Member Article

Mexico’s package of energy reform laws (“Energy Law” – nine new laws and amendments to twelve existing laws) became a reality with its promulgation on Monday, August 11, 2014. With the enactment of the Energy Law, Mexico finally joins the international mainstream of energy resource development and management. This alert addresses only the oil and gas aspects of the reform.

The Energy Law holds promise for almost everyone in the oil, gas, power, and manufacturing industries, as well as related support industries. So what does this mean to you and your clients?

Opportunity! For service, construction, equipment supply, infrastructure, pipeline, consulting, water treatment and supply, and products’ companies, among others, it means a multiplication of potential clients. Pemex and CFE have ceased to be the sole or almost sole sources of business for those sectors in Mexico.

For the first time since 1938, private industry will have access to exploration and production projects in Mexico with or without Pemex; and Pemex will be able for the first time to associate in a significant manner with the oil and gas exploration industry to develop the resources assigned to it. For E&P companies, this means new sources of production and revenue, whether as stand-alone or as part of a Pemex-partnered projects (in which Pemex may or may not be the operator), and the possibility to book reserves (but not own them in situ).

For financial institutions, private equity providers, and the public market, this means potential new markets to service the large capital and funding needs that Mexican energy reform will generate.

The significance of the Energy Law cannot be overstated: it is truly both historic and, for Mexico and the region, an economic game changer. By some estimates, the impact on GDP growth could be substantial: a gross increase of .5 percent in 2015, 1.5 percent in 2016 and 2017, and 2 percent per year between 2018 and 2025.

To read the full alert, click on the PDF linked below.

Mexican-Energy-Reform-on-Oil-and-Gas.pdf

If you have any questions, please feel free to contact one of the attorneys listed below.