lp gas outlook - gob

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LP Gas Outlook

2016-2030

Mexico, 2016

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Secretariat of Energy Pedro Joaquín Coldwell Secretary of Energy Leonardo Beltrán Rodríguez Deputy Secretary of Planning and Energy Transition Cesar Emilio Hernández Ochoa Deputy Secretary of Electricity Aldo Flores Quiroga Deputy Secretary of Hydrocarbons Gloria Brasdefer Hernández Senior Officer Rafael Alexandri Rionda General Director of Planning and Energy Information Víctor Manuel Avilés Castro General Director of Communications

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Document Preparation and Review: Rafael Alexandri Rionda General Director of Planning and Energy Information ([email protected]) Luis Gerardo Guerrero Gutiérrez Director for the Integration of the Sector Outlooks ([email protected]) Fabiola Rodríguez Bolaños Deputy Director for the Integration of Energy Policies ([email protected]) Alain de los Ángeles Ubaldo Higuera Deputy Director of Energy Consumption ([email protected]) Ana Lilia Ramos Bautista Head of Department of Energy Policy ([email protected]) Cover: Administrative support: María de la Paz León Femat, Maricela de Guadalupe Novelo Manrique. 2016, Secretariat of Energy.

mailto:[email protected]





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Acknowledgments

We owe a debt of gratitude to the following agencies, entities, organisms, and institution for the integration of this outlook:

Comisión Nacional de Hidrocarburos (National Hydrocarbons Commission)

Comisión Reguladora de Energía (Energy Regulatory Commission)

Comisión Nacional para el Uso Eficiente de la Energía (National Commission for the Efficient Use of Energy)

Subsecretaría de Hidrocarburos (Undersecretariat of Hydrocarbons)

Petróleos Mexicanos (Mexican Petroleums)

Instituto Mexicano del Petróleo (Mexican Petroleum Institute)

Secretaría de Hacienda y Crédito Público (Secretariat of Finance and Public Credit)

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Index

Index .......................................................................................................................................................................................5

Index of Tables ...................................................................................................................................................................7

Index of figures ...................................................................................................................................................................8

Presentation ........................................................................................................................................................................9

Introduction ...................................................................................................................................................................... 10

Executive Summary ........................................................................................................................................................ 11

1. Liquefied-Petroleum Gas Regulatory Frame .............................................................................................. 13

1.1. Regulatory Instruments in the Liquefied-Petroleum Gas Value Chain .................................... 13

1.1.1. Gas Exploration and Extraction Activities ............................................................................................. 13

1.1.2. Industrial Transformation ........................................................................................................................... 14

1.1.3. Transportation and Storage ...................................................................................................................... 15

1.1.4. Distribution .......................................................................................................................................................... 16

1.1.5. LP Gas Trading ..................................................................................................................................................... 16

2. Historic LP Gas Domestic Market ................................................................................................................. 18

2.1. LP Gas Domestic Market ....................................................................................................................... 18

2.1.1. LP Gas Domestic Demand by Sector ....................................................................................................... 18

2.1.2. LP Gas Regional and State Demand ........................................................................................................ 22

2.1.3. LP Gas Domestic Production ...................................................................................................................... 24

2.1.4. LP Gas Infrastructure ................................................................................................................................... 24

2.1.5. LP Gas Foreign Trade ................................................................................................................................... 27

2.1.6. LP Gas Prices ................................................................................................................................................... 28

2.1.7. LP Gas Balance ............................................................................................................................................... 28

3. LP Gas Domestic Market Prospective .......................................................................................................... 30

3.1. LP Gas Domestic Market ....................................................................................................................... 30

3.1.1. LP Gas Domestic Demand, 2005-2030 ................................................................................................. 30

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3.1.2. LP Gas Regional and State Demand ........................................................................................................ 36

3.1.3. LP Gas Production ......................................................................................................................................... 38

3.1.4. LP Gas Trading ............................................................................................................................................... 38

3.1.5. LP Gas Balance ............................................................................................................................................... 39

LP Gas Annexes ............................................................................................................................................................... 40

Glossary ............................................................................................................................................................................. 53

Acronyms .......................................................................................................................................................................... 55

Conversion Factors ......................................................................................................................................................... 57

References......................................................................................................................................................................... 59

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Index of Tables

TABLE 2. 1 LP GAS DOMESTIC SALES BY REGION AND STATE, 2005-2015 ..................................................... 23

TABLE 2. 2 LP GAS PRODUCTION IN PGPB, 2005-2015 .......................................................................................... 24

TABLE 2. 3 PERMITS GRANTED BY SENER FOR LP GAS DISTRIBUTION AND RETAIL* ................................... 26

TABLE 2. 4 LP GAS NATIONAL BALANCE....................................................................................................................... 29

TABLE 3. 1 DOMESTIC DEMAND FOR FUELS IN THE INDUSTRIAL SECTOR, 2015-2030 ............................. 35

TABLE 3. 7 OIL SECTOR* DOMESTIC DEMAND FOR FUELS, 2015-2030 ............................................................ 36

TABLE 3. 8 LP GAS DEMAND BY REGION AND FEDERAL ENTITY, 2015-2030 ................................................. 37

TABLE 3. 9 LP GAS DOMESTIC BALANCE, 2015-2030 ............................................................................................. 39

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Index of figures

Figure 2. 1 Natural Gas And Lp Gas Domestic Demand By Sector ......................................................................... 18

Figure 2. 2 Residential Sector Domestic Demand For Fuels, 2015 ......................................................................... 19

Figure 2. 3 Services Sector Domestic Demand For Fuels, 2014 .............................................................................. 20

Figure 2. 4 Motor-Carrier Sector Demand For Fuels, 2015 ....................................................................................... 20

Figure 2. 5 Industrial Sector Demand For Fuels, 2015 ................................................................................................ 21

Figure 2. 6 Oil Sector Domestic Demand For Fuels, 2015 ......................................................................................... 22

Figure 2. 7 Infrastructure For Transporting And Distributing Lp Gas, 2015. ....................................................... 25

Figure 2. 8 Capacidad De Almacenamiento De Gas L.P., 2015 ................................................................................ 26

Figure 2. 9 Lp Gas Foreign Trade In Mexico, 2015 ....................................................................................................... 27

Figure 2. 10 Lp Gas Fhs And Retail Prices, 2005-2015 .............................................................................................. 28

Figure 3. 1 Lp Gas Domestic Demand, 2005-2030. .................................................................................................... 30

Figure 3. 2 Lp Gas* Domestic Demand By Sector, 2015-2030. .............................................................................. 31

Figure 3. 3 Residential Sector Consumption Of Fuels, 2015-2030. ....................................................................... 31

Figure 3. 4 Lp Gas Savings In The Residential Consumption Due To Technical Improvements And Changes In The Consumption Patterns, 2015-2030. ................................................................................................. 32

Figure 3. 5 Fuels Consumption In The Services Sector, 2015-2030. ..................................................................... 33

Figure 3.6 Lp Gas Savings In The Services Sectors By Type Of Equipment, 2015-2030. ............................... 33

Figure 3. 7 Fuels Demand In The Motor-Carrier Sector, 2015-2030. ................................................................... 34

Figure 3. 8 Lp Gas Industrial Demand And Gdp Of The Manufacturing Sector .................................................. 35

Figure 3. 9 Lp Gas Production, 2015-2030 .................................................................................................................... 38

Figure 3. 10 Lp Gas Foreign Trade ..................................................................................................................................... 38

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Presentation

After the Energy Reform, some amendments to the energy policy have been carried out towards the efficiency of the energy markets and to improve their performance, and thus, contribute to the household’s welfare and the competitiveness of the companies working within the country.

To implement the Energy Reform, varied laws were issued to support the legal frame of the new energy reform, such as the Hydrocarbons Law and the on the Coordinated Regulatory Organs for the Energy Matters. These laws are the basis to develop a new regulatory matrix, which will bring enough clarity and certainty to the participants in the varied energy markets.

The Energy Reform has generated significant changes throughout the hydrocarbons value chain, like the direct allocation of resources considered as strategic to Petroleos Mexicanos (PEMEX), production and shared-utility contracts, licensing of international players, and the opening to private companies for trading hydrocarbons.

As for the trading and distribution of LP gas, the greatest advance was the import liberalization of this fuel starting on January 2016. With this, the Mexican Government reasserts its commitment to foster more competitiveness in the LP gas by granting 136 permits1 to import LP gas, and to reduce its price for the benefit of Mexican families.

The present document was devised along with varied entities of the energy sector, whose role is highly significant in matters of the regulation and performance of the LP gas market.

1 Permits granted by December 12, 2016, http://www.gob.mx/cms/uploads/attachment/file/171836/Permisos_de_importaci_n_de_Gas_LP_5dic16.pdf

http://www.gob.mx/cms/uploads/attachment/file/171836/Permisos_de_importaci_n_de_Gas_LP_5dic16.pdf

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Introduction

LP gas is a fuel highly consumed in the country: used in petrochemical processes, agriculture, or vehicles, its main utilization is in the residential sector for heating water, cooking, or heating in 7 of every 10 Mexican families. Therefore, it becomes relevant the monitoring the changes of the LP gas market derived from the Energy Reform.

It is important to have a tool for indicative planning which shows the historic and expected behavior of the LP gas market, and contribute as well to the decision-making of the varied sectors. Thus, the Secretariat of Energy issues each year the outlooks for the energy sector, according With Article 24 of the Interior Regulation of the Secretariat of Energy.

This prospective document is formed by three chapters which display the LP gas market behavior, historic and prospective. The first chapter presents the regulatory frame for the activities within the LP gas value chain, about the instruments published after the Energy Reform.

The second chapter contains the LP gas market behavior during the period 2005-2015, on subjects such as demand, production, prices, gas-pipelines infrastructure, trade, and balances, at domestic as well as regional level.

The third chapter addresses the forecast of the LP gas market for the next 15 years, showing the demand, production, foreign trade, and domestic and regional balances. Finally, this document includes the annexes with information from chapters two and three.

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Executive Summary

Regulatory Frame

After the enactment of the Constitutional Reform in Energy Matters, and the coming into force of the Hydrocarbons Law, the legal frame which had regulated the development of the hydrocarbons industry was deeply amended to help Mexico achieve meaningful objective in energy matters.

The activities for exploring and extracting hydrocarbons are regulated by the National Hydrocarbons Commission (CNH, for its Spanish acronym); while the activities for treating and refining oil, natural-gas processing, as well as the export and import of hydrocarbons and oil products require permits granted by the Secretariat of Energy (SENER). Likewise, the permits for the transportation, storage, distribution, compression, liquefaction, decompression, regasification, trading, and retailing of hydrocarbons, oil products and petrochemicals, are granted by the Energy Regulatory Commission (CRE).

Regarding exploration and extraction, the CNH has signed, on behalf of the State, 24 contracts for exploring and extracting hydrocarbons with 27 companies in 7 different countries. This makes room to a diverse industrial system for hydrocarbons, in which, for now on, besides Petroleos Mexicanos (PEMEX), there will be other private companies competing under the same rules. On December 17, 2015, the requirements for the fourth call for Round Two were published. On July 19, 2016, the First Call for Round Two was published, and on August 24, 2016, the Second Call. Thus, for Round 1.4 in deep water, terminated on December 5, 2016, eight out of ten fields were allocated. For Round 2.1, which includes shallow water, the proposals submittal and the proclaimed winners will take place on March 22, 2017, while the verdict will be delivered on March 24, 2017. In the case of Rounds 2.2 and 2.3, which includes offshore fields, their results will be published on July 12, 2017.

As for gas processing, on November 19, 2015, the Official Journal of the Federation (DOF, for its Spanish acronym) published the general Administrative Provisions, which establish the models for the permits' titles for treating and refining oil, as well as for the processing of natural gas, and ensure that the granting of permits will be transparent and efficient, and in compliance with the mandate established in the legal instruments.

To regulate the activities of transportation, storage, distribution, and trading, the CRE has issued agreements and resolutions, which will serve as the regulatory instruments for these activities.

Historic Domestic Market

In 2015, the demand for LP gas decreased 1.5% regarding 2014, reaching 283.0 thousand barrels per day (MBD). During the period 2005-2015, it had an average annual growth rate (AAGR) of 1.2%.

The residential sector had a share of 59.5%, followed by the services sector with 14.8%, motor carrier with 12.5%, industrial with 10.3% with 1.5%, and the oil sector with 1.4%.

In 2015, the domestic production reached a volume of 176.0 MBD, a decrease of 14.6% regarding 2014. From the total production, 85.1% came from the gas processing complexes (CPG, for its Spanish acronym) of Pemex-Gas and Basic Petrochemistry (PGPB, for its Spanish acronym); 13.0% from the refineries of

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Pemex-Refining; and 1.9% from Pemex-Exploration and Production (PEP, for its Spanish acronym) and Pemex-Petrochemistry (PPQ, for its Spanish acronym)2.

To convey LP gas to the maritime and terrestrial distribution terminals operating in the country, diverse pipelines systems, tanker trucks, gas vessels, and tanker semi-trailers. By the end of 2015, there were five permits for transportation through pipelines, which were granted to CRE, PEMEX, and other companies.

In 2015, the LP gas imports reached a volume of 105.2 MBD, a volume 23.9% more than in 2014. As for exports, these decreased by 98.7% regarding 2014, falling from 1.3 MBD to 0.02 MBD in 2015.

Regarding prices, during 2015, the first-hand sales (FHS) prices averaged 9.41 pesos/kg ($/kg), an increase of 4.6% regarding 2014. Retail price (national simple average before VAT) remained in 12.49 $/kg during the period January-December 2015.

Prospective Domestic Market

It is expected that in 2030, the LP gas demand will reach a volume of 263.3 MBD, decreasing 7.0% regarding 2015. The residential sector will remain as the largest consumer of LP gas, with a 52.4% share from this fuel's domestic total, followed by the services sector with 17.8%; industrial, 13.7%; motor carrier, 13.6%; agricultural and livestock, 2.2%; and oil sector with 0.3%.

In 2030, LP gas is expected to reach a 154.7 MBD volume, a decrease of 12.1% regarding 2015, with an AAGR of -0.9% during 2015-2030.

As for foreign trade, by 2030, LP gas imports are projected to reach a volume of 108.6 MBD, an increase of 3.2% regarding 2015, and no exports are expected during the studied period.

2 On April 28, 2015, the DOF published the agreement to create Pemex Industrial Transformation, in which were

reorganized Pemex-Refining, Pemex-Gas and Basic Petrochemistry, and Pemex-Petrochemistry as a sole state productive enterprise, a Pemex subsidiary.

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1. Liquefied-Petroleum Gas Regulatory Frame

1.1. Regulatory Instruments in the Liquefied-Petroleum Gas Value Chain

After the enactment of the Constitutional Reform in Energy Matters, and the coming into force of the Hydrocarbons Law, the legal frame which had regulated the development of the hydrocarbons industry was deeply amended to help Mexico achieve meaningful objective in energy matters.

