www.accesstoenergy.mx Page 1 to 13

NEWSLETTER

ACCESS TO ENERGY is a multidisciplinary corporate service shelter integrated by

committed professionals that collaborate contributing knowledge and experience to

provide comprehensive tailored solutions which facilitate the opening and operations

of our clients in Mexico.

The firm provides all kinds of essential services for every stage of a company’s life

cycle: feasibility analysis, soft landing opening, operation, logistics, and attached

services required for a successful corporate strategy.

Number 33

EDITION AND PRODUCTION: ACCESS TO ENERGY CONTACT: news@accesstoenergy.mx

www.accesstoenergy.mx Page 2 to 13

News from international Energy sector.

Newsletter August 2017.

MEXICO'S PESO WEAKENS AFTER TRUMP SAYS HE MAY KILL

NAFTA. (Reuters) 2

TEXAS AND MEXICO ENERGY SECTORS STRENGTHENING TRADE

ALLIANCES. (Rivard Riport) 3

RAISE YOUR SOLAR GLASS AND MAKE A TOAST TO RENEWABLE

ENERGY. (Renewable Energy Mexico) 5

PETROFAC SELLS ITS INTEREST IN PÁNUCO TO SCHLUMBERGER.

(Penny Energy) 5

BRAZILIAN CORRUPTION CHARGES COULD IMPACT MEXICO’S

OIL BOOM. (Oil Price) 6

OVER ONE HUNDRED SORIANA STORES TO RUN ON WIND

POWER. (Energía 16) 7

WHEN WILL MEXICO START TO FRACK FOR NATURAL GAS?

(Forbes) 7

FUEL THEFT INCIDENT IN MEXICO CAUSES EXPLOSION. (The Oil

and Gas News) 9

MEXICAN GOVERNMENT RAISES PEMEX DEDUCTIONS TO

CONTINUE OIL OUTPUT. (Rigzone) 9

MEXICO’S SHALE-RICH BURGOS BASIN OPENS TO PRIVATE

INVESTMENT FOR THE FIRST TIME. (Penny Energy) 10

PEMEX TO ESTABLISH A FAR-REACHING AND INTENSE

MAINTENANCE PROGRAM IN THE REFINERY OF CIUDAD

MADERO. (PEMEX) 10

OIL PRICES SINK AND GASOLINE FUTURES SURGE AS STORM

HEADS INTO GULF OF MEXICO. (Business Insider UK) 11

PEMEX FERTILIZANTES SELECTS JACOBS FOR AMMONIA IV

REHABILITATION PROJECT. (Gulf Oil and Gas) 12

OIL AND GAS ASSOCIATIONS SHOW THEIR SUPPORT ON NAFTA.

(Oil & Gas Mexico) 13

(

MEXICO'S PESO WEAKENS AFTER TRUMP SAYS HE

MAY KILL NAFTA.

Mexico's peso weakened more than 1 percent in

early trading on Wednesday, reacting to U.S.

President Donald Trump's comments casting doubt

on the future of the North American Free Trade

Agreement (NAFTA).

Initial talks to re-negotiate the trade pact between

Mexico, the United States and Canada ended in

Washington this weekend with no sign of a

breakthrough, and further discussions are due in

Mexico City in September.

In a speech on Tuesday night, Trump said he might

terminate NAFTA, saying its future looked bleak. The

peso weakened more than 1 percent before paring

losses to 17.7970 pesos per dollar.

www.reuters.com

www.accesstoenergy.mx Page 3 to 13

TEXAS AND MEXICO ENERGY SECTORS STRENGTHENING TRADE

ALLIANCES.

Access To Energy had de honor of participate in the event "ENERGY: A

Conecting Sector Between Texas and México” organized by the the

Mexican Entrepreneur Association, or Asociación de Empresarios

Mexicanos (AEM) which was created by a group of Mexican

entrepreneurs to create business opportunities between the U.S. and

Mexico by guiding binational business people and young entrepreneurs.

The event hosted a great Panel to discuss Energy integration between

Texas and Mexico. This conversation was moderated by Texas Secretary of State Rolando Pablos, with the special

participation of Mexico Energy Regulatory Commission (CRE), Chairman Guillermo Garcia Alcocer, ERCOT CEO

Bill Magness and Texas RailRoad Commissioner Ryan Sitton. The speakers exchanged views about challenges

and opportunities brought by the Mexican Energy Reform. The conversation focused on opportunities in the

downstream, midstream and electricity which are the activities regulated by the CRE. The event was very well

attended by the energy industry and members and allies from the City of San Antonio, Houston, The Woodlands,

The Port of Corpus Christi, and the region.

