Mapping as Mexico Opens for Exploration

10/7/2015 The New York Times

MEXICO CITY —Sediment_in_the_Gulf_of_Mexico_(2) Now that Mexico’s potential oil and gas riches are open to outside investment, how does the industry figure out what’s there?

North of an east-west line across the Gulf of Mexico are United States waters, where the bedrock deep below the ocean floor has proved to hold vast reservoirs of oil and gas. But south of that line, there is very little information.

Geologists suspect that Mexico’s Gulf waters hold similar resources, but they lack the crucial first step in oil exploration, the seismic data that allows them to develop a picture of what lies beneath.

Until now, whatever seismic data existed was closely held by Pemex, the state-owned oil company, which commissioned the studies for itself. But that is all starting to change.

Not only did Mexico’s 2013 energy reform end Pemex’s monopoly on exploration and production, it also ended its monopoly on information.

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Mexico central bank sees low inflation impact from weak peso

10/5/2015 Reuters

5504964078_df874cacb5_zMost of Mexico’s central bankers think that economic growth remains sluggish and see few signs so far that a weak peso has hit inflation, suggesting they could hold interest rates steady in the coming months.

Central bank board members voted 5 to 0 at their Sept. 21 meeting to hold their benchmark rate at a record low of 3.0 percent, minutes showed on Monday.

Minutes showed that most policymakers noted there was only “low passthrough” from the weak peso to consumer prices so far, which backs expectations Mexico will hold rates until the U.S. Federal Fed lifts borrowing costs.

Mexico’s peso gained for a second session in a row on Monday after weak U.S. jobs data on Friday backed bets that the Fed could wait until next year to raise borrowing costs.

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Mexico to Create Economic Zones to Develop Poor Southern States

Wall Street Journal 9/29/2015

shutterstock_72758224MEXICO CITY—Mexican President Enrique Peña Nieto on Tuesday unveiled a legislative proposal to create special economic zones in Mexico’s poorer southern states, which have historically lagged behind the rest of the country in education and living standards.

The zones would include tax incentives for companies investing in the designated areas, trade facilities and duty-free customs benefits, as well as streamlining of regulatory processes. The zones would also see increased infrastructure investment, such as in energy and telecommunications.

People in southern states have long been recipients of government poverty relief efforts, although those handout programs are the same for all, said Viridiana Rios, head of México, ¿Cómo Vamos?, a think tank that keeps tabs on Mexico’s economic, social and political performance. “But this is the first time there has been a different policy for a particular area.”

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Mexico Awards Three Areas in Oil Auction

Wall Street Journal 9/30/2015

energy -drilling_platform_in_seaMEXICO CITY—The Mexican government on Wednesday awarded three of the five areas of oil and gas reserves put out to bid in its second oil auction since opening the industry to private and foreign investment.

The companies that submitted winning bids for the fields containing light oil and gas in the southern Gulf of Mexico were Italy’s ENI International, Pan American Energy of Argentina in consortium with E&P Hidrocarburos y Servicios, and Fieldwood Energy of the U.S. in consortium with Mexico’s Petrobal.

In a first auction of exploratory blocks in July, just two of the 14 blocks were awarded. The poor results of that auction led the government to improve the terms for the second auction and to announce ahead of time the minimum bids that the government would accept for each area.

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Mexico announces import duties on steel products for six months

Reuters 9/30/2015

via Flickr - Dave Parker
via Flickr – Dave Parker

Mexico on Tuesday announced new levies for six months to protect its steel industry from a flood of low-priced imports from countries including China.

A 15-percent increase in the duties would apply to five types of products including cold-rolled steel, hot-rolled steel, wire rod, steel sheet and plate from countries that do not have free trade agreements with Mexico, the economy ministry said.

China does not have such an agreement with Mexico.

Mexico said earlier this month it would investigate whether China was dumping steel wire rod into the country following a request from three firms which complained cheap imports were hurting the local industry.

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The Two Mexicos

The Economist 9/19/2015

Innovation2“IN ESTABLISHING the rule of law, the first five centuries are always the hardest.” For much of the past two decades, that quip by Gordon Brown, a former British prime minister, has seemed not just dour, but wrong. Buoyed by China, by trade growth and capital inflows, by talk of new middle classes and the bottom billion, it was easy to forget old truths about how hard it is for poor countries to become rich. A breezy assumption took hold: that emerging markets would surely follow the likes of South Korea and Taiwan on the path to wealth.

That view of development has crumbled of late, along with emerging markets’ growth rates. China, the locomotive to which many are still hitched, is slowing. Russia, South Africa and Brazil are in reverse gear. Their currencies drop with every fall in commodity prices; they will no doubt weaken further if the Federal Reserve raises American interest rates in a meeting due to end after we went to press. Trade is growing more slowly than global GDP, a trend that seems unlikely to reverse soon. All of this makes the trajectory taken by the East Asian tigers seem ever more exceptional.

A more realistic model of development is Mexico, a country that has parlayed its considerable advantages into patches of modernity but has singularly failed to eradicate poverty nationwide. Some of its disappointments can be laid at the door of specific policies. But they also reflect the difficulties countries face throughout the emerging world.

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Mexico is Latin America’s success story as Brazil stumbles

CNN 9/23/2015

shutterstock_101964346The Mexican economy isn’t surging, but it’s surviving — and that’s a success in a year of tough economic times for the region. Low commodity prices, plunging currencies and a stock market sell off across emerging markets have hit Latin America particularly hard this year. But Mexico’s economy is growing, unemployment is falling and its debt was upgraded earlier this year.

That’s exactly the opposite situation in Brazil, which had been the region’s biggest success story until recently. Brazil’s economic size, performance and potential surpassed all others in the region. But now its economy is in recession, its debt has beendowngraded to junk status and the future outlook appears dim.

Mexico’s economy is closely aligned with the U.S. economy — they’re major trade partners. And Brazil has dramatically increased its trade ties with China over the past decade. As China’s economy slows down, it’s weighed on Brazil’s growth potential. Likewise, as the U.S. economy continues its economic recovery from the Great Recession, Mexico benefits too, says Axel Christensen, BlackRock’s chief investment strategist for Latin America.

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