The hydrocarbons value chain is formed by activities such as: exploration, extraction (onshore wells or offshore platforms), production (oil or gas), industrial transformation (refineries or gas processing units), transportation (pipelines, tankers, railway), storage, distribution, and retailing (gas stations or LP gas distribution and fueling centers)3.

The activities for exploring and extracting hydrocarbons are regulated by the National Hydrocarbons Commission (CNH, for its Spanish acronym); while the activities for treating and refining oil, natural-gas processing, as well as the export and import of hydrocarbons and oil products require permits granted by the Secretariat of Energy (SENER). Likewise, the permits for the transportation, storage, distribution, compression, liquefaction, decompression, regasification, trading, and retailing of hydrocarbons, oil products and petrochemicals, are granted by the Energy Regulatory Commission (CRE).

FIGURE 1. 1 LIQUEFIED-PETROLEUM GAS SUPPLY CHAIN.

Source: SENER with information from the Energy Regulatory Commission (Development of the Mexican Regulatory System in Energy Matter)

1.1.1. Gas Exploration and Extraction Activities

In exploration and extraction, the CNH has signed, on behalf of the State, 24 contracts for exploring and extracting hydrocarbons with 27 companies in 7 different countries. This makes room to a diverse industrial system for hydrocarbons, in which, for now on, besides Petroleos Mexicanos (PEMEX), there will be other private companies competing under the same rules.

On December 17, 2015, the requirements for the fourth call for Round Two were published. On July 19, 2016, the First Call for Round Two was published, and on August 24, 2016, the Second Call. Thus, for Round 1.4 in deep water, terminated on December 5, 2016, eight out of ten fields were allocated. For Round 2.1, which includes shallow water, the proposals submittal and the proclaim of winners will take place on March 22, 2017, while the verdict will be delivered on March 24, 2017. In the case of Rounds 2.2 and 2.3, which includes offshore fields, their results will be published on July 12, 2017.

3 Assessment of the Design of the Budgetary Program G031. Regulation, Management, and Supervision of the Hydrocarbons Sector ASEA-SEMARNAT, p. 2.

Pro

cess Exploration

andExtraction

Transport Refining Storage Consumption

WholesaleConsumption

RetailingDistribution

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On September 30, 2015, the Quinquennial Plan of Biddings for the Exploration and Extraction of Hydrocarbons 2015-2019. In addition to the tendering rounds and the Quinquennial Plan, other agreements which will serve as regulatory frames have been published (see Figure 1.2).

FIGURE 1. 2 AGREEMENTS ON EXPLORATION AND EXTRACTION

Source: SENER with information from agreements published in the DOF.

1.1.2. Industrial Transformation

According to the Regulations for the activities referred to in the Third Title of the Hydrocarbons Law, it is the SENER's role to regulate, oversee, modify, and revoke permits for processing natural gas, as well as for treating and refining oil.

On November 19, 2015, the DOF published the General Administrative Provisions which establish the models for the permits titles for treating and refining oil, as well as for the processing of natural gas, which aim to enable the transparency and efficiency of the grating of permits, and to comply with the mandate established in the legal instruments.

On February 27, 2015, PGPB requested SENER permits for processing natural gas for the CPGs Arenque, Burgos, Cactus, Ciudad Pemex, Coatzacoalcos, La Venta, Matampioche, Nuevo Pemex, and Poza Rica. Likewise, Pemex-Refining request a permit for the refineries: Miguel Hidalgo (Tula), Ing. Antonio M. Amor (Salamanca), General Lazaro Cardenas (Minatitlan), Francisco I. Madero (Madero), Ing. Antonio Dovali Jaime (Salina Cruz), and Ing. Hector R. Lara Sosa (Cadereyta). On June 30, 2015, the SENER, through the General Directorate of Natural Gas and Petrochemicals, and the General Directorate of Oil Products, granted permits for nine CPG and six refineries. Besides, three permits for treating oil were granted with a 30-year validity, which could be extended complying with what is established in the Hydrocarbons Law4.

4https://www.gob.mx/sener/prensa/sener-otorga-permisos-a-pemex-para-continuar-con-las-actividades-de-tratamiento-y-refinación-de-petroleo-asi-como-para-procesamiento-de-gas.

Agreement CNH.E.02.001/16, through which theHydrocarbons National Commission amendsarticles 43, section II and 46, first paragraph andadds the seventh transitory to the TechnicalGuidelines on Hydrocarbons Measurement, issuedon September 29, 2015. (11/02/16)

Agreement CNH.E.09.002/16, through which theHydrocarbons National Commission amends article17 and adds the eighth transitory of the Guidelinesthat Regulate the Process of Quantification andCertificacion of the Nation´s Reserves and thereport of the related contingent resources.(15/04/16)

Agreement CNH.E.29.002/16 through which theHydrocarbons National Commission amendsarticles 42 and 43 of the Technical Guidelines onHydrocarbons Measurement (24/08/16)

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1.1.3. Transportation and Storage

The transportation of LP gas is characterized for being an oligopolistic market, with Pemex as the dominant company. Supply consists of three segments which transport a volume of 283 MBD: tankers (54%), PGPB5 and private gas pipelines (44%), and vessels (2%). The demand representatives are distributors through plants and retailers through warehouses or service stations with a specific purpose6.

Storage comprises the activity of receiving hydrocarbons, oil products, or petrochemicals owned by third parties, in the reception points of their facility or system, preserve them in deposit, safeguarding them, and take them back to the depositor o to whom the latter appoints, in the delivery points defined in its facility or system, according to the general Administrative Provisions issued by the CRE7.

For the transportation through pipeline and large-scale storage, the transportation and storage tariffs are calculated using the incentive regulation method, agreed in the permit granted by the CRE. This organism has issued varied agreements and resolutions for regulating these activities (see Figure 1.3).

FIGURE 1. 3 RESOLUTIONS ON TRANSPORTATION AND STORAGE

Source: SENER with information from the resolutions published in the DOF.

5 On April 28, 2015, the DOF published the agreement to create Pemex Logistics, which started up on October 15 of that same year; currently, it is the subsidiary state productive enterprise which operates the LP gas storage and transportation infrastructure, formerly the property of PGPB. 6 Development of the Mexican Regulatory System in Energy Matter (CRE), p. 35. 7 Regulation of the activities referred to in Third Title of the Hydrocarbons Law.

•Agreement by which the Energy Regulatory Commission extends the delivery term of the firstquarterly report on the duties for permit holders with activities of transportation, distribution, andretailing of oil, oil products, and petrochemicals, foreseen in the format issued through ResolutionRES/308/2015, and published in the electronic Filing Office. (12/04/2016)

•Resolution by which the Energy Regulatory Commission amends the transitory seventh provision ofthe general Administrative Provisions in matters of open-access and provision of the services oftransportation through pipeline and storage of oil products and petrochemicals. (30/03/2016)

•Resolution by which the Energy Regulatory Commission issues the general administrative provisionson measurement matters, applicable to the activity of oil, oil products, and petrochemicalsstorage.(11/01/2016)

•Resolution by which the Energy Regulatory Commission issues the general administrative provisionswhich establish the specifications of the requirements referred to in articles 50 and 51 of theHydrocarbons Law, the permit application formats, and the models of the permit titles forperfoming activities of storage, transportation, distribution, and retailing of liquefied petroleumgas.(15/12/2015)

•Resolution by which the Energy Regulatory Commission issues the general administrative provisionsapplicable for the provision of the services of transportation through pipelines and hydrocaronsstorage. (04/11/2015)

Transportation and Storage

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1.1.4. Distribution

Distribution comprises the activity of purchasing, receiving, keeping, and, if the case, conveying natural gas and oil products for retailing or final consumption. Distribution can be carried on through pipeline, tankers, delivery vehicles, portable containers, pressurized portable containers, as well as any other means established by the CRE in the general Administrative Provisions for its delivery to users or end users, in their facilities or utilization facility, as appropriate8. In addition to the provisions and resolutions, already mentioned in the section about transportation, the following have been issued to regulate this activity:

• General Administrative Provisions which establish the rules for LP gas-distribution permit holders, regarding the compliance with the applicable regulations for the maintenance and replacement of infrastructure and equipment, as well as for personnel training (25/02/16).

• Resolution by which the Energy Regulatory Commission issues the general administrative provisions on open access and distribution services through pipeline of oil products (06/01/16).

1.1.5. LP Gas Trading

In 2015, LP gas supply was generated by two big segments: PEMEX (62.6%) and imports (37.4%). The demand is formed by more than 1,000 distributing companies, such as Grupo Tomza, Gas Uribe, Vela Gas, Gas Nieto, y Gas Zaragoza9. This activity has been reduced, mainly due to the increase on the consumption of natural gas.

The strategy to liberalize the LP gas market began on January 1st, 2016, with the granting of imports permits to any interested party complying with the applicable legal provisions. In this case, the SENER is accountable for the regulation, supervision, granting, amending, and revocation of permits to export and import hydrocarbons under the terms of the Foreign Trade Law and with the support of the Secretariat of Economy. To December 12, 2016, the SENER have granted 136 permits to import LP gas.

The regulatory objectives of the LP gas wholesale are to ensure the market sustainability and foster competitive prices. In this sense, the CRE has issued agreements, resolutions, and decrees which serve as regulatory instruments (see Figure 1.4).

8 Idem. 9 Development of the Regulatory Mexican System in Energy Matter (CRE), p. 37.

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FIGURE 1. 4 RESOLUTIONS ON TRADING

Source: SENER with information from the agreements and resolutions published in the DOF.

Decree whereby the previous decree validity is extended and which subjects liquefied petroleum gas to first-hand sales and end-users' maximum prices, issued on December 31st, 2015. (30/09/16)

Resolution of the Energy Regulatory Commisision which extends the terms to update the trading contracts on oil and oil productsother than gasoline and diesel, as well as to implement the methodologies to define the first-hand sales prices for these products.(03/08/16)

Resolution whereby the Energy Regulatory Commisision extends the validity of oil-products' contracts other than gasoline and diesel, as well as the termination period of the transitory regime referred to in the sixth and eighth points resolved of the ResolutionRES/071/2016. (16/06/16)

Agreement whereby the Energy Regulatory Commisision extends the term in order that permittees of the activities of transportationand distribution through means other than pipelines, supply, and retaling of liquefied petroleum gas submit the reports correspondingto the first and second quarter of 2016, foreseen in the corresponding permit titles. (14/06/16)

Resolution whereby the Energy Regulatory Commisision issues the general administrative provisions which establish the formats tosubmit information for permittees trading hydrocarbons, oil products, and petrochemicals. (06/01/16)

Resolution whereby the Energy Regulatory Commisision issues the general administrative provisions which establish the requirementsto submit applications for provisional permits on transportation, storage, distribution, retailing, and management of the integratedsystems of oil, oil products, petrochemicalas, and biofuels. (27/01/15)

Resolution whereby the Energy Regulatory Commisision Commisision issues the general administrative provisions which establish the specifications of the requirements referred to in articles 50 and 51 of the Hydrocarbons Law, the permit-application formats, and the models of the permit titles to perform activities of storage, transportation, distribution, and retailing of liquefied petroleum gas. (15/12/15)

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2. Historic LP Gas Domestic Market

2.1. LP Gas Domestic Market

In Mexico, as in other countries, LP gas is the most used fuel in the residential sector, mainly for heating water and cooking; nevertheless, there is a significant amount of population who are still using firewood or coal due to the difficulty to access this fuel and/or to the low income in some regions.

This document addresses an analysis of the LP gas market in Mexico during 2005-2015, on subjects such as the national and sectoral demands, production, permits, infrastructure, trade, prices, and national and regional balances for this fuel.

2.1.1. LP Gas Domestic Demand by Sector

In 2015, the LP gas demand decreased 1.5% regarding 2014, reaching 283.0 MBD, and having, during the period 2005-2015, an AAGR of -1.2%.

From the total volume of LP gas consumed, the residential sector had a share of 168.4 MBD, 59.5%. This sector was seconded by the services sector, with a 14.8% share; motor carrier, 12.5%; industrial, 10.3%; oil, 1.5%; and agriculture and livestock, 1.4%. In general, all sectors decreased their LP gas demand, due to a rise in the use of natural gas.

FIGURE 2. 1 NATURAL GAS AND LP GAS DOMESTIC DEMAND BY SECTOR (Percentage share)

Source: SENER, based on information from IMP.

Residential59.5%

Services14.8%

Industrial10.3%

Motor carrier12.5%

Oil1.5%

Agriculture and livestock

1.4%

LP GAS283.0 MBD

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L.P Gas Demand in the Residential Sector

By the end of 2015, the total demand for fuels in the residential sector was of 305.9 thousand barrels per day of LP gas equivalent (MBDLPGE). From this volume, 168.4 MBD were LP gas, 55.0% from the total, seconded by firewood with a 113.2 MBDLPGE volume and a share of 37.0%, and finally, natural gas with a volume of 24.4 MBDLPGE and a 8.0% share. From these fuels, LP gas and firewood had a negative AAGR of 1.7% and 1.1%, respectively, during 2005-2015. As for natural gas, it had a positive AAGR of 0.9% throughout that period.

In 2005, the use of solar panels in this sector increased 7.4% regarding 2014, reaching 97.8 thousand units, while the park of LP gas water heaters grew 3.0% (see Annex Table A.1). Additionally, the use of firewood in some regions, and the rise in the consumption of natural gas, had an impact on the LP gas demand, which decreased 7.8% regarding 2014.

In the case of firewood, the historic data were updated from 2011 on, with the latest information from the National Institute of Statistics and Geography (INEGI, for its Spanish acronym). The data about firewood present a decrease (see Annex Tale A.2).

FIGURE 2. 2 RESIDENTIAL SECTOR DOMESTIC DEMAND FOR FUELS, 2015 (MBDLPGE)


L.P Gas Demand in the Services Sector

By the end of 2015, the consumption of fuels in the services sector reached a volume of 68.8 MBDLPGE, being LP gas the most used fuel with 42.0 MBD, seconded by firewood with 18.1 MBDLPGE, and natural gas with a 8.7 MBDLPGE volume. Like in the residential sector, LP gas and firewood had a negative AAGR of 0.5% and 1.1% during 2005-2015, while natural gas had a 5.1% AAGR during the same period.

In 2015, the consumption of LP gas in the services sector decreased 0.2% regarding 2014, due to the inclusion of water-heating systems for pools and rooms in some hotels, the efficiency of heating equipments, and to the increase on the consumption of natural gas in this sector.

Just like in the residential sector, the historic data on firewood demand were updated with the latest information from INEGI (see Annex Table A.3).

