• 2 days Shell Oil Trading Head Steps Down After 29 Years
  • 2 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 2 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 2 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 3 days Venezuela Officially In Default
  • 3 days Iran Prepares To Export LNG To Boost Trade Relations
  • 3 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 3 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 3 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 3 days Rosneft Announces Completion Of World’s Longest Well
  • 3 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 4 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 4 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 4 days Santos Admits It Rejected $7.2B Takeover Bid
  • 4 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 4 days Africa’s Richest Woman Fired From Sonangol
  • 4 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 4 days Russian Hackers Target British Energy Industry
  • 5 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 5 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 5 days Lower Oil Prices Benefit European Refiners
  • 5 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 5 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 5 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 6 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 6 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 6 days OPEC To Recruit New Members To Fight Market Imbalance
  • 6 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 6 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 6 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 6 days GE Considers Selling Baker Hughes Assets
  • 6 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 6 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 7 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 7 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 7 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 9 days The Oil Rig Drilling 10 Miles Under The Sea
  • 9 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 9 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 9 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Alt Text

Can Iraq Dethrone Saudi Arabia In This Crucial Oil Market?

After significantly cutting its crude…

Alt Text

China Resumes Oil Hoarding Despite Higher Prices

Satellite imaging data suggests that…

Alt Text

When Will Oil Demand Begin To Taper Off?

As energy analysts begin announcing…

Mexico Wants Foreign Private Investment in Oil Sector

Mexico Wants Foreign Private Investment in Oil Sector

Mexican President Enrique Pena Nieto unveiled plans this week to amend articles of the Constitution that prohibit private investment in the country's oil industry. The state company Pemex would remain in government hands, as would the oil reserves themselves, but the government would break the monopoly on production, in order to attract private investors.

It is not yet clear that the proposed reforms will pass. But the Mexican industry clearly needs help. Oil production has fallen 30 per cent in the last eight years. The country has impressive natural gas resources but is dependent upon imports. The pipeline system desperately needs to be modernized.

All this means that the electricity generation and distribution systems lack capacity to promote industrial expansion. The high price of electricity and energy costs in general are a drag on industrial output.

Related article: What's the Future for Your State Monopoly?

According to government estimates, an annual investment of $20 billion in infrastructure and new production is required to start the modernization of the industry and its networks.

The response in Canada to these proposals has been ambivalent. The Mexican ambassador to Canada has assured journalists that his country does not seek to compete for the U.S. market. On the contrary, he said to the Globe and Mail in Toronto, "I think this opens great possibilities for Canada not as competitors but as complementary economies. I think this offers enormous opportunities for the relationship between Canada and Mexico."

In the best of all possible worlds, with cutting-edge foreign technology and intensive capital investment, the decline in Mexican petrochemical production could be halted within two years. And Canada's oil and gas service companies are well placed to take advantage of the opportunities, with their expertise in shale oil, shale gas, and both offshore and onshore fields.

But Canadians have been anticipating that their own energy crude production would replace Mexico's in the U.S. market as the latter's market share continues to decline. U.S. government figures shown that imports from Mexico are down 41 per cent over the last six years while from Canada they are already up 25 per cent. If Canadian services help to rehabilitate the Mexican industry, then Canadian sales expectations to the U.S. might have to change.

Related article: OPEC Set to Suffer at the Hands of Mexico’s Energy Market Reform

In fact, it is more like that U.S. service companies would enter the Mexican market and convince their partners there not to work so much with the Canadians. An exception is TransCanada, which already works on gas pipelines in Mexico. A spokesman there says the company might consider investment in electricity generation.

A big sticking point is that it appears foreign companies would still be prohibited from owning the reserves themselves. Particularly since details of the reform concerning foreign involvement in the sector are not all spelled out, it is not clear what kind of contracts would be permitted and what kind would not.

If the state continues to own the reserves and wishes to restrict foreign involvement to "service" contracts for the production, then there is not likely to be much interest, at least from the U.S. side.

By. Robert M. Cutler




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News