Posts Tagged ‘Energy’

An Eye on Mexico

April 13, 2016

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s April 2016 newsletter.

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This past month, Mexico’s civil society groups handed the Senate president a new piece of anti-corruption legislation—the Ley3de3. The citizen led legislation looks to force public officials to disclose tax information and possible conflicts of interest, and increases the punishment for acts of corruption. After a widespread media campaign, the bill received 291,467 signatures (more than double the 120,000 signatures necessary to get it onto the legislative table), representing a new path for the country’s civil society to influence the anti-corruption agenda. You can read more about the Ley3de3 in my recent Dallas Morning News op-ed and the other ways that Mexicans are taking the fight against corruption into their own hands.

There have also been steps forward for Mexico’s energy reform. This past week, the Federal Electricity Commission (CFE) held its first long-term electricity tender with ultimately eleven companies (out of sixty-nine bidders) winning clean energy certificates and electricity contracts. The government’s goal is to have clean energy contracts producing 5 percent of the country’s electricity in the next two years. Meanwhile on the oil and gas side, the reform is also continuing apace, despite Moody’s downgrade of Pemex’s credit rating (along with Mexico’s general outlook) this past week due to its precarious financials. The next tender will be for deep-water exploration and production and is scheduled for the first week in December.

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North America: King of the road

May 5, 2015

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s May 2015 newsletter.

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When Americans think about Mexico’s economic ties with the United States, popular exports like tomatoes, avocados, and Mexican soccer may come to mind. But these products make up barely a drop in the export bucket. Instead the big dollars come from the back and forth in car parts and brand new cars.

Over the past weeks, global automotive giants Toyota, Ford, and Volkswagen all announced new factories or expansions in Mexico to the tune of a combined $4.5 billion. They add to the billions in foreign investments already scattered across eleven Mexican states, which have fostered a booming car industry south of the border. Just last year, the U.S. and Mexican trade in cars and their parts totaled $131 billion—that’s pretty much equal to the entire economies of Guatemala, Costa Rica, and Bolivia, combined.

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Mexico in transition

February 18, 2015

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s interview with Grapevine Magazine.

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With lower oil prices now around $50 a barrel, what effects do you foresee for Mexico and for Round One bidding?

The low global oil prices have absolutely changed the energy landscape for countries across the world and Mexico is no exception. For Mexico, an oil producing and exporting country, the most immediate effect is the fiscal one, as less revenue flows back into Pemex or is channeled into the federal budget, which has been receiving roughly one third of its funding from these energy revenues.

The Mexican government has actually been preparing for this type of drop, by employing an extensive annual hedging scheme that, along with gasoline taxes, will somewhat soften the blow this year. But if prices don’t start rebounding, and it doesn’t look like they will anytime soon, then they’ll need to make up for the lost revenues. One way the government could do this would be to raise taxes, and since they recently promised not to do this, their options will largely be constrained to cutting spending, taking on more debt, or doing a little of both. In fact, we’ve already seen them slash planned government spending by over $8 billion in response to oil prices. And with roughly half of that earmarked for Pemex, it’s not hard to imagine the types of effects that this will have for Mexico’s energy sector, not to mention the country’s economic growth more broadly.

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Ambassador Garza on Mexico’s Future

January 26, 2015

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s January 2015 newsletter.

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As 2015 kicks off, there is a lot of talk about what we should be watching over the coming months. Analysts such as Ian Bremmer and Andy Langenkamp have offered their thoughts in wide-ranging and succinct geopolitical roundups. Their hotspots span the globe, but reading them I was struck by how little there was on Latin America or Mexico in particular. So to complement their global approach, here’s a look into what events and trends I’ll be watching in the region over the coming year.

Looking at Mexico’s future, I would be remiss without starting with the two biggest things that everyone will be watching, and that is what develops on the security and energy fronts. After the heartbreak of the missing 43 students, government corruption, and the outpouring of emotion and frustration across the country, the government’s actions in 2015 will be critical for proving its leadership and ability to strengthen the country’s rule of law. What happens or does not will influence everything from protecting citizens to safeguarding investments to influencing the midterm election outcomes later this year.

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Mexico: Looking Ahead to 2015

December 11, 2014

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s December 2014 newsletter.

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As we count down to 2015, I want to wish you all the very best for the upcoming holiday season. It also seems like a good time to take a moment to reflect on some of the events in Mexico over the past twelve months. In this newsletter, I’ve outlined three takeaways from what has been a dramatic year.