The most relevant contributions were the following:

“The key word here is trust,” Texas Secretary of State Rolando Pablos said in his remarks moderating the Mexican

Entrepreneur Association forum, “Energy: A Connecting Sector Between Texas and Mexico,” on Monday. “We

need to make sure that, in spite of all the background noise that’s occurring, we stay focused on the relationship

and continue to strengthen the relationship between Texas and Mexico.

“With the recent Constitutional reform, it is now possible for Valero to import refined products directly into Mexico

for further distribution, including branded sales,” stated Joe Gorder, Valero chairman, president and CEO, in the

Aug. 3 announcement.

“This transaction will enable us to extend our supply chain to efficiently supply gasoline, diesel and jet fuel to the

growing Mexican market. As we continue to evaluate ways to further engage in Mexico, we look forward to

discussing opportunities with Pemex that advance our respective strategic objectives, as well as discussing supply

arrangements with independent retail operators.”

Sponsored by Valero, the AEM forum brought together energy experts from both sides of the border, including

Mexican Energy Regulatory Commission Chairman Guillermo García Alcocer. García oversees the agency that

grants permits for the import/export of electricity in Mexico, and works with natural gas importers and exporters.

At the forum, García spoke of the Valero deal and how it signals the continuation of more private entities looking

to Mexico and creating a more market-based economy there. He said what is needed now to generate more

opportunities are common standards and connected systems between the U.S. and Mexico.

“That’s an opportunity with NAFTA (North American Trade Agreement) negotiations – to have standards as a

goal and that will bring competitiveness,” García said.

The panel also discussed potential for future trade in electricity. Electric Reliability Council of Texas (ERCOT) CEO

Bill Magness said there are already electrical ties that can be opened and closed between the countries for the

sake of reliability.

“There is growing discussion between both sides of the border, should there be the availability to trade in large

amounts with new ties, so I think we will see the discussion is ongoing,” Magness said. “I think the chairman’s

reference to standards is critical … You can’t run the system safely unless you have agreement on what these

standards are.”

www.accesstoenergy.mx Page 4 to 13

Pablos reminded the audience of several hundred that his job is to make sure there’s economic opportunity on

both sides of the border. “And it’s no secret that reliable and affordable electricity is a component that is

considered when investment is to be made, particularly in manufacturing,” he said.

“I would think that with the trade in electricity, if it makes electricity more affordable, more Mexican

manufacturing could occur. So I would love to see an effort that begins the process of rethinking that.”

As for oil and gas, Mexico already imports 600,000 barrels a day of refined oil products and 400 billion cubic feet

of natural gas, and roughly 50-60% of both come from the U.S., according to Texas Railroad Commissioner Ryan

Sitton, one of three leaders at the agency that regulates oil and gas in the state.

“That demand has gone up substantially and continues to climb. If you look at projections, you can see it

continues to go up.” Working to agree on standards, however, is key to that growth, he added.

“I think that the other meeting point that needs to happen is expectations for economics and how commerce is

done,” Sitton said. “From a regulator perspective, my job is not to drive business. My job is to make it easy for

people to do business. So I say to a guy who wants to build a pipeline, we want to make sure that pipeline is safe.

“Being a proud American, we always think the way we do it is right, and I’m sure my Mexican counterparts think

the same thing. But the more we can agree on how we allow private investment to bring those products, the

better it will be. That opens up the opportunity for Mexican people to leverage U.S. products at a really good

rate.”

The panel also touched on clean energy. Texas has spent $7 billion to build transmission infrastructure that brings

wind power from remote parts of the state into urban areas, a “tremendous” investment, according to Magness.

It’s this kind of investment along with advances in technology, like widespread smart-meter use, that will cut costs

for consumers.

“We’re just beginning to see the ways in which technology is going to change how we relate to electricity in our

own homes,” Magness said. “CPS Energy here is a leader in demand-response areas, and we’re starting to see

how that can shift what we’re seeing on the grid.”

Sitton also spoke of technology developments and the impact on the Texas oil and gas industry. Though

fracturing has been around since the late 1940s, the combination of long laterals with multi-stage hydraulic

fracturing with slick water is what opened up shale developments here and elsewhere. From 2007 to 2014, Texas

oil production grew from 1 million barrels a day to 3 million.

“But if I just had oil production in the state of Texas, that by itself wouldn’t make me globally competitive,” he

said. “If I just had the largest section of pipelines – literally, over 400,000 miles of pipelines in the state – that by

itself wouldn’t do it. If I just had the most complex refining infrastructure in the world, that wouldn’t do it.

