By 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
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
It might sound like more bureaucracy, not less: Instead of four operating units, Pemex, Mexico’s state oil company, now has two, plus five separate subsidiaries.
However, in a statement to the stock exchange, company officials said its market-oriented reorganisation would bring greater efficiency and transparency as it moves into a new era of competition.
The long-planned restructuring scraps Pemex’s four divisions – exploration and production; refining; petrochemicals; and gas and basic petrochemicals – and replaces them with just two: upstream and downstream, or exploration and production on one hand and industrial transformation on the other. Its five non-core subsidiaries – drilling, logistics, co-generation and services, fertilisers and ethylene – are destined to become affiliate companies in the coming year. Read more
Brazil and Mexico, Latin America’s two biggest economies, are engulfed in high-profile scandals that have involved their presidents and also touched on investor interests. So far, Dilma Rousseff has made a better fist of handling the fallout in Brazil than Enrique Peña Nieto has in Mexico – although that could easily change. Read more
Ever pragmatic, the boss of Pemex, Mexico’s revamping state oil company, knows the first barrels of oil extracted from the enticing deepwater prospects in the Gulf of Mexico under the country’s historic energy reform will probably be processed and shipped through existing US infrastructure.
But don’t be tempted to think that Pemex is taking its eye off Asia. Read more
Full marks for Enrique Peña Nieto: the Mexican president’s energy reform is in the bag, so it’s full speed ahead now to cheaper energy, faster growth, higher investment and more jobs, right?
That’s the plan, and Mexico certainly looks to be on track – indeed, the government is so aware that it has not a moment to lose that with the ink barely dry on the legislation, it was already announcing what private investors could look forward to bidding for as the sector is opened up for the first time since 1938. Read more
After what has felt like an endless waiting game, Mexico’s energy reform is finally entering the home straight.
This weekend Senate members approved key bills to govern the new-look hydrocarbons sector, as well as the energy sector and the state utility, CFE, and oil company, Pemex, that will lose their monopolies under the sweeping reform. There is just one section still to be passed. Read more
As secondary legislation to enact Mexico’s historic energy reform chugs through Congress and the clock ticks towards a December 2015 deadline for state oil company, Pemex, to be transformed into a “state productive enterprise”, a new report from the Natural Resource Governance Institute (NRGI) makes for interesting reading.
The think-tank has studied a dozen national oil companies and distilled its findings into key recommendations. Pemex, a company about to discover competition as its nearly eight-decades-old monopoly on the sector is flung open, currently hands over the bulk of its revenues to the state in the form of taxes, and will face the challenge of how to invest like a private company while still propping up the state for years to come (the government says a transition to a lower tax burden will take a decade). Read more
Mexico’s interest in boosting trade ties with China has long been clear, and the country’s historic energy reform is clearly a golden opportunity.
So it should perhaps come as no surprise that Pemex, the state oil company, is negotiating an investment fund to finance Pemex infrastructure projects with China, to be called the Sino-Mex Energy Fund. Read more
Never mind all that “three amigos” stuff. A potential energy pipeline from Canada to the US could help those two Nafta members, but not the other, Mexico.
The proposed Keystone XL pipeline could spell bad news for Mexican oil company Pemex, which is losing its monopoly at home and is currently the third biggest crude exporter to the US. Read more
Oil companies hoping that by March 21 they might have clues as to which oil and gasfields may be up for grabs in Mexico should not get their hopes up too high.
Pemex, the state company which is having its 75-year-old monopoly opened up to private competition in a historic reform, will face a new competitive environment. And that means learning to keep corporate secrets, it says. Read more
The 11th in our series of guest posts on the outlook for 2014 is by Duncan Wood and Christopher Wilson of the Wilson Center
We will look back on 2013 as a truly historic year for Mexico. The scale of the reform process that was undertaken and largely achieved by President Enrique Peña Nieto is astonishing by comparison not only with other countries around the world today, but also in the context of recent Mexican history. For 15 years Mexico had seemed condemned to endure one of the less palatable elements of democratic systems, legislative gridlock. However President Peña Nieto, through a combination of determination, hard bargaining and political skill, has managed to work with the congress to pass a series of major reforms that do much to put Mexico on the road to modernity and competitiveness. Read more
By Jason Marczak and Peter Schechter of the Atlantic Council
Mexican President Enrique Peña Nieto capped a year of reform with a final act that far exceeded expectations of the 47-year-old leader’s first year. Energy reform, passed by the Senate and Chamber of Deputies last week, will end a 75-year policy prohibiting private investment in the country’s hydrocarbons sector. Some estimate that the reform will add an additional 2 percent to Mexico’s economy by 2025. Read more
Enrique Peña Nieto, Mexico’s president, has pulled a rabbit out of the hat. If all he wanted for Christmas was energy reform, well, Santa looks to have come early.
Just a few days ago, Senators were struggling to get together to thrash out details of the country’s sweeping energy reform and there was talk of having to extend sessions beyond December 15, when legislators break for the holidays. Read more
Has opposition to Mexico’s reform agenda gone away, swept from the capital’s main square by police and from the headlines by tropical storms?
Time will tell – a recent demonstration against energy reform plans attracted thousands and striking teachers are promising more protests.
So it may be surprising to observe – in the first survey devoted to the subject of attitudes to Mexico’s pending energy reforms – that as much as 53 per cent of respondents were pretty – or very – happy with the plans. Read more
The countdown begins for one of the most eagerly-awaited policy decisions that Mexican President Enrique Peña Nieto will make, one which may very well define his six-year presidency and shape Mexico’s economic future: his proposal to reform Mexico’s strongly-protected energy sector.
The Mexican president will unveil this week – some speculate as soon as Wednesday – his plans to open up Mexico’s oil industry to private investment. Read more
One of the most widely watched – and significant – of Mexican President Enrique Peña Nieto’s reforms is that of the energy sector.
It’s on the agenda when Congress resumes after the summer break in September – and is attracting a lot of international attention in the energy sector. But with disappointing results out from state oil company Pemex out, it’s now looking even more important than before. Read more
What is Pemex playing at?
Why would the Mexican oil company’s CEO go to the trouble of flying to Barcelona two weeks ago to explore the possibility of brokering a peace deal between Spain’s Repsol (in which it has a 9.37 per cent stake) and YPF, Repsol’s renationalised former unit, if Pemex was then going to vote against the deal at a board meeting? Read more
Tuesday’s announcement that Mexico has signed an agreement with Japan’s Mitsui Corporation to construct a gas pipeline for $460m was accompanied by the idea that the deal would provide cheaper and more abundant energy for Latin America’s second-largest economy. Read more