LP Gas Outlook

Transcription

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2 LP Gas Outlook Mexico,

3 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 2

4 Document Preparation and Review: Rafael Alexandri Rionda General Director of Planning and Energy Information Luis Gerardo Guerrero Gutiérrez Director for the Integration of the Sector Outlooks Fabiola Rodríguez Bolaños Deputy Director for the Integration of Energy Policies Alain de los Ángeles Ubaldo Higuera Deputy Director of Energy Consumption Ana Lilia Ramos Bautista Head of Department of Energy Policy Cover: Administrative support: María de la Paz León Femat, Maricela de Guadalupe Novelo Manrique. 2016, Secretariat of Energy. 3

5 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) 4

6 Index Index...5 Index of Tables...7 Index of figures...8 Presentation...9 Introduction Executive Summary Liquefied-Petroleum Gas Regulatory Frame Regulatory Instruments in the Liquefied-Petroleum Gas Value Chain Gas Exploration and Extraction Activities Industrial Transformation Transportation and Storage Distribution LP Gas Trading Historic LP Gas Domestic Market LP Gas Domestic Market LP Gas Domestic Demand by Sector LP Gas Regional and State Demand LP Gas Domestic Production LP Gas Infrastructure LP Gas Foreign Trade LP Gas Prices LP Gas Balance LP Gas Domestic Market Prospective LP Gas Domestic Market LP Gas Domestic Demand,

7 LP Gas Regional and State Demand LP Gas Production LP Gas Trading LP Gas Balance LP Gas Annexes Glossary Acronyms Conversion Factors References

8 Index of Tables TABLE 2. 1 LP GAS DOMESTIC SALES BY REGION AND STATE, TABLE 2. 2 LP GAS PRODUCTION IN PGPB, TABLE 2. 3 PERMITS GRANTED BY SENER FOR LP GAS DISTRIBUTION AND RETAIL* TABLE 2. 4 LP GAS NATIONAL BALANCE TABLE 3. 1 DOMESTIC DEMAND FOR FUELS IN THE INDUSTRIAL SECTOR, TABLE 3. 7 OIL SECTOR* DOMESTIC DEMAND FOR FUELS, TABLE 3. 8 LP GAS DEMAND BY REGION AND FEDERAL ENTITY, TABLE 3. 9 LP GAS DOMESTIC BALANCE,

9 Index of figures Figure 2. 1 Natural Gas And Lp Gas Domestic Demand By Sector Figure 2. 2 Residential Sector Domestic Demand For Fuels, Figure 2. 3 Services Sector Domestic Demand For Fuels, Figure 2. 4 Motor-Carrier Sector Demand For Fuels, Figure 2. 5 Industrial Sector Demand For Fuels, Figure 2. 6 Oil Sector Domestic Demand For Fuels, Figure 2. 7 Infrastructure For Transporting And Distributing Lp Gas, Figure 2. 8 Capacidad De Almacenamiento De Gas L.P., Figure 2. 9 Lp Gas Foreign Trade In Mexico, Figure Lp Gas Fhs And Retail Prices, Figure 3. 1 Lp Gas Domestic Demand, Figure 3. 2 Lp Gas* Domestic Demand By Sector, Figure 3. 3 Residential Sector Consumption Of Fuels, Figure 3. 4 Lp Gas Savings In The Residential Consumption Due To Technical Improvements And Changes In The Consumption Patterns, Figure 3. 5 Fuels Consumption In The Services Sector, Figure 3.6 Lp Gas Savings In The Services Sectors By Type Of Equipment, Figure 3. 7 Fuels Demand In The Motor-Carrier Sector, Figure 3. 8 Lp Gas Industrial Demand And Gdp Of The Manufacturing Sector Figure 3. 9 Lp Gas Production, Figure Lp Gas Foreign Trade

10 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 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, 9

11 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 , 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. 10

12 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, In the case of Rounds 2.2 and 2.3, which includes offshore fields, their results will be published on July 12, 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 thousand barrels per day (MBD). During the period , 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 MBD, a decrease of 14.6% regarding 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 11

