Research done while in PwC Mexico. A short version was published within the publication "The Future of Pacific Alliance", launched in the presidential summit of Chile in 2016.

1. 1
Energy in the Pacific Alliance: oil and gas, electric power and
renewables
a) Relevance
Energy is the world's largest industrial sector, and its services are an essential
input to almost all goods and services in the global economy.1
The share of the energy sector in the gross domestic product (GDP) of member
countries of the Pacific Alliance is as follows:
Countries Oil & Gas Electric power Total
Colombia 7.3 3.8 11.1
Chile 1.0 2.4 3.4
Peru 3.4 1.8 5.2
Mexico 6.3 2.3 8.6
Note: it includes oil downstream industry.
By recognizing that energy is necessary for development and sustainable energy is
a must for sustainable development, the UN has set ambitious goals for 2030
through its initiative "Sustainable Energy for All"2:
• Ensure universal access to modern energy services3
• Double the market share of renewable energy in the mix of global energy.
• Double the global rate of improvement of energy efficiency.
The World Energy Council, a specialized agency from the UN, has translated these
goals in order to maintain three dimensions in balance: Energy security,
environmental sustainability and energy equity.4 According to its latest ranking
(2015), the performance of Pacific Alliance member countries among a set of 130
countries is as follows:5
1
So stated by the UN in its framework document The future we want: background paper for global energy
consultation, 2013.
2
Sustainable energy for all: a global action agenda, 2012; Sustainable energy for all: a vision statement by
Ban Ki-Moon, secretary-general of the United Nations, 2011; Energy for a sustainable future, the secretary-
general’s advisory group on energy and climate change, 2010.
3
Which means, among other things, stop using polluting fossil fuels to heat food.
4
Energy security is the critical dimension for the necessary supply that feeds the economic growth and
social development; environmental sustainability is the dimension that combats climate change and
maintains good air and water quality; and energy equity is the dimension that ensures affordable access to
energy at all levels of society.
5
2015 Energy Trilemma Index: benchmarking the sustainability of national energy systems; World Energy
Council, 2015.

2. 2
Country/Dimension Energy
Security
Environmental
Sustainability
Energy
Equity
General
Ranking *
Member countries of the Pacific Alliance
Colombia 13 3 58 18
Peru 27 36 84 40
Chile 57 81 51 43
Mexico 37 80 61 48
Other countries
United States of
America
3 95 1 12
Argentina 9 30 103 47
Brazil 43 17 78 37
* It includes additional considerations on the countries’ political, social and economic strengths,
therefore, it can be above or below the specific energy rates.
The ranking of Colombia is good (18), particularly regarding environmental
sustainability (3). While it is not the same in the case of Mexico, which ranks 48
and in environmental matters is 80.
The global primary energy supply has historically
been covered by more than 80% from fossil fuels
(crude oil, coal and gas). This is bound to
change. Only natural gas will increase its share
in the coming years, since it will increasingly
replace the industrial and power generation use
vis-a-vis the other two more polluting fuels and
also because of its demand as raw material for
the petrochemical industry. Meanwhile, non-
conventional renewable energy (especially, wind
and solar) will increase their share in electric
power generation6.
Combating climate change rests largely on the
consolidation of this distribution pattern in the composition of primary energy
sources in favor of renewable energies, and in the possibility that it can even be
accelerated and deepened to achieve the goal of preventing the rise of two
degrees Celsius in the planet’s temperature.7
6
Here the definition of the International Energy Agency on the classification of primary energy sources is
adopted: fossil fuels are crude oil, coal and gas; conventional renewable energies are large-scale hydro-
electric and nuclear; and non-conventional renewable energies refer to wind, solar, geothermal, small-scale
hydroelectric and biomass.
7
Impact of Paris 2015”; IHS Energy CERAWeek, The Wall Street Journal, February 23, 2016.
Source: BP Energy Outlook 2035, February 2015.

