Mexico’s New Oil & Gas Regime

Market_Note_CoverMARKET NOTE 193 (HOUSTON) — THE ENERGY REFORM IN MEXICO that was announced by the Peña Nieto administration in December of 2013 was applauded by prospective investors in the oil‐and‐gas and power industries. Six months later, as the two pieces of implementing legislation in relation to hydrocarbons wind their way through committee review, the applause has noticeably weakened in volume.

The Hydrocarbon Governance Act (Ley de Hidrocarburos) in its transitory articles is market-friendly to an extent that is beyond expectations; for example, the concepts of open access, electronic bulletin board and secondary markets are embraced. The concepts set forth in the Hydrocarbon Revenue Act, in contrast, are entangled with ideological and populist constraints that diminish the attractiveness of the fiscal terms.

It is this entanglement to which we shall give primary attention in this report.

Our concern is that the government and legislators who are trying to make peace between the Past and the Future may end up being too deferential toward the Past; and, in so doing, they may put at risk the future benefits of the energy reform, especially in the upstream.

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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.