NotiEn - A Newsletter on Energy Policy Issues in Latin America
September 29, 2011Vol 2, Issue 12
Mexico, Honduras Move Forward on Wind Projects; Costa Rica Imposes Moratorium on Oil Drilling; PEMEX Boosts Shares in Spain's Repsol
A NOTE FROM THE EDITOR

This issue of NotiEn  addresses recent developments in Mexico and Central America, including updates on the wind-energy industry and policy decisions in the oil sector.

 

A handful of countries in Latin America have begun to place a greater emphasis on alternative energies to reduce reliance on fossil fuels and provide cheaper electricity to municipalities and industry. In Mexico, President Felipe Calderón's administration launched a number of projects in the first eight months of 2011 that would greatly expand the country's capability to produce electricity from wind power. The new projects are all funded with private capital, with the largest announced in late July. The new wind parks--in the states of Baja California, Zacatecas, and Quintana Roo--would have a combined capacity of 322 megawatts, bringing the country's total wind-energy output to almost 825 MW.

 

In Honduras, construction of the Cerro de Hula wind farm is underway about 24 km south of Tegucigalpa. The project was developed by Globeleq Mesoamerica Energy (GME)--a financial-services firm in Central America better known as Mesoamerica Energy, a subsidiary of the UK-based Globeleq. The joint venture of the Spanish companies Gamesa and Iberdrola is in charge of building the farm at a cost of US$269 million. The 100 MW to be generated will go to Honduras' Empresa Nacional de Energía Eléctrica (ENEE) for distribution under a 20-year purchase accord.

 

There have also been some new developments in the Central American oil sector. On Aug. 1, Costa Rican President Laura Chinchilla's administration said no to oil exploitation in this Central American nation's territory, declaring a three-year moratorium on the activity. The measure covers the remainder of the administration's four-year term (2010-2014), and it came amid loud protests from environmentalist quarters angered by news about a possible signing, by the Chinchilla administration and the US-based Mallon Oil Company, of a contract allowing the latter to explore and eventually exploit the oil and gas it might find in Costa Rica's northern region, bordering Nicaragua.

 

Mexico's state-run oil company PEMEX also found itself in the middle of a policy decision that had small repercussions on its future operations. In late August, PEMEX teamed up with Spain-based construction and real estate company Sacyr Vallehermoso to boost their share of Spanish giant Repsol YPF SA. The two companies acknowledged that their intention was to restructure Repsol's management. But PEMEX said its primary motivation was to gain access to Repsol's expertise in exploration and extraction, which the Mexican state company sorely needs to try and shore up its reserves, which have plummeted in recent years.    

Carlos Navarro - Editor      

In This Issue...
A Note From the Editor
Mexico Announces Projects that Would Greatly Expand Wind-Energy Capacity
After Kickoff by Former President Mel Zelaya in 2008, Honduran President Lobo Lays Cornerstone for Wind Farm to Start Generating in 2012
PEMEX Boosts Participation in Spain's Repsol, Prompting Some Nationalist Concerns in Spain
Costa Rica Decrees Moratorium on Oil Exploitation for Remainder of President Chinchilla's Term
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Mexico Announces Projects that Would Greatly Expand Wind-Energy Capacity - By Carlos Navarro      

Mexico launched a number of projects in the first eight months of 2011 that would greatly expand the country's capability to produce electricity from wind power. The new projects are all funded with private capital, with the largest announced in late July.  

 

Under this project, the California-based Cannon Power Group had agreed to invest about US$2.5 billion in the construction of three wind-power parks in Mexico. The facilities-in the states of Baja California, Zacatecas, and Quintana Roo--would have a combined capacity of 322 megawatts.

 

The new wind-powered projects are part of President Felipe Calderón's strategy to increase the use of renewable energy to reduce reliance on fossil fuels. "It is true that we are a country that has relied on petroleum," Calderón said at the ceremony announcing the Cannon Power Group investments. "But we are also aware that we need to speed up the development of renewable energy for the good of future generations."  

 

Mexico currently produces about 51,000 MW of electricity from renewable sources, but much of this total comes from hydroelectric power.  

 

The three projects would bring the country's total output from wind energy to almost 825 MW when added to Mexico's installed capacity of 500 MW. Other smaller projects in the works could add additional capacity to the nation's wind-power capability, including new facilities planned in Ensenada in Baja California, Parque Virgen de los Zacatecas in Zacatecas, and Ixtepec in Oaxaca. Read more... 