3. 3
Oil and Gas Subsector
Crude oil, transformed into fuel, which is and will remain being dominant in the
transportation sector, will reduce its share in the primary energy supply due to
three main factors:
• Efficiency measures in the land transportation industry which will allow
longer transfers with lower fuel consumption
• Government measures to improve fuels’ quality through the production of
biofuels that do not compete with food production
• Marginal growth of the share in motor vehicles powered by energy other
than traditional fossil fuels.
Three of the member countries of the Pacific Alliance (Colombia, Peru and Mexico)
produce and export hydrocarbons, and they are all major importers of by-products.
To date, only a small fraction of exports is subject of intra-regional trade.8
Country Imports Exports Intra-regional
trade
Mexico
33.2 billion USD 44.2 billion USD Gas imports from Peru
(785 million USD)73% refined products
21% gas
88% oil
Colombia
7.5 billion USD 33.5 billion USD Coal exports to Chile
(529 million USD)
99% refined products 79% oil
14% coal
Refined products
imports from Peru (287
million USD)
Peru
5.9 billion USD 3.0 billion USD Gas exports to Mexico
(785 million USD)
50% oil
48% refined products
68% refined products
19% gas
12% oil
Refined products
exports to Colombia
(287 million USD)
Crude oil exports to
Chile (115 million
USD)
Chile
14.2 billion USD 417 million USD Coal imports from
Colombia (529 million
USD)
41% refined products
39% oil
13% gas
63% refined products
22% coal
Crude oil imports from
Peru (115 million USD)
Data for 2014, items from the four-digit Harmonized System (HS).
8
Foreign trade database integrated by SAI, Law and Economy, with information from United Nations
Comtrade Database.

4. 4
The dependence of these countries on imported refined products is variable:9
Country Volume imported 2012
(thousand barrels/day)
% of total national
production
Colombia 65 20%
Chile 136 66%
Mexico 652 45%
Peru 57 24%
Mexico is already the world's largest importer of gasoline with more than 400
thousand barrels per day. Its government has announced that it will advance for
2016 the measure foreseen for the following year regarding the free import of
gasoline into the country, so distribution will also stop being a public monopoly.
At the Latin American region level, the backwardness in refining has been growing.
Peru and Colombia are currently immerse in the upgrading of their refineries, while
Mexico was about to start various projects in that sense. However, the drop in oil
prices has restricted the availability of public resources to undertake the necessary
investments.
While global proven oil reserves have increased by 2.4 between 1980 and 2011,
two thirds of them are not viable in a scenario of US$30 per barrel or less.10 The
low price level will remain for the near future under the OPEC policy aimed at
9
U.S. Energy Information Administration, data from 2012.
10
BP statistical review of world energy 2012 and The Economist, “Who’s afraid of cheap oil?”, January 23,
2016.

5. 5
preserving its market share, the entry of low-cost producers such as Iran, and the
slow exit of higher-cost producers. It is worth mentioning that, unlike the upstream
industry, the effect of low prices in the downstream refining and petrochemical
industry is favorable.
In case of the Pacific Alliance countries, their proven oil reserves have been
declining. At the current level of production, Colombia has proven reserves for
seven years, Mexico for 11 and Peru for 29. In the case of natural gas, at current
production levels, the proven reserves of the countries will have a duration of: 11.1
years in Peru, 15.5 years in Colombia, 18.5 years in Chile, and 9.0 years in
Mexico.11
For oil producing and exporting countries, in the region, the fall in international
prices has also meant a significant reduction in their public revenue.
On the other hand, it is worth mentioning as an outstanding global phenomenon,
regarding the transformation of North America (Canada, United States and Mexico)
in the area with the greatest availability of low-cost natural gas, derived from the
rapid increase in
production from
Canada and the
United States in
recent years, and
the dense network
of pipelines that run
through the region.
It is in this latter
aspect where
Mexico appears,
with the dynamic
growth of its
national pipeline
network, with gas imported from the United States, to supply power plants and
industrial areas, and even export to Guatemala12 and other countries in Central
America.
11
CIA World Factbook; January 2014, this information from Chile refers to proven reserves divided by annual
consumption.
12
Some industry representatives in the United States have also expressed their view that Mexico and its
pipeline network can be a cheaper alternative to export gas to Asia.

