Pemex Reforms Could Open Doors to Mexican Oil Fields
Pemex Reforms Could Open Doors to Mexican Oil Fields
AS/COA’s Eric Farnsworth calls the reforms a “fundamental shift in terms of Mexican political opinion” at allowing international companies to invest in the country's oil and gas industry.
Oil and gas producers from Canada and around the world could gain access to crude oil in Mexico, a market that’s been closed for 75 years, if a new proposal by the Mexican president wins approval.
President Enrique Pena Nieto presented a bill to Congress today that would restructure Pemex and end the state oil company’s monopoly.
But the change requires a change to the Mexican constitution and restructuring of a company plagued by pension liabilities, corruption, outdated technology and falling production....
Fundamental shift
Eric Farnsworth, vice president at Council of the Americas in Washington, D.C., calls the measures a seismic shift in Mexican attitudes.
"This is a fundamental shift in terms of Mexican political opinion toward the hydrocarbon sector and it would allow for the first time international and companies from Canada, the U.S. and elsewhere to invest directly in Mexico’s oil and gas sector and also in the power generation sector," he said in an interview with CBC's Lang O'Leary Exchange.
Farnsworth says Mexicans may finally have realized that Pemex is in such bad shape from lack of modernization that something has to be done. He says the firm has been starved of investment capital to feed the state piggybank and Mexico will have to set the right conditions to attract international capital.
"Mexico is looking at a competitive situation — they are going to have to attract resources that, frankly, would go to other places. That’s the key for them — they are going to have to open up wide enough and address [risk] enough that at the end of the day companies will say ‘This may be a risky alternative, but the upside is great enough we can take that risk,” Farnsworth said....