“All these things together, plus import-export terminals, are what make the state of Texas so globally competitive

… And as Mexico comes into their own, you’ll get the same kind of development where Texas, Mexico, and the

United States can benefit.”

https://therivardreport.com/texas-and-mexico-energy-sectors-strengthening-trade-alliances/

www.accesstoenergy.mx Page 5 to 13

RAISE YOUR SOLAR GLASS AND MAKE A TOAST TO RENEWABLE

ENERGY.

What if your office building’s glass facade, in addition to letting sunlight in

and blinding your co-workers whose working booths face the sun directly,

could also help reduce your electric bill?

That is the objective Physee, an Amsterdam-based startup launched in

2014, set for commercial, residential and office buildings. The company

combines and integrates glass, solar cells, coatings, electronics, printed

circuit boards, storage solutions, sensor technologies and connectivity units to offer solar-powered buildings

through PV power producing glasses adaptable to building structures and facades: PowerWindow. After the

successful pilot project of the Eindhoven Rabobank Office where they installed 10 PowerWindows in partnership

with OVG Real Estate, Physee was able to scale up their projects. The Dutch start-up is now working to install

1,850m2 of PowerWindows for the BOLD Residential project and the renovated building of the Lottery Association

Goede Doelen Loterij.

In Mexico, Grupo Vazquez Vela is undertaking the same endeavor. The Group is looking to make Onyx PV glass

a standard practice for Mexico’s buildings, integrating them in both new constructions and building renovations.

The Mexican company is already showcasing this product in FEMSA’s corporate office in Monterrey.

“Our material can take on any shape, size, thickness and even color. The cost is practically the same as

conventional glass. Any differential cost generated by a particular request from a client can be recovered by a

ROI of less than a year. Considering all the intrinsic fiscal benefits and energy savings, we turn expenses into

investments” says Daniel Vazquez, partner of Grupo Vazquez Vela in an exclusive interview with Mexico Energy

Review. “Not only does the building use renewable energy as a primary source but it also avoids energy loss in

bypassing the need for electric transmission”, he added.

Mexico’s energy transition is not only showing an increasingly renewable component in its energy mix. It is also

the main scene for new products and technological developments that assist renewable energy to also

penetrate the distributed generation sector.

http://www.renewableenergymexico.com/raise-your-solar-glass-and-make-a-toast-to-renewable-energy/

PETROFAC SELLS ITS INTEREST IN PÁNUCO TO SCHLUMBERGER.

Petrofac and Schlumberger recently announced that Petrofac has sold its

50% interest in Petro-SPM Integrated Services S.A. de C.V (1) to

Schlumberger. Petro-SPM operates the Pánuco Integrated Service

Contract in Mexico. Schlumberger now owns 100% of Petro-SPM.

The total potential consideration is in line with the net book value of

Petrofac’s interest and comprises cash on completion and deferred

consideration. The deferred consideration comprises both a payment on

migration from an Integrated Service Contract to a new contract form and a further share of post migration cash

flows.

Rob Jewkes, Chief Operating Officer, Petrofac Integrated Energy Services, commented: “We are pleased to

conclude this transaction, which is in line with our strategy and simplifies the ownership of the Pánuco field. We

will continue to focus on the remaining production service contracts in our Mexican portfolio.”

“We consider Mexico’s Energy Reform as a significant step in the evolution of the country’s oil and gas industry,

and we are optimistic in regard to the various business opportunities created under the new reforms,” said Patrick

www.accesstoenergy.mx Page 6 to 13

Schorn, Executive Vice President, New Ventures, Schlumberger. “This transaction aligns with our well-established

portfolio of production management projects and enables us to move forward with our plans to continue to

develop the Pánuco field.”

This transaction was completed on August 15, 2017.

http://www.pennenergy.com/articles/pennenergy/2017/08/oil-and-gas-petrofac-sells-its-interest-in-p-nuco-to-

schlumberger.html

BRAZILIAN CORRUPTION CHARGES COULD IMPACT MEXICO’S

OIL BOOM.

Last year, Brazilian construction firm Odebrecht pleaded guilty to

bribing officials in 12 countries to secure high-paying contracts. The

firm agreed to a payment of at least $3.5 billion, the largest penalty in

history for a foreign bribery case. Now, months later, the scandal

continues to escalate as new allegations pop up.

The latest addition to the scandal is Mexican state oil company Pemex, which has now been swept up in the

widespread accusations of corruption. While Pemex officials have already been called for testimony in

Odebrecht-related investigations back in April, this week the plot thickened. On Saturday accusations surfaced

that Emilio Lozoya, the former chief executive of Pemex, accepted $10 million in bribes from Odebrecht in

exchange for sending the company lucrative contracts.

