. The party is likely to embrace more moderate stances going forward.  257
  • 258. Member - Susana Monreal GENERAL DETAILS  Political Party: PRD  State: Zacatecas BACKGROUND  Degree in Public Accounting OTHER POSITIONS  2005-to date: PRD’s national counselor (Consejera Nacional) Profile: P= Politician PM: Energy Policy Maker T: Technical Energy Expert PB: Pro-Business Susana Monreal is sister of Ricardo Monreal, former governor of Zacatecas and one of AMLO’s closest collaborators. Ms. Monrealrepresents the radical PRD wing and will likely P PM T PB oppose all efforts of reforms.  258
  • 259. Finance Commission 259
  • 260. President - Charbel Jorge Estefan Chidiac GENERAL DETAILS  Political Party: PRI  State: Puebla BACKGROUND  Degree in Economy from ITAM (Instituto Tecnológico Autónomo de México) OTHER POSITIONS  1997-2000: Lower House deputy  Secretary of Social development under current Puebla Governor Mario Marin Torres  Secretary of the General Comptroller Office of Puebla, during Manuel Bartlett’s term as governor Profile: P= Politician As president of the Lower House finance commission, PM: Energy Policy Maker T: Technical Energy Estefan wields significant power. He is perceived as the Experttypical priista, and will follow the party line. He is close to PB: Pro-Business Manuel Bartlett, who has been a strong and vocal opponent to reforms in the energy sector. P PM T PB   260
  • 261. Jose Murat - Member GENERAL DETAILS  Political Party: PRI  State: Oaxaca BACKGROUND  Law degree from Universidad Nacional Autónoma de México (UNAM) OTHER POSITIONS  2006 – 2009: Federal Deputy (this is the third time he has held a congressional position)  1998-2004: Governor of the state of OaxacaMurat is close to Roberto Madrazo and unsuccessfully ran Profile:against Emilio Gamboa for the PRI leadership in the Lower P= Politician House. Despite the fact that he has experience and PM: Energy Policy Maker political muscle, he represents the old priista guard and T: Technical Energy Experthas been involved in several scandals that have soiled his PB: Pro-Businessreputation. He has increasingly interest in energy matters, opposing all efforts proposed. P PM T PB  261
  • 262. Member - Antonio Soto GENERAL DETAILS  Political Party: PRD  State: Michoacán BACKGROUND  Degree in Political Science and Public Administration  Master degree in Public Administration OTHER POSITIONS  2000-2006: Federal Senator  1998-2004: PRD president in Michoacán  1992-1995: Local congressman of the state of Michoacán  1990-1992: Mayor of the Tumbiscatío municipality in Michoacán Antonio Soto is a moderate PRDista. He is part of the Profile:finance and energy commissions in the Lower House. He P= Politicianis more open to discuss reforms in the sector than other PM: Energy Policy Maker members of his party. T: Technical Energy Expert PB: Pro-Business P PM T PB  262
  • 263. Member – Jose Manuel Minjares GENERAL DETAILS  Political Party: PAN  State: Federal District BACKGROUND  Degree in Public Accounting from Universidad La Salle  Masters degree in Public Administration OTHER POSITIONS  2003-2005: Public Administrator (“Oficial Mayor”) at SENER (during Calderon’s term as Secretary of Energy)  2000-2003: Federal Lower House Deputy  1997-2000: Local congressman of the Federal District Minjares appears to be one of the most interested Profile:deputies in energy topics. He has a direct connection with P= Politician President Calderon (they worked together both at PM: Energy Policy Maker Banobras and in SENER) and he has influence within the T: Technical Energy ExpertPAN group in the Lower House. In addition to participating PB: Pro-Business as a member of the finance commission, he is also in the budget commission. P PM T PB    263
  • 264. Constitutional Affairs Commission 264
  • 265. President - Raymundo Cardenas GENERAL DETAILS  Political Party: PRD  State: Zacatecas BACKGROUND  Degree in Chemical Engineering from Universidad Autónoma de Zacatecas OTHER POSITIONS  2000-2006: Federal Senator  2004: Secretary General of the PRD  He served as Zacatecas’ Government Secretary during Ricardo Monreal’s governorship (1998-2004) Despite the fact that Cardenas worked with Ricardo Profile: Monreal when he was governor of Zacatecas, he is notbelieved to be close to him or AMLO’s group. Cardenas is P= Politician PM: Energy Policy Makerconsidered an opportunistic politician. Regarding energy, T: Technical Energy Expert it is likely he will tow the party line. PB: Pro-Business P PM T PB  265
