Mexico’s Oil Auction: short-term disappointment v long-term progress

July 16, 2015

7/16/2015 Beyond Brics, The Financial Times

By Duncan Wood, Director, Mexico Institute

Oil Rig 2 by Flickr user tsuda Photo by Flickr user tsudaOn Wednesday July 15, Juan Carlos Zepeda, the president of Mexico’s National Hydrocarbons Commission (CNH), announced the results of bidding for exploration contracts in 14 shallow water blocks in the Gulf of Mexico, the first time in over 75 years that production-sharing contracts have been awarded in the country. The results were eagerly awaited by energy industry analysts the world over. As the envelopes began to be opened, the president’s office and the CNH tweeted an inforgraphic stating that the process would be deemed a success if four to seven contracts were successfully awarded.

In the end, only two blocks were awarded, both to a consortium formed by Sierra Oil of Mexico, Talos Energy of the US and Premier Oil of the UK. The government received offers from just nine bidders (five individual companies and four consortia), a pitiful tally given that 49 companies each paid $365,000 to enter the data rooms and 25 of those companies pre-qualified to bid. Of the majors, only ENI and Statoil made bids, leaving most of the big names on the sidelines.

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Mexico Energy Reform Starts with Thud in Offshore Oil Auction

July 16, 2015

7/15/2015 BloombergBusiness

Oil Rig 2 by Flickr user tsuda Photo by Flickr user tsudaMexico’s first auction of offshore oil leases fell short of the country’s expectations as several majors decided not to participate.

Only two of the 14 shallow-water blocks released on Wednesday received qualifying bids. Exxon Mobil Corp., Chevron Corp. and Total SA passed on the country’s sale of territory in the Gulf of Mexico, 77 years after the country nationalized crude. The 14 percent success rate was less than half the 30 percent to 50 percent goal that the government said would be its minimum for judging the event a success…

“This has to be crushingly disappointing for the government,” Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars in Washington, said Wednesday. “It has to be seen as a very clear message that they need to do a lot more to make the oil and gas opening a success.”

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Historic Mexican Oil Tender Fails to Attract Investors

July 16, 2015

7/16/2015 Financial Times

oil rigsCrestfallen Mexican officials admitted that the historic tender to open the country’s oil sector to private investors for the first time in 80 years had fallen well short of expectations after only two of the 14 exploration blocks on offer were awarded.

In spite of government hopes of attracting an array of companies and netting some $18bn in investment if all blocks had been awarded on Wednesday, the same consortium comprising Mexican group Sierra Oil & Gas — Talos Energy of the US and Premier Oil of the UK — scooped both of the blocks…

….But as Duncan Wood, director of the Mexico Institute at the Wilson Center, noted, officials had been stressing all along that the only tenders likely to be impacted by the price fall were those for shale prospects, not those in cheap-to-develop shallow waters. “I think that has to be seen as an excuse,” he said. “The blocks on offer just weren’t particularly attractive.”

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New Publication | A Mandate for Mexico

June 29, 2015

By Lucy Conger

mandate for mexicoIt was not so long ago that Mexico teetered on the brink of bankruptcy following a short-lived oil boom and a wild run of government spending. And, until quite recently, Mexico, despite sharing a 2,000-mile border with the United States, kept foreign goods out and gave domestic industries nearly exclusive access to a country-sized captive market.

Free trade has made Mexico a powerful manufacturing platform, a top global automobile assembler, and has radically diversified the economy, sharply reducing dependence on oil exports. The paradigm shift that unfettered Mexico’s protected and closed economy has been highly successful in creating a stable economic and policy environment and in making Mexico a marketfriendly global super-trader. But formidable challenges remain. Economic growth has slowed and consistently falls short of the level needed to create enough jobs to absorb the expanding domestic labor force.

Mexico is at a critical juncture. The record shows that the first wave of reforms that began 30 years ago failed to deliver the desired boost to economic growth and competitiveness. The reforms now underway promise even bigger changes for the economy, particularly by opening up the long closed petroleum industry. Looking ahead, can the new wave of reforms move Mexico into a higher gear, stimulate increases in productivity and economic growth, lubricate the economy with more credit, establish and enforce genuine competition in strategic sectors, and train the work force in modern skills? Or, three decades hence will we look back and say the Peña Nieto reforms were inadequately implemented and Mexico remains a low-growth, low-productivity economy?

