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An Update of Mexican NGL’s. Rodrigo Aranda NGL’s Trading - PMI. A presentation for: The Petrochemical Feedstock Association of the Americas (PFAA) Fourteenth Annual Conference. Barton Creek, Austin Tx. November 8th, 2007. Topics. Introduction NGL: main source points and applications

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an update of mexican ngl s

An Update of Mexican NGL’s

Rodrigo Aranda

NGL’s Trading - PMI

A presentation for:

The Petrochemical Feedstock Association of the Americas (PFAA)

Fourteenth Annual Conference

Barton Creek, Austin Tx.

November 8th, 2007

topics
Topics
  • Introduction
    • NGL: main source points and applications
    • NGL processing centers
  • Natural Gasoline and N+A Naphtha
    • Natural Gasoline
    • N+A Naphtha
    • Forecasts
  • Liquified Petroleum Gas (LPG)
    • Demand and Consumption
    • Production
    • Imports
    • Distribution and Pricing
    • Outlook
  • Special Projects
  • Conclusions
introduction about pmi
Introduction: About PMI…

P.M.I.

  • PMI is a group of companies which acts as the international trading arm of Petróleos Mexicanos (PEMEX).
  • With operations worldwide, P.M.I. handles all of PEMEX's crude oil and oil product exports and imports, supplying and sourcing products to and from different markets around the world.

Crude oil

Refined products

NGL’s

Petrochemicals

slide4

METHANE

Sent to Coatzacoalcos for

petrochemical processes

PROPANE

Consumed as fuel for

Internal processes

ETHANE

Sent to Morelos and

Cangrejera for

Ethylene production

HEXANE

Mixed with oil

LPG

90% of LPG comes from

Nuevo Pemex, Cactus y

Coatzacoalcos

NATURAL

GASOLINE

Sent to Pajaritos for

waterborne exports

Introduction: Mexican NGL’s Origins and Applications

Condensates from Gas Processing Plants

slide5

Pipelines

Gas Processing Centers

Introduction: NGL’s Processing Centers in Mexico

/ Burgos

BURGOS

slide6

160

140

39.7

120

100

10.3

80

MBD

23

9.3

74.4

60

42.1

38

41.7

0.8

40

2.2

20

37.6

36

34.4

34

24.7

4.1

1.1

11.8

4.4

2.6

1.1

0

Cactus

Nuevo Pemex

Morelos

La Cangrejera

PozaRica

Pajaritos

Reynosa

Matapionche

Ethane

LPG

Natural Gasoline

Source: Statistical Yearbook 2006

NGL Fractionation by Processing Center

kbd

Ethane 180

LPG 205

Natural Gasoline 88

slide8

Natural Gasoline Streams

  • “Naphtha” is a generic term used in Mexico for natural gasoline.
  • Mexico’s natural position is long.
  • Mexico remains as one of the main exporters of natural gasoline in the world.
  • Mexico’s natural gasoline streams are:

1) “Cactus Naphtha”

2) “Burgos Naphtha” (formerly known as “Reynosa Naphtha”)

Burgos Naphtha comes from the Burgos Gas Processing Center in the Northeast region of Mexico next to the U.S. border.

Cactus Naphtha comes mainly from the Cactus, Nuevo Pemex and Ciudad Pemex Gas Processing Centers, in the Southeast region of Mexico

slide9

Cactus Naphtha Specs

  • Cactus is well known as a petrochemical feedstock mainly used for cracking…
  • Cactus specs are:
slide10

Cactus Naphtha Production Sites

Source: PEMEX Statistical Yearbook 2006

slide11

Cactus Naphtha Logistics

  • A closer look on Cactus logistics…
  • Overall production: 88 kbd
  • Volume for export: 70 kbd
  • Volume for domestic use (petrochemical): 18 kbd
  • Transported from Gas Processing Centers to Pajaritos Terminal on the Gulf of Mexico
  • From Pajaritos, shipped waterborne to destination ports in USGC and other regions in the world

La.

Tx.

Main destination areas

2-day voyage

Pajaritos (Little Birds)

Gas Processing Centers

slide12

Burgos Naphtha Specs

  • Burgos is a stream coming from both Burgos and Reynosa plants. It may be used either as a petrochemical feedstock or even gasoline blendstock due to its low sulfur content…
  • Burgos specs are:
slide13

Burgos Naphtha Logistics

  • A closer look on Burgos logistics…
  • Overall production: 9 kbd (expected to increase up to 20 kbd towards 2010)
  • Volume for export: 9 kbd
  • Transported from Burgos Gas Processing Center to Brownsville by pipeline and trucks
  • From Brownsville, shipped waterborne by barge to destination ports in the U.S.

