Black Gold: Fragile Rule of Law Threatens Mexico's One Chance at Energy Reform Rafa Fernandez de Castro - Fusion
go to original July 30, 2015

For 75 years Mexico protected its state-run energy sector with a strong sense of national pride. March 17, the day commemorating Mexico’s 1938 expropriation of the oil industry, was a national holiday celebrated with gusto by a country that took a rabid stance against privatization.

All that has changed in the past few years. President Enrique Peña Nieto managed to break the privatization taboo by passing a bold energy reform that this month opened the oil industry to private investment for the first time since the late 1930s.

But convincing lawmakers to support the reform may have been the easy part; the real challenges that lie ahead will be far more complicated. Over-regulation, government corruption and lack of transparency in bidding processes could threaten to turn what was meant to be windfall for Mexican society into a cookie jar that only a select few can stick their hands into.

This month the first round of bidding for oil and gas exploration was smooth, but fell short of expectations. Only nine of 25 participants entered bids, and only two of the 14 initial exploration blocks in the Gulf of Mexico were awarded to a Mexican consortium. Private foreign companies will likely jump into subsequent bidding rounds, but with global oil prices dipping to new lows, Mexico’s timing to market couldn’t be worse.

Read the rest at Fusion

Illustration: Victor Abarca

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