Why Mexican Energy Reforms Could Greatly Affect Houston

Mexican president Enrique Pe’±a Nieto recently proposed large-scale energy reforms and they were a major topic of discussion at the BN Americas LatAm Oil and Gas Summit in Houston.

Central points of the reforms include opening the Mexican oil industry to privatization and foreign investment, but a recent poll by a Mexico City based research institute shows that 65% of Mexicans oppose foreign investment in the Mexican oil industry. Petroleos Mexicanos, better known as PEMEX, is Mexico’s state-owned petroleum monopoly and the company that would be most drastically affected by the reforms.

Mexico, however, is not the only place with skin in the game. Houston, an international hub for the oil and gas industry, would be influenced by these reforms in many ways. George Baker is publisher of the industry newsletter Mexico Energy Intelligence.

“In Houston we have a global oil conversation; in Mexico you have a very private Mexican conversation, so one of my functions is to build a bridge between these two conversations. The oil industry is a global activity and you cannot isolate yourself from it. If you do you will pay a terrible price in missed opportunities and higher cost.”

Experts predict that Mexico will become a net oil importer within the next decade unless some real changes are made. Meanwhile, the debate over these energy reforms continues in the Mexican Congress and Houston is paying attention.

“If you open the framework and said ‘Okay, now fifty oil companies can operate,’ that means fifty new customers to provide oilfield services to, so it could be a very big event for Houston companies.”

Mexican oil reserves on the Mexican side of the Gulf have an estimated ten billion plus barrels of untapped oil.

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