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Mexico gas and power reforms: first impressions

by Jed Bailey | December 16, 2013     [wpdm_package id=2625 template=”link-template-button.php”]

 

 

Mexico’s gas and power reforms have been overshadowed by the oil upstream opening. They will have far reaching consequences nonetheless.

 

Mexico’s far-reaching energy reform—overhauling the country’s electric power sector, natural gas downstream, and hydrocarbon exploration and production—was passed on December 12, 2013 after a marathon Congressional session. In many ways, passing the reform bill marks the beginning of the real work of transforming Mexico’s energy sector. The constitutional changes must be ratified by a majority of states, the related enabling legislation must be draft-ed and enacted, new institutions must be created and others profoundly changed. All of this will take time, and much can happen along the way. This first step, however, is critically important and sets the stage for profound changes throughout Mexico’s energy value chain.

 

This report discusses four initial observations about the path ahead:

• Downstream changes are a critical part of the package, not an after-thought.
• There is a lot to be done in little time—expect delays.
• New investment will likely wait until the new rules and institutions are well established.
• An extended transition period could strain Mexico’s gas and power supply.

 

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