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Mexican Energy Sector Poised for Growth

On October 1, 2013,  former U.S. ambassador to Mexico, Antonio Garza, released an opinion piece that is entitled, “Mexico, Energy and the Border.  In it the lawyer, based in the Mexico City offices of the law firm White & Case comments upon the potential positives and negatives related to the reform of the Mexican energy sector proposed by the nation’s president, Enrique Peña Nieto.

Garza asserts that, due to Mexico’s need to exploit its energy resources more effectively to fund its social and economic development, and the current president’s political skills, achieving the goal of  fomenting the increased participation by foreign parties in the development of the Mexican energy sector is a distinct and real possibility.

As is the case in some parts of the United States, the ex-ambassador, sees the exploitation of shale oil as one of the greatest opportunities to be taken advantage of by both Mexican and foreign companies. According to studies conducted by the United States Energy Information Administration, Mexico is the possessor of the sixth largest shale oil reserves on the planet.

According to Garza, most of these reserves are located in the northern part of Mexico. Mexican energy sector activity with respect to the exploitation of shale oil and gas will take place mainly in areas that are contiguous to the Eagle Ford region in South Texas. The exploitation of these natural resources could do for the northern part of Mexico what a similar boom has done for the twenty Texas counties adjacent to Eagle Ford.

Given a boom of this kind on both sides of the U.S.-Mexico border there will be economic gains to be had by both countries, but also a coordinated need to put the physical infrastructure in place that will effectively harness additional business and commercial flows. Garza asserts that a part of the revenues generated by this new economic activity should be utilized to strengthen the border region’s transportation infrastructure, as well as to fund the construction of additional water and wastewater plants, and to finance the building of new schools, housing and healthcare facilities.

The Mexican energy sector is ready to take off, but plans must be put in place to make the most of this opportunity. Additionally, Mexico and the United States must communicate, collaborate and coordinate to improve the quality of life for citizens living on both sides of the international boundary.

The full original article can be read at marketwired.com

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