Energy Reform is in the cloud… now it has to be downloaded  

 

By Marcial Díaz Ibarra

 

 

Marcial Diaz Ibarra is a lawyer, consultant of the Energy Sector, with studies in Public Administration. Collaborated in the Legal Department of Pemex for over 10 years, being Legal Assistant at Pemex Refining, Pemex Gas and Basic Petrochemicals and Pemex Exploration and Production, serving in contentious and advisory matters, as an Advisor in the Committees of Procurement under the New Regimen under Pemex Law and the DACS such as: Acquisitions, Public Work, CAAOS, Subcaaos and the Board of Directors. marcial.diaz.ibarra@gmail.com

 

 

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Much has been said since 20 months ago on the energy sector: projects, legislative speeches, discussions on defense for all Mexicans, etc. Finally, since we have the amendment of sections 25, 27 and 28 of the Political Constitution of the Mexican United States, the issue of 9 new laws and the reform of existing 12, 25 regulations newly issued and with that the regulatory stage culminates. But this does not mean that the so called ENERGY REFORM is ready, its implementation is still lacking.

 

Three examples of why the Energy Reform is still in the cloud:

 

1

The certainty and legal security for investment are notably absent in recent

times.

Just remember some events that have happened in recent years in areas related to the industry activities.

 

Extortion, use rights, levantones (express kidnapping), etc, words that we have entered in our vocabulary.

 

Just look at the press and it seems that we live in two Mexicos, the real and the one we want to sell to investors; hollow speeches and short-term politicians that use forums to promote themselves and not to commit to the rule of law that is reeling.

 

The obvious question is: Does the social atmosphere that exists is ripe for investment in Mexico, despite the benefits of the energy reform?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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2

Investors   are    waiting    to    see    how international markets behave and they will study each of the projects to see which is the most viable; gradually oil prices have been lowering, in the month of June Brent crude oil was traded at $115 dollars per barrel getting to be below $85 dollars in October. Obviously, the Mexican mix has also changed, but not many want to account that and we live in a country that 33% of

government revenue comes from oil.

 

In past days the Ministry of Finance told lawmakers that the formula update of the price of the export Mexican crude oil for 2015 results in an estimate of $79 per barrel, which is less than three dollars at the price calculated the Income Law sent by the Federal Government to the House of

Representatives on September 5, and two dollars to the content of the bill approved in San Lazaro on October 16.

 

Do our legislators know more about futures trading in oil matter or they just don´t care about the oil price, ultimately something has to be done with the payment of $450 million dollars a year for oil coverages?

 

Thus, the 2015   Federation Revenue Act will decrease from four billion 702 thousand 951 million pesos to four billion 694 thousand 687 million pesos.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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  • The oil oversupply hits prices worldwide. To this we must add other factors, such as price war held by countries members of the Organization of Petroleum Exporting Countries (OPEC).

 

 

 

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3

This year the shallow waters and extra heavy crude bidding prebases will be given and in the first quarter of 2015 on unconventional fields, onshore fields, deep waters; all this to sign the first contracts between July and October and begin operations in 2016; what makes us see that big capital money has not

entered yet.

 

Added  to   this,  the   prices  are   under pressure as US production continues to

NUMBERS

 

33% of Mexico´s federal revenues come from oil sale.

 

81 dollars is the price per barrel of Mexican oil by 2015, as stipulated by

the deputies in the Revenue Act.

 

79 dollars is the price adjusted by the Senate for not affecting the economy.

 

on a production cut, while for some   the      •

forecast by Goldman Sachs for

 

rise and OPEC cannot reach an agreement

 

price drop is a brake for investments, for others as American citizens, this decline represents savings of between 5 and 15 dollars every time they load the car tank, which is not reflected in Mexico despite that 45% of the gasoline sold by Pemex is of foreign origin.

 

  • Oil companies worldwide have canceled or postponed projects worth over $200,000 million dollars since the beginning of last year, according to the investment firm Sanford C. Bernstein

 

Derived from these three cases is that the so called energy reform is still in the cloud, so you need to find the application to download it.

 

65 dollars is the price of   Mexican

crude

the second quarter of 2015.

 

For every dollar lost by the oil barrel, the Federal Government fails to receive

three thousand 800 million pesos.

 

In the last six years, US production increased 65 percent.

 

The international unit of measurement is the Barrel, which has a capacity of 42 gallons or 158.9 liters and not as expressed by a senior official of the sector to investors in London, saying that a barrel

of oil has 64 gallons.