The bribes allegedly started rolling in in March 2012, when Lozoya began his reign at Pemex, until he left the post

in 2016. As of right now the allegations have not been proven and Lozoya has categorically denied all charges,

but documentation from Brazil providing solid evidence of the payouts is due to arrive in the hands of Mexican

investigators in the coming days.

Even more concerning, in 2012 Lozoya was also head of the international affairs office for current Mexican

president, then-candidate Enrique Peña Nieto’s presidential campaign. As Peña Nieto is no stranger to corruption

allegations himself, his closeness to the scandal has caused a stir in Mexico and many accuse the president of

being fully aware of Lozoya’s nefarious dealings with Odebrecht. Lozoya will head to court next week for

questioning about the scandal and his alleged involvement, which he has already denounced as “false” and

“malicious”. Peña Nieto’s PR team has offered similar denials.

According to numbers published in the the U.S. court ruling against Odebrecht last November, the Brazilian

company paid around $788 million in bribes dealing with 100 projects in 12 different countries including Mexico,

Argentina, Colombia, and Venezuela between 2001 and 2016. During this period, Pemex had a contract with

Braskem for ethane supply and three more contracts with Odebrecht, two for a $2.1 billion construction project

at the Tula refinery in the Mexican state of Hidalgo, and the last for the development of a waste management

project at the Salamanca refinery in central Mexico.

This money trail and the brazen accusations of corruption reflect quite badly on Pemex and on President Peña

Nieto. Some critics are saying that it could go so far as to impact Mexico’s political and economic allies, including

the critical North American Free Trade Agreement.

If so, this could come as a huge blow to Pemex, which is currently undergoing incredible financial gains and

developing a slew of new projects. Many were predicting that Mexico’s current oil boom, largely prompted by

the new allowance of private explorations and drilling in Mexican waters, would begin a new era of trust and

cooperation with the U.S. Now, that could all be in jeopardy.

http://oilprice.com/Energy/Crude-Oil/Brazilian-Corruption-Charges-Could-Impact-Mexicos-Oil-Boom.html

www.accesstoenergy.mx Page 7 to 13

OVER ONE HUNDRED SORIANA STORES TO RUN ON WIND POWER.

The recently commissioned La Mesa wind farm, located in Güemez,

Tamaulipas, will supply renewable energy to around 165 stores owned by

Mexican grocery and department store Soriana.

La Mesa, which entailed an investment of $105 million, covers over 2,037

hectares and has a total installed capacity of 49.5 MW, with 15 wind

turbines, according to a statement issued by the company. According to

the firm, the wind farm is expected to have an annual production of 181 GWh, equal to the power consumed in

25,523 households in a year.

The company assured that supplying clean energy to 165 of its stores “will reduce GHG emissions and other

polluting gases.”

Soriana explained that the energy supply will be carried out in two stages: the first one began on June 1 in 129

stores with different formats, including Distribution and Commercial Centers, and the second one will begin on

January 1, 2018.

“This project will prevent the emission of 82,898 tons of CO2, equal to getting 24,400 cars out of circulation a

year,” the statement read.

http://www.energia16.com/over-one-hundred-soriana-stores-to-run-on-wind-power/?lang=en

WHEN WILL MEXICO START TO FRACK FOR NATURAL GAS?

Mexico has fracked just a few test wells, while the U.S. has had nearly 2

million commercial ones. Mexico hasn't yet produced shale gas,

compared to the U.S., which now that the Anadarko play in Oklahoma

has been added to the EIA's Drilling Productivity Report on 7 shale plays is

producing 60 Bcf/d of shale gas - over 80% of total national production

(here).

Thanks to the 2013 Energy Reforms that loosened monopoly laws, Mexico's

energy sector is now far more open to foreign investment. The National Hydrocarbons Commission envisions

fracking from unconventionals within a few years, but probably no significant levels until sometime after that.

There are key obstacles to producing shale gas in Mexico: a lack of knowledge on unconventional resource

geology, higher costs, smaller service industry, poor regulatory framework, pipeline dearth, lack of security amid

narco-trafficking, water shortages, and others. Not to mention that the recent massive demonstrations against

rising fuel costs: deregulation was sold to a skeptical public as the path to "lower prices."

