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Mexico Joint Energy Proposal to Break $95 Billion Monopoly

Senators from Mexico’s two biggest political parties proposed a bill to break the nation’s 75-year oil monopoly by amending the constitution to allow production sharing contracts and licenses for outside producers. The joint legislation would allow private companies such as Exxon Mobil Corp. (XOM) to develop fields in the largest unexplored crude area after the Arctic Circle as state-owned Petroleos Mexicanos seeks to reverse eight years of falling output. The bill would allow companies to log crude reserves for accounting purposes, which may make it easier to secure project financing . The bill comes after four months of political wrangling following the release of separate plans from President Enrique Pena Nieto’s ruling Institutional Revolutionary Party , or PRI, and the opposition National Action Party , known as the PAN. The government says an energy overhaul would lift economic growth 1 percentage point by 2018 and reverse oil production losses. […]

Posted On : Published By : Tom Whipple
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Big Oil to Get Brazil-Like Terms in Plan to End Mexico Monopoly

Global oil majors from Exxon Mobil Corp. to Chevron Corp . are about to get their clearest indication yet of how far Mexican lawmakers will go to lure them into the world’s second-largest unexplored crude-producing region. Senate committees will begin debating a bill to end a seven-decade state oil monopoly as soon as today. On the agenda is a proposal by members of President Enrique Pena Nieto ’s Institutional Revolutionary Party, or PRI, and the opposition National Action Party, or PAN, to extend a profit-sharing model unveiled in August by also allowing production sharing or a license model used in Brazil, according to two people with knowledge of the talks who asked not to be named as the plan is not yet public. The proposal seeks to offer companies more control over riskier fields and attract enough investment to halt a decade-long output slump in Mexico’s $95 billion industry, […]

Posted On : Published By : Tom Whipple
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US natural gas exports into Mexico to continue growth

Natural gas imports into Mexico from the US—its largest supplier—increased 24% to 1.69 bcfd in 2012, according to data from the US Energy Information Administration cited by Mayer Brown Practices in a legal update on US Federal Energy Regulatory Commission permitting of NET Mexico Pipeline Partners LLC’s cross-border gas export project. FERC issued a Presidential Permit and Granting Authorization Nov. 8 (under Section 3 of the Natural Gas Act) allowing NET Mexico, a subsidiary of NET Midstream, Houston, to build a 2.1-bcfd gas export site at the US-Mexico border. According to the FERC order, the export hub will be supplied by a 120-mile, 42-in OD intrastate pipeline NET Mexico is planning to build from the Agua Dulce Hub in Nueces County, Tex. Exports would enter Mexico’s Los Ramones Pipeline, which has yet to be built ( OGJ Online, May 21, 2013 ). The FERC order adds that the export […]

Posted On : Published By : Tom Whipple
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Fight begins over privatizing Mexico’s oil monopoly

Mexico oil MEXICO CITY (AP) — The fight to revamp Mexico’s moribund, state-run oil industry could start as early as this week with a Senate proposal to allow private access to the country’s oil, a nationalist symbol that for decades has been fiercely protected by the constitution from possible profiteering by foreign companies. Legislators from the two parties supporting an oil overhaul say they support constitutional changes to allow the government to grant licenses and share oil and profits with multinational giants such as Exxon or Chevron. The anticipated proposal would go much further than the plan introduced by President Enrique Pena Nieto in August, which would have allowed the sharing of profits but not of oil. Javier Trevino, a legislator from Pena Nieto’s Institutional Revolutionary Party, said his party has struck an agreement after several weeks of talks with the opposition National Action Party, which has favored stronger […]

Posted On : Published By : Tom Whipple
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Fight begins over privatizing Mexico's oil monopoly

Mexico oil MEXICO CITY (AP) — The fight to revamp Mexico’s moribund, state-run oil industry could start as early as this week with a Senate proposal to allow private access to the country’s oil, a nationalist symbol that for decades has been fiercely protected by the constitution from possible profiteering by foreign companies. Legislators from the two parties supporting an oil overhaul say they support constitutional changes to allow the government to grant licenses and share oil and profits with multinational giants such as Exxon or Chevron. The anticipated proposal would go much further than the plan introduced by President Enrique Pena Nieto in August, which would have allowed the sharing of profits but not of oil. Javier Trevino, a legislator from Pena Nieto’s Institutional Revolutionary Party, said his party has struck an agreement after several weeks of talks with the opposition National Action Party, which has favored stronger […]

Posted On : Published By : Tom Whipple
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Will Mexico amend its constitution to drill for oil?

M exico’s oil industry is in a bad way. The country’s once massive petroleum reserves have basically been sucked dry. Production is plummeting , and the state oil monopoly, Petróleos Mexicanos (Pemex) is hemorrhaging money . Unless something is done soon, for the first time in decades Mexico could fall from its coveted spot among the world’s top 10 oil producers. At the same time that classic oil drilling is stalling, the country is sitting on top of fuel sources that are harder to tap: massive amounts of shale oil and gas , as well as deep-water reserves in the Gulf—just like the ones the United States drills. (What, you thought those geological formations stopped at the border?) So why isn’t Mexico going after the same resources that have been so lucrative for its northern neighbor? According to President Enrique Peña Nieto, there’s just one thing standing in the […]

Posted On : Published By : Tom Whipple
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Mexico Seeks Deeper Revamp of Energy Sector

MEXICO CITY—President Enrique Peña Nieto is negotiating a deeper revamp of the country’s nationalistic energy laws than his initial proposal this summer, aiming to put Mexico’s laws on a par with other top oil producers and to attract greater interest from private oil companies. Top government officials and their counterparts in the conservative National Action Party, or PAN, are in advanced talks to seal a deal that would give private energy firms a share in oil production and licenses designed to tap shale gas deposits and ultra deep-water oil, said three people involved in the negotiations, who cautioned that hurdles remained. Mr. Peña Nieto this summer became the first Mexican president in decades to formally propose changing the country’s constitution to end the state monopoly on oil and gas. That monopoly dates back to 1938, when former President Lázaro Cárdenas expropriated the oil industry and turned petroleum in a […]

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The next Mexican revolution in oil and gas

Nick Butler is Visiting Professor and Chair of the Kings Policy Institute at Kings College London. He spent 29 years with BP, including five years as Group Vice President for Policy and Strategy Development at BP from 2002 to 2006. He has also served as Senior Policy Adviser at No 10, Chairman of the Centre for European Reform and Treasurer of the Fabian Society. Nick Butler is an investor in, and an adviser to a number of companies and institutions in the energy business. The views expressed are solely those of Mr Butler. This material is not intended to provide and should not be relied upon for investment advice or recommendations. Readers are urged to seek professional advice before making any investment.

Posted On : Published By : Tom Whipple
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Mexican Cartel Retaliates Against Civilians

MEXICO CITY—Crime groups launched coordinated attacks on a regional electricity grid that left hundreds of thousands of people without electricity and several dead in a rare case of civilians being deliberately targeted in Mexico’s drug war. The attacks in Mexico’s southern Michoacán state on Sunday morning left some 420,000 residents, about 10% of the state’s population, without electricity, authorities said. The outages also happened in Morelia city, where an international film festival attended by the directors Quentin Tarantino and Alfonso Cuarón was under way. On Monday, as electricity mostly returned, the government didn’t specify how exactly the attacks shut down the system, only that armed men fired bullets and threw Molotov cocktails at electricity stations throughout the state, leaving 11 towns and cities without power. Officials confirmed that five people were killed in attacks, but didn’t say how or why. A resident and local media reports said a crime […]

Posted On : Published By : Tom Whipple