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Will recent reform spur technology transfer to the Mexican energy sector?

Will recent reform spur technology transfer to the Mexican energy sector?

Technology transfer to the Mexican energy sector is critical component for ensuring the success of recent reforms.

Two years ago, Mexico enacted sweeping reforms across several important sectors of the country’s economy, including, one of the most critical, energy. Reforms that ended a seven decades long monopoly over production of oil and natural gas by state-owned Pemex, resulted in the countries opening the industry up to both foreign and domestic investment. The reform was a move in the right direction towards the removal of obstacles to a free-market shifts in capital and technology. But critics are now asking, is it truly enough?

Energy Industry Concerns

Chief among the concerns for the domestic industry is the question of technology transfer to the Mexican energy sector – namely, how will international oil companies (IOCs) transfer technology to research facilities and companies in Mexico? What institutional framework will facilitate this shift? In order to reinvigorate its hydrocarbons potential, Mexico has placed a bet on the free market and deregulation to push the country’s industry to the next level. This is due in part to a few concerns facing the developing nation:

  • In spite of their focus on technical education, demand is outpacing Mexico’s ability to train new professionals;
  • Deep-water reserves continue to pose a challenge to the national industries capacity. Hence, technology transfer to the Mexican energy sector in this area is critical;
  • Mexico’s domestic energy industry does not have a substantial base of specialized services and providers.

Yet critics believe this may not be enough to optimally affect technology transfer to the Mexican energy sector. Some cite various challenges such as the maquiladora industries historic inability to deliver more than 5% of domestic inputs into goods, the recent drop in energy prices worldwide, and the relatively low amount being spent on investments in R&D domestically at present.

Energy Reform Provisions

While Mexico’s energy reform is a step in the right direction, it does contain some elements of a state-led industrial policy that is headed up by the Ministries of Economy and Energy. This strategy includes financial and technical assistance for foreign-domestic partnerships, which may or may not lead to technology transfer to the Mexican energy sector.

One of the more promising elements of the energy reform in Mexico is the establishment of the Mexican Petroleum Fund for Stabilization and Development, which finances projects for future technological advancement in the sector. While fiercely competitive, this fund is available for numerous opportunities to advance and modernize the energy sector in Mexico. This could provide a modest mechanism for technology transfer within Mexico’s energy industry.

IMP is the R&D arm of Mexico’s state-owned petroleum company, Pemex. Mexico’s energy reform allows for Pemex to utilize this arm to carry out the R&D activities necessary for technological advancement and overall improvement for the country’s energy-related industries. While not mandatory, this could provide another avenue by which to direct technology transfer to the Mexican energy sector

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