An Update of Mexican NGL�s by toVV2OW

VIEWS: 41 PAGES: 47

									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

                                                                                  1
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

                                                                                              PMI
PFAA Fourteenth Annual Conference                       An Update of the NGL Mexican Market
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Introduction: About PMI…

     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


                                       P.M.I.
                                                                                             PMI
PFAA Fourteenth Annual Conference                      An Update of the NGL Mexican Market
                                                                                             3
Introduction: Mexican NGL’s Origins and Applications

                                       ETHANE
                                     Sent to Morelos and
                                       Cangrejera for
                                                                          PROPANE
       METHANE                       Ethylene production                Consumed as fuel for
   Sent to Coatzacoalcos for                                             Internal processes
   petrochemical processes




                                    Condensates from Gas
                                      Processing Plants




         HEXANE                                                                    LPG
                                       NATURAL                            90% of LPG comes from
         Mixed with oil                                                   Nuevo Pemex, Cactus y
                                       GASOLINE                               Coatzacoalcos
                                      Sent to Pajaritos for
                                      waterborne exports
                                                                                                    PMI
PFAA Fourteenth Annual Conference                             An Update of the NGL Mexican Market
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Introduction: NGL’s Processing Centers in Mexico
                                                                         / Burgos




                                    BURGOS




        Pipelines

        Gas Processing Centers



                                                                                    PMI
PFAA Fourteenth Annual Conference            An Update of the NGL Mexican Market
                                                                                    5
NGL Fractionation by Processing Center
         160

                                                                                                   kbd
         140                                                                      Ethane                      180
                                  39.7                                            LPG                         205
                                                                                  Natural Gasoline            88
         120



         100
   MBD




                                           10.3
         80       23                                     9.3
                                  74.4



         60
                                           42.1          38

                 41.7                                                   0.8
         40
                                                                                 2.2



         20                       37.6      34          34.4            36
                 24.7
                                                                                                     4.1              1.1
                                                                                         11.8
                                                                                                     4.4     1.1             2.6
          0
                Cactus      Nuevo Pemex   Morelos   La Cangrejera    Poza Rica         Pajaritos   Reynosa         Matapionche


     Source: Statistical Yearbook 2006
                                                     Ethane    LPG    Natural Gasoline                                       PMI
PFAA Fourteenth Annual Conference                                                  An Update of the NGL Mexican Market
                                                                                                                                 6
Natural Gasoline Streams




                           7
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
                                                                                               PMI
PFAA Fourteenth Annual Conference                        An Update of the NGL Mexican Market
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Cactus Naphtha Specs
   Cactus is well known as a petrochemical feedstock mainly used for cracking…

   Cactus specs are:
                                          TEST             MIN     MAX     TYP      METHOD
                                      Specific Gravity     0.65*     -     0.67     ASTM-D 1657

                                          RVP, psi           -     12.5*   11.5      ASTM-D 323

                                      Paraffins, % vol.    85*       -     87       ASTM-D 5134

                                       Olefins, % vol.       -      1*     0.05     ASTM-D 5134

                                     Naphtenes, % vol.       -     12*     10.5     ASTM-D 5134

                                     Aromatics, % vol.       -      3*     2.1      ASTM-D 5134

                                       Color Saybolt       +20*      -     +30       ASTM-D 156

                                    Total Sulphur, ppm       -     400*    120      ASTM-D 3120

                                Mercaptan Sulphur, ppm       -     150*    115      ASTM-D 3228

                                    Total Chlorides, ppm     -     10*      5         UOP- 588

                                         Lead, ppb           -       -     <10        UOP-350

                                     Copper Corrosion        -      3*     1B        ASTM-D 130

                                     H2S in liquid, ppm      -       -      1         UOP-163

                                       Nitrogen, ppm         -       -      1       ASTM-D 4629

                                            RON              -       -     65       ASTM-D 2699

                                           MON               -       -     63       ASTM-D 2700

                                        MTBE, ppm            -       -     < 50     ASTM-D 4815
                                                                                  * Guaranteed Values                       PMI
PFAA Fourteenth Annual Conference                                                     An Update of the NGL Mexican Market
                                                                                                                            9
Cactus Naphtha Production Sites

                              Cactus Naphtha Production Sites



                    26%                                                           Nuevo Pemex
                                                                                  Morelos
                                                                    46%
                                                                                  Cangrejera
                                                                                  Poza Rica
                                                                                  Reynosa
        1%                                                                        Matapionche
         5%                                                                       Cactus
                      10%
             1%
                                     11%