13 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 MBD, a volume 23.9% more than in As for exports, these decreased by 98.7% regarding 2014, falling from 1.3 MBD to 0.02 MBD in Regarding prices, during 2015, the first-hand sales (FHS) prices averaged 9.41 pesos/kg ($/kg), an increase of 4.6% regarding Retail price (national simple average before VAT) remained in $/kg during the period January-December Prospective Domestic Market It is expected that in 2030, the LP gas demand will reach a volume of MBD, decreasing 7.0% regarding 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 MBD volume, a decrease of 12.1% regarding 2015, with an AAGR of -0.9% during As for foreign trade, by 2030, LP gas imports are projected to reach a volume of 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. 12

14 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. Wholesale Consumption Process Exploration and Extraction Transport Refining Storage Distribution Retailing Consumption Source: SENER with information from the Energy Regulatory Commission (Development of the Mexican Regulatory System in Energy Matter) 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, In the case of Rounds 2.2 and 2.3, which includes offshore fields, their results will be published on July 12, Assessment of the Design of the Budgetary Program G031. Regulation, Management, and Supervision of the Hydrocarbons Sector ASEA-SEMARNAT, p

15 On September 30, 2015, the Quinquennial Plan of Biddings for the Exploration and Extraction of Hydrocarbons 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 Agreement CNH.E /16, through which the Hydrocarbons National Commission amends articles 43, section II and 46, first paragraph and adds the seventh transitory to the Technical Guidelines on Hydrocarbons Measurement, issued on September 29, (11/02/16) Agreement CNH.E /16, through which the Hydrocarbons National Commission amends article 17 and adds the eighth transitory of the Guidelines that Regulate the Process of Quantification and Certificacion of the Nation s Reserves and the report of the related contingent resources. (15/04/16) Agreement CNH.E /16 through which the Hydrocarbons National Commission amends articles 42 and 43 of the Technical Guidelines on Hydrocarbons Measurement (24/08/16) Source: SENER with information from agreements published in the DOF 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 Law

16 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%), PGPB 5 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 purpose 6. 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 CRE 7. 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 Transportation and Storage Agreement by which the Energy Regulatory Commission extends the delivery term of the first quarterly report on the duties for permit holders with activities of transportation, distribution, and retailing of oil, oil products, and petrochemicals, foreseen in the format issued through Resolution RES/308/2015, and published in the electronic Filing Office. (12/04/2016) Resolution by which the Energy Regulatory Commission amends the transitory seventh provision of the general Administrative Provisions in matters of open-access and provision of the services of transportation through pipeline and storage of oil products and petrochemicals. (30/03/2016) Resolution by which the Energy Regulatory Commission issues the general administrative provisions on measurement matters, applicable to the activity of oil, oil products, and petrochemic als storage.(11/01/2016) Resolution by which the Energy Regulatory Commission 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 for perfoming activities of storage, transportation, distribution, and retailing of liquefied petroleum gas.(15/12/2015) Resolution by which the Energy Regulatory Commission issues the general administrative provisions applicable for the provision of the services of transportation through pipelines and hydrocarons storage. (04/11/2015) 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 Regulation of the activities referred to in Third Title of the Hydrocarbons Law. 15

17 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 appropriate 8. 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) 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 Zaragoza 9. 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

18 FIGURE 1. 4 RESOLUTIONS ON TRADING Decree whereby the previous decree validity is extended and which subjects liquefied petroleum gas to first-hand sales and endusers' maximum prices, issued ondecember 31st, (30/09/16) Resolution of the Energy Regulatory Commisision which extends the terms to update the trading contracts on oil and oil products other 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 Resolution RES/071/2016. (16/06/16) Agreement whereby the Energy Regulatory Commisision extends the term inorder that permittees of the activities of transportation and distribution through means other than pipelines, supply, and retaling of liquefied petroleum gas submit the reports corresponding to 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 to submit information for permittees trading hydrocarbons, oil products, and petrochemicals. (06/01/16) Resolution whereby the Energy Regulatory Commisisionissues the general administrative provisionswhich establish the requirements to submit applications for provisional permits on transportation, storage, distribution, retailing, and management of the integrated systems 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) Source: SENER with information from the agreements and resolutions published in the DOF. 17

