Mexican President urges UN to reform Security Council, step up action against world drug problem

World Politics Review 9/24/2015

energy - oil_rigEarlier this month, the Mexican government submitted a budget to cut spending in 2016, including reduced investment in the state oil company Pemex, given the drop in global oil prices. In an email interview, Amb. Antonio Garza, former U.S. ambassador to Mexico and currently counsel in the Mexico City office of White & Case LLP, discussed Mexico’s economy and the impact of the oil shock.

WPR: How have declining oil revenues affected Mexico’s budget and spending power?

Antonio Garza: Historically, Mexico has relied on oil revenues to fund roughly one-third of its budget. This arrangement was fairly stable when oil prices were high, but as prices began plummeting last summer, so did the amount of money coming into government coffers, amounting to a roughly 36 percent year-on-year decrease for the first six months of 2015. The drop was steep, but things weren’t as bad as they could have been. Certain policies and outcomes—such as the government’s widespread hedging program, an uptick in non-oil taxes from the 2013 fiscal reform and a revenue surplus from the gasoline price cap—certainly helped lessen the budgetary pressure.

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THIS THURSDAY: Second Annual North American Energy Forum

mainWHEN: Thursday, September 17, 9:00am-1:00pm

WHERE: 6th Floor Auditorium, Woodrow Wilson Center

Click here to RSVP. 

The Mexico and Canada Institutes of the Woodrow Wilson Center are pleased to invite you to the Second Annual North American Energy Forum.

9:00 am – Welcome
Duncan Wood, Director, Mexico Institute
Laura Dawson, Director, Canada Institute, Wilson Center
9:10 am – The Outlook for the Oil and Gas under Low Prices
Moderator: Jan Kalicki, Wilson Center Energy Fellow

Marco Antonio Cota Valdivia, Director General of Exploration & Extraction of Hydrocarbons, Ministry of Energy
Sara Ladislaw, Director and Senior Fellow, Energy and National Security Program, CSIS
Shirley Neff, Senior Advisor, U.S. Energy Information Administration
Duncan Wood, Director, Mexico Institute

• The outlook for North American oil and gas production
• Mexico’s oil and gas reform
• Canada’s oil sands after Keystone and low prices

10:30 am – Keynote Addresses

Cesar Hernandez Ochoa, Mexican Under-Secretary of Energy for Electricity
Amos J. Hochstein, Special Envoy, Bureau of Energy Resources

11:30 am – Coffee and Snack Break

11:45 am – North American Electricity Futures
Moderator: Laura Dawson, Director, Canada Institute

Patrick Brown,  Director of US Affairs, Canadian Electricity Association
John Renehan, Director of Strategy, GE Power and Energy
Eduardo Andrade, Corporate Director, Iberdrola Mexico
Rafael Fernandez
Henry Gentenaar, Managing Partner,  MegaSolar

• The development of Mexico’s electricity market
• Linking the region’s electricity grids and markets
• New technologies and ideas
• Smart grids and distributed generation

1:00 pm – Event Concludes

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Upcoming Event! Second Annual North American Energy Forum

Energy Banner Color UPDATEDWHEN: Thursday, September 17, 9am-4pm

WHERE: Woodrow Wilson International Center for Scholars

Click here to RSVP

The Mexico and Canada Institutes of the Woodrow Wilson Center are pleased to invite you to the Second Annual North American Energy Forum
Featured Keynote Speakers: 
Mexican Under- Secretary of Energy for Hydrocarbons, Lourdes Melgar
Mexican Under-Secretary of Energy for Electricity, César Hernández Ochoa
The Forum will also feature panels on:
  • The Outlook for Oil and Gas under Low Prices
  • North American Electricity Futures
  • Low Carbon Futures
Over the past year, two new developments have left their mark on North America’s energy markets. The first concerns the impact of low oil prices on the region’s producers, with revenue affecting existing and future projects. Alongside the issue of price, we have seen major developments in all three North American countries. In Mexico, the first round of oil contracts is underway, with contracts awarded for exploration in shallow water in July of 2015. At the same time, we have seen major new investment plans unveiled in the electricity sector. In Canada, major infrastructure challenges and political change in the province of Alberta have altered the investment environment. In the US, the Interior Department proposal to open a stretch of the Atlantic Ocean to offshore drilling has generated a highly charged debate, and new EPA rules on emissions have been the subject of analysis and legal challenge. The objective of the forum is to provide insight and draw attention to the challenges and opportunities that these new developments have created.