                                                       Source: PEMEX Statistical Yearbook 2006   PMI
PFAA Fourteenth Annual Conference                     An Update of the NGL Mexican Market
                                                                                                 10
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

                                                                                                               PMI
PFAA Fourteenth Annual Conference                                        An Update of the NGL Mexican Market
                                                                                                               11
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…
                                            TEST                 TYP       METHOD
                                    Specific Gravity 60/60 °F    0.70       D-1298
   Burgos specs are:               Reid Vapor Pressure, psi     11.5       D-5191
                                        API Gravity 60°F          69        D-1298
                                          Sulphur % W            0.001      D-4045
                                          Doctor Test           Negative     D-235
                                         Octane Index             N/A       D-2699
                                    Copper Corrosion at 40°C      1A         D-130
                                             IBP °C               30         D-86
                                            10% °C                48          D86
                                             50 °C                81         D-86
                                             90 °C                148         D86
                                            FBP °C                197        D-86
                                         Residue % Vol             0          D86
                                        Recovered % Vol           97         D-86
                                          Loss % Vol               3          D86
                                        Paraffins % Vol           73        D-5134
                                         Olefins % Vol            0.3       D-5134
                                       Naphthenes % Vol           18        D-5134
                                        Aromatics % Vol            8        D-5134
                                         Color, Saybolt           +30        D-156
                                                                                                                 PMI
PFAA Fourteenth Annual Conference                                          An Update of the NGL Mexican Market
                                                                                                                 12
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




                                                                                                                PMI
PFAA Fourteenth Annual Conference                                         An Update of the NGL Mexican Market
                                                                                                                13
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:


                               TEST                     MIN              MAX             METHOD
                       Reid Vapor Pressure, psi          5                7                D-5191
                            Sulphur, PPM                  -              500               D-4045
                             Doctor Test                      Negative                      D-235
                               IBP °C                    40               -                  D-86
                               FBP °C                     -              190                 D-86
                    Naphthenes + Aromatics, % Vol        40               -                D-5134
                            Color, Saybolt              +20               -                 D-156                    PMI
PFAA Fourteenth Annual Conference                                              An Update of the NGL Mexican Market
                                                                                                                     14
Naphthas and Natural Gasoline: Distribution of Logistics




                                                                                 WATERBORNE
                                                                                WATERBORNE
                                                                                 EXPORTS
                                                                                  EXPORTS 93%
                                                                                    93%




                                       WATERBORNE
                                            WATERBORNE
        3%
INLAND INLAND                                 IMPORTS
                                        IMPORTS 4%
          3%                                     4%




                                    WATERBORNE
                                      WATERBORNE
                                        97%
                                         97%




                                                                                 Source: PMI   PMI
PFAA Fourteenth Annual Conference                        An Update of the NGL Mexican Market
                                                                                               15
Forecasts

 Natural Gasoline

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

                               2008       2009                2010
                               115.9      113.4               107.9

                                                            Source: Pemex-Gas y Petroquímica Básica



 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.


                                                                                                 PMI
PFAA Fourteenth Annual Conference                      An Update of the NGL Mexican Market
                                                                                                 16
Liquified Petroleum Gas (LPG)




                                17
Mexican LPG Demand per capita (2005)
            Egypt                                  40.2

         Morocco                                      41.3

              Irak                                    41.3

      Saudi Arabia                                     42.4
                                                                                      Mexico is the largest
Dominican Republic                                      43.5
                                                                                       consumer of LPG per
          Malaysia                                      43.5                           capita in the world
             Israel                                          45.7

           Algeria                                           45.7                     More than 70% of
      South Korea                                            45.7
                                                                                       Mexican families
                                                                                       depend on LPG as a
             Spain                                            46.7
                                                                                       heating fuel
           Taiwan                                                    52.2

             Chile                                                   52.6

          Ecuador                                                           57.6

             Japan                                                            59.8

           Mexico                                                                           73.9          Source: SENER, PEMEX


                      0    10       20   30      40            50           60         70          80
                                              kg/person
                                                                                                                         PMI
PFAA Fourteenth Annual Conference                                                  An Update of the NGL Mexican Market
                                                                                                                         18
Mexican LPG consumption per capita