Natural gas24.4

LP Gas168.4

Firewood113.2

305.9 mbglpe

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FIGURE 2. 3 SERVICES SECTOR DOMESTIC DEMAND FOR FUELS, 2015 (MBDLPGE)


Motor-Carrier Sector LP Gas Demand

In 2015, the motor-carrier sector LP gas demand reached a volume of 1,490.1 MBDLPGE. From this, gasoline had the largest share with 981.0 MBDLPGE, followed by diesel with 473.2 MBDLPGE, LP gas with 35.3 MBD, and natural gas with 0.6 MBDLPGE. For gasoline, diesel, and natural gas, these presented positive AAGRs during the period 2005-2015, while the one for LP as was of -0.04%.

In this sector, the demand for LP gas decreased by 1.7% regarding 2015, mainly due to an increase in the vehicle fleet using natural gas and gasoline, while the vehicle fleet fueled by LP gas decreased by 1.3% regarding 2015, going from 253.2 thousand units to 250.3 thousand units (see Annex Table A.4).

FIGURE 2. 4 MOTOR-CARRIER SECTOR DEMAND FOR FUELS, 2015 (Thousand barrels per day of gasoline equivalent)


Natural gas8.7

LP Gas42.0

Firewood18.1

68.8 MBDLPGE

LP Gas2.4%

Compressed Natural Gas

0.04%

Gasoline65.8%

Diesel31.8%

1,490.1 MBDLPGE

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LP Gas Demand in the Industrial Sector

In 2015, the industrial sector used a volume of 621.1 MBDLPGE, from this, natural gas had the largest demand with a 354.5 MBDLPGE volume, 57.1% of the total consumption. Meanwhile, LP gas had a 4.7% share from the sectoral total, with 29.2 MBD.

For LP gas, its demand in 2015 decreased 0.2% regarding 2014. Even if this fuel is fundamental in diverse industrial branches, the high prices of LP gas regarding other fuels, limits the growth of the demand in this sector.

FIGURE 2. 5 INDUSTRIAL SECTOR DEMAND FOR FUELS, 2015 (percentage)


Oil Sector Demand for LP Gas

In 2015, the oil sector used 639.1 MBDLPGE, 3.7% less than in 2014. In this sector, all fuels decreased their demand. LP gas demand was of 17.6% regarding 2014, falling from 5.1 MBD to 4.2 MBD in 2015, followed by gasoline, which decreased 15.3%, fuel oil with 6.8%, diesel with 4.4%, and LP gas with -3.3%.

From the total demand for LP gas in this sector, 2.3 MBD corresponded to refining activities, seconded by exploration and production with 1.4 MBD, gas processing with 0.5 MBD, and petrochemistry with 0.002 MBD (see Annex Table A.5).

Natural gas57.1%

Fuel Oil2.4%

Diesel7.1%

LP Gas4.7%

Petroleum coke

14.1%

Coal14.6%

621.1 MBDLPGE

22

FIGURE 2. 6 OIL SECTOR DOMESTIC DEMAND FOR FUELS, 2015 (MBDLPGE)


2.1.2. LP Gas Regional and State Demand

In 2015, the domestic sales of LP gas reached a volume of 278.8 MBD, a decrease of 1.2% regarding 2014; and for the period 2005-2015, domestic sales decreased by 1.2% annual average. Except for the Central Eastern region, every region decreased regarding the volume demanded on the previous year. Domestic sales by state and region are showed in Table 3.1.

The demand in the Northwest region represented 9.0% from the national total, with a 25.0 MBD demand, 1.7% less compared to 2014. Baja California, with 8.6 MBD was the state with the highest domestic sales. It was seconded by Sonora with 7.7 MBD, Sinaloa with 6.7 MBD, and Baja California Sur with 2.0 MBD, equivalent to a growth in their domestic sales in 2015.

In the Northeast region, the domestic sales decreased 3.9% regarding 2014, achieving 38.7 MBD, 13.9% of the domestic total sales. Chihuahua was the state with the largest domestic sales, with 10.1 MBD, even if its sales decreased by 6.5% regarding 2014. The state with the lowest sales was Durango, with a volume of 3.3 MBD, 6.0% less than in 2014.

As for the Central-Eastern region, in 2015, domestic sales reached a volume of 64.7 MBD, 2.2% more regarding 2014, and which represented 23.2% of the domestic sales total. In the region, Jalisco had the largest domestic sales volume with 21.7 MBD, 2.3% more regarding 2014; and Colima had the lowest sales with a volume of 1.7 MBD, a decrease of 35.3% regarding 2014.

In 2015, the Central region reached a volume of 113.6 MBD of domestic sales, 40.8% of the national total; though, this Regina decreased 2.2% regarding 2014. Within this region, Estado de México had the largest domestic sales, 48.9 MBD, which represented a decrease of 1.7% regarding 2014; and Tlaxcala had the lowest demand, with a sales volume of 4.5 MBD.

The domestic sales from the South-Southeast region were of 36.7 MBD, equivalent to 13.2% of the national total in 2015. In this region, Veracruz had the largest domestic sales, 13.5 MBD, contrasting with Campeche whose sales volume was of 1.0 MBD.

Natural gas566.8

Fuel Oil36.5

Diesel29.6

LP Gas4.2

Gasoline2.2

23

TABLE 2. 1 LP GAS DOMESTIC SALES BY REGION AND STATE, 2005-2015 (thousand barrels per day)


Region / State 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015AAGR

2005-2015

Northwest 27.8 26.7 26.1 25.1 24.0 24.0 24.3 24.4 24.7 25.4 25.0 1.0-

Baja California 11.1 11.1 11.3 10.8 10.4 10.2 9.8 9.6 9.4 9.8 8.6 2.6-

Baja California Sur 1.7 1.8 1.9 1.9 1.7 1.8 2.0 1.9 2.0 1.5 2.0 1.5

Sinaloa 6.9 6.4 6.0 5.8 5.8 5.7 5.8 6.0 6.6 6.6 6.7 0.2-

Sonora 8.1 7.5 6.9 6.6 6.2 6.2 6.7 6.8 6.8 7.6 7.7 0.4-

Northeast 47.5 44.4 43.5 40.0 38.1 41.0 40.7 41.8 42.7 40.3 38.7 2.0-

Coahuila 10.1 9.2 8.8 8.0 7.6 8.2 7.7 8.1 8.1 7.8 7.7 2.7-

Chihuahua 12.8 12.3 12.2 11.4 11.1 12.4 12.4 12.5 12.7 10.8 10.1 2.3-

Durango 3.9 3.6 3.5 3.1 2.7 3.0 3.3 3.5 3.4 3.1 3.3 1.6-

Nuevo León 11.7 10.7 9.3 7.7 7.1 7.2 6.7 7.8 8.4 8.8 9.2 2.4-

Tamaulipas 9.0 8.8 9.6 9.9 9.6 10.2 10.7 9.8 10.1 9.7 8.4 0.7-

Central-Eastern 71.5 70.2 69.7 67.8 64.3 65.9 65.4 64.4 64.0 63.3 64.7 1.0-

Aguascalientes 3.9 3.5 3.4 3.4 3.1 3.1 3.0 3.3 3.5 3.4 3.8 0.1-

Colima 1.7 1.6 1.7 1.8 1.6 1.8 2.9 3.0 3.1 2.6 1.7 0.0-

Guanajuato 13.4 13.7 13.7 13.6 13.0 13.8 13.9 12.9 12.9 12.9 14.1 0.5

Jalisco 24.6 23.9 23.5 22.8 22.2 22.5 21.3 20.7 20.7 21.2 21.7 1.2-

Michoacán 11.5 11.4 11.4 10.3 10.1 10.3 10.1 10.1 10.8 10.3 10.0 1.4-

Nayarit 2.5 2.4 2.4 2.3 2.1 2.3 2.2 2.3 2.2 2.2 2.0 2.0-

Querétaro 4.1 3.8 3.5 3.2 2.4 2.3 2.5 2.4 2.2 2.9 3.2 2.4-

San Luis Potosí 5.5 5.4 5.5 5.4 5.4 5.5 5.3 5.3 4.6 4.5 4.6 1.7-

Zacatecas 4.4 4.5 4.5 4.9 4.5 4.4 4.3 4.4 3.9 3.3 3.5 2.3-

Central 126.3 124.6 122.6 120.3 118.8 120.1 117.3 117.5 114.8 116.1 113.6 1.1-

Distrito Federal 34.4 33.9 32.7 30.7 29.1 28.6 27.9 26.7 25.6 25.9 25.0 3.2-

Hidalgo 9.2 9.2 8.9 8.4 8.0 7.9 7.7 8.3 8.1 8.3 8.1 1.3-

México 55.3 55.3 54.3 51.7 49.6 49.5 48.8 49.2 48.2 49.7 48.9 1.2-

Morelos 6.3 6.3 6.1 5.8 5.5 5.5 5.4 5.5 5.4 5.5 5.4 1.5-

Puebla 17.6 16.7 17.2 19.7 22.2 23.8 22.9 23.1 22.9 22.1 21.8 2.2

Tlaxcala 3.5 3.3 3.4 3.9 4.5 4.8 4.6 4.7 4.7 4.6 4.5 2.6

South-Southeast 40.9 40.1 39.5 38.9 36.6 37.9 37.9 38.4 37.7 36.9 36.7 1.1-

Campeche 0.9 0.9 0.9 0.9 0.9 1.0 0.9 1.0 1.0 1.0 1.0 0.9

Chiapas 5.6 5.3 5.2 5.1 4.9 5.0 5.2 5.1 4.7 4.9 4.8 1.6-

Guerrero 3.8 3.7 3.6 3.3 3.2 3.2 2.9 2.5 1.7 1.4 1.3 9.9-

Oaxaca 4.3 4.3 4.4 4.3 4.4 4.4 4.5 4.6 4.9 4.8 4.8 1.1

Quintana Roo 2.4 2.5 3.0 3.3 3.1 3.4 3.5 3.6 3.7 4.0 4.2 5.9

Tabasco 4.1 4.1 3.6 3.6 3.6 3.8 3.8 3.8 3.9 4.0 3.9 0.5-

Veracruz 15.9 15.5 15.4 15.1 13.4 14.1 14.1 14.7 14.5 13.7 13.5 1.7-

Yucatán 3.9 3.7 3.5 3.3 3.0 3.2 3.1 3.1 3.2 3.1 3.2 2.0-

Domestic Total 314.1 306.0 301.3 292.1 281.8 288.8 285.8 286.5 283.9 282.1 278.8 1.2-

24

2.1.3. LP Gas Domestic Production

In 2015, the national supply reached a volume of 176.0 MBD, a decrease of 14.6% regarding 2014. From the total production, 85.1% came from the CPG, 13.0% from the Refineries, and 1.9% from PEP and PPQ.

In the case of the CPG, there was a decrease of 14.8% regarding 2014, falling from 175.7 MBD to 149.7 MBD. From the total, the CPG Cangrejera produced 43.4 MB, 7.6% more than in 2014; Matapionche was the CPG with the lowest production, a volume of 0.7 MBD. This decrease of the LP gas production is attributable to a lower supply of sour and sweet wet gas, and to the decommissioning of a cryogenic plant which was adapted to deliver ethane to the project Etileno XXI10.

As for the transfers of LP Gas from the refineries to the storage and distribution terminals, the largest volume was transferred from Tula refinery with 9.4 MBD; though, the latter decreased 22.7% regarding 2014 (see Annex Table A.6).

TABLE 2. 2 LP GAS PRODUCTION IN PGPB, 2005-2015 (thousand barrels per day)

* Gas processing complex.


2.1.4. LP Gas Infrastructure

Diverse systems of pipelines, tankers, vessels, and tank trucks are used to convey LP gas to the maritime and terrestrial distribution terminals of the country.

By the end of 2015, there were five permits for transportation through pipelines, which were granted by the CRE to different companies:

• TDF, S. de RL de CV (route running from CPG Burgos towards Monterrey, Nuevo León);

• Ductos del Altiplano, SA de CV (route running from Tuxpan, Veracruz towards Atotonilco de Tula, Hidalgo);

• Penn Octane de Mexico S de RL de CV (route running from the border crossing of Sabina, Tamaulipas towards the terminal in Matamoros);

• Pemex Logistics SNGLP (route running from Cactus towards Guadalajara); and

10 Annual Report 2015, Petroleos Mexicanos.

CPG* 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 AAGR2005-2015

Total 215.4 215.3 198.9 182.4 180.6 184.2 185.4 176.0 177.7 175.7 149.7 -3.6

Burgos 9.9 14.5 17.0 18.0 20.0 19.9 19.8 18.2 19.5 18.0 14.9 4.2

Cactus 40.2 45.0 35.5 27.1 27.0 32.7 31.7 32.0 28.9 25.1 21.2 -6.2

Cangrejera 43.6 44.1 39.1 43.4 43.4 39.6 45.0 43.0 39.2 47.0 43.4 -0.1

Matapionche 2.2 2.2 2.1 1.8 1.5 1.1 1.0 0.8 0.9 0.8 0.7 -10.7

Morelos 42.1 46.3 41.8 39.8 46.6 47.6 38.9 41.1 40.7 37.1 39.1 -0.7

Nuevo Pemex 70.4 57.8 57.8 48.2 38.9 39.8 44.2 35.5 42.2 42.1 25.5 -9.7

Poza Rica 2.7 2.3 3.0 2.7 3.1 3.4 4.7 5.4 6.1 5.6 5.0 6.5

Reynosa 4.4 3.2 2.6 1.5 0.1 - - - - - - n.a.

25

• Pemex Logistics "Hobbs-Mendez" (route running from the station "hobbs", located in the border of Texas, U.S. towards Ciudad Juarez, Chihuahua.

For the permits to distribute LP gas through pipelines, the CRE have granted four permits by the end of 2015:

• Compañía de Gas de Tijuana, S.A. de C.V. in the state of Baja California;

• Asociación de Colonos de la Herradura, A.C. in Estado de México;

• Gas del Caribe, S.A. de C.V. in the state of Quintana Roo; and

• Hermogas S.A. de C.V. in the state of Sonora.

The following map displays the infrastructure of transportation and distribution pipelines by the end of 2015:

FIGURE 2. 7 INFRASTRUCTURE FOR TRANSPORTING AND DISTRIBUTING LP GAS, 2015.

Source: SENER with information from CRE

By September 9, 2016, the CRE had granted the following permits: 1,182 permits for distribution plants, 342 permits for retailing through self-consumption service stations, 3,155 permits for retailing through service stations with specific purpose, and 7 permits for retailing through warehouse retailing.

TDF.S. de R.L. de C.V

Penn Octane de México, S. de R.L de C.V.

Ductos del Altíplano, S.A. de C.V.

Pemex-Logistics(SNGLP)

Compañia de Gas de Tijuana, S.A. de C.V.

Hermogas S.A. de C.V.

Asociación de Colonosde La Herradura, A.C.

Gas del Caribe , S.A. de C.V.

