In an important new step to transform Mexico’s energy sector, the country has recently enacted an energy reform bill. This bill has created the possibility of high levels of foreign investments, and simultaneously ended a 76-year monopoly of the state-owned Petroleos Mexicanos for oil production.
Prominent investment companies and firms like the Royal Dutch Shell plc, Chevron Corporation, and New York-based private equity firm KKR plan to undertake heavy investments in the country. KKR in particular foresees positive prospects for their firm in such an enterprise.
Said David Petraeus, Chairman of the KKR Global Institute:
“There are a number of different opportunities that we’re evaluating, the reason that I’ve been in Mexico four times in the last seven or eight weeks is this extraordinary promise that the financial community sees in this country.”
The legislation and restricting of the energy sector has opened the industry to investments both foreign and private. Writes Micheal Kaufman for Bidness Etc, “According to Bloomberg, Mexico will receive bids for 169 blocks from private companies for crude oil production and exploration. Investments worth $13 billion are expected to be undertaken by major energy companies,” noting that Latin American investors in particular expect to see higher returns on their assets.
President Enrique Pena Nieto’s sweeping energy reforms have focused on Mexico’s gas and oil sectors, with many insiders saying there hasn’t been enough serious debate on the future of renewable energy. Many had hoped Pena Nieto’s reforms would make good on his commitment to clean energy.
There are still numerous challenges the country faces, and some believe its promises have been unrealistic in regards to the renewable energy sector. In 2012, Mexico was one of the very first nations to pass a climate change law, which promised to reduce carbon emissions by 30% by 2020 and 50% by 2050. With the recent passing of this bill, time will tell if Mexico’s energy sector undergoes the transformation business insiders predict it will.