Big Oil to Get Brazil-Like Terms in Plan to End Mexico Monopoly

December 4, 2013

Bloomberg, 12/3/2013

oil pipeline150Global oil majors from Exxon Mobil Corp. to Chevron Corp.  are about to get the clearest indication yet of how far Mexican lawmakers will go to lure them into the largest unexplored crude area after the Artic Circle.

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 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, said two people with knowledge of the talks.

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The PRD Reform Proposal, Mexican Economy and Teachers’ protest – Weekly News Summary: August 23

August 23, 2013

coffee-by-flikr-user-samrevel1The Mexico Institute’s “Weekly News Summary,” released every Friday afternoon summarizes the week’s most prominent Mexico headlines published in the English-language press, as well as the most engaging opinion pieces by Mexican columnists.

What the English-language press had to say…

This week, the debate on the Energy reform continued and the PRD presented its reform proposal. Last Monday the PRD presented its own energy reform proposal, which did not include constitutional changes or a greater role for private companies. The Proposal seeks to loosen the government’s stranglehold over revenues from Pemex, where approximately 70 percent of profits go to fund the federal budget. The main speaker during the presentation was Cuauhtémoc Cardenas who said Pemex should be more independent by removing Cabinet secretaries and the oil workers union from the Pemex board seats they now hold. In the same regard, this week in an interview with The Wall Street Journal, Pemex’s CEO Emilio Lozoya announced the plans to set up a new company to explore and produce shale gas and deep-water oil in the U.S. as part of an ambitious strategy to turn around years of falling production. “The geology is similar and we can benefit from numerous areas of collaboration with international oil companies”, Lozoya said to the newspaper.

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Reform will boost oil investment by $10bn a year, says Pemex chief

August 16, 2013

energy -drilling_platform_in_seaFinancial Times, 8/15/2013

The head of Mexico’s state oil monopoly expects the energy reform announced this week to boost oil investment by $10bn a year, even though the foreign companies that it hopes to attract will not be able to book reserves.

While Enrique Peña Nieto, the president, is in charge of handling the delicate politics of the reform, Mr Lozoya is at the operational hard-end. It is a formidable task. Pemex, the world’s 10th-biggest oil producer, has over $127bn of revenues a year but also 160,000 employees, a powerful union, pays virtually all its profits to the government in taxes and has onerous pension obligations equivalent to 8 per cent of the Mexican gross domestic product.

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Weekly News Summary: March 1st

March 1, 2013

Coffee by Flikr user samrevel

The Mexico Institute’s “Weekly News Summary,” released every Friday afternoon summarizes the week’s most prominent Mexico headlines published in the English-language press, as well as the most engaging opinion pieces by Mexican columnists.

What the English-language press had to say…

This week, Elba Esther Gordillo, the powerful leader of the SNTE, Mexico’s teachers’ union was arrested for allegedly embezzling over $150 million in union funds to support her lavish lifestyle. The arrest shocked the nation and came only a day after President Enrique Peña Nieto signed into law a new education reform package. Many interpreted the move as an attempt by the Peña Nieto administration to reassert state authority over special interests, and as a warning to other industries (e.g. telecommunications and energy) that reform is on the way. NYT columnist Thomas Friedman gave much to talk about following two very optimistic pieces. He suggested Mexico will become a dominant economic power in the 21st century, and praised Mexico’s young ‘just do it’ generation of innovators and entrepreneurs. Pemex CEO Emilio Lozoya mirrored Mr. Friedman’s optimism by suggesting a reinvigorated energy sector will transform Mexico into the world’s “new Middle East.” Meanwhile, north of the border, looming automatic budget cuts prompted ICE to release several hundred low-risk immigrants from deportation centers across the country.

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Energy links seen boosting U.S. ties to Mexico

March 1, 2013

energy- oil pumps 2The Washington Times, 2/28/2013

A senior Obama administration official voiced optimism about the growing economic relationship between the U.S. and Mexico, stressing that energy sector ties between the two nations have “enormous potential for progress.” Assistant Secretary of State Roberta S. Jacobson told a congressional hearing Thursday that Washington’s overall approach to Latin American ties “is as much about seizing opportunities as it is about countering threats.”

Her remarks during a hearing of the House Committee on Foreign Affairs dovetailed with comments this week from a top Mexican official, who expressed optimism that the nation’s state-run oil monopoly, long managed as a closely held national asset, is on the verge of opening up to billions of dollars in foreign investment. Emilio Lozoya, the newly tapped chief of the monopoly — known as Pemex — told the Financial Times that he expects Mexican lawmakers to sign off as early as this summer on landmark changes to the sector proposed by recently elected Mexican President Enrique Pena Nieto.

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Pemex chief hails Mexico as ‘new Mideast’

February 28, 2013

energy - oil_rigFinancial Times, 2/27/2013

Emilio Lozoya jumps to his feet and marches over to a wall cabinet in his  44th floor office at Pemex’s headquarters in Mexico City. “You see this?” the fresh-faced 38-year-old Harvard graduate, asks, holding  up a glass vial with a pale liquid inside. “That’s pure gold. It’s as good as it  gets.”

Mr Lozoya’s optimism is infectious as he contemplates the high-grade oil  sample which he believes is emblematic of Mexico’s future. To ram home the  point, he produces an investment bank report which describes the hemisphere as  the world’s “new Middle East”. Shale gas production north of the border has already slashed energy costs in  the US, setting the stage for a manufacturing resurgence few imagined only five  years ago. Mr Lozoya believes the same is possible in Mexico.

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Mexico Moves on Energy in Economic Reset

February 14, 2013

Oil barrelsThe Wall Street Journal, 2/13/2013

For decades, Mexico’s energy policy has largely boiled down to exporting oil for cash to fund state spending. Now the new government is negotiating with rival political parties to curb that practice and instead use state monopoly Petróleos Mexicanos to a different end: cheaper energy, said Pemex CEO Emilio Lozoya. In an interview with The Wall Street Journal, the 38-year-old chief said the administration of President Enrique Peña Nieto was striving to overhaul tax and energy laws this year that Mr. Lozoya said would result in cheaper energy for consumers and companies that could drive a more competitive economy.

Now, the Mexican government relies on Pemex, one of the world’s biggest oil firms, for 35% of government spending, leaving the company with little left over to invest in areas like natural gas. Private companies, meanwhile, are largely barred from investing thanks to Mexico’s nationalistic energy laws. The result is an energy-rich country where companies often pay higher prices for energy than elsewhere. Mexico has large reserves of natural gas, for instance. But since Pemex doesn’t invest enough in gas, the country imports gas from the U.S.—raising costs to Mexican firms as they try to compete with global players like China.

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