Energy
From The Report: Mexico 2015
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With more than 6% of GDP coming from oil and gas, and 1.8% from the utilities sector, energy is one of the most important components of the Mexican economy. The country’s oil exports have made up a large part of the public budget for several decades. Nonetheless, the decline in production of Petróleos Mexicanos (Pemex), the state-owned oil company, from a peak of roughly 3.4m barrels per day (bpd) to around 2.5m bpd after 2010, combined with oil price volatility, led to a legislative revision in 2013. The energy reform, which opened up the sector to private investment, is expected to have a profound impact on the sector, though in an initial phase, investment in oil and gas exploration and production is likely to be outrun by advancements downstream. Even so, following reform, Mexico is poised to become one of the most dynamic energy markets in the region.

This chapter includes interviews with Pedro Joaquín Coldwell, Minister of Energy; Emilio Lozoya Austin, CEO, Petróleos Mexicanos (Pemex); and Alberto de la Fuente, Managing Director, Shell Mexico.

Articles from this Chapter

Overview

Poised for change: Major legislative amendments pave the way for a more competitive sector
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With more than 6% of Mexico’s GDP coming from oil and gas, and 1.8% from the utilities sector, energy is one of the most important components of the economy. Historically, the country has been largely dependent on its oil exports, which have made up a large part of the public budget for several decades. Nonetheless, the decline in production of Petróleos Mexicanos (Pemex), the state-owned oil company, from a peak of roughly 3.4m barrels per day (bpd) to around 2.5m bpd after 2010, combined with…

Analysis

Incentivised reform: A changing energy mandate spells new opportunities for hydrocarbons and electricity
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Since the release of the energy reform in December 2013, the Mexican energy sector has been on the rise. Little by little the rules have been set to turn a closed sector with two state-owned giants – Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (Comisión Federal de Electricidad, CFE) – into a modern-day open market. Much Needed Pemex production has dropped by more than 24% since reaching a peak of 3.4m barrels per day in the early 2000s. Added to that, handling the amount…

Analysis

Renewable vows: Increasing capacity through wind and solar alternatives
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With installed capacity of 2600 MW in wind and 55 MW in solar power plants, Mexico generates around 10% of its energy with non-hydro renewables, but it aims to produce 35% of its energy from clean sources by 2024. Jose Pablo Fernandez, director-general at Grupo Dragon, told OBG, “Mexico’s 2024 goal is ambitious but possible. It has 18-19% clean energy production, and the aim is to raise this by 5% by 2018.” This 5% excludes pre-existing projects and upcoming endeavours under grandfathered…

Viewpoint

Up and coming: Pedro Joaquín Coldwell, Minister of Energy, on the new model for the sector
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The initial phase of the energy reform’s legal and institutional framework has been concluded. During this process, the Federal Executive Council, Congress, political parties and the media, as well as academic, social and business sectors, have had a dialogue on how to transform the industry in order to allow technical, financial and human elements to take advantage of all the energy resources Mexico has. The legal changes occurred in three stages, and each one was accomplished quickly and effectively…

Interview

Preparing for change: OBG talks to Emilio Lozoya Austin, CEO, Petroleos Mexicanos (Pemex)
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Interview:Emilio Lozoya Austin How will the planned company reforms change Pemex’s corporate structure? EMILIO LOZOYA AUSTIN: The reforms establish the very clear goal of transforming Pemex within two years into a productive state enterprise. To do this, Pemex will reform its strategy, structure, business processes and corporate culture, something it has not done since 1992. The most important changes recently approved by the administrative council include transforming the four subsidiaries…

Analysis

In the pipeline: Gas production and exports look set for an upswing
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Bolstered by its substantial natural resources, Mexico’s gas production and exports are expected to rise in the longer term as a result of new investment triggered by the government’s energy liberalisation policies, and a general recovery of hydrocarbons prices from their low point in 2015. According to estimates by BP “Statistical Review of World Energy 2015”, Mexico had 12.3trn cu feet of proven natural gas reserves at the end of 2014 and one of the world’s largest shale oil endowments,…

Analysis

Extraction protraction: Despite major hurdles, shale still holds great potential
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At first glance, the story of Mexican shale oil and gas sounds frustrating. Like its northern neighbours Canada and the US, Mexico has some of the world’s largest shale deposits. The government’s deep energy reforms of 2013-14 created an environment attractive to international oil companies (IOCs) willing to invest the tens of billions of dollars needed to develop shale. But in 2014-15, just as the country seemed poised to unleash a shale revolution of its own, with the sale of exploration and…

Interview

Together we can: OBG talks to Alberto de la Fuente, Managing Director, Shell Mexico
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Interview:Alberto de la Fuente How do local content laws affect competiveness? ALBERTO DE LA FUENTE: At first sight it seems like Mexico learned a thing or two from the Brazilian experience, as the government has set very reasonable targets in terms of local content for shallow-water exploration. In other areas, such as deepwater, the government has recognised there is a lack of experience in the country, and therefore local content laws will be adapted to avoid damaging sector competitiveness.…