Implications of Mexico's Energy Reform

Published 19 December 2013

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Implications of Mexico's Energy Reform

We see the recently passed Mexican energy sector reform as the start of a fundamental paradigm shift for the country's hydrocarbon sector. While it does not challenge the national narrative that hydrocarbons belong to the State, working within these constraints the landmark bill takes majors steps to incentivise private sector involvement through the creation of a flexible contract system. Over the long term, we believe this will bolster investment and begin to revive the sector, reversing a nearly decade long decline in oil production.

Business Monitor International (BMI) has published a Special Report identifying what we believe will be the key implications of Mexico’s Energy Reform Bill over the long term, especially on the oil & gas and power sectors, as well as the broader political connotations.

On December 12th, the Mexican Congress pushed through energy reform, with the Chamber of Deputies
(lower house) voting to pass the landmark bill just two days after it cleared the Senate. While the exact magnitude of the reform will be difficult to judge until secondary legislation is enacted in early 2014, we believe this bill is a game changer for the Latin American country's hydrocarbon sector and the special report reveals our key views on the outlook.

Topics covered in the report include:

  • The initial framework of the new legislation
  • Potential implications for Mexico's struggling oil & gas sector
  • Details of the new electricity regulations
  • Implications for the power sector from private participation
  • The political context of the legislation
  • Political implications over the coming year

The report draws upon BMI’s expertise to provide maximum integration of our Country Risk and Industry analysis. The views are integrated, forward looking, and independent. It benefits from BMI’s 30 years of experience to critically evaluate the outlook for the energy sectors in Mexico, helping you assess the role this could play in your company’s growth strategy going forward.

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