6. 6
This phenomenon is largely based on the production of shale gas in the United
States, which is expected to continue at high levels even in an extended scenario
of low international prices. US proven natural gas reserves at current production
level are almost 100 years, and still growing. The effect of widely available gas at
low cost will be reflected in improved competitiveness for the manufacturing sector
in the region13, and in particular for the energy-intensive industries.
The effect has been favorable for the petrochemical industry for which gas is its
main raw material. Ethylene production in the United States based on ethane gas
(more competitive than naphta as an input) has been very dynamic in recent years;
it is expected to increase 45% from 2015 to reach 35 million tons in 2020, and –at
a global level– to double its production by 2040.14 The demand for petrochemicals
is linked to the overall growth of the economy due to the wide range of products in
which it is incorporated as a raw material, and it is already hydrocarbons’ main use
outside the transport sector (crude oil) and the electric power subsector (gas).
Power generation and renewable energy sub-sector
Meanwhile, the electric generation subsector will be increasingly the leading
activity in the energy field due to its growing involvement in the use of primary
energy15 (which will be close to 50% of the total primary energy by 2035), and its
apparent effect on economic and social development. In the Pacific Alliance
13
Which in the case of Mexico could be enhanced through the special economic zones to be promoted as of
this year in three regions facing the Pacific: the area close to port of Lazaro Cardenas, the Isthmus of
Tehuantepec and the area around the Chiapas port.
14
Petrochemical Update website, posted on February 20,2015.
15
BP Energy Outlook 2035; British Petroleum, February 2015.

7. 7
member countries, the current distribution (2012)
of energy primary sources to generate electricity
reflects the dominance of fossil fuels (gas, oil and
coal) in Chile and Mexico, and hydropower in the
case of Colombia and Peru.16
As for electricity demand in Latin America, it will almost double between 2014 and
2030, and will grow an additional 70% between 2030 and 2050.17
16
The primary energy sources to generate electricity can be divided, based on their generation of
greenhouse gases (GHGs), into fossil (coal, oil and gas), nuclear and renewable. Renewable energy can be
further divided into conventional (large-scale hydro, biomass) and unconventional (wind, solar, geothermal,
tidal).
17
Meeting the electricity supply/demand balance in Latin America & the Caribbean; Rigoberto Ariel Yepez-
García, Todd M. Johnson and Luis Alberto Andrés; World Bank, September 2010.

8. 8
The requirements to increase generation capacity and investment for the Pacific
Alliance countries have been estimated as follows18:
Country
Increased Capacity, GW Required Investment
(million USD)
(2014-2030 annual average)
Mexico 2,000 3,545
Chile 909 1,611
Colombia 568 1,007
Peru 363 644
Total 3,840 6,807
The generation of electricity and heat is the main source of greenhouse gas
emissions (GHG) in Chile and Mexico, while in Colombia and Peru is the transport
sector.
18
Ibid.
Source: World Bank database.

9. 9
It is estimated that Latin America is the second region in the world in terms of the
size of the effort to increase electric power generation from renewable sources by
2040, only after China and before India, the European Union and the United
States.19
The main contribution will be of hydroelectricity (Brazil, Colombia, Peru), followed
by wind energy (Mexico, Colombia) and third solar (Chile).
The technical potential for the development of renewable energies in Latin America
is significant. To give an idea of its magnitude, if 1.6% of the total estimated
potential were used, it could cover the entire current demand in the region. 20
19
World Energy Outlook 2015; International Energy Agency, November 2015.
20
Rethinking our energy future; Walter Vergara, Claudio Alatorre and Leandro Alves; Inter-American
Development Bank, 2013.

10. 10
The opportunities for development of the various renewable energies for the Pacific
Alliance region have been identified along the sub-continental geography. Some
areas stand out: for solar energy in Mexico and Chile, for wind power in Colombia
and Mexico, for geothermal energy in Peru and Mexico (since it is one of the 5
countries with the largest installed capacity in this technology), and for marine
energy in Chile.21
21
Ibid.