  • 266. Member - Carlos Armando Biebrich Torres GENERAL DETAILS  Political Party: PRI  State: Sonora BACKGROUND  Law degree OTHER POSITIONS  1999-2000: Undersecretary of Labor under President Zedillo  1994-1995: Legal Affairs Director at SENER  1973-1975: Governor of the state of Sonora  1970-1973: Undersecretary of Interior, during President Echeverria administration  1967-1970: Lower House deputy Carlos Armando Biebrich is an experienced politician. In Profile:2000, he disappeared from the political arena, but returned P= Politician PM: Energy Policy Maker in 2002 as part of the PRI National Committee under T: Technical Energy Roberto Madrazo’s term as party president. He is part of Expert PB: Pro-Business the PRI old guard, but we expect him to vote along party lines. P PM T PB  266
  • 267. Member - Juan Jose Rodriguez Prats GENERAL DETAILS  Political Party: PAN (former priista)  State: Tabasco BACKGROUND  Law Degree from Universidad Veracruzana OTHER POSITIONS  1991-1994: Lower House deputy (from the PRI)  1997-2000: Lower House deputy (from the PAN)  2000-2006: Federal Senator (PAN)Rodriguez Prats is an experienced politician. In 1994, Profile: he ran for the Tabasco Governorship against AMLO P= Politician and Roberto Madrazo. He has been a legislator over PM: Energy Policy Makerthe last decade, and presided over the Senate energy T: Technical Energy Expert commission (2000-2003). PB: Pro-Business P PM T PB   267
  • 268. Senate: 2006 - 2012 268
  • 269. Senate Presidency 269
  • 270. Manlio Fabio Beltrones GENERAL DETAILS  Political Party: PRI  President of the Senate Executive Legislative Board “Mesa Direciva” and leader of the PRI fraction in the senate BACKGROUND  Degree in Economics from UNAM OTHER POSITIONS  2006-2012: He holds a senate post  1991-1997: Governor of the state of Sonora  1988-1991: Undersecretary of Interior 1985: PRI president in the state of Sonora 1982-1985: Federal deputy 1976: Advisor to Jesus Reyes Heróles (father of current PEMEX CEO) Profile: Beltrones has substantial experience as a political operator. He P= Politician PM: Energy Policy Maker retains strong ties to the National Confederation of Popular T: Technical Energy Organizations (CNOP), which contains about one-third of the PRI’s Expert PB: Pro-Business hardcore voters. During President Fox Administration, Beltrones led a group of deputies in opposing Fox initiatives on electricity, comprehensive fiscal reform, and PEMEX fiscal reform. He will P PM T PB play a significant role in any reform negotiations as PRI leader in the Senate.   270
  • 271. Santiago Creel Miranda GENERAL DETAILS  Political Party: PAN  President of the Senate Political Coordination Council “Junta de Coordinación Política” and leader of the PAN fraction in the senate BACKGROUND  Degree in Law from UNAM  Graduate studies in law from Georgetown University  Master degree in Law from The University of Michigan OTHER POSITIONS  2005- 2006: Creel lost the PAN primaries against Felipe Calderon for presidencyProfile:  2000-2005: Secretary of Interior under President Fox AdministrationP= Politician  2000: Ran as PAN’s candidate for Mexico City’ mayoral election. He lost to AMLOPM: Energy Policy Maker  1997-2000: Lower House DeputyT: Technical EnergyExpertPB: Pro-Business Creel’s term as Secretary of Interior was characterized by a failure to negotiate and reach agreements with his counterparts. He was often viewed as indecisive, naïve and P PM T PB weak. His recent political losses (DF and PAN presidential candidacy) could undermine his leverage in the Senate as   President of the Political Coordination Council. Rather than defining the stances of the PAN in the Senate, we see him following the party line. 271
  • 272. Carlos Navarrete Ruíz GENERAL DETAILS  Political Party: PRD  Leader of the PRD fraction in the senate BACKGROUND  Degree in Law from UNAM  Master degree in Law from The University of Michigan OTHER POSITIONS  2000 – 2006: Substitute senator to PRD Senator Jesus Ortega  2003- 2005: PRD Secretary General  1999-2002: PRD’s Comunication and Media Secretary  1996-1999: he was PRD’s Planning Secretary (Secretario de Planeación del CEN)Profile:  1988-1991: Lower House DeputyP= PoliticianPM: Energy Policy MakerT: Technical EnergyExpert Navarrete founded the Socialist Mexican Party, and the NationalPB: Pro-Business Democratic Front, which evolved into the PRD in 1989. Navarrete is perceived as a moderate Perredista and member of the “Chuchos” aP PM T PB powerful faction within the PRD that favors negotiation and dialogue as opposed to the uncompromising positions of some of the more radical elements in the PRD. He s currently being perceived as one of the leading  Perredistas trying to rebuild a good relationship with the private sector. 272
