New energy opportunities in Mexico

Shannon O’Neil and James S. Taylor recently wrote a great primer on Mexican energy reform.  Click here to read the whole article.

The part I found most interesting is at the end, where they discuss the possibilities for future energy development in Mexico.  Besides the opportunity for partnering with PEMEX, here are some areas where they see real investment potential:

1. Shale oil and gas. Mexico possesses substantial shale gas resources that Pemex has effectively left untouched. There are five promising, geographically disbursed basins in the country, as identified by Pemex. The Cuenca de Burgos (as the Eagle Ford is known in Mexico) is estimated to hold two-thirds of Mexico’s technically recoverable shale gas resources and would have significant appeal for companies familiar with the geology of the formation and the infrastructure that exists in the region.”  

2. “Pipelines. With the current lack of sufficient pipelines creating inefficiencies in the sector, we believe there are significant opportunities to invest in midstream infrastructure.”

3. “Electricity. The energy reform also includes the opening to private investment for electricity generation. The major areas of opportunity in this field will be in the addition of power generation capacity (nuclear energy will remain solely responsibility of the Mexican government) and in the upgrading and improvement of the electricity grid.”

It is amazing that the government was able to reform PEMEX at all, given how much of a sacred cow it has been.  But as the authors make clear, this was just the first step of many.  Mexico needs a host of secondary reforms to clarify and support the new laws.  Apparently the executive branch is currently working on that and should have a package together in the next couple of weeks.  Vamos a ver…

2 thoughts on “New energy opportunities in Mexico

  1. Shale really has not worked outside the US. Many reason for that I will not go into. Mexico has lots of low hanging fruit before they get to shale. For example, import US gas to produce electric power and export the oil that was used (and is with much more than the gas they import).

  2. Opportunities will be there but it is dependent upon us how we use it, if we use it well then we will never fail, but if we waste this up then obviously we will leave trading completely. I am lucky to be working with OctaFX broker since they got mind blowing conditions with having no swap free account, so we can save so much money over there and for me it’s especially great since my history has been of average trade to last 2-3 week and that’s pretty long with swap.

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