11. 11
The growing participation of non-conventional renewable energies in the mix of
sources for power generation in the region will be possible to the extent that:
• Regulatory, operational and business models have lined up to facilitate
private participation
• The leveled costs of energy in the various technologies will continue to
converge in the future22
• There are explicit goals of the countries in this area.
A recent example of the evolution in prices of renewable energy to more
competitive levels is the fourth auction for supply of electricity from renewable
energy sources to the national electricity grid (SEIN) in Peru last February 16,
2016, particularly if it is compared with the prices registered at the auction
celebrated five years ago.
22
The leveled cost of energy is one that allows a comparison on the same basis of different investment,
operation and maintenance costs of various technologies, taking into account their actual availability.

12. 12
Thus, Chile has indicated its intention that 60% of power generation in 2035 will
come from renewable sources (including hydropower); Mexico has defined its
purpose that by 2024 at least 35% of its mix will be provided by renewable sources
(also including large-scale hydropower, nuclear and efficient co-generation).
Colombia has proposed to increase the share of non-conventional renewable
energies between 6 and 10% by 2028 (besides the 68% that is already produced
based on hydropower). While Peru has offered to include at least 5% of non-
conventional renewable energies by 2025, in addition to 60% that hydropower
already represents.
In addition to the accelerated growth of renewable energy, Latin America's effort
will also concentrate on the substitution of fuel oil and coal for gas. Overall, the
region has the least polluting mix worldwide to generate electricity.23,24
In the field of renewable energy resources, innovation is critical, and there is a
great opportunity for Latin America and Pacific Alliance member countries to seek
synergies through joint research and development efforts.25 Through cooperation,
it will be less difficult to cope with the problems in this area: reduced availability of
various skills, lack of experience in managing intra-regional cooperation,
insufficient funds, among others.
23
This has been noted by Rigoberto Ariel Yepez-Garcia, head of the energy division of the Inter-American
Development Bank, attributing the phenomenon to the fact that about 55% comes from hydropower.
24
Rethinking our energy future; Walter Vergara, Claudio Alatorre and Leandro Alves; Inter-American
Development Bank, 2013.
25
IRENA; RD & D for renewable energy technologies: cooperation in Latin America and the Caribbean; 2015.

13. 13
In particular, it is necessary to strengthen and link together the national innovation
ecosystems on energy, in order to address issues related to the use of non-
conventional renewable energies, as well as the implementation of smart grids26,
the solution of intermittency management and the technical problems of energy
loss in transmission and distribution (which is not exclusive of renewable energies),
and the development of feasible energy storage options.
26
The smart grid refers to the application of technologies for remote control and automation of the
network, including all the elements necessary to carry electricity from the plant where it is generated to
consumers: cables, substations, transformers, switches, etc. To make it smart, two-way digital
communications technology is added to the network connecting all devices associated with it. Each device
has a sensor to collect information (meters of line, voltage sensors, fault detectors, etc.), as well as two-way
digital communication between the device in the field and the operations center of the utility. Possible
applications are growing rapidly. The benefits include better cyber security, management of supply sources
such as solar and wind power, etc.

14. 14
The implementation of
smart grids has hardly
begun in the Pacific
Alliance region, except for
some tests conducted by
Colombia.27
27
Smart from the start; PwC, 2011.

15. 15
Currently, less than 5% of the assets in the power generation industry are
connected. But it is estimated that over 10 billion devices will by 2020. The
subsector value chain will completely transform: power and information will flow in
multiple directions and different players may add value. Energy suppliers will
evolve towards digital-industrial companies. The centralized digital generation will
rest on a mix of fossil fuels and renewable energies; digital generation network will
connect generation with consumption in multiple forms, the digital consumer will
add capabilities of demand response, as well as distributed generation and energy
storage capabilities.28
To the extent that the industry seeks to optimize its mix of primary sources and not
concentrate on a single source, and, given the intermittency of non-conventional
renewable energies, the goal is to maintain the network stable, supported by
software that, on the one hand, manage the intermittency of renewable energies
making it predictable and, on the other, ensure the use of gas to compensate the
supply-demand fluctuations on the network.
SOURCE: Smart grids: best practice fundamentals for a modern energy system; World Energy Council, 2012.
For the sake of energy security, electrical interconnection is a critical goal in the
short-term agenda in Latin America: Mexico and Central America have been
28
“Digital Revolution: the biggest transformation the power sector has seen”; in World Energy Focus, #18,
December 2015; World Energy Council.