La.

Tx.

Main destination areas

Brownsville

Burgos Gas Processing Center

slide14

N+A Naphtha

  • Pemex Refining still produces about 36 kbd of N+A naphtha at La Cangrejera complex in Veracruz.
  • Almost all N+A produced goes to the BTX plant that Pemex Petrochemicals owns at the same complex La Cangrejera.
  • The rest of the N+A produced goes to Pemex Refining for refining processes.
  • Sometimes Pemex Refining sends product to other refineries, but that is rare.
  • The BTX plant at La Cangrejera has a total capacity of 45 kbd so it is still necessary for Pemex to import product.
  • PMI has importing roughly 9 kbd of N+A naphtha since 2006.
  • The main specifications for N+A naphtha required by Pemex are:
slide15

Naphthas and Natural Gasoline: Distribution of Logistics

WATERBORNE EXPORTS 93%

WATERBORNE IMPORTS 4%

INLAND3%

WATERBORNE97%

Source: PMI

slide16

Forecasts

Natural Gasoline

  • The forecast for Natural Gasoline Production (Cactus + Burgos) is shown below in kbd

N+A Naphtha

  • Pemex Refining is expected to maintain its production of N+A naphtha in 36 kbd through the year 2010.
  • Pemex Petrochemicals is expected to need 45 kbd in order to keep its BTX plant running at capacity. Imports of N+A should continue though quota may decrease.

Source: Pemex-Gas y Petroquímica Básica

mexican lpg demand per capita 2005
Mexican LPG Demand per capita (2005)
  • Mexico is the largest consumer of LPG per capita in the world
  • More than 70% of Mexican families depend on LPG as a heating fuel

Source: SENER, PEMEX

mexican lpg consumption per capita
LPG has remained as the preferred source of heating fuel over the years while natural gas has substituted wood by 2-3%Mexican LPG consumption per capita

Kg/Inhabitant (States)

160

to

170

(4)

120

to

159

(6)

80

to

119

(13)

40

to

79

(8)

0

to

39

(1)

Source: PEMEX

lpg demand growth in mexico 1995 2005
Main factors for demand drop:

Natural gas competition in Residential and Services sectors

Climate change

Savings due to increased efficiency of LPG fueled devices

Higher prices of LPG relative to wood or coal

LPG Demand growth in Mexico (1995-2005)
  • AAGR = 2.1%

Source: SENER, PEMEX

mexican lpg consumption by sector
Mexican LPG Consumption by sector (%)
  • Although the share of vehicle fuel has increased over the last ten years, the residential sector remains the main market for LPG in Mexico.

Source: SENER, PEMEX

mexican lpg demand by region
There are 5 regional divisions in MexicoMexican LPG Demand by region

314 kbd

NORTHEAST

NORTHWEST

CENTRAL

  • The CENTRAL and WEST CENTRAL regions are the areas of highest demand

WEST CENTRAL

SOUTH-SOUTHEAST

Source: SENER, PEMEX

sources for ngl s and lpg production in mexico
Sources for NGL’s and LPG Production in Mexico

Natural Gas

Ethane

Non Associated Gas

Sour Gas and

Liquids To

Processing Plants

LPG

Associated Gas

Naphtas

Processing

Plants

LPG

Crude

Refinery

Gas

Crude Oil to exports

Crude Oil

  • Mexico has three different sources of LPG:
  • Gas Plants
  • Refineries
  • Imports (balance)

Source: PEMEX

pemex stats
PEMEX ranks among the top ten NGL fractionators in the world.