Transportation

Distribution

Pemex-Logistics(Hobbs-Méndez)

26

TABLE 2. 3 PERMITS GRANTED BY SENER FOR LP GAS DISTRIBUTION AND RETAIL*

Source: SENER with information from the CRE.

In December 2015, the CRE granted varied permits to Pemex Logistics to operate the infrastructure for the transportation and storage of hydrocarbons11, among which there are three permits for LP gas storage.

By the end of 2015, the CRE had granted 26 storage permits, with a capacity of 5,513,974 barrels of LP gas, which represented an increase of 111.6% regarding 2014. This, due to the three permits granted in 2015 with a 2,650,452 barrels of LP gas capacity; two of these permits are located in Veracruz, and one in San Luis Potosí. One of these permits correspond to an underground-storage project in saline caves, and with which Veracruz increased fivefold its storage capacity regarding 2014.

FIGURE 2. 8 STORAGE CAPACITY FOR LP GAS, 2015 (barrels)


11 Report of preliminary results of PEMEX by December 31st, 2015, p. 14.

Permits granted for LP Gas No. of permits

LP Gas-Distribution Permits through Distribution Plant

1,182.0

LP Gas-Supplying Permits through Service Station for self-consumption

342.0

Valid Permits for LP Gas Retailing through Service Station with specific purpose

3,155.0

Valid Permits for LP Gas Retailing through Retailing Warehouse

7.0

3.218.502

917.572 868.734

210.00980.000 79.999 43.721 30.505 22.854 15.347 12.579 9.435 4.717

Total capacity: 5, 513, 973 barrels

27

2.1.5. LP Gas Foreign Trade

Up to the end of 2015, the LP gas imports were performed by Pemex through its subsidiary MGI Trading Ltd. in order to meet the national demand, since this hydrocarbon production does not suffice.

In 2015, LP gas imports reached a volume of 105.2 MBD, an increase of 23.9% regarding 2014. From this volume, 66.9 MBD (63.6%) were received through vessels. From the imported volume through sea, 46.5 MBD were received in the terminal of Pajaritos.

As for imports by land, a total of 12.6 MBD were received, corresponding to 12.0% of the total. From this volume, most of it was received through Mexicali with 4.9 MBD, seconded by Piedras Negras with 3.8 MBD, Tijuana with 3.1 MBD, and Nogales with 0.9 MBD.

Finally, imports through pipelines reached a volume of 25.7 MBD, equivalent to 24.4% of the total. From the imported volume, 17.9 MBD were received through Ciudad Juarez, and the rest, through Matamoros.

In the case of exports, these decreased by 98.7% regarding 2014, dropping from 1.3 MBD to 0.02 MBD, which were sent to Belize.

FIGURE 2. 9 LP GAS FOREIGN TRADE IN MEXICO, 2015 (thousand barrels per day)

Source. SENER, based on information from IMP.

Pajaritos46.5

Nogales0.9

Cd. Juárez17.9

Mexicali4.9

Tijuana3.1

Matamoros7.8

Topolobampo3.4

Rosarito4.8

Manzanillo4.3

Tuxpan8.0

Piedras Negras3.8

Cactus (Belice) 0.02

Sea imports

Land imports

Pipeline imports

Exports (destination)

28

2.1.6. LP Gas Prices

In 2015, the Federal Executive published in the DOF, the Decree by which the LP gas is subjected to first-hand and retailing maximum prices. According to this Decree, and to Resolutions RES/284/2014 and RES/385/2014 issued by the CRE, Pemex issues the first-hand price of LP gas by population originated in each shipping center12.

During 2015, the FHS price averaged 9.41 pesos/kg ($/kg), an increase of 4.6% regarding 2014, while the retail rice (simple average before VAT), remained in 12.49 $/kg during the period of January to December 2015.

FIGURE 2. 10 LP GAS FHS AND RETAIL PRICES, 2005-2015 (pesos per kilogram)

Source: CRE.

The prices of administered LP gas and LP gas based on opportunity cost are presented in the Annex Figure A.1.

2.1.7. LP Gas Balance

In 2015, the supply of LP gas reached a volume of 176.0 MBD, equivalent to 17.1% less than in 2014, what made it necessary to resort to imports for meeting a 283.0 MBD, a decrease of almost 2% regarding 2014.

As for the demand, the residential sector was the largest consumer with 168.4 MBD, seconded by the services and motor-carrier sectors with 42.0 MBD and 35.3 MBD, respectively; this trend was observed in three of the five regions, except for the Northwest and Northeast regions (see Annex Table A.7-A.11).

In 2015, exports fell from 1.3 MBD to 0.01 MBD, and were sent to Belize; on the other hand, imports grew from 85.0 MBD to 105.2 MBD.

12 http://www.gas.pemex.com.mx/PGPB/Productos+y+servicios/Gas+licuado/Precios/Veta+GLP+distribuidores/

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

FHS price ($/kg)

Retail price ($/kg) (average beforeVAT)

29

TABLE 2. 4 LP GAS NATIONAL BALANCE (MBD)

Note: The volumes of propane and butane consumed as raw material are included in the industrial sector. * Includes differences, packaging, and ships in transit. Source: SENER, with information from IMP.

Concept 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015AAGR

2005-2015Origin 320.7 317.4 308.9 298.0 289.6 291.6 292.9 292.0 286.5 291.0 281.2 -1.3

Domestic Supply 247.8 241.8 226.0 209.3 209.6 212.8 210.5 206.4 207.0 206.1 176.0 -3.4Pemex Gas and Basic Petrochemistry 215.4 215.3 198.9 182.4 180.6 184.2 185.4 176.0 177.7 175.7 149.7 -3.6Pemex Refining 31.4 26.1 26.8 26.4 28.0 26.7 22.7 27.5 26.1 27.1 22.9 -3.1Pemex Petrochemistry 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 n.a.Pemex Exploration and Production 1.0 0.3 0.2 0.6 1.0 1.9 2.4 2.9 3.3 3.3 3.3 13.1

Imports 72.9 75.6 82.9 88.7 80.0 78.8 82.4 85.6 79.5 85.0 105.2 3.7Destination 320.3 313.3 308.0 297.3 287.8 292.9 291.9 291.0 286.7 288.5 283.0 -1.2

Domestic demand 318.5 311.2 307.0 297.2 286.7 292.9 290.4 290.9 286.5 287.2 283.0 -1.2Agriculture and livestock sector 6.2 4.2 3.3 4.6 4.4 4.4 4.7 4.1 4.0 4.0 4.0 -4.2Motor-carrier sector 35.4 28.1 30.5 28.3 26.8 26.6 29.2 32.8 35.8 35.9 35.3 0.0Industrial sector 28.3 29.8 29.1 27.8 27.4 28.9 27.0 27.4 29.8 29.2 29.2 0.3Oil sector 4.4 5.2 5.7 5.1 4.9 4.0 4.6 4.4 2.5 5.1 4.2 -0.4Residential sector 200.1 198.1 196.0 191.5 183.5 188.3 182.9 179.6 171.0 170.8 168.4 -1.7Services sector 44.1 45.8 42.5 39.9 39.6 40.5 41.9 42.6 43.4 42.1 42.0 -0.5

Exports 1.8 2.1 1.0 0.1 1.1 0.1 1.5 0.1 0.2 1.3 0.02 -35.9Inventories variation * 0.4 4.1 0.9 0.7 1.8 -1.3 1.0 1.0 -0.1 2.5 -1.8 n.a.

30

3. LP Gas Domestic Market Prospective

3.1. LP Gas Domestic Market

The industrial, services, and residential sectors receive energy goods and services, such as LP gas and natural gas. To have a correct planning, which fosters the development of these sectors, it is necessary to know how the market will behave and thus, reliably supply high-quality fuels at competitive prices. This chapter presents the supply and demand forecasts for the period 2015-2030.

3.1.1. LP Gas Domestic Demand, 2005-2030

It is expected that by 2030, the LP gas demand will reach a volume of 263.3 MBD, a decrease of 7.0% regarding 2015, and an AAGR of -0.5% during 2015-2030. This shrinkage is the result of a lower consumption of LP gas in the residential and oil sectors. The decrease in the residential sector are attributable to the replacement of LP gas with natural gas.

FIGURE 3. 1 LP GAS DOMESTIC DEMAND, 2005-2030. (MBD)


In 2030, the residential sector will remain the largest LP gas consumer, with a volume of 137.9 MBD, equivalent to 52.4% from the total domestic demand for this fuel; nevertheless, it will decrease 18.1% regarding 2015. This sector is followed by the services sector, with a 17.8% share, industrial with 13.7%, motor-carrier with 13.6%, agriculture and livestock with 2.2%, and oil sector with 0.3%. During the period 2015-2029, almost every sector will have positive AAGRs, except for the oil and residential sectors, which will have an AAGR of -10.1% and -1.3%, respectively (see Figure 3.2).

200

220

240

260

280

300

320

340

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

31

FIGURE 3. 2 LP GAS* DOMESTIC DEMAND BY SECTOR, 2015-2030. (MBD)

* Includes propane and butane used as raw material in the industrial sector. Source: SENER, based on information from IMP.

LP Gas Demand in the Residential Sector

In 2030, this sector's demand for fuels is estimated to be of 261.5 MBDLPGE, a decrease of 14.5% regarding 2015. In this sector, LP gas will remain as the most used one with a share of 52.7%, even if it will decrease by 30.4 MBD regarding 2015, and will have an AAGR of -1.3% during 2015-2030. This reduction is attributable to a larger penetration of natural gas into this sector.

Firewood will be the second most used fuel with a 92.6 MBD volume, a share of 35.4%. Like LP gas, its demand will decrease 18.2% regarding 2015, falling from 24.4 MBDLPGE to 31.0 MBDLPGE, an AAGR of 1.6% during the same period.

FIGURE 3. 3 RESIDENTIAL SECTOR CONSUMPTION OF FUELS, 2015-2030. (MBDLPGE)

Source: SENER with information from IMP

Residential168.4

Services42.0

Industrial*29.2

Motor carrier35.3

Oil4.2


4.0

Residential137.9

Services46.8

Industrial*36.1

Motor carrier35.8

Oil0.9


5.7

20302015

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Natural gas 24.4 25.4 26.8 28.0 28.9 29.8 30.1 30.5 30.9 31.1 31.2 31.2 31.1 31.3 31.2 31.0

Firewood 113.2 112.6 111.4 110.0 108.5 106.8 105.4 104.1 102.6 100.9 99.7 98.3 96.9 95.4 93.8 92.6

LP Gas 168.4 166.5 164.4 162.9 160.1 157.8 154.9 152.2 150.9 148.6 146.4 144.4 142.4 141.6 139.7 137.9

0

50

100

150

200

250

300

350

32

The LP gas savings in the residential sector will reach a volume of 13.7 MBD in 2030, and will derive from the efficiency of water heaters, the introduction of solar heaters, microwave ovens, and electronic-ignition stoves. The savings related to the efficiency of heaters and the introduction of solar heaters will reach a volume of 9.0 MBD, a share of 65.7% from the total LP gas savings. The savings from the electronic-ignition stoves will be of 4.1 MBD, while the savings from microwave ovens will be of 0.6 MBD (see Figure 3.4).

FIGURE 3. 4 LP GAS SAVINGS IN THE RESIDENTIAL CONSUMPTION FOR TECHNICAL IMPROVEMENTS AND CHANGES IN THE CONSUMPTION

PATTERNS, 2015-2030. (MBD)

Source. IMP, based on ANES, CONAPO, INEGI, PROCALSOL and private companies.

LP Gas Demand in the Services Sector

In 2030, the services sector will demand a volume of fuels of 74.6 MBDLPGE, 8.7% more than in 2015, and an AAGR of 0.6% during 2015-2030. In this sector, LP gas will be the most used fuel, with a 62.6% share, equivalent to 46.8 MBD and an AAGR of 0.7% during that same period. Firewood will be the second most used fuel, with a 19.8% share (14.8 MBDLPGE), and an AAGR of -1.3%; and natural gas will have a consumption of 13.1 MBDLPGE, equivalent to 17.5% of the share.

0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.6

2.73.1

3.54.0

4.8

5.6

6.26.8

7.47.8

8.28.5 8.7 8.9 9.0 9.0

3.23.3

3.43.5

3.5

3.6

3.7

3.7

3.83.9

3.94.0

4.04.1 4.1 4.1

0

2

4

6

8

10

12

14

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Microwave ovens Water-heaters efficiency and introduction of solar water heaters Stoves with electronic ignition

33

FIGURE 3. 5 FUELS CONSUMPTION IN THE SERVICES SECTOR, 2015-2030. (MBDLPGE)

Source: SENER with information from IMP

LP gas savings in the services sector will rise from 0.7 MBD in 2015 to 3.1 MBD in 2030, which will represent accumulated savings for 30.4 MBD during 2015-2030. These savings are related to the efficiency of water heaters and stoves. The savings derived from heaters' efficiency will reach 3.1 MBD in 2030, while the savings from stoves will be of 0.04 MBD during that same year.

FIGURE 3.6 LP GAS SAVINGS IN THE SERVICES SECTORS BY TYPE OF EQUIPMENT, 2015-2030.

(thousand barrels per day)

Source. IMP, based on ANES, CONAPO, INEGI, PROCALSOL and private companies.

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

LP Gas Firewood Natural gas

0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.03 0.03 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.7 0.7 0.8 1.0

1.21.4

1.61.8

2.02.2

2.42.5 2.7 2.8 2.9 3.1

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Stoves

Water heaters

Total Saving

34

LP Gas Demand in the Motor-Carrier Sector

By 2030, fuels consumption is expected to reach a volume of 2,067.2 MBDLPGE, 38.7% more than in 2015. In this sector, gasoline will remain as the most used fuel with a 62.6% share from the total demand, which is a 1,293.5 MBDLPGE volume; it will be followed by diesel with 735.5 MBDLPGE and 35.6% share; LP gas and natural gas with a share of 1.7% and 0.1%, respectively.

This increase on fuels is attributable to a growth in the vehicle fleet, which is expected to reach 44,390.4 thousand units by the end of the prospective period (see Annex Table A.12).

FIGURE 3. 7 FUELS DEMAND IN THE MOTOR-CARRIER SECTOR, 2015-2030. (percentage)


LP Gas Demand in the Industrial Sector

In 2030, the industrial sector's GDP is expected to reach 3,705.4 million pesos. For that year, the use of fuels in this sector is forecasted to increase 31.2% regarding 2015, rising from 621.1 MBDLPGE to 814.7 MBDLPGE, which corresponds to an AAGR of 1.8% during the period 2015-2030. In this sector, the most demanded fuel will still be natural gas with a volume of 540.4 MBDLPGE, a share of 66.3%; it will be seconded by coal with a 11.8% share; petroleum coke, 11.0%; diesel, 6.4%; and LP gas, 4.4%. As for LP gas, its demand will reach a volume of 36.1 MBD, an increase of 23.8% regarding 2015, with an AAGR of 1.4% during the period 2015-2030 (see Table 3.1).