16. 16
working in this direction; Colombia along with Panama; Brazil and Ecuador, and
the latter with Peru; Chile with Argentina; Bolivia and Peru.
b) Challenges
From the international context and based on their own potential, the countries of
the PA region must face challenges in two main areas of the energy sector that
should be revised separately: the oil and gas industry, and the power generation,
including in the latter the renewable energies.
In the first case –the oil and gas industry–, the main challenges are:
• That the large oil companies, both state-owned and private, are able to
design strategies to address a low-price scenario, including at least the
following: cost reduction, access to capital, portfolio optimization (project
and business units prioritization according to their cost-effectiveness, and
concentration in the core business), talent retention, and systematic review
of the consistency among short-, medium and long-term plans.
• Strengthen national value chains of the industry through new business
models in public-private partnership schemes, both in core and
complementary activities; and through the development of regional, world-
class suppliers under clusters schemes that promote inter-business
cooperation and alignment of actions of the different government levels.
• Increase investment and private participation in hydrocarbon exploration in
order to increase proven reserves (despite the low price of oil), and to
continue being an industry providing revenues for national governments and
the source of raw materials for local and regional industries.
• Increase investment and private participation in the production of refined
and petrochemical products, in order to take advantage of favorable pricing
conditions and reduce dependence on foreign markets, promptly meeting
the demands and opportunities of environmental regulations (as the
complementary production of biofuels).
• In general, open up new investment opportunities in public-private
partnership schemes along the industrial chain (up-stream, mid-stream and
down-stream) with clear efficiency improvement criteria.

17. 17
• Incorporate as a determining factor in the future development of the industry
its adequacy to national policies in order to combat climate change.
In the second case –power generation and renewable energies– the main
challenges are:
• Transform the region into a zone with availability of low-cost energy for the
manufacturing, mining and primary sector (agricultural, livestock, forestry
and aquaculture) through the use of gas and development of pipeline
national networks, structuring a regional market for gas.
• Promote a regional cross-border electricity market through the
interconnection of national networks from Mexico to Chile. Leverage the
route of power lines to make the physical connection of the countries
through fiber optics, as a regional backbone for telecommunications.
• Increase investment and private participation in the generation
infrastructure, as well as the strengthening of the national power
transmission and distribution backbone, and the conversion of the system
into a smart network, in order to meet the expected growth in demand and
increase the share of renewable energies in the energy mix, with efficiency
improvement of the system.

18. 18
• Consolidate cluster formation for the generation of wind, solar and
geothermal energy, in areas of greatest potential in the region, taking care
of local communities, environmental sustainability and development of
suppliers integration.
• Achieve the electrification of all isolated areas of the four countries, and
particularly Peru and Colombia, which rural population lacks this service by
27% and 12%, respectively.29 To do this, inexpensive technological
solutions are available from small networks based on the use of renewable
energy (solar) and –when required– supplemented by other traditional
energy sources (diesel).
• Full use of knowledge and capabilities of regional research in renewable
energies, in order to develop global leadership in technologies related to
solar, wind and geothermal energy.
c) Strategic bets
In the short term, opportunities for public and/or private involvement are identified
that may have a greater effect on the productivity of the economic activities of the
four countries, and which can also positively influence the integration process of
the Pacific Alliance.
In oil and gas, the opportunities are:
New tenders for exploration and production of oil and gas in Colombia, Mexico and
Peru in areas of low development cost.- The oil countries of the Pacific Alliance are
in need of increasing their proven reserves of hydrocarbons and can do so with
technology support and global financial resources considering that their institutional
environments have been updated.
HYDROCARBON EXPLORATION
Main opportunities in Colombia are in deepwater blocks in the Caribbean and in
fracking. Peru will tender smaller areas in order to attract more companies.
Depending on the prevailing international prices, Mexico expects to receive around 2
billion dollars in exploration projects over the next three years, particularly in the
Gulf of Mexico and deepwater areas of Perdido Fold Belt.
29
2012 data, database of the World Bank.

