Welcome!

News Feed Item

Former U.S. Ambassador to Mexico Offers Perspective on Broader Impact of Mexico's Landmark Energy Reforms

Opinion: Mexico's Energy Reform Enters New Stage

AUSTIN, TX--(Marketwired - August 11, 2014) - With final Congressional approvals now in place, Mexico and President Enrique Peña Nieto can begin celebrating the passage of the secondary legislation necessary to codify last year's constitutional amendments that opened the energy sector to private investment. The confetti will have barely hit the floor when the focus must necessarily turn to the crucial implementation period when the institutional and market architecture must go from blueprints to the hard work of build out.

The December 2013 constitutional reform ended the monopoly of the state-owned energy company Pemex and introduced private investment into every segment of Mexico's hydrocarbon sector. It also gave regulatory authority to a new set of autonomous, independently funded entities that will oversee licensing, safety, and environmental protection. Additionally, the reform required that Pemex be transformed into a "state productive enterprise" and established the Mexican Petroleum Fund, under the purview of the Central Bank, to manage contract payments and oil revenue. 

There are uncertainties about how Mexico's new energy model will function when fully implemented, but they appear to be within the norms of other energy sector openings and entirely normal for this type of major reform. And, as others have noted, Mexico derived a bonus from the timing of its overhaul in the form of 'lessons learned' and 'best practices.'

The secondary legislation enables the constitutional reforms and serves as the basis on which business and investment decisions will be made. The recently approved package of bills included some 21 legislative changes that detail the fiscal regime, including the contract terms for private-sector upstream participation, as well as the responsibilities of the regulatory entities and new transparency and anti-corruption measures that will govern the sector.

Though the legislation has finally passed after several marathon sessions does not erase every doubt and eliminate every uncertainty, reaction has been largely favorable. Energy analysts have termed the legislation "fairly pro-market" and worries articulated early on in the process -- notably about whether private parties would be able to book oil reserves or the expected revenue streams from them for financial reporting purposes -- appear to have been satisfactorily addressed.

In fact, observers have been nearly unanimous in commending the government for its thorough preparation and commitment to following best international practices. They also have made note of the strong pro-market attitude and stance of government officials and a demonstrable commitment to the investor community.

One aspect of the secondary legislation of particular interest internationally is the provision relating to national content requirements. The legislation specifies a 25 percent national content minimum for incoming companies by 2015, which will increase to 35 percent by 2025. Analysts note the requirements are very competitive with those specified by other countries and have commented that they are a "non-issue."

Texans, in particular, appreciate what it takes to build a vibrant energy sector and know that it requires much more than legislation. The sector's architecture and the infrastructure that allow it to function are fundamental, and Mexico has done well in meeting expectations in these areas thus far. But each stage of the transition is important, and as the proximate period entails a central role for Pemex, both as the primary domestic operator and as a potential transitional partner, some are voicing concerns. Quashing these doubts is a tall order for the company, which is not known as nimble or efficient and which must overcome perceptions of corruption, demonstrate its commitment to transparency, and rapidly move to a new rule-driven, competitive reality. 

The energy opening has been termed "Mexico's second revolution." While some may view the statement as an exaggeration, few would dispute that the reform will be transformational for the country. Given Mexico's immense existing and potential resource wealth, and its other favorable attributes (stable democracy, solid macroeconomic fundamentals, global economic integration, geographic proximity to the US, to name a few), the energy reform should attract international interest appropriate to the unique and unusual opportunity it presents. For those involved in a booming energy sector, the extension of North America's energy renaissance is a good thing.

Antonio Garza is a former U.S. ambassador to Mexico. He is counsel in the Mexico City office of White & Case and chairman of Vianovo Ventures. Ambassador Garza is 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
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
SYS-CON Events announced today that Hitrons Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Hitrons Solutions Inc. is distributor in the North American market for unique products and services of small and medium-size businesses, including cloud services and solutions, SEO marketing platforms, and mobile applications.
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
SYS-CON Events announced today that Adobe has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. 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 co...
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...
As the world moves toward more DevOps and Microservices, application deployment to the cloud ought to become a lot simpler. The Microservices architecture, which is the basis of many new age distributed systems such as OpenStack, NetFlix and so on, is at the heart of Cloud Foundry - a complete developer-oriented Platform as a Service (PaaS) that is IaaS agnostic and supports vCloud, OpenStack and AWS. Serverless computing is revolutionizing computing. In his session at 19th Cloud Expo, Raghav...
SYS-CON Events announced today that eCube Systems, a leading provider of middleware modernization, integration, and management solutions, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. eCube Systems offers a family of middleware evolution products and services that maximize return on technology investment by leveraging existing technical equity to meet evolving business needs. ...
Data is an unusual currency; it is not restricted by the same transactional limitations as money or people. In fact, the more that you leverage your data across multiple business use cases, the more valuable it becomes to the organization. And the same can be said about the organization’s analytics. In his session at 19th Cloud Expo, Bill Schmarzo, CTO for the Big Data Practice at EMC, will introduce a methodology for capturing, enriching and sharing data (and analytics) across the organizati...
Enterprises have forever faced challenges surrounding the sharing of their intellectual property. Emerging cloud adoption has made it more compelling for enterprises to digitize their content, making them available over a wide variety of devices across the Internet. In his session at 19th Cloud Expo, Santosh Ahuja, Director of Architecture at Impiger Technologies, will introduce various mechanisms provided by cloud service providers today to manage and share digital content in a secure manner....
SYS-CON Events announced today that Isomorphic Software will exhibit at DevOps Summit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Isomorphic Software provides the SmartClient HTML5/AJAX platform, the most advanced technology for building rich, cutting-edge enterprise web applications for desktop and mobile. SmartClient combines the productivity and performance of traditional desktop software with the simp...
With so much going on in this space you could be forgiven for thinking you were always working with yesterday’s technologies. So much change, so quickly. What do you do if you have to build a solution from the ground up that is expected to live in the field for at least 5-10 years? This is the challenge we faced when we looked to refresh our existing 10-year-old custom hardware stack to measure the fullness of trash cans and compactors.
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions wi...
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
With over 720 million Internet users and 40–50% CAGR, the Chinese Cloud Computing market has been booming. When talking about cloud computing, what are the Chinese users of cloud thinking about? What is the most powerful force that can push them to make the buying decision? How to tap into them? In his session at 18th Cloud Expo, Yu Hao, CEO and co-founder of SpeedyCloud, answered these questions and discussed the results of SpeedyCloud’s survey.
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...