• 2 hours Getting out of oil .. now
  • 5 hours Surprise! Aramco Scraps International Listing Plans
  • 2 hours Too much or doable - $900 Billion Annual Investments Needed In Renewables By 2030
  • 1 hour U.S. Arrests Iranian Over Alleged $115 Million Sanctions Evasion Scheme Involving Venezuelan Housing Project
  • 9 hours EU Proposes Online Turnover Tax For Big Tech Firms
  • 58 mins The Facebook/Cambridge Analytica Scandal
  • 8 hours Country With Biggest Oil Reserves Biggest Threat to World Economy
  • 7 hours "Rock star of science" - Stephen Hawking, Who unlocked The Secrets Of Space And Time, Dies at 76
  • 3 hours CERAweek Meeting
  • 21 hours 2020 - Electricity From Renewables Will Be Cheaper Than From Most Fossil Fuels?
  • 2 hours Nuclear Bomb = Nuclear War: Saudi Arabia Will Develop Nuclear Bomb If Iran Does
  • 10 hours Step forward or blackmail? DJT: Tariffs On Steel and Aluminum Will Only Come Off If New Fair NAFTA Agreement Is Signed.
  • 8 hours McDonald's Sets Greenhouse Gas Reduction Targets
  • 3 hours Bad seven days for Martin Shkreli
  • 21 hours Terminator plans to sue big oil for 'first degree murder'
  • 21 hours Statoil Changes Name
OPEC Doubles Down On Draining Oil Inventories

OPEC Doubles Down On Draining Oil Inventories

While the OPEC production cut…

Solving Renewable Energy’s Biggest Problem

Solving Renewable Energy’s Biggest Problem

While renewable energy appears to…

Mexican Local Content Rules Could Complicate Oil Investment

The Mexican government is considering implementing local content rules for oil and gas exploration in an effort to provide benefits to Mexican companies. According to Reuters, however, the rules risk deterring international investment in Mexican oil fields. Mexico’s landmark constitutional reform that opened up its oil sector after 75 years of being controlled by a state-owned monopoly has attracted interest from several international oil companies.

Now, the government is beginning to add more specific rules as it seeks to setup a governance structure over the newly opened oil sector. Mexican lawmakers are considering adding local content rules that ensure a percentage of goods and services are purchased from Mexican companies. Members of the ruling Institutional Revolutionary Party (PRI) proposed a requirement that Petroleos Mexicanos (Pemex) purchase 100% of goods and services from Mexican companies for onshore development, with no requirements for offshore. The conservative National Action Party (PAN) preferred a case-by-base approach that would be written into individual contracts, rather than blanket requirements.  A powerful Mexican industry lobby is arguing for local content rules of 45% to 60%.

Related Article: BP Return to Gulf of Mexico Marks U.S. Energy Sea Change

Yet local content rules are highly controversial. In Brazil, strong local content rules at around 55% have been blamed as a reason for significantly raising the cost of development, and thereby deterring investment. "The national content requirements in Brazil have easily delayed the overall development by a factor of several years and increased costs," said John Padilla, oil analyst with energy consulting firm IPD Latin America, as reported by Reuters.

Mexican President Enrique Pena Nieto aggressively pushed energy reform in order to halt the decline in oil production, which has dropped by a quarter over the last decade. President Pena Nieto argues that the investment from international oil companies could help raise production and spur economic growth of around 6% per year. However, according to Quartz, Pemex is hoping to retain control of 83% of Mexico’s proven and probable oil reserves. It is unclear what affect that would have on international investment if Pemex gets what it wants.

By Charles Kennedy of Oilprice.com

Join the discussion | Back to homepage

Leave a comment

Leave a comment

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