Mexico Seeks Quick Energy Reforms

Mexico Seeks Quick Energy ReformsMexico Seeks Quick Energy Reforms

Mexico is moving quickly to implement its aggressive energy reforms, two officials of its government told a conference at the Woodrow Wilson International Center for Scholars.

 “[Electricity] generation is going to be open for anyone to participate in, including state oil firm Petroleos Mexicanos (Pemex) and anyone from the private sector, under long-term contracts,” Enrique Ochoa Reza, director general of Mexico’s Federal Electricity Commission (CFE) was quoted by Oil & Gas Journal as saying. “That producer which generates power cheaper will be dispatched first. That’s an important incentive.”

Constructing a true national natural gas pipeline system with interconnections, which the current 11,342 km network lacks, will be a top priority, Ochoa said. “Our goal is to increase pipelines by 32% in the next 2 years.” He said, “Pipelines under construction in Pacific coastal states will be linked to the center of the country. Creating a truly integrated national gas pipeline system is very important, because it’s going to help make our national power system more competitive.” Ochoa emphasized, “We will not have a natural gas monopoly. If we need more gas, we’ll have multiple producers in Mexico; a competitive gas transportation system under Cenegas, a new entity; and a regulatory system which will facilitate construction of new pipelines by other entities. It’s what Europe and the US have, and Mexico will have it soon.”

  Initial Emphasis

Mexico’s crude oil production has fallen 1 million b/d in the last decade, Melgar noted. “We want to increase our oil and gas production, which is why we’re starting in shallow water with relatively light crude,” said Maria de Lourdes Melgar Palacios, hydrocarbons undersecretary in the country’s hydrocarbons secretariat. "If we work fast, we’ll see the first oil around 2015-16.” The country also has a diversified set of deposits that Pemex did not have the resources to develop, include a giant field with ultra-heavy crude, and plans to revisit mature fields onshore and offshore, she said. “In this first round, we’re also putting a little bit of shale gas and oil on the table.”

  ‘Absolutely on Track’

“It’s more competitive than Brazil, and more stable than Venezuela,” said David L. Goldwyn, president of Goldwyn Global Strategies LLC and a nonresident senior energy fellow at the Atlantic Council. “For competitive terms and local content, it’s the best in class.” He said, “The next 4 months will be very critical. The bellwethers to watch are the capacity of organizations to get the funding they need, the first contracts that come in, and investments. A lot of the reforms in deepwater President [Enrico Pena Nieto] has initiated won’t materialize until after he’s left office. It will be important to see who is willing to invest in infrastructure in the meantime.”