Mexico

Mexico’s oil liberalisation is now well under way, with the tender of a second lot of oil assets – nine fields grouped into five blocks – now set to join the 14 that have already been announced. But do the country’s projections for future oil recovery add up?

The government is hoping that private investment in a sector closed for nearly 80 years under the monopoly of state oil company Pemex will succeed in turning around a decade of inexorable decline in Mexico’s oil output. Indeed, it has talked of adding 500,000 barrels per day (bpd) by 2018, when the government’s term is up. Read more

Good news: After weeks of political gridlock, Mexico’s three main parties have agreed a framework for a new anti-corruption system. It should be put to a vote in the lower house of Congress this week.

But the devil is in the details. Does it go far enough? Will it get watered down before it comes to a vote? And, the biggest question of all, will it stop corruption?

The jury is out. But before taking a look about what’s good and what should be better, it is worth remembering why Mexico so urgently needs a serious anti-corruption strategy. Corruption has long been an accepted part of life in Mexico. If you start digging, you will find it, says one political analyst – much like how the missing bodies of 43 students in the state of Guerrero has turned up other undiscovered mass graves. Read more

Director Alejandro González Iñárritu

Electricity market regulations may sound dry and complex. But for César Hernández, Mexico’s electricity undersecretary, these regulations will “move us to the type of institutions our country deserves to have”.

The unspoken message: Take that, Alejandro González Iñárritu!

The Mexican director created a domestic storm with his Oscar acceptance speech on Sunday night, in which he said: “I pray that we can build the government we deserve.”

The comment generated a much lampooned response from the ruling PRI party (the tone was “but we already ARE, haven’t you noticed?”) and sparked much Twitter discussion about what Mexico needed and deserved from an unpopular government under fire from conflict-of-interest scandals. Read more

Oil is popularly known as black gold. Now the world’s biggest miner of another shiny precious metal is jumping on Mexico’s ambitious energy reforms to get in on the dirty black stuff.

Alberto Baillères, head of Grupo Bal, which counts silver producer Peñoles y Fresnillo among its companies (as well as upscale department store the Palacio de Hierro), has launched a new oil company, called Petrobal. Read more

Just over a month to go, and Mexican car exports to Argentina and Brazil (which Mexico has overtaken as No. 1 Latin American car maker) should be back on track after a three year system of quotas. That’s the plan, at least.

Or rather, that’s the deal the three countries signed: March 15, 2015 would spell a return to free auto trade. Read more

By Joy K Gallup of Paul Hastings

The transformation of Mexico’s telecoms sector has begun. Reforms enacted in 2013 promise to transform the investment opportunities and market dynamics of the sector and have already had a major influence, managing the current market dominance of América Móvil through the regulatory actions of IFETEL and opening the sector to foreign investment. In the past few months we have seen fines and other regulatory decisions taken against the dominant players, including América Móvil’s subsidiaries Telmex (which controls 80 per cent of Mexico’s fixed-line telephone market) and Telcel (which controls 70 per cent of its mobile phone market). In recent days, AT&T completed the purchase of Mexico’s third-largest wireless company Iusacell for $2.5bn from Grupo Salinas, and announced an agreement to buy Nextel Mexico from NII Holdings for $1.8 bn (expected to close mid-year). So, what do these reforms mean for the future of the smaller telco companies in Mexico, such as Axtel, Alestra and Maxcom? Read more

Mayors fronting drug cartels, a union leader splurging thousands on cosmetic surgery, and a multi-million-dollar mansion reportedly gifted to the president by a federal contractor. Enrique Peña Nieto’s first two years in charge have not been short of scandals.

Peña Nieto was pitched by many as Mexico’s great reformer. Since taking office in December 2012, the Institutional Revolutionary Party (PRI) politician has achieved the seemingly impossible, ushering through a string of key economic reforms with a view to boosting investment, competitiveness, and growth. Read more

Pemex, the Mexican state oil company, is being forced to sharpen up its act.

Not only are costs under pressure, so is its reputation. Read more

By Joy K Gallup of Paul Hastings

A year ago, the reforms of Mexico’s restructuring law for financially distressed companies were just taking effect. Most practitioners felt the changes addressed many of the flaws in the existing bankruptcy or concurso process. One year later, the new restructuring law is again in the spotlight, as the three largest bankruptcies currently before the courts are proving terrible test cases for the revised law and highlighting where further improvements are needed. Read more

Bye-bye “primitive” internet banking. Hello smart banking straight from your smartphone. That, at least, is the pitch from Mexico’s Grupo Azteca, part of businessman Ricardo Salinas’s finance, retail and TV empire. Read more

Mexico’s traffic pollution is legendary. So how about a clean, green – and for now, at least, free – solution?

The CFE, the state electricity company, has inaugurated four “electrostations” – recharging stations for electric or hybrid cars – in a partnership with retailer Walmart, carmaker BMW and Schneider Electric, an electricity distribution and management company which has developed (in Mexico) the all-car compatible “plug”. Read more

It might just be total speculation, but persistent rumours that Citigroup wants to dump Banamex, the former star unit that landed it in a sticky fraud last year, seem to have increased a notch.

