July 29, 2014

Mexico Closer to Opening Energy Sector

Reforms aimed at dissolving government control.

Legislators in the Mexican government signed off on most of the rules meant to open an oil and gas market controlled by a state monopoly.

The government of President Enrique Peña Nieto has proposed changes to the way the oil and natural gas sector is governed. The measures, if passed in their entirety, open a Mexican energy sector controlled by state-run Petroleos Mexicanos, known also as Pemex, since the 1930s.


Members of the Mexican Senate voted 89 to 27 in favor of a measure that would convert Pemex and the state-owned Federal Electricity Commission into semi-private operations. The measure would open the door for both companies to form partnerships with private companies.

Mexico's president is struggling to overhaul a sagging energy sector. His government set a goal of producing 3.5 million barrels of oil per day by 2025, which would be a 40 percent increase from 2013 levels.

The oil sector accounted for 13 percent of the country's export earnings last year. The country, a top 10 oil producer, had an estimated 10 billion barrels of proven oil reserves as of 2013.

A January report from financial services firm BBVA Compass, based in Birmingham, Ala., concluded the investment and new projects expected to flow from Mexico's energy reforms could mean 2.5 million new jobs in Mexico by 2025.




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