 

After Kickoff by Former President Mel Zelaya in 2008, Honduran President Lobo Lays Cornerstone for Wind Farm to Start Generating in 2012 - By George Rodríguez    

In 2008, only months before his downfall via a coup, Honduran President Manuel "Mel" Zelaya announced a 100-megawatt, US$269 million wind power project--with debt-financing support worth US$220 million jointly provided by the US Export-Import Bank and the regional Banco Centroamericano de Integración Económica (BCIE).

 

Some 24 km south of Tegucigalpa, the Cerro de Hula wind farm is a project developed by Globeleq Mesoamerica Energy (GME)--a financial-services firm in Central America better known as Mesoamerica Energy, a subsidiary of the UK-based Globeleq--focused on developing, building, and operating renewable-energy projects throughout the region.

 

GME's first transaction in the region was the acquisition, in 2004, of Plantas Eólicas SRL (PE SRL), a 23 MW wind farm in operation in Costa Rica. Its present projects, generating hundreds of megawatts, now include the Cerro de Hula wind-farm project.

 

A joint venture, consisting of the Spanish companies Gamesa and Iberdrola, is in charge of building the farm, with Gamesa--owner of 76%--responsible for supplying and installing the 51 Gamesa G87 wind turbines of 2 MW each, as well as starting up and supervising the turbines, and Iberdrola--owner of the remaining 24%--providing the design and construction of the wind-turbine foundationsRead more...    

 

PEMEX Boosts Participation in Spain's Repsol, Prompting Some Nationalist Concerns in Spain
By Carlos Navarro   

It's not uncommon to see the state-run oil company PEMEX at the center of controversies regarding the designation of energy resources as the national patrimony of the nation's citizens. This debate has often been in connection with Mexico's crude oil, natural gas, and PEMEX itself. In late August, PEMEX found itself on the other side of the conflict when it teamed up with Spain-based construction and real estate company Sacyr Vallehermoso to boost their share of Spanish giant Repsol YPF SA. The two companies acknowledged that their intention was to restructure Repsol's management. Even though Spain's Constitution does not have a provision reserving energy resources as national patrimony, questions arose on whether Repsol, a symbol of Spain around the globe, would remain sufficiently "Spanish."

 

Under the transaction, PEMEX raised its shares of Repsol to 9.8%. This brought the combined shares of Sacyr Vallehermoso and the Mexican oil company to 29.8%, just short of the 30% trigger for a takeover bid under Spanish law. Even without a takeover, the two companies would gain enough board seats to allow them to push for restructuring Repsol. The primary aim is to split the chairman and chief executive officer roles currently held by Antonio Brufau.

 

This is the second time this year that PEMEX has boosted its shares in Repsol. In July, the Mexican company acquired 825,125 shares in the Spanish company through its international subsidiary PMI holdings. PEMEX said the transaction increased its stake in Repsol to 5%. At that time, PEMEX justified the move as a maneuver to allow it to attain certain tax advantages available from the Spanish government. Read more...    

 

Costa Rica Decrees Moratorium on Oil Exploitation for Remainder of President Chinchilla's Terms
By George Rodríguez    

Costa Rican President Laura Chinchilla's administration decided to say no to oil exploitation in this Central American nation's territory, declaring a three-year moratorium on the activity on Aug. 1.

 

The measure covers the remainder of the administration's four-year term (2010-2014), and it came amid loud protests from environmentalist quarters angered by news about a possible signing, by the Chinchilla administration and the US-based Mallon Oil Company, of a contract allowing the latter to explore and eventually exploit the oil and gas it might find in Costa Rica's northern region, bordering Nicaragua.

 

The exploration blocs the company has focused on include the spot on the eastern end of the border where the present Costa Rica-Nicaragua dispute erupted in October 2010, a conflict the International Court of Justice (ICJ) began studying in January, ordering, in March, both countries to comply with precautionary measures.

 

The story dates back to 1998, when René Castro, head of the Ministerio de Ambiente y Energía (MIAE) in the administration of former President José María Figueres (1994-1998), signed a decree making it easier for foreign oil companies to work in Costa Rica.

 

The decree revoked 17 articles of the Ley de Hidrocarburos, in force since 1994, which included the prerequisite of an environmental feasibility study in order for a company to be awarded an oil-exploration contract. Read more...    

 

LA-ENERGAIA
Energy Policy, Regulation and Dialogue in Latin America

 

NotiEn is an original newsletter with breaking news that analyzes and digests relevant and contemporary information in energy, alternative energy and energy policies in Latin America. A complimentary service provided by the University of New Mexico as part of LA-ENERGAIA Project funded by the US TICFIA Program