19 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 , on subjects such as the national and sectoral demands, production, permits, infrastructure, trade, prices, and national and regional balances for this fuel LP Gas Domestic Demand by Sector In 2015, the LP gas demand decreased 1.5% regarding 2014, reaching MBD, and having, during the period , an AAGR of -1.2%. From the total volume of LP gas consumed, the residential sector had a share of 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) Oil 1.5% Agriculture and livestock 1.4% Motor carrier 12.5% Industrial 10.3% Services 14.8% Residential 59.5% LP GAS MBD Source: SENER, based on information from IMP. 18

20 L.P Gas Demand in the Residential Sector By the end of 2015, the total demand for fuels in the residential sector was of thousand barrels per day of LP gas equivalent (MBDLPGE). From this volume, MBD were LP gas, 55.0% from the total, seconded by firewood with a 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 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 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) Natural gas 24.4 Firewood LP Gas Source: SENER, based on information from IMP mbglpe 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 , 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). 19

21 FIGURE 2. 3 SERVICES SECTOR DOMESTIC DEMAND FOR FUELS, 2015 (MBDLPGE) LP Gas 42.0 Firewood 18.1 Natural gas MBDLPGE Source: SENER, based on information from IMP. 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 MBDLPGE, followed by diesel with 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 , 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 thousand units to thousand units (see Annex Table A.4). FIGURE 2. 4 MOTOR-CARRIER SECTOR DEMAND FOR FUELS, 2015 (Thousand barrels per day of gasoline equivalent) LP Gas 2.4% Compressed Natural Gas 0.04% Diesel 31.8% Gasoline 65.8% Source: SENER, based on information from IMP. 1,490.1 MBDLPGE 20

22 LP Gas Demand in the Industrial Sector In 2015, the industrial sector used a volume of MBDLPGE, from this, natural gas had the largest demand with a 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 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) MBDLPGE Coal 14.6% LP Gas 4.7% Petroleum coke 14.1% Diesel 7.1% Natural gas 57.1% Fuel Oil 2.4% Source: SENER, based on information from IMP. Oil Sector Demand for LP Gas In 2015, the oil sector used MBDLPGE, 3.7% less than in 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 MBD (see Annex Table A.5). 21

23 FIGURE 2. 6 OIL SECTOR DOMESTIC DEMAND FOR FUELS, 2015 (MBDLPGE) LP Gas 4.2 Diesel 29.6 Gasoline 2.2 Fuel Oil 36.5 Natural gas Source: SENER, based on information from IMP LP Gas Regional and State Demand In 2015, the domestic sales of LP gas reached a volume of MBD, a decrease of 1.2% regarding 2014; and for the period , 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 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 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 The state with the lowest sales was Durango, with a volume of 3.3 MBD, 6.0% less than in 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 In 2015, the Central region reached a volume of MBD of domestic sales, 40.8% of the national total; though, this Regina decreased 2.2% regarding 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 In this region, Veracruz had the largest domestic sales, 13.5 MBD, contrasting with Campeche whose sales volume was of 1.0 MBD. 22

24 TABLE 2. 1 LP GAS DOMESTIC SALES BY REGION AND STATE, (thousand barrels per day) Region / State AAGR Northwest Baja California Baja California Sur Sinaloa Sonora Northeast Coahuila Chihuahua Durango Nuevo León Tamaulipas Central-Eastern Aguascalientes Colima Guanajuato Jalisco Michoacán Nayarit Querétaro San Luis Potosí Zacatecas Central Distrito Federal Hidalgo México Morelos Puebla Tlaxcala South-Southeast Campeche Chiapas Guerrero Oaxaca Quintana Roo Tabasco Veracruz Yucatán Domestic Total Source: SENER, based on information from IMP. 23

25 LP Gas Domestic Production In 2015, the national supply reached a volume of MBD, a decrease of 14.6% regarding 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 MBD to 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 XXI 10. 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, (thousand barrels per day) CPG* AAGR Total Burgos Cactus Cangrejera Matapionche Morelos Nuevo Pemex Poza Rica Reynosa n.a. * Gas processing complex. Source: SENER, based on information from IMP 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. 24