  • 273. Energy Commission 273
  • 274. Senate Energy Commission PRESIDENT – Francisco Labastida Ochoa (PRI) SecretariesRuben Camarillo Ortega (PAN) Graco L. Ramirez Garrido (PRD) Other Members • Fernando Elizondo Barragan (PAN) • Raúl Jose Mejia González (PRI) • Juan Bueno Torio (PAN) • Carlos Lozado de la Torre (PRI) • Augusto Cesar Leal Angulo (PAN) • Rogelio Humberto Rueda (PRI) • Gustavo Enrique Madero Muñoz (PAN) • Jorge Andrés Ocejo Moreno (PAN) • Arturo Escobar y Vega (PVEM) • Arturo Nuñez Jimenez (PRD) • Dante Delgado Rannauro (Convergencia) • Pablo Gomez y Alvarez (PRD) 274
  • 275. Senate Energy Commission Integration 6 members (40.0%) PRD 4 members (26.7%) PAN PRI 3 members (20.0%) 1 member (6.7%) Convergencia 1 member (6.7%) PVEM 275
  • 276. President – Francisco Labastida Ochoa GENERAL DETAILS BACKGROUND  Political Party: PRI  Degree in Economics from UNAM  State: Sinaloa  Postgraduate studies in Project Evaluation in Mexico OTHER POSITIONS  2000: Ran as the PRI presidential candidate  1998 – 1999: Served as Minister of the Interior  1995 – 1998: Served as Secretary of Agriculture, Livestock and Fishing  1987–1992: Governor of the state of Sinaloa  1982–1986: Secretary of Energy and Mines under the Miguel de la Madrid administrationProfile: P= Politician  Power PM: Energy Policy Maker T: Technical Energy Manage Expert PB: Pro-Business closely P PM T PB Reactive Active -     Level of Interest Labastida has worked in the public sector for over 37 years. He has experience in the energy sectorand has taken a leading role as Senate Energy Commission President in moving hydrocarbons reform forward. He views his position as central to all discussions on energy reform. Since having lost the2000 presidential elections, his political clout has waned. Labastida appears to see energy reform as a means of regaining lost political muscle and influence. 276
  • 277. Secretary – Ruben Camarillo Ortega GENERAL DETAILS  Political Party: PAN  State: Aguascalientes BACKGROUND  Chemical/Industrial Engineer (Instituto Tecnologico de Agusacalientes)  Postgraduate studies in Oil and Petrochemical Technologies (Instituto Tecnologico de la Ciudad de Madero) OTHER POSITIONS  Founder and member of the Aguascalientes Industrial Engineers Association  Local Advisor of COPARMEX (Confederacion Patronal de la República Mexicana)Profile: P= Politician  Coordinator of the New Products Investment at the IMP (Instituto Mexicano del PM: Energy Policy Maker Petroleo) T: Technical Energy Expert  2004 – 2007: PAN National Advisor (Consejero Nacional) PB: Pro-Business  2004 – 2006: Local Deputy in Aguascalientes  1998-2004: Secretary of Economic Development in Aguascalientes P PM T PB   Power Reactive Active  Manage closely Mr. Ortega’s technical background will help him in understanding technical issues within the commission. As a PAN member, we expect him to be in favor of energy reforms. As a businessman, his interest will be on the economic impact energy reform could have. -  Level of 277 Interest
  • 278. Secretary – Graco L. Ramirez Garrido GENERAL DETAILS  Political Party: PRD (he was a member of the PRI until 1975, when he was expelled due to allegedly misusing PRI funds to support opposition candidates in the state of Tabasco)  State: Morelos BACKGROUND  Degree in Laws from UNAM OTHER POSITIONSProfile: P= Politician  1985 – 1988: Federal Deputy for Morelos PM: Energy Policy Maker T: Technical Energy  1979 – 1982: Federal Deputy for Morelos Expert  1975: Mr. Ramirez is expelled from the PRI due to allegedly misusing PRI PB: Pro-Business funds to support opposition candidates in the state of Tabasco P PM T PB Power Reactive Active   Manage closely Mr. Ramirez is an opportunistic politician. He has no experience in the energy sector. We do not expect to see him favoring any type of reform in the sector. -  Level of 278 Interest