Processing

Nat Gas: 3,879 Mcfd

Condensates: 102 kbd

Production

Dry gas: 3,147 Mcfd

Gas liquids: 436 Mbd

LPG: 215 Mbd

Sweetening plants: 20

Sour wet gas capacity: 4,503 Mcfd

Sour wet condensates capacity: 144 Mbd

Criogenic plants: 17

Capacity: 4,992 Mcfd

LPG distribution terminals: 20

Pipeline systems:

Natural gas: 9,016 km

Products: 3,051 km

PEMEX Stats

Source: PEMEX

pemex lpg production sites gas plants kbd
PEMEX LPG Production sites (Gas Plants, kbd)

Arenque, 9.9

Reynosa, 4.4

Cactus, 40.2

  • Total 2005 supply: 216 kbd
  • Nuevo PEMEX gas plant is the largest LPG producing facility in the country

Cangrejera, 43.6

Morelos, 42.1

Nuevo Pemex, 70.4

Poza Rica, 2.7

Matapionche, 2.2

Source: SENER, PEMEX

pemex lpg production sites refineries kbd
PEMEX LPG Production sites (Refineries,kbd)

Cd. Madero, 1.3

Cadereyta, 3.3

Salina Cruz, 8.3

Minatitlán, 6.5

Tula, 8.1

Salamanca, 3.8

  • Salina Cruz and Tula are the refineries with the largest production of LPG
  • Total 2005 supply: 31 kbd

Source: SENER, PEMEX

pemex lpg transportation and storage facts
PEMEX LPG Transportation and Storage Facts
  • PEMEX infrastructure includes:
    • 1,800 km of pipelines in the domestic system
    • 5 pumping stations
    • Lines of 14, 20 and 22 inches
    • Trans-Isthmus pipeline connecting Gulf of Mexico and Pacific Ocean (Pajaritos-Salina Cruz)
  • In addition, 2,500 tanktrucks are dedicated to domestic LPG transportation
  • Storage in Mexico includes:
    • 31 distribution terminals with an overall capacity of 2.5 million bls
    • 971 privately-owned distribution plants

Source: SENER, PEMEX

lpg supply demand balance in mexico kbd
In 1995, 87% of total demand was covered with domestic production

In 2005, this percentage dropped to 77%

The deficit in supply has been covered by imports

LPG Supply-Demand Balance in Mexico (kbd)

D e m a n d

285 297 287 303 328 350 334 338 333 340 321

S u p p l y

  • Supply AAGR = 1.2%

Source: SENER, PEMEX

lpg imports kbd
LPG Imports (Kbd)
  • Before 1996, Mexico was a net exporter of LPG (with the USGC as the main destination for exports).
  • AAGR for imports on the 1995-2005 period: 7%
  • Imports have shrunk because of:
    • Increase in production
    • Demand drop

77 94 121 100 102 85 84 73 67

Source: PMI

logistics for lpg imports and exports in mexico
Logistics for LPG Imports and Exports in Mexico

Mexicali

Tijuana

Hermosillo

Ciudad

Juarez

Imports

Exports

Pipeline

Nogales

Piedras

Negras

Rosarito

Nuevo Laredo

Arbitrage line

Matamoros

Topolobampo

PEMEX terminals

Non-PEMEX terminals

Cadereyta

Manzanillo

Ciudad Madero

2

Abasolo

3

Guadalajara

Salamanca

Pajaritos

4

7

5

1

6

Cactus

Salina Cruz

Source: PEMEX, PMI

mexican waterborne lpg imports 2006
Mexican Waterborne LPG Imports 2006

Total: 674 kT

Source: PMI

mexican inland lpg imports 2006 kbd
Mexican Inland LPG imports 2006 (kbd)

Mexicali, 3.3

  • All inland imports come from the US
  • Transportation units that normally cross the USA-Mexico border:
    • Tanktrucks: 23,000/y
    • Railcars: 4,500/y
  • There are 3 pipelines that connect USA-Mexico:
    • El Paso-Juarez
    • Laredo-Nuevo Laredo
    • Brownsville-Matamoros

Hermosillo, 0.7

Ciudad

Juarez, 20.1

Tijuana, 8.2

Nogales, 2.2

Piedras

Negras, 5.0

Nuevo Laredo, 8.5

Matamoros, 7.8

Imports (truck/rail)

Exports (truck)

Pipeline

Cactus

Belize: 0.2

Source: PMI

mexican lpg supply production imports
Mexican LPG Supply: Production + Imports
  • Inland imports are mainly 90% propane and 10% butane

While…

  • Waterborne imports are mainly 100% propane
  • Typical LPG composition of Mexican mix is 70% propane / 30% butane, this is a result of the blending of domestic production and imports.

Source: SENER, PEMEX

domestic price of lpg in mexico
Domestic price of LPG in Mexico
  • The LPG price for first hand sales and the maximum price to the end consumer are regulated by the Ministry of Economics (SE) and the Energy Regulatory Commission (CRE).
  • There are 145 different price zones in Mexico.
  • Domestic prices are Mont Belvieu related (as Mont Belvieu is the closest and most important reference market for storage and product supply).