26 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, Pemex-Logistics (Hobbs-Méndez) Compañia de Gas de Tijuana, S.A. de C.V. Hermogas S.A. de C.V. 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. Gas del Caribe, S.A. de C.V. Transportation Distribution Asociación de Colonos de La Herradura, A.C. Pemex-Logistics (SNGLP) 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. 25

27 TABLE 2. 3 PERMITS GRANTED BY SENER FOR LP GAS DISTRIBUTION AND RETAIL* 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 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 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 hydrocarbons 11, 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 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 FIGURE 2. 8 STORAGE CAPACITY FOR LP GAS, 2015 (barrels) Total capacity: 5, 513, 973 barrels Source: SENER with information from the CRE. 11 Report of preliminary results of PEMEX by December 31st, 2015, p

28 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 MBD, an increase of 23.9% regarding 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) Tijuana 3.1 Mexicali 4.9 Nogales 0.9 Rosarito 4.8 Cd. Juárez 17.9 Piedras Negras 3.8 Topolobampo 3.4 Matamoros 7.8 Tuxpan 8.0 Sea imports Land imports Manzanillo 4.3 Pajaritos 46.5 Pipelineimports Exports (destination) Cactus (Belice) 0.02 Source. SENER, based on information from IMP. 27

29 LP Gas Prices In 2015, the Federal Executive published in the DOF, the Decree by which the LP gas is subjected to firsthand 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 center 12. 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 $/kg during the period of January to December ,0 FIGURE LP GAS FHS AND RETAIL PRICES, (pesos per kilogram) 12,0 10,0 8,0 6,0 4,0 2,0 0,0 FHS price ($/kg) Retail price ($/kg) (average before VAT) Source: CRE. The prices of administered LP gas and LP gas based on opportunity cost are presented in the Annex Figure A LP Gas Balance In 2015, the supply of LP gas reached a volume of MBD, equivalent to 17.1% less than in 2014, what made it necessary to resort to imports for meeting a MBD, a decrease of almost 2% regarding As for the demand, the residential sector was the largest consumer with 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 MBD

30 TABLE 2. 4 LP GAS NATIONAL BALANCE (MBD) Concept AAGR Origin Domestic Supply Pemex Gas and Basic Petrochemistry Pemex Refining Pemex Petrochemistry n.a. Pemex Exploration and Production Imports Destination Domestic demand Agriculture and livestock sector Motor-carrier sector Industrial sector Oil sector Residential sector Services sector Exports Inventories variation * n.a. 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. 29

31 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 LP Gas Domestic Demand, It is expected that by 2030, the LP gas demand will reach a volume of MBD, a decrease of 7.0% regarding 2015, and an AAGR of -0.5% during 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. 340 FIGURE 3. 1 LP GAS DOMESTIC DEMAND, (MBD) Source: SENER, based on information from IMP. In 2030, the residential sector will remain the largest LP gas consumer, with a volume of MBD, equivalent to 52.4% from the total domestic demand for this fuel; nevertheless, it will decrease 18.1% regarding 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 , 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). 30

32 FIGURE 3. 2 LP GAS* DOMESTIC DEMAND BY SECTOR, (MBD) Motor carrier 35.3 Agriculture Oil and livestock Motor carrier 35.8 Oil 0.9 Agriculture and livestock 5.7 Industrial* 29.2 Residential Industrial* 36.1 Residential Services 42.0 Services 46.8 * 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 MBDLPGE, a decrease of 14.5% regarding 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 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, (MBDLPGE) Natural gas Firewood LP Gas Source: SENER with information from IMP 31

33 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, (MBD) Microwave ovens Water-heaters efficiency and introduction of solar water heaters Stoves with electronic ignition 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 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. 32

34 FIGURE 3. 5 FUELS CONSUMPTION IN THE SERVICES SECTOR, (MBDLPGE) Source: SENER with information from IMP LP Gas Firewood Natural gas 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 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, (thousand barrels per day) 3.00 Stoves Water heaters Total Saving Source. IMP, based on ANES, CONAPO, INEGI, PROCALSOL and private companies. 33

