Mexico’s Senate approves the energy reform bill

By Adina Moloman

Sources: The Wall Street Journal, Forbes

Mexico’s Senate approved the controversial energy reform bill in order to open the state-run oil industry to foreign and domestic investors.

So, the government will be able to grant contracts and licenses for exploration and extraction of oil and gas to transnational corporations or any Mexican Corporation willing to invest under the Mexican Governments terms.

The contract terms are mentioning profit sharing, maybe production sharing, but definitely do not grant concessions. This actually is translated in not offering oil or ownership in the energy field and the oil transnational companies would be paid for their services. Foreign companies will be allowed to open up gasoline stations; so far in Mexico are only Pemex gasoline stations.

Under this new energy reform companies can explore the country’s deep-water deposits and shale oil and gas reserves that Mexico has in the Gulf of Mexico. Those transnational companies would pay royalties and taxes to the Mexican government for the right to explore and drill. Different sources are mentioning that Mexico could have another 29 billion barrels of oil and gas in deep-water plays in the Gulf of Mexico, and an additional 13 billion barrels of recoverable shale oil reserves.

It is also needed to define an organism that will regulate the oil industry in order to be more efficient and convert Mexico in an important energy exporter in the region.

Due to lack of cash and know how or not having a strong will to create energy products; Mexico is so far a crude exporter mostly to the U.S., shipping more than 1 million barrels a day.