Mexico ex-president tells nation to give energy reform 2nd chance

19 September 2013 23:05  [Source: ICIS news]

HOUSTON (ICIS)--Former Mexican president Felipe Calderon on Thursday implored his country to give energy reform another chance, warning that the nation could lose the opportunity to develop its substantial reserves of shale energy.

"Either Mexico jumps into the future or we will lose again a tremendous opportunity," Calderon said. He made his comments during a speech he gave at the World Affairs Council of Houston.

Mexico has one of the world's most restrictive energy regimes, as it limits oil, gas and natural gas liquids (NGLs) production to the state monopoly, Pemex. Other companies are prohibited from establishing alliances with Pemex.

Calderon tried to reform Mexico's energy policy while he was president from 2006 to 2012. As a member of the Partido Accion Nacional (PAN), however, Calderon faced opposition from the Partido Revolucionario Institucional (PRI).

In the end, Mexico adopted only modest reforms during Calderon's term. It allowed Pemex to enter into service-type contracts with other companies.

After PRI opposed energy reform during Calderon's presidency, its candidate, Enrique Pena Nieto, won the 2012 election and introduced his own energy-reform proposals, which resembled many of Calderon's, the ex-president said.

Pena Nieto's proposal would essentially clean Mexico's constitution of prohibitions on production, allowing the nation's legislature to draft new rules that would determine who can develop the country's energy resources and under what terms.

This time around, what has changed in Mexico is the opposition, Calderon said. "My party, PAN, is happy as a responsible, constructive opposition."

He added: "We will not lose the opportunity again to make the reforms that Mexico needs."

As a state-owned company, Pemex lacks the incentives to be efficient, he said. Plus it is impossible for Pemex to assume all of the risks of exploration and production (E&P).

Despite Mexico's substantial energy reserves, the country has a trade deficit in every hydrocarbon except crude oil.

In 2012, its natural gas trade deficit reached $2.15bn (€1.59bn), according to the Instituto Nacional de Estadistica y Geografia (INEGI), a government agency that keeps economic statistics.

Natural gas imports supply one-third of Mexico's demand for natural gas, according to the US Energy Information Administration (EIA).

For oil products, Mexico had a trade deficit of $24.7bn in 2012, according to the INEGI. The petrochemical trade deficit was $8.15bn. For products that originated from petrochemicals, the deficit reached $5.24bn.

Without Mexico's oil exports, the nation would have an overall trade deficit in hydrocarbons.

It is unclear how long Mexico can continue exporting oil so that it can pay someone else to supply oil products, petrochemicals and natural gas. Last year, oil production was 2.60m bbl/day, down 25% from a high of 3.48m bbl/day in 2004, according to the EIA.

($1 = €0.74)


By: Al Greenwood
+1 713 525 2645



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