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Mexico Opens up Shale and Deepwater – Who Will Get There First?

On April 30 the Mexican government published a series of proposed laws that will govern how the newly opened oil industry will work. It was an important step for Mexican President Enrique Pena Nieto, and the proposals add a lot of details to his much-heralded energy reform. More importantly, the proposed rules bring the country closer to realizing its goal of kicking off a new era of energy production.

The Mexican state has held an iron grip on the oil sector ever since President Lazaro Cardenas nationalized the industry in 1938. Keeping oil reserves and production in state hands has been a source of pride for the country. To this day, there is a lot of controversy about allowing any private company to compete in the oil sector, with a recent poll finding 42 percent opposed to the idea.

For years public opinion prevented any reform of the energy sector. But Mexico’s oil production has significantly fallen over the last decade, dropping by a quarter between 2004 and 2013. Corruption and mismanagement at Petroleos Mexicanos (Pemex), the state-owned oil monopoly, has been blamed as a big factor in the nation’s deteriorating oil position.

But Mexico remains the world’s ninth largest oil producer and has potential to regain lost ground. President Pena Nieto made energy reform a centerpiece of his six-year term.  He successfully pushed through a constitutional amendment last year that will open up the oil industry for private investment.…




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