Energy Reform in Mexico - Giving It Both Barrels The Economist
go to original August 16, 2013

MEXICO CITY - To Mexicans, state ownership of their oil is a bit like gun ownership in the United States - steeped in history. So President Enrique Peña Nieto’s proposal, unveiled on August 12th, to change the constitution to allow private investment in Mexico’s oil industry for the first time since 1960, is a taboo-buster.

To clear the historic hurdles, he niftily dressed up the reform proposal as a return to the regime that prevailed after Mexico’s patriotic hero, President Lázaro Cárdenas, seized the oil industry from foreign hands in 1938. Few will be fooled, however, into thinking that he shares Cardenas’s nationalist convictions.

In fact his intention is nakedly economic. It starts from the premise that Mexico is running out of easy-to-access oil in the shallow waters of the Gulf of Mexico. Pemex, the national oil and gas monopoly, has neither the funds nor the expertise to take advantage of the shale and deepwater deposits that have proved so bounteous across the border in the United States. So it needs partners. The proposal leaves one big question unanswered, however: on precisely what terms will Mexico seek to attract private investment?

Read the rest at The Economist

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