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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Mexico’s economy heading for further slowdown in Q2

7/20/15 EconoTimes

asian currencyMexico’s industrial production in May was -0.94% yoy, which is first negatice growth rate in 13 months. As a result and given the strong correlation between monthly supply-side proxy of growth and industrial production, Societe Generale estimates growth to have slowed substantially to 0.5% yoy in May – the weakest pace since April 2014.

According to Societe Generale, “The seasonally-adjusted series is expected to show a sequential decline of 0.9% mom and, barring a strong improvement in June, the economy looks set to slow further in Q2 after posting weak growth of 1.6% qoq (annualised ). What it also implies is that the economy could grow below trend in 2015 – presenting downside risk to our current forecast of 2.6% – unless it shows sharp improvement in H2 something we do not rule out for now.”

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Mexico deploys thousands to hunt down Joaquin Guzman

07/17/15 BBC

Photo by Flickr user Thraxil
Photo by Flickr user Thraxil

Mexico says it has stepped up its search for drug lord Joaquin Guzman, who escaped from jail on Saturday. The Interior Ministry said it had deployed almost 10,000 police and 48 dogs to track down the fugitive leader of the Sinaloa cartel. Mexico is also co-operating with neighboring Guatemala and the United States to increase border controls. Guzman’s escape from a top-security jail through a 1.5km-long tunnel is a major embarrassment for officials. It is the second time the drug cartel leader has escaped from a top-security Mexican jail.

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Mexico Awards First Oil Blocks in Historic Auction

07/16/15 Wall Street Journal

oil rigsMEXICO CITY—The Mexican government’s initial auction to open the oil and gas industry to private and foreign investment for the first time in almost eight decades came up short of expectations Wednesday, with successful bids made for just two of the 14 blocks tendered.

Nine companies participated in the auction. Seven companies submitted bids for one or more of the blocks in the southern Gulf of Mexico. Numerous blocks received no offers, and others had bids that were below the minimum requirement for profit-sharing with the government.

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Mexican oil auction a flop as blocks go unsold

07/15/15 Financial Times

Oil barrelsIt was an underwhelming start to Mexico’s historic first oil and gas tender.

Just two of the 14 shallow-water exploration blocks were awarded, and the same consortium scooped them both, reports Jude Webber in Mexico City.

There were no bids at all for eight blocks and in four blocks the scant offers that were submitted were rejected for not being higher than the government’s threshold.

The day’s winner was the consortium made up of Sierra Oil & Gas of Mexico, Talos Energy of the US and the UK’s Premier Oil, which scooped two blocks, rather undermining the government’s hope to boost competition by attracting an array of new players.

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Chinese Steel Imports Cause Industry Rift in Mexico

7/9/15 Wall Street Journal

via Flickr - Dave Parker
via Flickr – Dave Parker

The Mexican government’s recent decision to impose anti-dumping duties on some key steel imports from China has sparked a rift between the country’s steel and automotive industries, reigniting a debate over whether Mexico should adopt a more protectionist stance over trade policy.

On Thursday, the government announced several additional measures to support domestic steelmakers, including strengthening customs controls to block the entrance of illegal steel. But authorities stopped short of meeting local industry demands for a 15% blanket tariff on all steel imports from China. Mexico doesn’t apply import tariffs on steel.

As a result of the global steel glut caused by falling demand and excess output by China, Mexican steel producers have announced thousands of layoffs and have been lobbying in recent weeks for the imposition of tariffs.

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Mexico unveils new measures to protect struggling steel industry

7/8/15 Financial Express

technicians making repairs - industry job trainingMexico unveiled news measures to protect its struggling steel industry on Wednesday as slack global demand, oversupply from China and cheap imports from Russia have hammered steelmakers in Latin America’s second largest economy.

The measures come a month after Mexico imposed provisional import duties on hot-rolled steel from Germany, China and France amid an anti dumping investigation.

Later in June, the government announced import duties on cold-rolled steel sheet from China.

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