Finding some way to produce more natural gas might be Mexico's most vital energy goal. Mexico has been

moving away from fuel oil- and diesel-fired electricity, so gas now accounts for nearly 60% of all power generation

and this could reach 72-75% by 2022. Mexico's domestic gas production, however, has continued to fall, mostly

because it's produced as "associated gas," which comes along with oil production. Mexico's oil production is

down 30-35% in the past decade.

Mexico has been importing 4.2-4.5 Bcf/d from the U.S. in recent weeks, and we now account for 60% of Mexico's

total usage. Rio Grande, Texas (~43%) and Roma, Texas (~12%) are the main exit points for our gas to Mexico.

And as I document here, short pipeline infrastructure amid surging demand has installed Mexico as the largest

buyer of U.S. LNG, taking in more than 140 Bcf of gas (23% of the exported U.S. LNG total).

www.accesstoenergy.mx Page 8 to 13

But, the impetus for Mexico's deregulation was to produce more, not import more from the U.S. Let's be clear:

more oil and gas production is seen as the path to real national energy security, especially since the U.S. has big

plans to export much more oil and gas to other energy thirsty nations around the world. For example, by 2020,

the U.S. capacity to export LNG will boom 5-fold to over 10 Bcf/d.

The biggest problem for Mexico to develop its unconventional resource base is the current low-price

environment. Mexican gas prices are linked to those in the U.S. (particularly the Houston Ship Channel) and our

Henry Hub prices have sunk nearly 70% in the shale era to today's ~$3.00 per MMBtu.

Much more information is needed on Mexico's portion of the Eagle Ford and potentially even the Permian Basin

- both hugely important shale plays because they produce huge volumes of both oil AND gas. Broad 2D-seismic

imaging has been done in the resource heavy Burgos Basin in the northeast, but there's been very little of the 3D

variety. Some private firms have been mapping, but there's a strict timeline for profiting from the sale of that data

to exploration and development companies. That's because after a 10-year period, the National Hydrocarbons

Commission takes control of the geological data on hydrocarbon reserves.

Mexican officials know that U.S. LNG will remain imperative because of the country's capacity constraints. One

option for Mexico is to follow the expensive (here) "New England model" and rely on imported LNG during peak

periods. Just as importantly, Mexico is now focused on developing underground storage options, with preliminary

government plans to be published by September.

Mexico has just a few days of capacity to store gas, compared to nearly 3 months for its OECD allies. Mexico also

needs the development of its own domestic gas price indices along pipeline connection points, perhaps to be

centered in the industrial center of Monterrey - "The Growing Role of Mexico in the North American Automotive

Industry."

EIA estimates that Mexico has nearly 550 Trillion Cubic Feet of recoverable shale gas (here). Hopes are high.

Deregulation is sure to eventually help produce more hydrocarbons, and the country will need 15 successful

upstream auctions to reach output goals (here). Petroleum, however, is destined to remain the focus: ~90% of

Mexico's historical hydrocarbon production has been crude.

After long infighting, Mexico is just now starting to realize the positive effects of deregulation. The upstream

auctions held have been successful, with deep-water acreage ones hoped to bring in $35 billion alone (here).

And in June, the number of active offshore exploration rigs reached a 10-year high. Backed by Riverstone Capital

and Miquel Galuccio, Vista just became the first independent E&P company to be listed on Mexico's stock

exchange (Bolsa Mexicano de Valores SAB de CV, BMV) since the reforms were adopted. And although still

marginal at this point, there are now 17 non-PEMEX (Mexico's national oil company) gas producers in the country.

Price caps ("first hand sales") have been eliminated to encourage more upstream investment since output from

unconventionals will be too difficult until prices increase significantly. And a must read EIA write-up here: "Mexico

conducts its first natural gas pipeline capacity open season." The National Hydrocarbons Commission believes

that it could take a decade to produce 3-4 Bcf/d of shale gas. EIA sees Mexican gas production significantly

taking off after 2025 (here).

One emerging problem is the July 2018 presidential election, where energy nationalist Andrés Manuel López

Obrador has been leading in the early polls. In Mexico, presidents get just one six-year term without the possibility

of running again. Although he likely can't fully "bring back the old days of energy monopolies," Obrador can

surely create roadblocks to scare off foreign investors. As for the U.S. gas industry, without the 4.5 Bcf/d gas export

valve to Mexico, our prices would be around just $2.00 - 33% below the current market. The good news is that

Mexico borders the U.S., so eventually our massive shale industry will naturally flow into Mexico as the North

American energy arena becomes more integrated - which is an absolute must my fellow energy security

advocates.

https://www.forbes.com/sites/judeclemente/2017/08/19/when-will-mexico-start-to-frack-for-natural-gas/2/#4a3f4c5553ed

www.accesstoenergy.mx Page 9 to 13

FUEL THEFT INCIDENT IN MEXICO CAUSES EXPLOSION.

