ITAM Mexico City, 27 October 2016
Founded in 1974 Formed in wake of 1973 oil embargo with mission to promote member country energy security -- autonomous agency of the Organisation for Economic Cooperation and Development (OECD) 29 member countries Asia Pacific: Australia, Japan, Korea and New Zealand North America: United States, Canada Europe: Austria, Belgium, Czech Rep, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey and United Kingdom European Commission also participates in the work of the IEA Chile and Mexico are in the process of accession to become members of the IEA Headquarters: Paris Decision-making body: Governing Board Consists of member country representatives Under the Governing Board, several committees are focusing on each area Secretariat: Staff of around 240, mainly energy experts and statisticians from its member countries OECD/IEA 2015
IEA worldwide engagement IEA member countries Accession countries Association countries Key Partner countries Countries co-operating through IEA programmes 2015
Context for a bold Reform Pre-Reform pathway not sustainable Declining oil production & exports Inefficiencies in the power sector undercut competitiveness Large solar & wind potential untapped Vision of a more productive, efficient & clean energy sector Historic constitutional, legal & regulatory changes Channels to attract new investment & technology Leadership on climate & other environmental issues Impact of lower oil & natural gas prices Oil fall has hit government finances & upstream budgets But US shale revolution a boost for the power sector
Natural gas & renewables rebalance Mexico s energy mix 7% 32% 2014 188 Mtoe 1% 9% Primary energy demand in Mexico 14% Oil 3% Natural gas Coal 51% Renewables Nuclear 38% 2040 224 Mtoe 3% 42% The current share of oil in Mexico s energy mix is higher than in the Middle East, 20 percentage points above the global average
(Mtoe) (Mtoe) (Mtoe) The scope for growth & efficiency End-use energy consumption in Mexico 60 Industry Buildings Transport 35 70 50 30 60 40 30 20 10 25 20 15 10 5 50 40 30 20 10 0 2014 2040 Electricity 0 Natural gas 2014 2040 Others 0 2014 2040 Passenger vehicles Others Trucks Electricity accounts for almost half the growth in final consumption to 2040; the need for strong efficiency policies applies across all end-use sectors
A clean break with the past Power generation mix in Mexico Natural gas Renewables Nuclear Coal 2014 Change to 2040 Hydro Wind Solar PV Other renewables Oil 0 50 100 150 200 250 300 (TWh) The new auctions deliver cost-effectively on Mexico s clean energy targets, while fuel switching & lower network losses also help to bring down electricity supply costs
mb/d Time to turn the oil sector around 4 Total oil production (crude oil plus natural gas liquids) in Mexico 3 Deep water 2 Shallow water Onshore tight oil 1 Onshore conventional Decline from existing fields 2015 2020 2025 2030 2035 2040 New partnerships, technologies and players help Mexico to develop new resources, notably in deepwater & tight oil, while slowing declines in the shallow offshore
mb/d Without the Reform, oil struggles to recover Total oil production (crude oil plus natural gas liquids) in a No Reform Case 4 3 Main scenario 2 Deep water Shallow water 1 Onshore tight oil Onshore conventional Decline from existing fields 2015 2020 2025 2030 2035 2040 Maintaining the pre-reform patterns of investment leaves oil production more than 1 mb/d lower by 2040, removing an important source of non-opec supply growth
A No Reform Case has impacts well beyond the energy sector Change in the No Reform Case versus the main scenario, 2040 Oil production Oil export revenue -50% -40% -30% -20% -10% 0% 10% 20% Industrial electricity price Power sector CO 2 emissions -5% -4% -3% -2% -1% 0% Household consumption GDP Lower investment in the economy, higher costs for industry and lower household consumption leave a cumulative $1 trillion gap in GDP to 2040
Conclusions The Reforma Energética equips the energy sector with the tools to meet the need & aspirations of a modern Mexico Many tasks lie ahead to mobilise new investment, develop regulation & institutions, but the initial signs are positive Allowing PEMEX & CFE to focus on their strengths & others to compete on an equal footing is key to a productive energy sector Mexico s leadership on energy & climate offers a valuable blueprint for other countries coping with today s multiple challenges With international engagement on energy more important than ever, the IEA stands ready to be a strong partner for Mexico