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Energy Reform in Mexico. Challenges, changes and prospects Duncan Wood Mexico Institute, WWICS, November 2008. Outline. Background The reform Impact The future. BACKGROUND. Mexico as outlier. Unrestricted private investment. - PowerPoint PPT Presentation
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Energy Reform in Energy Reform in MexicoMexicoChallenges, changes and prospectsChallenges, changes and prospects
Duncan WoodDuncan WoodMexico Institute, WWICS, November 2008Mexico Institute, WWICS, November 2008
OutlineOutline
BackgroundBackground The reformThe reform ImpactImpact The futureThe future
BACKGROUNDBACKGROUND
Unrestricted private investment
Private investment through risk contracts, Joint Ventures, etc.
No private investment
Mexico as outlierMexico as outlier
Total hydrocarbon reservesTotal hydrocarbon reserves
Millions of barrels of crude equivalent
57,741
58,20556,153
52,95050,032 48,041 46,914
Scenario 1: declineScenario 1: decline6.5 billion dollars a year6.5 billion dollars a year
Thousands of barrels per day
Scenario 2: maintain current situationScenario 2: maintain current situation10 billion dollars a year10 billion dollars a year
Scenario 3: GrowthScenario 3: Growth15 billion dollars a year15 billion dollars a year
Scenario 4: maximising productionScenario 4: maximising production25 billion dollars a year25 billion dollars a year
Deep water potentialDeep water potential
Background: 2007 evaluation of PEMEX
Background: 2007 evaluation of PEMEX
1. PEMEX internal problems:
Falling production
Falling reserves
Low replacement rate
Low recovery rate in
mature fields
Growing refined product
imports
Infrastructure problems
2. Changes in global oil markets
The end of easy oil
Rising costs and complexity
Human resource challenges
Industry structure
The energy transition to a
post-hydrocarbon model
THE REFORMTHE REFORM
Strengthen the regulator and improve
the fiscal regime
Raise investment levels
Raise investment levels
Improve execution Improve execution capacity and raise capacity and raise
efficiency levelsefficiency levels
Improve execution Improve execution capacity and raise capacity and raise
efficiency levelsefficiency levels
Incorporate cutting-edge technologies
Incorporate cutting-edge technologies
Oil
Challenges
Facilitate the energy transition
Facilitate the energy transition
Transition
Flexible contractsFlexible contractsFlexible contractsFlexible contracts
AutonomyAutonomy Transparency and accountability
Transparency and accountability
Strengthening PEMEXChanges
Increase nationalIncrease national contentcontent
Increase nationalIncrease national contentcontent
RenewablesRenewables
Sustainable energySustainable energy
The Axes of Energy ReformThe Axes of Energy Reform
Laws modified by the reformLaws modified by the reform
• Renewable energy and energy savings :
• Ley para el Aprovechamiento Sustentable de la Energía
• Ley para el Aprovechamiento de Energías Renovables y el Financiamiento
de la Transición Energética
• Better planning and strategic controls:
• Artículo 33 de la Ley Orgánica de la Administración Pública Federal (nuevas
atribuciones a SENER)
• Nueva Ley de la Comisión Nacional de Hidrocarburos
• Ley de la Comisión Reguladora de Energía (CRE)
• Strengthening PEMEX:
• Ley Reglamentaria del Artículo 27 Constitucional en el Ramo del Petróleo
• Ley de Petróleos Mexicanos
• Ley Federal de Derechos
IMPACTIMPACT
According to the Mexican governmentAccording to the Mexican government
ProductionProduction• The government predicts that the changes will
increase both production and oil revenues.
Crude oil production(thousands barrels per day)
Crude oil production per capita(barrels)
Fuente: SENER
With Reform With Reform
Expected resultsExpected results• New discoveries.
Fuente: SENER
3P discoveries (with Reform)(millions of barrels of oil equivalent)
3P replacement rate (with Reform)(%)
New oil fieldsNew oil fields• The government expects that the reform will help in
the replacement of mature and declining fields
Production from new projects with the reform (thousands of barrels a day)
Fuente: SENER
Value of new production projects (millones de pesos)
*MME: 75 d/b y tipo de cambio 13 pesos por dólar.
RefiningRefining• It is expected that the reform will have a positive
impact on refining capacity
Production versus demand/gasoline(thousands of barrels a day)
Fuente: SENER
New investments and new government revenues
New investments and new government revenues
An extra 70 billion pesos a year in new investments
The government and PEMEX will benefit by between 194 y 83 billion extra pesos per year in revenue
New investments(billions of pesos)
Government revenue(billions of pesos)
Fuente: SENER
Promedio
THE FUTURETHE FUTURE
What’s next?What’s next?• Will production recover?• Is the government “over-selling” the reform? Disjuncture between rhetoric pre- and post-reform.• Deep water exploration and production – the technological, financial, technical challenges• PEMEX debt – PIDIREGAS and the rest..• Real investment in renewables – Mexico’s potential• The electricity sector – modernization, efficiency, the union• The political challenge
APPENDICESAPPENDICES
For more information, For more information,
please contact me at [email protected] contact me at [email protected]