An explosion at a Pemex pipeline Saturday morning has resulted in one

death and injuries to five people in the municipality of Ixtaczoquitlán in

Veracruz state. The blast occurred during an illegal pipeline tapping

operation.

That evening, Pemex confirmed the information on its Twitter account and

noted that the fire had been extinguished. No information has been

released regarding pipeline damage or oil spills.

It was the latest in a series of deadly incidents involving fuel theft. On May 13, a hot tap on a Veracruz pipeline

from the Minatitlán refinery to Mexico City led to an explosion, killing four. On May 3, four soldiers and six civilians

were killed during clashes linked to an attempted tap in Puebla.

Around 35,000 barrels of fuel are stolen in Mexico each day. Authorities reported 6,873 illegal taps on pipelines

last year, resulting in a financial loss of MXN 30.8 billion (USD 1.49 billion).

http://www.theoilandgasyear.com/news/fuel-theft-incident-in-mexico-causes-explosion/

MEXICAN GOVERNMENT RAISES PEMEX DEDUCTIONS TO

CONTINUE OIL OUTPUT.

Mexico's finance ministry on Friday said state oil company Pemex will be

allowed to deduct more costs for developing some projects so the firm

can maintain production, which has been steadily declining since 2004.

The cost recovery adjustments will allow Petroleos Mexicanos, as Pemex

is formally known, to continue producing some 150,000 barrels per day

of oil and 500 billion BTUs of natural gas per day from so-called marginal

fields that the company was given in 2014 as part of a landmark energy opening that ended the its decades-old

monopoly.

The finance ministry said in a statement that the increased cost recovery will allow Pemex to continue developing

projects that are profitable before taxes.

The costs recovery allowed for onshore fields, with the exception of areas in the Chicontepec basin, was raised

from 20 percent to 40 percent. For shallow water fields it was raised from 14 percent to 35 percent.

"In the case of projects that are profitable before taxes and fees, it makes sense to continue the activities," the

ministry said, adding that Pemex would need to show that a given field would not be profitable under the current

tax structure to be eligible for the modified rates of recoverable costs.

Mexico hit peak crude output of 3.4 million bpd in 2004, while production so far this year has averaged about

2.02 million bpd.

http://www.rigzone.com/news/oil_gas/a/151457/Mexican_Government_Raises_Pemex_Deductions_To_Continue_Oil_Outpu

t

www.accesstoenergy.mx Page 10 to 13

MEXICO’S SHALE-RICH BURGOS BASIN OPENS TO PRIVATE

INVESTMENT FOR THE FIRST TIME.

In July 2017, Mexico’s national energy ministry (SENER) opened the

onshore portion of the Burgos Basin, a shale-rich basin in northeastern

Mexico, for natural gas exploration and development by private

companies. This is the first time non-state entities were offered access to

the Burgos Basin for development since the creation of the national oil

company Petróleos Mexicanos (PEMEX) in 1938. SENER hopes that

private investment will help to reverse the decline in natural gas

production and offset decreasing PEMEX investment in the region.

Production from the Burgos Basin accounted for 15% of total natural gas production in Mexico in 2016, and the

basin holds the largest undeveloped shale resources in the country. Increasing production from the region would

help meet growing natural gas demand, particularly from new natural gas-fired generation in Mexico’s

Northeastern region, and make Mexico less reliant on natural gas imports in the long term.

Located in the state of Coahuila, south of the Rio Grande River, the Burgos Basin covers an onshore area of

approximately 24,200 square miles. Offshore, it extends onto the continental shelf of the Gulf of Mexico. The

Burgos Basin is the southern extension of Texas’ Western Gulf Basin, which encompasses the Eagle Ford shale play.

PEMEX initiated exploration activities in the Burgos Basin in 1942 and it has discovered some 227 fields, mostly rich

in natural gas. The basin currently has more than 3,500 active natural gas wells in non-shale formations.

Many reservoirs in the Burgos Basin have low permeability and high decline rates typical for tight formations,

which require significant investment from PEMEX to maintain or increase production. In response to decreasing

natural gas prices over the past five years and energy reforms introduced in 2014 that gave priority to oil

development, PEMEX has decreased its exploration and production spending in Burgos. In 2017, PEMEX plans to

spend $51 million (0.9 billion pesos) in the Burgos Basin, down 92% from the $657 million (11.7 billion pesos) it spent

in 2012. At the same time, natural gas production in the basin has dropped by 32%, from 1.2 billion cubic feet per

day (Bcf/d) in 2012 to 0.87 Bcf/d in 2016, all from nonshale formations.

