Welcome!

News Feed Item

Former U.S. Ambassador Antonio Garza on Mexico's Energy Reforms

Mexico: An Energy Future

AUSTIN, TX--(Marketwired - December 18, 2013) - Mexico took a giant leap toward a new economic future last week with Congressional passage of a remarkably bold energy reform bill. Both euphoria and hand wringing ensued as Mexico observers and the Mexican people began contemplating the significance to the country of opening its long-protected oil and gas industry.

These emotional reactions, though deeply felt, will soon subside; giving way to the realization that there's much hard work ahead and that the road to reform is long and potentially strewn with obstacles.

But there's every reason to believe that President Enrique Peña Nieto's administration is attuned to the challenges. After all, there's been quite a lot of discussion -- albeit largely of the academic sort -- about how to revamp the sector. And Mexico surely stands to benefit from the examples of previous reform efforts in the hemisphere and beyond, namely in Brazil, Colombia, Peru and Norway.

The measure that emerged from Congress last week barely resembled the initial, cautious, proposal presented in August by the governing Party of the Institutional Revolution (PRI). That middle-of-the-road effort, which would have introduced profit-sharing agreements, was judged unappealing by the foreign firms whose investment and expertise Mexico's energy sector desperately needs to overcome its woes.

And so a new, more transformative piece of legislation was produced by what is known as "the art of political compromise." It's a craft that has been evident throughout Peña Nieto's first year in office, facilitated by the three-party accord known as the Pact for Mexico. But with the leftist Party of the Democratic Revolution (PRD) unwilling to negotiate meaningful change for the energy sector, the Pact inevitably dissolved. The PRI and the conservative National Action Party (PAN) remained at the bargaining table and together produced a reform more far-reaching than many analysts had thought possible. 

The approved legislation reforms Mexico's constitution by ending the oil and electricity monopolies (PEMEX and CFE, the Federal Electricity Commission); allowing private oil companies to explore for and produce oil and gas under a variety of contracts, including services, production or profit-sharing, and licenses; creating a sovereign fund to manage oil revenues; and, revising the nature and governance of the PEMEX board.

It took less than a week for the constitutional changes to be ratified by a majority of state legislatures: 17 of Mexico's 31 states approved the reform within five days of its Congressional passage. Senate recognition of the state actions and the President's signature will soon follow.

The proximate step will be far more challenging: translating constitutional reforms into workable policies. This secondary legislation, also called implementing laws, will stipulate the policy framework and legal processes required to carry out the reform.

These measures are highly anticipated and potentially will set the stage for as much as $20 billion a year in new investment in the sector. They must clarify roles (for all actors in the sector, from private companies and regulators to PEMEX, CFE and other government entities) and establish the mechanisms and procedures by which the country's energy resources will be developed and distributed. Among the details to be addressed are which oil and gas blocs will be developed, when, and under which terms and how costs will be established and recuperated.

Adding to this daunting task is an aggressive time frame stipulated in the reform for developing the follow-on laws and regulations, and pressure from continued political opposition from the left can't be dismissed as a potential complication.

Still, Mexico has taken the crucial first step toward reforming its energy sector. The arduous work of building a framework and policies that can bring Mexico's energy sector into the modern era and enable the country to realize its great economic promise is underway. The excitement of this moment is real, for Mexico and anyone concerned about this hemisphere's future.

Antonio Garza is a former U.S. Ambassador to Mexico, Counsel in the Mexico City office of White & Case and Chairman of Vianovo Ventures. He can be found online at www.tonygarza.com and on Twitter, @aogarza.