35 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 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 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, (percentage) LP Gas 2.4% Compressed Natural Gas 0.0% LP Gas 1.7% Compressed Natural Gas 0.12% Diesel 31.8% Diesel 35.6% Gasoline 65.8% Gasoline 62.6% Source: SENER, based on information from IMP. 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 MBDLPGE to MBDLPGE, which corresponds to an AAGR of 1.8% during the period In this sector, the most demanded fuel will still be natural gas with a volume of 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 (see Table 3.1). 34

36 TABLE 3. 1 DOMESTIC DEMAND FOR FUELS IN THE INDUSTRIAL SECTOR, (MBDLPGE) Year Natural gas Fuel Oil LP Gas Diesel Petroleum coke Coal Total (MBDLPGE) (MBDLPGE) (MBD) (MBDLPGE) (MBDLPGE) (MBDLPGE) (MBDLPGE) AAGR n.a 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 FIGURE 3. 8 LP GAS INDUSTRIAL DEMAND AND GDP OF THE MANUFACTURING SECTOR (MBD and billion pesos) , , ,000.0 thousand barrels per day , , , , ,000.0 billion pesos of , , LP Gas Industrial Demand (MBD) LP gas industrial demand, no replaced by natural gas (MBD)* GDP Manufacturing Industry (billion pesos of 2008) Source: IMP, based on information from BANXICO, CONAGUA, CONUEE, EIA, EPA, IEA, INE, INEGI, PEMEX, SENER and private companies. 35

37 LP Gas Demand in the Oil Sector In 2030, the oil sector's demand for fuels will decrease 30.3% regarding 2015, falling from MBDLPGE to MBDLPGE, equivalent to an AAGR of -2.4% during the period Natural gas will be the most demanded fuel with 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 TABLE 3. 2 OIL SECTOR* DOMESTIC DEMAND FOR FUELS, (MBDLPGE) Year Natural gas Fuel Oil Diesel LP Gas Gasolines Total (MBDLPGE) (MBDLPGE) (MBDLPGE) (MBD) (MBDLPGE) (MBDLPGE) AAGR * Includes sales between organs and self-consumption of PEMEX Industrial Transformation. Source: IMP with information from Pemex LP Gas Regional and State Demand In 2030, the LP gas demand will decrease 7.0% regarding 2015, going from MBD to MBD. The Central region will have the largest consumption, a volume of 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 MBD to 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. 36

38 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 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, (MBD) State AAGR Northwest Baja California Baja California Sur Sinaloa Sonora Northeast Coahuila Chihuahua Durango Nuevo León Tamaulipas Central-Eastern Aguascalientes Colima Guanajuato Jalisco Michoacán Nayarit Querétaro San Luis Potosí Zacatecas Central Ciudad de México Hidalgo México Morelos Puebla Tlaxcala South-Southeast Campeche Chiapas Guerrero Oaxaca Quintana Roo Tabasco Veracruz Yucatán Domestic Total 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. 37

39 LP Gas Production In 2030, LP gas is expected to reach a MBD volume, a decreased of 12.1% regarding 2015, and an AAGR of -0.9% during 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, (MBD) Source: IMP, based on PEMEX LP Gas Trading By 2030, LP gas imports are expected to reach a volume of MBD, equivalent to an increase of 3.2% regarding 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. 120 FIGURE LP GAS FOREIGN TRADE (MBD) Imports Exports Source: IMP, based on information from PEMEX. 38

40 LP Gas Balance In 2030, LP gas production will reach a volume of MBD, while the national demand will be of MBD; thus, to meet the demand, it will be necessary to resort to imports for MBD. As for the regional balances, the Northwest region will have a demand of 24.9 MBD in 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 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 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 MBD, and will import 3.9 MBD of LP gas, reaching a total supply of 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, (MBD) * Includes statistic difference, packaging in pipelines, and ships in transit. Source: IMP, based on CONAGUA, Conapo, Pemex, SENER and private companies. 39