An Indirect Critique of Mexico’s Energy Reform Proposals

PRESS RELEASE — HOUSTON, Aug. 26, 2013

Many persons in Mexico and abroad spent much of their time this August digging into the nuts and bolts of the three energy proposals offered by the PAN, PRI and PRD. The question on our minds was this: How to explain and summarize these proposals in a simple, comparative framework?

On the oil side, the simplest explanation is this:

The PAN and PRI want to return to an oil regime (somewhat) like that of the Oil Law of 1940 (when private parties could be issued production licenses directly from the State); while the PRD wants nothing of the kind.

In time, we came to two conclusions:

1) To call these documents “proposals” is at best premature. They are more in the order of frameworks for future discussion and legislative negotiation.

2) These documents were not written for an international audience of energy professionals; they were written in a deeply coded language for a small audience of Mexican political insiders.

While waiting for actual energy reform proposals at the level of legislation and regulation, we propose, instead, a 10-page meditation about how far a non-market oil regime like that of Mexico would have to evolve in order for Mexico to offer international oil companies terms, conditions and materiality equal to, or better than, those available in the U.S. We carry out this intention by offering nine charts that are meant to capture key concepts in the global oil industry.

Our intent is to hold up a kind of global mirror so that the merits and imperfections of future energy proposals and regulations in Mexico may be clearly seen.

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Written by

George Baker

Baker & Associates offers niche-market business and policy intelligence related to Mexico's oil and gas, power and chemical industries. Over 1,000 reports have been issued in the last 20 years. Subject matter expert and publisher George Baker, who directs the firm, has carried out consulting assignments starting in the late 1970s at the height of the Oil Boom in Mexico. He brings bilingual and bicultural skill-sets to understanding and responding to challenges of business and public policy, coupled with a deep familiarity with the history and idiosyncrasies of the Mexican operating environment.

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