2014-04-02 16:24:03 - Mexico Oil and Gas Report Q1 2014 - a new market research report on companiesandmarkets.com
We see the recently passed Mexican energy sector reform as the start of a fundamental paradigm shift for the country´s hydrocarbons sector. While it does not challenge the national narrative that hydrocarbons belong to the state, working within these constraints the landmark bill takes steps to incentivise private sector involvement through the creation of a flexible contract system. As such, although we stress that it will take a number of years before results are felt in the country´s production and reserves data, over the long term, we believe this will bolster investment and could reverse a nearly decade long decline in oil production.
- Mexico has recently passed landmark energy reform, which we believe is likely to begin to revive the
long-moribund sector over the long term. Mexico´s hydrocarbons production has long been hamstrung by the resource nationalism engrained in the country´s energy policy. At the heart of the problem lies the wording of the constitution which, reinforced by the Petroleum Law of 1958, clearly identifies the Mexican nation as the sole owner of the country´s hydrocarbons, and leaves little room for the private sector. While the new reforms do not challenge the idea that the oil belongs to the state, it does take aggressive steps forward to open the sector to greater private investment. Specifically, it allows for the creation of a multi-tiered system in which a range of contracts, from profit sharing to licences, can be granted.
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