Pacto por Mexico – Energy Reform Passed

Last week, Pres. Pena signed into law the secondary legislation implementing the Energy Reform under the Pacto por Mexico. The final contours of the law did not differ significantly from the changes made by the Senate, discussed here. This is a significant reform, as reflected by these comments from the local press:

  • “[The Energy Reform] is the most significant in recent years and will change the way the energy sector operates in Mexico…This was unthinkable until the past few years and will end the government’s monopoly in this sector after 76 years.” (El Financiero)
  • “After 364 days, Pres. Pena unveiled the most iconic and controversial measure of his administration: an initiative to amend the Constitution and open the energy sector to domestic and foreign private investment, a 180 degree turn in the existing legal framework since the nationalization of oil in 1938.” (CNN Mexico)

In addition to signing the legislation into law, Pres. Pena announced ten steps aimed at expediting the implementation of the reforms (with deadline in parentheses):

  1. Ronda Cero (August 13) – announce the results of the ‘Round Zero’ – in which PEMEX claims certain oil fields for itself – on August 13. In the subsequent announcement, PEMEX was assigned 83 percent of Mexico’s probable and possible reserves.
  2. Ronda Uno (August 13) announce the fields opened up to the first ‘Round One’ bidding in early 2015. As part of Round One, Mexico hopes to attract investment into 169 exploration and extraction blocks. The public tenders for these blocks will happen sometime between May and September 2015.
  3. ‘Decentralized’ Bodies (August) – create the National Center for the Control of Energy and the National Center for the Control of Natural Gas.
  4. New Regulators (August) – the President will send to the Senate his nominees to head the National Hydrocarbons Commission and Energy Regulatory Commission, as well as independent advisers to PEMEX/CFE and the Petroleum Fund.
  5. New Fund (September) – create Mexican Petroleum Fund and promote the development of national providers/contractors for the energy industry.
  6. Human Resources (September) – present the decree on the strategic program for the formation of human resources in the energy sector.
  7. Regulations (October) – publish all regulations pertaining to the secondary legislation.
  8. Research (October) – present the decree restructuring and modernizing the Mexican Petroleum Institute.
  9. Clean Energy (October) – publish guidelines for the issuing of clean energy certificates.
  10. Environmental Agency (next 90 days) – publish the rules for the national agency for industrial security and environmental protection in the hydrocarbons sector.

In several cases, the updated timeline is much quicker than previously anticipated (via El Financiero):

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According to experts at the Mexico Institute, the most significant event will be the publication of the regulations in October, which will essentially fill in any detail gaps left by the secondary legislation. In the meantime, however, it is safe to conclude that Mexico’s Energy Reform is seen as a major step forward for the country and a major political win for Pena. Whether it will meet expectations is a question for a future post.

This entry was posted in economy, energy, legislation, oil and gas, Pact for Mexico, reform, Uncategorized. Bookmark the permalink.

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