LP Gas1.7%


0.12%

Gasoline62.6%

Diesel35.6%

LP Gas2.4%


0.0%

Gasoline65.8%

Diesel31.8%

2015 2030

35

TABLE 3. 1 DOMESTIC DEMAND FOR FUELS IN THE INDUSTRIAL SECTOR, 2015-2030

(MBDLPGE)

Source: IMP, based on information from BANXICO, CNIAA, CONAGUA, CONUEE, CRE, EIA, EPA, IEA, INEGI, PEMEX, SE, SENER and private companies.

As for the impact from replacing fuels for this sector's consumption, the LP gas demand -if natural gas would not be replacing it- would reach a volume of 47.0 MBD, an increase of 10.9 MBD more than in the scenario with replacement, in which the LP gas consumption would be of 36.1 MBD in 2030.

FIGURE 3. 8 LP GAS INDUSTRIAL DEMAND AND GDP OF THE MANUFACTURING SECTOR

(MBD and billion pesos)

Source: IMP, based on information from BANXICO, CONAGUA, CONUEE, EIA, EPA, IEA, INE, INEGI, PEMEX, SENER and private companies.

Natural gas Fuel Oil LP Gas Diesel Petroleum coke Coal Total

(MBDLPGE) (MBDLPGE) (MBD) (MBDLPGE) (MBDLPGE) (MBDLPGE) (MBDLPGE)

2015 354.5 14.9 29.2 44.3 87.4 90.9 621.1

2016 369.8 6.9 29.4 43.7 85.6 89.4 624.9

2017 447.5 5.2 28.4 43.3 88.3 90.3 702.9

2018 490.9 3.5 27.7 43.9 94.5 91.1 751.5

2019 497.7 1.7 28.0 44.5 92.4 91.4 755.8

2020 505.1 0.0 28.4 45.2 92.9 91.7 763.1

2021 511.5 0.0 28.8 45.8 93.8 92.4 772.4

2022 518.1 0.0 29.3 46.6 94.7 92.8 781.6

2023 522.8 0.0 29.8 47.3 95.2 93.3 788.4

2024 526.3 0.0 30.5 48.0 94.9 93.5 793.1

2025 530.2 0.0 31.2 48.7 94.4 94.2 798.7

2026 533.6 0.0 31.9 49.5 94.5 94.6 804.2

2027 536.8 0.0 32.8 50.3 93.6 95.0 808.5

2028 539.0 0.0 33.8 51.0 92.2 95.2 811.2

2029 540.3 0.0 34.9 51.8 91.1 95.8 813.9

2030 540.4 0.0 36.1 52.5 89.7 96.0 814.7

AAGR2015-2030

2.9 n.a. 1.4 1.1 0.2 0.4 1.8

Year

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

7,000.0

8,000.0

9,000.0

10,000.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

billi

on p

esos

of 2

008

thou

sand

bar

rels

per

day

LP Gas Industrial Demand (MBD)

LP gas industrial demand, no replaced by natural gas (MBD)*

GDP Manufacturing Industry (billion pesos of 2008)

36

LP Gas Demand in the Oil Sector

In 2030, the oil sector's demand for fuels will decrease 30.3% regarding 2015, falling from 639.3 MBDLPGE to 445.3 MBDLPGE, equivalent to an AAGR of -2.4% during the period 2015-2030. Natural gas will be the most demanded fuel with 373.9 MBDLPGE in 2030, but will show a decrease of 34.0% regarding 2015; fuel oil will be second with 38.3 MBDLPGE, followed by diesel with 30.9 MBDLPGE, gasoline with 1.4 MBDLPGE, and LP gas with 0.9.

Towards 2030, the LP gas demand will decrease 79.7% regarding 2015, dropping from 4.2 MBD in 2015 to 0.9 MBD in 2030, which corresponds to an AAGR of -10.1% during the period 2015-2030.

TABLE 3. 2 OIL SECTOR* DOMESTIC DEMAND FOR FUELS, 2015-2030 (MBDLPGE)

* Includes sales between organs and self-consumption of PEMEX Industrial Transformation. Source: IMP with information from Pemex.

3.1.2. LP Gas Regional and State Demand

In 2030, the LP gas demand will decrease 7.0% regarding 2015, going from 283.0 MBD to 263.3 MBD. The Central region will have the largest consumption, a volume of 110.2 MBD, and will be seconded by the Central-Eastern region with 54.0 MBD, the South-Southeast with 36.9 MBD, and the Northwest with 24.9 MBD.

By that same year, the Central region will reduce its consumption by 3.0% regarding 2015, going from 113.6 MBD to 110.2 MBD, with an AAGR of -0.2% during the studied period. In this region, Estado de México will remain as the main LP gas consumer, with a 49.1 MBD volume, 44.6% of the region's total, and 18.7% of the national total. In contrast, Tlaxcala will consume a volume of 3.8 MBD, equivalent to 3.4% of the regional total.

Natural gas Fuel Oil Diesel LP Gas Gasolines Total

(MBDLPGE) (MBDLPGE) (MBDLPGE) (MBD) (MBDLPGE) (MBDLPGE)2015 566.8 36.5 29.6 4.2 2.2 639.3

2016 585.0 38.3 30.9 4.6 1.3 660.1

2017 585.0 38.3 30.9 4.6 1.4 660.2

2018 553.8 38.3 30.9 4.6 1.4 629.0

2019 542.1 38.3 30.9 4.2 1.4 617.0

2020 579.3 38.3 30.9 3.9 1.4 653.8

2021 615.3 38.3 30.9 3.9 1.4 689.7

2022 618.2 38.3 30.9 3.7 1.4 692.5

2023 567.1 38.3 30.9 2.2 1.4 639.9

2024 528.2 38.3 30.9 0.9 1.4 599.7

2025 483.8 38.3 30.9 1.6 1.4 556.0

2026 455.9 38.3 30.9 1.4 1.4 527.9

2027 435.2 38.3 30.9 1.2 1.4 507.0

2028 414.5 38.3 30.9 1.1 1.4 486.2

2029 391.6 38.3 30.9 1.0 1.4 463.2

2030 373.9 38.3 30.9 0.9 1.4 445.3

AAGR2015-2030 -2.7 0.3 0.3 -10.1 -3.2 -2.4

Year

37

The consumption of the Central-Eastern region will represent 20.5% of the national total, with an AAGR of -1.2% for the studied period. By 2030, Jalisco is expected to become the main consumer with a volume of 16.9 MBD, 31.3% of the region's total. As for Colima, it will have the lowest demand among this region's states.

The Northeast region will have a share of 14.1% of the national total, going from 38.7 MBD in 2015 to 37.2 MBD in 2015, and an AAGR of -0.3% during the studied period. In the region, Chihuahua will be the biggest consumer of this fuel with a 9.9 MBD volume and a regional share of 26.7%. Durango will be the lowest consumer, 3.5 MBD and a share of 9.4% of the regional total.

The South-Southeast region will have a share of 14.0% of the national total, with an AAGR of -0.7% during the period 2015-2020. Veracruz will be the largest LP gas consumer, with a 12.8 MBD volume and a 34.7% regional share. In contrast, Campeche will be the lowest, with 1.1 MBD and 3.1% from the regional total.

Finally, the Northwest region will have a 9.5% of the regional total and an AAGR of 0.01% during the prospected period. Within this region, Baja California will be the main consumer with 9.0 MBD and a share of 36.1% of the regional total. Baja California Sur will have the lowest demand, reaching a volume of 2.0 MBD and an 8.1% share of the regional demand.

TABLE 3. 3 LP GAS DEMAND BY REGION AND FEDERAL ENTITY, 2015-2030 (MBD)

Note: Does not include PEMEX self-consumption. Source: IMP, based on AMDA, AMIA, ANPACT, CONAGUA, CONAPO, CONUEE, CRE, EIA, EPA, IEA, INE, INEGI, Pemex, SEMARNAT, SCT, SENER and private companies.

State 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030AAGR

2015-2030

Northwest 25.0 23.5 23.5 23.8 23.9 24.1 24.2 24.2 24.4 24.4 24.5 24.6 24.6 24.8 24.9 24.9 0.01- Baja California 8.6 8.6 8.7 8.8 8.8 8.9 8.9 8.9 8.9 8.9 8.9 8.9 9.0 9.0 9.0 9.0 0.4 Baja California Sur 2.0 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 2.0 2.0 2.0 2.0 2.0 2.0 0.1 Sinaloa 6.7 5.9 5.8 5.9 5.9 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.1 6.1 6.1 0.6- Sonora 7.7 7.0 7.1 7.2 7.3 7.4 7.4 7.5 7.5 7.6 7.6 7.6 7.7 7.7 7.8 7.8 0.0

Northeast 38.7 35.9 35.5 35.3 34.7 34.9 35.1 35.3 35.6 35.9 36.1 36.4 36.6 36.9 37.0 37.2 0.3- Coahuila 7.7 6.7 6.8 6.8 6.7 6.7 6.7 6.7 6.8 6.8 6.8 6.8 6.7 6.8 6.7 6.7 0.9- Chihuahua 10.1 10.1 9.9 9.8 9.5 9.5 9.5 9.5 9.6 9.6 9.7 9.7 9.8 9.9 9.9 9.9 0.1- Durango 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.4 3.4 3.4 3.4 3.5 3.5 3.5 3.5 3.5 0.4 Nuevo León 9.2 6.8 6.7 6.6 6.6 6.7 6.8 6.9 7.0 7.1 7.3 7.4 7.6 7.7 7.9 8.0 1.0- Tamaulipas 8.4 8.9 8.9 8.8 8.7 8.7 8.8 8.8 8.9 8.9 9.0 9.0 9.0 9.1 9.1 9.1 0.5

Central-Eastern 64.7 63.1 61.7 60.4 59.4 58.7 57.9 57.1 56.7 56.1 55.6 55.2 54.8 54.7 54.4 54.0 1.2- Aguascalientes 3.8 3.6 3.5 3.4 3.3 3.3 3.2 3.2 3.1 3.1 3.1 3.1 3.0 3.0 3.0 3.0 1.5- Colima 1.7 2.0 1.9 1.9 1.9 1.9 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 0.3 Guanajuato 14.1 13.6 13.2 12.8 12.6 12.4 12.2 12.1 12.0 11.9 11.8 11.7 11.6 11.6 11.5 11.4 1.4- Jalisco 21.7 20.5 20.1 19.7 19.4 19.0 18.7 18.4 18.2 17.9 17.7 17.5 17.3 17.2 17.1 16.9 1.6- Michoacán 10.0 10.2 10.0 9.8 9.6 9.5 9.4 9.3 9.2 9.1 9.0 9.0 8.9 8.9 8.8 8.7 0.9- Nayarit 2.0 2.1 2.1 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.1 2.1 2.1 0.2 Querétaro 3.2 2.5 2.5 2.4 2.4 2.4 2.4 2.3 2.3 2.3 2.3 2.3 2.2 2.2 2.2 2.2 2.5- San Luis Potosí 4.6 4.8 4.7 4.6 4.6 4.5 4.5 4.5 4.5 4.4 4.4 4.4 4.4 4.4 4.4 4.4 0.2- Zacatecas 3.5 3.9 3.8 3.7 3.7 3.6 3.6 3.6 3.6 3.5 3.5 3.5 3.5 3.5 3.5 3.5 0.1-

Central 113.6 114.6 113.7 113.0 111.5 111.1 110.5 110.0 110.1 109.7 109.5 109.4 109.3 109.9 110.0 110.2 0.2- Ciudad de México 25.0 28.6 28.1 27.7 27.0 26.7 26.3 26.0 25.8 25.5 25.3 25.2 25.1 25.1 25.0 25.0 0.0 Hidalgo 8.1 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.7 7.7 7.7 7.8 7.9 7.9 0.2- México 48.9 50.2 50.0 49.9 49.4 49.4 49.3 49.1 49.2 49.1 49.0 49.0 48.9 49.1 49.1 49.1 0.0 Morelos 5.4 5.6 5.6 5.6 5.5 5.4 5.5 5.5 5.5 5.5 5.5 5.6 5.6 5.7 5.7 5.7 0.4 Puebla 21.8 18.6 18.5 18.4 18.3 18.2 18.1 18.1 18.2 18.2 18.2 18.2 18.3 18.5 18.6 18.7 1.0- Tlaxcala 4.5 3.9 3.9 3.8 3.8 3.8 3.8 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.8 3.8 1.1-

South-Southeast 40.9 41.6 41.3 41.0 40.3 39.8 39.6 39.4 38.0 36.7 37.5 37.2 37.1 37.1 37.0 36.9 0.7- Campeche 1.0 1.0 1.0 1.0 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 0.8 Chiapas 4.8 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.4 5.4 5.4 5.5 5.5 5.5 0.9 Guerrero 1.3 2.6 2.7 2.7 2.7 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 4.9 Oaxaca 4.8 4.2 4.2 4.2 4.2 4.1 4.1 4.1 4.1 4.1 4.1 4.0 4.0 4.0 4.0 4.0 1.2- Quintana Roo 4.2 3.6 3.6 3.6 3.6 3.7 3.7 3.7 3.7 3.7 3.8 3.8 3.8 3.9 3.9 3.9 0.5- Tabasco 5.7 4.2 3.9 3.8 3.8 3.8 3.8 3.8 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.7 2.8- Veracruz 15.9 17.6 17.6 17.3 16.7 16.1 16.0 15.8 14.3 12.9 13.7 13.4 13.2 13.1 13.0 12.8 1.4- Yucatán 3.2 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 0.3-

Domestic Total 283.0 278.6 275.8 273.5 269.9 268.6 267.3 266.1 264.8 262.8 263.2 262.7 262.4 263.4 263.3 263.3 0.5-

38

3.1.3. LP Gas Production

In 2030, LP gas is expected to reach a 154.7 MBD volume, a decreased of 12.1% regarding 2015, and an AAGR of -0.9% during 2015-2030. This decrease is attributable to a lower demand of sweet and sour wet gas.

From the total LP gas production, 48.7% will be produced in the CPGs, 30.9% will come from Refineries, and 20.4% will come from Petrochemical Complexes.

FIGURE 3. 9 LP GAS PRODUCTION, 2015-2030 (MBD)

Source: IMP, based on PEMEX

3.1.4. LP Gas Trading

By 2030, LP gas imports are expected to reach a volume of 108.6 MBD, equivalent to an increase of 3.2% regarding 2015. The Northwest region will perform most of these imports, with a volume of 82.5 MBD; it will be followed by the Northeast region with 20.4 MBD, South-Southeast with 3.9 MBD, and Central-Easter with 1.8 MBD. LP gas exports are projected to be null during the prospected period.