  • 279. Member – Pablo Gomez y Alvarez GENERAL DETAILS  Political Party: PRD (former priista)  State: Federal District BACKGROUND  Law Degree from UNAM OTHER POSITIONS  Federal deputy in the LI Legislature (1979-1982); in the LVII Legislature (1997- 2000); local deputy in the Mexico City assembly from 1992 to 1995 He is one of the founding members of the PRD and was the party’s interim president in 1999 In 2000 he ran for the PRD candidacy for Mayor of Mexico City. He lost the party nomination to Lopez Obrador 2003-2006: He was federal deputy and coordinator of the PRD faction in the LIX Legislature 2000 – 2003: He was the PRD representative before the IFE Power Profile: P PM T PB ManageP= Politician closelyPM: Energy Policy MakerT: Technical EnergyExpert  Reactive ActivePB: Pro-Business -  Level of Interest Mr. Gomez is a true left hardliner. He is an experienced legislator and will be one of the strongest opponents to opening up the energy sector. 279
  • 280. Member – Juan Bueno Torio GENERAL DETAILS  Political Party: PAN  State: Veracruz BACKGROUND  Business Administration degree from UNAM OTHER POSITIONS  1995 – 1996: President of the Municipal Committee of Cordoba,Profile:  1997 – 2000: Lower House deputy P= Politician  2001 – 2003: Undersecretary for the small and medium companies in PM: Energy Policy Maker T: Technical Energy the Secretary of Economy Expert  2001- 2007: PAN National Advisor PB: Pro-Business  2003 – 2006: General Director of Pemex Refining Power P PM T PB  Manage closely Reactive Active    Bueno Torio has limited experience in the sector. He has interests inseveral gas-stations in the state of Veracruz. He will favor reforms if he perceives a personal benefit can derive from it. He has been involved -  Level of Interest in several corruption scandals. 280
  • 281. Member – Dante Delgado Rannauro GENERAL DETAILS  Political Party: Convergencia (former priista)  State: Veracruz  President of the Convergencia fraction in the senate BACKGROUND  Law Degree from Veracruz University OTHER POSITIONS  Masters in Law from University of New York In 1999 he created Convergencia. In 2004, under a PRD-Convergencia coalition, he competed for the Veracruz governorship, which he lost to current Governor Fidel Herrera. 1988-1992: Interim Veracruz governor (when then Governor Fernando Gutierrez Barrios resigned to become the Secretary of the Interior under President Salinas.) 1985-1988: Lower House deputy 1980-1986: Veracruz Undersecretary of Government Reactive ActiveProfile: P= Politician P PM T PB PM: Energy Policy Maker Power T: Technical Energy Expert PB: Pro-Business   Manage closelyDelgado believes in a nationalistic, closed economy with a heavy State role at all levels. As such, we expect that Delgado will continue to share an allegiance with PRD hardliners and some members of thePRI, opposing reforms in the sector. Because of his extreme stance, he appears to be losing relevance within his own party. -  281 Level of Interest
  • 282. Member – Fernando Elizondo Barragan GENERAL DETAILS  Political Party: PAN  State: Nuevo Leon Reactive Active BACKGROUND  Law degree from Nuevo Leon University  Masters degree in Business Administration from ITESMOTHER POSITIONS  Masters degree in Comparative Jurisprudence from New York University  Coordinator of the following business organizations:  Cámara Nacional de Comercio de Monterrey (CANACO),  Cámara de la Industria de la Transformación de Nuevo León (CAINTRA)  Confederación Patronal de la República Mexicana (COPARMEX)  2004 – 2005: Secretary of Energy  2003: Substitute Nuevo Leon Governor (replacing Fernando Canales) Profile: P PM T PB Power P= Politician PM: Energy Policy Maker T: Technical Energy  Manage closely Expert PB: Pro-Business    Mr. Elizondo will favor reforms in the sector but he will continue lobbying in favor of the Monterrey industrial base. He is also member of the Hacienda commission. -  282 Level of Interest
  • 283. Constitutional Affairs Commission 283
  • 284. President - Pedro Joaquin Coldwell GENERAL DETAILS  Political Party: PRI  State: Quintana Roo BACKGROUND  Degree in Law from Universaidad Iberoamericana OTHER POSITIONS 1998: Ambassador of Mexico in Cuba 1988-1994: Secretary of Tourism during Carlos Salinas de Gortari administration 1981 – 1987: Governor of the state of Quintana Roo Coldwell was the Peace and Reconciliation Commissioner in Chiapas Director General of the Fondo Nacional para el Desarrollo Turístico (FONATUR) He is an experienced politician. As president ofthe Constitutional Affairs Committee he would be Profile: involved in any constitutional reforms P= Politician undertaken. We do not expect him to oppose PM: Energy Policy Maker reforms in the energy sector. He is perceived as T: Technical Energy Expert P PM T PB a moderate priista, open to negotiate. He is PB: Pro-Business perceived as a conciliator.   284