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Falling energy prices in Mexico could be bad for Ontario

8/13/2015 CBC News

energy - gas pumpOngoing efforts to drive down the costs of energy in Mexico may hurt the competitiveness of the industrial sector in southwestern Ontario, warns an energy policy expert.

Over the past two years, Mexico has brought forward legislative changes to allow greater private and foreign investment in its oil, gas and electricity sectors, said Duncan Wood, the director of the Mexico Institute in Washington, D.C.

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Will There Be Blood?

07/30/15 US News

energy - oil_rigOn one particular pipeline being built in Mexico’s desert, work stopped at 5 p.m. No exceptions.

“After 5:30, when the cartels start moving drugs, they have to leave the site. And the cartel made it very clear that if they saw them after 5:30, they would be butchered. So they enter into an ‘agreement,'” says Miriam Grunstein, a professor at the Universidad Autonoma de Nuevo Leon and attorney who advised the unnamed pipeline construction company that entered into the understanding.

“It’s very spooky, but that’s how it works,” she says.

Pick your euphemism, but oil and gas companies are certainly no strangers to working in “volatile,” “dynamic” or “uncertain” settings, whether they be in Angola, Colombia, Indonesia, Nigeria or Papua New Guinea, not to mention Iraq after the U.S. invasion. Now Mexico may soon join that list: Last year, his country faced with a potential credit downgrade and hungry for cash, President Enrique Pena Nieto announced Mexico would begin allowing foreign companies to drill for oil and gas alongside the state-owned company, Petroleos Mexicanos, or Pemex, which has controlled exploration and production since 1938.

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Congressional testimony: Mexican energy reform

7/24/15 Energy Global

via Flickr - Dave Parker
via Flickr – Dave Parker

Below are highlights from the testimony given by Ambassador Carlos Pascual, Senior Vice President, IHS Inc. before the House Foreign Affairs Committee, Subcommittee on the Western Hemisphere regarding recent reforms to the energy sector in Mexico in the context of greater North American energy independence.

“Since 2012, Mexico has embarked on an historic opening of its energy sector to allow private investment and competition in the production, transit and sale of oil, gas and electricity, and in the coming years in retail markets as well. On July 15, Mexico completed the first tender since 1938 for the sale of hydrocarbon assets. Even though the results did not meet expectations, it formalised a process of opening the energy sector to private investment, and with that, the benefits that will eventually ensure from infusions of capital and technology. Mexico will benefit from these reforms, but so will American businesses and workers. North America can improve its energy security and play a more profound role in stabilising energy markets regionally and globally.”

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Mexico’s Energy Reform: A Look From Inside the Learning Curve

7/21/15 Texas Lawyer

energy -wind_energyThe opening process of Mexico’s energy sector has been well documented. Local and foreign media have extensively reported on how a country that had been closed to private oil and gas investment for close to 76 years, has, in the span of only 18 months, reformed its Constitution, passed implementing regulations, created and strengthened new and existing regulatory bodies, conducted a Round Zero process with its state-owned oil company (Pemex), begun three public bid processes and awarded the first two production sharing agreements in its history.

However, this fast-moving train (in many ways politically fueled) is now facing its most serious challenge to date: attracting oil and gas companies to invest in Mexico. Recent developments in the opening process have shown once again that the oil and gas industry continues to run deep in Mexico’s political, social and economic life and that the country cannot afford a long and prolonged learning curve.
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