                                                                  1995        Natural
                                                                               gas
                                                                                5%



                                                                      Wood
                                                                       31%



                                                                                             LPG
                                                                                             64%




                                                                  2005       Natural
                                                                              gas
                                                                               7%




                                                                     Wood
                                                                      28%



Kg/Inhabitant (States)                                                                       LPG
                                                                                             65%


           160 to 170    (4)       LPG has remained as the preferred
           120 to 159    (6)
            80 to 119   (13)        source of heating fuel over the
            40 to 79     (8)
             0 to 39     (1)        years while natural gas has
                                    substituted wood by 2-3%
                                                                                                   PMI
PFAA Fourteenth Annual Conference                           An Update of the NGL Mexican Market
                                                                                                   19
Source: PEMEX
      LPG Demand growth in Mexico (1995-2005)



                                                                                            Main factors for demand drop:
      350
                                                                                                 Natural gas competition in
      300
                                                                                                  Residential and Services
      250
                                                                                                  sectors
      200
kbd




      150                                                                                        Climate change
      100


      50                                                                                         Savings due to increased
       0
                                                                                                  efficiency of LPG fueled
                                                                                                  devices
            1995

                   1996

                          1997

                                 1998

                                        1999

                                               2000

                                                      2001

                                                             2002

                                                                    2003

                                                                           2004

                                                                                  2005




                                                                                                 Higher prices of LPG relative
                          AAGR = 2.1%
                                                                                                  to wood or coal

                                                                                                                                          PMI
  PFAA Fourteenth Annual Conference                                                                 An Update of the NGL Mexican Market
                                                                                                                                          20
  Source: SENER, PEMEX
Mexican LPG Consumption by sector (%)



                   Vehicle fuels, 2%         Farming, 2%
 100%
                       Industrial, 7%
                                         Vehicle fuels,         Although the share
                                             13%
                       Services, 13%                             of vehicle fuel has
   80%                                   Industrial, 8%
                                                                 increased over the
                                         Services, 13%
                                                                 last ten years, the
   60%
                                                                 residential sector
                                                                 remains the main
   40%             Residential, 78%
                                                                 market for LPG in
                                        Residential, 63%
                                                                 Mexico.
   20%



    0%
                         1995              2005




                                                                                                     PMI
PFAA Fourteenth Annual Conference                              An Update of the NGL Mexican Market
                                                                                                     21
Source: SENER, PEMEX
Mexican LPG Demand by region
                                                                         314 kbd
                                                                       Sales per region %, 2005
          There are 5 regional
                                                  100%
           divisions in Mexico
                                                   80%                                                          40%

                                                   60%
                                                                                                   23%
                                                   40%
                                                                                      15%
                                                   20%
                                                                          13%
                            NORTHEAST               0%      9%
                                                         No rthwe st     So uth-   No rthe ast    We st       C e ntral
                                                                       So uthe ast               C e ntral


     NORTHWEST                      CENTRAL
                                                                        The CENTRAL and
          WEST CENTRAL                                                   WEST CENTRAL
                                                                         regions are the areas
                                              SOUTH-SOUTHEAST
                                                                         of highest demand



                                                                                                               PMI
PFAA Fourteenth Annual Conference                                       An Update of the NGL Mexican Market
                                                                                                               22
Source: SENER, PEMEX
 Sources for NGL’s and LPG Production in Mexico

                                                                                   Mexico has three
                                                                Natural Gas
      Non Associated Gas     Sour Gas and                         Ethane            different sources of
                               Liquids To                             LPG           LPG:
                            Processing Plants
           Associated Gas                                        Naphtas
                                                   Processing                          Gas Plants
                                                     Plants



                                                                                       Refineries

                                                                LPG
                                     Crude
                                                                                       Imports (balance)
                                                    Refinery
     Gas


                                    Crude Oil to exports
  Crude Oil




                                                                                                                        PMI
PFAA Fourteenth Annual Conference                                                 An Update of the NGL Mexican Market
Source: PEMEX                                                                                                           23
PEMEX Stats

                                             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
     PEMEX ranks among the top ten NGL
      fractionators in the world.            Pipeline systems:
                                                  Natural gas: 9,016 km
                                                  Products: 3,051 km


                                                                                            PMI
PFAA Fourteenth Annual Conference                     An Update of the NGL Mexican Market
                                                                                            24
Source: PEMEX
 PEMEX LPG Production sites (Gas Plants, kbd)