  • 285. Secretary - José Alejandro Zapata Perogordo GENERAL DETAILS  Political Party: PAN  State: San Luís Potosí BACKGROUND  Degree in Law from the Universidad Autónoma de San Luis Potosí OTHER POSITIONS  2000-2003: Federal deputy. In 2003 he was leader of the PAN fraction inProfile: the Lower House P= Politician  1997-2000: Major of the city of San Luís Potosí PM: Energy Policy Maker T: Technical Energy  1994-1997: Federal deputy Expert PB: Pro-BusinessP PM T PB Zapata Perogordo is a traditional panista. He is perceived to be close to Felipe Calderon; the two go back to when they served  together as Lower House deputies in 1994. We expect him to vote along party lines. 285
  • 286. Secretary – Arturo Nuñez Jimenez GENERAL DETAILS  Political Party: PRD (former priista)  State: Tabasco BACKGROUND  Degree in Economics from UNAM OTHER POSITIONS  Undersecretary of Interior during President Zedillo administration (1994 – 2000)  1997 - 2000: Federal deputy and PRI coordinator for the Lower House  PRI member until the year 2000, when he allied with Lopez Obrador and entered the PRD  In 2000 Mr. Nuñez tried running for the PRI candidacy for the Tabasco governorship. He lost the internal election to Manuel Andrade, Roberto Madrazo’s candidate, and resigned from the party Mr. Nuñez is considered to be one of the Profile: closest allies to Andres Manuel Lopez P= Politician Obrador. We expect him to be one of the PM: Energy Policy Maker T: Technical Energy P PM T PBstrongest opponents to reforms in the energy Expert sector. PB: Pro-Business  286
  • 287. Member - Eloy Cantu GENERAL DETAILS  Political Party: PRI  State: Nuevo León BACKGROUND  Degree in Law from the University of Monterrey  Degree in Economics from Instituto Tecnológico de Estudios Superiores de Monterrey  Master in Public Administration from the International Public Administration Institute of Paris  PhD. in Constitutional Law form University of Paris II, Panthéon-AssasOTHER POSITIONS (La Sorbona) 2003-2006: Secretary of Economic Development of Nuevo Leon 2000-2003: Federal deputy 1994-2000: Senator Profile: 1991-1944: Federal deputy P= Politician PM: Energy Policy Maker T: Technical Energy Mr. Cantu has vast legislative experience and is considered to Expert be a very progressive politician. He is very close to the PB: Pro-Business Monterrey Governor, José Natividad González Parás and also to the Monterrey industrial base. He will act on behalf of his P PM T PB constituencies.  287
  • 288. Finance Commission 288
  • 289. President - Gustavo Enrique Madero GENERAL DETAILS  Political Party: PAN  State: Chihuahua BACKGROUND  Degree in Communications from the Instituto Tecnológico y de Estudios Superiores de Occidente OTHER POSITIONS  2003 – 2006: Federal Deputy  2001: Candidate for the Municipal Presidency of Chihuahua  President of the Economic Development Council of the state of Chihuahua Profile:  Vice-president of the Chihuahua Businessmen Center P= Politician  Secretary of Evaluation and Planning of the state of Chihuahua PM: Energy Policy Maker T: Technical Energy Expert PB: Pro-BusinessMr. Madero will play an important role in any fiscal reform negotiations as President of the Finance P PM T PB Commission. He is also member of the energycommission and although he has no experience in the sector, he is likely to favor energy reform.   289
  • 290. Member - Maria de los Angeles Moreno GENERAL DETAILS  Political Party: PRI BACKGROUND  Degree in Economics from UNAM  Graduate studies in Socioeconomic planning from the Institute of Social Studies, Netherlands University Foundation for International Cooperation OTHER POSITIONS  1994 – 2000: Held a Senate position. In 1997 she served as Senate President and in 1999 she was President of the Senate Permanent Commission 1988-1991: Secretary of Fisheries under President Carlos Salinas administration 1982 – 1988: Undersecretary of Finance (Subsecrtaria de Programación y Presuesto) Profile: P= Politician Ms. Moreno was the first woman to preside over PM: Energy Policy Maker the PRI back in 1994. She is considered to be an T: Technical Energy Expert experienced politician and a good negotiator PB: Pro-Business and technical operator. She has substantial legislative experience having served as a senator and also as a deputy in the Mexico City P PM T PB legislature.  290
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