GGP: Mexican energy reforms - Oxford Energy Forum
The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.
Originally published by The Oxford Institute for Energy Studies in the Oxford Energy Forum, June 2017, Issue 109.
This issue of the Oxford Energy Forum is devoted to Mexico’s recent energy sector reforms. The reforms were designed to open up the country’s energy sector to international and local private players, inject competition, provide new partnering opportunities for PEMEX, establish new markets domestically, and potentially strengthen Mexico as a key link between the American and international markets for energy trade. However, these landmark reforms – which have signifi cant implications for the country’s overall economy and the role of Petróleos Mexicanos (PEMEX), the state oil company that hitherto dominated its energy sector – are also not entirely without wider economic implications which need to be carefully considered as the country moves forward. This issue presents a spectrum of views on energy sector reforms in a country that continues to be important to both the regional and international energy systems. The issue opens with two articles presenting an overview of the reform and of the general challenges. Aldo FloresQuiroga provides a general overview, from a government perspective, of the reform, arguing that well-functioning markets require a set of conditions including: clear rules of the game, strong property rights, unhindered information fl ows, low barriers to entry and exit, enough buyers and sellers to sustain a competitive process of price formation. He argues that the government has paid considerable attention to the sequence, pace, and transparency of implementation, which are key for the credibility of the new investment regime and for maintaining the trust of the Mexican people. ‘Shock therapy’ – liberalizing everything at once – might be attractive in theory but is inadvisable due to market rigidities or the need to secure the social licence before launching new projects. The author summarizes the approach to upstream, midstream, and downstream reforms, emphasizing that these will be an incremental and gradual process, where investments are made for reasons that go beyond market liberalization and the quality of the new policy regime, acknowledging that Mexico constitutes a growing market for energy demand in its own right. Armando Zamora identifi es additional challenges to Mexico’s energy sector transformation as the world moves towards a new era of more competitive, technologically-based innovation aimed at achieving the simultaneous goals of universal access, higher effi ciency, lower prices, and cleaner sources.
To access Issue 109 of the Oxford Energy Forum please visit The OIES.
The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.