OPORTUNIDADES DE LA INDUSTRIA DEL GAS NATURAL EN AMÉRICA LATINA

(1)

October 22, 2015

O

PORTUNIDADES DE LA INDUSTRIA DEL GAS NATURAL

EN

A

MÉRICA

L

ATINA

(2)

Gasolines

23,137

Diesel

10,833

LPG

4,964

Natural gas

3,491

Petrochemicals

1,760

Kerosene

1,812

Fuel oil

1,507

Asphalts, 519

Others, 614

1. The values for 2015 are annualized.

2015

$48,637

MMUSD

1

Market description

1

• 49 Billion dollar market in 2015, world 3rd LPG , 6th gasoline, and 8th NG largest consumer markets,

• Deficit in high value O&G products, net imports: gasoline (48%), diesel and jet fuel (29%), LPG (35%), NG (27%) and petrochemicals (>50%).

• Expected growth in O&G products demand of about 3% per year for the next 5 years.

• Strategically located in the North America Region, large northern border with the USA and a 200 km isthmus in the south that may capture the

high price differential between the Pacific and the Atlantic oceans

• Pemex has a competitive advantage in Production & Logistics through its existing infrastructure

Cadereyta Monterrey Madero Tula Pajaritos Morelos Minatitlán Cactus Salina Cruz Cd. Pemex Salamanca Guadalajara Cd. México Camargo Reynosa Poza Rica Cangrejera Cosoleacaque N. Pemex

San Martín La Venta Matapionche Arenque Burgos

Refinery

Petrochemical Center

Pipeline

Sales Point

Gas Processing Center

Producer Zone

(3)

2 • Asset manager.

• Supply obligation.

• Volumetric approach.

• Prices set by the Ministry of

Finance.

• Public debt.

• Balance sheet and credit rating not

linked.

• Free license to operate.

• Rigid regulatory framework.

From state-owned

monopoly…

…to a productive state

enterprise

• Business administrator.

• Economic supply with obligations.

• Maximize company value.

• Prices set by the market.

• Company debt.

• Link between balance sheet and credit

rating.

• Operating license subject to performance.

• Flexible regulatory framework.

A cultural change is necessary to move from an oil monopoly to a productive enterprise.

.

Efficiency

(4)

Transforming PEMEX

PEMEX:

A competitive

business

New Tax

Regime

New

internal

control

regime

Partnerships

strategic

Round

zero

Autonomy

managerial

Autonomy

budget

New

Procurement

System

3 Change Strategy

New

compensation

scheme

restructuring

pension funds

New

corporate

governance

New

Legal

Frame

w

ork

Change in Structure

Cultural exchange

A

L

I

G

N

(5)

PEMEX Downstream

Infrastructure

6 Refineries

9 Gas Processing

Centers

2 Petrochemicals

Centers

Opera

ting

m

ode

l

Proj

ect

managem

ent

Input

• Non associated gas

• Associated gas

• Condensates

• Crude oil

• Natural gas

• Natural

gasoline

• Benzene

• Naphtha

• Sweetening

• Cryogenics

• Fractionating

• Distillation

• Hydro desulfurization

• Reforming

Processing

G

as

Petrochemicals

Re

fining

Products

• Aromatic

fractionation

• Reforming

• Synthesis / reaction

• Reforming

• Coking

• Natural gas

• LPG

• Natural

gasoline

• Sulphur

• Ethane

• Styrene

• Xylenes

• Benzene

• Toluene

• HAO

• Methanol

• Petrochemicals

• Gasoline

• Jet fuel

• Diesel

• Fuel oil

• Lubricants

• Asphalts

• Coke

• Sulphur

• Propylene

4 Our

clients

Residential

Industrial

Power

Transportation

(6)

Mexico Gas Natural: Highlights

1_{Source: INEGI. Census of Population and Housing, 2010 Basic Questionnaire.}

2 _{Source: INEGI. 2nd semester 2014.}_{http://www.inegi.org.mx/inegi/contenidos/espanol/prensa/comunicados/pibbol.pdf Exchage rate 02.10.2015}_{: 16.81 Source Banxico.}

3 _{Source: Bp Statistical Review of World Energy June 2015. http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-full-report.pdf} 4._{Source: Iea.org, Key World Energy Statistics 2014.}

T

OTAL

P

OPULATION

:

112,336,538

1 GDP:

USD $834,968

MILLON

2 E

LECTRICITY PRODUCTION FROM FOSSIL FUELS

- N

ATURAL GAS

(2012)

4

C

OUNTRY

USA

R

USSIAN

F

EDERATION

J

APAN

I

RAN

M

EXICO

I

TALY

E

GYPT

S

AUDI

A

RABIA

TH

AILAND

K

OREA

R

EST OF THE

WORLD

TW

H

1265

525

397

170

151

129

125

121

112

117 1988

5100

8 TH PLACE IN NATURAL GAS WORLD

CONSUMPTION

3,029 B

CF

3

13 TH

_{PLACE IN NATURAL GAS WORLD}

PRODUCTION

2,051 B

CF

3

35 TH

_{PLACE IN NATURAL GAS WORLD}

(7)

Natural gas consumption by sector

Consumption Distribution By Sector (August 2015)

PEMEX

2,159

I

NDUSTRIAL

894 D

ISTRIBUTORS

388 E

LECTRICITY

1,410

S

ELF

-

GENERATION

141 40%

17%

7%

26%

3%

C

OMMERCIALS

352 7%

T

OTAL

: 5,344 MM

CFPD

1,262

390

187

320

SOURCE: BDI, SEPT2015

Pemex Exploración y Producción

Pemex Gas y Petroquímica Básica

Pemex Petroquímica

(8)

Estimate trends for mexican industrial demand of

natural gas

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

Industrial

1 240

1 366

1 590

1 713

1 804

1 910

1 973

2 033

2 100

2 166

2 234

2 304

2 383

2 462

2 546

2 630

500 1 000

1 500

2 000

2 500

3 000

MM

cfp

d

(9)

Natural gas forecast demand in Mexico 2014-2019

/2 It considers esports.

Source: SENER“Prospectiva de gas natural y gas LP 2014-2028”

MM

CFPD

-700

1 300

3 300

5 300

7 300

9 300

11 300

'14

'15

'16

'17

'18

'19

Domestic Supply

Imports

Demand

-2.19%

11%

4%

A

VERAGE

A

NNUAL

(10)

Connecting Mexico with better markets

T

HE

M

EXICAN PIPELINE

EXPANSIONS ARE

GIVING THE

POSSIBILITY TO

ACCESS IN CHEAPER

MARKETS IN THE

U.S.

USA

Agua Dulce

Henry Hub

Tennesse

zone 4-300 Leg

NET

Mexico

Los Ramones

II North

Los Ramones I

MEXICO

Los Ramones II

South

E

XISTING PIPELINES

(11)

Related market prices

7,9

11

4.8

2.5

5.4

10.1

Crudo Heating Oil Propano Gas Natural Combustóleo Gasolina

H

YDROCARBONS

*

O

RIGINAL

P

RICES

E

QUIVALENT

P

RICES

C

RUDE

O

IL

(WTI, C

USHING

O

KLAHOMA

N

YMEX

)

$46.14 USD/B

ARRIL

$7.9 USD/MMB

TU

H

EATING

O

IL

(D

IESEL

, N

YMEX

N

EW

Y

ORK

H

ARBOR

)

$1.5 USD/G

AL

$11 USD/MMB

TU

P

ROPANE

(M

ONT

B

ELVIEU

, TX.)

$43.8USD/G

ALÓN

$4.8 USD/MMB

TU

N

ATURAL

G

AS

(H

ENRY

H

UB

, N

YMEX

)

$2.5 USD/MMB

TU

$2.5 USD/MMB

TU

F

UEL

O

IL

(H

IGH

S

ULFUR FUEL OIL

, N

YMEX

)

$212 USD/G

AL

$5.4 USD/MMB

TU

G

ASOLINE

(N

YMEX

)

$1.27 USD/G

AL

$10.1 USD/MMB

TU

Information as of Oct 19, 2015

*Reference Prices

P

RICES OF

N

ATURAL

G

AS

USD/MMBtu

Elaborated by Pemex Gas y Petroquímica Básica using Thomson Reuters prices .