Source: SENER, PEMEX

lpg value chain in mexico
LPG value chain in Mexico

Ministry of Economics sets the max. price for end consumers

CRE sets first hand sale prices

STORAGE

SUPPLY

DISTRIBUTION

CONSUMPTION

Domestic production

and imports

Transportation to terminals

Wholesales

Terminals

Retail sales

PEMEX and third parties

End users

Distributors

PEMEX

  • There are different entities involved in the LPG distribution chain:

Source: SENER, PEMEX

lpg expected demand growth in mexico 2007 2015
LPG Expected Demand Growth in Mexico 2007-2015
  • Growth per sector:
    • Residential, 0.7%
    • Vehicle fuel, 1.5%
    • Industrial, 1.9%
    • Farming and Oil industry, 2.1%
  • Total AAGR = 1.2%

Source: SENER, PEMEX

expected change in lpg demand
Expected Change in LPG Demand

314 kbd

  • The CENTRAL and WEST CENTRAL regions remain as the highest demand areas but …

NORTHWEST

NORTHEAST

  • The CENTRAL and WEST CENTRAL regions are the ones with the lower growth rate of all regions…

CENTRAL

WEST CENTRAL

SOUTH-SOUTHEAST

Source: SENER, PEMEX

lpg supply by gas plants kbd
LPG Supply by Gas Plants (kbd)

2005

2015

Source: SENER, PEMEX

lpg supply by refineries kbd
LPG Supply by Refineries (kbd)

2005

2015

Source: SENER, PEMEX

expected lpg balance 2005 2015 kbd
LPG supply from gas plants is expected to have an AAGR of 0.8%.

LPG supply from refineries will increase at a 5.6% AAGR.

The gap between supply and demand will continue to be covered with imports.

Expected LPG Balance 2005-2015 (kbd)

319 314 320 327 333 338 341 345 348 353 357

  • Supply AAGR = 1.5%

Source: SENER, PEMEX

slide42

Burgos Project

  • The Burgos Gas Processing Center started operations in August 2006
  • 2 cryogenic plants of 200 mcf each
  • One condensate stabilization section of 6 kbd
  • Total capacity: 17 kbd
  • Storage capacity: 40 kbd for LPG, 25 kbd for naphtha
  • Truck rack: 6 trucks/hour
  • Current production: 11.5 kbd of LPG, 9 kbd of natural gasoline, 380 mcf of dry gas

Source: Pemex

slide43

Fénix Project

  • Original Fénix Project has been redifined.
  • PEMEX is focusing on extending already-existing facilities and infrastructure at petrochemical complexes in Veracruz.
  • The building of a brand-new cracker has not been confirmed. It is unlikely within the next few years.
  • Alternative plans for Fenix Project may include:
          • Separation of C5’s from C6+
          • Use of C6+ for petrochemical purposes
          • Potential exports of Pentanes
          • Potential isomerization of Pentanes
          • Potential normalization of Pentanes
  • No official announcement about any Fénix development has been given yet by PEMEX or the Mexican government.
natural gasoline and naphtha conclusions
Natural Gasoline and Naphtha Conclusions
  • Mexico will continue to be a net exporter of Natural Gasoline. USGC will continue to be the main destination.
  • Natural Gasoline exports may reach over 70 kbd in following years.
  • Cactus will remain as the most widely available Natural Gasoline stream from Mexico.
  • Burgos naphtha availability should slowly increase within next few years. Logistics for transportation and marketing may include use of pipelines, trucks, barges and vessels.
  • Burgos naphtha could become an attractive component for gasoline blending in the U.S. under increased gasoline demand conditions and sulfur restrictions.
  • Mexico may import less N+A naphtha in coming years due to change in crude slate for domestic petrochemical units.
lpg conclusions
LPG Conclusions
  • Mexico will continue to be a net importer of LPG, even with less domestic demand.
  • Mexico will continue to play a key role as a buyer under the scenario of upcoming new worldwide production.
  • Waterborne vs. inland imports will vary depending on the economic incentives and strategic projects to attract supply from different sources.
  • LPG in Mexico will continue to compete against alternative fuels like LNG, natural gas, wood and coal.
  • Mexico is still the highest LPG per capita consumer in the world and it is expected to import product at least through 2010.
  • LPG supply is a key social aspect in Mexico. It will continue to be for the coming years.