19. 19
Definition of long-term public programs for linking ethanol production with biofuels
production and marketing.- The sugar industry is important in the three oil countries
of the Pacific Alliance, and requires new customers to offset the gradual loss of
demand which has been experienced worldwide. Biofuel production based on
ethanol from sugar cane has not developed at a large scale mainly due to
institutional factors such as the lack of an agreement among government offices,
commodities and industrial producers, which can give certainty through programs
and long-term contracts.
ETHANOL BASED-BIOFUELS
Colombia currently allocates 80 thousand hectares to the production of biofuels and
has 5 million hectares suitable to supply not only the domestic needs but also become
a world-class supplier.
PEMEX has started to buy in public auctions ethanol (157 million liters). But the
existing potential, considering only 5% of biofuel per liter of gasoline, in half of the
national production, can multiply the initial volume by four.
New business models for managing the reliability along the value chain of oil and
gas.- Reliability refers to comprehensive asset management, including
maintenance and operation, with a focus on safety and efficiency. This philosophy
is based increasingly on the generation and use of relevant information obtained
with the help of specialized software and electronic devices. Upstream, as well as
midstream and downstream industries require these concepts to define baselines,
operational metrics, benchmarking, and use other relevant information in a timely
manner to support decision-making.
INSTITUTIONAL RELIABILITY SYSTEM
Increased reliability and the establishment of an institutional system along the entire
value chain is a high priority for PEMEX. There is a clear business opportunity for
SMEs with proven global experience and technical expertise in developing reliability
systems, based on information and communication technologies, within diversified
models of public-private partnership (outsourcing, performance-based contracts,
etc.)
Selective promotion of investment in refining and petrochemical plants.- Refining
plants of the Pacific Alliance four member countries require modernization in order
to meet state of the art environmental standards and increase the percentage of
distillates in the final product mix. In a scenario of low oil prices, petrochemical
plants may be attractive business options, to the extent that they have secured raw
material supply and markets for their products.
INVESTMENT IN DOWNSTREAM INDUSTRY

20. 20
ECOPETROL is completing the expansion and modernization of its refinery in
Cartagena, which will almost double the processing capacity from 80 to 150,000
barrels per day. This production will multiply the production of diesel by four;
ecological-quality gasoline will be developed; fuel oil will be eliminated, and surplus
for the petrochemical industry will be generated. Total investment has been
estimated at 4 billion dollars.
PETROPERU is modernizing and expanding its Talara refinery, to move from a
processing capacity of 65 thousand barrels per day to 95 thousand. The advance at
the beginning of 2016 is estimated at 30%, and the start of operations is scheduled
for 2019. It will produce higher quality fuels with a total investment of 3.5 billion
dollars.
PEMEX will invest 23 billion dollars over the next three years in upgrading its refining
plants under public-private partnership schemes, in order to produce cleaner fuels,
reduce greenhouse gas (GHG) generation and reuse waste products. It will develop
energy cogeneration projects of 2.3 MW of electricity for self-consumption and sale
of surplus.
PEMEX can also produce more ethylene in association with appropriate private
companies, in order to meet domestic demand. Capital expenditure is estimated at
200 million dollars.
Consolidate local clusters in the upstream industry to improve business skills of
SMEs in order to meet the requirements of new global players.- Clustering allows
SMEs to improve their technical and business skills through cooperation and
solution of common problems, through dialogue with other stakeholders
(government levels, research and development institutions, financial service
providers and other specialized players). It provides the right ecosystem for
growth. Aberdeen in Scotland, Stavanger in Norway and Houston in the United
States are examples of sites that have managed to develop oil clusters of great
impact. The oil countries of the Pacific Alliance could learn from these successful
cases, in order to develop local clusters able to meet the requirements of the
operating companies and other global service integrators that are entering the
market.
DEVELOPMENT OF CLUSTERS AND LOCAL SUPPLIERS
In the context of current Mexican market, PEMEX will be only one operator among a
broad set of private companies of global size. With a scenario of low oil prices and,
therefore, requirements of efficient low-cost services, emerging global players are
looking to stock up with local businesses, and help them improve.
Cd. del Carmen and Villahermosa are the two places where most of the SMEs serving
the upstream oil industry are concentrated. Their location is ideal to promote the
consolidation of a cluster of services with qualified local suppliers and others who
might arrive from the oil services markets of Colombia and Peru.

