EMBASSY OF MEXICO IN DENMARK THE MEXICAN ENERGY REFORM Ambassador José Ignacio Madrazo
EMBASSY OF MEXICO IN DENMARK
THE MEXICAN ENERGY
REFORM
Ambassador José Ignacio Madrazo
AGENDA
1. Why was the Energy Reform Introduced
2. Oil Production
3. Gas Demand
4. Electricity Rates
5. Forecast
6. Relevant Aspects of the Mexican Energy Reform
7. Main Benefits
8. Authorities and Estate-Owned Companies
9. Private Participation and Regulation
1.WHY WAS THE ENERGY REFORM
INTRODUCED?
• TO INCREASE THE ENERGY PRODUCTION
LEVELS
• TO OPEN OPPORTUNITIES FOR PRIVATE INVESTMENT, TECHNOLOGY TRANSFER, INDUSTRIAL KNOW-HOW AND COMPETITION, ALLOWING THE COUNTRY TO TAKE ADVANTAGE OF ITS VAST NATURAL RESOURCES
• TO MAXIMIZE THE ENERGY INCOMES
• TO FOSTER ECONOMIC GROWTH, WHICH IN THE PAST THREE DECADES HAS AVERAGED 2.4% ANNUALY
• TO PRODUCE MORE ENERGY AT LOWER COSTS • TO PROMOTE THE USE OF RENEWABLE ENERGY
2. OIL PRODUCTION
OIL PRODUCTION IN MEXICO HAS DECREASED, DESPITE THE INCREASED INVESTMENT FOR EXPLORATION AND PRODUCCTION
3.- GAS DEMAND
• THE DEMAND HAS INCREASED • THE PRODUCTION HAS REDUCED THIS SITUATION HAS BEEN GENERATED THAT IMPORTS REACH 30% OF THE NATIONAL CONSUMPTION IN 2013
4. ELECTRICITY RATES
5. FORECAST
IF THIS TREND CONTINUES, IN A FEW YEARS MEXICO WILL BECOME A NET ENERGY IMPORTER
PRIMARY ENERGY: NATIONAL CONSUMPTION AND PRODUCTION
6. RELEVANT ASPECTS OF THE
MEXICAN ENERGY REFORM
• ALLOWS PRIVATE AND FOREIGN INVESTMENT, COVERED BY DIFFERENT KINDS OF CONTRACTS
• PEMEX WILL HAVE THE PRIORITY OF CHOICE ON AREAS THAT
CAN EXPLOIT WITH THEIR OWN RESOURCES
• PEMEX TAX BURDEN WILL BE LESS • RENEWAL ENERGY WILL REDUCE GAS EMISSIONS AND
THEREFOR REDUCE ENVIRONMENTAL RISKS • GRADUALLY ALLOW SALE AND DISTRIBUTION OF GASOLINE BY
PRIVATE COMPANIES
• CREATION OF THE MEXICAN OIL FUND
7. MAIN BENEFITS
• INCREASE IN ELECTRICITY, GAS AND OIL
PRODUCTION
• INCREASE IN GAS AND OIL RESERVES
• GENERATE ONE PERCENTAGE POINT OF
ECONOMIC GROWTH IN 2018 AND TWO
MORE POINTS FOR 2025
• CREATE NEARLY A HALF MILLION
ADDITIONAL JOBS IN THE CURRENT
ADMINISTRATION AND TWO AND A HALF
MILLION MORE FOR 2025.
• REDUCE ENVIROMENTAL RISKS
• INCREASE PRODUCTIVITY IN THE INDUSTRY
AND COMPANIES
8. AUTHORITIES AND STATE-
OWNED COMPANIES
THE MINISTRY OF ENERGY (“SENER”): WILL BE RESPONSIBLE FOR THE SELECTION OF AREAS TECHNICAL DESIGN OF CONTRACTS AND THE TECHNICAL GUIDELINES ASSOCIATED WITH THE BIDDING PROCESSES.
THE MINISTRY OF FINANCE (“SHCP”): SHALL ESTABLISH THE TAXATION RELATED TO BIDDING PROCESSES AND
CONTRACTS.
THE NATIONAL HYDROCARBONS COMMISSION (“CNH”): SHALL BE ENTITLED TO PERFORM BIDDINGS, AWARD CONTRACTS, THE SIGNING AND TECHNICAL MANAGEMENT OF THE CONTRACTS, AS WELL AS THE SUPERVISION OF THE DEVELOPMENT PROGRAMS.
MEXICAN STATE-OWNED OIL COMPANY
MEXICAN STATE-OWNED ELECTRICITY COMPANY
DERIVED FROM THE OBJECTIVE OF MODERNIZATION OF STATE-OWNED COMPANIES, IT IS INTENDED THAT PEMEX AND CFE ARE TRANSFORMED INTO PRODUCTIVE COMPANIES OF THE STATE, PROVIDING THE STATE-OWNED COMPANIES INVOLVED IN THE ENERGY INDUSTRY, WITH TECHNICAL AND MANAGEMENT AUTONOMY, IN ACCORDANCE WITH BEST PRACTICES OF THE INDUSTRY.
9. PRIVATE PARTICIPATION AND
REGULATION
THE ENERGY REFORM ALLOWS THE MERGER OF PUBLIC AND
PRIVATE INVESTMENTS IN THE ENERGY PRODUCTION AND
COMMERCIALIZATION AND THIS IS ATTRACTING INCREASING
INTEREST FROM MANY COMPANIES TO MAKE BUSINESS.
THROUGH THE ENERGY REFORM, NEW SPECIALIZED
INSTITUTIONS WILL DEVELOP, WHICH WILL WORK WITH A
SPECIAL LEGAL FRAMEWORK TO REGULATE AND PROTECT
MEXICO'S INTERESTS AS WELL AS THE INTERESTS OF THIRD
PARTIES.
THE MEXICAN GOVERNMENT WILL CREATE THE FOLLOWING ENTITIES: • MEXICAN OIL FUND • NATIONAL GAS CONTROL CENTER (CENAGAS) • NATIONAL ENERGY CONTROL CENTER (CENACE)
• NATIONAL AGENCY OF INDUSTRIAL SAFETY AND
ENVIRONMENT FURTHERMORE IT WILL PROMOTE THE STRENGTHENING OF THE NATIONAL HYDROCARBONS COMMISSION AND THE ENERGY REGULATORY COMMISSION
• ON APRIL 30, 2014, PRESIDENT ENRIQUE PEÑA NIETO INTRODUCED TO THE MEXICAN CONGRESS THE PROPOSED SECONDARY LAWS THAT WOULD IMPLEMENT THE REFORMS INITIATED THROUGH THE CONSTITUTIONAL MEASURES PASSED BY THE CONGRESS
• IT IS EXPECTED THAT THE MEXICAN CONGRESS WILL CONSIDER THE ENABLING LEGISLATION IN A SPECIAL SESSION DURING THE LAST HALF OF JUNE 2014