Although PEMEX has conducted shale exploration activities on its own in the Burgos Basin, they have yet to reach

commercial production, as many of the early wells have low production rates. The companies that were

awarded licenses in the Burgos Basin are expected to stabilize or reverse the declining natural gas production in

the region. High levels of production in the U.S. Eagle Ford shale play to the north could indicate similar production

levels in the Burgos Basin region.

The Mexican government is planning to open more acreage in Burgos and other shale basins to private

companies before the end of 2018.

http://www.pennenergy.com/articles/pennenergy/2017/08/oil-and-gas-mexico-s-shale-rich-burgos-basin-opens-to-private-

investment-for-the-first-time.html

PEMEX TO ESTABLISH A FAR-REACHING AND INTENSE MAINTENANCE PROGRAM IN THE REFINERY OF

CIUDAD MADERO.

Petróleos Mexicanos is currently developing various approaches to improve the operating efficiency of the

National Refinery System, in order to improve the objective of profitability, as established in the company’s

Business Plan for 2017-2021. The strategy focuses on the increased production of refined products that have a

greater economic value, such as fuels and diesel.

In this respect, Pemex Transformación Industrial will carry out the most thorough and intense complete

maintenance program in the Francisco I. Madero refinery, which is located in Ciudad Madero, Tamaulipas.

www.accesstoenergy.mx Page 11 to 13

Today, the gradual scheduled shutdown of the different plants and associated services will begin, until full

operations shutdown is achieved over the course of the next few days.

This procedure will guarantee the safety and reliability of the operating processes of the refinery, and will

contribute decisively to the improvement of its performance level. This initiative, which has been unheard of in

the refinery’s history, is the result of the new approach applied by Pemex to build solid foundations in order to

become an efficient and highly competitive corporation.

Throughout the maintenance and overview work, the roster of unionized and trusted employees, who are

already a part of the refinery, will be used. This is aimed at assisting in the initiative’s success. Various companies

will also participate in conducting the various different tasks, which will generate a positive financial impact in

the area.

In terms of the fuels that the refinery will cease to produce during this maintenance period, Pemex is making the

appropriate commercial decisions to guarantee the supply of oil products in the country. It is estimated that, by

the end of December 2017, the operating stability of the refinery in Ciudad Madero will be achieved and its

optimal level reached, thus turning around its negative financial results.

With these actions, which contribute to the fulfilment of its mandate of creation of value, Pemex reaffirms its

steadfast commitment with Mexico to continue being the country’s flagship company.

http://www.pemex.com/en/press_room/press_releases/Paginas/2017-074-national.aspx

OIL PRICES SINK AND GASOLINE FUTURES SURGE AS STORM HEADS

INTO GULF OF MEXICO.

Oil prices fell nearly 3 percent on Thursday amid concerns over demand

as U.S. Gulf Coast refineries shut operations as Tropical Storm Harvey was

forecast to turn into a major hurricane.

Benchmark Brent crude was down 75 cents, or 1.4 percent, a barrel at

$51.82 by 1:25 p.m. ET (1725 GMT). U.S. light, sweet crude fell $1.17, or 2.4 percent, at $47.24 a barrel.

Meanwhile, U.S. gasoline prices were up 2.1 percent at $1.6532.

The divergence of crude oil and gasoline prices appears to be a clear sign that traders are engaging in so-called

crack spread buying, said John Kilduff, founding partner at energy hedge fund Again Capital.

Anticipating refinery outages on the U.S. Gulf Coast, traders were buying refined products like gasoline and selling

crude oil, the primary feedstock at refineries, he told CNBC.

U.S. gasoline margins and cash prices in the Gulf Coast rose to the highest levels in almost a year ahead of the

storm. Margins were on track for the biggest percentage gain since Feb.21.

The U.S. National Hurricane Center forecast Harvey was quickly strengthening and expected to be a major

hurricane when it approaches the middle Texas coast on Friday and make landfall Friday night or early Saturday,

and then stall near the middle Texas coast through the weekend. .

Two refineries in Corpus Christi, Texas - Flint Hills Resources' 296,470 barrels per day plant and Citgo Petroleum's

157,000 bpd plant - were shutting down operations in preparation of the storm.

Traders said they were concerned that other refineries might shutter because of flooding, affecting demand.

www.accesstoenergy.mx Page 12 to 13

Exports of oil and condensates would also be affected as NuStar Energy and Magellan Midstream Partners were

also shutting down their Corpus Christi terminals ahead of Harvey.

