Mexican Energy Sector Reform and U.S.-Mexico Energy Relations

The objective of the Capstone workshop is to examine the opportunities that will develop over the next three years between Mexico and the U.S. in the Energy Industry.  The assessment focused on the possible acceleration of energy-related upstream development and infrastructure that the U.S. shale revolution has had in Mexico.  

The Capstone project's final deliverable includes both a presentation and report on the Constitutional reforms that the Mexican energy sector was undergoing, and what potential investment opportunities may arise in the oil and gas sectors from it. The Capstone team began with an overview of the Mexican energy industry, focusing on the history of nationalization, through to the current changes that are moving through Congress to deregulate the industry, turn PEMEX into a for-profit company, and open the sector to private investment. The report explores the implications of deregulation on investments in the offshore and onshore oil sectors, as well as the natural gas sector. The team evaluated where there is an opportunity for private investment to impact the sector, and how Mexico can encourage these investments, through partnerships with PEMEX. In order to best analyze the reforms Mexico is making, the team provided a comparison of energy policies in Brazil, Norway, and Colombia. These countries have all experienced a de-nationalization of their oil and gas industries to varying extents, and all serve as a useful comparison tool to the changes Mexico was undergoing. Additionally, the team analyzed the impact on U.S. and Mexican relations. Specifically, the team looked at how the imminent changes regarding the Keystone XL project will influence Mexico, whether there would be any possible pipeline development between the two countries, and what would be the impact on trade between the nations. Under this, the team specifically addressed Mexico’s strong reliance on U.S. natural gas, and the potential for Mexico’s own development of fracking capabilities through investment.