The latest log on the fire comes from Darío Celis, a columnist at newspaper Excelsior. Nothing has been confirmed by anyone yet, but it’s tempting to linger over his article for a moment.

He reckons five groups are interested in Banamex, Mexico’s second biggest bank – including two prominent – and now out-work, or soon to be so – senior Mexican bankers. Read more

A new year, a newly opening Mexican oil sector … but things are off to a mixed start.

On the less than rosy side, little more than a week into what is supposed to be a year heralding an unprecedented energy investment boom, Pemex, the state oil company, has taken the step of not renewing a host of contracts for oil service workers. Read more

Pemex refinery in Tula, Hidalog stateBy Michael Fitzgerald and Arturo Carrillo, Paul Hastings

Mexico’s government recently passed reforms repealing important limitations on oil and gas ownership introduced in 1938.While these reforms will reshape Mexico’s energy industry over the next few years, they will also bring about investment opportunities in the energy industry throughout the rest of Latin America.

The proposed privatization of Pemex, the state oil company, would open up 17 per cent of currently producing oil fields to foreign exploitation and allow foreign companies to bid for development rights to 79 per cent of Mexico’s reserve fields. In addition, the state-owned Federal Electricity Commission (CFE) is set to face competitors. Mexico’s energy industry, which was in decline due to the dire need for improved technology, investment and reserve management, is now gushing with investment opportunity that will be principally supported by investors from the US and Canada. However, there will also likely be great interest from investors worldwide. Read more

By Grace Fan, Trusted Sources

One-third of the way through his six-year term, Mexican President Enrique Peña Nieto has dazzled investors with his ambitious reform record, the cornerstone of his administration’s broader development programme to revitalize the sluggish Mexican economy. But the telegenic 48-year-old leader with a reputation for results-oriented governing has failed to convince his increasingly sceptical domestic constituency that he can deliver the goods.

Tepid GDP growth, devastating security problems, political mis-steps and escalating corruption allegations at the end of the year have embroiled him in the worst political crisis in the two-year history of his administration. Read more

By Alejandro Poiré of Tecnológico de Monterrey

What makes Mexico’s current political turmoil unique is that it has put the problem of corruption front and centre of the social agenda. Streets, schools, homes, corporate offices, union meetings and workplaces are teeming with a mix of anger and concern. There is an underlying feeling that it is corruption that lies at the root of our inability to protect the innocent from murder and abuse; that it is corruption that could derail the future promised by the remarkable reforms of the past few years.

As Mexico’s leading public intellectuals have argued, its current crisis, a crisis of corruption and rule of law, calls into question its very viability as a democracy. Yet its political elites have yet to grasp the depth of the problem. The government’s leadership style has pushed social allies away. Opposition parties, mired in their own decomposition, have not served as a channel for social outrage, and players on all sides of the aisle seem way too eager to look past their lamentable wrongdoings. Read more

You don’t have to look far to see the impact on Mexico of falling oil prices (now close to a five-year low): just take a look at the trade balance of state giant Pemex . It slumped by half in one month, to $656m in October from $1.3bn in September, and that was before the combination of Mexico’s lower production and lower world prices really began to bite.

So now would be a good time to take a cold look at how much damage falling prices could really do to Mexico as it prepares to open up its oil sector to private investment, what Mexico could do about it, what wider impact that could have, and what the US and the International Monetary Fund could do to help. Read more

How far to trust a politician? Often a tricky subject – especially in a country like Mexico, where impunity is rife and many elected representatives appear still to live by the maxim of the late Carlos Hank González, an influential politician and businessman (with a statue to his honour in the city of Toluca), namely: “A politician who is poor is a poor politician.” Read more

Enrique Pena Nieto, governor of the state of MexicoIt was hard to miss the massive demonstrations in Mexico City on Thursday night: tens of thousands of people marched to the main square, the Zócalo, many waving flags with Mexico’s green and white stripes turned black. They were demanding justice in the wake of the apparent murder of 43 students in September that has convulsed the nation. Many chanted from one to 43, then shouted the word “justice”.

Enrique Peña Nieto, the president, clearly heard the call: at a justice forum on Friday, he said: “One of the principal demands of Mexican society is to count on better results in the procurement and implementation of justice.

 Read more

Mexico’s government has bowed to the inevitable and cut its 2014 GDP growth forecast, to between 2.1 and 2.6 per cent this year, despite hailing a pick-up in activity in the third quarter that it said should continue throughout the rest of the year.

No big surprise there – growth has been disappointing all year so the writing has long been on the wall. And indeed owing to a change in methodology (more on this shortly), the government is keeping its options open with a new range-based forecast. For 2015, its estimate is 3.2 to 4.2 per cent. The growth goal for 2015 in the budget was 3.7 per cent.

But is there a silver lining to all these cuts? Read more