                                                                                       Nuevo PEMEX gas
                                                        Cangrejera, 43.6
                               Reynosa, 4.4
                                                        Morelos, 42.1                   plant is the largest
                                                        Nuevo Pemex, 70.4               LPG producing
                                    Arenque, 9.9                                        facility in the
                                                                                        country
                                    Poza Rica, 2.7
                                                                      250
                                                                                                                             225
                                                                                                                       212         216
                                                                                                   201 204   205 205
                                                                             196 187         196
                                                                      200
                                               Cactus, 40.2                            177
                       Matapionche, 2.2
                                                                      150




                                                                kbd
                                                                      100


                                                                       50
      Total 2005 supply: 216 kbd
                                                                        0
                                                                            1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

                                                                             Nuevo Pemex           Cangrejera          Morelos
                                                                             Cactus                Arenque             Reynosa
                                                                             Poza Rica             Matapionche         Total
                                                                                                                             PMI
PFAA Fourteenth Annual Conference                                                  An Update of the NGL Mexican Market
                                                                                                                             25
Source: SENER, PEMEX
 PEMEX LPG Production sites (Refineries,kbd)

                                                                  60         55

                                                                  50
                                                                        44

                                                                  40                37
                                                                                                  33                     35
                                Cadereyta, 3.3                                                                      31              31
                                                                                            30               29                29




                                                            kbd
                                                                  30                                   25
                                   Cd. Madero, 1.3
                                                                  20


                                   Tula, 8.1                      10


               Salamanca, 3.8             Minatitlán, 6.5          0
                                                                       1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

                                         Salina Cruz, 8.3
                                                                        Salina Cruz        Tula             Minatitlán        Salamanca

                                                                        Cadereyta          Madero           Total



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

                                                                                                                                    PMI
PFAA Fourteenth Annual Conference                                                         An Update of the NGL Mexican Market
                                                                                                                                    26
Source: SENER, PEMEX
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



                                                                                            PMI
PFAA Fourteenth Annual Conference                     An Update of the NGL Mexican Market
                                                                                            27
Source: SENER, PEMEX
         LPG Supply-Demand Balance in Mexico (kbd)

                                                                                               In 1995, 87% of
            Demand
                                                                                                total demand was
         285    297     287    303    328     350    334    338    333    340    321
                                                                                                covered with
         13%
                18%                                                              23%
                                                                                                domestic
                        26%    25%    29%
                                              35%
                                                     30%    30%
                                                                   26%    25%
                                                                                                production
         18%
                19%                                                              10%
Supply




                               10%                                 10%    9%
                        13%           10%            9%      9%
                                               7%
                                                                                               In 2005, this
                                                                                                percentage
         69%                                                                     67%
                                                                                                dropped to 77%
                63%            65%                                 64%    66%
                        62%           61%     58%    61%    61%


                                                                                               The deficit in
                                                                                                supply has been
         1995   1996    1997   1998   1999    2000   2001   2002   2003   2004   2005           covered by
                      Gas plants             Refineries            Imports                      imports

                                Supply AAGR = 1.2%


                                                                                                                             PMI
     PFAA Fourteenth Annual Conference                                                 An Update of the NGL Mexican Market
                                                                                                                             28
     Source: SENER, PEMEX
 LPG Imports (Kbd)

                                                                           Before 1996, Mexico
77        94    121 100 102 85                   84     73     67           was a net exporter of
                                                                            LPG (with the USGC
                                                                            as the main
                                                                            destination for
57%      56%
                46%
                        54%         59%
                                                                            exports).
                                          69%    70%
                                                        76%
                                                               83%
                                                                           AAGR for imports on
                                                                            the 1995-2005
                54%
                                                                            period: 7%
43%      44%            46%         41%
                                          31%    30%
                                                        24%
                                                               17%         Imports have shrunk
1998     1999   2000    2001    2002      2003   2004   2005   2006
                                                                            because of:
                                                                                Increase in
                      Waterborne           Inland                                production
                                                                                Demand drop

                                                                                                            PMI
PFAA Fourteenth Annual Conference                                     An Update of the NGL Mexican Market
                                                                                                            29
Source: PMI
Logistics for LPG Imports and Exports in Mexico
                      Mexicali
           Tijuana
                                Hermosillo      Ciudad
                                    Nogales     Juarez                                                            Imports
                                                                                                                  Exports
                                                               Piedras
                     Rosarito
                                                               Negras                                             Pipeline