The following files are available for download:

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Adobe is changing the world though digital experiences. Adobe helps customers develop and deliver high-impact experiences that differentiate brands, build loyalty, and drive revenue across every screen, including smartphones, computers, tablets and TVs. Adobe content solutions are used daily by millions of companies worldwide-from publishers and broadcasters, to enterprises, marketing agencies and household-name brands. Building on its established design leadership, Adobe enables customers not o...
Everyone knows that truly innovative companies learn as they go along, pushing boundaries in response to market changes and demands. What's more of a mystery is how to balance innovation on a fresh platform built from scratch with the legacy tech stack, product suite and customers that continue to serve as the business' foundation. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, will discuss why and how ReadyTalk diverted from healthy revenue an...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform and how we integrate our thinking to solve complicated problems. In his session at 19th Cloud Expo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm ...
Digitization is driving a fundamental change in society that is transforming the way businesses work with their customers, their supply chains and their people. Digital transformation leverages DevOps best practices, such as Agile Parallel Development, Continuous Delivery and Agile Operations to capitalize on opportunities and create competitive differentiation in the application economy. However, information security has been notably absent from the DevOps movement. Speed doesn’t have to negat...
Leading cloud-centric IT organizations are establishing core capabilities to improve productivity, control costs and provide a highly responsive end-user experience. Key steps along this journey include creating an end-user cloud services catalog, automating workflows and provisioning, and implementing IT showback and chargeback. In his session at 19th Cloud Expo, Mark Jamensky, executive vice president of Products at Embotics, will walk attendees through an in-depth case study of enterprise I...
Without a clear strategy for cost control and an architecture designed with cloud services in mind, costs and operational performance can quickly get out of control. To avoid multiple architectural redesigns requires extensive thought and planning. Boundary (now part of BMC) launched a new public-facing multi-tenant high resolution monitoring service on Amazon AWS two years ago, facing challenges and learning best practices in the early days of the new service. In his session at 19th Cloud Exp...
The Transparent Cloud-computing Consortium (abbreviation: T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data processing High speed and high quality networks, and dramatic improvements in computer processing capabilities, have greatly changed the nature of applications and made the storing and processing of data on the network commonplace.
Your business relies on your applications and your employees to stay in business. Whether you develop apps or manage business critical apps that help fuel your business, what happens when users experience sluggish performance? You and all technical teams across the organization – application, network, operations, among others, as well as, those outside the organization, like ISPs and third-party providers – are called in to solve the problem.
Digital transformation is too big and important for our future success to not understand the rules that apply to it. The first three rules for winning in this age of hyper-digital transformation are: Advantages in speed, analytics and operational tempos must be captured by implementing an optimized information logistics system (OILS) Real-time operational tempos (IT, people and business processes) must be achieved Businesses that can "analyze data and act and with speed" will dominate those t...
While DevOps promises a better and tighter integration among an organization’s development and operation teams and transforms an application life cycle into a continual deployment, Chef and Azure together provides a speedy, cost-effective and highly scalable vehicle for realizing the business values of this transformation. In his session at @DevOpsSummit at 19th Cloud Expo, Yung Chou, a Technology Evangelist at Microsoft, will present a unique opportunity to witness how Chef and Azure work tog...
Almost two-thirds of companies either have or soon will have IoT as the backbone of their business in 2016. However, IoT is far more complex than most firms expected. How can you not get trapped in the pitfalls? In his session at @ThingsExpo, Tony Shan, a renowned visionary and thought leader, will introduce a holistic method of IoTification, which is the process of IoTifying the existing technology and business models to adopt and leverage IoT. He will drill down to the components in this fra...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
As ridesharing competitors and enhanced services increase, notable changes are occurring in the transportation model. Despite the cost-effective means and flexibility of ridesharing, both drivers and users will need to be aware of the connected environment and how it will impact the ridesharing experience. In his session at @ThingsExpo, Timothy Evavold, Executive Director Automotive at Covisint, will discuss key challenges and solutions to powering a ride sharing and/or multimodal model in the a...
I'm a lonely sensor. I spend all day telling the world how I'm feeling, but none of the other sensors seem to care. I want to be connected. I want to build relationships with other sensors to be more useful for my human. I want my human to understand that when my friends next door are too hot for a while, I'll soon be flaming. And when all my friends go outside without me, I may be left behind. Don't just log my data; use the relationship graph. In his session at @ThingsExpo, Ryan Boyd, Engi...