(12)

Natural gas international prices

P

RICES AS

O

CTOBER

14 TH

2015

(USD/MMB

TU

)

$2.57/

2.58

So Cal

$ 2.52/

2.52

Nymex Henry Hub

$2.45/

2.46

Reynosa

$ 5.37/

3.50

Algonquin

$6.23/

6.06

UK NBP

$6.04/

6.02

Dutch TTF

$6.64/

6.68

Italian PSV

$6.65/

6.60

India

$6.45/

6.40

China

$6.65/

6.60

Japón

$6.65/

6.60

Corea del Sur EUROPA

ASIA

$6.06/

6.04

Germany EGT

* Prices in green are from a previous week

(13)

Net Gas Natural exports from US to Mexico (2014-2015)

1

2 NET EXPORTS 2014-2015 (MMBT

U

/

D

)

2014

2015

1. W

EST

T

EXAS

299,339

45,940

2. S

OUTH

T

EXAS

979,800

1,227,949

TOTAL

1,279,139

1,273,889

2014

2015

W

EST

T

EXAS

, A

Z

. C

ALIF

.

MMBT

U

/

D

S

AMALAYUCA

89,718

0 C

HIHUAHUA

-CDJ

117,965

38,796

N

ACO

34,801

7,144

N

ORTE

II

56,855

0 N

ORTH

B

AJA

0

0 T

OTAL

:

299,339

45,940

S

OUTH

T

EXAS

T

RANSPORTATION

S

OUTH

T

EXAS

(MMBT

U

/

D

)

2014

2015

T

ENNESSEE

215,398

67,652

K.M. B

ORDER

216,192

173,816

K.M. T

EXAS

422,316

452,441

T

ENNESSEE

RB

73,768

0 T

ETCO

41,818

2,712

NET

10,308

531,328

T

OTAL

:

979,800

1,227,949

Source: BDI, Sept 2015

(14)

Net Gas Natural exports from US to Mexico (2014 - 2015)

N

ET

A

VERAGE

E

XPORTS

2014 – 2015 (M

MBTU

/D)

2014

2015*

1,279,139

1,273,889

* Jan-Sep 2015

MMBTu/day

2014

2015

1 139 254

1 318 019 1 285 747 1 286 183

1 324 219

1 422 843

1 424 591

_{1 380 998}

1 402 086

1 307 756

1 051 378

1 011 832

1 108 041

1 168 491

1 208 740

1 133 078

1 270 997

1 368 500

1 486 642

1 447 268

1 488 615

Ene

Feb

Mar

Abr

May

Jun

Jul

Ago

Sep

Oct

Nov

Dic

2014 2015

Jan

Apr

Aug

Dec

(15)

Natural gas infrastructure projects 2015-2019

LNG regasification terminals

Pipelines in operation

Concluded Pipelines (2013/2014/2015)

Pipelines in construction (2015/2016)

Pipelines included

at “Plan Quinquenal”

Compression Station

“El Cabrito”

Pipelines

1.El Encino – La Laguna

2.Sur de Texas – Tuxpan (submarino)

3. Tula – Villa de Reyes

4. Tuxpan – Tula

5. Samalayuca

– Sásabe

6. Colombia – Escobedo

7. Jáltipan

– Salina Cruz

8. Los Ramones – Cempoala

9. Villa de Reyes - Aguascalientes – Guadalajara

10. La Laguna – Centro

11. Lázaro Cárdenas – Acapulco

12. Salina Cruz – Tapachula

Source: SENER. Plan Quinquenal de Transporte y Almacenamiento Nacional Integrado de Gas Natural 2015-2019.

La Laguna El Encino _Colombia Escobedo Naranjos Tuxpan Topolobampo Durango Cempoala Los Ramones Jáltipan Salina Cruz Tamazunchale V. Reyes Guadalajara Aguascalientes Sásabe Tapachula San Isidro Guaymas Puerto Libertad El Oro Camargo Samalayuca Mazatlán Altamira Apaseo el Alto Lázaro Cárdenas Acapulco Nuevo Pemex Ciudad Pemex Huexca Tula Zacatecas

San Luis Potosí

Nativitas

1

2

3 ₄

5

6

7

8

9

10

11

12

(16)

Conclusions

• PEMEX, as a Productive State Enterprise aims to maximize economic value and profitability

for the Mexican state, by improving its productivity to maximize oil and gas revenues and

contribute to national development.

• PEMEX operation as the only producer of hydrocarbons in the country has changed by a new

model of open competition.

• PEMEX can take advantage of the opportunity to establish new legal framework with strategic

partners to consider alliances or joint ventures to encourage the country's competitiveness to

ensure industry and a national economy that transforms Mexico.