                                                                          Nuevo Laredo



Arbitrage line                                                                        Matamoros



                                               Topolobampo
  PEMEX terminals                                              Cadereyta
  Non-PEMEX terminals
                                                       Manzanillo                 Ciudad Madero

                                                         Abasolo          2
                                                                                  3
                                         Guadalajara      Salamanca                          Pajaritos
                                                                              4        7
                                                                      1           5
                                                                                       6
                                                                                                     Cactus
                                                                                      Salina Cruz



                                                                                                                                 PMI
PFAA Fourteenth Annual Conference                                                          An Update of the NGL Mexican Market
                                                                                                                                 30
Source: PEMEX, PMI
Mexican Waterborne LPG Imports 2006




                                              Nigeria
                                     Argentina 8%
                                          3%
                                                            USA
                                                            30%
                          Norw ay
                            17%


                                                                     Total: 674 kT
                                NWE
                                  5%                    Saudi
                                Libya /                 Arabia
                                 Egypt                   18%
                                          Algeria
                                   5%                                                                   PMI
                                           14%
PFAA Fourteenth Annual Conference                                 An Update of the NGL Mexican Market
                                                                                                        31
Source: PMI
Mexican Inland LPG imports 2006 (kbd)
                  Mexicali, 3.3

                      Hermosillo, 0.7 Ciudad
Tijuana, 8.2
                         Nogales, 2.2 Juarez, 20.1
                                                                                         All inland imports come
                                             Piedras
                                             Negras, 5.0                                  from the US
                                                     Nuevo Laredo, 8.5


                                                           Matamoros, 7.8                Transportation units that
                                                                                          normally cross the USA-
                                                                                          Mexico border:

                                                                                               Tanktrucks: 23,000/y
                                                                                               Railcars: 4,500/y
               Imports (truck/rail)                            Cactus
               Exports (truck)                                          Belize: 0.2      There are 3 pipelines that
               Pipeline
                                                                                          connect USA-Mexico:
                                                                                               El Paso-Juarez
                                                                                               Laredo-Nuevo Laredo
                                                                                               Brownsville-Matamoros
                                                                                                                            PMI
PFAA Fourteenth Annual Conference                                                     An Update of the NGL Mexican Market
                                                                                                                            32
Source: PMI
Mexican LPG Supply: Production + Imports



                             Propane-
                                                 Propane, 37%
                            Butane, 63%



      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.


                                                                                       PMI
PFAA Fourteenth Annual Conference                An Update of the NGL Mexican Market
                                                                                       33
Source: SENER, PEMEX
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).




                                                                                     PMI
PFAA Fourteenth Annual Conference              An Update of the NGL Mexican Market
                                                                                     34
Source: SENER, PEMEX
LPG value chain in Mexico
     There are different entities involved in the LPG distribution chain:
                                           CRE sets first                             Ministry of Economics
                                            hand sale                               sets the max. price for end
                                              prices                                        consumers

SUPPLY                    STORAGE                                   DISTRIBUTION                   CONSUMPTION




  Domestic
 production
and imports




                  Transportation      Terminals        Wholesales
                                                                                   Retail sales
                   to terminals



                           PEMEX                                     Distributors                      End users
  PEMEX
                          and third
                           parties
                                                                                                                  PMI
PFAA Fourteenth Annual Conference                                        An Update of the NGL Mexican Market
                                                                                                                  35
Source: SENER, PEMEX
LPG Expected Demand Growth in Mexico 2007-2015

       360

       355

       350
                                                                                   Growth per sector:
       345

       340
                                                                                        Residential, 0.7%
 kbd




       335
                                                                                        Vehicle fuel, 1.5%
       330
                                                                                        Industrial, 1.9%
       325
                                                                                        Farming and Oil
       320
                                                                                         industry, 2.1%
       315

       310
             2007


                        2008


                               2009


                                      2010


                                             2011


                                                    2012


                                                           2013


                                                                  2014


                                                                         2015




                       Total AAGR = 1.2%

                                                                                                                           PMI
PFAA Fourteenth Annual Conference                                                    An Update of the NGL Mexican Market
                                                                                                                           36
Source: SENER, PEMEX
Expected Change in LPG Demand
                                                                         314 kbd
                                                                       Sales per region %, 2015
     The CENTRAL and WEST
      CENTRAL regions remain                      100%
      as the highest demand                        80%                                                           36%
      areas but …
                                                   60%
                                                                                                   23%
                                                   40%
                                                                                      15%
                                                   20%                    17%