FIGURE 3. 10 LP GAS FOREIGN TRADE (MBD)

Source: IMP, based on information from PEMEX.

176.0166.5

171.2179.0 176.1 172.4

177.4 173.6178.6 179.3 175.6 175.4 171.9 168.6

161.2154.7

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

105112

10594 94 96

90 9286 84 88 87 91 95

102109

0

20

40

60

80

100

120

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Imports Exports

39

3.1.5. LP Gas Balance

In 2030, LP gas production will reach a volume of 154.7 MBD, while the national demand will be of 263.3 MBD; thus, to meet the demand, it will be necessary to resort to imports for 108.6 MBD.

As for the regional balances, the Northwest region will have a demand of 24.9 MBD in 2030. Since this region does not produce LP gas, its imports will reach 20.4 MBD, and will receive 4.6 MBD from other regions. The residential sector will be the largest consumers, reaching a volume of 11.4 MBD, while the agriculture and livestock sector will be last with a 0.9 MBD volume.

In 2030, the Northeast region will have a supply of 100.3 MBD, from which 17.7 MBD will come from domestic production and 82.5 MBD from imports. From this supply, 37.2 MBD will be used to meet the regional demand, and 63.1 MBD will be sent to other regions.

In the Central region, the demand will reach a volume of 110.2 MBD, from which the residential sector will consume more than half of it, reaching a volume of 59.7 MBD. This region's production will be of 18.5 MBD, and the transfers to other regions, 91.7 MBD.

The Central-Eastern region will demand 54.0 MBD and will produce 6.6 MBD. Transfers will be of 45.7 MBD, and imports, 1.8 MBD.

Finally, the South-Southeast region will consume 36.9 MBD, will produce 111.9 MBD, and will import 3.9 MBD of LP gas, reaching a total supply of 115.8 MBD. From this volume, 79.0 MBD will be sent to other regions.

The regional balances are displayed on Tables A.13 to A.17.

TABLE 3. 4 LP GAS DOMESTIC BALANCE, 2015-2030 (MBD)

* Includes statistic difference, packaging in pipelines, and ships in transit. Source: IMP, based on CONAGUA, Conapo, Pemex, SENER and private companies.

40

LP Gas Annexes

Sensitivity Analysis

For this outlook, the sensitivity analysis for the natural-gas demand was devised taking into account three macroeconomic scenarios (base, high, and moderate). For the base scenario, the growth will be 2.9% average, 3.6% for the high scenario, and 2.4% for the moderate one, during 2016-2030. Additionally, it was considered a low-savings scenario, mainly for what is related to the motor-carrier, industrial, residential, and services sectors.

The assumption considered for the base scenario are the following:

• OPEP and Saudi Arabia’s inability to control oil production, as well as the weakness of worldwide demand, have an impact on the balance between Supply and Demand, with negative effects on prices.

• The normalization of the American monetary policy and the rise on interest rates generate uncertainty in the financial and exchange markets, strengthening American dollar and weakening the rest of the currencies.

• The standardization of the American monetary policy and the rise of its interest rates, generate uncertainty within the financial and exchange markets, strengthening the U.S. dollar and weakening other currencies.

• The exit of the United Kingdom from the European Union emphasizes the financial and currency uncertainty in the short term, and will weaken ever more the worldwide trade and economy in the medium and long terms.

• China's economy loss of dynamism affects international trade, particularly emerging economies.

• The dropping in the prices of raw materials and commodities, reduce the revenues of producing countries and limiting thus, their demand for goods and services.

• The industrial sector contraction in the United States as an impact on their economic activity.

• Budgetary cuts in 2016 and 2017 will narrow economic growth potential.

• Financial and Exchange markets turmoil

• Tightening of the monetary policy and rises on the interest rates.

• The domestic market and its determiners will lose dynamism

• The Energy Reform will foster the oil and the electricity-generation sectors.

41

For the moderate scenario (low) the following was considered:

• The surplus of the worldwide oil supply keep the oil prices in levels below $100 per barrel at the medium term.

• The standardization of the American monetary policy has an effect over the financial and exchange markets of emerging countries.

• The United Kingdom's exit from the E.U., have an impact on important trade agreements and over the economic growth of the Eurozone.

• China's economic slowdown is deeper than expected.

• The prices' drop of raw materials and commodities, will continue reducing the revenues of producing countries limiting their demand for goods and services.

• The American economic growth is lower than expected.

• The industrial crisis in the U.S. becomes more acute having an impact on the Mexican industry and manufacturing sector.

• The exchange turmoil spreads and widens.

• The determiners of the domestic market are weakening, unable to counteract the negative effects from abroad.

Finally, for the high scenario, the assumptions are:

• Drop of the prices of raw materials and commodities.

• Discoordination of the monetary policies in advanced economies.

• Uncertainty in emerging economies.

• Less dynamism of the American economy.

• Normalization of the U.S. monetary policy.

• Turmoil’s within financial markets.

• Employment’s formalization, revenues from real salaries, and credit expansion, which foster consumption and investment.

• Family remittances going on in the medium and long term.

• The oil-production platform bounces back, thanks to the Energy Reform.

• The advances in infrastructure to transport hydrocarbons will reduce costs, fostering their consumption.

• The Financial Reform has generated the necessary means to have access to financing at lower rates and to higher credit amounts.

42

The results for the residential and services sectors are displayed according to the latter. As for the residential sector, the three scenarios will have a constant volume of 137.9 MBD in 2030, and for the low-savings scenario, the demand will reach a volume of 159.8 MBD (see Figure 4.1).

FIGURE 4. 1 RESIDENTIAL SECTOR DEMAND, 2010-2030 (MBD)

Source: Prepared by IMP, based on information from CFE, CNIAA, CONAGUA, CONAPO, CONUEE, CRE, EIA, EPA, IEA, INEGI, Pemex, SENER and private companies.

Finally, in the services sector, the difference among the varied scenarios is not very significant; in the base demand, the demand will reach a volume of 46.8 MBD; for the high scenario, 46.0 MBD; for the low scenario, 45.5 MMCFD; and for the low-savings scenario due to efficiencies, the demand will be of 49.5 MBD.

FIGURE 4. 2 SERVICES SECTOR DEMAND, 2010-2030 (MBD)

Source: Prepared by IMP, based on information from, CFE, CNIAA, CONAGUA, CONAPO, CONUEE, CRE, EIA, EPA, IEA, INEGI, Pemex, SENER and private companies.

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Base Scenario Base Scenario-Low saving Moderate Scenario High Scenario

20.0

25.0

30.0

35.0

40.0

45.0

50.0

55.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Base Scenario Base Scenario-Low saving Moderate Scenario High Scenario

43

TABLE A. 1 HISTORIC WATER-HEATER FLEET PER TYPE OF FUEL, AND SOLAR PANELS, 2005-2015, 2005-2015 ............................................................................................................................................................................ 44

TABLE A. 2 RESIDENTIAL SECTOR DOMESTIC DEMAND FOR FUELS, 2005-2015 ....................................... 44

TABLE A. 3 SERVICES SECTOR DOMESTIC DEMAND FOR FUELS, 2005-2015 ............................................... 45

TABLE A. 4 REGIONAL COMPOSITION OF THE VEHICLE FLEET BY FUEL, 2005-2015 ................................. 45

TABLE A. 5 OIL SECTOR DEMAND FOR LP GAS, 2005-2015 ............................................................................... 45

TABLE A. 6 LP GAS TRANSFERS FROM REFINERIES, PEP AND PETROCHEMICAL PLANTS TO LP GAS STORAGE AND DISTRIBUTION TERMINALS 2005-2015 ...................................................................................... 46

TABLE A. 7 BALANCE OF LP GAS, PROPANE, AND BUTANE, NORTHWEST REGION, 2005-2015 ......... 47

TABLE A. 8 BALANCE OF LP GAS, PROPANE, AND BUTANE, NORTHEAST REGION, 2005-2015 ........... 47

TABLE A. 9 BALANCE OF LP GAS, PROPANE, AND BUTANE, CENTRAL-EASTERN REGION, 2005-2015 ................................................................................................................................................................................................... 48

TABLE A. 10 BALANCE OF LP GAS, PROPANE, AND BUTANE, CENTRAL REGION, 2005-2015 ............... 48

TABLE A. 11 BALANCE OF LP GAS, PROPANE, AND BUTANE, SOUTH-SOUTHEAST REGION, 2005-2015 ........................................................................................................................................................................................ 49

TABLE A. 12 REGIONAL COMPOSITION OF THE VEHICLE FLEET BY FUEL, 2015-2030 .............................. 49

TABLE A. 13 LP GAS BALANCE OF THE NORTHWEST REGION, 2015-2030 ................................................. 50

TABLE A. 14 LP GAS BALANCE OF THE NORTHEAST REGION, 2015-2030 ................................................... 50

TABLE A. 15 LP GAS BALANCE OF THE CENTRAL REGION, 2015-2030 ......................................................... 51

TABLE A. 16 LP GAS BALANCE OF THE CENTRAL-EASTERN REGION, 2015-2030 ..................................... 51

TABLE A. 17 LP GAS BALANCE OF THE SOUTH-SOUTHEAST REGION, 2015-2030 ................................... 52

FIGURE A. 1 LP GAS AND NATURAL GAS PRICES, 2005-2015 ........................................................................... 46

44

TABLE A. 1 HISTORIC WATER-HEATER FLEET PER TYPE OF FUEL, AND SOLAR

PANELS, 2005-2015 (Thousand units)

Source: IMP Estimate based on fuels’ consumption, the data from ENIGH and statistics from equipment sales. The units of solar panels were estimated with information from suppliers, ANES and PROCALSOL.

TABLE A. 2 RESIDENTIAL SECTOR DOMESTIC DEMAND FOR FUELS, 2005-2015

Source: IMP, based on information from SENER, PGPB and private companies.

Concept 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Domestic 10,942.8 11,401.9 11,883.2 12,387.8 12,917.0 13,472.0 13,889.1 14,291.3 14,695.7 15,102.0 15,510.3

Natural gas 827.2 857.1 888.3 920.7 954.5 989.6 1,018.0 1,046.5 1,075.3 1,104.1 1,133.2 LP Gas 8,985.2 9,384.4 9,803.5 10,243.6 10,705.9 11,191.6 11,550.2 11,913.4 12,280.8 12,651.9 13,027.0 Firewood 1,130.4 1,160.4 1,191.4 1,223.5 1,256.6 1,290.8 1,321.0 1,331.3 1,339.6 1,345.9 1,350.1 Gas with solar panel 14.7 14.2 22.6 17.5 43.8 40.0 65.0 79.0 84.8 91.1 97.8

Natural gas LP Gas Firewood

MBDLPGE MBD MBDLPGE MBDLPGE

2005 22.3 200.1 126.8 349.3

2006 21.8 198.1 125.9 345.8

2007 22.8 196.0 125.2 344.0

2008 22.5 191.5 124.2 338.2

2009 21.4 183.5 124.0 328.8

2010 22.1 188.3 123.1 333.5

2011 21.0 182.9 121.4 325.3

2012 21.7 179.6 119.2 320.4

2013 22.3 171.0 117.5 310.8

2014 22.6 170.8 115.4 308.8

2015 24.4 168.4 113.2 305.9

AAGR2005-2015

0.9 -1.7 -1.1 -1.3

Year

Residential sector´s fuelsTotal

45

TABLE A. 3 SERVICES SECTOR DOMESTIC DEMAND FOR FUELS, 2005-2015

Source: IMP, based on information from SENER, PGPB and private companies

TABLE A. 4 REGIONAL COMPOSITION OF THE VEHICLE FLEET BY FUEL,

2005-2015 (Thousand units)

Source: IMP, based on information from private companies. Note: includes hybrid vehicles and motorbikes.

TABLE A. 5 OIL SECTOR DEMAND FOR LP GAS, 2005-2015 (MBD)

Source: IMP, based on Pemex and SENER.

Natural gas LP Gas Firewood

MBDLPGE MBD MBDLPGE MBDLPGE

2005 5.3 44.1 20.3 69.6

2006 6.0 45.8 20.1 72.0

2007 6.2 42.5 20.0 68.7

2008 6.5 39.9 19.9 66.3

2009 6.3 39.6 19.8 65.8

2010 6.9 40.5 19.7 67.1

2011 6.5 41.9 19.4 67.9

2012 6.9 42.6 19.1 68.6

2013 7.3 43.4 18.8 69.5

2014 7.7 42.1 18.5 68.2

2015 8.7 42.0 18.1 68.8

AAGR2005-2015 5.1 -0.5 -1.1 -0.1

Year

Residential sector´s fuelsTotal

Fuel 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015AAGR

2005-2015

Compressed natural gas 1.9 2.9 2.7 2.8 1.8 1.5 1.5 1.6 4.3 3.1 3.1 5.0 Gasoline 16,667.1 19,198.6 21,182.0 23,147.2 24,159.7 25,241.1 26,801.6 28,369.4 30,099.7 30,747.2 32,338.2 6.9 LP Gas 305.0 234.5 221.4 196.0 184.9 185.1 203.0 232.2 250.1 253.5 250.3 2.0- Diesel 672.3 700.9 737.5 773.6 780.4 791.0 799.2 844.9 898.4 854.5 842.0 2.3 Total 17,646 20,137 22,144 24,120 25,127 26,219 27,805 29,448 31,252 31,858 33,434 6.6

Concept 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 AAGR2005-2015

Total 4.4 5.2 5.7 5.1 4.9 4.0 4.6 4.4 2.5 5.1 4.2 0.4-

Corporate - - - - - - - - - - - n.a.

Refining 3.7 4.6 5.0 4.3 4.3 3.4 3.9 3.8 2.2 2.9 2.3 4.9-

Gas and Basic Petrochemistry 0.6 0.6 0.6 0.6 0.6 0.7 0.7 0.6 0.3 0.4 0.5 1.6-

Exploration and Production - 0.0 0.0 0.0 0.0 0.0 - - - 1.8 1.4 n.a.

Petrochemistry 0.0 0.1 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 36.6-

46

TABLE A. 6 LP GAS TRANSFERS FROM REFINERIES, PEP AND PETROCHEMICAL PLANTS TO LP GAS STORAGE AND DISTRIBUTION

TERMINALS 2005-2015 (MBD)

Source: IMP with information from Pemex Gas and Basic Petrochemistry.

