Energy reform proposals emerging in Mexico

Mexico’s ruling political party is expected this week to propose market-oriented energy reforms after the opposition National Action Party (PAN) on July 31 advanced a program that would open oil and gas exploration and production to private participation (OGJ Online, July 24, 2013).

According to a legal update by the law firm Mayer Brown, the PAN proposal would:

• Open oil and gas exploration and production to private investment and competition.

• Establish the National Hydrocarbon Commission as grantor of oil and gas upstream concessions.

• Open the oil and gas downstream and midstream businesses to private investment and competition.

• Open the electricity industry to more private investment and competition than exists at present.

• Create the Mexico Oil Fund to administer oil profits and seek to decrease the government’s dependence on oil revenue.

• Provide Petroleos Mexicanos, the state oil monopoly, and Federal Electricity Commission (CFE), the electricity company, greater autonomy to change corporate governance.

• Focus on sustainability and climate change.

The proposal calls for amending three articles of the Mexican Constitution, one of which, Article 27, has combined with Mexico’s Regulatory Law to restrict private participation in oil and gas activities for more than 60 years.

Mayer Brown said the PAN and ruling Institutional Revolutionary Party (PRI) together “are expected to have the required consensus to amend the Constitution.”

It said the parties both “favor market-friendly energy policies, making major changes in the Mexican petroleum regime a real possibility.”

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