This is a timely moment for reviewing Mexico’s success with deep economic reforms and asking what is required from here on in to make the new wave of reforms successful so that Mexico and Mexicans can enjoy the benefits of higher growth and productivity. This study offers a qualitative analysis of the deep economic reforms undertaken in Mexico during the past 30 years, the progress made and informed opinions on what is needed today to boost economic growth, enhance competitiveness and, hopefully, increase employment. The study summarizes the views about the successes and failures of the first wave of reforms as seen by a select group of former cabinet members and other prominent policy makers, consultants to government, opinion shapers in policy centers, and thought leaders in academia.

Download the report here.


Mexico’s Justice System At A Crossroads

June 29, 2015

06/29/15 Forbes

Aflag StarrGazrs an emerging market, Mexico has tremendous appeal. Its huge volume of trade with the United States, combined recent reforms in the telecommunications and energy sectors, means opportunities abound for savvy investors. But severe challenges remain. Pervasive corruption adds layers of risk to any business venture. Corruption has also hamstrung the nation’s justice system—and which many observers blame for Mexico’s intractable security challenges.

To date, reform efforts have languished. A series of constitutional and legislative reforms passed in 2008 sought to overhaul the justice system and root out corruption, but they have yet to be fully implemented. The 2008 reforms set a 2016 deadline for defining new criminal procedures and new duties for law enforcement and public agencies. Last year the government cleared an important hurdle with the passage of a unified criminal code, but much more work remains. With little less than a year to go, the fate of justice reform in Mexico appears quite uncertain.

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Mexico Corporate Security 2015 Forum To Bring Together Senior Security Representatives

June 25, 2015

6/24/15 US Source Security

security_lockMexico is currently undergoing major reforms to the energy, telecommunications, education, and financial sectors and the Government is opening the door to $50 billion of international investment by 2018 in the wake of these reforms, but this boost in the economy is menaced by serious security risks. Companies wanting to benefit from the huge investment opportunities offered by Mexico must ensure their corporate security is thoroughly evaluated, planned and executed.

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Upcoming Event! Advancing Justice Sector Reform in Mexico

June 23, 2015

justice - gavel and bookWHEN: Friday, June 26, 9:30-11:00am

WHERE: 5th Floor Conference Room, Woodrow Wilson Center, Washington, DC

Click here to RSVP.

Mexico’s deadline to fully implement new, adversarial criminal trial procedures is less than one year away. The government of Mexican President Enrique Peña Nieto has pushed strongly to comply with the constitutionally mandated shift to the new criminal justice system by June 18, 2015, particularly in light of the country’s ongoing security challenges. Together with the University of San Diego’s Justice in Mexico program, the Mexico Institute at the Woodrow Wilson International Center for Scholars will host a panel discussion to examine current efforts to implement the new reforms. The discussion will include a presentation of recent survey data on the views of judges, prosecutors, attorneys, and police, as well as insights from a delegation of visiting law professors attorneys from Mexico’s National Autonomous University as part of the Oral Advocacy Skill-building Immersion Seminar (OASIS) funded by the Mérida Initiative. This program will be conducted in English and Spanish.

Speakers:

“Justice in Mexico: The Road Traveled and the Road Ahead”
David Shirk, Global Fellow, Mexico Institute; Professor, University of San Diego

“Progress Report: Judicial Reform Implementation in Mexico”
Octavio Rodriguez, Esq., Coordinator, Justice in Mexico, University of San Diego

“La preparación de la próxima generación de abogados en México”
Leoba Castañeda, Dean, Law School, Universidad Nacional Autónoma de México

“Algunos retos para el nuevo sistema penal”
Alberto Del Castillo Del Valle, Professor, Law School, Universidad Nacional Autónoma de México

Comments:

Daniel Schneider, Professor, School of International Service, American University

Click here to RSVP.


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