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Mexico Energy Reform

For more than 78 years, most of Mexico’s Petroleum Industry was closed to the private sector. This is changing thanks to the new Energy Reform that was approved by the Mexican Congress in 2013.

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Mexico Energy Reform

  1. 1. ® Mexico Energy Reform
  2. 2. ® The retail market is changing Jan 1, 2017 Free imports of fuel, price control Free Market Jan 1, 2016 Other brands allowed 2015 2016 2018 How the Energy Reform Affects the Fuels Market? Original Time Line Only PEMEX 2017 Jan 1, 2018 2016 © Afton Chemical Corporation, All Rights Reserved. Not to be copied, shared, or reproduced in any media without the express written permission of Afton Chemical Corporation.
  3. 3. ® The retail market is changing April 1, 2016 Free imports of fuel, price control Free Market* Jan 1, 2016 Other brands allowed 2015 How the Energy Reform Affects the Fuels Market? Revised Time Line Jan 1, 2017 * Will open by Regions through 2017 - 2018 Only PEMEX 2016 © Afton Chemical Corporation, All Rights Reserved. Not to be copied, shared, or reproduced in any media without the express written permission of Afton Chemical Corporation. 2016 20182017
  4. 4. ® Fuels Distribution Confidential and Proprietary - Not be copied, shared, or reproduced in any media without the express permission of Afton Chemical Corporation BEFORE THE ENERGY REFORM ENERGY REFORM SUPPLY CHAIN STORAGE PEMEX TRANSPORTATION PEMEX DISTRIBUTION PEMEX Y PRIVATE CONSUMERS PEMEX SERVICE STATIONS INDUSTRIAL PEMEX & PRIVATE SUPPLY CHAIN TRANSPORTATION STORAGE DISTRIBUTION PRODUCTION & IMPORTS OF FUELS PEMEX & PRIVATE CONSUMERS INDUSTRIAL PEMEX SERVICE STATIONS OR PRIVATE BRANDS PRODUCTION & IMPORTS OF FUELS PEMEX 2016 © Afton Chemical Corporation, All Rights Reserved. Not to be copied, shared, or reproduced in any media without the express written permission of Afton Chemical Corporation.
  5. 5. ® A new Norm for fuels: NOM-016-CRE-2016  Specifies the quality of fuels to be commercialized in Mexico  In place as of October 28, 2016  http://dof.gob.mx/nota_detalle.php?codigo=5436878&fecha=12/05/2016  Afton was the only additive Company that participated in the working groups that elaborated this norm Consequences of the Energy Reform NOM-086 (Old) NOM-016 (New) Octane: 92 Octane: 91 Cetane: 48 Cetane: 45 NO EtOH >5.8 EtoH outside Metropolitan areas Sulphur in Diesel <500 Sulphur in Diesel <15 Did not mention additives for Jet A-1 Mentions additives for Jet A-1 Did not consider Tracers Will consider Tracers 2016 © Afton Chemical Corporation, All Rights Reserved. Not to be copied, shared, or reproduced in any media without the express written permission of Afton Chemical Corporation.
  6. 6. ® A new Norm for fuels: NOM-016-CRE-2016 (Cont.)  All gasoline to be additized  Gasoline to be additized in Mexico, at the last distribution point before going to a service station or industrial customer  The CRE (Comisión Reguladora de Energía) will approve all additives that go into fuels  The requirements for gasoline additives are: Consequences of the Energy Reform TEST LIMIT ASTM D-5598 Standard Test Method for Evaluating Unleaded Automotive Spark-Ignition Engine Fuel for Electronic Port Fuel Injector Fouling Treat rate to meet EPA Spec 80.165 No more than 5% flow restriction in any one injector ASTM D-5500 Standard Test Method for Vehicle Evaluation of Unleaded Automotive Spark-Ignition Engine Fuel for Intake Valve Deposit Formation Less than 100 mg of intake valve deposits on average 2016 © Afton Chemical Corporation, All Rights Reserved. Not to be copied, shared, or reproduced in any media without the express written permission of Afton Chemical Corporation.
  7. 7. ® A new Norm for fuels: NOM-016-CRE-2016 (Cont.)  The Norm specifies a reference fuel to run the tests. These specs are described on table 5.1 of the Norm  This Reference Fuel has its origins from the EPA 65TH Percentile Reference Fuel Table 5.1 Reference Gasoline Specification for Additive Testing in Methods ASTM D5598 and D5500 Gasoline Sulphur, mg/kg, mínimum Destillation Temperature at 90% (C), mínimum Olefines, % vol. Minimum Aromatics, % vol. Mínimum Oxigenates, % vol. mínimum Minimum Deposits required ASTM D5500 (average mg/ valve) Regular no oxigenates 80 170 11.4 31.1 0 290 Regular with oxigenates 80 170 11.4 31.1 5.8 etanol or 11 MTBE 290 Consequences of the Energy Reform 2016 © Afton Chemical Corporation, All Rights Reserved. Not to be copied, shared, or reproduced in any media without the express written permission of Afton Chemical Corporation.
  8. 8. ® How are Additives Regulated?  The CRE will review and approve all additives going into a fuel (Does not cover after market products), including gasoline detergent packages  Gasoline marketers will have to demonstrate every six months with a report, that the gasoline additive is being used in the quantities required, by presenting a balance between the gasoline being produced or imported and the additive consumption  The CRE (Comisión Reguladora de Energía) started giving fuels import permits since April 1, 2016 New Players  In 2016 there has been a consolidation and formation of service stations associations  Some of these Groups have launched their own brands: Oxxo Gas, Hidrosina, Lagas, Octanfuel, etc.  Several newspaper reports about international brands interested in participating in the Mexican fuels market Consequences of the Energy Reform 2016 © Afton Chemical Corporation, All Rights Reserved. Not to be copied, shared, or reproduced in any media without the express written permission of Afton Chemical Corporation.
  9. 9. ® Six refineries in Mexico PEMEX currently has 77 Terminals There are 11,500 service stations in Mexico Gasoline characteristics:  46 MM M3/Year • Premium 9 MM M3/Year • Magna 37 MM M3/Year  Regular: 87 octanes (AKI)  Premium: 91 octanes (AKI)  Sulfur: 80 ppm Diesel characteristics:  Cetane: 45 minimum  Sulfur: 350 ppm (Will go down to 15 ppm) Interesting Statistics 2016 © Afton Chemical Corporation, All Rights Reserved. Not to be copied, shared, or reproduced in any media without the express written permission of Afton Chemical Corporation.
  10. 10. ® Thank You For more information, please contact: Jesus Bravo Jesus.bravo@aftonchemical.com 2016 © Afton Chemical Corporation, All Rights Reserved. Not to be copied, shared, or reproduced in any media without the express written permission of Afton Chemical Corporation.

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