The system is located 365 miles (590 kilometers) southeast of Corpus Christi, Texas, and packing maximum

sustained winds of 65 miles per hour (100 kph), the NHC said.

Offshore, Royal Dutch Shell, Anadarko Petroleum and Exxon Mobil have all taken steps to curb some oil and gas

output at platforms in the Gulf.

"Operators in the area are already closing down platforms and evacuating workers as a precaution," said Sukrit

Vijayakar, director of energy consultancy Trifecta.

The market was also under pressure by a stronger dollar as investors eyed a meeting of central bankers that

begins on Thursday in Jackson Hole, Wyoming. The meeting, which could signal changes to monetary policy, will

include speeches by U.S. Federal Reserve Chair Janet Yellen on the outlook for monetary policy and interest

rates.

"Today some of the pressure in the market might be attributed to the strength in the dollar," said Gene McGillian,

manager of market research at Tradition Energy in Stamford, Connecticut.

Beyond the weather, traders said declines in U.S. commercial crude storage levels were a sign of a gradually

tightening market, although another rise in output held the market back.

U.S. crude oil production hit 9.53 million barrels per day (bpd) last week, its highest since July 2015 and up over 13

percent from their most recent low in mid-2016.

Despite this, U.S. crude stocks fell last week and gasoline stocks were down as well, the Energy Information

Administration said on Wednesday.

https://www.cnbc.com/2017/08/23/oil-steady-on-falling-crude-inventories-but-rising-output-weighs.html

PEMEX FERTILIZANTES SELECTS JACOBS FOR AMMONIA IV REHABILITATION PROJECT.

Jacobs Engineering Group Inc. (JEC) has been awarded a contract from PEMEX Fertilizantes to deliver Project

Management Contract (PMC) services for the Ammonia IV Rehabilitation Project in the Cosoleacaque

Petrochemical Complex in Veracruz, Mexico.

PEMEX Fertilizantes is rehabilitating the Ammonia IV plant, and its associated auxiliary facilities, in order to restore

its operating design capacity and reduce the risks associated with non-programmed shutdowns and abnormal

operations. As PMC contractor for PEMEX Fertilizantes, Jacobs supervises the Engineering, Procurement and

Construction (EPC) contractor developing the Ammonia IV Plant Rehabilitation.

“Building on our outstanding performance as PMC service provider for their Minatitlan Refinery Reconfiguration

Project, we are committed to support PEMEX in delivering the Ammonia IV Rehabilitation project safely and

successfully,” said Jacobs Petroleum and Chemicals Senior Vice President Downstream Mark Bello.

http://www.gulfoilandgas.com/webpro1/main/mainnews.asp?id=61119

www.accesstoenergy.mx Page 13 to 13

OIL AND GAS ASSOCIATIONS SHOW THEIR SUPPORT ON NAFTA.

In the wake of the NAFTA re-negotiations, especially the ones going

around energy to take place from Friday 18 until Sunday 20, oil and gas

associations AMEXHI, API and CAPP stated their support towards market-

oriented politics that eliminate barriers, bring economic growth and

create job opportunities. This vision is shared by main outlets such as

Bloomberg, and the Financial Post.

The oil and gas associations of the three countries highlighted the

advantages that NAFTA has brought during its 23 years of existence to their nations, by allowing for a free flow of

oil, gas and their derivatives. Considering that the North American region may achieve self-energy-sufficiency by

2020, the associations pointed out the need of ensuring flow of liquid energetics among their respective nations.

The associations, who bring together diverse companies along the oil & gas value chain from each country, also

stated how having renegotiations on an already healthy and steady NAFTA, that has worked well for the

countries and companies that participate in the market, might be dangerous for all its players and ultimately

reduce investment and jeopardize millions of jobs.

Among the specifics that the three associations support and believe that are favorable elements for the involved

countries are: fees decrease or elimination, liberalized market of oil, natural gas and derivative industrial products,

market access, coexistence clauses, intellectual property norms, rules of origin, reimbursement rights and

regulatory cooperation and coherence. To know more about each one of the aspects visit their statement of

position.

AMEXHI, API and CAPP finished their position statement by reminding that the re-negotiations should remain as a

trilateral effort that puts Mexico, the US and Canada in a position to successfully compete in the world markets,

showing how the initial Trump’s NAFTA statements during his campaign are not shared by the companies and

associations that face the reality of the markets.

http://www.oilandgasmexico.com/2017/08/17/oil-and-gas-associations-show-their-support-on-nafta/

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