Research Library

This issue brief proposes a framework for awarding bids in a public tender for exploration blocks. The context for the proposal is Mexico’s energy reform of 2013-2014.

This issue brief examines the signals conveyed by Mexico's 2014 energy reforms, and analyzes the limitations in law, institutional design and policy that may delay, if not derail, the reforms' success.

Twenty years after NAFTA came into force, Mexico is more dependent than ever on food imports. Energy reforms could help change that.

Under proposed legislation to implement Mexico’s energy reforms, Pemex will remain a privileged state operator supporting exploration and production in most of the country's proven onshore and shallow water fields. It is not known if energy reform will effectively turn Pemex into a firm able to compete without policy bias against private investors.

Energy regulation under Mexico's energy-sector reforms are of great interest to investors, since autonomous regulators—protected from political pressures and able to make and sustain technical decisions—can guarantee greater legal consistency than government authorities exposed to political pressures. The difficulty was finding an alternative model that ensured the institutional strengthening of the agencies without relinquishing too much control of the executive branch.

Mexico's organized crime groups have expanded into areas that include the theft of crude oil, gas and gasoline. The impact of organized crime on the energy sector is a real threat to the intended effects of Mexico's energy reforms.

The violent struggle between rival Mexican drug cartels and other criminal groups has left tens of thousands dead and towns across Mexico paralyzed with fear. With overwhelmed police forces relatively powerless to control drug-related murders and kidnappings, a growing number of vigilante organizations, or self-defense groups, aim to restore order — but now even they are fighting, and killing, among themselves.

Mexico’s 2013–2014 energy reform promises to bring the country’s economic drivers and regulatory institutions in line with the global practices of free market democracies. If successful, this development would be a 180-degree turn. The accomplishment of such realignment is hardly assured, however.

On Monday, three committees in Mexico’s senate — constitutional issues, energy and legislative studies — voted to bring an energy reform bill to the chamber’s floor for debate. The legislation would provide international oil companies the opportunity to participate in profit-sharing contracts and concession-like licenses for energy operations in Mexico, and it is expected to become law by the end of the legislative session Dec. 15.