March 4, 2014
The chief executive officer of Mexico’s state-run oil company Petroleos Mexicanos invited the world to explore for shale deposits in its recently opened energy sector. “Mexico holds about the sixth largest shale gas reserves in the world,” Emilio Lozoya said in a speech yesterday at the CERA energy conference in Houston. “You’re more than welcome to come and join the exploration opportunity,” he told a crowd of representatives from the world’s largest energy companies, such as Chevron Corp. and Exxon Mobil Corp.
The crude production monopoly held since 1938 by Pemex, as the state-run company is known, ended on Dec. 20. Pemex aims to attract as much as $1 trillion in energy investment during the next decade to exploit the biggest proven oil reserves in Latin America after Venezuela and Brazil, he said.
February 24, 2014
The keenly awaited fine print that will flesh out a landmark Mexican energy reform will not require state oil giant Pemex to take minimum stakes in contracts and will set out national sourcing requirements, leading lawmakers said on Wednesday.
Mexico’s Congress in December approved the reform that ends Pemex’s 75-year monopoly on crude production and aims to attract significant new streams of private investment into the country’s lumbering oil, gas and electricity sectors.
“Pemex will participate (in future exploration and production contracts) if it wants to participate,” said Marco Antonio Bernal, who heads the energy committee in the lower chamber of Congress and belongs to President Enrique Pena Nieto’s ruling Institutional Revolutionary Party.
February 11, 2014
The Wall Street Journal, 2/7/14
The director of the exploration and production division of Mexico’s state-owned oil company Petróleos Mexicanos resigned Friday, and a deputy director was tapped to take over as the oil-and-gas monopoly gears up to face private competition for the first time in 75 years.
Carlos Morales, 59, had run the powerful production division at Pemex for a decade during a time when the company reached peak crude-oil production of about 3.4 million barrels a day in 2004. Oil output has since fallen to 2.5 million barrels a day primarily because of the steep decline of its Cantarell field.
Pemex, as the company is known, said that Chief Executive Emilio Lozoya lauded Mr. Morales for his 30 years of service. The deputy director of planning and evaluation for the production division, Gustavo Hernández García, 55, will take over Mr. Morales’s post on an interim basis, Pemex said.
February 4, 2014
Mexico’s energy reform is a long-term positive for the country and Petroleos Mexicano’s (Pemex) credit quality, while Comision Federal de Electricidad (CFE) faces margin pressures, according to a new Fitch Ratings report. ‘Fitch does not expect Pemex’s ratings to change due to the energy reform, but the company will benefit from the ability to find partners to share exploration risks and budgetary independence,’ said Lucas Aristizabal, Director.
Overall, the energy reform is a positive for Mexico’s competitiveness. Industrial and commercial electricity users with large enough loads to enter into bilateral contracts with independent power producers stand to see electricity costs decline as a result of the energy reform, assuming new generators are able to secure low cost natural gas from the United States or incremental gas production in Mexico. The rationale behind the ongoing energy reform is to attracting private investors in order to increase the country’s oil and gas production. Mexico has been severely underexplored, while production significantly decreased during the past decade, due to Pemex’s low investing ability. Mexico has estimated resources of approximately 159 billion barrels of oil equivalent (boe) with proved reserves (1P) accounting for 13.7 billion boe.
February 4, 2014
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.
January 29, 2014
As Mexico moves to open its energy sector to international companies, the new investments and increased activity could mean a bonanza for border towns on both sides, attracting as much as $1.2 trillion in economic activity to the region in the next decade, according to a BBVA Compass economist.
The Mexican energy reforms are a series a series of constitutional changes passe din December that ends the monopoly of Mexican oil company Pemex and opens all segments of the energy sector to private firms. Mexico’s congress currently is debating the supporting rules that will provide key information on how the new policy will be implemented and regulated.
January 28, 2014
Mexico’s Energy Reform establishes relevant regulatory and administrative changes with regard to environmental protection that may have a significant impact on the operations of private parties participating in the energy sector. Through the amendment of articles 25, 27, and 28 of the Mexican Constitution, the Decree opens up the possibility for private parties to participate in the Mexican energy sector, specifically in activities related to: (i) the generation and commercialization of electric energy and (ii) the exploration and extraction of oil and other hydrocarbons.1
As a result, both the Federal Electricity Commission (Comisión Federal de Electricidad or “CFE”) and Petróleos Mexicanos (“PEMEX”) transform from decentralized operations to productive state companies whose objective is “creating economic value and increasing the Nation’s income,” activities that now will have to be done in cooperation with other public and private companies. In that respect, the Energy Reform contains significant environmental elements to be developed within the next months with potential impact for the private sector, which are generally described below.
January 28, 2014
Oil & Gas Journal, 1/27/14
International oil and gas companies keenly await more details as Mexico’s Congress drafts and debates secondary laws to implement its recently passed energy reforms. Opinions vary on whether Mexico can meet the deadlines it scheduled for secondary laws and the creation of various regulatory groups. On Dec. 21, 2013, Mexico’s sweeping energy reform became law, representing the most significant overhaul of Mexico’s oil, gas, and electric industries since 1938. Many ambiguities have yet to be resolved, various energy attorneys and consultants told Oil & Gas Journal.
Secondary legislation will stipulate contract logistics and tax reforms as Mexico ends the state-owned monopolies of oil company Petroleos Mexicanos (Pemex) and electric company Comision Federal de Electricidad (CFE). Companies outside Pemex are to be allowed to participate in exploration and production activities, breaking the decades-old Pemex monopoly. The reforms also will allow direct private investment in Mexico’s midstream and downstream.
January 23, 2014
Infraestructura Energetica Nova (IENOVA*) SAB, the Mexican unit of Sempra Energy (SRE), is being forecast by analysts as a winner because of energy legislation that helps it extend last year’s growth and a 53 percent stock gain.
Ienova is expected to be an “early beneficiary” of the energy law enacted by Mexico’s President Enrique Pena Nieto last month that will allow foreign companies to produce crude in Mexico for the first time since 1938, Credit Suisse analysts led by Vanessa Quiroga said in a Dec. 16 note to clients. Opportunities to enter oil and natural gas transportation and storage as well as electricity transmission and distribution will probably keep driving Ienova shares, according to Curt Launer, an analyst at Deutsche Bank AG. He rates the shares a buy with a target price of 67 pesos.
The second part of Mexico’s energy law will be debated in congress next month. Secondary legislation will determine legal specifics for contracts of foreign oil companies entering Mexico such as Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX)
“Energy reform brings in new capital and new drilling and makes Mexico able to grow its own natural gas production,” Launer said in a Jan. 21 phone interview from New York. “Ienova is very well positioned to be the natural gas processor, to be the liquids processor, and the joint venture they already have with Pemex looks like it would be a big winner in any of those circumstances.”
January 16, 2014
Petroleos Mexicanos, the state-owned oil company, sold $3 billion of 30-year bonds, a record for an emerging-market corporate issuer, as laws opening up the country’s energy sector to outside investment spur demand.
Pemex, as the company is known, issued the securities to yield 6.43 percent. The producer also sold $500 million of notes due in 2019 to yield 3.125 percent and $500 million of debt due in 2024 to yield 4.945 percent.
While Mexico’s energy law enacted last month ends Pemex’s 75-year monopoly on oil production in the country, the government says the measure will leave the company with more money to invest in new drilling projects and estimates that its output could jump as much as 60 percent by 2025.