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Houston Companies Likely To Benefit From Mexican Energy Reforms

Mexican oil fields will open up to foreign investors this week.

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Mexican Consul General Luis Malpica y de Lamadrid discusses the opening of the Mexican energy market.

Mexican President Enrique Pena Nieto has signed new reforms into law that privatize that country’s energy industry. The Mexican Congress passed a constitutional amendment last December that ends 76 years of government control of the oil, gas and electricity industries.

The Mexican consul general here in Houston, Luis Malpica y de Lamadrid, briefed local media on the changes.

“The Mexican government seeks to increase the energy security of the nation,” he said, “stimulate economic development, increase the creation of jobs as well as increasing the revenue of the Mexican government and the income of the Mexican people.”

He said the energy reforms aim to create 2 1/2 million new jobs and grow the Mexican economy by 2 percent by 2025.

Lamadrid also said it’s an opportunity for many Houston-based companies.

“It’s increasing the commercial interchange between the enterprise in Houston and Mexico,” he said, “because the technology and the resources are here, especially here in Houston. And we share the shale gas and shale oil with Texas.”

The Mexican government is expected to announce this week which parts of its oil fields will be reserved for the state-run oil company Pemex, and which ones will be open for potential investors.

So with all this oil now accessible to non-Mexican companies, there should be an international run on drilling contracts there, right?

“There could be and there may not be,” said Don Van Nieuwenhuise, director of petroleum geoscience programs at the University of Houston. “It depends on how Pemex and the Mexican government execute this, what kinds of regulations and laws they set up and what kinds of conditions they put on purchasing or leasing acreage to drill.”

Nieuwenhuise said companies will be very cautious, but he does expect the level of activity here in Houston in the middle of an oil boom to rise even more.

“Of course, if we open up another area like Mexico to international activity, I think it will spark the infusion of more capital,” he said. “And that will result in more drilling and more drilling should result in more production.”

In recent years, Mexico’s oil production has decreased. That caused the government to consider opening up its energy industry to the marketplace.

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