Energy
From The Report: Mexico 2014
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A key sector of the Mexican economy, the energy industry is set to undergo radical changes as a result of the structural reform passed by the government in 2013. The reform will open the nationalised oil industry to foreign investment, allow for open competition in the electricity market, enable private companies to build natural gas pipelines with more freedom, and will give producers of clean energy better access to customers. For the first time in decades, the energy reform is set to break the existing monopolies in the oil and electricity segments. While the government estimates the energy reform will add between 0.5% and 1% to GDP each year between 2014 and 2018, the end of the current administration’s term, this could be an overstatement of the short-term effects of the reform. Other estimates point to a boost to the economy of between 1.5% and 1.7% on average per year from 2017 to 2030, with a lesser benefit in the early years of this period and a larger one later on. This chapter includes interviews with Pedro Joaquín Coldwell, Minister of Energy; and Emilio Lozoya Austin, Director-General, Petróleos Mexicanos (PEMEX).

Articles from this Chapter

Overview

Change is in the air: Wide-ranging energy reform could redefine the sector and more
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There is no part of the Mexican energy industry that will not be changed by 2013’s reform. The reform will open the nationalised oil industry to foreign investment, allow for open competition in the electricity market, enable private companies to build natural gas pipelines with more freedom, and will give producers of clean energy better access to customers. The constitutional amendments that serve as the reform’s foundation were passed in December 2013. In April 2014, the proposals for the…

Analysis

Powering up: While reform spells opportunity, infrastructure upgrades are needed
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Like the oil industry, electricity in Mexico has been dominated by a state-owned company for a number of years. The Federal Electricity Commission (Comisión Federal de Electricidad, CFE) is the sole provider of transmission and distribution services and also controls all output, producing 70% of electricity on its own and sub-contracting the other 30% to private firms. Energy reform will break the CFE’s monopoly by transferring control of the grid to a new, independent regulator, the National…

Analysis

Shale potential: Unlocking resources and playing catch up with its northern neighbour
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There is no difference in geology between the Mexican and US sides of the Texas border, but there is a difference in activity. South Texas is the centre of the US shale revolution. Thousands of shale wells have been dug and their production has enriched the region. The Eagle Ford Formation (EFF), where most of Texas’s wells are located, stretches into Mexico, but on that side of the border, the vast shale reserves have barely been touched. The discrepancy results from the fact that Petróleos Mexicanos…

Interview

OBG talks to Pedro Joaquín Coldwell, Minister of Energy
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Interview:Pedro Joaquín Coldwell What exploration measures have been taken to help halt the further decline of oil production? PEDRO JOAQUÍN COLDWELL: Had the constitutional energy reform not been passed, Mexico would have run the risk of becoming completely dependent on imported energy in just a few years. With the reform, this trend will be steadily reversed. Even though we invest more and more in the exploration and extraction of hydrocarbons, oil production fell from 3.4m barrels a…

Interview

OBG talks to Emilio Lozoya Austin, Director-General, Petróleos Mexicanos (PEMEX)
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Interview:Emilio Lozoya Austin How drastically could the planned energy reforms affect the sector and PEMEX? EMILIO LOZOYA AUSTIN: The energy reform will open Mexico’s oil and gas industry to a competitive market for the first time in 75 years. This will make PEMEX’s corporate structure, unchanged since 1992, obsolete. To adapt, PEMEX needs to undergo restructuring to become a more efficient and transparent company. The energy bill also opens the sector to investments from international…