Energy: Focus on Pemex raises hopes of private investors

energy - oil_rigFinancial Times, 6/27/2013

Although some Mexicans celebrated the anniversary of the 1938 nationalisation of their oil and gas this year, there are high hopes that the industry is on the brink of important constitutional reform. If successful, the reforms will enable an influx of private investment in long-needed projects. This could transform the industry and boost the country’s economic competitiveness after decades of meagre investment contributed to the gradual decline of Pemex, the state oil monopoly that was once a source of national pride.

“Pemex’s infrastructure is stretched to the limit,” says Marcelo Mereles, a partner at Mexico City-based energy consultancy, EnergeA. “There is desperate need for investment,” he says, explaining that Pemex has become increasingly inefficient, with debilitating losses and steep production declines. With the election of Enrique Peña Nieto as president, winds of change have begun to blow. The construction of a $2.4bn gas pipeline that will connect Mexico with the US is under way, representing the country’s biggest energy infrastructure investment in 40 years. The Ramones project plan is for it eventually to meet one-fifth of Mexico’s demand for natural gas.

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