                                                    0%      10%

                                                         No rthwe st     So uth-   No rthe ast    We st        C e ntral
                                                                       So uthe ast               C e ntral
                            NORTHEAST


                                                                       The CENTRAL and WEST
     NORTHWEST                                                          CENTRAL regions are the
                                    CENTRAL
                                                                        ones with the lower
        WEST CENTRAL                                                    growth rate of all
                                                                        regions…
                                              SOUTH-SOUTHEAST

                                                                                                                 PMI
PFAA Fourteenth Annual Conference                                        An Update of the NGL Mexican Market
                                                                                                                 37
Source: SENER, PEMEX
LPG Supply by Gas Plants (kbd)

                                              260   258   260                   251
                                       243                      247     249
                                 227                                                    231    233
                        215




                       2005 2006 2007 2008 2009           2010 2011 2012 2013 2014 2015

      2005                                                                                                 2015
   Nuevo Pemex                                      32%         27%                                       Cactus
      Cangrejera                        20%                       25%                                     Morelos
         Morelos                        20%                                       14%                     Poza Rica
          Cactus                        19%                                             10%               Cangrejera
        Arenque             5%                                                          10%               Nuevo Pemex
        Reynosa        2%                                                                9%               Burgos

    Matapionche        1%                                                                        3%       Matapionche

       Poza Rica       1%                                                                            2%   Arenque

                                                                                                                    PMI
PFAA Fourteenth Annual Conference                                             An Update of the NGL Mexican Market
                                                                                                                    38
Source: SENER, PEMEX
LPG Supply by Refineries (kbd)

                                                                                     55     54
                                                                      45     47
                                                                44
                                                    40     41
                                        33   35
                       31
                             28




                       2005 2006 2007 2008 2009          2010 2011 2012 2013 2014 2015

      2005                                                                                              2015
   Salina Cruz                                       26%                            13%                New capacity

          Tula                                       26%                                       6%      Madero

                                                                                          8%           Salamanca
    Minatitlán                                21%
                                                                                          9%           Cadereyta
    Salamanca                       12%
                                                                                  16%                  Tula
    Cadereyta                     11%
                                                                              19%                      Salina Cruz

       Madero          4%                                            29%                               Minatitlán

                                                                                                                 PMI
PFAA Fourteenth Annual Conference                                          An Update of the NGL Mexican Market
                                                                                                                 39
Source: SENER, PEMEX
Expected LPG Balance 2005-2015 (kbd)


  319    314      320    327    333     338    341    345    348    353    357
                                                                                       LPG supply from gas
  22%     19%
                  14%    10%    10%     11%    15%    15%    15%    19%    20%          plants is expected to
                  10%
                         11%    12%     12%
                                               13%    13%    13%
                                                                                        have an AAGR of
  10%
          9%
                                                                    16%    15%          0.8%.

                                                                                       LPG supply from
  68%     72%     76%    79%    77%     77%
                                               72%    72%    72%
                                                                                        refineries will
                                                                    66%    65%
                                                                                        increase at a 5.6%
                                                                                        AAGR.

  2005   2006     2007   2008   2009    2010   2011   2012   2013   2014   2015        The gap between
                Gas plants             Refineries            Imports                    supply and demand
                                                                                        will continue to be
                          Supply AAGR = 1.5%                                           covered with
                                                                                        imports.
                                                                                                                       PMI
PFAA Fourteenth Annual Conference                                                An Update of the NGL Mexican Market
                                                                                                                       40
Source: SENER, PEMEX
NGL’s Projects




                 41
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          PMI
PFAA Fourteenth Annual Conference                                     An Update of the NGL Mexican Market
                                                                                                            42
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.


                                                                                                           PMI
PFAA Fourteenth Annual Conference                                    An Update of the NGL Mexican Market
                                                                                                           43
Conclusions




              44
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.

                                                                                              PMI
PFAA Fourteenth Annual Conference                       An Update of the NGL Mexican Market
                                                                                              45
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.


                                                                                              PMI
PFAA Fourteenth Annual Conference                       An Update of the NGL Mexican Market
                                                                                              46
¡¡Muchas gracias!!

                     47

								
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