FIGURE A. 1 LP GAS AND NATURAL GAS PRICES, 2005-2015 (Pesos per gigajoule)


Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015AAGR

2005-2015

SNR 31.4 26.1 26.8 26.4 28.0 26.7 22.7 27.5 26.1 27.1 22.9 3.1-

Cadereyta 3.3 2.5 2.9 3.0 2.7 1.7 1.3 1.7 1.5 1.3 1.1 10.5-

Madero 1.3 0.4 0.8 0.9 0.8 0.9 0.8 0.8 1.1 0.8 2.0 4.3

Minatitlán 6.5 5.0 5.3 5.8 7.3 6.2 6.1 8.0 5.8 6.2 3.3 6.6-

Salamanca 3.8 3.3 2.2 2.6 2.0 1.5 1.6 1.7 2.4 2.9 3.2 1.6-

Salina Cruz 8.3 6.6 6.0 5.7 4.8 5.7 4.4 3.5 4.4 3.6 3.8 7.4-

Tula 8.1 8.3 9.6 8.4 10.4 10.6 8.5 11.7 10.8 12.2 9.4 1.5

PEP and PPQ 1.0 0.3 0.2 0.6 1.0 1.9 2.4 2.9 3.3 3.3 3.3 13.1

0

50

100

150

200

250

300

350

Jan-

05

May

-05

Sep-

05

Jan-

06

May

-06

Sep-

06

Jan-

07

May

-07

Sep-

07

Jan-

08

May

-08

Sep-

08

Jan-

09

May

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

May

-11

Sep-

11

Jan-

12

May

-12

Sep-

12

Jan-

13

May

-13

Sep-

13

Jan-

14

May

-14

Sep-

14

Jan-

15

May

-15

Sep-

15

Residential NGl ($/GJ)

Industrial NG ($/GJ)

Administered LP Gas ($/GJ)

LP Gas based on opportunity cost ($/GJ)

47

TABLE A. 7 BALANCE OF LP GAS, PROPANE, AND BUTANE, NORTHWEST REGION, 2005-2015

(MBD)

* Includes differences, packaging, and ships in transit. Source: IMP, based on Pemex y SENER.

TABLE A. 8 BALANCE OF LP GAS, PROPANE, AND BUTANE, NORTHEAST REGION, 2005-2015

(MBD)


Concept 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015AAGR

2005-2015

Origin 28.2 27.1 26.0 25.3 23.9 23.9 24.4 24.4 24.7 25.5 25.0 -1.2

Domestic - - - - - - - - - - - n.a.

Pemex Gas and Basic Petrochemistry - - - - - - - - - - - n.a.

Pemex Refining - - - - - - - - - - - n.a.

Pemex Petrochemistry - - - - - - - - - - - n.a.

Pemex Exploration and Production - - - - - - - - - - - n.a.

Imports 18.0 21.1 17.9 16.3 14.8 15.5 16.7 13.4 12.3 14.7 17.0 -0.6

From other regions 10.2 6.0 8.1 9.0 9.1 8.5 7.7 11.0 12.4 10.7 8.0 -2.4

Destination 27.9 27.3 26.1 25.1 24.0 24.0 24.3 24.4 24.7 25.4 25.0 -1.1

Domestic demand 27.8 26.7 26.1 25.1 24.0 24.0 24.3 24.4 24.7 25.4 25.0 -1.0

Agriculture and livestock sector 0.7 0.7 0.5 0.5 0.5 0.6 0.7 0.5 0.6 0.6 0.6 -2.0

Motor-carrier sector 4.1 2.7 2.6 2.8 2.1 2.1 2.3 2.6 2.7 2.8 2.8 -3.9

Industrial sector 2.5 3.7 3.7 3.7 3.4 3.3 3.4 3.3 3.5 3.7 3.7 4.1

Oil sector - - - - - - - - - - - n.a.

Residential sector 16.0 14.8 15.1 14.1 14.0 14.0 13.7 13.9 13.8 14.1 13.7 -1.6

Services sector 4.5 5.0 4.2 4.0 4.0 4.0 4.3 4.0 4.2 4.2 4.3 -0.3

Exports - - - - - - - - - - - n.a.

To other regions 0.1 0.5 - 0.0 0.0 - - - - - - n.a.

Inventories variation* 0.3 0.2- 0.1- 0.2 0.1- 0.0- 0.1 0.0 0.0- 0.0 0.0- n.a.

Concept 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015AAGR

2005-2015

Origin 60.5 59.8 62.7 61.8 58.9 56.8 52.2 52.6 52.8 42.5 47.5 -2.4

Domestic 19.0 20.6 23.3 23.4 23.6 22.5 21.9 20.7 22.1 20.2 18.0 -0.5

Pemex Gas and Basic Petrochemistry 14.3 17.7 19.6 19.5 20.1 19.9 19.8 18.2 19.5 18.0 14.9 0.4

Pemex Refining 4.7 2.9 3.7 3.9 3.5 2.6 2.1 2.6 2.6 2.1 3.1 -3.9



Imports 41.5 39.3 39.4 38.3 35.3 34.3 30.3 31.9 30.6 22.2 29.5 -3.4

From other regions - - - 0.0 0.0 - - - 0.1 0.1 - n.a.

Destination 60.5 59.8 62.7 61.8 58.9 56.9 52.2 52.5 52.9 42.5 47.6 -2.4

Domestic demand 47.5 44.4 43.5 40.0 38.1 41.0 40.7 41.8 42.7 40.3 38.7 -2.0

Agriculture and livestock sector 1.2 0.8 0.5 2.3 2.1 2.2 2.1 1.7 1.8 1.7 1.6 3.0


Industrial sector 4.7 6.0 6.4 5.8 4.8 5.2 5.2 4.5 5.0 4.7 4.6 -0.4

Oil sector - - - - - - - - - - - n.a.


Services sector 7.5 7.8 7.4 5.9 6.1 6.8 7.3 6.5 6.8 6.3 6.1 -1.9

Exports - - - - - - - - - - - n.a.

To other regions 12.9 15.4 19.3 21.8 20.9 15.9 11.4 10.8 10.2 2.2 8.8 -3.7

Inventories variation* 0.0 0.0 0.0- 0.0- 0.0- 0.0- 0.0- 0.1 0.1- 0.0 0.1- n.a.

48

TABLE A. 9 BALANCE OF LP GAS, PROPANE, AND BUTANE, CENTRAL-EASTERN REGION, 2005-2015

(MBD)


TABLE A. 10 BALANCE OF LP GAS, PROPANE, AND BUTANE, CENTRAL REGION, 2005-2015

(MBD)


Concept 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015AAGR

2005-2015

Origin 71.6 70.1 69.7 67.8 64.3 65.9 65.4 64.4 64.0 63.3 64.7 -1.0

Domestic 3.8 3.3 2.2 2.6 2.0 1.5 1.6 1.7 2.4 2.9 3.2 -1.6


Pemex Refining 3.8 3.3 2.2 2.6 2.0 1.5 1.6 1.7 2.4 2.9 3.2 -1.6



Imports - 4.5 11.0 10.0 10.4 9.2 2.0 1.8 0.1 3.2 4.3 n.a.


Destination 71.5 70.2 69.7 67.8 64.3 65.9 65.4 64.4 64.0 63.3 64.7 -1.0

Domestic demand 71.5 70.2 69.7 67.8 64.3 65.9 65.4 64.4 64.0 63.3 64.7 -1.0


Motor-carrier sector 7.4 5.3 5.1 5.0 5.4 6.0 6.7 7.8 8.8 8.7 8.9 1.9

Industrial sector 3.8 4.2 4.1 4.4 4.3 5.0 4.8 5.4 6.5 6.5 6.6 5.8

Oil sector - - - - - - - - - - - n.a.


Services sector 7.1 7.9 8.0 8.6 8.6 8.5 8.3 9.0 10.4 9.9 10.0 3.5

Exports - - - - - - - - - - - n.a.

To other regions - - - 0.0 0.0 - - - - - - n.a.

Inventories variation* 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -10.4

Concept 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015AAGR

2005-2015

Origin 126.4 124.7 122.5 120.2 118.7 120.1 117.4 117.6 114.8 116.0 113.7 -1.1

Domestic 8.1 8.3 9.6 8.4 10.4 10.6 8.5 11.7 10.8 12.2 9.4 1.5


Pemex Refining 8.1 8.3 9.6 8.4 10.4 10.6 8.5 11.7 10.8 12.2 9.4 1.5

Pemex Petrochemistry - - - - - - - - - - n.a.

Pemex Exploration and Production - - - - - - - - - - n.a.

Imports - - - - - - - - - - n.a.


Destination 126.3 124.6 122.6 120.3 118.8 120.1 117.3 117.5 114.8 116.1 113.6 -1.1

Domestic demand 126.3 124.6 122.6 120.3 118.8 120.1 117.3 117.5 114.8 116.1 113.6 -1.1


Motor-carrier sector 9.3 9.5 13.4 12.2 11.7 10.4 11.7 11.8 13.3 13.8 13.3 3.6


Oil sector - - - - - - - - - - - n.a.


Services sector 19.7 18.8 16.8 15.8 15.8 15.7 15.8 16.2 14.5 14.4 14.2 -3.3

Exports - - - - - - - - - - - n.a.

To other regions - - - 0.0 0.0 - - - - - - n.a.

Inventories variation* 0.1 0.1 -0.1 -0.1 -0.1 0.0 0.1 0.1 0.0 -0.1 0.0 -11.2

49

TABLE A. 11 BALANCE OF LP GAS, PROPANE, AND BUTANE, SOUTH-SOUTHEAST REGION, 2005-2015

(MBD)


TABLE A. 12 REGIONAL COMPOSITION OF THE VEHICLE FLEET BY FUEL, 2015-2030

(Thousand units)

Note: includes hybrid vehicles, does not include motorbikes Source: IMP based on information from private companies.

Concept 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015AAGR

2005-2015

Origin 230.3 220.4 205.4 199.0 193.1 197.9 212.0 210.8 208.2 215.6 199.7 -1.4

Domestic 216.8 209.6 190.8 174.9 173.5 178.1 178.5 172.4 171.7 170.8 145.3 -3.9

Pemex Gas and Basic Petrochemistry 201.1 197.6 179.3 162.9 160.4 164.3 165.6 157.9 158.1 157.7 134.8 -3.9

Pemex Refining 14.8 11.7 11.3 11.5 12.1 12.0 10.5 11.6 10.2 9.9 7.1 -7.1

Pemex Petrochemistry 0.0 0.0 - - - 0.0 - - - - - n.a.

Pemex Exploration and Production 1.0 0.3 0.2 0.6 1.0 1.9 2.4 2.9 3.3 3.3 3.3 13.1

Imports 13.4 10.7 14.6 24.1 19.6 19.8 33.4 38.5 36.5 44.8 54.4 15.0

From other regions - - - 0.0 0.0 - - - - - - n.a.

Destination 230.3 216.2 204.3 198.3 191.1 199.2 211.1 210.0 208.3 213.0 201.4 -1.3

Domestic demand 45.3 45.3 45.2 44.0 41.5 41.9 42.6 42.7 40.2 42.0 40.9 -1.0




Oil sector 4.4 5.2 5.7 5.1 4.9 4.0 4.6 4.4 2.5 5.1 4.2 -0.4


Services sector 5.3 6.3 6.1 5.6 5.3 5.6 6.2 6.9 7.5 7.2 7.3 3.3

Exports 1.8 2.1 1.0 0.1 1.1 0.1 1.5 0.1 0.2 1.3 0.0 -35.9

To other regions 183.2 168.8 158.1 154.2 148.5 157.2 167.0 167.1 167.9 169.7 160.5 -1.3

Inventories variation* 0.0 4.2 1.1 0.7 2.1 -1.3 0.8 0.9 0.0 2.6 -1.7 n.a.

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Gasoline 32,338.2 33,184.6 33,626.7 33,846.7 34,422.3 34,909.1 35,922.9 36,938.1 37,925.8 38,645.1 39,396.3 40,317.3 41,082.0 41,557.6 42,105.8 42,620.9

Diesel 842.0 831.2 829.6 846.9 882.2 929.6 987.5 1,045.7 1,104.2 1,159.9 1,210.5 1,274.1 1,331.9 1,386.1 1,439.5 1,497.0

LP Gas 250.3 240.6 242.3 230.5 223.5 223.5 225.5 228.3 232.0 236.3 240.2 246.6 252.9 259.3 265.5 265.7

GNC 3.1 3.8 4.0 4.3 4.5 4.8 5.1 5.3 5.5 5.7 5.9 6.0 6.1 6.3 6.7 6.8

Total 33,433.6 34,260.2 34,702.6 34,928.4 35,532.4 36,067.0 37,141.0 38,217.4 39,267.6 40,047.0 40,852.8 41,844.1 42,673.0 43,209.3 43,817.5 44,390.4

50

TABLE A. 13 LP GAS BALANCE OF THE NORTHWEST REGION, 2015-2030 (thousand barrels per day)

N.A: Not applicable *Includes statistic difference, packaging in pipelines, and ships in transit. Source: IMP, based on INEGI, CONAGUA, Conapo, Pemex, SENER and private companies.

TABLE A. 14 LP GAS BALANCE OF THE NORTHEAST REGION, 2015-2030 (thousand barrels per day)


Concept 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030AAGR

2015-2030

Origin 25.0 23.5 23.5 23.8 23.9 24.1 24.2 24.2 24.4 24.4 24.5 24.6 24.6 24.8 24.9 24.9 0.0-

Domestic production - - - - - - - - - - - - - - - - n.a.

Imports 17.0 19.3 19.5 18.1 20.1 20.3 19.6 19.6 19.8 19.8 19.9 20.0 20.1 20.2 20.3 20.4 1.2

From other regions 8.0 4.2 4.0 5.6 3.8 3.8 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 3.6-

Destination 25.0 23.5 23.5 23.8 23.9 24.1 24.2 24.2 24.4 24.4 24.5 24.6 24.6 24.8 24.9 24.9 0.0-

Domestic demand 25.0 23.5 23.5 23.8 23.9 24.1 24.2 24.2 24.4 24.4 24.5 24.6 24.6 24.8 24.9 24.9 0.0-

Agriculture and livestock sector 0.6 0.6 0.6 0.6 0.6 0.7 0.7 0.7 0.7 0.7 0.7 0.8 0.8 0.8 0.8 0.9 2.6

Motor-carrier sector 2.8 2.8 3.0 3.0 3.1 3.2 3.3 3.3 3.4 3.4 3.5 3.5 3.6 3.6 3.7 3.7 1.9

Industrial sector 3.7 3.4 3.4 3.5 3.6 3.7 3.7 3.8 3.9 3.9 4.0 4.0 4.0 4.1 4.1 4.1 0.8

Oil sector - - - - - - - - - - - - - - - - n.a.

Residential sector 13.7 12.5 12.4 12.4 12.4 12.4 12.2 12.1 12.1 12.0 11.8 11.7 11.6 11.6 11.5 11.4 1.2-

Services sector 4.3 4.1 4.1 4.2 4.2 4.2 4.2 4.3 4.3 4.4 4.4 4.5 4.6 4.7 4.7 4.8 0.7

Exports - - - - - - - - - - - - - - - - n.a.

To other regions - - - - - - - - - - - - - - - - n.a.

Inventories variation* 0.01- - - - - - - - - - - - - - - - n.a.

