US Energy Companies Poised to Benefit from Mexico Energy Reform

Article title
US energy companies are positioned to benefit from Mexico's energy reform, analysts say.

Mexico's energy reforms will create "abundant opportunities" for U.S. energy companies and shrink the socioeconomic disparities between Texas' booming metro areas and its border cities, according to the latest BBVA Compass research.

"The 2013 reform promises to create abundant opportunities for private companies that have the technology and expertise to revive Mexico's hydrocarbons and electricity industries," BBVA Compass economist Marcial Nava wrote in his report on the reforms.

Under the reform, the state would retain ownership of hydrocarbons beneath the surface and Petroleos Mexicanos (PEMEX) and Comision Federal de Electricidad (CFE) would not be privatized. However, the new legal framework would allow the ownership of hydrocarbons at the wellhead through profit-sharing, production sharing and license sharing contracts. BBVA Compass estimates that the reform could increase private direct investment inflows into Mexico by $20 billion to $30 billion per year, or 1.5 to 2.3 percent of Mexico’s gross domestic product.

While secondary laws are still needed to translate the reforms into a workable framework and legal processes, U.S. oilfield services, shale gas and infrastructure companies, among others, stand to benefit from the reforms, Nava said in the Jan. 22 report.

Deepwater will likely receive the initial influx of private investment; these inflows should start to arrive later this year or in 2015 if the framework and legal processes required to carry out the reform are implemented this year.

PEMEX will have the right to determine what acreage it wants, and the Energy Ministry (SENR) will determine whether it can keep assets based on whether PEMEX has the technical and financial resources to develop them. This process began immediately after the reform legislation was ratified and will continue through this year. PEMEX will retain over 50 percent of the acreage.

Once the secondary laws and Round Zero is allocated, PEMEX and private joint venture partners are expected to bid two years from now deepwater and ultra-deepwater Gulf of Mexico fields and Mexico’s onshore shale resources in north and east-central Mexico under the same rules and tax treatments.


1234

View Full Article

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com

WHAT DO YOU THINK?

Post a Comment Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE



Most Popular Articles

From the Career Center
Jobs that may interest you
Lead Control Systems Engineer | Great Package | 10yr Project
Expertise: Electrical Engineering|Engineering Manager|Instrument & Controls Engineer
Location: USA
 
Document Controller
Expertise: Document Control
Location: Malden, MA
 
Account Manager - Coatings
Expertise: Business Development|Sales & Marketing|Technical Sales
Location: Houston, TX
 
search for more jobs

Brent Crude Oil : $50.68/BBL 0.35%
Light Crude Oil : $46.75/BBL 1.08%
Natural Gas : $2.73/MMBtu 3.01%
Updated in last 24 hours