21. 21
It should be noted that Colombia and Peru opened their
oil industry several years ago to the participation of
global companies that are now present in their markets.
And the local supplying companies were forged on
competition and the level of demand from international
operators, so they can now capitalize their experience
by participating directly or in partnership with other local
companies in the Mexican market that is beginning to
also receive the big global players.
Definition of business models and tender conditions to promote farm-outs in the
upstream oil and gas industry.- As contracts of strategic partnership between the
company that owns exploitation rights and other companies that provide capital,
technology, operational capacity, etc., the farm-outs can accommodate to the
terms of each specific project. Their success will depend on the clarity and
transparency with which the tenders are made.
FARM-OUTS IN PEMEX
The first farm-outs will be held in 2016. Ten packages were defined with a total of 2.1
billion barrels of oil equivalent 2P reserves and 539 million barrels of oil equivalent
3P reserves. The total investment is estimated at 32.3 billion dollars over a period of
5-10 years. Packages include mature fields, extra heavy marine oil, deep water giant
gas fields, and the Perdido Fold Belt oil field in deep waters.
Definition of business models and technical conditions in developing efficient
logistics chains to store and transport (pipeline network and port facilities) oil, gas
and derivatives, of public and private property.- Owning the supply chain is not a
priority of national oil companies, especially when the owners of oil, gas and other
derivatives may be many other companies. The Pacific Alliance four member
countries need to improve their national pipeline networks and their sea and land
intermodal terminals.
TRANS-OCEANIC CORRIDOR IN THE TEHUANTEPEC ISTHMUS
PEMEX plans to make a tender in 2016 to allocate an investment project to a partner
capable of developing a transoceanic corridor across the Isthmus of Tehuantepec, to
connect the ports of Salina Cruz on the Pacific and Coatzacoalcos on the Atlantic,
through two new pipelines. The contract value is estimated at 1.7 billion dollars,
including storage facilities and the improvement required of the port facilities.
Develop new refining plants to reflect the state of the art in this industry.- The
production of distillates is notoriously insufficient in the case of Mexico to supply

22. 22
domestic demand. The country currently imports more than 400 thousand barrels
of gasoline per day, and around 150 thousand barrels of diesel.
NEW PRIVATE REFINERY IN CAMPECHE STATE
There is a business opportunity to develop and operate a new refinery of private
property, which reflects the state of the art in the field, with more compact and
efficient plants, in the state of Campeche. In its first stage, it could process around
100 to 150 thousand barrels per day to supply fuel to the Yucatan Peninsula and
export surpluses.
Meanwhile, in the electric power subsector and renewable energies, six short-term
intervention opportunities are identified:
Implement the Smart Grid to achieve full utilization of national power grids.-
Digitalize the electric networks in order to interconnect generation, transmission
and distribution facilities, represents a quantum step in the management of national
systems. It is a process of several years to be implemented in stages. Initially, in
addition to a plan, it consists in establishing advanced metering infrastructure.30
"SMART METERS" FOR THE NATIONAL ELECTRICITY NETWORK IN MEXICO
The plan to transform the Mexican grid into a smart grid considers in a first stage the
incorporation of 30.2 million "smart meters" by 2025, with a market value of 10
billion dollars.
Consolidate distributed electric power generation networks in order to include
remote areas and interconnect the various potential energy producers.- Provide
electricity to remote areas in the Pacific Alliance four member countries is a high
social priority. The technology allows already for various options to provide micro-
networks to small communities, based on renewable energies or combined with
traditional sources, which do not connect with the national grid. Moreover, the
distributed network is a concept used to describe the technology that is part of the
smart grid and allows the interconnection of different power generating units to the
national grid and its proper management.
NATIONAL PROGRAM OF HOME PHOTOVOLTAIC ELECTRIFICATION IN PERU
It began in 2013 and its goal is to provide electricity to 500,000 families in remote
areas of the country to reach a level of 95% rural coverage by 2018. The technology
used is solar photovoltaic, being highly versatile in terms of its scale and installation
conditions, in addition to being locally administered.
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Advanced metering infrastructure (AMI).