  1. Mexico’s reform agenda kept rolling through 2014, but turbulence could lie ahead.

2014 opened with much anticipation in the wake of President Peña Nieto’s ambitious 2013 reform agenda. By August, Mexico had passed eleven new structural reforms, with sweeping changes across the education, political, financial, fiscal, and telecommunication sectors. Some of these changes were widely viewed as necessary—such as opening up television and Internet networks to competition or allowing reelection for members of Congress—while others including mandatory teacher evaluations or higher taxes for border manufacturing sparked fierce debate.

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Critical Point in Energy Reform

October 13, 2014

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s October 2014 newsletter.

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I’ve been following Mexico’s energy reform closely—from the lead-up to the constitutional reform through the passing of the secondary legislation. Almost one year in, what Mexico has accomplished is nothing short of historic. The reform went far beyond what many believed possible and international energy companies are already busy announcing their investment plans and partnerships with Pemex.

But this doesn’t mean that the work is done. And in fact, for many companies the game is just beginning. Though not grabbing the headlines, today’s process of designing contracts and bidding rounds, will be, in many respects, far more critical.

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Mexico’s energy reform to attract international interest

August 11, 2014

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s August 7, 2014 special to the Houston Chronicle.

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With final Congressional approvals now in place, Mexico and President Enrique Peña Nieto can begin celebrating the passage of the secondary legislation necessary to codify last year’s constitutional amendments that opened the energy sector to private investment. The confetti will have barely hit the floor when the focus must necessarily turn to the crucial implementation period when the institutional and market architecture must go from blueprints to the hard work of build out.

The December 2013 constitutional reform ended the monopoly of the state-owned energy company Pemex and introduced private investment into every segment of Mexico’s hydrocarbon sector. It also gave regulatory authority to a new set of autonomous, independently funded entities that will oversee licensing, safety and environmental protection. Additionally, the reform required that Pemex be transformed into a “state productive enterprise” and established the Mexican Petroleum Fund, under the purview of the Central Bank, to manage contract payments and oil revenue.

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Mexico’s Energy Reform: One Critical Step Closer

July 24, 2014

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s July 2014 newsletter.

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Mexico’s landmark constitutional energy reforms, approved last December, moved another step towards final passage this week when Mexico’s Senate gave final approval to key parts of the secondary legislation necessary to regulate the opening of the country’s oil and gas industry to private investment.  That secondary legislation now goes over to the house where, within weeks, it is expected to pass.

The full legislative package addresses 21 laws necessary to implement the reform and support its goals of transparency, competition and growth. Anticipation of a new energy era in Mexico is building and expectations for the reform’s beneficial economic effects are great.

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Mexico’s economic transformation means change for Texas

June 25, 2014

Antonio O. Garza, Jr. (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassadors Garza’s June 10, 2014 special to The Dallas Morning News.

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Texas has worked for many years to cultivate greater private sector opportunity. We’ve gotten a lot of things right, as a look at the most recent report from the Dallas Federal Reserve makes clear. But with the profound process of change now underway in Mexico, the competitive dynamics of our region, and very possibly of the global economy as a whole, will shift. That means it’s imperative that Texans look beyond the good news of today and prepare for the challenges — and opportunities — of tomorrow.

Mexico’s historic reforms, including the much talked about energy sector opening, will recast its economy. The bonds Mexico shares with Texas are sure to deepen and grow more complex, a fact that should compel state policymakers here to address issues that are important to our own economic vitality and competitiveness.

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To manage Putinism, look to Norway

April 1, 2014

Thomas A. Loftus (Ambassador to Norway, 1993-1997)

Cross-posted from Ambassador Loftus’ March 31, 2014 op-ed in the Cap Times.

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Norwegians grow up with skis on their feet and Russians on their northern border. The choice of former Norwegian Prime Minister Jens Stoltenberg to head NATO puts a young man with a long and successful political resume in charge of what now has become an alliance faced with managing relations with Russia after the annexation of Crimea. This is a Russia with a saber-rattling bent and a mercurial leader.

It is not a new Cold War, let us hope, but certainly a frosty turn of events. Norway’s adept handling of relations with their Russian neighbors since the end of the Soviet Union gives the West some guidelines but knowing that history is only useful if understood in the context of two new realities.

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