Concept 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030AAGR

2015-2030

Origin 47.5 98.1 89.2 89.4 85.9 87.7 83.3 85.5 83.7 81.8 86.6 87.9 87.4 90.8 95.5 100.3 5.1

Domestic production 18.0 12.1 10.3 15.5 16.6 17.3 18.5 18.2 19.1 19.8 20.7 22.4 21.6 21.9 19.4 17.7 0.1-

Imports 29.5 86.0 78.9 73.9 69.3 70.4 64.8 67.3 64.6 61.9 65.9 65.6 65.8 68.9 76.1 82.5 7.1

From other regions - - - - - - - - - - - - - - - - n.a.

Destination 47.6 98.1 89.2 89.4 85.9 87.7 83.3 85.5 83.7 81.8 86.6 87.9 87.4 90.8 95.5 100.3 5.1

Domestic demand 38.7 35.9 35.5 35.3 34.7 34.9 35.1 35.3 35.6 35.9 36.1 36.4 36.6 36.9 37.0 37.2 0.3-




Oil sector - - - - - - - - - - - - - - - - n.a.


Services sector 6.1 6.2 6.2 6.3 6.3 6.3 6.3 6.4 6.5 6.5 6.6 6.7 6.8 7.0 7.1 7.2 1.1

Exports - - - - - - - - - - - - - - - - n.a.

To other regions 8.8 62.2 53.6 54.1 51.2 52.8 48.2 50.2 48.1 45.9 50.5 51.5 50.7 53.9 58.5 63.1 14.0


51

TABLE A. 15 LP GAS BALANCE OF THE CENTRAL REGION, 2015-2030

(thousand barrels per day)


TABLE A. 16 LP GAS BALANCE OF THE CENTRAL-EASTERN REGION, 2015-2030 (thousand barrels per day)


Concept 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030AAGR

2015-2030

Origin 113.7 114.6 113.7 113.0 111.5 111.1 110.5 110.0 110.1 109.7 109.5 109.4 109.3 109.9 110.0 110.2 0.2-

Domestic production 9.4 8.9 9.9 14.3 14.3 14.3 18.5 18.5 18.5 18.5 18.5 18.5 18.5 18.5 18.5 18.5 4.6

Imports - - - - - - - - - - - - - - - - n.a.


Destination 113.6 114.6 113.7 113.0 111.5 111.1 110.5 110.0 110.1 109.7 109.5 109.4 109.3 109.9 110.0 110.2 0.2-

Domestic demand 113.6 114.6 113.7 113.0 111.5 111.1 110.5 110.0 110.1 109.7 109.5 109.4 109.3 109.9 110.0 110.2 0.2-




Oil sector - - - - - - - - - - - - - - - - n.a.


Services sector 14.2 13.8 13.9 14.0 14.0 14.1 14.2 14.4 14.6 14.9 15.2 15.5 15.8 16.2 16.5 16.9 1.2

Exports - - - - - - - - - - - - - - - - n.a.


Inventories variation* 0.03 - - - - - - - - - - - - - - - n.a.

Concept 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030AAGR

2015-2030

Origin 64.7 63.1 61.7 60.4 59.4 58.7 57.9 57.1 56.7 56.1 55.6 55.2 54.8 54.7 54.4 54.0 1.2-

Domestic production 3.2 2.4 2.4 4.2 4.2 4.2 6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6 4.8

Imports 4.3 1.0 0.7 - 1.6 1.9 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 5.8-


Destination 64.7 63.1 61.7 60.4 59.4 58.7 57.9 57.1 56.7 56.1 55.6 55.2 54.8 54.7 54.4 54.0 1.2-

Domestic demand 64.7 63.1 61.7 60.4 59.4 58.7 57.9 57.1 56.7 56.1 55.6 55.2 54.8 54.7 54.4 54.0 1.2-


Motor-carrier sector 8.9 8.7 8.4 8.1 7.8 7.7 7.6 7.5 7.4 7.3 7.2 7.2 7.1 7.1 7.0 7.0 1.7-

Industrial sector 6.6 5.0 4.5 4.2 4.3 4.4 4.6 4.7 4.8 4.9 5.0 5.0 5.1 5.1 5.2 5.2 1.6-

Oil sector - - - - - - - - - - - - - - - - n.a.


Services sector 10.0 8.9 8.9 8.9 8.8 8.8 8.9 8.9 9.0 9.1 9.2 9.3 9.5 9.6 9.8 10.0 0.0-

Exports - - - - - - - - - - - - - - - - n.a.


Inventories variation* 0.01 - - - - - - - - - - - - - - - n.a.

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TABLE A. 17 LP GAS BALANCE OF THE SOUTH-SOUTHEAST REGION, 2015-2030 (thousand barrels per day)


Concept 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030AAGR

2015-2030

Origin 199.7 149.0 154.1 147.4 143.7 140.2 137.5 134.1 134.5 134.4 129.9 128.0 128.2 125.5 120.7 115.8 3.6-

Domestic production 145.3 143.2 148.7 144.9 140.9 136.6 133.9 130.4 134.5 134.4 129.9 128.0 125.2 121.7 116.8 111.9 1.7-

Imports 54.4 5.8 5.5 2.5 2.8 3.7 3.7 3.7 - - - - 3.0 3.9 3.9 3.9 16.1-

From other regions - - - - - - - - - - - - - - - - n.a.

Destination 201.4 149.0 154.1 147.4 143.7 140.2 137.5 134.1 134.5 134.4 129.9 128.0 128.2 125.5 120.7 115.8 3.6-

Domestic demand 40.9 41.6 41.3 41.0 40.3 39.8 39.6 39.4 38.0 36.7 37.5 37.2 37.1 37.1 37.0 36.9 0.7-


Motor-carrier sector 3.6 3.3 3.1 2.9 2.7 2.6 2.5 2.4 2.4 2.4 2.3 2.3 2.3 2.3 2.4 2.4 2.8-

Industrial sector 2.8 2.3 2.2 2.1 2.2 2.2 2.3 2.4 2.4 2.5 2.5 2.5 2.6 2.6 2.6 2.7 0.4-

Oil sector 4.2 4.6 4.6 4.6 4.2 3.9 3.9 3.7 2.2 0.9 1.6 1.4 1.2 1.1 1.0 0.9 10.1-


Services sector 7.3 6.4 6.5 6.5 6.5 6.6 6.7 6.8 6.9 7.0 7.1 7.3 7.4 7.5 7.7 7.9 0.5

Exports 0.0 - - - - - - - - - - - - - - - n.a.

To other regions 160.5 107.4 112.8 106.4 103.4 100.4 97.9 94.7 96.4 97.7 92.4 90.8 91.1 88.4 83.7 79.0 4.6-


53

Glossary

Acid gas Compound occasionally present in the NG, like sulfuric acid and carbon dioxide, and which give NG acid peculiarities due to their physical and chemical properties.

Butane Hydrocarbons that belong to the alkane family formed by four atoms of carbon, and ten of hydrogen and which are produced by fractionating NG liquids, condensates, and some refining processes, like crude-oil atmospheric distillation, catalytic disintegration, and naphthas reforming. Mixed with propane, it produces liquefied petroleum gas.

Compressed natural gas Dry natural gas stored at a pressure of 200-250 atmospheres in gaseous state in a container.

Cryogenic plant Plant which, through a low-temperatures process separates and eliminates any gas component that could affect the transport and distribution systems, such as carbon dioxide, water steam, and heavy hydrocarbons.

Distribuitor Permit holder of a distribution permit.

Distribution Activity of receiving, conveying, delivering, and if the case, commercialize NG through pipelines within a geographical zone.

End user

Person who purchases gas for his/her consumption.

First-hand sales price They are defined as the first sale of natural gas, produced in Mexico and sold by Petroleos Mexicanos to a third party for delivery in the national territory, the First-Hand Sale (VPM) is an activity regulated by the Energy Regulatory Commission (CRE).

Fuel

Substance used to produce thermal energy through a chemical or nuclear reaction. The energy is produced by the conversion of the fuel mass into heat.

Fueling L.P. Gas Name given to the LP Gas used in vehicles with internal combustion engines.

Gas Processing Center

PGPB facility in which the sweetening process of the sour gas is carried out; the resultant sweet gas is processed for extracting, through cryogenic and fracking processes, liquid hydrocarbons contained in the NG, obtaining -among others- the products which form the L.P. gas.

Liquid or gas fossil fuels Derivatives of crude oil or NT such as limpid petroleum (kerosene), gasolines, diesel, fuel oil, gasoil, LP gas, butane, methane, isobutane, propylene, butylene, or any of their combinations.

Liquids fractionation Process through which condensates and gas liquids are separated by distillation to obtain mainly LP gas and gasoline

LP gas fueling station Storage system using containers exclusively destined to deliver LP gas for

54

gas-fueled vehicles.

Mexican Official Standards Mandatory norms issued by the competent entities subjected to what is ordered in the Federal Law on Metrology and Normalization.

Permittee Owner of a permit for transportation, storage, and distribution.

Pipes or LPG-pipelines Piping systems used for transporting LP gas according to the Mexican Official Standards.

Propane Hydrocarbon found in small amounts within NG. It is obtained by fractionating NG liquids, from condensates, and from diverse refining processes such as crude-oil atmospheric distillation, catalytic disintegration, and naphthas reforming. It is relatively easy to liquefy if compressed, and thereby is used on its own or blended with butane to form LP gas.

Refining capacity Refers to the capacity per operation day, not to the capacity per calendar day. The capacity per operation day of a plant is the maximum volume that can be processed working uninterruptedly, while the capacity per calendar day considers stoppages normally demanded due to maintenance and other events.

Solid fuels Varieties of mineral coal and oil coke whose fixed content of carbon ranges from 10% to 90% in weight.

Sour gas NG containing sulfur derivatives such as sulfuric acid, mercaptans, sulfurs, and disulfurs. Comes directly from crude oil reservoirs or from the various refining processes.

Sweet gas NG free of sulfuric acid, mercaptans, and other sulfur derivatives. There are sweet gas reservoirs, but it is mostly obtained through sweetening sour natural gas using chemical solvents, physical solvents, or absorbents.

Tank car Container designed to work under pressure or at atmospheric conditions, assembled on a platform or directly on wheels to be transported on railways.

Tanker truck Vehicle in which chassis is permanently installed a container for L.P. gas with a maximum capacity of 25,000 liters, and is used to exclusively supply fuel to non-transportable containers within utilization facilities and L.P. gas stations for fuel through a filling system. They are known as "pipes".

Transportation

Reception, conveyance, and delivery of NG by means of pipelines to people who are no end users.

User

Person who uses or asks for the services of a permit-holder.

Wet gas Hydrocarbons blend obtained from processing NG from which impurities or non-hydrocarbons compounds have been eliminated, and whose content of components heavier than methane is such that allow its commercial processing.

55

Acronyms

AAGR Annual Average Growth Rate

CENAGAS National Center for Natural Gas Control

CFE Federal Electricity Commission

CNH National Hydrocarbons Commission

CONAGUA National Water Commission

CONAPO National Population Council

CPG Gas Processing Center

CRE Energy Regulatory Commission

DOF Official Journal of the Federation

EIA Energy Information Administration (U.S)

EIP Energy Independent Producer

EPE State Productive Enterprise

EPS Subsidiary Productive Enterprise

FHS First-Hand Sales

Gas L.P. Liquefied Petroleum GAs

Gcal Gigacalory

GDP Gross Domestic Product

GN Natural gas

GNC Compressed natural gas

GNL Liquefied natural gas

Ibídem Same as the previous

IEA International Energy Agency

IMP Mexican Petroleum Institute

INEGI National Institute of Statistics and Geography

MBD Thousand barrels per day

mbdge Thousand barrels per day of gasoline equivalent

56

MBDLPGE Thousand barrels per day of LP gas equivalent

MCFD Thousand cubic feet per day

MMCFD Million cubic feet per day

MMCFDNGE Million cubic feet per day of natural gas equivalent

MMT Million tons

MT Thousand tons

N. A Not applicable

PEMEX Petróleos Mexicanos

PEP PEMEX Exploration and Production

PGPB PEMEX Gas and Basic Petrochemistry

PPQ PEMEX Petrochemistry

PR PEMEX Refining

SENER Secretariat of Energy

SNG National Gas-Pipelines System

SNR National Refining System

US$ American dollars

57

Conversion Factors

TABLE B.1

VOLUME EQUIVALENCES

TABLE B.2 POWER EQUIVALENCES

* Factor applied to fuels in the diesel group.

1 pound = 0,4535 kilograms

1 pound = 0,9842 long tons

1 pound = 2.204,6226 pounds

1 pound = 6,2898 barrels

1 pound = 6.289.800 barrels

1 pound = 178,1070 barrels

Volume

1 million tons of oil = 40,4 BTU (1012 thermal units)

1 tons of crude oil equivalent = 41,868 GJ

1 million tons of crude oil equivalent = 41,868 PJ

1 metric ton = 7,33 barrels of oil

1 barrel of fuel oil = 6.783 feet3 of natural gas

1 barrel of oil = 5.000 feet3 of natural gas

1 m3 of natural gas = 8.460 kilocalories (for manufacturing dry gas)

1 Mm3 of natural gas = 900 tons of crude oil

1 Mfeet3 of natural gas = 26 tons of crude oil

1 Mcal = 3,6791 Mfeet3 of gas

Power Conversions

58

TABLE B.3 HEAT EQUIVALENCES

1 foot3 = 1,03 MBtu of natural gas

100 feet3 = 1,03 MBtu of natural gas

1 barrel of LP gas = 1,004108149 gigacalories

1 BTU** = 1.055,056 J

1 BTU** = 0,252 kcal

1 cal = 4,1868 J

1 kcal = 3,968254 Btu

Mcal = 3.968,254 Btu

Gcal = 3.968,254 Btu

1 PJ = 947,08 barrels of crude oil equivalent

1 Wh = 3.600 J

1 GJ = 239.000 kcal

Heat Conversions

59

References

• Petróleos Mexicanos, Informe Anual 2015

• Cuarto Informe de Labores 2015-2016

• Desarrollo Del Sistema Regulatorio Mexicano En Materia Energética (CRE)

• Reglamento de las actividades a que se refiere el Título Tercero de la Ley de Hidrocarburos

• Reporte de resultados preliminares de PEMEX al 31 de diciembre de 2015

• https://www.gob.mx/sener/prensa/sener-otorga-permisos-a-pemex-para-continuar-con-las-actividades-de-tratamiento-y-refinacion-de-petroleo-asi-como-para-procesamiento-de-gas.

• http://www.gob.mx/cms/uploads/attachment/file/171836/Permisos_de_importaci_n_de_Gas_LP_5dic16.pdf

• http://www.gas.pemex.com.mx/PGPB/Productos+y+servicios/Gas+licuado/Precios/Venta+GLP+distribuidores/

lp gas outlook - gob

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