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Develop a regional network for research and development on renewable energies
(particularly solar, wind and geothermal), with emphasis on energy storage
technologies.- Learning from the formation of the regional research network on
climate change, the member countries of the Pacific Alliance could promote the
design and development of a research and development program on renewable
energies conducive to the interaction of skilled human resources and having as
objective to achieve world leadership on issues of interest to the region. Due to the
strategic importance that would have giving viability to larger-scale non-
conventional renewable energies, it is considered that one of the research topics
could be on energy storage technologies.
Develop efficient national networks of gas pipelines to supply industrial and
residential areas.- Gas has become the main source of primary energy in this
phase of the global transition to cleaner energies. For countries of the region, it will
be an essential component in power generation, and also to supply industrial and
residential areas by means of pipeline networks, whether it is imported as in the
case of Mexico and Chile, or it is locally produced as in Colombia and Peru. What
is relevant is to enable efficient platforms that make this energy available at a low
cost and enhance competitiveness of the region for the various economic activities:
manufacturing, mining and the primary sector (agriculture, forestry, aquaculture).
ENERGY REGION OF NORTH AMERICA
Mexico plans to increase its pipeline network in 75% by 2018 and multiply by three
the supply of gas by pipeline from the United States, in order to reach 7 billion cubic
feet per day in 2028.
Several projects will be tendered in 2016, including an underwater pipeline from
Texas to Tuxpan, with an estimated cost of 3 billion dollars.
More than 10 billion dollars in investments in planned or finished pipelines have been
announced only in 2015.
Develop specific energy clusters in the countries of the region (wind in Colombia
and Mexico, solar in Chile and Mexico, geothermal in Peru and Mexico).- In every
country in the region, a zone stands out for the concentration that the investment in
non-conventional renewable energies has had there. Such is the case, for
example, of the Isthmus of Tehuantepec in Mexico for wind energy and the
Atacama Desert in Chile for solar energy. The orderly development and greater
local participation and benefit in these areas is possible through the organization
and operation of clusters that bring together various stakeholders, including
government levels, research centers, suppliers of the value chain, to agree on a
common agenda that promotes long-term sustainability –social and environmental–
of the area and local added value.

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WIND POWER CLUSTER IN LA VENTOSA
The Southern part of the Isthmus of Tehuantepec, where la Ventosa is located, has
one of the biggest potentials for wind power in the world. Mexico has the highest
global growth industry of wind power generation. This factor and the need to
consider the impacts on local communities can be better addressed from a cluster-
type organizational structure.
Implement the electrical interconnection among the countries of the region
(particularly between Chile and Peru).- Peru has low energy costs and a surplus of
energy. Chile, on the other hand, has high energy costs and a deficit. Their
neighborhood strengthens the convenience to interconnect their electricity
systems, so that Peru can sell low-cost energy and Chile can buy electricity for
improving costs. This effort would be part of a political initiative of Pacific Alliance
countries to achieve within a short period the electrical interconnection from Mexico
to Chile.
CHILE-PERU ELECTRICAL INTERCONNECTION
To date, the technical discussion on the electrical interconnection between Chile and
Peru has ended. They defined bidding rules for the first electrical line with a laying of
70 kilometers between Arica and Tacna. Only the political decision is still pending.