Mexico to not lift tariff on gas imports in 1998

Mexico will not consider lifting its tariff on natural gas imports this year, says the general director of state-owned Petroleos Mexicanos. The Pemex chief, Adrian Lajous, told a natural gas conference in Mexico City last week that "the national petroleum industry will be ready for competition after 1999," and that, after 1999, the tariff would be "strictly a trilateral commercial issue," not an energy issue.

Aug. 3, 1998

2 min read

Mexico will not consider lifting its tariff on natural gas imports this year, says the general director of state-owned Petroleos Mexicanos.

The Pemex chief, Adrian Lajous, told a natural gas conference in Mexico City last week that "the national petroleum industry will be ready for competition after 1999," and that, after 1999, the tariff would be "strictly a trilateral commercial issue," not an energy issue.

Also at the conference, Energy Regulatory Commission (CRE) Pres. Hector Olea unveiled the start of the bidding process for the rights to distribute natural gas in the El Bajío region, a fast-growing industrial area northwest of Mexico City.

Future areas to contract out natural gas distribution will be the cities of Tijuana, Cuernavaca, Puebla, Guadalajara, and the La Laguna region around the cities of Gómez Palacios and Torreón.

On Aug. 4, CRE will announce the winner of the bidding process for the hotly contested natural gas distribution permits for Mexico City and the surrounding area.

Tariff

Under terms of the North American Free Trade Agreement (Nafta), Mexico is scheduled to reduce its tariff by 1 percentage point/year from its current level of 5%, meaning the tax would disappear in 2003.

But hopes had been raised in April, due to comments by Mexico Commerce Sec. Hermenio Blanco that Mexico would eliminate the tariff entirely this year as part of tariff reduction negotiations on a wide variety of products between the three Nafta nations. Lajous's comments indicate the tariff will likely remain in place until early 2000.

In a speech to the conference, Lajous noted the dramatic upswing in Mexico's natural gas production, mainly stemming from accelerated development of Burgos basin fields near the border with Texas.

Burgos production has increased from 238 MMcfd in 1994 to 700 MMcfd in June this year and is expected to reach 970 MMcfd by yearend, Lajous said.

Total natural gas production in Mexico during the first half of the year averaged 4.759 bcfd, 31% above the same period in 1994.