Page 17: of Offshore Engineer Magazine (Feb/Mar 2014)

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Analysis

Mexican energy reform:

Awaiting secondary legislation and the ? rst bidding round exico has approved its most liberal reform concern-

Now that reform has passed in Mexico, ing its energy sector. It introduces new arrangements

GlobalData’s weighs in Adrian Lara

M such as pro? t-sharing contracts, production-sharing on what to expect from the country’s contracts and licenses and a complete opening for private par- ticipation in the downstream and midstream sectors.

budding energy industry.

Congress legislators now have 120 days after the promulga- country’s remaining hydrocarbon reserves are located in chal- tion date to pass the secondary laws that will include the terms lenging areas from both geological and engineering perspectives. and details for the new forms of private participation.

As a result, their recovery requires sophisticated and expensive

Pemex was given 90 days after promulgation of the reform to technology. Pemex has ample expertise in shallow waters but request, under preferential treatment, its chosen existing and does not have the expertise to enter more complex projects prospective areas for exploration and production. located in deep water or onshore shale plays. Moreover, the pro-

For accounting and ? nancial purposes, the changes in the posal established that, from a business point of view, it would be constitutional text will allow for the private sector and the state unwise to let Pemex assume the risk of such projects.

company to report any contract and its related bene? ts. It is still to be seen whether the secondary legislation and rules for The ruling Institutional Revolutionary Party (PRI) put for- implementation will allow for booking of reserves. ward an original proposal that only considered a pro? t-sharing contract as the new addition to contracting options. However,

The path towards a liberal reform the approved reform also includes the options of production-

In August 2012, the executive branch of the Mexican government sharing contracts and licenses, which are generally considered sent to Congress a proposal for reforming the country’s energy much more attractive. These additions were pushed by the sector. Concerning oil and gas, it argued that the bulk of the right-wing National Action Party (PAN).

Future contracting scenarios

Possible Contracts for Expected

Type of ResourceWhat has been Pemex Role? Possible Bidding Round

Private Participants Date

Onshore conventional Dominant position in explora- - Service contracts Round Zero and 2014 ? elds tion and production - Pro? t-sharing contracts subsequent rounds

Dominant position in explora- - Service contracts Round Zero and

Shallow-water ? elds 2014 tion and production - Pro? t-sharing contracts subsequent rounds

Unconventional onshore Exploration and production in - Production sharing

First Round 2015 ? elds (i.e. Shale) some areas (i.e. Chicontepec) contracts - licenses - Production sharing

Deepwater ? elds Exploration in some areas Second Round 2016 contracts - Licenses

Source: GlobalData oedigital.com February 2014 | OE 19 019_OE0214_ Analysis.indd 19 1/21/14 12:19 PM